TBPN Live - Studio Ghibli, Andrew Reed, Rob Mohr, Tanay Jaipuria, Immad Akhund, Steven Schwartz, Jeremy Levine, Anthropic Copyright Dispute

Episode Date: March 26, 2025

TBPN.com is made possible by:Ramp - https://ramp.comEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - ht...tps://getbezel.comFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://youtube.com/@technologybrotherspod?si=lpk53xTE9WBEcIjV(00:13) - Studio Ghibli (24:50) - Anthropic Copyright Dispute (01:00:18) - Immad Akhund (01:30:41) - Steven Schwartz (01:46:31) - Jeremy Levine (02:00:55) - Rob Mohr (02:19:02) - Andrew Reed (02:48:05) - Tanay Jaipuria

Transcript
Discussion (0)
Starting point is 00:00:00 You're watching TBPN. It's Wednesday, March 26th, 2025. We are live from the Temple of Technology, the fortress of finance, the capital of capital. We got a great show for you today. I'm sure you've seen all over the timeline. It's Studio Ghibli, too cheap to meter. Everything too cheap has been gibblified. There's been a movement by Geordie to try and move us past the studio Ghibli era era I advocated for a Simpsons era didn't really get much traction on that but but there's people on the timeline I got Jared Callan replying to me right now. He says that dr. Seuss is out and actually where the wild things are We're entering a new era but people have a lot of fun.
Starting point is 00:00:45 People said we were entering this era of abundance and clearly we're here. Yeah, we're here. We're here. This is post scarcity. Yeah, post scarcity. Post scarcity, yeah. Food, eggs, you know, are still $10 an egg, I hear.
Starting point is 00:01:01 But. Lutnik was saying he brought down the price of eggs or something. I haven't checked the facts on that, but that's what I heard in the last Well, we were here to spread misinformation Yeah, not do the research but we did the research on open AI as new model if you haven't seen they just updated It's available in chat GPT right now. You can get the app check it out. It's in GPT 4o I think oddly it doesn't really show up if you're using the the oh three high
Starting point is 00:01:27 Reasoning models. I yeah, you would you would almost think that they are intentionally making it difficult to find Yep Because it works great in 4.0 really the enthusiasts are the only ones using it you can take a picture anything from your camera Roll you can even just snap a photo right within the app and then just say studio Ghibli style and boom you Have a meme that you can share. Yeah, I think the wild thing about this iteration is That there's zero prompt engineering. Oh, yeah, it used to deliver an exceptional Yeah, I mean with mid-journey have the s ref refs and all these different prompts and negative prompts, remember, no six fingers. You just have to say that and tell it, remind it.
Starting point is 00:02:09 And now you can just go in there with two words, three words, and you get exactly what everyone else wants. And it's fascinating because I wonder how, I mean, there's so much to talk about here, but I wonder how enduring this will be. Like you could imagine now that the, like the JD Vance memes where they made him look like a child and then like a very furry person and like a gigachad
Starting point is 00:02:31 and all these different iterations. I'm wondering if like the studio gibbification of iconic images will happen like the same day. Yeah. Well, and it seems like we could be 24 or 48 hours away from somebody figuring out how to make, you know, the matrix as Studio Ghibli, right? Like if you... Like the whole movie you think or like a trailer or something? It would take quite a lot to figure out how to do that today, but we're maybe six months
Starting point is 00:02:59 out. Well, we have a video that actually someone we interviewed at YC demo day made I don't know if we can pull it up then but someone made with this with this new image prompt they made a whole bunch of studio Ghibli style images about San Francisco and YC and their life in Y Combinator and then they animated it probably with runway or one of these yeah video image to video generators so it just adds a little bit of motion, a little bit of character to the visuals. And hopefully, I think we're gonna have the founder of Runway on soon, Cristobal Valenzuela,
Starting point is 00:03:35 who I'm a big fan of. But anyway, let's go through Ben Thompson's analysis because he broke it down really well. The Verge also covered this, and the Verge really sets the table for exactly what's going on here. So OpenAI is integrating new image generation capabilities directly into ChatGPT starting today. I think it's interesting because with the video model Sora,
Starting point is 00:03:57 Sora is now a separate website that you have to go to, and there's a link to it from ChatGPT to take you over to Sora and Sora is more of a, it's almost like a nonlinear editor like a Premiere Pro. Like you start with a prompt, it generates a few videos and then it can kind of cut them all together and you can make edits and it's a little bit more
Starting point is 00:04:17 of a UI based paradigm. This is different because, and if you remember when Dolly 2 launched, it was its own website separate from ChatGPT, separate from GPT-3 Playground or any of those, you'd go over to Dali and then it would have a whole bunch of UI functionality to do in-painting and touch-ups and expansion. You could do really cool things,
Starting point is 00:04:39 but it was a separate thing. This is clearly that Google mindset of like, there's the search bar. Yeah. Go to chat.com, chatgpt.com, openai.com. You're just going to get, what do you want to do? Oh, you want to do an image? We'll do it right now. Uh, Ben, can you play that video? Okay. Uh, so I'll keep reading from the verge. This feature is dubbed images in chat GPT. So they're not giving a crazy new name to this structure or product. Users can now use GPT-40 to generate images
Starting point is 00:05:09 within Chat GPT itself. This initial release focuses solely on image creation and will be available across GPT plus pro, team and free subscription tiers. I'm sure the servers are absolutely melting today because everyone has been dumping prompts in there and you can just tell from how long they take to render that there's something going on.
Starting point is 00:05:29 Yeah, and it's interesting to think of this as effectively a marketing expense for OpenAI, right? Check this out, Celsius, I love it, cheers. Crazy. And we are in this, I believe. So I think that's Brian Chesky speaking at YC and then the Golden Gate Bridge, and then just a little bit of motion, nothing crazy.
Starting point is 00:05:49 It's not a full movie. It's more like moving paintings, but it's very cool. And hey, that's us. There we are. At YC Demo Day. I love it. Thank you for including us. It was fun interviewing you.
Starting point is 00:05:59 And yeah, this is just, I don't know. This is lovely. It is sloppy, but it's cool. And I don't know, it's fresh. It's very clearly less sloppy. Yeah. Like that, like the sort of, yes, slop is flooding the timeline, but at the same time,
Starting point is 00:06:16 it's better than ever. You're getting the text right. The fingers are right. I'm one-shotting every single generation that I'm doing. After we had started the show, look at this. I'll post it in a second. That's great, yeah, post that. That's great.
Starting point is 00:06:32 But yeah, just one-shotting prompts left and right. Including text, which has been really hard for a long time. The text is phenomenal. Of course, if you're doing really detailed sub-layer text, like it's just a few pixels high, like font size 10, it's gonna get a little bit confused. Some people took our banner and overlay and put that through the Studio Ghibli filter and some of the smaller logos from brands
Starting point is 00:06:55 that we know and love were kind of mutated a little bit, but it got pretty close, honestly, and it did really well with the ramp logo, it did really well with a lot of other icons. yeah oh we have a soundboard now by the way we have a soundboard now when certain things are mentioned on the show I might I might hit this yeah we're upgrading the show every day and we hope you enjoy it so the free tiers usage limit is the same as Dali the spokesperson told the verge but added they don't have a specific number to share. These may change over time based on demand.
Starting point is 00:07:27 Per the ChatGPT FAQ, free users were previously able to generate three images per day with Dali 3. That'd be terrible on a day like this. You don't want to be on the free tier now. As for the fate of Dali, Christensen said fans will still have access via a custom GPT, but they're clearly moving towards aggregation around this one box, one Xbox.
Starting point is 00:07:49 The model is a step change. I mean, it's so crazy to think about as a dad, I know you've done this kind of thing in the past, but you could go through, take pictures of every picture of your kid's favorite book, swap your own faces onto all the characters, and you could do that in like maybe 10 minutes right now, and somebody could build software
Starting point is 00:08:09 that does it all automatically. And that's like probably the biggest opportunity today if you just wanted to figure out how to make 100K is like printing kids' books by just doing the sort of like face swapping thing, remaking these things. Yeah, I think it's probably a business that you don't raise a ton of money for.
Starting point is 00:08:25 Yeah, don't raise. But you start today. You start today, you figure out the exact cost of what it'll cost to generate all those images, what are your printing costs, and then you go on Facebook and you market to people over 65 years old that have grandkids. And you say, it's $100, but this Christmas,
Starting point is 00:08:43 you make your grandson elated with an amazing book. And I think you have a good business on your hands if you can figure out the acquisition funnel. So let's go to Ben Thompson. Creativity is too cheap to meter. It really is so cool. I mean, we were debating about this earlier, like does this put Studio Ghibli out of business
Starting point is 00:09:01 or will Studio Ghibli just have tools to make more content faster? Yeah, we were debating whether or not OpenAI, it's possible we have no insight into this but it's possible that they actually did a deal and said hey we're launching this new image generation tool we already know let us basically like actually do this because I was messing around with it last night and I was running into a bunch of copywriting issues that then seemingly went away
Starting point is 00:09:26 Yeah, it wouldn't let me make a studio gibbly image of winnie the pooh but it would let me make a studio give the gibbly image of donald trump or anyone or us because um, I guess like the likeness of Public figures is a little bit looser and the style is hard to copyright, but you can copyright specific. The idea of making maps. Right now it's inconsistent. I'll upload a picture on my phone and do a prompt
Starting point is 00:09:53 and it'll say, can't do that. And then I'll go on my computer and do the same thing and it'll work. Yeah, it's definitely, people are dancing around it trying to figure out what it can do. But it's fun and clearly the technology is advancing very, very quickly and this functionality will probably be all over the place and you know Grok is gonna be
Starting point is 00:10:10 getting wild with it and letting you do way more stuff. Yeah, you know the meme of the soldier sort of like tossing a grenade over, couldn't do that, frustrating. Oh interesting, so no violence and stuff. Yeah, I mean I'm sure there's a bunch of filters around adult material. I am very interested to hear, you know, is this a change in scale or is this a change in algorithm?
Starting point is 00:10:30 And that will probably be open sourced at some point or discussed on Dorkesh's podcast probably. Someone will explain what's going on here. I don't understand it at this point, but it's really cool. Let's go to Ben Thompson. He says, the big change here is that Dali and most other image generators use diffusion.
Starting point is 00:10:50 The model would start with an image of nothing but noise and iteratively denoise it to create an image. The unit being operated on was in fact the image itself. Changes in ChatGPT on the other hand is auto, images in ChatGPT, the new product on the other hand is auto regressive, which is to say it works the same way ChachiPT works. First one token is predicted,
Starting point is 00:11:13 then that token is fed back into the context, and then the next token is predicted, et cetera. In this case, however, the next token isn't text, but rather pixels. This pixel by pixel generation makes images in Chachipiti particularly good at iterating on images or stylizing them. For example, here's a picture of his cat next to a picture of his new water fountain. I love that he's sharing pictures of his cat. And then boom, Studio Ghibli style. The Studio Ghibli stylizing was inspired by this viral
Starting point is 00:11:42 tweet, which almost certainly horrifies Hayao Miyazaki, the creator of Spirited Away. And this one went super viral, 29,000 likes when Ben Thompson screenshotted it. I'm sure it has more now. Grant Slatton said, "'Tremendous alpha right now in sending your wife photos "'of y'all converted to Studio Ghibli anime.'"
Starting point is 00:12:01 I did that last night before I went to bed with my kids. I took my son out to ice cream and I Studio Ghibli live him. I tried to make my kid, and they said we can't generate images of kids. Just stick to the boys, stick to Jeremy Giffon, stick to Wilmanitis and David Sentra. Yeah, your Jeremy generations were fantastic.
Starting point is 00:12:26 Yeah, this is the cute one, I'll show you this. I think that's good. Wow. Yeah, it's funny. Anyway, so it is particularly good at handling text now. You can also iterate on image with high fidelity and he gives some examples of editing a minimalist sticker of a raccoon.
Starting point is 00:12:47 Let's have the raccoon eating a strawberry. Let's give it a thick white border. Now let's make the raccoon gray. Can you make the raccoon actually take a bite out of the strawberry? And it does that. It's all very progressive and it's a very different style of prompt engineering because you're not starting from scratch because the image is being fed in
Starting point is 00:13:08 every time you prompt and so that leads to character consistency and a lot stronger and it's just a more natural feedback loop. A lot of people would get frustrated when they were prompting previous image models because they would say, oh, okay, it's really, really close. Like this is amazing, it looks great, but I just need that tree.
Starting point is 00:13:31 The tree on the left mountain needs to be on the right mountain. And it'd be like, well, here's a whole new image. And you're like, no, no, no, you really were close. We just wanted to move this over here. And I just wanted to go to Photoshop. It feels like working with an actual creative partner, where you can say, OK, this is great,
Starting point is 00:13:48 but you need to change this small part or change the color of this. Yeah, and so he gives another example here. You can, as noted above, use an existing image as inspiration or draw on the model's world knowledge. And so draw a design for a vehicle with triangular wheels, use these images as reference, and then now make this a photo
Starting point is 00:14:09 that's taken in New York City, and it just makes this photo real, which is very cool. So anything that you have, and I saw a bunch of, I think the underrated discussion right now, obviously the Ghibli memes are really fun, but a lot of people were showing how they could use this for e-commerce advertising. Take a picture of your product, okay, put it in a hand,
Starting point is 00:14:27 put it on a table, put it in an everyday carry, get my Ridge Wallet, take a photo of that. I actually saw some people generate Ridge Wallet ads that looked extremely convincing and were well past the uncanny valley at this point. What is so striking about these examples? Yeah, this is the kind of thing, I imagine this massively improves icons product, right?
Starting point is 00:14:45 Totally, yeah. What is so striking about these examples is the clear day-to-day utility. Diffusion is probably still better for original image generation, given its global nature. Auto-regression can get stuck in local maximas. The clear barrier to actually using diffusion for day-to-day image workflows, however,
Starting point is 00:15:02 was the relative lack of control that Images and Chat GPT excels at. And he goes on to talk about graphic design and Google. I wrote earlier this year, Ben Thompson says, in the introduction to deep research and knowledge value, when did you feel the AGI? This is a question that's been floating around AI circles for a while, and it's a hard one to answer for two reasons. First, what is AGI?
Starting point is 00:15:24 And second, feel is a bit like obscenity as Supreme Court Justice Potter Stewart famously said, I'll know it when I see it. And Ben Thompson has given his definition of AGI. What 03, an inference time scaling point to, is something different. AIs that can actually be given tasks and trusted to complete them. I'm certainly feeling this when I use deep research or fire off some huge query. It feels like it's gonna take a while, but it's gonna get it right.
Starting point is 00:15:51 And I don't do nearly as much fact checking after as I did with the original ChatGPT product, which was built on 3.5, which had a fair amount of hallucinations. And so he goes on to write, "'This by extension looks a lot more like an independent worker than an assistant, ammunition rather than a rifle sight. That may seem like an odd analogy,
Starting point is 00:16:12 but it comes from a Keith Raboi talk that he gave at Stanford. My definition of AGI is that it can be ammunition. It can be given a task and trusted to complete it at a good enough rate. My definition of artificial super intelligence is the ability to come up with tasks in the first place. The feel part of that question is more recent discovery.
Starting point is 00:16:29 Deep research from OpenAI feels like AGI. I just got a new employee for the shockingly low price of $200 a month. Pretty soon we're gonna get ASI and ramp it up to artificial giga intelligence. And that will just be the new sort of what we're all sort of racing towards. Yes. Yes.
Starting point is 00:16:49 Talking about definitions of giga intelligence. Yeah. We're going to need a new term pretty soon. Yeah. For sure. Well, good news for me. I just got another new employee. I already gave it a job for the section below.
Starting point is 00:17:00 This employee was like Root Deep Research. One that I wouldn't have hired otherwise. Making a cartoon helped make my point but it was hardly necessary at the same time however you can certainly see the level of control afforded by images in chat GPT making a real making real a lot of the fears that accompanied the first wave of image generators what's also notable about image and images in chat GPT is that it wasn't the first autoregressive image model. Google released Gemini 2.0 Flash native image generation two weeks ago, and I remember seeing
Starting point is 00:17:34 a lot of screenshots on X about this Gemini 2.0 Flash native image generation, another great name in AI, of course. And people were talking about how good this product from Google was for specifically editing images and saying, okay, you know, I have a Celsius here, let's remove that from the image. It was really, really good at that. But Ben Thompson's pointing to two limitations compared to what OpenAI just launched. So Gemini 2.0 Flash Image Generation Experimental, that's the model name,
Starting point is 00:18:07 is only available in the Gemini API and Google AI Studio. So there's memes about like the Virgin Gemini that you get from Google and then the Chad Google AI Studio because AI Studio was vending in the latest and greatest model. So when you saw those AI influencers on X posting, they were using the best model from Google AI Studio or the API. But Gemini 2.0 Flash Image Generation Experimental doesn't support converting images to new styles. It's designed to start with images it generates from scratch, which then you can iterate on.
Starting point is 00:18:41 And so when he went to Google's product, Gemini 2.0 Flash Image Generation Experimental, what a mouthful. G2FIGE, I don't know, it says make an exact version of this with Studio Ghibli style. It creates an entirely new image from scratch. It's not doing the proper style transfer.
Starting point is 00:19:05 And style transfer has existed for a long time, even before Dali, and has been really cool, but it's always been just not quite right. There were all these examples of like, make this like a Van Gogh painting. I don't know if you've ever seen those, but they were always like close, but not super reliable. So, but now you can literally go and just
Starting point is 00:19:27 take your kid to the park, document it with a couple photos, and then say make this a comic book, and boom, it will look exactly like you expected it to. All the framing will be the same, all the characters will be the same. It'll capture the essence. It really captures the soul of the person that you're taking a picture of.
Starting point is 00:19:41 It's kinda crazy. Yeah, and you were saying every time somebody makes a Ghibli version of you, they take a piece of your soul. I think the Native American rumor. They were onto something. I don't know if it's even a true story, but we've certainly been taught that in grade school.
Starting point is 00:19:57 That idea of the image of the camera capturing a part of your soul, it feels more real than ever today. In short, Google released some very cool technology, but they didn't release a very cool product, something we've talked about before. OpenAI did, and that's why everyone's talking about it. And oh, by the way, Google also just released Gemini 2.5.
Starting point is 00:20:17 Ben has this uncanny ability to say something very plainly that just is devastating. Cool tech. Now build a product. Now build a product. Ouch. Well, yeah, I mean, it's a good point. More on security.
Starting point is 00:20:35 One day I will learn not to wade in with orthogonal takes on current political topics, but apparently not this week. This is OpenAI's depiction of me reading all of your mostly thoughtful emails to yesterday's update. What about, what about, what about and Ben's sitting there thinking, I've already written about all of that. Specifically, I received a lot of emails noting that secure communications and he goes on to talk about
Starting point is 00:20:56 Signal. I don't know if we want to get into this. I think we should stay on Ghibli. Very fun. But you can go read the full update. Of course go subscribe to Sir Techery, one of the greatest writers to ever do it. But let's move on to the next slide because lots of people are having fun with Ghibli on the timeline and I wanted to get into it because none other than show sponsor Ramp. Switch your business to ramp.com.
Starting point is 00:21:24 Put up a beautiful Studio Ghibli image of Saquon Barkley. There it is. There it is. And there are a couple cool things about this image. So, I mean, you just see like the level of detail, like the hands are perfect. It's really like past the uncanny valley, but it does a great job of,
Starting point is 00:21:40 in the actual Super Bowl video, they're using a camera that has shallow depth of field. So you can't really see what's behind. And you can imagine it just maintains that depth of field. It's just like, oh, blurry stuff in the background. Let's just make blurry comic book in the background. But that's not how the Studio Ghibli style is. Like these cartoon, anime, Studio Ghibli style,
Starting point is 00:22:04 it doesn't have depth of field. And so it has to figure out what's back there and then render it properly. And so you can see in the background of this image, there's like very sharp lines on the paintings on the wall. And there's things that actually make sense. Like there's books stacked on top of boxes, stacked on top of other boxes,
Starting point is 00:22:21 and all of it kind of follows like a very clear logic. You don't have this situation where there's just something floating or something that doesn't really feel right. It feels great. Um, the other thing that's interesting is that in the Superbowl ad, I didn't realize that the snow globe that's sitting on the table says world's best boss, but in the studio Ghibli version, it read that, understood that clarified clarified that, and created it even clearer to read text.
