TBPN Live - Tesla Robotaxis, Saudi Arabia, AI in Big Tech, Art Market Update + Guests

Episode Date: May 13, 2025

TBPN.com is made possible by:Ramp - https://ramp.comFigma - https://figma.comVanta - https://vanta.comLinear - https://linear.appFigma - https://www.figma.comEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.com Numeral - https://www.numeralhq.comPolymarket - https://polymarket.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(02:39) - Tech Takes Over Saudi Arabia (22:35) - Tesla's Robotaxi Timelines (40:38) - Big Tech's AI Midlife Crisis (45:23) - Dylan Abruscato. Dylan is the creator of Crypto: The Game, an on-chain survival game that blends gameplay with crypto-native mechanics. He’s known for pushing the boundaries of interactive web3 experiences. (59:34) - Jared Madfes. Jared is an investor and writer who has become an online correspondent on Saudi Arabia’s growing influence in tech and finance. His commentary blends humor, geopolitics, and startup insight. (01:14:04) - Sam D'Amico. Sam is the founder and CEO of Impulse Labs, a company developing battery-integrated induction stoves that combine high performance with grid energy storage. With a background in hardware engineering at companies like Google and Oculus, Sam is leveraging his expertise to revolutionize home appliances and drive electrification. (01:32:33) - Vincent Weisser. Vincent is the co-founder of Prime Intellect, a decentralized AI platform that aggregates global compute to collaboratively train and co-own advanced models. He helped lead the development of INTELLECT-2, a 32-billion-parameter reasoning model trained through globally distributed reinforcement learning. (01:47:30) - Maneet Khaira. Maneet is the founder and CEO of Backbone, a company specializing in mobile gaming hardware and software. Backbone is best known for its Backbone One controller, which transforms smartphones into portable gaming consoles, and its companion app that integrates with services like Xbox Cloud Gaming and PlayStation Remote Play. (01:59:48) - Aaron Ginn. Aaron is the co-founder and CEO of Hydra Host, a platform providing decentralized, bare-metal GPU infrastructure for AI and high-performance computing workloads. (02:36:06) - Dan Gray. Dan is the Head of Insights at Equidam, a platform specializing in startup valuation. He is also a frequent contributor to Crunchbase News, where he shares his expertise on startup valuation and fundraising trends.

You're watching TVVN. Today is Tuesday, May 13th, 2025. We are live from the Temple of Technology, the fortress of finance, the capital of capital. We are wearing pit vipers today. Chris, the founder and CEO of pit vipers, set these to us. These look perfectly on brand for us. Yes, they look very on brand. They're fantastic. And I'm going to take them off because I can't see very well. Yeah, it is. But thank you to Chris for us. Yes. They look very on brand. They're fantastic and I'm gonna take them off because I can't see very well Yeah, it is. But thank you to Chris for sending them over on the set. Anyway We got a great show for you guys today folks. We're talking Saudi Arabia Technology has taken over Saudi Arabia all of our hardest hitters all of the absolute dogs of Silicon Valley have

crossed the Atlantic Ocean and bring our technology to the Middle East. Yes to Riyadh. So we'll cover that, talk about what's happening, why folks are there. Alex Wang's there, I saw Alex Karp there, bunch of Alex's in tech there out in Saudi Arabia. Jensen Wong and Nvidia's announcing stuff, different trade deals going down, bunch of interesting things happening. Then we're gonna talk about Tesla's RoboTaxi timelines, what's going on with their RoboTaxi launch.

It seems like they've made some setback. There's an article in the information that seems to make it all doom and gloom, but I didn't like one of the quotes that I saw in there, so I wanna talk about it. Truth Zone. Truth Zone. And there's also some stories about just how big tech is grappling with artificial intelligence

Generally there we've been talking about this a lot the innovators dilemma the problems of trying to build a product when you're a massive Tech company even though you have all the resources possible. You're still struggling to get something to work Why Zuck started doing to Jitsu and then last year? Yeah, so you could This is why Zuck started doing jujitsu. That's that point last year. So you could really. They're one of the companies that's doing okay, but the rest are struggling, I think. But we'll dig into it. The art market, we say it's absolutely ripping.

There was a big sale. It wasn't quite where people wanted it, but we'll break it down for you because we know that you need an update on what's happening in the art market. And then we are gonna hopefully talk to somebody who's out in Saudi Arabia. It's going to be like midnight or 10 PM their time, but hopefully we'll be able to get on a call with somebody in Saudi Arabia,

breaking down what's exactly happening with all the technology folks who are out there in Saudi Arabia. And then we got a great lineup of founders and investors and analysts to take us through the stories of the day. So let's kick it off First of it Trump has lift lifted sanctions on Syria and touts deals in his Middle East tour This is from Riyadh president Trump has decided to lift sanctions on Syria giving the country a financial lifeline after a lightning campaign Over through its decades-long dictator last late last year I will be ordering the cessation of sanctions

against Syria, Trump said during a foreign policy address in Riyadh, his first stop on a four day swing through the Gulf. I wonder where else he's going. We'll have to figure that out, track him. Cutter, right? Probably. I'm gonna be surprised.

I'm assuming they wanna give him the jet. Yeah, he's gotta go check it out. They can't just fly out to him. These things don't fly themselves. Yeah, and even though it's a gift, it's such a meaningful gift. It's such, you know, he wants got a can't just fly these things don't fly themselves. Yeah, even though it's a gift. It's such a meaningful gift It's such you know he wants to make sure he wants to you know He's not gonna take the gift sight unseen Trump is going to break the bottle of champagne over that new plane Yes, that's he's not gonna let he's not gonna delegate that he's not yeah

No way there are things you delegate and there are things you do delegate yes, and he's in founder mode on that one He's not in manager mode. That's right Now it's time now. It's their time to shine. We're all we're taking them all off The announcement sets the table for Trump to speak with the new Syrian president Ahmed al-shara on Wednesday in the Saudi capital Which the White House has billed as a quick meet and greet that like the the structuring of these deals like oh I asked him to call me and I he didn't call me of these deals like, oh, I asked him to call me and I he didn't call me. It's not a request that you request a meeting with us. That's the key to maybe maybe we should port some of that back to venture capital. If you're pitching a VC request that they request a meeting with you.

If you're founder, you're going out raising your series B. Hey, Andreessen, I would request that you request a meeting with me. I would request that you reach out to me cold. Yeah, exactly. With a preemptive term sheet. I would request that you preempt my round. Yes. I always think it's good that the way that founders will message rounds. It's like they'll be raising for two months

and then they'll be like, yeah, we were preempted. Exactly, exactly, yes. Buddy, you've been raising for weeks now. Like you've been taking meetings with investors, getting a tariff sheet is not- The preempting branding, I mean, I know a friend of ours who said that to me at one point. Also preempting on a pre-seed is hilarious

What are you preempting? You were gonna bootstrap. Yeah, we definitely weren't ready for yes He'd yeah, we weren't ready for pre-seed. We weren't ready yet. They just totally jumping ahead on the value Yeah, we were really going for more of a friends and family, you know, once somebody, you know, once this pre-seed fund Yeah, offered a hundred K. Well, yeah, we felt yeah, maybe we're okay with getting preempted. You know, it's become such a meme to use the preempting thing. I feel like the next stage is putting in the press release. I mean, like we announced, instead of,

you know, we announced a seed, seed plus, A, B, all of these rounds have kind of shifted around, so an A is now the size of a B or whatever. You should just announce, hey, we're announcing a preempted series A. And just put that on the news wire. Yeah. Or companies should just announce

that they're in advanced talks. That works too. Like just say like, yeah, we're- Call the press. I mean, that's basically what a company, it seems like if sometimes a fundraise will leak and it's like, okay, this company is in advanced talks. Other times you can tell it's the company itself.

Just like going to the press and being like, we are in advanced talks. I love this segment because we were like, let's talk about what Trump's doing in the Middle East in two seconds. Let's bring it back to early stage technology investing. Because that is- I really don't care that much about this story.

I really don't. I'll dive in a little bit. So- Okay, yeah. There's some interesting stuff here, but it's- Trump's remarks capped an eventful first day of his Middle East visit. He signed 300 billion in investment deals. Let's see here.