Starting point is 00:22:49 Did you notice the World's Best Boss? I never saw it. I never saw it, but it was actually there because I saw this and I was like, did it just think to put that in there? And I looked back at the original image and it did say World's Best Boss. It was just very subtle in the actual Super Bowl ad.
Starting point is 00:23:04 So I thought this was very cool. It even, the logo's not 100% right, but it's pretty close. They certainly got the font right on the ramp logo. It's just wild. This kind of image was possible to generate through extremely intentional prompt iteration and massive iteration. Totally.
Starting point is 00:23:23 But we were going back and forth with the ramp team this morning You know a bunch of stuff and I know that they generated this like basically in a one-shot. Yeah And that's and that's just what's so powerful about this, you know most recent iteration Yeah, and it's it's interesting because it It it clearly cuts corners and takes like creative liberties but it doesn't take creative liberties that wind that bring it to a negative place or a place that degrades the image. And so like, even the expression on Saquon's face,
Starting point is 00:23:54 it's not exactly what was happening in the Superbowl ad, but it, it tells this like emotional story that makes it just feel like, Oh, okay, this is actually thought out. It's not just a screen cap that's been colored over line for line, which I thought was really cool. And so Ramp on X says we're assembling a team and they put both of their star athletes up in Studio Ghibli form. And this is a great time to tell you.
Starting point is 00:24:20 We are talking about using Ramp. Yes. If you haven't seen it, we have talked about Ramp so much that we made a whole song about it and our editors edited together every time we said Ramp and made a little jingle for us. Not every time, I think it was like 1%. Oh yeah, 1% of the time.
Starting point is 00:24:38 Anyway, time is money, save both, go to ramp.com. Easy to use, corporate cards, bill payment. Thank you to Ramp for not just sponsoring the Not just sponsoring the show, but presenting the show. Presenting the show. We love you. Presenting sponsor. Anthropic. Should we go to Anthropic?
Starting point is 00:24:52 This is kind of interesting because it relates. This happened, like the timing is unrelated, but it's an interesting story because it obviously relates to what's going on with image generation stuff. So this is from the Wall Street Journal, Anthropic scores win an AI copyright dispute with record labels. Music companies claimed the company was harming them
Starting point is 00:25:13 by using copyrighted material to train its AI chatbot, Claude. And so, I'm sure with all these Studio Ghibli images, there will be a big question, where'd you get the data? And was that, did you have the right to train on that data? Where'd you get the data and was that what was did you have the right to train on that data? Where did you get the data buddy? Where'd you get the data? That's always the question with these with these AI training runs but I've always said that There we have a process for sorting this out. It's done in the courts and there there's we have fair use is this transformative is
Starting point is 00:25:43 done in the courts and there's, we have fair use. Is this transformative? Is drawing Saquon Barkley like an anime? Is that fair use of that anime style? Or do you have to pay some sort of royalty? And that economic equation can be solved and it will be solved by the courts. And the mere fact that there is, there are lawsuits is not indicative of like true wrongdoing in East. It's more just like, Hey, there's a new thing going on
Starting point is 00:26:11 and we need to decide where the, where the dollars flow. And this was true when music streaming started and whatnot, and eventually got to a place where I think everyone feels like they're getting their fair share. So entropic scoreics score to win this week after a U S court denied an injunction that universal music group and other record labels had sought to prevent the artificial intelligence company from using copyrighted lyrics to train future AI models. So of course, if you hold back all of the lyrics that are associated with universal music,
Starting point is 00:26:44 AI is going to be a lot worse at writing lyrics and also just less aware of the lyrics that are associated with universal music, AI is gonna be a lot worse at writing lyrics. And also just less aware of the world. You ask it, a question about Taylor Swift and it just is blind to everything that Taylor Swift has ever sung about. That could be a pretty big hole in world knowledge. Even if you're just asking for, hey, write me a biography of her,
Starting point is 00:27:05 or write me, or just answer a question about what she's up to today. It's important to have that extra context, but at the same time, music is copyrighted. So how does this sort out? So Concord ABKCO Music and Records Universal Music and several subsidiaries sued Anthropic in October of 2023,
Starting point is 00:27:24 this has been going on for a year and a half saying the company was harming them by using copyrighted material to train its AI chatbot Claude. The record labels alleged that Claude's responses to user queries contained verbatim or near verbatim copies of the work saying their, their reproduction violated copyright. The music companies, which represent a large cohort of artists ranging from Taylor Swift to an Ariana Grande to the Rolling Stones, set anthropic infringed copyright in lyrics from at least 500 songs and sought a
Starting point is 00:27:53 preliminary injunction that would prohibit the company from using the works to train future models. However, a judge in California on Tuesday denied a motion for that injunction saying the record labels hadn't demonstrated how using the work to train Claude caused reputational or market related harm. So this is a good, this is, I always go back to just like the most normie analysis of fair use is just like, could you imagine a Taylor Swift fan saying, nah, I'm not going to listen to her new album, I'm just going to go to Claude and ask Claude to reproduce the lyrics and then I'll read the lyrics
Starting point is 00:28:30 and that will be satisfactory, right? No, no one's doing that, it just doesn't make sense. But there are plenty of scenarios where fair use gets a little wonky because someone is, there are examples of streamers who are streaming like, yeah, I'm streaming the whole boxing match, the whole UFC match, and I'm just kind of being like, cool, yeah, that was a good one.
Starting point is 00:28:54 And they're not really adding anything, they're not breaking it down. They're not really reacting to it. The bigger streamers, from what I'm aware of, are not actually showing any of the imagery or the sound. They're just providing this sort of additive commentary that you can position as a watch along or watch companion.
Starting point is 00:29:13 So you would still, to get the full experience, you still need to buy the pay-per-view or whatever. And it depends a lot on who owns the IP. Some video game companies love... They actually pay streamers. I think Call of Duty right now is promoting their new product, Black Ops 6, and they're paying streamers to stream it and effectively share that intellectual property, which Nintendo for a minute, I don't know if it held up, was saying, hey, maybe we don't want streamers streaming Nintendo products because it could be seen as a substitute.
Starting point is 00:29:44 It's kind of silly to think about, but because playing a video game and watching a video game is a very different experience, but for some people, they might say, hey yeah, this particular game is very story driven, I'm just gonna watch some pro play it and they'll be better at it than me and I'm too lazy to press buttons, which is kind of sad, but I understand people are busy,
Starting point is 00:30:03 and maybe they wanna fold laundry instead of actually hold the controller. Yeah, I remember being probably 10 or 11, and I would watch Call of Duty sometimes. I talked to this guy yesterday, Sam. Batesh? Yeah, yeah, yeah, yeah. He was ex-Jaws?
Starting point is 00:30:18 Yeah, he was like, oh yeah, Jordan, you're a big fan. Yeah, when I moved to, I was a fan when I was probably 10 or 11. Sam was only a few years older than me, but was one of the biggest gaming youtubers Yeah, I think he hit a million subscribers on YouTube for his Call of Duty content so he was massive and I would watch it because my parents like were kind of against video games and let me get a
Starting point is 00:30:42 Console, but it only could be in the living room. We had a small house and like, I didn't wanna play video games like with my family as a preteen or whatever. So I'd just be like, cool, I'm gonna watch it on YouTube. I'm gonna watch XJaws or whatever. So shout out to Sam. It's extremely Zoomer coded.
Starting point is 00:31:02 Yeah, exactly. Just sitting in your room, in cell, and yourself watching video games. But that's where I- Back in my day, if you wanted to watch a video game, you had to sit on dial-up internet for 12 hours downloading a two minute highlight reel of Counter-Strike. In many ways, 360 no scopes are a form of art.
Starting point is 00:31:20 It is. It's performance art. Yes, it is. It's high stakes. Well, let's move on to more of this Wall Street Journal article. Despite the court's narrow ruling, we remain very confident in our case against Anthropic
Starting point is 00:31:35 more broadly, represented for the music company said. This case remains vital to protecting creators from the wholesale theft of their copyrighted works by Anthropic and other AI companies. We expect that as we proceed with this case and fully develop a full discovery record, our claims will be validated. There's gonna be emails saying,
Starting point is 00:31:56 yeah, we gotta get Taylor Swift lyrics in here. The AI just won't work without them. It's impossible. We'll never be able to do that. It is interesting because many people are paying OpenAI as like a writing, a writer as a service, right? It's like writing as a service or image creation as a service.
Starting point is 00:32:16 And what do writers do when they are being paid to write? They sort of look at various sources, it informs their approach, and it informs the content, even though it's new content, and you don't see record labels suing some author and saying, like, we know you read our stuff, stop. It just doesn't, there's no case there,
Starting point is 00:32:41 it's not causing consumer harm, it's not threatening. This, and from the record company's point case there, it's not causing consumer harm. It is transformative. Not threatening. This, and from the record company's point of views, they're fine if they just sue the model companies until they get a big settlement, and then it's like, cool. Yeah. Like, we're still in the music business, people still wanna buy music.
Starting point is 00:32:59 I mean, a lot of this is just figuring out where the value accrues and what's fair. The bigger threat is that you get this AI generated music that becomes so good that people stop streaming GUNNA on Spotify because they can just generate unlimited GUNNA songs, which I've done. At one point I included a GUNNA song in a video because it was fully AI, it sounded exactly like Gunna
Starting point is 00:33:27 and it was a cool vibe and whatever. So that will be more contentious and I think they'll have probably more of a case potentially because hey, you're using our content to generate a substitute for that content that is harming our business. Yep, yep. So we'll see. substitute for that content that is harming our business. So, we'll see.
Starting point is 00:33:46 So, the judge noted that the company doesn't meaningfully dispute that Claude's training data included copyrighted lyrics, and Thropic said Claude's intended purpose isn't to reproduce existing works in our user queries, but to generate original output. So they said, yep, it's in the training data, but we think that's fine. It's very used because we are transforming it.
Starting point is 00:34:11 Earlier this year, Anthropic struck an agreement with the record labels to apply guardrails that would prevent current and future AI models from generating responses that might infringe copyright. The judge said the deal effectively resolved one aspect of the case, but didn't prevent Anthropic from using songs to train the models.
Starting point is 00:34:27 What's interesting is I feel like the real company that's getting maybe wrecked more than Universal Music Group would be like Genius.com, like Rap Genius, or like a lyrics website. Because a lyrics website, if you're just looking like, oh, what's that lyric in that Rolling Stone song? I don't really know the name, but it goes like, something like this, like paint black or something.
Starting point is 00:34:52 And that's why the LLMs as answer engines. And then it just gives you the answer. Yeah, answer, typically you end up on the lyric website because you're like such and such song that by hip hop artists that says these three words and then it'll pull it up but now you can just go into the directly to the LLMs for that kind of thing. Yeah the case is the latest in a string of disputes between AI companies and publishers on whether and how easily accessible content like music or news
Starting point is 00:35:20 can be used to train AI models publishers are moving to shield themselves from what they see as violations of their work from AI startups. Last year, the Wall Street Journal parent Dow Jones and the New York Post sued Generative AI search engine Perplexity for alleged copyright infringement, saying the company used copyrighted news to generate responses to user queries, siphoning away traffic that would otherwise go to publishers' websites. Meanwhile, the New York Times is suing Microsoft and Chachi PT Maker OpenAI for alleged copyright infringement.
Starting point is 00:35:48 Kind of the same idea. Very rough. Well, I mean, it's good that this is working its way through the courts because I think it is, I mean, we have a lot of free speech and fair use doctrines to build off of, but there clearly needs to be foundational settlements and new case law created essentially. Anyway, should we do it to some? And we're always talking about supporting private equity,
Starting point is 00:36:13 making sure private equity sponsors, fund managers are thriving and doing well. Lawyers gotta get paid too, right? These guys are levered up on Fantastic Real Estate all over the country and they got to keep driving fees and one way to do that is suing big companies and getting big settlements. Yeah. And so yeah, they got to get in on the AI boom somehow. Yeah, I mean there's another lawsuit going on between one of the legal AI companies
Starting point is 00:36:45 and one of the legal data providers, saying that there's like these case notes that kind of define the case law and summarize it, and they say, hey, you scraped all those, and you're reproducing those. And so this is gonna keep happening in every single industry until there's a lot of, like a very clear path to how AI companies can partner with different troves of data
Starting point is 00:37:06 and different intellectual property. But I certainly hope that in the long term, these products are monetized in a way that there's enough money to go around to kind of keep everyone happy. Like one of the cool things about TikTok was that they started by bootstrapping the lyrics and the music off of the iTunes preview API. Have you heard about this? We talked about this, I think, during TikTok.
Starting point is 00:37:30 So iTunes, when you go into iTunes music library, you can pull up a Taylor Swift song and it costs 99 cents to buy the song, $9.99 to buy the album. Now everyone just streams everything and it's an all you can eat plan, but you can still, and many years ago routinely did, buy single songs for 99 cents. And that was the ITS promise, right? But you could play a preview of that song and they would give you 15 seconds of the song for free. And so I believe apps had access to that API and could pull in song previews basically for free. And so those little snippets became very easy
Starting point is 00:38:12 to create vertical video, lip sync videos around. And it was all deeply integrated. That was hugely innovative because before that, everybody's spending hours a day on social media, but you had no, none of the music that people really loved. It was just a huge, it was just a huge missing element of content on these social platforms.
Starting point is 00:38:32 Yeah, and then on YouTube, like you could just download a song, put it in Premiere Pro, export and upload it with, and have your driving video or vlog with like a popular song, but you would get flagged and actually demonetize, so you wouldn't be able to make money off that content for a lot of really professional creators. That was not an option because they're making thousands of dollars in ads on every video they upload.
Starting point is 00:38:54 And for other folks, you could get content strike or content warning. You could actually get your channel deleted if you did it enough. It was a risk. And so now there's services like Lict that allow you to pay for rights to, licenses to really popular songs.
Starting point is 00:39:12 But also there's a lot of libraries out there that are licensed by the social media platform. So when you go and you use a popular song on TikTok, that artist is actually getting a cut of that ad revenue and it's all happening seamlessly on the backend. Your creator payout might be a little bit lower but you don't even notice. And so the real good ending here would be a situation
Starting point is 00:39:31 where hey, ChatGP is making $200 a month from people generating Studio Ghibli photos and Studio Ghibli's making a couple bucks from every person that's doing that and there's enough to go around and everyone's getting paid. But we'll see where the value of the company happens. The real company, and this was going around, I think Justin texted us something about it,
Starting point is 00:39:52 is Fiverr being just absolutely, like I'm interested to go in public and see what. This was something that you would normally go to Fiverr for, find an illustrator to do a little one-off thing for you Their logo is it down. I mean they're down To two point seven percent today hard to say that's a day But I want to know more about like over the last two know but this Historically the best way if you wanted to get a nicely photoshopped image
Starting point is 00:40:21 Hey swap this person's face onto this person's face. And you didn't, couldn't do it yourself. You need somebody to do it for $5. That was the best way to do it. And so they're just gonna have to go more upmarket. But anyways, should we go through some of these products? Some of these Studio Ghibli reactions because they're all golden. The timeline's been on fire this morning.
Starting point is 00:40:46 We had a lot of fun. We tried to add to it in creative ways. Some hit, some flopped, but that's the name of the game. You had a hit on your hand. Hitter. I mean, this is just so perfect because it feels like, just genuine, when you have the text there,
Starting point is 00:41:04 it feels like it's actually a real scene from. Totally, it is so cool that it kept the text and the text looks fantastic. It's not wobbly or rough around the edges, like that is text. But at the same time, it's text that you would expect to see in a cartoon or in an anime and it's not actually perfect, perfect.
Starting point is 00:41:24 Like there's slight changes in the kerning, like I'm looking between the C and the A there. And it's like, it's slightly together, but it's so good that it looks like it was done by hand. It looks hand crafted. Way better, if you think about the font generation in these previous models, it was always the worst. Yeah, it was always the fastest thing to expose,
Starting point is 00:41:47 that it was AI slop. Oh yeah, yeah, yeah. I remember, I remember Seth. You actually see a picture of a car and immediately go to the license plate and say, oh, does the license plate look like garble junk? If it does, then it's AI. Yeah, when we had Lesson and Seth on to talk about
Starting point is 00:41:59 just AI broadly, Seth came on with this background and there was a bunch of text in it and it was all just, it was all. broadly, Seth came on with this background and there was a bunch of text in it and it was all just, it was all. It was like, the vibe was correct. It was like generally like, okay, there's some San Francisco text back there generally, but you'd get repeated characters, you'd get fonts out of alignment,
Starting point is 00:42:19 you'd get extra rows or stuff would just kind of trail off, but this nailed it. So Sam Altman saying he's doing this because he loves it. I mean, at this point, I believe him, honestly. He's gotta be loving it today, John. This is like, it's the best technology to be working on. It's so much fun. And like, you get to drive these massive moments online.
Starting point is 00:42:38 And like, yeah, obviously he's getting paid now, but that's good. And think about it. I want the for-profit. This is going to be, have a bigger impact on OpenAI's consumer awareness than any Super Bowl ad. So even if they lose $20 million today
Starting point is 00:42:54 from everybody in there and their mom just like generating images over and over and over, it still doesn't matter because it's the best marketing that they could possibly have. And it really shows this cycle of like, it is a really, really intense race right now to level up the models, launch new products. There's clearly different forks in the tree that people are going down, whether it's image generation, deep research, just humor and chat, just natural feel.
Starting point is 00:43:24 And OpenAI seems to be the first one to hit these breakthroughs. The first one to issue, to do chat GPT that felt like you passed the Turing test. This feels like a crossing the chasm, getting out of the uncanny valley moment for these AI generated images. And you can imagine that Elon is meeting
Starting point is 00:43:39 with the XAI team today. Being like, why is it Open AI dominating the timeline and not us? Yep. It's like we actually, and this will be the cool thing, you can imagine a very close future in which you see an iconic image on X, you can immediately generate some variation of it and repost it immediately. The grok button right there should just take you and be like, hey, what style,
Starting point is 00:44:06 do you want to restyle this image? Like get a prompt or use one of our pre-populated templates. You should just be able to click a button and say, I want this to be cartoon, I want this to be CGI or 3D render or something or whatever else. It's kind of crazy how much the Ghibli style
Starting point is 00:44:23 has dominated the timeline today because they launched a whole product that you can do a ton of different stuff in but everyone seems obsessed with this. It really became a meme and it really shows like our propensity for like congregation. It's a shelling point, I guess. It's like everyone kind of gets this one.
Starting point is 00:44:40 And so even the Dr. Seuss post, which are funny, you haven't shifted the entire timeline to that yet. Maybe it'll happen. So we got some more iconic tech pictures, Studio Ghibli edition, we got Jensen Wong signing a female's body. Very iconic picture. 15k likes.
Starting point is 00:45:00 And it looks, I mean it's funny, this treatment. It's so funny in this style, yeah. But Arun absolutely went off, I think he had one of the better. Oh yeah? Show me. This was last night. Oh yeah.
Starting point is 00:45:12 And he also posted one of us. Oh really? In that same thread. That's so nice of him. That was sweet. But yeah. Yeah, he has Trump in front of the McDonald's. He's got a thousand likes on that. Yeah, it was this one, you remember? We front of the McDonald's. He's got a thousand likes on that.
Starting point is 00:45:26 Yeah, it was this one, you remember? We were in the same thread. Oh, he posted that, that's great. Yeah, I love that one. Deleon posted a picture of his wife, Nadia, who's actually coming on the show on Friday. She has a new book out. You should go pre-order it.
Starting point is 00:45:43 It's called Anti-Mimetics, Why Ideas Don't Travel, which is very interesting. Tellian always snapping into the Borat. Yeah, he loves the Borat. You can tell he's genuinely thrilled. Oh yeah. Because he's like, my rockets. Yeah, it's so funny.
Starting point is 00:46:00 He says, God damn, my wife. Yeah, I mean, it's a fantastic photo. And again, just like, it's a fantastic photo. And again, just like even the painting in the background is like just super high fidelity, but also fits in the world and the vibe of the Studio Ghibli stuff. Sam Altman has been enjoying the moment.
Starting point is 00:46:20 He says, be me, grind for a decade trying to help make super intelligence cure cancer or whatever. Mostly no one cares for the first seven and a half years. Then for 2.5 years, everyone hates you for everything. And then finally, wake up one day to hundreds of messages, look, I made you into a Twink Ghibli style, ha ha. Wild. I love it.
Starting point is 00:46:43 When you're having a good day on the timeline, when you got the hot hand You got to just keep posting have fun I like this image of Alec Baldwin in Glen Gary Glen Ross. He's wearing a Gold Rolex presidential he says look at this watch this watch costs more than your car He's giving a motivational speech to the to the car salesman at this dealership and it reminded me of a motivational speech to the car salesman at this dealership. And it reminded me of Bezel, where you can shop over 23,500 luxury watches, fully authentic, in-house
Starting point is 00:47:10 by Bezel's team of experts. Go to GetBezel.com. And every brand, I mean, this is just like a freebie today. Just take your brand images, throw them through the Studio Ghibli filter, put them up on the timeline. Your job, you can go home early as a social media manager today. You can have some fun.
Starting point is 00:47:27 And I saw on X, Jeremiah Lancaster was working on taking my Dr. Seuss image of Mark Andreessen and swapping a Patek Minute Repeater onto his hand. There we go. So it's still in the works. But I'm excited to check this out. You had another post. The good morning with the Saratoga sparkling water, the ice bowl,
Starting point is 00:47:49 the bowl of ice water and the bananas. Feels very calming. And there was something else going on here. You said that, not to go back to the Ashton Hall viral morning routine that broke Monday, but you said that there were some brands that were partnered that did not go viral. And there were some brands that were not partnered with him that did go viral. Yeah. And so painful moments, painful moments. So I posted this and a company called hostage tape responded and said, I think you
Starting point is 00:48:18 forgot something. And if you actually think about the video at the very beginning of the video, he's taking off his mouth tape. I don't know if you've ever tried sleeping with mouth tape. I haven't Honestly recommended it to me. Yeah, didn't take his advice, but I've gone back and I've gone back and forth on it I I I think it's worth doing it's certainly worth trying It's kind of annoying to tape up your mouth, but it just helps you breathe through your nose Basically, so that you're not mouth breathing and does And so hey, if you're a mouth breather, try some mouth tape, but super painful for hostage tape
Starting point is 00:48:51 to be in that video, be so front and center. And it seems like they're sponsoring him, right? Maybe, but nobody is- It's unclear because I would imagine. Nobody's memeing them basically. I know that you can just use athletic tape. You can just go buy cheap athletic tape. Hostage tape is like a premium version of that.
Starting point is 00:49:08 And I think Hostage tape might even have some branding on the tape, but when I saw it in the video, I didn't notice Hostage's brand on the tape, which is kind of a weird problem. Saratoga Water, of course, has their logo front and center the entire time because the blue bottle not only is the blue bottle iconic and it doesn't just look like any bottle of water it looks like a blue bottle and so you're wondering what that is but the Saratoga logo is very clear throughout that
Starting point is 00:49:38 entire video you see it constantly and I didn't see the hostage-shaped logo and so little bit of a miss if they are partnered with him, but his videos seem to continually go viral. So I imagine he will drive a lot of sales there. The next routine video, he's gotta go and say, hey, I average a billion views per video. Yep. And I imagine that he,
Starting point is 00:50:09 that if you Google mouth tape right now, you will get an ad on Google for hostage tape and maybe wind up in that funnel. And so hostage tape is probably going to have a good month just because the overall awareness of mouth tape went up this month. And so they should be doing well. And already I think it's a fantastic business. I think they're doing over $100 million. Yeah, selling tape. It's pretty good.
Starting point is 00:50:27 95% gross margins. Pretty, pretty good. Good business. Anyway, zero interest rates. Rahul Sunwalker, the founder of Julius AI, was spotted on the Timeline Studio, gibblified with his buddy, Growing Daniel, and their boxes outside of X headquarters after Elon Musk took hold.
Starting point is 00:50:48 Dorkesh Patel and Leopold Oshinbrenner as well. It's still under discussed that he's holding up I think Michelle Obama's book. He really leaned into the bit, it's great. Leaned into the bit. I love it. Leopold Oshinbrenner and Dorkesh having their chat, iconic moment in tech podcasting and AI
Starting point is 00:51:08 after situational awareness dropped. We were talking about essays with Lulu that had major impacts, and we had identified going direct and founder mode, and I think we were digging into this more with David Senra this morning, and I think that it's not so much that those essays were groundbreaking,
Starting point is 00:51:28 it's that they were compressed into memes that had even more impact than the essay themselves. And so I think people use the term founder mode more than they actually reference the ideas in the actual essay. And Leopold's essay, situational awareness is kind of the opposite. That essay was really, really widely read in AI circles,
Starting point is 00:51:52 but people don't use the term situational awareness as a meme in the same way that they use founder mode. But it's interesting. Little bit of a Coogan's law moment there. Leopold should have come up with something a little bit spicier maybe, but I don't know. He's usually does his brand for his fund and I'm sure it's doing well.
Starting point is 00:52:11 Luke Metro posted, this really works on everything, huh? And do you know who this guy is? I'm blanking on his name. Mike Vining. Mike Vining was a special operator for the US military and is the basis for the special operator in Sicario who wears the glasses. Ah, that's why he's so iconic.
Starting point is 00:52:32 And is in that car scene on that bridge. Yes, and so if you look up pictures of Mike Vining, you will see, this is his military photo, but you'll see a photo of him in very thick glasses in a white button-down shirt and a tie, looking very buttoned up. He looks kind of like the Ben Affleck and the accountant. He looks very kind of just dorky almost,
Starting point is 00:52:55 but he's known as like the deadliest operator in history and has been in like serious, serious operations and is just like a fantastic shot and a fantastic operator and leader. Yeah, and there's something, I think, what Luke's hitting into here, it's extremely easy. Everybody's one-shotting these. And the style is just very fun and iconic.
Starting point is 00:53:18 And it makes people have seen so much of Studio Ghibli online and memes and stuff like that, even if you don't know the show or you're not a fan of the show, the style is just very cool. Even just like repurposing the memes from even just a few weeks ago, there's this White Lotus meme that Brandon Gorel over at PirateWire shared. He took that. This was all over the timeline after that episode dropped and now it's been Studio Ghiblified and it's very fun. I was just thinking of one other image that you generated
Starting point is 00:53:46 that won't make the cut. That was from a screenshot of a post from a long time ago, over a decade ago, that was a good one. Bad content for the show though. Yeah. But yeah, that's another thing. You don't have to post them on X. You can generate these images
Starting point is 00:54:01 checking your group chats. Just share them with your absolute board. I was telling Jordy that sometimes it feels really good to get a thousand likes on a post on X But sometimes just getting five heart emojis in a group chat of six people that'll do the trick That's the dopamine you need for the day Did you see this studio Ghibli image of a billboard on the 101 in San Francisco? I did a lot of people have been talking about this, John. This was a really cool one, and it reminded me of AdQuick because if you wanted to do
Starting point is 00:54:30 a real life billboard like this one pictured in the Studio Ghillie image- The only place to go- AdQuick.com. AdQuick.com. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only AdQuick combines technology, out of home expertise, and data to enable efficient seamless ad buying
Starting point is 00:54:45 across the globe. And the studio gibblification continued. Stage four, the sign bears no reality, no relation to any reality whatsoever. It is its own pure simulacrum and of course, those bizarre JD Vance as a child memes have now been gibblified. So it's just a snake eating its tail
Starting point is 00:55:07 and Ouroboros of Sloth at this point. But there's still a little bit of JD in there and I'm sure he's having a laugh looking at those. The one on the left is too good. It's really fun. I want versions of us with those. We'll go to the next slide. We're getting there.
Starting point is 00:55:22 No one has made us into children and then studio gibblified us, but Arun. I mean, we kind of look like children in some of these. It does, we do look very childish here. So it's us at the desk with the Polycom, they nailed it. And a TV in the background that doesn't quite exist. It got some of the background objects correct, but it nailed some of the podcast mics.
Starting point is 00:55:46 It definitely got the idea of what the show looks like. Us at a table in these chairs, wooden desk, Polycom, suits, white suits. Of course we're not wearing the white suits today, but it looks pretty accurate. Oh yeah, Ben's showing you what we look like and then what they look like. And this is one of those iconic tech images.
Starting point is 00:56:03 So we were very appreciative to be included in this, in this chain, this thread, right above Zuckerberg with the chain, looking good. We already watched the Sebastian vocal thing, Dwarf Kesh enjoyed his studio gibbification. Dan Romero shared the PayPal mafia in studio gibbly form. You got Peter Thiel, Keith Raboy in there. Lots of cool images.
Starting point is 00:56:28 It's a great image, iconic. And did you see this image of this beautiful house? I mean, this in Studio Ghibli form just looks fantastic. Looks very warm inside, very welcoming. I wish I could stay there and guess what? You can on wander.com. Find your happy place. Find your happy place.
Starting point is 00:56:51 Book a wander with inspiring views, hotel-grade amenities, and dreamy beds, top-tier cleaning, and 24-7 concierge service. It's like a vacation home, but better. I like that Augustus gibblified himself for his Florida Senate rules committee hearing. He testified, he looks great there. Looking a little surprised,
Starting point is 00:57:13 and I'm sure he was surprised because by some of the comments that the audience were giving. By someone who shared the video with a little take down of Augustus. What a username, we're not gonna say this. Hustle, B-I-T-C-H says ever wonder who's really behind weather modification? This guy is the CEO of one of the most powerful
Starting point is 00:57:33 geo engineering companies in the world. That's right, Rainmaker from El Segundo. He showed up to. Augustus De Rico folks. Augustus De on down into the temple of technology we'll have to have him back on the show to discuss this and put this guy in the truth zone. I mean perfect marketing for Augustus. Really it's great I mean you can't pay for this. For every 10 haters you get one die hard new fan so I wouldn't worry about itus, but maybe put on a bulletproof vest. Because they're coming for you, boy.
Starting point is 00:58:10 He just showed up to defend cloud seeding, chemical spraying, and even electric weather manipulation, and he's fighting to keep it going in Florida. Why is he pushing so hard for this? What are his motivations? Why would he want to do this? We all want to know. Yeah, August, if you have some questions to answer, man,
Starting point is 00:58:32 and there's already a community note on it, we'll see how that fights out in the comments. No, I think it's proposed community notes. Yeah, proposed, because I'm in a program. Because we're ex hall monitors. Yeah, we are. If you ever need help community noting I got to get on there and be we're happy to community you know he's
Starting point is 00:58:49 the best dude ever he loves white monster I love him he's the best well we have some breaking news today should we should we finish up with two more slides and sure I was gonna say we have a mod joining in less than a minute okay we're breaking news today. Should we finish up with two more slides and move on? Sure, I was gonna say we have a mod joining in less than a minute. Okay. We're already there, but what was the breaking news that you had?
Starting point is 00:59:11 Oh, just that a mod is raising a trillion dollars. Oh yeah, one T, one T. And then we're gonna have him on the show, and we're excited about that. Do I have a slide? What's the actual announcement? We should read through that to introduce him. He is the founder of Mercury. Do you have a slide? What's the actual announcement? We should read through that to introduce him. He is the founder of Mercury.
Starting point is 00:59:28 Do you have the... I'm pulling up his post. We actually discussed this on the show when it was breaking or when it was leaked, but the news is out now. They're announcing a $300 million Series C in a mix of primary and secondary funding and a $3.5 billion valuation.
Starting point is 00:59:45 Congrats to the whole team over there. They're excited to bring on Sequoia as the lead investor. So nice of them. I like the soundboard's better than the physical thing. Here comes the boom, ready or not. ["How You Like Me Now?" by The Vigilantez plays in background.] They got Spark Capital, Marathon MP, KOTU, CRV, and Andreessen coming in and participating
Starting point is 01:00:08 in this round. They say, since our founding in 2017, we've been on a remarkable road to reimagine banking to truly serve the needs of ambitious founders. Welcome to the show, Ahmad. Thanks for joining. Yeah, thanks for having me. It's always cool when you listen to a podcast and now you're on the other side
Starting point is 01:00:26 and you get to be part of it. I love it. You're live. I'm so glad you've been listening. I hope you've enjoyed the content. Great to have you here. Can you give us a breakdown of, introduce yourself, introduce Mercury,
Starting point is 01:00:36 introduce what's going on today with the round. Yeah, I'm the co-founder and CEO of Mercury. Mercury provides banking to startups, e-commerce and professional services. We started in, I guess we launched in April 2019, so relatively young company, but a ton of startups use us, especially after SVB and that kind of failure. And then we just announcing our CBC.
Starting point is 01:01:01 Sequoia is leading the round with Spark and Marathon coming in as new investors and all of our previous kind of VCs are participating. So it's a 300 million round with a combination of primary and secondary. Very cool. We're having Andrew Reid on the show later. Who at Sequoia did the deal? Who's the rule maker? Us. Yeah. Sonia Huang. Cool. She's been doing a ton in AI, including Langchain and Glean.
Starting point is 01:01:25 And she knows a lot about fintech as well, so excited to have her on board. Talk about what it's like now raising these rounds that are in the hundreds of millions of dollar range. Does it still kind of feel very similar to the early days, where you're just like, hey, let's grab coffee and hang out, and you talk about the business?
Starting point is 01:01:42 I haven't built a spreadsheet in years Surprisingly similar process to an earlier round right I did this in about four weeks And you know at least as a founder you really still like pitching the big vision like how can this be? You know another hundred X right like that. That's that seems archivist like like that's 350 billion, but I want to do that. The bit that's different is there's a lot more support, like when I was doing a seed round, it's all by yourself, whereas now I have a finance team, I have a data science team, and a ton of stuff
Starting point is 01:02:18 after that first meeting is done by them. It's like you have to have a great data room, you have to paint this picture of where's the finances going in the next kind of era too. But you still always have to tie it back to like, how, how is this going to be like, you know, even bigger and what's the long term vision and, and paint that picture. Yeah, just talk about this moment for you and the team. I mean, the SVB crisis was obviously net positive. It was tumultuous, but you guys benefited in a big way from it.
Starting point is 01:02:50 But then there was also an entire, maybe it felt like a two year period where it seemed like FinTech was just over. Everything in the public markets was so bad, but at the same time, interest rates were way up. So you guys were benefiting from that. Does this feel like you guys feel finally kind of validated
Starting point is 01:03:05 in this moment to say like, hey, we're getting repriced well beyond where you guys were at in 21. And you're sort of like here to stay, it feels like. So we've been profitable for 10 quarters. Congrats, it's good for profitability, folks. I really wanna build a long-term company. I really like the time when no one cares, right? Like I think that's a great for profitability, folks. I really want to build a long-term company. I really like the time when no one cares. I think that's a great time to,
Starting point is 01:03:29 it was a great time to hire great people. Hiring in FinTech was rare, there was amazing FinTech talent out there. It was a great time because we didn't have that many competitors, actually. I'm always worried that, I think actually, this is surprisingly uncompetitive space for how big the opportunity is. Bank banking in the US makes two trillion dollars
Starting point is 01:03:47 Like this is an insanely huge market and I don't think it's like as competitive as like frickin b2b sass, right? Like yeah, that's actually a smaller market. Yeah, so I like those quiet times, but obviously it's nice to get like a big valuation boost Our last round was at 1.6 billion valuation. This is 3.5. And we made a ton of progress. We were a relatively small company. We had 140 employees back then. Then we announced we had about 40,000 customers.
Starting point is 01:04:15 Now we have 200,000 customers. We have almost 860 employees. So we made a lot of progress. It's nice for, I guess, the world to see that and us to be able to talk about it publicly. How do you think about Mercury is in many ways the bank of X, right? Like it's almost like it'd be hard to have been on X
Starting point is 01:04:35 the past few years and not be aware of Mercury. Like you have a big following, all this stuff. How do you think about reaching founders that maybe aren't on X and kind of like scaling up, right? because every single day there's entrepreneurs that that walk into banks and They are building a startup and they just walk into Chase or Bank of America and they create an account. And how do you think about kind of? reaching that next generation that maybe isn't sort of hyper online or
Starting point is 01:05:02 already in the community Yeah, we've been kind of yeah, I thought always thought about mercury is targeting digital entrepreneurs isn't sort of hyper online or already in the community. Yeah, we've been kind of, yeah, I've always thought about Mercury is targeting digital entrepreneurs. So that's beyond startups, that's e-commerce, that's professional services, like anyone that spends all their time in front of a computer to run their business.
Starting point is 01:05:16 And these people, you know, most entrepreneurs have friends that are entrepreneurs or they are in communities. So it's not just on X, right? Like it's Facebook groups, it's YouTube, it's Reddit, et cetera. And like Mercury is all over those things as well, right? Like we, more than 50%, about 60% of our customers
Starting point is 01:05:33 come through organic word of mouth distribution. And that's not just in the startup space, that's in all of these spaces. And our NPS is 82, so customers really like Mercury. No one's out there saying, like, go use Chase, it's the best customer experience ever, like, you'll love it, right? Like, Mercury kind of stands so far apart
Starting point is 01:05:51 from kind of these incumbent banks that we are still growing from that cold word of mouth. But we do invest in other things as well, like we built a bunch of kind of virality into the app and the products. So, last year we launched invoicing and bill pay. And part of that is that those are like viral payments methods, right?
Starting point is 01:06:08 If you send an invoice via Mercury, often you're sending it to another business. So obviously they can just pay it, but they can also sign up to Mercury and the next time they have to pay an invoice, it's instantaneous and like super easy to do. So trying to think about these things as like creating this kind of payments network
Starting point is 01:06:23 that like every business and and now consumers Well as part of creates this kind of like added Yeah, talk about focus Maybe I think people had been asking for mercury sort of personal banking for so long and it was an obvious Opportunity for you guys. It felt like something you could have sprinted towards and launch How did you you know? What was kind of the thought process there was there a certain scale that you wanted to be at before you launched Personal, or what did that look like?
Starting point is 01:06:49 Yeah, it was definitely the biggest feature request for us for a long time. Yeah, it's definitely a matter of execution, doing it at the right time. We did it with a relatively small team. I'm a big fan of doing these new things with initially fairly small teams and seeing if it works and then investing.
Starting point is 01:07:05 So I think we had a five person team. One of the drivers was we found this amazing guy, Alexei, who previously had his own kind of startup, Neobank, in the consumer space, and then he helped Albert launch their consumer bank, and then did the same in Mercury. So, yeah, having great leaders, what's the term Keith Rabois likes,
Starting point is 01:07:25 having like shotgun barrels or whatever, is part of like knowing when the right time is. But yeah, we do a lot, but we also try to be really focused, right? Like banking and doing an amazing banking experience for startups is the core, and that's where we have like the biggest investment. Can you talk a little bit about underwriting
Starting point is 01:07:44 at the earlier stage, these online businesses, how is that different? Is it riskier? How are you thinking about the risk profile of a non-brick and mortar customer coming on the platform? Yeah, I mean, we don't give them loans, so underwriting isn't necessarily about credit risk, but it's about KYC and KYB.
Starting point is 01:08:03 How do you really know someone? Definitely startups are actually easier, right? Like people have a pretty big digital presence, they have better websites, they have a LinkedIn, they have X, et cetera. And you know, their descriptions and their VCs, like if a Sequoia funded company shows up, you can underwrite that very quickly.
Starting point is 01:08:23 I think it's a lot trickier when it is like a professional service consultancy and they don't have online presence and you have to kind of learn more about it quickly. There we think of like a tiered approach, right? If we understand less, we'll ask you more questions, ask for proof of address or that kind of thing. And then we end up setting like kind of lower limits and things like that as well. So a startup will have a lower risk here.
Starting point is 01:08:49 We'll give them a lot of flexibility. A company that we know less of will, you know, initially they won't be able to send like a million dollar wire. They'll have to kind of earn their way to building up the understanding and the kind of like features we give them. Yeah. What do you think is the future of venture debt?