We love 300 billion. With Saudi Arabia with an eye toward doubling the total within four years, I believe that the White House was highlighting $600 billion. Where does that even go? Is that us investing in them, them investing in us both ways? One hand watches the other, I assume. Who knows?

Why don't you figure that out? I mean, I think it's primarily in the US. That's what Trump cares about. He heaps praise on the kingdom's crown prince, Mohammed bin Salman, promising that we will always be friends. Yeah. I mean, this is one of those things where like.

He announced. He also encouraged Riyadh to move towards normalization with Israel as soon as it's ready, even though war rages in Gaza and Palestinians are no closer to self-rule. The fact that you restrained yourself on the soundboard when we had the secretary of the Army on, this is a really, it's a safe show.

He would have loved it. In hindsight, he would have loved it. In hindsight, he would have loved it. Public company CEOs, presidential appointees, really the most important decision makers in the world come on, and they all get sound effects equally. Yeah, yeah, I really need to adopt an equal opportunity.

Not just with the friends. You hit those, it's very clear who you're friends with. Yeah, Tish yesterday was, you could tell he was just, like it really meant a lot to him. Yeah, feeding off the energy, it's great. But I think it's universal. I think everyone loves the soundboard effect. So yeah, let's try and space it out today.

Try and hit everyone. This article is extremely politically charged. Yep. I'm gonna read this next point. Still the main message of the first day is that Trump values the transactional nature of US Gulf relations. As long as money pours into the American economy, the US will remain engaged and close to the region. He just said we will always be friends. Like he just said, we're boys. MBS, we're boys.

And now this journalist wants to say that it's just about the money? I mean, come on. Come on, give him some credit. You achieved a modern miracle the Arabian way, Trump said of the Gulf's oil-rich monarchies. The Gulf nations have shown this entire region a path towards safe and orderly societies with improving quality of life, flourishing economic growth, expanding personal freedoms and increasing responsibilities on the world stage. Trump's stop in Riyadh was always billed as a glitzy spectacle, but few could have predicted the warmth displayed between the two leaders and the nations they lead.

But few could have predicted the warmth displayed between the two leaders and the nations they lead Trump's visit to Riyadh kicked off with a Saudi F-15 escort as Air Force one touchdown at King Khalid International Airport on Tuesday Drums boomed and horns blared as the crown prince the country's de facto ruler greeted Trump on a lavender colored carpet Rolled out beneath the American plane. It really rolled out the lavender carpet for him There it is Then they walked into the airport for a private ceremony lined by waving us and saudi flags to welcome the president and many of his senior officials Including secretary of state marco rubio and defense secretary pete hexeth a former andres and horowitz partner

Sri ram krishnan. Yeah, I hope he got a chance on the carpet. He got a bunch of photos. He's a heavy hitter over there. It's amazing. Heavy, heavy. He loved it. Very cool. And again, they clearly understands.

They understand that Trump loves showbiz. And so the more that you can lean into that, the better the relations you'll have with the US. Yep, Elon Musk is there, FIFA President Gianni Infantino is there. Trump landed in the Middle East transformed by nearly two years of war which responded with a devastating military campaign

that has killed tens of thousands of people. Trying to shut it down, trying to bring peace to the middle East. Yep. It's rough. Um, anyway, we should go to some of the other announcements that relate to this. So unusual Wales has a post that, uh, US and Saudi Arabia agreed to $142 billion in defense sales. You have to imagine that that's important to defense tech one way or another, although we haven't seen a lot of stories about this most of the stories that we've seen out of defense tech have been around

Ukraine, but I was wondering If we're going to see you know the story of Nero's the drone company. Yeah, how a Soran great name He went out to Ukraine he's one of he's he's literally the world champion in FPV drone flying. Have you seen this? So drone racing, drone racing. So, so he's, he's incredible pilot. Like you, you go out and you think, oh, he's going to fly the drone.

And it's like the most intense whipping around a tree is crazy. Uh, so he went out to Ukraine and was helping train drone pilots there to use drones as weapons basically comes back builds a company around it. It's an incredible story raises from Sequoia obviously lots of lots of competitive dynamics with and roll and stuff. So a lot of questions and a lot of problems I need to solve but still like an incredible story of like going and getting experience on the ground as a young technologist and then going and building the exact thing that they need,

and then eventually selling it to the Ukrainians. But we haven't heard those stories as much from Saudi Arabia or the Middle East. And I was also wondering with the India-Pakistan conflict if there was going to be a Neurose type company that grows up out of India. Obviously there's a lot of folks from India who work at Andoril or who work in DefenseTech or even don't even come to America but want to work in DefenseTech. It'd be interesting to see someone who

cuts their teeth in the Indian Pakistan conflict then build a company out of that and that's something I'm like tracking right now. Didn't have that much time to cut their teeth. Well yeah, cuz it was very very short, but still I I like and America the whole time was like weird It hands off on this like we're not taking sides But if you look at the actual numbers America has kind of taken a side in the sense that just in the last year America has sent five billion dollars worth of military Equipment to India and zero to Pakistan. And so the numbers are pretty clear. And when I see $5 billion, I don't see,

okay, yeah, there's a generational company to be built right there for American, and a role for America for India or whatever. That probably doesn't make sense. But is there someone, like an entrepreneur who could go over there and get one contract done for 10 million and then take those learnings from that unique Conflict because I'm sure it's different from other conflicts and then build a real company around that

That was something I was kind of tracking but and I've heard some folks saying like they want to build like the end Roll for India and that'd be interesting to track but haven't seen that actually happen yet. Anyway back on Saudi Arabia Saudi Arabia brought in a mobile McDonald's for President Trump on his visit. Incredible. And it's just like a portable McDonald's. Like his reputation precedes him. What an inciting that looks like. It looks nice.

Not just any old McDonald's. Yeah, that looks like top tier McDonald's. Pretty sweet. And then Vittorio kind of summed it up all in one post here he says Trump Elon Sam Altman Jensen and Saudi royalty this might be one of the most important events of the decade Trump signs the peace accords sets up the largest bilateral deal in history Elon brings autonomy solar grids orbital access Sam Altman brings AGI and Stargate infrastructure Jensen brings silicon and compute Saudis bring capital land and energy this is how post-scarcity begins Sam Altman brings AGI and Stargate infrastructure. Jensen brings Silicon and Compute.

Saudis bring Capital, Land and Energy. This is how post-scarcity begins. Compute for carbon swaps and desert solar powering AGI. Fabs instead of oil rigs and starship landing pads on Arabian sand. Petaflop replaces Petrodollar and Sun replaces oil. This is the birth of a post-Western, post-scarcity, post-democratic world order.

Interesting take, Vittorio. Let's hear it for Vittorio. Let's go! Which is the most aggressive take possible out of like, something that they described as like a meet and greet. And they're like taking some photos, but you know? I mean, yeah, you gotta- I think it's directionally correct that there's like-

Imagining the- This is the beginning of partnerships and the continuation of partnerships because obviously Saudi Arabia through Investments as exposure to a lot of these and you know, there's been discussions here It's not like all of these deals are gonna get signed today, but I like that. He's putting a pull on it He's saying we are entering post scarcity today. I like some even even post-democratic. Yeah, right Yeah, laatorio, thought-provoking to say the least. There's some other. We should talk about specifically the Nvidia thing.

The Nvidia deal, so I'll pull this up. So Humane and Nvidia announced strategic partnership to build AI factories of the future in Saudi Arabia. We're hearing the AI factory term again. Humane is the AI subsidiary of Saudi Arabia's public investment fund, PIF. So they're making a major investment to build AI factories powered by hundreds of thousands of NVIDIA's

most advanced GPUs over the next five years. NVIDIA will work with Humane to train and empower an AI ready workforce. Sounds awesome. When did Jensen start calling data centers, AI factories? I don't know. And I wonder if that came from him or it came from the media. But it does seem like a more general term,

like anyone can understand AI factory, like everyone in this factory. Data center is very, it's like are you just storing data? Yeah. All right. Add another one trillion to the market cap I've seen it The projected capacity for one of the first factories is 500 megawatts, which is not massive by American standards

But it's up there and that will have several hundred thousand and video GPUs over the next five years the first flip first phase of deployment will be a 18,000 cluster 18,000 GPU cluster of Nvidia GB 300 grace Blackwell AI Supercomputer with Nvidia in Vinny band networking and they really like the jargon in here And Nvidia popped on the news. They're up another five percent today back 3t club. Let's get some soundboard for them.