Starting point is 01:09:08 You know, over the last year, it's been in the news because of some sort of high profile shutdowns, but obviously it's an important tool. Does that become a meaningful part of the business over time, or is it just something that you guys want to have available, but you know, it a not a huge focus? Yeah, venture debt is actually like a small-ish market like people talk about it in the VC
Starting point is 01:09:30 community but even SVB which you know by far was the biggest venture debt provider I think they had like a seven billion dollar portfolio when they failed. So I think there's a good way to do it and a bad way to do it. A good way to do it is like your revenue generating company and maybe there's some cash flow need because your AR takes a while or you have some equipment, et cetera, and then you do it. That's great. I think the cases where I don't love it is you're some AI company that's not making any
Starting point is 01:09:59 money today and you want to go extend your kind of fund raise and run away by like 20% or something. I think in those situations, when you run out of that, as you start getting into that 20%, it reduces your options. When you have a fund raise, a VC fund raise, and you're in that last 20%, sure, you do layoffs, you kind of reprioritize, you cut your founder's salary, you do whatever the hell it takes to survive. But if you have like a kind of this fixed burn rate
Starting point is 01:10:30 that like is caused by venture debt, that's not a healthy position to be inside. I think if you use it in the right way, it can be quite beneficial. You know, my last company, yeah, I raised a million dollar venture debt and like it saved the company and actually like got us to a profitability.
Starting point is 01:10:44 So it's really important for us. And I know, I think venture debt and like it saved the company and actually like got us to a profitability so it's really important for us and I know I think people kind of like But like most things on the internet at least like people tend to say these extremes like never do it I think it's like is the right thing at the right time. That'll be the catch we do we do provide venture debt Yeah, when we post this clip, it'll be like breaking news never used that venture Watch for the full reaction. I had a question about interest rates. Do you want to go first? Go for that and then I have a different.
Starting point is 01:11:11 Yeah, I want to talk about how interest rates affect your business and how you think startups could prepare for this. I mean, high interest rates, you're making more money on interest. Low interest rates, there's more business formation, more venture capital flowing in. Does it just net out where you don't care? Do you have a preference?
Starting point is 01:11:26 What's your view on interest rates right now? I mean, obviously we can't control it. So under every circumstance we will try to win. I think the ideal interest rate for us is like something like 3%. I think there's lots of VC funding and business formation at 3%. But we also have the opportunity to make money on our deposits better at 3%. And for us, and I think most startups, I think you wanna operate whatever the macro economy is
Starting point is 01:11:55 and try to set yourself up in that way. So we grew a lot when interest rates were zero, especially during the big bubble. And there was definitely a struggle in terms of growth during some of that 2022 period. And there was definitely like a struggle in terms of growth during like some of that 2022 period, but since then it's picked up and we've obviously grown our market share and things like that as well.
Starting point is 01:12:13 You've invested in hundreds of other startups. I imagine the first of every month is pretty chaotic in your inbox. You're just getting flooded. You're like, great, I have another 300 emails to get through. Talk about your sort of personal investing process. I imagine you have such an amazing, you have one of the craziest networks and startups
Starting point is 01:12:34 because so many of the best companies in the valley are running on Mercury. But talk about your personal process. You're busy running a multi-billion dollar, you know business that's doing You know hundreds of millions of actual EBITDA At this point. Are you ever making investments where it's just you know, a good friend or a founder you back says Hey, you should invest in this company and just email them say sure I'm in or is it you know What is your actually look I talked to every company I invest in I do
Starting point is 01:13:04 Probably do like 20-ish this year. I've done about 300 altogether. Main reason I do it is I just like talking to entrepreneurs and hearing these crazy, fun ideas. I've done a bunch in space and defense and things like that where it's very new to me, very different from FinTech, and it's always a great learning experience. And I really want to give back to entrepreneurs.
Starting point is 01:13:23 I've been doing startups since 2006 and I think it's a great way to actually be helpful to people. But if I invest, I really want to believe in them. My rough criteria is if this person texts me at like 5 p.m., am I going to be excited to do a call with them or am I going to be annoyed that I have to talk to them? So I definitely want to do that 30 minutes to like have like a bar of saying, okay, you know, I will be excited because I like, I love this space and I want to help this person out. So yeah, that's definitely a key. And yeah, it tends to be a broad set of kind of things
Starting point is 01:13:55 and I'm still an active, active investor. So hit me up if you, if you're raising. Yeah, it's amazing that it's actually, most people have to like really justify, oh yeah, I'm angel investing and it's gonna benefit me in these ways and maybe get some return, but for you it's like hardcore customer development, feedback, talking to customers,
Starting point is 01:14:12 and maybe you invest as well, so very cool. You got anything else? Yeah, can you talk about how AI is impacting the business? I'd love to know. There's the boring stuff, which I feel like is just, LLMs are great at text processing I'm sure you're there's a lot of stuff. That's no longer paperwork. Maybe you're scanning documents OCRing them throwing them through LLMs. Is that working? And then?
Starting point is 01:14:35 How does that compare to just having your? Engineers be more performant because they have cursor and clogged code and Devon cognition in the mix What does the AI strategy look like right now? Yeah, I think the most exciting kind of short-term stuff for us is the back office stuff. So, you know, my part of the thesis of starting Mercury was like, what if the marginal cost of serving the next user is zero, right? Like, if you think about a normal incumbent bank, like you're walking into the bank branch, you're talking to someone, you know,
Starting point is 01:15:04 everything is like actually quite expensive for them to serve a new user. And that's why they have these on-risk fees for small businesses, right? Like it's hard for them to make money from like a small business. For us, it's like, how do we get it to be a database row? But it turns out like there is a lot of customer support, there's a lot of compliance, there's a lot of onboarding, and a lot of that is like tech space stuff. So, you know, how do we make it so if someone submits a utility bill to prove their address, we can like automatically process stuff. So how do we make it so if someone submits a utility bill to prove their address, we can like automatically process that. And not just, it's not just cheaper, it's also instantaneous, right? Like instead of waiting three days for
Starting point is 01:15:32 a human to look at it, we can give them a great answer straight away. So lots of applications and compliance risk and onboarding and support and lots of it we have rolled out already, lots of it we are rolling out. I'm really excited about it. I think it's like a genuine improvement for customers. You know, engineering productivity, I haven't seen as much of a boost as I would like to see. I think it's really good for making an app from scratch. When you have a huge code base that's all interlinked,
Starting point is 01:15:59 it's just not as good. We also built in like a weird programming language, Haskell, which has been great. We've got amazing engineers, but I think a lot of these as good. We also built in like a weird programming language, Haskell, which has been great. We've got amazing engineers, but I think a lot of these kind of coding LLMs are not trained on Haskell as well. So like when we were like a late adopter,
Starting point is 01:16:13 at least on the backend side. And then lastly, I think the user features, there's some interesting stuff coming. I'm not a fan of just like shove a chat bot in front of it as an interface. I think it's easier to have structured data and be able to do things. But we've done some stuff around search and OCR. And I think in the long run, if we have your finances, if we have your financial workflows, we have all that data, there's lots of ways to help you automate
Starting point is 01:16:40 your business, help you speed up getting insights and things like that. So yeah, I think there'll be lots of like, kind of really meaningful ways to incorporate AI that customers like. Yeah, on that last note there, are you guys thinking about LLM result optimization? You guys benefit, you said something like 60% of your growth and new customers are from word of mouth. Obviously, LLMs are just another form of word of mouth,
Starting point is 01:17:07 because they're just sort of taking all of this content and then sort of organizing it and channeling it. How are you guys thinking about that? Or is it just happening by default? You mean like a founder that goes to Chachapiti and says, what bank should I use? And you hope it says Mercury. Yeah.
Starting point is 01:17:23 Yeah, I did a tweet or Zito, whatever they call it now. And we've got a graph of how a number of sign-ups is going with LLMs. And it's fully exponential, especially in the last two, three months. Still a small base. But if the growth rate continues, it'll be significant. And I'm using ChatGPT to ask about services
Starting point is 01:17:41 and what should I use. And Mercury actually just naturally gets shown up, right? But yeah, that's what I would have expected. So much of the content is like this kind of community-based. So if you ask for it, like, what's a bank I should use for my startup? Like, you know, Mercury is likely to come up. One thing that I'm thinking about is like,
Starting point is 01:17:57 how are you even more active on these communities, right? So obviously I'm on X and I'm very active there, but a lot of our conversations that are happening on Reddit are not like with me or someone at Mercury kind of participating. So I do think you can change the sentiment and improve your visibility by being active in communities. And I think that's like a big part of like how you influence LLMs. I think like you want to basically create like real content, right?
Starting point is 01:18:21 Like it's a new type of SEO. This is like community-based kind of SEO SEO and recommendation and I think that's like that's like probably genuinely aligns with like building good online community anyway well thanks for stopping by congratulations on the round big milestone massive and the whole team and yeah good luck to you. We'll talk to you soon. Talk soon. Bye. On the Fed rates issue, he wouldn't take a stance, but thankfully that's why we have Polymarket. Polymarket has an open market on what the Fed will decide at their May 7th meeting.
Starting point is 01:18:59 This is the FOMC meeting. It's 41 days, 16 hours, 40 minutes, and 27 seconds away. I know you've been counting it down, Geordie. What do you think Polymarket's expecting? Right now, the options are 50 basis point cut, 25 basis point cut or no change. The market's pricing, no change at 86%, but they are expecting a 25% basis point cut in on the next meeting, June 18th. And then no change. Yeah, while the volume on this is pretty substantial, there's eight, almost nine million of volume
Starting point is 01:19:41 just on this one polymarket. Wow, yeah. Useful tool if you're monitoring rates. I think Ahmad's probably sleeping pretty well these days with an extra 300 million in the bank. That's right. He's probably sleeping on an eight sleep, folks. Go to eightsleep.com.
Starting point is 01:19:59 Nights that fuel your best days. Turn any bed into the ultimate sleeping experience. Do you have a snore sound on there or something? Or just the gong? Okay, the gong. Wake up to the gong. Wake up. I bet there's a way to add a custom sound in here.
Starting point is 01:20:16 We also got the Studio Ghibli photo of the eight sleep. Looks fantastic on the previous slide. I really enjoyed making these. Yeah, they should throw that up on social. Throw it up. I'll send it over to you, Sam. I got a 95 last night. My 8Sleep autopilot made adjustments
Starting point is 01:20:34 to the temperature of the bed overnight to boost my REM sleep by a whopping 17%. Let's go. Double digit increase. You're doing great. Thank you to 8Sleep for supporting the show. You can get an 8Sleep by going to 8Sleep. You're doing great. Thank you to 8 Sleep for supporting the show. You can get an 8 Sleep by going to 8Sleep.com slash TVPN. Get $350 off your pod.
Starting point is 01:20:52 Just do it! Totally clipping the audio. Someone just had to take out their headphones for that one. Rough. Well, let's move through some of the timeline then we got more guests joining in about nine minutes. Salma says, okay, GPT-40 cooked, I fear. I generated this creative ad for Bic pen.
Starting point is 01:21:15 The prompt was create Bic creative ad. Add the pen as a hair accessory used to tie models hair up. Compelling message. And it just one shots it. Say what ad copy to use. Used to tie models hair up compelling message Say what Ad copy to use. Yep, and it says twisting hair since 1945 and that's a pretty good ad now with these things, you know You're in this like uncanny valley where it's possible that the prompt was a little bit more Like you never know if somebody did a little bit more work on the front end, right?
Starting point is 01:21:44 This is this is what's happening with like the vibe coding thing where people are saying Oh, I just vibe coded this game and it's like yeah, they actually spent more time on it But I think this is real I think this really was the prompt and I think if you went and tested this right now You would get there and it's photo real not uncanny Valley at all and looks great And yeah, if I was big pen, I'd be printing this out and putting it in the New York Times. Send it to the printer. Send it to the printer.
Starting point is 01:22:09 Anyway, it's a knockout drag out fight for the next format of Studio Ghibli. Webb Weaver Deep Fates is advocating for Rick and Morty anime, which is terrifying in my opinion. I don't know if we can even show the full image, but it's very funny and it does look like Rick and Morty. I liked this Studio Ghibli of the New York Stock Exchange on the next slide, and it reminded me of our sponsor,
Starting point is 01:22:38 Public Investing, for those who take it seriously. And Public.com. Industry leading yields and they're trusted by a million folks, go over to Public.com and sign up. Fantastic, I like that one. Theo says, sir, another gibblified historic photo. I wasn't done doing an ad for public. Oh you were?
Starting point is 01:22:57 Public.com. All right, that's enough. Go to public.com. Thank you to Public for supporting the show. People are having a lot of fun with these Studio Ghibli photos. There's George Bush receiving the information about 9-11. I actually don't think good effort.
Starting point is 01:23:17 I don't think they did W that well on this. Yeah, it's not. It just doesn't really look like him. It's the right orientation. I've seen it botch the likeness thing a couple times. Well, the Fiverr illustrators still have a job, I guess. Yep. Mimetic Theory Mass, who has been on the show before
Starting point is 01:23:40 for that fun swing project he did. If chat GPT has rejected gibbifying multiple of your ideas, you're not trying hard enough. You were running into that yesterday. And someone gibbified his swing, which is very nice to see. Sam Altman says, tremendous alpha in images
Starting point is 01:24:00 in chat GPT right now. It's very true. The new version of images in chat GPT is still rolling out. So please try again later today if you don't have one. So it's an incredible technology product. I remember seeing some of the first images come out of the model and having a hard time thinking that they were really made by AI.
Starting point is 01:24:17 We think people will love it. And I think they have loved it. They're really enjoying it. Yeah, and this is why I was saying this is, you know, very clearly sort of Sputnik, Hoover for dogs kind of moment for AI. Yeah, exactly. It's like Sputnik of iPhone moments,
Starting point is 01:24:34 with a little deep-seek moment sprinkled in. Sprinkle a little deep-seek moment in there. Yeah. Should we talk about Nikita Beer? He's making moves. He's over at Solana now, officially an advisor. Yeah, officially an advisor, not a full-time employee, but cool moment.
Starting point is 01:24:49 I think he had been a pretty big critic of crypto historically. He went on this sort of generational shitposting run where he just kept saying, like, I'm gonna do it. I'm gonna launch a coin, launch a coin. He never did. I don't think he ever did okay, well, it's coming soon then and
Starting point is 01:25:08 Anyways big big pickup for Solana yeah, Solana especially after the rough It's just like a new it's a new surface area for Nikita. Yeah, it's it's you know undoubtedly one thing that we know is some of the best social products are many of the best sort of social products are providing entertainment and Crypto is very good at providing entertainment right anybody that's sort of invested in one of these tokens It's like you're watching the chart all day long. You're following it
Starting point is 01:25:39 There's sort of this like team oriented element to it So and yeah, I mean, when you think about the hope for pretty much every cryptocurrency project over the last decade has been, let's cross into the average users on the consumer side, not purely just as an investment vehicle, but let's help developers create crypto projects like Polymarket that really, really broke through
Starting point is 01:26:02 during the election cycle and was just a new source for people basically, even though there were crypto rails underneath, I'm sure Solana wants to power that and that's what Nikita has been writing about online for years, talking about how to grow consumer apps and specifically take advantage of a bunch of different APIs and iOS, figure out how to link contact books and whatnot, all techniques, growth hacks that should benefit Solana
Starting point is 01:26:30 if it's building its own apps or developers in the ecosystem. And so Grok summarizes it saying, "'This development is viewed as a significant boost "'for Solana, particularly due to recent favorable changes "'like regulatory clarity, increased app store openness, "'and the upcoming launch of Solana's mobile device Seeker. due to recent favorable changes like regulatory clarity, increased app store openness, and the upcoming launch of Solana's mobile device Seeker. The community is highly optimistic, seeing this as
Starting point is 01:26:50 a critical moment for Solana to expand in the mobile app market. With expectations that consumer crypto applications will see accelerated growth." And so Nikita writes, while the jury is not out yet, Solana has the fundamental building blocks for something to break out on mobile and certainly many apps are making headway. So today I'm joining Solana as an advisor to help select companies and launch, help select companies launch and grow their apps.
Starting point is 01:27:17 So let's hear it for Nikita. Some personnel news on the timeline. You'll love to see some people making moves. Spoke with Nikita the last night over DMs. We're gonna get him on the show at some point, which would be cool. And speaking of crypto coins, we have massive drama going down on hyperliquid
Starting point is 01:27:35 involving jelly. So for those that don't know, hyperliquid is a sort of decentralized exchange. It's very popular right now. It's already publicly listed itself. It trades at around a $14 billion valuation. And so this one is in there's some drama involving Jelly Jelly, which is a token that
Starting point is 01:27:54 was launched by a slow venture portfolio company. So Sam Lesson was helping them out with it, which, remember, we covered. It sort of ran up to, I think, $300 million valuation in 24 hours, or something crazy like that. It came back down to earth. It's been at a $20 million market cap,
Starting point is 01:28:12 and sometime in the last 24 hours, a trader opened a massive $6 million short position on Jelly Jelly. Oh yeah, I just need to pause you, because when you say, as I process this, Jelly Jelly, Sam has posted some images of what the app is supposed to Do this new social format? I'm like, you know could work. It's kind of ridiculous Like I like people taking shots at wild apps. You tell me it's a 20 million dollar market cap company
Starting point is 01:28:37 I'm like, yeah, like that's awesome. Like that sounds perfect for this Like it's a seed stage company like go for it guys Like I'm in full support if you tell me the tokens trading at like 20 billion. seed stage company, like go for it guys. Like I'm in full support. If you tell me the token's trading at like 20 billion, I'm like, okay, maybe let's pump the brakes. Is this real? But it's so funny that you can have a $20 million market cap startup, essentially like a YC stage startup in terms of size, and then someone can come
Starting point is 01:28:58 and take a $6 million short position out on you. That's like, it's only in crypto as possible, and it's very, very weird dynamic. But take me through what's happening with hyperliquids. You know, they're getting a Slack message. Hey, somebody's shorting us with size. Yeah, it's like, normally that's reserved for like, a pre-seed company, but we're being shorted with size,
Starting point is 01:29:17 actually. Shorted with size. So the trader deliberately self-liquidated themselves by pumping Jelly Jelly's price on chain, essentially forcing himself out of the trade. Weird. Hyperliquid was left holding the toxic short position currently at a massive loss to negative $10 million P&L.
Starting point is 01:29:36 Jelly Jelly pumped from a $10 million market cap to $50 million in under an hour due to the forced squeeze. Hyperliquid could face full liquidation if Jelly Jelly reaches $150 million market cap, which would be a 3X away. Market is watching closely. But is that that big of a deal for hyperliquid? I mean, we were talking about this earlier.
Starting point is 01:29:55 It seemed like it's a $14 billion organization or coin. It seems like, yes, obviously losing $10 million or even more would not be great, but it seems sustainable. This doesn't seem like a true run on the bank situation. Yeah, and I'm looking at Jelly Jelly right now, and it appears that they are still at around 20, so hyperliquid seems to be. Doing just fine, So massive drama, but not a full crisis over at Jelly Jelly.
Starting point is 01:30:31 Very interesting though. Yeah, we'll have to talk to Sam about it. And get there because this is such a fascinating thing. Before we get our next guest in here, he's actually ready. He's ready. Let's bring him in. Let's bring him in.
Starting point is 01:30:42 There he is. Hey, welcome to the show. What's up guys, how are you? We're great, how are you? I like your bananas. Oh, thank you. Yeah, we were inspired. We're doing the morning routine.
Starting point is 01:30:52 We got the Saratoga water right here. We're taping our mouths. We can't tape our mouths during the show, but. It's been good. How are you doing? Can you give us a little brief intro on yourself, your company, what's new? Yeah, so I'm Stephen Schwartz. I
Starting point is 01:31:14 Grew up learning how to program pretty early and I basically spent all my childhood going Facebook group to Facebook group and selling different people's software and met some people really early on that I'm still working with and you can kind of consider us like chronically online kids and we figured out a lot of ways to make money on the internet and segue that into a platform called WAP, where we help people make money on the internet. And a lot of shit is going on right now. I think we just released a lot of new products.