That's fantastic. SIZE GONE. That's really good. Here's a good quote. This is what we were talking about. Here's a good quote from Jensen. You were talking about the path to the biggest company on polymarket, how it was a race between Apple and Microsoft.

And we were like, yes, that makes sense. But the one company that could just absolutely pop would be Nvidia. If it was a wild card. Yeah, Microsoft is still. yeah, of course, of course But but like if Nvidia does a couple more huge deals out of nowhere all of a sudden it's good it's funny because the gap between Nvidia and Microsoft's is like 200 billion dollars. Oh, that's it. I thought it was like a trillion dollars 200 billion dollars. There's just not they could close that in a weekend.

Yeah, yeah, that's just like a one swing. Here's a good quote from Jensen. Jensen says, AI like electricity and internet is essential infrastructure for every nation. Together with Humane, we are building the AI infrastructure for the people and companies of Saudi Arabia to realize the bold vision of the kingdom. So anyways, big news.

Another 28% to be the largest company by the end of 2025. It's Microsoft at 37%, Apple at 31%, and then Nvidia at 28%. And the market caps are 3.33 trillion versus 3.17 trillion. Wow, yeah, doable, doable for Jensen. Couple deals, and he makes it happen. Yeah, interesting.

I wonder what they'll be training. I mean, they've done Falcon 9B. I haven't heard more about their LLM development. Are they okay being a buyer of OpenAI and Anthropic and the other foundation models, or do they really wanna own their own? If they're really close with us and they are boys, right? Like, you shouldn't care.

It shouldn't be that big of a deal. Should be like, yeah, that's fine. I don't care if I use an American LLM. But we'll see where they go with it. Anyway. We will see. Alex Wang was over there. He said, good discussion on AI leadership

with President Trump and my colleagues from across the AI industry. Shaking hands emoji. Thank you to our Saudi hosts as well. Seems like he had a great time. And Elon Musk posted a eight minute interview from the Saudi US investment forum. And there were some details that came out of here.

I don't know if we can play this video. Do we have audio for this? Imagine the tension between Elon and Sam. Yeah. To celebrate a US Saudi and a Saudi US relationship that is 92 years old about how we move from an oil-based economy to an innovation-based economy powered by wonderful technologies that definitely you're one of the pioneers in this industry. We just showed to His Royal Highness some of your optimist robots and to President Trump.

Let's talk about that. Tell me about them. Yes, so we just showed several of our Tesla Optimus robots to His Highness and President Trump. And I think they were very impressed. In fact, one of our robots did the Trump dance, which I thought was pretty cool. YMCA, yeah? Yeah, to YMCA. So, yeah, robots can dance, they can walk around, they can interact. I think we're headed to a radically different world.

I think a good world, an interesting world, my prediction actually for humanoid robots is that ultimately there will be tens of billions. I think everyone will want to have their personal robot. You can think of it like as though you had your own personal C3PO or R2D2, but even better. Then who wouldn't want to have their own personal C3PO or R2D2, but even better, then who wouldn't want to have their own personal C3PO or R2D2, that would be pretty great. And I also think it unlocks an immense amount of economic potential because when you think about

what is the output of an economy, it is productivity per capita times population per capita. Once you have humanoid robots, the actual economic output potential is tremendous. It's really unlimited. Potentially we could have an economy 10 times the size of the current global economy where no one wants for anything. There's sometimes an AI that talks about universal basic economy. I think it's actually going to be universal.

No one's clapping in the actual audience. Yeah, it was kind of low energy. Come on guys. Where's your soundboard? I was falling asleep. Saudi US investment forum stepping up guys We should stay on we should stay on Elon and talk about the test. What would a taxi stuff should Tesla get? Credit for those tens of billions of humanoid sales today Because I don't think that's priced into the stock. It's not good is not quite pricing it. It's pricing to figure right? Yeah, 38 billion. You got to

think that that figure is priced in for sure. But if I'm looking at Tesla, I mean, you know, you're like half joking, but they're really back over one trillion. We're so back. It's so crazy even so you could buy Tesla at 227 dollars a share a month ago less than a month ago. It's at 335 today All it took was giving up the doge dream terrible time to be a techno pessimist It's really awful anyway I, I do think the Tesla story

is interesting because there are two narratives right now that are kind of rivaling. Like you're joking about like, are you pricing in all $10 trillion worth of GDP or whatever that they're going to add? But I do think that there are a significant number of investors that are saying, I'm investing because of optimists. And there are different set of investors that are thinking I'm investing because of RoboTaxis. Because these are the two major transformative technologies that if they work will be big new markets, right? And Tesla's working on both of them,

but there's questions internally about timelines on each of them. Optimus obviously seems farther out, potentially bigger market even. And then also there's like reports of like, how far along are each of the technologies? How are the teams actually doing on this stuff? But the thing that I keep coming back to

and the thing I wanna dive into is just, there's a lot of negativity around Tesla, like missing deadlines or, oh, the robots are actually tele-operated or whatever. But I think it's always useful to step back and benchmark against what else is happening in the market. Because, um, like the idea of a robot that dances is not science fiction. Like we've seen it with Boston dynamics. We've seen it with unitry.

And it seems like the question is not, can Elon build a robot that dances that's as good as unitry or as good as Boston dynamics? Like that seems like pretty Commoditized right now should be able to do that. The question is can he Dominate the category and really scale up production to a point where the economic flywheel works It's profitable and the products are so much better that they're winning winning winning Just like in the heyday of Tesla The model 3 was winning like best car of the year

by car and driver, like a pretty nonpartisan group that was just like, yeah, on paper for the price, this is an incredible car, it goes zero to 60 in two seconds, so it's the plaid, and it's like under 100K, you could never get that performance for price ever before, and it drives itself. So anyway, the big discussions about

the Tesla RoboTaxi deadline, the information says the deadline is nearing and it's the start of a key testing phase that is uncertain. And so in Austin, Texas, there is a deadline that's just weeks away, but the company hasn't started testing its cars without a human safety driver as of last month, according to an engineer close to the testing and former employee.

That's a crucial step required before Tesla can launch the pilot service for customers. And so Waymo is going through the approval process for self-driving taxi services, obviously, all over the place. They're in Los Angeles now. They've been very successful in San Francisco. And there's clearly stages and gates to that rollout

where there's a human driver in, then you pull the driver out, and the car is driving around by itself at low speeds then at higher speeds and as you get approved you move forward and so Tesla has been training its most popular model the model Y in Austin since at least last fall according to internal emails Tesla employees are now testing the robotaxi service cars on supervised rides in which a human safety driver sits behind the wheel testing without a safety driver is the next step, although it's unclear when that will start. Much is at stake. Musk is

betting Tesla's future on robotaxi ambitions, which will initially rely on existing Tesla vehicles before using cyber cabs, the specialized vehicles without steering wheels. It plans to begin manufacturing next year. And making the cyber cab, that does not seem complicated because it's basically a model three without a steering wheel, it's like less parts. And it's all the same infrastructure. So like I would be shocked if they don't hit that goal

to make that because it's like paint it gold and you're good to go basically. It wasn't like a radical reinvention of what the vehicle is. Yeah, I mean, the most exciting thing was the doors go up, right? Yes, the butterfly doors are important exciting thing was the doors go up, right? Yes. The butterfly doors are important.

Yeah. The doors go up. Musk is also betting that Tesla can catch up to Alphabet's Waymo, which already operates a commercial robot taxi service in several US cities, but employs a different approach to training and operating cars, which we'll talk about. So when Waymo wants to offer its service in a new city,

it uses data from sensors on a handful of test cars to prepare detailed maps of each city so its vehicles can safely navigate the streets. The process took a decade to develop and can take at least a year to complete. In Austin, Waymo tested for about six months with the safety driver in its vehicles and six months without them.