Starting point is 01:31:36 And someone leaked our fundraise a year ago. So I think there's been a lot of people reaching out to us. And things are really busy right now. So it's getting pretty crazy. Where'd the name come from and why didn't you release the funding information? Yeah, the name came from, we actually just purchased a ton of domains
Starting point is 01:31:57 throughout our early years. And we just, every project we had, we picked a random domain off the shelf and we always buy like auctions ending soon and domains are about to expire. And we had WAP.io and looked like a cool, phonetically sounding name. And now it stands for We Help Offers Pop,
Starting point is 01:32:12 and I think it was super random. So that's where it came from. And we didn't announce the fundraiser, I think, because our goal is not to raise money. And I think our customers don't really give a shit about how much money we raised or anything like that. And I think it's more distracting than not. And even the people that we want to work with and I think our customers don't really give a shit about how much money we raised or anything like that and I think it's more distracting than not and even the people that we wanna work with and whatnot, I don't think that the good people
Starting point is 01:32:31 really care so much about all the buzzy stuff that you might wanna talk about online. So I think we were trying to just stay pretty low key, it's more distracting than not. Cool. Yeah, talk a little bit more about the team dynamics. Sounds like you just worked on a ton of different projects Cool. Yeah, talk a little bit more about the team dynamic. Sounds like you just worked on a ton of different projects with the founding team.
Starting point is 01:32:51 Was it fated that you guys were all going to work together forever? Yeah, talk about that. Yes. I met someone named Cameron in a Facebook group. We were like 13 years old. He made a post saying he's looking for an iOS developer to help him build some projects. I slid into his DMs and we started building different iOS apps together in 2013 and selling those apps to people in the Facebook group.
Starting point is 01:33:10 From there, we built games, we built chat apps, we built marketplaces, we had our own agency and just so many different things. I think during COVID, it became clear that everybody in the world, they didn't really like their job, they didn't want to sit behind a desk all day, they either got fired or they didn't really like it. They wanted to travel they were at home and people were pretty addicted to the internet
Starting point is 01:33:30 so it's kind of like the whole world is waking up to what we had done our whole life and when that happened, we found a lot of forums were actually meant for selling software and We started selling software in there just for fun. We was trying to make a little bit extra cash and We started selling software in there just for fun. We were trying to make a little bit extra cash and Cameron found one and we started to make like a couple thousand dollars a week from it. What the hell is this? People are cash-apping each other, zelling each other for desktop software. It was the same desktop software we built when we were younger. So we were like, why don't we just start selling it? And made a lot of money. And we were like, let's build a platform where we can actually
Starting point is 01:34:01 sell it and structure the delivery of the software and accept payments on it. And people like that a lot more than the forums. And pretty quickly people asked if they could also sell on the platform and we added the necessary functionality for that to happen. And over the past couple of years, I think people were asking us, hey, can we also sell this? Can we also sell this? Can we also sell this? And I think we started to build a lot of that and now people are selling all sorts of stuff. I think maybe for the first couple of years of our business, it was really like, we're building a better Shopify for more digitally native businesses,
Starting point is 01:34:30 and maybe you can kind of think about it like retail stripe. And then before we knew it, we had a couple of hundred thousand people come into the site each month and buying something, and we were like, how can we make this a little bit better where we reduce the barrier of entry for people that are trying to sell something? So you don't actually have to program software,
Starting point is 01:34:44 you don't have to have a Discord server where you have to come plug it into our website. Let's just build Discord and at least the parts that matter. And we started to build things like chat and forums and live streams and all these different ways to engage and connect with your customer base. And that's where we are now. And yeah, so I think on one end we have like retail stripe, retail Shopify, and now we have a lot of consumer functionality to chat and message and interact. Yeah, question going back a little bit to the raise and then I have some stuff related
Starting point is 01:35:14 to the product. Have you guys been profitable this entire time? You guys are the make money app. I imagine you guys like, you know, running a good business yourself. Maybe talk about that. Yeah, so when we first started, we were bootstrapped for like the first six months, then someone tried to acquire us and we said no
Starting point is 01:35:29 and raised our first money from a couple of people. And since then, we've definitely had a couple of profitable months. I think usually before each fundraise, we had some, a lot of months were cashflow positive and to take it up a notch when we raised a little bit more money. And I think after we do that,
Starting point is 01:35:43 we obviously ramp up spend and start investing in some pretty cool areas. So we've had profitable months right now. We're definitely not cash flow positive, but I think we could be, if we wanted to stop investing in the places we're growing. And I mean, our model is lent itself pretty well to making money.
Starting point is 01:35:59 And I mean, we only make money when people make money on the platform and people are making a lot of money on the platform. So we're certainly making good amount of revenue and we're also investing a lot of that back into the platform. Talk about hype generally. You don't care to announce fundraise that gets hype in the venture world, but at the rate that you're growing, I imagine at some point, you know, I can imagine WAP as a public company and you know, you are imagine WAP as a public company and you know,
Starting point is 01:36:25 you are going up against giants, right? You know, Shopify, you are, I'm sure, directly competitive in many ways and I'm sure you're gonna enter other areas. Will there come a time when you wanna, you know, do the tech podcast circuit, you know, you're on our show, which is awesome, but it seems like you've been very intentional about, I remember hearing about, you know, you're on our show, which is which is awesome. But it seems like you've been very intentional about I remember hearing about from from Kerry no interest
Starting point is 01:36:49 about WAP like last year at some point he's like WAP is the most underhyped just absolute monster like nobody's paying attention to them. They're absolutely crushing it. But will there do you do you ever see a moment where the the flip you'll kind of like flip the switch? Or are you guys just going to stay focused on your customers forever? I mean, I think it's definitely going to stay focused
Starting point is 01:37:10 on our customers forever. And I think we do the right marketing to the right customers. And I think that it's no shock that the people in tech don't necessarily know about WAP so much because they're not really the ones who are starting many businesses, right? They're trying to go for the super scaled up businesses.
Starting point is 01:37:23 And I think we have generated millions of views probably per day at this point across social media for LOP. And that's mostly targeting our core customer base, which is super scrappy young people that wanna do something that's entrepreneurial and start a business. So I think we're definitely allowed where we need to be. And I mean, we have a YouTube channel now
Starting point is 01:37:41 that generates several hundred thousand views of video and we're definitely allowed where we need to be but I don't think that and I mean recently we released a new product that's like getting a lot of attention that people are in tech are also finding a lot of value on and I think that's going to become more relevant to go on. What's that product? It's called Content Rewards. It's basically kind of think about it like a probably a 5 to 10X cheaper CPM than any other platform that exists right now.
Starting point is 01:38:06 And all UGC doesn't really feel like an ad, it's not exactly an ad. And people are getting a lot of views from that. And we certainly are experiencing a huge lift from that. That's like productizing the sort of clipping, which has been happening, right? You know, remember, I think people first realized that like Andrew Tate was doing it because, you know because you see videos of him that just were made by him,
Starting point is 01:38:29 but then also. Shared by completely other people that were funneling into his program monetizing. And is that the, we've talked about kind of the different eras of making money online. It was like selling Pokemon cards or trading sneakers and is like clipping. Is that like if you're in high school today and you have no skills, but you just
Starting point is 01:38:48 want to hustle, is that like how you see that as like that's the sort of it? Entrepreneurial activity. Yeah. So I would look at it as almost like a big funnel, right? So maybe you start with that and I think you graduate towards maybe operating your own business one day, even on the platform. So what's happening right now is we're having, it's the fastest growing way people can earn on WAPS right now. And we already have thousands of people that are earning money, some actually a pretty significant amount. I think we've paid out some people even for our own marketing
Starting point is 01:39:15 over $10,000 total. And those are definitely people in high school that are really good at just making videos and they know the trends on social media. And I think the future isn't really about like everybody kind of knows an ad when they see it and it's not really as effective as it used to be to just run an ad on meta and expect people to resonate well with it. So I definitely think it's the future and I definitely think that we'll see a lot of the people that are clipping and making UGC content right now go on to build really awesome businesses because they one they have a little bit of a taste of making money on the internet. They have a KYC payments account all set up. They know how to market very effectively.
Starting point is 01:39:48 They know what the contract rewards are. They know what they're marketing and they're pretty in tune with everyone that's actually paying them to market so they know it works. And absolutely, I think it's a huge part of the future and we look at it as maybe the first step in earning your first dollar online. Can you talk a little bit about the differences between Gen Z and millennial entrepreneurs these days? Like what, what's changing? What's better? What's worse? Yeah, I think, um, I would say Gen Z is prioritized fun and it sounds kind of
Starting point is 01:40:15 silly, but I think like nobody really wants to work on something if they're not having fun. And I think that, um, even if you give somebody a lot of money, it's, it's difficult to actually, um, get up out of bed every day and start to do the work. And I think that we're seeing that all over the place where people are just fine making $3,000 and traveling throughout Asia. And that's like a very, very different mindset where it's like, I need to go to college,
Starting point is 01:40:36 I need to make $200,000 a year, otherwise I didn't do it. And I think people in Gen Z are kind of just doing it and they're having a lot of fun with that. And I mean, we look at WAP as like like WAP is we we are building the future of work And I think that the future of work is very fun should be engaging people are making a lot of money By making funny memes and like that's a that's a complete shift of like value creation and and I think the Gen Z's all over that and They must bring fun into work and that is I, the key difference of what Millennials versus Gen Z.
Starting point is 01:41:07 Talk about live streaming. You guys support live streaming. It's been something that's been big in Asia. It's probably big here. I haven't purchased a product through a live stream myself, so it doesn't feel big yet, but is it already, do you feel like it's already mainstream? Like you're obviously bullish enough on it
Starting point is 01:41:27 to like integrate it into your platform. I love your take on it. Yeah, I mean, I think that the saying is like, you can say a picture is worth a thousand words and then maybe a video is worth a thousand pictures. And I think that a live stream is like the most effective way to communicate with an audience at scale. And it allows for people to repurpose the clips afterwards.
Starting point is 01:41:45 And it takes very little effort to go live to thousands of people, and maybe tens of thousands or hundreds of thousands. So I think live streaming is definitely the future of how you connect with an audience at scale. And it's probably the future of shopping as well. I don't think it's necessarily that different. I mean, you look at QVC,
Starting point is 01:42:00 and that's obviously a long time ago, you look at HQ Trivia even back in the day and now you look at TikTok Shop and even Amazon's integrated a lot of live shopping and nobody cares more about something than what's happening right now and that's what live stream is all about. So it's a very, very, very bullish on live streaming,
Starting point is 01:42:17 not only for actually the point of sale, but also what happens after the sale. If you're running a e-commerce brand, I'm sure you'd wanna have a weekly seminar where you actually go over with your customer base and say, hey, do you guys like the product you just purchased? Why don't you drop the comments right here? Maybe we can do a demo live and show everybody how to use the product.
Starting point is 01:42:34 So I think live streaming has a lot of good use cases, not just for the point of sale, but even after to engage a customer base. Is there a cohort on WAP that you think will be particularly resistant to the relentless march of AI? There's a lot of people worried about, oh, chat GPT, the next version's gonna put my business out of business. What do you see as being like, yeah,
Starting point is 01:42:53 this person on WAP's gonna be here for two decades or more. I think that people on WAP are really special because what happens is as the trends evolve on social media, the people don't just stop doing what they're doing, they don't just fall off the face of the earth. And I think that they adapt really well. And I think a lot of people on WAP start one business and then second business and third business,
Starting point is 01:43:11 and then all the way still 10 businesses later, they're finding their niche in the market. And just because the niche changed doesn't mean they're gonna stop trying to provide value for people on the internet. So I look at AI as actually like a pretty awesome driver of our business and it makes it, unless we're gonna hypothesize that everybody just stops living and doing anything
Starting point is 01:43:29 with AI, which I think is certainly maybe some people's perspective, but people are still going to exist and they're still going to be here, and it's not like they're going anywhere. So when that happens, it's like, I need to figure out how to make money for myself and maybe how to have a purpose. And I think that WAP is all about that. So I actually would say WAP as an entire platform, it lends itself very well to AI,
Starting point is 01:43:47 or maybe AI lends itself well to WAP. And I look at, we have a lot of AI products on the site and people talking about AI, doing AI courses, AI software, AI in their live stream. We have some video features that you can send people, avatar messages and creating ads with AI. So I look at AI as a huge plus for almost every single person on WAP.
Starting point is 01:44:08 That's awesome. Makes sense. Last question, how do you think about hiring? I'm sure you've got maybe your core team and then basically an army of like 100,000 people that are sort of your users that also want to support WAP because if they can make WAP better and bigger, it's good for their individual businesses. But yeah, what does your team look like?
Starting point is 01:44:27 Yeah, our team is actually mostly like users of our platform. And I mean, people, some of our earliest users, we were our first users, and some of our earliest team was our first users. And I think that the best place to recruit from companies broadly is actually user-based. They know the product well, they're building for themselves. And I think that we have a saying, you're your own customer and we don't use anything else other than WAP. We don't use Slack, we don't use Discord, everything's on WAP and I think that's the best way to hire also. We have a great community of hundreds of thousands of users that they use the product every single day and I
Starting point is 01:44:56 mean they're giving us the best feedback and oftentimes they're programming for us and building little features in the site and doing our marketing as well. So what we hire is people that are in our space, on our product, and that really are passionate about our mission. I can, random thought, I can imagine, you know, a boomer VC talking to you saying, you know what, I really think what you're doing is the future of work.
Starting point is 01:45:20 And you're like, bro, this is the present of work. Like, we're living it, but it's funny how these sort of platforms emerge where I look is the present of work. We're living it. But it's funny how these sort of platforms emerge where I look at WAP and I hear you talk about it. And it's like, yeah, I believe this is the future of work in many ways. It's people being entrepreneurial, like finding new ways to, like you said,
Starting point is 01:45:38 create value on the internet. And it's just very cool to see. So I love it. This is such an awesome. Congratulations on the progress. I reallyed that. Hopefully we don't create too much hype for you. Yeah, I think another another year,
Starting point is 01:45:49 but your days are numbered, dude. You're you got maybe another, you got basically another six months, relatively low key. And then people are gonna be like, wait, these kids are doing like, hundreds of millions of revenue, but it's great to have you on.
Starting point is 01:46:02 Would love to have you on again. Yeah, thanks so much for coming on. This was fantastic. Well, awesome guys. Have a great day have you on. We'd love to have you on again whenever it makes sense. This was fantastic. Well, awesome guys. Have a great day. Bye bye. Thank you. Bye.
Starting point is 01:46:10 That's great. What a fascinating company. I feel completely under discussed. That's the final boss of Gen Z entrepreneurs. I would love the charger. Oh yeah, sure. We share one charger. Hey, you don't become the most profitable podcast
Starting point is 01:46:28 while spending money on duplicate technology. But we got underdog coming in. We got Jeremy from underdogfantasy.com. He's got a beautiful background. How you doing? What's up? How you doing today? You're ready for the full, for TV.
Starting point is 01:46:44 Love the setup. Looking great. We got the background. I love TV. Love the setup. Looking great. We got the background. I love it. There you go. Can you give us just a quick intro, who you are, what your company is, what's new? Yeah, for sure. For sure.
Starting point is 01:46:56 Company is underdog. We just turned five years old. We focus on building games for sports fans in America. I've been doing something much the same my whole adult life, 15 years now. Started a business called Star Street in 2009. I actually started as a sports stock market, but it was very early, real money fantasy sports days. And I've been trying to make sports more fun
Starting point is 01:47:18 for 15 years now. That's awesome. Talk about the news today. You got a new... Yeah, we just announced the first close in our series C. Spark Capital's leading 1.225 pre-money valuation. There we go. There we go.
Starting point is 01:47:35 We're excited about that. I got this new soundboard. We're waiting there. I got this new soundboard. And some nice validation and acceleration for what we're doing. Size gone. Size gone.
Starting point is 01:47:43 Sorry, I got this new soundboard. We're very excited. We got a soundboard. We're having fun with it today. I don't know if you Size gone. Sorry, I got this new soundboard. We got a soundboard. We're having fun with it today. I don't know if you can actually hear it, but there's some great sound effects. I don't hear it. I want to get it.
Starting point is 01:47:51 No, so my first thought goes, one, super validated and get this round done. But I remember around the time when you started this company, it was every round. I don't know about every, but at least the first one or two rounds that you were raising were like very hot. Like people were, you know, chasing it. They got priced almost to perfection, right?
Starting point is 01:48:12 I don't even remember. I remember it was like my recollection. It was like almost like a seed pre-seed getting priced like well above 50. I don't know exactly the price, but a lot of people when they see rounds getting done like that that are just like super early and like expensive, end up saying like, well, this company has to execute perfectly.
Starting point is 01:48:32 And clearly, it's hard to execute perfectly, but you executed very well. How do you talk about kind of that journey in terms of like making sure that if you want to go from whatever, you know, wherever is initially priced to 1.2 and five years, you kind of have to like hit these sort of perfect milestones all along the way. Yeah, definitely. It's definitely not been perfect. It never is, of course. But but it's gone fast.
Starting point is 01:49:02 Look, I think we had the luxury of the founding team at Underdog was seven. We all worked together at a prior company draft. And we built products that people really loved. So we kind of had, in a way, the customer base, the fan base when we started the business. And we built games that ultimately through some M&A got taken away from them.
Starting point is 01:49:22 So that was the kind of start. And that allowed us to move fast. I've spent my whole adult life in this community. So we had the community and supported the community early. And that's something that's been really important to us is the people we build for, the customers we build for making sure that they love our products, they love our games. And they've supported us the whole way through. So that really helped those seed rounds. The first ones weren't as glamorous. I think our first valuation, the first one you were interested in was
Starting point is 01:49:48 at a 6 million valuation. Oh, wow. So, okay. So not that glamorous, but it went through. So I was not early. We did the first close, then a second one at a higher valuation, then a third, and then a year later, I think was our Series A.
Starting point is 01:50:01 The partner who led our Series A was my very first investor in my first company 15 years ago. He then was a partner at SBAngel, Kevin Carter's name. He runs the capital now. He was the first person I called when it was time to raise a big round. He had been in every seed round, obviously, and he stretched kind of well outside his fund to lead our round because that's not what his fund was meant to do.
Starting point is 01:50:20 But he's kind of seen this for 15 years and knew the journey. So he's been a great backer and a great asset to the company. Can you tell me more about the, I mean, you mentioned it's like very community led. What's the marketing mix right now? I see a lot of the big sports companies partnering with Pat McAfee or ESPN or there's the day Portnoy universe. Where have you found success? Yeah, it's a real mix.
Starting point is 01:50:44 Look, the top acquisition source for us always has been our existing customers. Almost a third of our customers come from directly attributed referrals from other customers. It's always gonna be the best source, right? That's a sign of us building products that people love, and that's our whole opportunity.
Starting point is 01:50:58 Yep. WAP, who is just on, we have partners on WAP, so that's great. They're a big partner of ours. And partners in general, we do a lot of our own content as well. Two years ago, we made the decision to start a show. And we built a set in Gilbert Arena's basement. That show is now Gil's Arena. And that show is, we think by kind of any forms of measurement, the fifth largest daily sports show in America right now.
Starting point is 01:51:25 Wow. Massive success for us and that crew, Gilded and the whole crew have been amazing to work with and amazing partners to the business. We have a couple other shows as well and just continue to invest in trying to meet sports fans where they are and add value to their lives. That's awesome. Talk about building in a hyper competitive space. I think you don't even have to be aware.
Starting point is 01:51:45 You don't have to know anything about, you know, sort of like anything sports gaming related to know that you're competing with some heavily, heavily funded, you know, sort of public companies that can outspend you on kind of every dimension. But clearly you guys have been able to like break through and become a real player, despite, you know, being able to invest far less. How have you guys, is it like raw execution and just building the product that you know you guys want so you know your customers are going to want? Or what do you think has been your guys' kind of winning formula to date? Yeah, look, we started Underdog with kind of a really simple thesis.
Starting point is 01:52:24 It was, there's so much more to be built for sports fans in America. And if we can be the best at building product, we'll build the biggest company in this space, right? That's always been the belief five years in. We have obviously more confidence in that than ever before. And look, we can be the best at building product and can with a lot of confidence say in this space we are the best at building product. Not just because it's our DNA and what we prioritize and what we look for in people and what we really care about, but also just by the kind of function of how this space came.
Starting point is 01:52:52 Almost every other large player is largely reliant on legacy tech that was initially built for a different market for different customers for the UK and Europe. And we had the opportunity when we started this business to really play a long game and say, Hey, we're gonna we're gonna build this for the future, we're gonna build to build the best product. So we should build all our own technology. And that's what we've done. Both fantasy sports now licensed sports betting technology. And that gives us the ability to build a differentiated product product to build a better product. And to just have the fastest product velocity, I think the whole company's sick of hearing me say it because every two weeks when we
Starting point is 01:53:28 do our big company meetings, the two things I make sure I say every two weeks are it's product and it's people. Those are two reasons we're going to win and we have to have the fastest product velocity and the best people here. And that's what we focus on. Can you talk a little bit about regulation? I know the products are legal in Wikipedia says 31 states. I don't know if that's exactly, exactly accurate,
Starting point is 01:53:47 but obviously there's a march from the whole industry. And even though you're competing, you're probably working together in some ways. Is there a lobbying group that you're part of? Like mechanically, if you're part of an industry and you got to kind of team up with your rivals, what does that look like day to day? Yeah, so there's a lot of different,
Starting point is 01:54:09 there's kind of a lot of different pieces to it because there's, we offer games right now in 41 states. We offer our core game, our pick them game in 36 states. Where licensed sports betting in one state, when Missouri launches later this year, Decemberst, but it will be a second state so we hope we obviously to get licensed by the regulator there and For us it's all about we we want to always build games within the laws And build the best customer experience we can within the laws and kind of the ones of the regulators
Starting point is 01:54:42 This space is definitely highly political. There's a lot of competition and a lot of people who generally don't have the means to compete or the ability to compete on products. So they try to compete in other ways. That's definitely something we faced. And when we do that, we always try to team up with the people who care about customer experience,
Starting point is 01:55:00 care about delivering the best products to customers and say, hey, that's how people should compete. That's how people should win. It should be all about customer experience. How do you think about focus specifically with the team? I'm sure that everybody, or not everybody, but I'm sure a lot of the people that join underdog do it because they'd like,
Starting point is 01:55:16 they're just obsessed with sports and they love the products that you guys make. But at the same time, like, you know, if you've got a lot riding on a certain outcome, it can be distracting from actually building the underlying product. And then I'm sure for you and other people on the team, there's also a lot of, you know,
Starting point is 01:55:32 distractions around some athletes like, hey, you want four seats to this game? You know, like they're a fan. Like how have you guys stayed focused? Cause clearly to accomplish what you have in the last five years, like you've had to be pulling some very late nights and really leaving it all on the court. There we go. Landed it.
Starting point is 01:55:53 It's fine. We're maybe signing a lease for a new office and we have this vision of putting a basketball court in there. So it will really be on the court then. There we go. Look, we're really lucky. We get to work in sports. Sports is fun.
Starting point is 01:56:07 Sports brings people together. I've been a sports fan my whole life. That's obviously kind of how I got into this. And I just think there's so many wonderful virtues of sports and the communities it creates and the bond it creates. I just think that that's a blessing for us. Look, it's funny, over the course of my career, people, and not as much anymore, but people used to say,
Starting point is 01:56:28 oh, we don't invest in games businesses because it's history of new businesses and it's tough to predict hits. The sports are the hits and the hits keep coming. We don't have to worry about that. Yeah. Can you take me on a little bit of a historical tour of the industry?
Starting point is 01:56:42 When I was a kid, it was gambling. It only happens in Las Vegas. Then in college, people were playing online poker. And then there was like a poker apocalypse or something where all those sites got shut down. Can you give me some just historical anecdotes? What were the key turning points in the, in the industry? Yeah. Um, let me start post black Friday. I believe that was 2006. Okay. And that's when poker really kind of went away online in America. It's now come back, but just in a few states and nowhere near to kind of believe that was 2006. Okay. And that's when poker really kind of went away
Starting point is 01:57:05 online in America. It's now come back, but just in a few states and nowhere near to kind of what it was then. Got it. Real money fantasy sports as we know it, really started in 2009. Fan duel, that's actually when Star Street was born as well. Fan duel kind of being the largest
Starting point is 01:57:22 of that early generation obviously, and have continued to be the largest. There were a lot of incumbents who weren't so pleased to kind of see their success. And in 2015, there was kind of this regulatory storm that hit the fantasy sports industry. For a period 15 Attorney General said the business was illegal. They were under an FBI investigation. They were under a DOJ investigation on like a six month stretch. The industry then got together and said, Hey, we need to clarify the laws. We believe what we're doing is legal. We need to clarify the laws
Starting point is 01:57:52 and got together and pass legislation. There's now fantasy sports legislation in I believe 22 states. So that that happened then. Then there's always kind of been fits and starts of, hey, maybe legalized sports betting is going to come to America. But it never really did until 2017, a court case called PASPA went to the Supreme Court. It was being kind of pushed by New Jersey who wanted to offer sports betting. Went to the Supreme Court in 2018 when PASPA was overturned by the Supreme Court, that made sports betting no longer federally illegal in the US. And from there, states can legalize it as they so choose. Somewhere around 28 states, I believe, have now legalized online sports betting or sports
Starting point is 01:58:38 betting in some form. And so the companies that were best positioned for that early set were Fandl and Draft Games because of the fantasy sports advantages, the customers they had, the ability to operate a digital business. And that's kind of wave one of sports betting in America. Now, when Paspo was repealed, there were 31 days until New Jersey was launching sports betting. And then a quick wave of six states came soon after. So every company that wanted to be live for the market open had to take tech that was already built and operational, that was built in the UK and Europe
Starting point is 01:59:10 where there was a way more mature market and bring it to America. And that's why if you look around the space today, you kind of see products that look almost all the same. There's different colors, there's sometimes different prices, but the core experience is the same. We believe, I believe that's but the core experience is the same.
Starting point is 01:59:25 We believe, I believe, that's not the right product for American customers. It's a very hardcore product. It's very transactional. It's not that much fun. We believe that the games we build and the games that should be built are to make sports more fun. For someone who's watching a game and wants to increase their enjoyment with the game or who wants a reason to watch the game or something to do with their friends.
Starting point is 01:59:47 And so that's specifically what we build for an analogy I use quite often. And I've never been a fan of using a company's analogy for another, but I think it just fits so well for what we're about and what we believe the opportunity is. Let's think about what Robinhood is to stop brokerage. That's kind of what we are to sports book, right? Simpler, more intuitive, more approachable, more fun, less transactional, less about big dollars and thinking about it from financial perspective, more put $10 on an experience tonight on your opinions, express your opinions on sports and have fun with that.
Starting point is 02:00:18 Cool, very awesome. Very cool. Congratulations, massive milestone. It's great having you on. Yeah, congratulations. Look forward to looking forward to the next markup. I having you on. Yeah, congratulations. This is awesome. Looking forward to the next markup. I'm sure it's gonna be something later.
Starting point is 02:00:27 Thank you, we're working on it. Yeah, awesome dude. Good luck. Thanks for coming on. We'll talk to you soon. See ya. Bye. That was great, we got Rob coming in soon. Another size gun hit. It's...
Starting point is 02:00:40 Who led Jordy? How did Jordy wind up with the soundboard this show? I feel like I would be a little bit more responsible with it. But somehow. You can trust me with the soundboard. Yeah. I'm just hitting it 25 times. Oh, well.
Starting point is 02:00:53 With incredible sound effects. So we got Rob Mower joining right now. Hey, Rob. Here he is. How you doing? What's going on? Hey, Jumps. How are you guys doing?
Starting point is 02:01:02 We're doing great. Doing great. It's great to have you. Why don't you introduce yourself before I do and do a silly one? Do it more. More clean comment. Yeah, definitely. So I'm not sure if you guys are getting any introduction here, but I created the Huberman
Starting point is 02:01:18 Lab podcast with Andrew. I now run the podcast along with the media company that Andrew and I created called Psycomm Media. The long and the short of it is, Andrew, as I'm sure many are familiar, neuroscientist at Stanford, natural born teacher who has a real gift for explaining how to better your physical health, mental health and performance. So my job at Huberman Lab is basically to get out of his way and just make sure that he has the tools he needs
Starting point is 02:01:47 and I'm running the business to make sure that we're putting out really a high quality episode every Monday and then also now on Thursdays with our Huberman Lab Essentials, which are our 30 minute episodes that go out on Thursdays. Was there a key turning point in the business where it was taking off or was it gradual? Actually start, maybe go a little bit earlier than that. I've heard it,
Starting point is 02:02:10 I've heard it, but like I love for the audience to like talk about the story of, of just like how it all kind of like started. Yeah, let's start there. That's great. Okay. Yeah, definitely. So let me bring you, I guess, best starting place in 2019, I met Andrew, we had lunch together because I was helping interesting people get booked on podcasts. After about 10 minutes of talking to Andrew, it was clear to me that he was one of the most knowledgeable people I've ever met on topics that were of interest to me. He, you know, like whether it was how to manage stress, how to optimize sleep, he had studied David Goggins in his lab researching fear. He had done MDMA tests on mice, studying the thermogenic effect of that compound on them. So basically,
Starting point is 02:03:00 I was like, this guy knows more about things that are of interest to me, interest to my friends, and probably of interest to folks like Rogan, Tim Ferriss, and other podcasters. And my goal from then became, okay, how do I help in terms of brokering some of these introductions and just selfishly wanting to hear him on some of these shows, chopping it up with folks like that. In 2020, when COVID broke out, Stanford basically encouraged Andrew to get out and start talking to media. And that's when Andrew and I reconnected.
Starting point is 02:03:36 Just given the fact that his lab and a lot of his research was around fear, circadian biology, things that people were struggling with during the early days of COVID, being kind of like locked down indoors, a lot of stress going around. So it just kind of seemed like a natural fit to go on a lot of these podcasts. And after doing a bunch of them, and, you know, getting just really positive response from audiences, Lex Friedman actually encouraged Andrew to start a podcast. And then Andrew and I talked about it, you know,
Starting point is 02:04:08 end of 2020, launched the show in 2021. And it was kind of off to the races from there. Did you guys have instant product market fit? It's sort of historically extremely difficult to grow podcasts, right? Like people don't really realize they see you guys at the top of the charts. They just imagine you get a couple of viral clips,
Starting point is 02:04:29 all of a sudden you have a big show. It's very difficult to grow. I'm sure you guys had the benefit of like getting Andrew on these shows and maybe having those other podcasts promoted or whatever, but how quickly was, you know, was it a rocket ship or maybe slow and steady, steadier than people might think? Yeah, it was definitely a bit of a rocket ship or maybe slow and steady, steadier than people might think? Yeah, it was definitely a bit of a rocket ship.
Starting point is 02:04:49 I think a lot of times people will look at the success of the show and kind of see it as this overnight success in some ways, but I think what is important to remember is that at this point, Andrew had 30 years of researching biology and speaking to it from like a deep love in terms of understanding the mechanism of how these different systems in the body work and how to kind of optimize health based on those. And had at least a decade of teaching experience, doing lectures and things of that nature.
Starting point is 02:05:22 And then just kind of like putting the camera in front of him and his ability to speak to these topics that are rooted in science, but kind of coming at them from the angle of how people can better their health in both the short term and long term through using them, I think is where the kind of like product market fit was where, whether it be on YouTube or on the
Starting point is 02:05:48 podcast, you know, RSS podcast platforms, people were interested in these topics, and Andrew could speak to him from a from a place of, you know, deep experience and understanding. And yeah, just kind of thinking it through in terms of what what topics are going to be of interest to folks, but really just kind of profuse her kind of following the path of where his interest lied as well was key. Give yourself some credit too, because you had like a decade,
Starting point is 02:06:14 like basically managing various brands and whatever. How do you guys think of just sort of like distraction and avoiding distraction and focus? You guys spent a very long time just doing the show, sort of simple, you've branched out more recently, but it still feels very focused. And then at the same time, I'm sure if you guys said yes to all the great opportunities in front of you,
Starting point is 02:06:42 you would never even be able to be in the studio. So how do you think about what's been your framework for deciding what to do, when to do it, when to say no, that kind of thing? Yeah, I would say our default answer is no. Basically, we look at it through the lens of, everything is a, if we look at it through the lens of our goal is to put out the best possible episode every Monday morning. Everything that is competing for our time against that is really needs to be fantastic for us to for it to make sense in terms of us pursuing. Andrew wants to
Starting point is 02:07:25 spend all of his time prepping for either guest interviews or solo episodes on the podcast. So basically we see everything as competing with that. So our goal is always to weigh opportunities to not just foolishly pass things up, but really to think about it from the context of, this is pulling us away from what our main goal is, which is those Monday morning episodes. And if we have the bandwidth to take on something that's not going to interfere with that, and maybe even will be additive to that, then fantastic.
Starting point is 02:08:03 Otherwise, it's a no. And I think, you know, you hear a lot about this from folks like Steve Jobs and other leaders where it's, you know, the challenge is not saying no to things that are easy to say no to, it's saying no to things that seem like fantastic opportunities and ultimately are going to pull away from, you know,
Starting point is 02:08:25 what our bread and butter is, which is just, you know, creating that best episode every Monday morning. Can you talk a little bit about the evolution of the product with the introduction of the essentials show and then distribution and how you think about repurposing the content and everything that happens downstream from that one really canonical piece of, you know, Monday show. Yeah, this is something I think a lot about. And it's something that our team is very focused
Starting point is 02:08:50 on. We view it as like we put out these, you know, three hour plus episodes, and then all the way down to a tweet that Andrew does. And it's like, how do we fill in the various kind of like subsequent like time domain elements that span that spectrum? So it's like, how do we fill in the various kind of like subsequent like time domain elements that span that spectrum? So it's like everything from, you know, full length episode to essentials episode, which is 30 minutes to clips on YouTube or X or wherever we're kind of, you know, putting those out on social media to newsletter and basically, you know, all the way down again to, to newsletter, and basically, you know, all the way down again to, you know, a tweet. And the goal
Starting point is 02:09:30 is always to get the information out to as many people as possible and help people, regardless of how much time they have to allocate towards consuming the information, get the information. So, you know, there's obviously the like monetization strategy that kind of spans across those two, because at the end of the day, we are a business, but the real goal is like, okay, how do we just get this information out there
Starting point is 02:09:54 to as many people as possible? And the Essentials episodes were a genesis of that where we're looking at our content saying, you know, a lot of people just do not have time for a three-hour episode. We were hearing from a lot of people just do not have time for a three hour episode. We were hearing from a lot of folks, this is actually pretty funny, that they'd love an episode, but they were like, if I'm sharing this with someone, and it's a three hour episode, it's almost like I'm giving them like a to do or like an obligation where
Starting point is 02:10:20 we were hearing especially from like a lot of, you know, CEOs or business leaders, they're like, listen, I loved this episode, but I'm not going to share this with my friend because it's basically like, hey, I'm going to suck three hours of your time away or basically be requesting this of you. So the essentials episodes were birthed out of that concept of how do we make our content more shareable? How do we make it more digestible for those who have limited time?
Starting point is 02:10:47 What do you think the future of RSS is, the actual underlying technology? As we've gotten, we're a new show, but working with Apple podcasts and Spotify and all this stuff, it's just genuinely hilarious and feels wrong how little it seems like Apple cares about just podcasting despite it being such an important medium. Do you think it all kind of like shifts more towards streaming or what's your take broadly on RSS? Is it sort of the cable technology and maybe there's a future or are we stuck with it forever? Oh man, I have so many thoughts on this, especially the Apple piece. You know, it's funny because like,
Starting point is 02:11:29 I got into podcasts in the very, very early days where it was like you download on iTunes and you kick it over to an iPod to listen to it. And I just became obsessed with podcasts. And again, this is like probably 2010 timeframe. And obviously at that point it was was like Apple was the only player and then, you know, they launched their podcast app. And slowly over time, other players have entered into the space and Apple's kind of just like been caught flat footed maybe. I think probably some of it has to do with the fact that
Starting point is 02:12:06 floated maybe. I think probably some of it has to do with the fact that it was a part of their business that was never earning money. So if you start with a zero revenue stream, then anything is a benefit. Whereas a company like Spotify or YouTube, they are very focused on P&L and looking to do things to dominate the space. To get to your question directly, though, it's interesting. I think this is how you guys view your show and how we view our show. Even calling it a podcast is weird,
Starting point is 02:12:37 because a podcast is just the medium through which it's being presented to an audience. And we see ourselves as content creators and we're always going to put ourselves on the platforms that make the most sense, whether that be RSS feed and people are getting it there. And I do think that there are a lot of people who listen to podcasts while they're doing various activities
Starting point is 02:13:05 and whatnot and are just listening to them. That having been said, I think there's a huge percentage of most shows now that offer video where I would say half of our audience is either watching our content on YouTube or on X. And another half is listening. The benefit of the RSS feed is it's far more consistent. So we'll have episodes on YouTube that get like 15 million views, but then we'll have other episodes that are kind of
Starting point is 02:13:42 in that 300, 400,000 range. Whereas on audio, it's a much tighter window. So it's like a kind of more consistent basis. That having been said, RSS feed is set up in this weird kind of like, it prioritizes recency over relevancy. So it's basically like, here's the most recent thing as opposed to serving it up in a meaningful way
Starting point is 02:14:04 like YouTube does. YouTube is really good at understanding the algorithm to serving it up in a meaningful way like YouTube does. YouTube is really good at understanding the algorithm and serving it up in terms of what's most relevant as opposed to just what's most recent. And I think RSS feeds need to figure that out. I think Spotify is working hard on that, but we haven't seen much movement from Apple on that front. I put a tweet out recently on the fact that I believe X is going to be a dominant player
Starting point is 02:14:29 in the podcast space in the future just by virtue of the fact that it's inherently social. If you think about it, we'll put out an episode on Spotify and on Apple and on YouTube, and we in large part are announcing it to our audience on X. And we do that as a means to broadcast it. And then people, oftentimes, we also put our episodes on X, but oftentimes people are then leaving the platform of X to then pay attention to the podcast elsewhere.
Starting point is 02:14:58 And I think as X gets better and better at allowing users to easily navigate content and watch full shows on their platform. There's no reason why people should be then migrating off platform to pay attention to the content. So I think that that's a major thing that Spotify will have to contend with. I think that YouTube has a pretty dominant place in the market with just their monthly active users. I want to say it's like 2.5 billion or something was the most recent number on that. Whereas X and Spotify are kind of in the like 600 million range over the course of a month.
Starting point is 02:15:39 So a lot of ground to make up. But I think it's a lot harder to build a social platform than it is to build a, you know, content hosting platform. So like, I think X would find an easier job of creating the ability for people to easily consume content on their platform, as opposed to something like Spotify, trying to build a social network as part of their app. Yeah, that makes sense.
Starting point is 02:16:03 Last question for now. Quick 30 seconds of advice on how you guys have handled AI impersonation. A lot of people have an incentive to generate an image of a video of Andrew saying, I love this product, I take it every day. It's like, it helps with my tea. And then it's just completely fake.
Starting point is 02:16:24 How, any words of advice for people I take it every day. It helps with my tea. And then it's just completely fake. Any words of advice for people that might be dealing with impersonation or just sort of fake AI content as well? Yeah, I think being vocal about it. So we've made sure that Andrew's been pretty vocal about it. We had this thing where it was the Jawserciser, which was a complete nightmare on our end.
Starting point is 02:16:43 We basically filed legal action against them numerous times. They kept like shut, they'd basically like file bankruptcy and spin up another company and kind of like all this craziness. A lot of people to this day still believe that Andrew was like promoting this plastic ball that you put in your mouth and chew on
Starting point is 02:16:59 where basically a large part of that was AI generated or clip out of context from a podcast. No affiliation with the company. So we've basically been vocal about, listen, if it's not being put out on a Huberman Lab handle or it's not listed on our HubermanLab.com slash sponsors, it is not a company that we have any association with. We also very intentionally have very few sponsors.
Starting point is 02:17:25 Most of them you're gonna be familiar with. They're the sponsors that are basically always featured in our episodes over the course of a month. And we're highly, highly selective with who we allow to be a sponsor of the show. And if you ever question it, just go to hubermoonlab.com slash sponsors. That's where the sponsors we work with are.
Starting point is 02:17:43 And if you're seeing Andrew say something ridiculous and it's being put out by some bizarre company, then it's probably AI or it's probably just like, faked in some manner. Believe half of what you see and none of what you hear. That's right. It's words of wisdom. Well, thank you so much for coming on the show.
Starting point is 02:18:02 And we got a last thing we got. Oh, yeah. Andrew himself in the chat on X. He says Rob is a secret weapon behind Human Lab and no one can steal him. He's a loyal bulldog. And he's also super generous with knowledge to help others. And he's a great triathlete. We didn't get to cover your athletic career. But would love to have you on again. You know, anytime. So much more to talk about. I mean, I know the same business.