Waymo cars don't yet ferry passengers on Interstate 35, but they are training on highways in California. Tesla, on the other hand, trains its cars mostly on data accumulated from existing Tesla drivers. Preparing to launch the service in Austin has forced the company to confront mundane operational problems like rerouting when cars get stuck and providing customer service. Essentially, the struggles of not having a human in the car, the engineer said. Waymo and other competitors have spent years grappling with these

issues. Musk told investors this month the launch in Austin could include as few as 10 model Y vehicles. The company is looking to hire a team of people to work remotely using virtual reality headsets to supervise the cars when they encounter problems. So this is teleoperation, very normal, and also used in Waymo's. This is the George Hott's contention. It's never been confirmed, but he said Waymo's don't work when the cell phone towers go down, so you know that they're connected to the internet and you know that people are watching them. But the VR headset thing is interesting

because I haven't seen that as necessary. I always thought that when you had a teleoperation team working on self-driving cars, what you'd see is somebody had a big screen or series of screens and they would be looking at maybe four cars simultaneously and it would have kind of like green, yellow, red and if it's green it's just cruising down a clear day on an empty street no problem but then it sees a cone that it doesn't understand it goes yellow and you can kind of look at it and then red is I'm really

confused I'm stopping the car now you need to of look at it. And then red is, I'm really confused. I'm stopping the car. Now you need to hop in and take over. And then you're not driving the car in VR. You're saying, hey, I've double checked as a human and I see no humans there. So you can go for it, car. Yeah, and it's not, I mean, at the end of the day, it's not unreasonable to think that Tesla rolls this out

and there is perpetually somebody monitoring every single minute that the car is operational. Why not? It's not that expensive. And it's not that expensive. And obviously, it doesn't work over the very long term, but it's fine as a way as a path to market.

And so the Texas Department of Public Safety, which oversees the highway, has not yet received an emergency plan from Tesla But said it's prepared for the launch such a plan would help emergency responders engage with cars if they fail to pull over Or if they block traffic such as other robotaxi services have done So it seems like the government's actually catching up to this thing the stuff and it's putting a plan in place to say hey Like we want this and people want this, but we gotta figure out what to do if this car freaks out, basically.

I saw a video, somewhat unrelated, but I saw a video of somebody figured out how to trap a Waymo. A Waymo had was using- How do you just put a cone on it and it stops? Yeah, so apparently a Waymo was in front of this guy's house. And so he went and just took tape and just put four pieces of tape around

The main sensor and so that the cars like on and it's like running but like and I was like me I don't support Abuse any type of robot that person's first to go when the yeah Yeah, the Terminator is not gonna look Kindly on that behavior Anyway, spot robots full self-driving could take over most of city driving on city streets FSD launched to the public in 2022 by last year more than 2.5 2.4 million cars were using it. That's a lot of data several Several autonomy researchers and engineers said musk's confidence in Tesla's ability to quickly expand its autonomous vehicles to new markets fails to account for the logistics needed to operate ride hailing fleets scales at scale. Yeah, whether they're driven by a human or computer. It also glosses over some of the regional differences such as traffic light and lane design that have slowed other companies that they try to scale.

key thing we'll go into but this is like the really really important it is a very very important underlying strategy to the way Tesla is approaching this versus way now so Tesla receives video clips from a from an array of cameras mounted around its cars and processes them at a cluster of supercomputers which it calls dojo a primary goal is reducing the frequency with which a human has to intervene in the cars driving this was called on policy learning versus off policy learning And so you the cars driving itself whenever the human interacts to take the steering wheel or apply the brakes that's sent as a negative Reward to the to the neural network to say hey whatever you did there that was wrong The human didn't like it and so go back and do more of the driving where the human isn't taking over

And and you get a lot of data on that, you build a big transformer network, and eventually you get a very strong machine learning model essentially. So the computer systems handling the data learn differently from humans and sometimes stumble over issues that would be obvious to people, the engineer said,

like this is obvious, we've seen this with hallucinations with LLMs. The development has at times relied on feedback from Musk and from youtubers driving the semi-autonomous modes who map out parts of the roads in San Francisco in Florida where the cars struggle Tesla soul this is citizen Yeah training

Tesla soul reliance on cameras rather than laser and radar based systems in Waymo means its autonomous approach is more prone to mistakes, critics say. Cameras only is not enough and likely will never be enough, says Seton Mersili, the co-founder of the autonomous trucking and logistics companies, Locomation and Atlas Robotics. Tesla's approach doesn't work, period, said Missy Cummings, an autonomous vehicle researcher at George

Mason University, computer vision is simply not enough for this task. And I completely disagree with that betting against Elon Musk. It's not just that it's betting against it's betting against the way humans do driving like humans don't have LIDAR, we just have vision and we drive fine. And so I've never I've never buy I've never bought this argument, this line of reasoning that you definitely need something more advanced than just a camera

because humans are able to drive. 18 year olds can drive, 16 year olds can drive. And yes, you obviously need to create something that's human level intelligence and very, very capable and you need a huge amount of data, but there's, there's nothing like this is such a reputation director of the Mason autonomy and robotic center. Yeah. And I, and I understand where she's coming from. She was a naval pilot in the eighties. Yeah. I mean, I understand where she's coming from in the sense that like right now LIDAR and radar based systems and

GPS based systems are seeing better results right now, but to just throw out the bitter lesson and disrespect scale is all you need is a really, really tall order that's been wrong many, many times. And so it's, it's a very risky position to be in. And, and I don't, I don't think it'll pay off well. And the whole theory of the scaling laws and the ideas that you want to, that you wanna just get a whole bunch of data

and crunch it down into a huge transformer essentially has proven correct many, many times. And it also puts you on a different path to scaling because as, if you have a system that's more hand coded, more customized based on the particular locale, every time you go into a new city, you need a new team to spin up new records and scan and whatnot and do all these things.

Yeah, and her broad point is that laser-based LIDAR systems also make errors like computer vision is making today, but it's just that layer of redundancy that allows you to avoid mistakes that pure computer vision systems are making today. It's just a very strong statement to say camera only will never be enough because it's literally enough right now in a human. And so I just don't I just don't buy

this line at all. I just think the timeline to actually scale this up is long, it's gonna take a long time. But but the idea that you will never be able to operate a car safely, which is camera is ridiculous to me anyway. Her analysis last year of Waymo crews and and Zucs and other testers found that computer vision systems are very brittle and likely play an outsized role in crashes in part because they miss obstacles and can hallucinate imaginary obstacles that don't exist. This is what I was saying, if you add that LIDAR system you can add

redundancy and so it's just another effectively you know check on the pure computer vision approach. It's difficult to gauge safety of either approach because Waymo's developments are still limited to specific cities and Tesla's system is not yet fully autonomous. Federal regulators are examining how Tesla cars handle relatively common traffic occurrences such as sun glare fog and airborne dust which is legitimate. Musk has countered doubters by saying that humans manage to drive with only their eyes. Got him.

But acknowledged last month that Tesla's robot taxi services won't work in snow, prompting some followers online to offer to help train Tesla by driving more in poor conditions. They're just like, I will do it for you. I volunteer as tribute. I volunteer, Musk. Musk also said it's been difficult to train on enough incidents to make sure

the cars can handle them safely because if the Teslas don't get into a lot of crashes, there's not a lot of data there. If Elon can add the Tesla camera system to a Lamborghini Storado, That'd be great. I'm happy to put 5,000 miles on it in harsh winter conditions.