Starting point is 02:18:28 I'll see you back in Malibu. You're the man. Thanks for coming on Ron. Yeah. Thanks Andrew. Andrew's the best. I'll talk to you guys soon. We'll talk to you later. Bye.
Starting point is 02:18:36 That's great. We got another Andrew coming on. We do. Andrew Reed from Sequoia capital, creator of Reed's law. Are you familiar with this? Yeah, yeah, yeah. We gotta try to find that. from Sequoia Capital, creator of Reed's Law. Are you familiar with this? Yeah, yeah, yeah. We gotta try to find that post. Oh yeah, we gotta find that post.
Starting point is 02:18:49 It was to Rune. Rune was saying, sometimes the person who popularizes a phrase accrues more value than the person who creates the idea, and Andrew replied and said, I call this Reed's Law. And here is none other than the creator of Reed's Law himself law himself Andrew welcome to show Thank you for having me. Thanks for being here. How you doing? I'm good. Yeah, that's gonna be my tweet
Starting point is 02:19:12 That's gonna live in infamy. Hopefully There's been various attempts from people I get that it's on Wikipedia page But I think there's an actual reads law that keeps canceling it out. So All right. Well, we're gonna work on it. Yeah. That's our new mission. Yeah, get it on Wikipedia. We gotta make it happen.
Starting point is 02:19:29 Very blue today. I love it. You're really owning it end to end. You're verticalizing blue. It's great. Great intro. But great to have you on. John, you wanna kick it off?
Starting point is 02:19:43 Yeah, I mean we wanted to have you on to talk about this post from Harry Stebbings. He says- Oh, I'm hoping that's why you asked. I was hoping that's why you asked me to come on the show. Yeah, he says, through my role at 20VC, I studied investors for a living. Andrew Reed must be the best investor
Starting point is 02:19:58 of the last five to seven years. 11 Labs, Vanta, Figma, Odo, Bold, Klarna, Zapier, Circa, average ownership of say 5%. 11 years, 11 labs, Vanta, Figma, Odo, Bold, Klarna, Zapier, Circa, average ownership of say 5%. Andrew will have made 3.75 billion for Sequoia and he ends it with an emoji that has star eyes. So we wanted to go through those companies, tell us how'd you meet them, what'd you like, what is the business doing well,
Starting point is 02:20:21 and kind of go through what your process is like. So maybe we could kick it off with 11 labs. Well, sure. I guess the timing of that tweet was particularly good because it was, you know, I think on Wednesday of last week was in the whiz deal was announced and you know, yet another $3 billion gain for Doug Leone. And, you know, of course, you know, everyone at the time is saying, you know, yet another $3 billion gain for Doug Leone. And, you know, of course, you know, everyone at the time is saying, you know, that guy
Starting point is 02:20:48 Andrew is just so amazing. Yeah, you know, so I spent like a few days in the typical Sequoia wallowing of self pity of like, how is it possible for Doug to have yet another one and I'll never live up to people who came before me. And then Harry's like, you know who's been amazing is Andrew. That's great. I love it. I was like, yeah, everyone's been saying that this week. That's been the real talk track at Sequoia.
Starting point is 02:21:13 That's awesome. Yeah, before we dive into all the individual companies, how did you end up at Sequoia? You started as an analyst at Goldman and then how did you end up at Sequoia? You started as an analyst at Goldman, and then how did you transition into venture? Was it something you always wanted to do? And yeah, I would just break that down for everybody. Sure.
Starting point is 02:21:35 Let's see. So I was 2012 from school. I started my career at Goldman Sachs, where they have the blue background profile pictures as the originators of that. Spent 18 months at Goldman and left to join Sequoia. I had one of the all-time amazing happenstance introductions. It was Sarah Guo, who's now at Conviction.
Starting point is 02:22:00 Back then, she was in my class at Goldman. And she was then dating and now married to a guy named Pat Grady, and Pat's not my partner here at Sequoia, and Pat, have either of you ever met Pat before? I haven't, no. So Pat is like one of the all time great technology investors
Starting point is 02:22:24 massively underrated. And he is a very interesting guy. He's one of these guys who has, the way I like to describe Pat is his brain is so structured and framework oriented that it ends up like when ideas enter his head and ping pong around for a while at the other end of his system spits out like very creative ideas, despite having like not one like kind of like,
Starting point is 02:22:51 he's not like a creative minded guy, but he ends up with very creative ideas, which is why he's a great investor. Anyway, his idea at the time was to have a class of two associates at Sequoia, one guy who is like maxed out finance and one guy or girl who's maxed out startups and I was the finance guy. I was, you know, at the top of my class at Goldman and the startups guy was Matt Huang, who now runs Paradigm, who had previously started and sold a company to Twitter and did a bunch of angel investing.
Starting point is 02:23:22 So they put me and Matt on a desk together. So we were the class of two associates, February 2014 at Sequoia. And it was a very interesting time to be entering the VC world. I think for those of us who were fortunate enough to enter at that time, you sort of had a few years of earning your stripes and learning. And by the time you were able to start doing your own investments, you know, you still had many years of this big cloud wave
Starting point is 02:23:53 ahead of you, and you caught the tail end of mobile. So you were able to get a few really good investments under your belt early on, and then, you know, since then it was kind of off to the races. But, and Sequoia is a great place obviously to start an investing career. Cause you look around and you know, it's like legend. And it was Doug and Mike and Jim Getz
Starting point is 02:24:15 and Ruloff and Alfred and Pat and Carl. You know, it's, you kind of like all the first name basis investors are pretty cool to be around, you know? So. That's great. Yeah, there's, there's this meme that founders want to raise from other founders. I think the reality is founders want
Starting point is 02:24:31 to work with very successful people that can help make their business more successful. In the early days, did you have any sort of self-doubt around sort of coming into this industry. You know, a lot of investing is just like, being a clear thinker and like not, just believing all the hype and like, likeability is a big factor.
Starting point is 02:24:55 There's a bunch of different factors, but did you have any self-doubt like in the early days prior to this like absolutely generational run? Hopefully you don't have too much self-doubt anymore. But just like- I've totally stomped out all the self doubt now Yeah, now I wake up every day just you know feeling so good about everything hubris hubris Investors that tried hubris after a generational run it always works out. Yeah, ask my ass masa
Starting point is 02:25:20 Do you have a crystal ball yet? We have a crystal ball here Yeah, you need a crystal ball yet? We have a crystal ball here Yeah, you need a crystal ball, yeah, yeah, yeah, this is great. That's correct It's a it's funny you mentioned the self doubt thing and kind of getting started I actually think you know I was I Think I was the first Person at Sequoia to actually tweet, you know, this was my, and the origins, this is probably 2017. I remember thinking, I started in 2014 and I was doing well.
Starting point is 02:25:54 I'd sourced some investments. I'd helped out on things. GitHub, we did in 2015. The company was acquired in 2017. So I felt like I kind of gotten my feet underneath me. But then I imagined, you know, imagine you are a founder and you are, you know, invited into Sequoia and you have your pick of like Doug, Ruloff, Jim, you know, Pat, Alfred, you know, why would anyone ever choose to work with me?
Starting point is 02:26:23 You know, I was 27 and I was like, well, like the one thing I do have is like, I think I'm reasonably likable. I have a pretty good sense of humor and I am, I guess, less self-conscious than many people when it relates to the internet. So I started with my 14 followers. So they all make some jokes on the internet
Starting point is 02:26:44 and it felt so countercultural at the time you know because I think this is kind of before VC was not yet as online as it is now. I think the pandemic was sort of a you know like the Clubhouse era pandemic you know last dance tweeting phase of venture was I think a bit of a paradigm shift. Anyway, so the origins of that was like, how can I possibly, you know, be like relevant to founders and, you know, the internet is a fairly open playing field where if, you know, your profile picture is pixelated enough, no one really knows how old you are, right?
Starting point is 02:27:22 And so the first investment that I was like truly led for Sequoia was Robinhood in 2017. And anyway, I have a question about, uh, the, that famous, uh, Sequoia memo that went out, right as the market was collapsing, I believe this was during the housing crash and it's this really deep macro econ analysis of what's going to happen. And I'm wondering if is that macro DNA still alive and well at Sequoia? Do you guys still look at consumer confidence and what's happening in the credit markets and all of that or is that less relevant today? No, it's, you know, Sequoia is a interesting business,
Starting point is 02:28:08 you know, in the sense that there is, people talk a lot about, you know, multi-stage VC firms and what that means. And, you know, Sequoia, we have this, you know, thriving seed and early stage business that's sort of the heart of Sequoia dating back to 1972. And, you know And a growth equity business that spans series Bs up through crossover investing into the public markets.
Starting point is 02:28:36 We have this overlay Sequoia Capital Fund vehicle, which is the permanent capital behind all these funds. We have Sequoia Heritage, which is a multifamily office. That is, it's an independent business affiliated with Sequoia. We obviously, we see them all the time. Sequoia Capital of Global Equities, which is, I think at this point, the largest TMT long short hedge fund in the world. So you put all that together, it's one of the benefits we have, I think, for being quote
Starting point is 02:29:06 unquote multi-stage is you get different bites at the apple as companies scale and you try to catch everything at the seed and if you missed a few, you can do the A, et cetera, et cetera. But also, it's hard to really lose your mind on things if you have the forcing function of the public markets around the corner every single day and And also it occasionally does provide us with interesting Interesting insights, I think the RIP good times memo, which is the one that you're referencing, you know the pig with a knife and the Which is you know, it's actually that's a great that style of
Starting point is 02:29:45 presentation of it's you know, it's actually that's a great that style of presentation of it, you know, it's all Substance no flash great every page is its own independent study And I think that's held up so well in hindsight is I think something that's a quia we try to do those sorts of things, speak from the voice of Sequoia very rarely. So we did this Black Swan memo right at the start of COVID, which was kind of a similar warning.
Starting point is 02:30:18 But yeah, it's a nice thing to have and obviously it helps both on the upside and the downside, spotting new interesting things and also making sure we don't just lose our minds. Yeah. The black Swan memo was obviously really key because everything was about to change, but it did feel a little bit lighter on the macro econ. And I was wondering if that was because of the structure of the fund and RIA
Starting point is 02:30:40 regulations or anything like that. But I don't know, maybe it's just different style. I mean, it was very, it was happening a lot more suddenly than the previous crisis certainly so there's less yeah well I also I think you know going back in you know in 07 you know like we're like we're out in Silicon it's in Silicon Valley and you know you not every founder was reading the journal every day right so there's a way in which you sort of had to shake everybody in your. Oh, there's this, you know, it's a New York problem, right?
Starting point is 02:31:10 It's a guy. You know, it's a housing problem and sort of it was shaking everybody and saying, no, this is a you problem. I think, you know, 2020 everyone's on Twitter all the time. No, nobody was like, wait, this is, you know, the China virus. Like it's so I think we all remember when it hit Italy and when it hit Washington on Twitter all the time. Nobody was like, wait, this is the China virus? I think we all remember when it hit Italy, when it hit Washington state. So anyway, it wasn't different in that sense.
Starting point is 02:31:32 What's your approach to working on boards sort of broadly? You've sat on a ton of different boards. You've been board director at a number of important companies. Do you have a playbook and a system now that you come in and you say, like, you know, you know, kind of grab the reins? Or like, what does that even look like? What is what is partnering with you look like at the board level? Every
Starting point is 02:31:59 every situation is just like, you know, every good board is, you know, is the same and every bad board is bad and so unique in an unhappy way. No, I think like the, in general, a paint-by-numbers approach to anything in technology and anything in investing is bad. And I think the worst board members tend to try to be the people who come in and take the reins and run their playbook, run that company through their playbook.
Starting point is 02:32:30 Because playbooks age very quickly, especially in a world of accelerating change. So I think the first thing you have to do when you join a board is just take the time to learn what business you're actually in. And I think this is one thing that I've found is you can get to a pretty good sense of a company and its market at the end of your diligence process when you're writing the memo, but you haven't seen the people in that company respond to adverse
Starting point is 02:33:01 events. You haven't seen what the real bottlenecks in the business are and you can have opinions but you sort of, it's much more easy to feel those opinions when you have dollars at risk. So I think in general the first thing I try to do is like just figure out what business we're actually in and where the bottlenecks actually are. I think one thing I like to do pretty soon after leading an investment is do an executive search with the founder. I think it's like a very nice way to get from the opposite sides of the table when you're negotiating an investment. The first thing you want to do is make sure you feel like you're on the same side of the table and go on the same side of the table
Starting point is 02:33:41 and grinding a recruiter on how many leads we have in the funnel for our VP of engineering search is like a great way to align. And then there's this concept that Ruloff talks about a lot of being a shock absorber on the board, which is something that I really, really believe in. You know, when things are going well, many board members love to do the rah-rah cheerleading board meetings. And one of the nice things about being at Sequoia is in the portfolio of you, if you're beating your number but your page is next to the whiz financials, it's like, okay, there's
Starting point is 02:34:19 levels to this. And I think it's helpful to remind the best companies, you know, that there are, like, you know, there are current generation companies that are performing even better than this and here's what they're doing. And then similarly, when things are going poorly, you know, and poorly is almost always relative, right? But, you know, you can have a company that in a vacuum is doing amazing, we come in at 80% of plan, and everyone's ho-hum in the board meeting. It's like, oh, and then we need to change our strategy. We need to change this executive.
Starting point is 02:34:52 We need to, as always, we need to fire the VP of sales. I think oftentimes the best thing you can do is just cause everyone to take a deep breath. We're actually in decent shape. We have a lot of runway. You know, look at these metrics. Here's what's going well. You know, it's probably not a VP of sales thing.
Starting point is 02:35:10 It's probably a product thing. You know, that sort of work is good. And then every now and then, maybe once every two years, you have a major thing you gotta deal with. Yeah. An M&A, big capital raise, et cetera. Can you talk a little bit about the importance of concentration?
Starting point is 02:35:29 I feel like just observing from the outside, the Sequoia playbook has basically been like, find the power law winner in whatever market, but then also get the most concentration and the highest ownership percentages. And we see that with the S1s go out and a lot of VC friends are saying congrats and Sequoia is the one showing up at the top of the cap table. Has that been
Starting point is 02:35:51 something that's been kind of a drumbeat internally or has there ever been like a moment when it's been kind of harder to establish that foothold because of like crossover investors coming in or overpaying or valuations or anything like that. There's the WhatsApp example, which is really famous, but I'm sure there's a million others, right? Yeah, I think our North Star, we wanna be the largest outside shareholders in the most important companies of tomorrow.
Starting point is 02:36:17 And it would be amazing if we were the seed investor in every single most important company of tomorrow And we actually do a decent job of that and If we don't do the seed we try to do the series a if we do do the seed we'll often try to do the series a and at any given round, you know, there's a relative risk reward and And also, you know, we can
Starting point is 02:36:47 We can't forget that we're in the you know net multiple of money business, right? We're focused on investment returns and if you know being the fourth biggest investor of the most most most important company is a good investment will do that too, but I think the ability to Double down and triple down on companies that we really believe in and hold them for the long term, that's the other thing that often gets lost is,
Starting point is 02:37:16 there's a famous example of Sequoia and Apple. Do you guys know how much money Sequoia made on Apple? No. Okay, well I'm not gonna tell you because it's not nearly as much as you might think. Oh right. Yeah. It's coming back to me. In the single digit I think it was I think Sukhoi made a 40x on 150k. Wow. So single digit million dollar gain and when you you know when you have experiences like that and then you realize, you know, it's quite on 10% of Google at the IPO, the list goes on and on and on. So this idea that we don't
Starting point is 02:37:58 necessarily need to be the first investor in every single company, but we should be the longest term investor. And for the really special companies, scaling up with them and compounding, you know, that's like the business that we want to be in. How do you balance both competition and partnership both within the firm? Like you want to put up the biggest and best numbers, right? Like I imagine you're competitive and then externally to your, your oftentimes competing with other firms that are sort of your friends to win rounds at certain moments, but you're a multi-stage fund So sometimes you're gonna do a round and they'll do the next one and then you'll do the next one and then you got to Be on the board with them. So like how do you approach?
Starting point is 02:38:38 You know, you have to sort of show up at some point to be like I'm going to win this deal and then at other times And then the next day you're back to being, uh, you know, boys. Yeah. Well, it's funny. There's been, you know, there's, this is one of those like really wonderful things about Silicon Valley. You know, I remember one time, um, you know, I'm sitting in a board meeting and, uh, I'm sitting next to somebody who I know has a term sheet in on a company that I also have a term sheet in on You know him I think he must know and I definitely know but we're not going to talk about it. You know, it's like Anyway, so I think it is actually quite wonderful this ability to sort of you know
Starting point is 02:39:20 Or you being even like it's constant right? Like, you know know we're co-investors in this one company But we're investors in the direct competitors in this other situation To me the lesson is just like always try to do business with good people and Trustworthy people and you know try to find front stabbers not back stabbers is a good rule of thumb and you know like If you do that, by and large, people are like good and ethical in the Valley. Like it's a pay it forward place, it's a repeat game.
Starting point is 02:39:52 I think there's a reason why a lot of the, you know, bad behavior comes from people who aren't from Silicon Valley, you know. The, it's like, yeah, it's actually a wonderful place to do business in that way. But Sequoia, you know, we are as cutthroat as it gets, right? Like we are front-stabbers, you know, we'll, like we don't hide that in general we want to do usually as much of a round as we possibly can. Um, we'll, you know, tell you what we're willing to pay. You know, we're not, um. We're not externally necessarily with investment banks
Starting point is 02:40:28 or with search firms known for being the easiest group to deal with. But here often, like, oh, Sequoia, I've heard it's really tough internally, like really sharp elbowed. And I mean, the stakes are really high, it's a small team, expectations on performance are insane. And it's a consensus, it's a small team, expectations on performance are insane, right? That's where the...
Starting point is 02:40:45 It's a consensus investment process as well where you don't need to just basically close you. You got to close, if you're an entrepreneur, you got to close all your partners, correct? Yeah, exactly. In the partner meeting, there's like, I've seen founders, some founders really rise to vacation in the Sequoia Partner Meeting Room. I've seen people just totally wilt. But it's an amazing, it's actually an amazing culture
Starting point is 02:41:15 inside the building. Because of that, I think like, because the expectations are so high and the team is so small, right? I think like this is one of the things that Doug has this presentation, he calls it the laws of physics, where one of the laws of physics is that fund returns are inversely proportional to team size, and also fund returns inversely proportional to fund size.
Starting point is 02:41:40 We've been very disciplined about keeping the number of people on the team and keeping the funds to like a relatively stable size and then working together to kick ass that's the Talk a little bit about paths to venture you mentioned that in your analyst class There is the high startups maxed out on startups versus maxed out on finance Are both of those paths still viable today or have they shifted over time? How do you think about hiring new people? I think with venture, um, and if I, I, I read, and,
Starting point is 02:42:14 and you know, I do, I help lead school growth stage investing business. So I think venture like true venture, you know, see it's a different thing. Um, from my perspective, it sort of doesn't matter at all what you did before, because nothing you do before joining a venture capital firm prepares you for how truly like multifaceted long-term successes in venture. Like you can divide the job into sourcing, picking, winning, and company building. Like those are probably the four core competencies. And what we try to do, or at least what I try to do,
Starting point is 02:42:56 is I want to find somebody who can really hit the ground running on one of those things. So with finance, you'll have people come in, and they can be really good on the picking you know, the picking, like the investment, the investment process, due diligence, have a real point of view on why a company should succeed. But maybe you've never taken a meeting before one-on-one with anybody in your life. You know, for me, that was me. Like when I joined Sequoia at Goldman, I was the, you know, headphones on behind the Excel sheet, you know, like that was, I literally had never done a one-on-one meeting before in my life.