Yeah, yeah, yeah. At this point, summer's approaching, probably need to take it down to Australia, but doing a road trip through the Australian winter sounds great, actually. Yeah, yeah. I mean, this also ignores simulation learning and transfer learning, which is obviously something Tesla's invested in a ton and has a very proven proven track record

There was a researcher from Nvidia at Sequoia's AI Ascent talking about transfer learning and how they're using Generative AI to generate essentially video from the simulated data. So they'll create a physics simulation, basically a video game, a robot picking up an orange or something like that. That's a physics simulation. Then they'll create a ton of variation

in the different physics properties, to try and inject a lot of noise into the system basically. But then they'll use generative AI to convert that into video feeds that then they can feed back into the system to train on and they've seen a lot of success with that and so I'm Skeptical that that that this is that big of an issue

But also like you could just put lidar on the cyber cab like it hasn't been built yet And if the price comes down you throw that on and then and then all of a sudden it's like. Yeah, Tesla, there's companies that Tesla could acquire that would immediately give them a message edge there. Yeah. Anyways, let's move on. Okay, well, there's some other commentary around this piece. With the Robotexing network, your Tesla will be able to earn money while you're not using it essentially paying for itself

It'll go it'll go to work. Just like you says Tesla Very bullish for buying a wild. This is big public company and tweet like this Don't use periods anymore. Oh, yeah, I saw Yeah, it's an interesting evolution. But periods are over. Done. And then Dan O'Dowd is another account on here pouring some cold water on the robot taxi launch. You can almost hear Elon's sigh of relief.

He now has his excuse for canceling Tesla's June robot taxi launch. It won't be long until Elon claims Tesla was totally ready, but the pesky regulator stopped him. Mighty convenient. Do you think Elon ordered NHTSA to send this letter? And so the NHTSA said- Get him a tinfoil hat. Get him a tinfoil hat.

And then Cole Grinde says, people say you should sell Tesla because it's hard to build a ride sharing system like Uber and Lyft, but little do they know Tesla already has over 20 million people using their app once the robotex II launches They'll be able to use the existing Tesla app for their ride sharing service This will allow Tesla to gain new customers through app downloads and cross-selling of other Tesla products once those members become come online I would not be selling here. I would be buying he's given some financial advice folks, but we aren't

and then Ramy who's clearly a Tesla fan his handle is Tesla explored says please send me a video of any other company that can drive me In New York in the rain door to door without any interventions. I didn't need to be in the car I could have easily been in the backseat of my own Tesla robotaxi and the result is that it took me to lunch autonomously, so he's a fan. The level of conviction from some of these Tesla fans is incredible. It's similar to the level of conviction around- It's even beyond our little corner of tech, right?

It's an entirely new level. But I mean, we see this with other companies. Like we see this with the word, Gramp fans. Like they go crazy. There's all those YouTubers. And they're people with like- People saying that they would defend ramp with their life.

Exactly, yeah. It happens a lot. Because like, I mean, they know that time is money and they want to save both. And so they create whole YouTube channels all around just easy to use corporate cards, bill payments, accounting, a whole lot more, all in one place. They're just obsessed.

It's crazy. Seeing people get time is money save both lots of tattoos Lots of ramp tattoos out there for sure Oh, some people start whole live shows whole podcast just totally just to promote ramp in service in service of devotion Yeah, they calmly you know, there's like the Tesla Roddy. They like the ramp a Roddy Ramp a Roddy. Yeah, the Illuminati. Yeah, it's great We're like the ramper-oddy. Yeah. The illuminati.

Yeah. That's great. Well, if you're looking to go long Tesla, short Tesla, whatever your decision is, go over to public.com. Investing for those who take it seriously. They got multi-asset investing, industry-leading meals. They're trusted by millions. Thank you for the soundboard, Jordy.

Thank you to public. Should we talk about the giants of Silicon Valley, how they're having a midlife crisis over AI? This was an interesting post in The Wall Street Journal We talk about the giants of Silicon Valley, how they're having a midlife crisis over AI. This was an interesting post in the Wall Street Journal because it kind of all stemmed from an interview with Sarah Guo, who's been on the show. And so she did a podcast with the Wall Street Journal, bold names, venture capitalist Sarah Guo's surprising bet on unsexy AI.

And they did a nice little write up here. So they say, one minute you're upending established industries is the younger disruptor the next you're staring into the abyss eating glasses But as Elon Musk likes to say watching the disruption at your door Most if not all of the magnificent seven are in that position Weirdly trying at the same time to figure out the threat of our general artificial intelligence to their kingdoms That dynamic has been on display for the past few weeks. Alphabet stock dropped more than 7% after a senior Apple executive disclosed

that Google search traffic on its devices using Safari fell for the first time in 20 years. They've had Safari around for 20 years as a Google partner? That's crazy, it's so long. Google clarified it continues to see overall search growth, even from Apple devices, putting Apple in the truth zone. Don't knock our stock down, Apple. We're still growing.

For his part, Chief Executive Tim Cook is trying to buy time for his company pushing investors during his latest earnings haul to be patient with the iPhone maker's delays around AI features. Then there's's Facebook Mark Zuckerberg is attempting to Brain a paint a bright future for his ad dollar juggernaut as something of an AI buddy for the lonely That was kind of taken out of context from a door cash interview Did you see this door cash said something and they attributed it to Zuck? It's like every time so bad

Anyway, you're lonely. how about an AI buddy? Even Musk seems to be sweating things as he returns from his Doge Sojourn to Tesla, seeking to counter a slide in the electric car maker stock price with promises of deploying driverless cars. We're not on the edge of death, not even close, Musk told analysts recently. We love to hear it and we saw it in the stock,

over a trillion dollars now, not bad. His protests sounded like that Monty Python and the Holy Grail character about to be thrown on a pile of corpses. I'm not dead I feel happy. To be fair none of these giants are dead yet and they have lots of reasons to feel happy. They are widely profitable pillars of corporate America which we love to hear. corporate America. And together, they represent around $7 trillion in market value. You have the crossroads they all stand at collectively, and how they react individually look like ready-made case

studies for 21st century update to the classic business school book, The Innovator's Dilemma. On the Tesla note, people that were shorting Tesla over the last couple months, right? Sales of the cars have been abysmal. Literally every market is down like double digits. It's like so bad, just getting crushed by every other EV manufacturer.

They're having to sell cars clearly at a- No blackpilling, no blackpilling, no blackpilling. blackpilling no blackpilling no black. I'm not I'm not I'm not I'm just I just have to the this is why it never be a short seller because you could have looked at all the data for Tesla and said this where is the bottom here. I mean it's like where like why is Tesla you know and it's like Elon Musk don't betting against never bet against it's okay not to invest with him, but betting against him. That is a rough dangerous.

And again, that's like, it's like, are these, this is what we keep going back to it. Like the Trump tear things and stuff. It's like, are these things stuff he can roll back? Yeah. Like, okay. So what, what, what's going wrong with Tesla in this theoretical bad scenario? Well, like Elon's not spending enough time there, right? He's spending too much time at Doge

Well, can he quit his job at Doge and go back to be CEO of Tesla? Yeah, like yes, okay And is that what he did? Yes, and that's worth about 350 billion dollars. It's like some oh like the lidar isn't working like could he add lidar to his cars? Yeah, like could he map every city? Yes, yes could he you know there's like all these things that people are like oh he'll never he's not doing this impossible oh he's like he's over he's politically he's too right-wing like well could he come out and endorse Gavin Newsom like yeah could he live out he could yeah it's never too late anything's possible it's never too late. Anything's possible. It's never too late. Well, let's talk

about the art market. I wanted to have my dear friend Dylan Abruscado on potentially the most important topic to talk about the show. Important story of today and certainly potentially the week. Yes, I think so.

It's it's shaking up Silicon Valley. There's a lot of there's a lot of venture capitalists, a lot of exited founders, post exit founders, and a lot of technology journalists who have generational wealth who are at Christie's right now bidding on modern art. And so they'll want an update. So we're running up the price on the studio. Welcome to the stream. How you doing? Thank you for joining Dylan. Uh, Dylan,

it's great to have you on the show finally, long overdue. You've given us a lot of- It's been a long time since I've been a first time caller. A lot of great pointers. But anyways, we were gonna cover the story, so thank you for being able to hop on on short notice. Do you wanna give a quick intro

and then we'll dive into the story just so people have some context? Yeah, sure. I'm Dylan, founder of Crypto the Game which is an interactive crypto survival game. Think HQ Trivia where I worked with the Rise and Fall meets Survivor or Squid Game or Hunger Games. We've had a couple viral seasons and before that I was Jordy's head of marketing over at Party Round in Capital so we go way back and we're excited to be here.

Way back. Awesome, why don't you give some context on your background as an amateur, but successful art collector as well. Yeah, yeah. Because we're talking about art today. Always been an obsessive collector of things. Growing up, I collected Beanie Babies, Pokemon cards,

baseball cards, sports memorabilia, always collecting. Fast forward to, I don't know, probably like 2017, 2018, my wife and I moved into our first apartment together, had very sterile white walls and decided that, I guess, like collecting art would be a good way to kind of scratch that itch of collecting and be something that we could do together. So kind of just started as something we could do together.

I kind of browsed Instagram. Back then there was like a much more intuitive kind of like explore tab. You were surfaced kind of like art if you followed artists and And pretty much just cold DM'd this artist, also coincidentally named Jordy, Jordy Kerwick, whose art immediately spoke to me. Sent him a DM. He didn't have any gallery representation. He made, you know, buying a piece and commissioning a painting as easy as like texting with a friend.

You know, I think the art market historically has been so hard to get into for young collectors and there was zero friction in the way that we went about it. I think we got a little lucky in the sense that he eventually blew up, got kind of like gallery representation and tier one gallery representation. He was breaking records in similar auctions to what we're about to discuss. And kind of because of that, I don't know, I almost like made a name for myself in this like Instagram art community. And yeah, I've kind of just like catapulted

into the art collecting scene. How's the P&L though? On paper, I'm sure that the returns are fantastic. Have you ever, do you ever sell or do you just buy? I don't know, I just buy. I don't know. Everyone always asks kind of because of that, like what to buy and how to go about it.

And my advice is always just to buy what you love and buy what speaks to you. And it kind of sounds like pretty simple advice, but anytime I've looked at a piece or like had a recommendation from a friend or a fellow collector on a piece or had a recommendation from a friend or a fellow collector on a piece that was going to be a great investment or was gonna do really well, has never worked out.

And I've always regretted buying and having my wall and looking at it versus the stuff that we do buy and collect and do it for the right reasons and have always been rewarded on paper, basically, for those early bets. Yeah, great. Well, let's talk about this story and then I'd love to get your update

on kind of the broader art market. So we'll read through it. So the journal covered it this morning but the Mondrian sells for 47.6 million. Christie's Modern Art Sales kickoff a week long series of art auctions that will gauge the art market's strengths amid broader economic uncertainty.

People are wondering, will our values soar or flop or, you know, in general, what the liquidity will be like? So this was at the kind of low end of the estimate. The 1922 work composition with large red, plain bluish, gray, yellow, black, and blue was expected by Christie's to sell for between 40 million and 50 million, but only one bidder emerged and it sold quickly for 41 million dollars or 47.6 with the auction house's fees. The work still ranks as the third highest price ever paid for the artist, but the record remains 51 million paid three years ago from Andrean's composition number two.

Both examples feature a large red square which the auction house hoped would help because Collectors tend to pay a premium for Mondrian's spare Abstracts that contained cherry Hughes said Alex Rotter Christy's president red always helps simple as it is Because it's a people that color. It's a color that people like said Roger There you go. That's what Dylan's talking about It's also particularly small it's only about like two feet by two feet or something and so I saw on X Borno sore a

NFT profile picture says this tiny Mondrian just sold for 47 and a half million dollars last night without anyone batting an eye and yet people think AAA, natively digital grails are overpriced at two to three million, much, much higher. Kind of saying, hey, maybe we should pump the market of the bored apes. Yeah. Let's get bored apes in the conversation. Yeah. Let's get four days in the conversation. Yeah, let's get it back in the conversation Anyways

Were you surprised at how this this got priced Dylan? Were you following it at all or or what? I mean, there's a lot of like there's a lot of uncertainty in the overall economy, right? So yeah, I mean you would expect that like art kind of oscillates, but yeah I mean, do you follow this or like, how do you even track the overall art market these days? Yeah. I mean, it's exactly, it is so similar to, uh, you know, venture investing. I know you kind of joked about it at the top, but, um, especially when you look at emerging markets and if you buy from their studio in the same way that I did with Jordy Kerwick,

it's basically getting into a friend and family round. Um, at least with kind of like living artists and artists that still have gallery representation. If you do, if they do basically sign with an up and coming gallery, that's the equivalent of a seed round. And then by the time they do get that kind of like tier one Gagosian level representation is the equivalent to an entry

sin or a tier one fund, like backing them in like a growth stage round. But yeah, I think you referenced that kind of like Mondrian record that was set three years ago. There were emerging artists, everyone, basically at the time of Zerp, everything was going crazy. And we saw that both basically across every single market,

art notwithstanding. So I think the way that I personally judge it is basically just off of the information that I receive. In 2021, 2022, I was reaching out to galleries kind of cold and being told that there were wait lists and the deal flow was basically like very, very hard to come by. Fast forward to a few years from then, galleries were kind of reaching

out to me. Hey, I know you were initially interested in this artist a few years ago. Here's all this work that's available and willing to offer discounts. And that immediately signals to me that times aren't good for galleries. But I do think that the best way of predicting how these auctions are going to go are based on basically how New York Art Week goes. And that was this past week, which was kind of headlined by Freeze, but they also had Te Faf as well as NADA, which is kind of like the more emerging art fair. And from what I can tell from everyone that I've spoken to, that was kind of like on the ground. It was a much more optimistic New York Art Week than years past. Gagosian sold a $3 million like on the ground. It was a much more optimistic New York art week than years past.

Gagosian sold a $3 million sculpture on the floor. They sold that, you know, tons of boots that were sold out kind of like on day one. Yeah, we're here. I love a $3 million sculpture selling on day one. That's great news. Yeah, so I think like that usually sets the tone for how these kind of like auctions go

There's been a ton of buzz around the bass house I'm not sure if you guys are familiar with the bass house, but it was a commissioned Like we both are but can you explain it for the fans who might not be sure? Yeah It's an architecturally significant home in Texas that these two kind of like well-known collectors Commissioned a very famous architect to design this mid-century modern house in Texas that these two kind of like well-known collectors commissioned a very famous architect to design this mid-century modern house in Texas specifically designed to house their collection of Rothko's and Warhol's and you know pretty much every big name and they are auctioning off the collection which everyone in our market is very surprised by because you would think, you know, you commission this home to specifically house this collection, it should eventually become

a museum. And I think that kind of like bodes well for what they think and what a lot of people think is going to be a lot of liquidity kind of like heading into these auctions. Having said all of that, I would say if we had this conversation like a week or two ago, I think it would be a lot more pessimistic or concerned. But given the very like recent kind of like positive news and kind of like market turnaround, I think there's some buzz kind of heading into heading into tonight. Yeah, I have a follow up question. I mean, the size seems significant. I feel like there's probably a sweet spot for the scale of a particular you mentioned that

Sculpture we're recording not too far from the Broad you walk in there's this massive Jeff Koons balloon animal. Yeah, I Walked in when I was in New York once I walked into a Jordan Wolfson. I Don't even know if it's a sculpture, but it's like a performance art piece. I don't know if you're familiar with Jordan Wolfson, but it's like this crazy interactive, like machine that has motors and stuff. And at a certain scale, it becomes like, how do you even collect that? Unless you have like a museum to put it in.

Uh, that's fine. It is, is the institution. It has to be, like I would imagine, you know, the three million dollar sculpture that could go see and sold that I mentioned was a Coons and I, you know, wrote, bought their Coon sculpture from the goes in. And I would venture to guess that the bitter or the person that bought this three million dollar sculpture was an institution looking to build out their collection for the museum.

Yeah, it's different. I mean, yeah, I'm curious not to not to switch gears too much, but I'm curious, is Christie's even slotting in NFTs this week at all, or are they so over it that they're not even putting them? Yeah, because it was a big thing like three years ago. Yeah, I mean, you gotta give Christie's, some of these- So at least did the bee poll, right? Yeah, you have to give them

some credit for moving quickly and getting NFTs into these auctions early, but I'm curious if they're doing that now. So this week is kind of like the hero week of every year, and there's no way that in like a 21st century masterpiece auction you'll see an NFT, but I do think they are still accepting crypto and selling NFTs. All the major auction houses kind of have daily auctions that they're running. all the main major auction houses kind of have daily auctions that they're running. You know, you probably won't see a people in something as kind of like highly publicized as this week's auctions. But I definitely think they're still selling digital art for sure. Yeah. Yeah, there's

one NFT that I think belongs in the conversation. Have you heard of this Moxie Marlin spike NFT? So he's the founder of signal and during the NFT boom He wrote a very technical deep dive on kind of some of the flaws with the way NFTs were structured in that He he basically designed an FT that displayed differently on open sea than in a phantom wallet than in differently on OpenSea than in a Phantom wallet than in an Ethereum wallet and he was making this commentary around the importance of platforms and the role that a firm like OpenSea plays in the art market and how like the the code is not purely on chain because it can be represented differently in different places and and it was kind of this like it was kind of a top signal at the time he wrote it when NFTs were super hot.