Starting point is 02:43:27 I got to Sequoia, turned to Doug, and I said, Doug, is there a sector you want me to cover? And Doug was so open, he goes, that's what we hired you for. Like, noted. I like to find somebody who can hit the ground running on one of those things, but clearly has the potential to max out on all of them if given enough time. And then we just really try to invest in young people and give them opportunities to try things and take meetings and sponsor investments. If you look at a lot of the people at Sequoia started in the early 20s here and
Starting point is 02:44:06 Apprentice, you know were nobodies for five six years and then all of a sudden People started recognizing them when they had you know amazing amazing portfolios and that's sort of what we try to we try to do Last big question I have for you. How do you think about underwriting? generative AI investments today? There's been a lot of chatter on the timeline this week about what's ARR, what's not. And you're in a lot of the companies that feel like they will be these sort of power lodge and AI winners, like even Figma itself is like such a sleeper, right?
Starting point is 02:44:43 And that like they have like most of the important creative people in tech in the app all day long, they should be able to launch a ton of different products that end up dominating in some of these categories. But what's your sort of like broad approach to sort of, and the way that you sort of look at all the revenue that's sort of just like popping up
Starting point is 02:45:03 in all of these new novel categories and will probably lead to big businesses, but some will kind of evaporate as well. It's a terrific, yeah, stay tuned everybody. It's the most transformative, it's the most interesting time in technology that I could possibly imagine. I actually think moments like today on the internet, you know, when you have the jubilification of all of the last five years of memes happening at once, it's like a nice reminder of this, you know,
Starting point is 02:45:38 unlike prior technology waves which were distribution extending waves where a small group of people had this at first. Now a billion people have access to Satchie PT and are logging on and doing the same thing. It turns out we have like a zillion computers in Virginia just making cartoon memes today, which is it's like a small power plant being burned. These are coal powered memes everybody. Another one of these, are you sure?
Starting point is 02:46:09 We can do so much. So it's amazing, but because of that fact, everybody's on the internet all the time, and most of these technologies are available at the get go to everybody. You can see revenue ramps like nothing we've ever seen before, right? Because it's transformative technology with full distribution from the get-go.
Starting point is 02:46:32 And some of that will certainly be easy-come, easy-go revenue. I think some of it certainly won't. It makes each individual investment decision, nuance and complex in its own way. I think the important thing is going back to that law of physics presentation that Doug gave when I first got to Sequoia. There are some things that never change in business and there are some things that change all the time. And I think the
Starting point is 02:47:04 important thing is knowing which ones which powerful powerful I can see why you close so many deals you're great you closed us yeah great having you on this is fantastic yeah thanks guys thanks for having me come on come on with we're gonna have Dylan field on hopefully at some point. You guys should come on and just we can all hang out. It'll be fun. That sounds wonderful. Have a good old days. Thank you guys.
Starting point is 02:47:29 Awesome. This is great. Take care. Cheers. All right. Yep. He's in a quiet period for some of the. Thank you, Jordy.
Starting point is 02:47:38 We heard your feedback to the fans. Jordy is keeping the soundboard and getting wild with it. He's in a quiet period on Klarna because they're about to IPO and I've been saying that the SEC should ban quiet periods because I just think that people should be able to yap 24-7 Regardless of what's happening in the public markets. So that's what I will be lobbying for the next time I'm in Washington DC ban quiet periods also ban lockups. Anyway, we have our next guest Welcome to the Temple of Technology. Boom, what's going on?
Starting point is 02:48:09 How are you? Hello, hello. Thank you for having me. Long time listener, first time call out. Fantastic. Let's go, let's go. Amazing, well, we were just talking about Klarna, we were talking to Andrew Reed, we were talking about how he's in a quiet period, can't talk about it, but maybe you can.
Starting point is 02:48:26 Maybe you can take us through any of the interesting S1s you've deep dived. But first, introduce yourself. What do you do and why do you deep dive these companies? Sure. I'm Tanay. I'm a partner of Wing, which is an early stage venture firm. We invest at the seed in Series A in primarily B2B companies, heavy emphasis on data and AI. My journey with S1 dates to even prior to being an investor. I think I've always been just a huge business nerd, I guess. And I view S1s as the time when a company lifts the curtain and gives you a peek into the business. And typically these are good good companies, because they've made it to the point of publishing an S1. Maybe once in a while, you do get a WeWook or something
Starting point is 02:49:10 out there. But Buy n Lodge, these are generally good companies. And I think in every S1, different ways to read it, obviously, there are public market investors that are making a decision on, hey, should we invest in this? How should we value this thing if we would invest? All of that. I think the lens that I generally take on it as someone that's not necessarily actively trying to
Starting point is 02:49:28 make that call, at least in a professional setting, is more what are the lessons from this business that, one, you can just learn to learn from about business in general. But then, two, I think there are a lot of interesting things about many businesses that could be applicable even at the earliest stage, both in terms of what's going on today. So, for example, NES won today, a lot of AI washing in them, whether or not AI is related. I think it just tells you where things are at in the current state of the market, which is, I think, an important thing to know, just given how quickly things are changing and how there's so much kind of noise and unclear where the signal comes. And I think you do get some signal from it. And I think the second is, depending on the kind of company
Starting point is 02:50:06 it is, there's a lot that similar startups maybe that are even 10 years earlier can take from it in terms of almost like lessons and playbooks of, how did they solve that? How did they grow their TAMs over time? How did they figure out reaching these customers that are maybe difficult to reach? And so one good example of that is a company like Service Titan,
Starting point is 02:50:26 which went public recently. I think any company building a vertical AI, any founder building a vertical AI company should be understanding Service Titan to figure out how do they expand all the products that they have, how do they grow their ACVs within their customer set, because it's a problem and a question that they're going to get in every financing round,
Starting point is 02:50:44 but a problem they're going to face as they grow that business. And there are some good kind of lessons in there about that. I remember when I think when Snapchat published their S1, it revealed how much they were spending on the cloud and that might have moved cloud budgets. Have you ever seen an S1 that's been almost like a bull signal for a startup in the sense that like you can see a line item on some company that's going public and hey they're spending a lot of money on this series b company we got to go talk to them and see if we can do the next round oh i i think there have been a few like
Starting point is 02:51:14 that in terms of it just tells you that some spaces are ripping as well and i do think like this core weave one is going to lead to a lot of other interest in for example the data center more broadly because i think what's happening is that these basically all the big tech companies are spending $200 billion a year of CapEx on that pie. And obviously, Nvidia is the big, big, big winner and the beneficiary of that. But reading through Corvay, Corvay is such a small pie, but it's like, Microsoft's 60% of that revenue in a year. And they're growing that revenue from 20 million to 2 billion in like two years. Like, you know, what companies have done that in the past.
Starting point is 02:51:49 And I think what it tells you is that there's just so much demand at that layer of the stack right now that if you have a compelling solution there, even if you take up like a small, small pie of like the budgets, you can race into these hundreds of millions of revenue very quickly. So I actually think this one is gonna be like,
Starting point is 02:52:05 thought of is gonna renew some of the interest and there has been a lot of interest in that chip companies and all of that, but in other areas and almost like that data center stack just because there's so much spend and so much build out still happening. And so I think that's actually a good one in terms of in present day even.
Starting point is 02:52:22 However, it feels like Core WeaveWeave is actively positioning itself to make sure that they're trying to get in front of the core questions, which is like, hey, you have some of these big contracts. They're long-term contracts, but they're not super long-term. Revenue concentration too. Yeah, revenue concentration issues. They've been working on this big open AI deal. Do you think that investors will even care? Obviously, you're not a professional public markets investors, but do you think the market just wants a pure play stock like CoreWeave? Is that part of
Starting point is 02:53:02 why they should just get out and maybe the revenue concentration doesn't matter? Because we're in the meme market still. And in many ways, business fundamentals don't matter. It's so much around narratives. Vibes. Yeah. No, I totally agree with you. I think in this initial period, I think the how CoreWeave trades is very much going to be about narratives and vibes and memes. And speaking of memes, I mean, this is a company that was started by three former commodity traders that basically got a bunch of GPUs together to mine crypto and then pivoted to AI.
Starting point is 02:53:36 This is the web 3D AI pivot done right. And it's going to be like, whatever, a $25 billion company in like six years basically. So it's kind of incredible in that sense. I think, onto your core questions, I think so much of it is going to be around that. I think like the public market investors who are going to think about it professionally are viewing this as like, do they have the potential of becoming like this kind of AI hyperscaler or this AI cloud? And they'll talk about, oh, like, we have the 15 billion
Starting point is 02:54:06 from OpenAI commitments over the next six years coming through. We have a bunch of 15 billion of performance obligations from prior contracts that are already going to hit over the next three to four years. But then on the flip side, you have Satya going on, bot-bossing that, hey, I'm glad that we're a leaser of capacity because there's going to be a surplus of supply over three, four years.
Starting point is 02:54:29 So that isn't a farewell for, you know, is this going to continue beyond that potentially for them? And I do think it's one of those where, in timing, I think it's, this is the moment in time, right? This is the time when markets, when there are some people that feel like they missed the boat on Nvidia, especially including the retail investors who are like, oh, this is now a new pure play generative AI workload company. And so I do think it's good timing from that. The other thing though
Starting point is 02:54:55 is they need the capital because they do lose a decent amount of money on a free cash flow basis. I think they lost like five, six billion dollars last year. And so they, and they have some cash in the bank, but they do need the capital. So it feels like a good time for them to get out and, you know, play into these memes and narratives and, and, and also, you know, obviously allow some of the early investors to like Sorry, you can't hear it, but he just played the loudest gong sound because of how loud this, how big the six billion dollars They were losing we gotta figure out how to get you and can hear this out. I don't get the joke
Starting point is 02:55:31 It's not gonna land. We're just cracking up anyway. I want to stay on core We've there's been this narrative of like will they get out won't they I saw Martin Scroggley say oh, they're 5x over subscribe now Can you just take me through like what is the emotional roller coaster that a company or a CEO or even a public markets investor goes on when one of these S1s drops? There's the quiet period and then there's the S1 and then later there's the IPO and like what is the normal cadence and what should people be paying attention to? Yeah, unfortunately, no personal experience in that. It would have been nice to take a company public, but I know I do think it's definitely a stressful period
Starting point is 02:56:05 for them in terms of just, and especially when there is so many questions around it, like there was some rumors about Microsoft not being, like trying to break free of some of their obligations, which they've now dispelled. So with this one, there's some added kind of just question marks on is this gonna happen? The Cerebris, which via Lostio had similar issues,
Starting point is 02:56:23 and there was some CFphus kind of just investigations have taken longer and it's kind of held back their IPO. And so it is one of those where now I think there's some rumors that the founders here have sold a decent amount of secondary already. So I'm sure there probably that's right. Helps a little bit, especially when it's like 450 million worth, but ultimately it still is, it does especially when it's like 450 million woods, but ultimately
Starting point is 02:56:45 it still is, it does look like it's going to go ahead now, but I can imagine it's going to still be a crazy kind of first few months once it does stop trading as well, just given so much uncertainty around it. Can you comment on what you think might be going out in the next year, what people are excited for, what kind of names are people chomping at the bit to read the S1s? Yeah, we saw, wasn't it Stripe? I mean, you imagine it's everything on that
Starting point is 02:57:13 most in demand secondary once you're in the DecaCorn category, but I wanna know. Yeah, yeah, and I'd even love your take on, do you think, do you think Figures gonna bring back the spec? Have you, have you heard any rumblings? Probably can't say, but I'd be curious.
Starting point is 02:57:32 Yeah, I think in terms of what's, what people will be excited to get out, I do think, you know, Stripe is definitely one of those. I don't know if they plan to go public anytime soon, given that they seem to be tapping into the secondary markets pretty often and, you know, providing liquidity to employees, potentially to some other investors as well, and so maybe not an immediate need. There are a few that are rumored to be filing soon, such as Chime, which I think will be an interesting one on the fintech side. I think the markets would really love an AI company going public.
Starting point is 02:58:04 I think CoreWeave is one example of that. But I don't see an OpenAI or something like that anytime soon. But maybe if one of those kind of labs decides to do it, I think that would be pretty interesting. I think the application layer AI companies are probably still a bit too early, is my guess. And so I do think we'll see some. And I think one of the interesting things is that CoreWe early is my guess. And so I do think we'll see some. And I think one of the interesting things is that CoreWeave is relatively younger. It's about seven years old as a company,
Starting point is 02:58:30 but Klarna, which file is like almost 20 years old. And then StubHub, which also I believe is five, she haven't gone through that one yet, is also like a 20 year old company. And so these are, these are some of the ones that have been like, you know, people have been waiting for these to go public for a really, really, really long time. And so it's nice to see some of them start to get out.
Starting point is 02:58:49 And I do think we might see some of the, some younger companies start to go just given how fast the AI boom is. But I think it might be another couple of years before we get like, you know, like a true AI native company out in the public markets. I I've heard a little bit of rumbling from investors that track the CFO before we get like, you know, like a true AI native company out in the public markets. I've heard a little bit of rumbling from investors that track the CFO hiring cycles at the large later stage growth stage, Deca corn companies. And they say, Hey, this CFO that just got hired at this company, he took his last three companies public within 18 months of getting hired. We know what's up. Is that
Starting point is 02:59:23 a valuable signal for anyone? Or is that just some like kind of fun fact in Silicon Valley? I think there's a lot of truth to that. I think the timing can vary though from that hire in terms of, but generally, especially some companies don't even have in CFO. And so when they bring one in, some people believe it's like, it's like this now starting to at least think about it. But I do think it could be that it's imminent like a year from now it could be like, it still might take two to three years because some of the internal controls and things like that like Corwee for example had like a note in its filing that they found like weaknesses in their internal reporting and controls which obviously is not is not great
Starting point is 02:59:57 to from like someone who would be a prospective investor looking at that. And so some companies just like to do it a little bit earlier to make sure that there's none of that ahead of when they actually file. Yeah. Any questions? You got one? I just want to have you back on the next time a big S1 drops. Yeah. I'd love for it to be a regular appearance. Yeah. This should be awesome when you drop a new deep dive. And I still, I definitely want to know deep dive and I still, I definitely want to know, yeah, just what the next big S1 will be.
Starting point is 03:00:28 Is there a polymarket for this yet? I want to bet on that. That would be good, yeah, that would be good. And it might actually incentivize them to actually go public, which maybe isn't the worst thing in the world. I do want to leave with, I'm sure you've seen the Doordash memes about Klarna.
Starting point is 03:00:43 Oh yeah, yeah, Yeah. Please break that. Yeah. You guys a fun fact from the filing. So Klarna is registered. It has a good life bank license in Europe. And so they basically get deposits from people in Germany and Netherlands and and places like that. And so that money is being used to fund the interest free loans. And so basically what's going on is that the European savings
Starting point is 03:01:05 are being used to fund like the Americans ordering burritos. Let's go. I thought it was just incredible. It's like American exceptionalism at its peak. The American consumer is the winner yet again. Amazing. Undefeated. Nothing can stop the American consumer.
Starting point is 03:01:20 It's the most powerful force in the world. Yeah. Well, I mean, thank you so much for coming out. This is a wonderful chat. Give us a heads up when next time you drop in. Yeah, yeah. We'd love to have you on the same day. And it'll be awesome.
Starting point is 03:01:31 We'll slot you in. And I look forward to it. Awesome. Really enjoyed this. And thanks, family. And yeah, looking forward to the next one. Yeah, for sure. Awesome.
Starting point is 03:01:38 We'll talk to you soon. Cheers. Thanks so much. Cheers. Bye. Yeah, Ben, tomorrow's challenge to make the show 1% better is let the guests hear the sound effects so we don't just they're just saying like some You know
Starting point is 03:01:52 Normal thing and we're just cracking up. Yeah It's great. Well, we should close with this This timeline post from go cool Roger on This timeline post from Gokul Rajaram, he says, prediction one or both of Canva and Figma will enter the AI builder market in the next few months, likely with a product very similar to Bolt.new or lovable.dev, but tightly integrated into their existing products.
Starting point is 03:02:17 There is no way these two very smart companies will tolerate being disintermediated by this next generation of AI native companies, which are essentially verticalized builders, design plus engineering platforms. It also supports their stated strategy to democratize building. I say this with zero knowledge of the roadmap
Starting point is 03:02:35 or internal discussions of these two companies. You mentioned it on the chat with Andrew, but what's your take? Yeah, I mean, for me, as a Figma enjoyer and active user, it's always been very frustrating that I can design something in the app that's pixel perfect, that I can even mirror on my device and it's pixel perfect, but then I can't even get the simple functionality of,
Starting point is 03:03:00 I've got to go to Webflow or Framer or actually build it out in Vercell or whatever. And it's just always, it's such a natural extension for them and that's going to be the challenge for Bolt and Lovable because all the, they do some of the design side stuff as well where they'll use like templates or you can just prompt it. But there's something about the sort of precision design that end up being the most sort of like durable creative properties or the most durable websites are probably the ones that are actually sort of designed that the sort of high quality customers end up caring like a lot about precision design.
Starting point is 03:03:43 Yeah, I mean, I'm so excited for this because I feel like the business that we're building here with TBPN is great and cool, but it's not one that can really support a software engineering department. But we will have problems that can be solved by small apps and with this new wave of generative AI, with better tools from Figma and integrated AI building products,
Starting point is 03:04:10 we will be able to either personally, in a weekend, build something that makes the show 1% better or hire someone to work on that for just a weekend or a week or even have one person on staff that can actually build and maintain systems that speed up our workflows. And then of course some of those will turn into SaaS products that will wind up building and we'll just say, hey, yeah, the thing that we built internally, we're shelving it.
Starting point is 03:04:34 It doesn't matter if we built it in a few days. As opposed to previously, the idea of building custom software at a media company was crazy, right? It was a huge waste of resources in almost every scenario. So I'm really excited for this. I have a bunch of ideas for little apps I wanna build, deploy to my phone. I was reading a post from Andre Carpathi
Starting point is 03:04:58 and he was saying that he's now gotten to the point where even though he doesn't know how to program for iOS, he was able to vibe code an iOS app, deploy it to his phone, and he doesn't need to go. World's most talented programmer. It's like, you probably learn it in a weekend, let's be honest. Or in an hour. But he was saying he could kind of program in languages that he was familiar with and still deliver in iOS, get it running on his phone.
Starting point is 03:05:23 And the really cool thing about that is that you don't, if you're a customer, a developer of one, for a customer of one yourself, you don't even need to go through the App Store. You can just deliver it directly to your phone. And so all of a sudden that opens up a whole new world of things that you can do that the App Store might say, hey, no, this is a violation, it's some sort of TOS,
Starting point is 03:05:44 or we need to review this. We can't change this. And by the way, it's gonna take you two weeks to approve this. You're gonna be able to just say, hey, I have an idea. I need it on my phone. Boom, the next day it's there. And so I'm really excited about that.
Starting point is 03:05:56 Anyway, great show today. Thanks for everyone to tune in. Do we wanna read our review? Oh yeah, we have a review. I'm gonna pull it up. I think you're the best at reading these. I got a review with an ad in it. And this is from. We love that.
Starting point is 03:06:09 Pamelawn. It says, the espresso martini of podcast. TBPN has immediately become one of my favorite listens, awesome guests and great conversations. Also incredibly bold for being the first US podcast on a 996 schedule. Thank you. One thing to improve, I have no way to get notified
Starting point is 03:06:24 when they drop the TBPN branded Italian suede driving slippers. They should get set up on Laylo, which powers drops for the world's biggest creators, musicians, and live events. Other than that, Great Show, I've been. Laylo.com, the drop CRM. We actually, 100% at some point, will have Italian suede driving slippers.
Starting point is 03:06:43 So go to Laylo. is it Lalo.com? Lalo.com, shout out. Great domain. We will pump the stock, go to Lalo.com folks. And this business just makes a lot of sense. Drops are the sort of default model for the internet. It's what the internet likes. So building a tool that sort of
Starting point is 03:07:01 lands around that. It's a hassle to do a drop. If you're not set up, and even if you have a Shopify store, you're like, okay now I have one skew that's only gonna be up for a couple days. It's like it can be a hassle So I mean I use the product available too soon. It's a great idea And I'm happy that they wrote this in and sent us the message because I'm gonna check it out Yep, and it seems like there's been a test. It worked with Nicki Minaj rolling loud speedway motorsports. We love cars Porter Robinson's great outside lands. Yeah. Thanks for thanks for writing in this is very office crushing it Lalo comm go do it and
Starting point is 03:07:35 Thank you for listening today. I'm excited for tomorrow. Yeah, it's fine. Bye. Yeah. Cheers. We'll see you tomorrow. Bye

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.