And obviously he came to it from a very engineering mindset perspective. And I think that even though he never sold it and it doesn't have any value and it never like minted in the traditional sense, it is an NFT and it has this historical provenance and the story around it that I think as we look back on the NFT boom we could remember that particular story as an interesting commentary on the entire industry that could actually drive the value up so I was considering buying it from him for a while but I didn't have the guts to throw out an actual price. Yeah, yeah. Well, I do think similar to how there's paintings and there's sculptures and there's basically all

different forms of, you know, there's mixed media art, like I do think digital art definitely has staying power. Probably just like in the more experimental guys that you were talking about. And then just to quickly touch on like size as being a blocker, I think once you're talking about these like, you know, eight, nine figure pieces, it's almost always someone that can house or store either in their museum or in their home a massive piece. But just for the everyday collector or someone that might be listening to this, personally

speaking, I have gigantic canvases that are still rolled up that I have absolutely zero wall space for, but that is like an addiction and a problem. And I do think that, you know, buy for the size that feels right to your home and something that you actually wanna hang. Well, we're moving into a new studio very shortly and we're certainly gonna have some wall space. So we'll only charge you a small storage fee.

I'll pump my bags. As a family and friends. Anyways, great to have you on. Come back on again soon. Thanks so much. We'll talk more. And let us know how things shake out this week in the art market.

Oh, talk soon. Later. Talk to you later. I was just pulling up so open C. Let's bring in Jared, because he just has five minutes. And he's all the way from Saudi Arabia. Jared Mancos, Marks.

Reporting live. Reporting live. From. From Riyadh. Saudi Arabia, Jared Malchus, Marks. Reporting live. Reporting live from Riyadh. He's there on the ground. He better be in the traditional. In the traditional. Oh, we were expecting a suit. We were expecting more pageantry. Yeah, no, no soap from me today, boys.

But I am calling in from a non-disclosed location in Saudi. Can you hear me? Yeah Yeah, you sound great. You sound great loud and clear. Give us the breakdown. Why are you there? What's going on? What's the mood on the ground? Yeah, so I'm here mostly just to see friends. Okay But but beyond that there was an event today where there was a US delegation President Trump was there the Crown Prince Mohammed bin Salman was obviously there. And a slew of top tech leaders from the US also came. So we had Jensen Wong, Elon Musk, et cetera, et cetera.

You know, all the big names, you can look them up online. Yep, can we hear, yeah, yeah, I'm not this. In terms of the big headlines, look, you guys can look them up. The big ones are 600 million in new committed capital. Billion. Sorry, 600 billion in new, yeah, 600 billion new committed capital.

But I don't wanna talk about that at all. What is the most interesting thing from today is the fact that sanctions on Syria have finally been lifted. Now I know between the three of us, every time we get together, it's like when are we finally gonna be able to enter the Syrian market?

Well boys, that day is today. That's today. All right, so, yeah, no, it's today. Yeah, this is the day everybody's been waiting for. We should start distributing the show there, for sure. Yeah. No, 100%, a lot of people don't realize, look, Syria, after the civil war started in 2011, our companies have just not really been able

to serve customers there. So the Syrians don't really know the joy of US big tech yet. And you know, they missed the whole web 2.0 mobile development. So most of the groups that are servicing them are from the Chinese sphere versus the American sphere. And I am beyond excited for the new crop of talented founders that are going to descend on the Syrian country to spread them the joys of talented founders that are going to descend on the Syrian country to spread them the joys of American Big Tech.

So if anyone is walking and is going to be launching any number of companies in Syria, my DMs are open. I could not be more excited. Very cool. Wow. 23 million people in Syria. Go get them. Go get them.

23 million people, they've had double digit inflation for like the past decade, which means that they are a prime market for stable coin adoption. So every stable coin neobank needs to be descending into Syria and seeing how quickly they can dollarize the entire country. If anybody is using the Syrian pound in five years instead of US dollars on blockchains, we have just massively screwed up as an industry.

So please request for startups, we are looking to fund. That's very cool. What about artificial intelligence? Nvidia launched some stuff. Have you been hearing any rumblings about AI stuff going on? Yeah, look, the fact that Jensen was here today on the main stage shows that we are likely softening some of the restrictions on being able to export GPUs to the kingdom and other parts of the Middle East. I might have the numbers off, but I think there was an announcement that a purchase order of 18,000 GPUs has just been approved for the Kingdom.

If you're listening and that sounds small, not enough to build a hyperscaler or a massive cluster, you're correct, but this is clearly the first of many. The entire region is rapidly searching to turn their petrol-based capital into token-based capital in the future. So expect continued investment from the region trying to diversify out of their kind of one main industry. Yeah, Humane is, just for extra context, so Humane, the AI subsidiary of the PIF

is going to be purchasing hundreds of thousands of advanced GPUs over the next five years. So starting with, I think the number that you said, 18,000 and scaling there. And the first plant is I think half a gigawatt, right? Something like that. What's your take on, why do you think that we started calling data centers AI factories?

Do you have a take there? Is it just sound cooler? Yeah, it lowers your cost of capital. Yeah. And that's the most important thing that anybody can be focused on at any given point. Yeah, what is the word on energy? Obviously, with AI training, it makes so much sense

to put big data centers there. But at the same time, they're trying to get away from the, hey, we have a whole ton of free energy because we have so much sense to put big data centers there. But at the same time, they're trying to get away from the, hey, we have a whole ton of free energy because we have so much oil. There's also a lot of sunlight. So maybe there's solar in the future. What are the hot energy sectors that people are looking at? Yeah, so a lot of people are with regard to energy talking about a potential nuclear deal.

While there is an abundance of oil in the kingdom, burning oil to power plants is not necessarily the most efficient use of oil. I don't have the numbers off the top of my head, but if you look at the amount of oil that is burnt in order to air condition all the buildings in the kingdom, it's like an exorbitant expense. So some Gulf states are slightly more advantaged in that they have larger deposits of natural gas

versus crude or shale, which is just, you know, it's more efficient in terms of converting into energy. And with regard to solar, solar in the desert has not really taken off as much because my understanding is there's a lot of wear and tear that comes from the sand and that you need to build a series of protections and the elements are not necessarily kind and you know 130 degree Fahrenheit weather as sand rapidly batters them. So we'll see what happens but yeah obviously there's been a

bunch of companies that are super interesting like Crusoe I might be mispronouncing that they're doing things like capturing excess flare using that to generate energy at first to do crypto mining and now to run data centers. So expect there to be a lot more as Jordy put it AI factories coming out of the region. And there's a massive focus on on renewables and alternative sources as well to power these things, because people would rather sell their oil versus use them to you know, spin water turbine.

Yeah, that makes sense. Do you think you or Jensen go to more conferences? I really don't go to that many conferences, guys. You know, I'm about to hit my quota for the year and then I will retreat to a dark room instead of my laptop for the next nine months. Yeah, you do it right though. You do it right. You go to just the right ones.

We've been just like, not even intentionally, but paying attention to Jensen's travel schedule. And he's at a new conference pretty much every single day. But a lot of buyers. What's the rest of the mood around crypto broadly? Is there a push for Saudi Arabia to build a position in Bitcoin, kind of a Bitcoin national reserve from their public investment fund?

Are they into Ethereum, Solana? Is there even a thesis from the sovereign wealth fund around crypto or is it kind of just general hand waving around, hey, we want crypto to be friendly generally? Yeah, so the holdings of PIF are public, or P-I-F, the Public Investment Fund of the kingdom. As of now, there's no crypto holdings in that, except via funds that they're invested in downstream. In terms of if it is going to emerge as a crypto hub, that is still yet to be seen. Crypto is largely legal in Saudi.

What is interesting though is when you look at countries that have been super friendly to crypto in the region, mainly the UAE, there's a lot in Abu Dhabi. There's quite a bit in Dubai. The customers that they tend to cater are not born Emiratis, right? The number of Emirati citizens that necessarily will make use of crypto products in terms of giving them access to banking is fairly low, right? These are nations that are mostly staffed by emigrants, expats that are choosing to live there. But when you look at Saudi, even though crypto is legal here, there are some studies that show that in terms of Gulf region, it has the highest penetration from a individual user adoption space, just how many individuals are holding the coins.

So I think that as the regulatory framework fleshes out a little bit and as more and more voices inside of the Ministry of Finance and the central bank here grow louder, we should expect to see a softening of the rules. And then the end state of that is probably a pretty robust environment, specifically in the Kingdom. But remember, the people that can benefit from crypto the most are regions that have high levels of inflation, low levels of banking, highly mobile first in terms of payment infrastructure and things like that. And that doesn't necessarily describe all the Gulf states the best. So, you know, jury's still out on how much and how quickly penetration will come outside of just like investment speculation, which, of course, you hear rumors about tons of family offices here building massive positions, but it's just very hard to validate that. Yeah. With the new 300 billion, 600 billion investment, is that one of those things where the investment

was already going to happen and they're tagging it for this press release or what is the structure? Is there any clarity on like the structure of that deal? Is that just investment dollars flowing into American investment funds or specific buying of American goods? Do you have any clarity on what we're going to expect here? I haven't really broken it down yet, but I think the right way to think about it is it's going to be a lot of infrastructure investments and a lot of purchasing of American goods. Sure. Right. So when Jordi's talking about the hundreds of thousands of GPUs that are going to be acquired, that's, you know, the pool of capital

that that's that where that's going to be coming from. But no, I mean, they specified they want to invest in energy infrastructure, they want to invest in data centers, they want to invest in you know, ports. So I mean, it could even be like more oil rigs in the in the short term as they, you know, they're they're moving away from oil, but you know, they're obviously still producing a lot of it. And American companies have kind of a dominant position in the, you know, they're obviously still producing a lot of it and American companies have kind of a dominant Position in the you know oil and gas infrastructure market, so they might be buying for that Totally, so we'll see also a part of that is a massive defense spending bill. Yeah, our defense spending agreement I think it was 143 billion that they committed and You know just socially talking with some of the people from the Ministry of Defense that you ran into at the conference

They were like, oh my god. Have you heard of this company called Saranic? Have you heard of this company called Andrew? They're really gung ho on some of the non-prime upstarts coming out of the States. And yeah, I had like three different guys from the Ministry of Defense. They're like, hey, if you meet any founders building interesting new defense companies, refer them to us. We want to potentially pilot them. We want to potentially invest in them if we want to make a purchase contract. So yeah, it's an exciting time for sure. I would like to see somebody with a Daytona SP3

using it as a launch pad for a Roadrunner. So like you're driving the Daytona, launching the Roadrunner off the back. I mean, in terms of early stage founders, how early is too early to start engaging with someone as senior as a Ministry of Defense official? I feel like you need to have a product that can be demoed. But when we talked to the Secretary of the Army,

his message was very much like, we want to hear from startups even at the early stage. We have a proving ground. You can come test here. We want to work with Silicon Valley. That seems like it's certainly a vibe shift in America, but it sounds like that's happening over in Saudi Arabia as well. Absolutely. I mean, I mainly do not focus on defense,

so I don't want to say anything too out of turn, but I think post the Ukraine Russia conflict, people saw how important it is to have the most up to date equipment for the battlefield. So in the same way that a lot of companies immediately went over to Ukraine and Russia immediately went over to Israel following October 7th. There's probably an increased appetite to try all new things and see where it goes.

And if you have a prototype, it's probably better than not having a prototype. But if you have good contacts, it probably is a good idea to get in touch earlier rather than later. Yeah, I think oftentimes the conversations start, but no purchase activity can actually happen until the US has actually

Yeah, basically approved it and said this works. We'll buy it now. You can export it to allies But anyways, we don't need to get into what what itar what's the mood around the trade war? Generally, it feels like we're almost in like post trade war discourse. It's a distant memory at this point after Uh sunday and monday, but are people still thinking about tariffs or has the conversation just completely moved on? trade war discourse. It's a distant memory at this point after Sunday and Monday. But are people still thinking about tariffs or has the conversation just completely moved on? Yeah, the day opened with tariff conversation. So Scott Pesan started the day and it was very calming. You know, he got up, he talked about the negotiations with his Chinese counterparties. got up, he talked about the negotiations with his Chinese counterparties. He made some very interesting points around

how while President Trump and Xi had a very strong relationship, some of the people more junior in the CCP perhaps did not share his warm feelings towards our president. So he mentioned that a lot of the talks in Switzerland were about showcasing and building favor with some of the second and tertiary level folks within the Chinese government. And came out and was very much, we don't want to trigger an embargo on Chinese goods. We don't want to trigger a double embargo. So the tariff rates came down and talked about a number of other countries he's going to negotiate with. And it was very much a non-escalatory tone. And I don't think it's a surprise at all that the

US delegation chose to start the day out that way. So no, tariffs weren't really talked about after that because Besson kind of kept everybody at ease. We'll see how much that remains and if we continue to lay off and have more 90-day reprieves more agreements negotiated, or if tomorrow things ramp back up again. But for now, I think people were pretty calm. Very cool. Thank you so much for taking the time. I know it's late there very clearly. Thank you for just throwing on the suit just to pop on.

Just for us. Yeah, thanks for throwing on the suit. Every time. Every time. Great to see you, Jared. See you. Let me talk about Linear. Linear is a purpose-built tool for planning

and building products Let me get some soundboard Jordy meet the system for modern software development Streamline issues projects and product is the standard for product development. Yeah, it is the backbone The global economy of the global economy many people are calling just considering that big tech is Many people are calling, just considering that big tech is... This really goes on for a long time. It's still going on. Well, we've got Sam D'Amico from Impulse Labs coming in the studios. He's talking about stoves, but also trade tariffs, manufacturing.

I want to ask him about what it takes to build a BYD in America. And I want to know the history of BYD, what he's learning from that company. And I also want to get him to sign up for Numeraleral because I want him to put his sales tax on autopilot. I want him to spend less than five minutes per month on sales tax compliance. But Sam, welcome to the studio. How are you doing, Sam? Welcome.

Welcome, Sam. It's great to have you. Good to have you here. How'd you sleep last night? Better than you have for the last few weeks? Yeah, it was pretty good. I think I got the notification at midnight on, was it Sunday night or something like that?

And I was like, oh, sweet. I didn't expect that, but I did. And that's why I didn't panic. But they, and so for clarification, basically we, I guess Ashley Vance scooped this, that we do a decent amount of our manufacturing in China at impulse, which is the highest performance store you can buy. And you can go check out his latest video on the core memory YouTube channel if you want to learn more.

But the fun part about that is we probably spent a couple of weeks being like, Hey, do we have to pay this 145% tariff on a bunch of the stuff we build? Um, my immediate calculation was this will stop trade between China and the United States and a bunch of businesses will not like that. And. Feedback will land from everyone from Ryan Peterson to someone that makes Brad stalls to, I don't know. Everything. So, I mean, it's only a 90 day pause.

Are you trying to get as much stuff in the country right now? Are you scrambling to import a year supply? Or are you thinking that this is the end of the trade war and we're gonna be more or less smooth sailing from here on out. Yeah, I mean, as much as I would. So one big thing with hardware companies is like a year supply is like a gazillion dollars. So you got to be you got to be you got to be you got to be a little strategic about what to grab men.

We made sure that our suppliers are multinational and have manufacturing sites in Southeast Asia and other places, including places that are likely scoped to have deals of coming together in terms of favorable treatment on the tariff side, Vietnam, other places in Southeast Asia, Mexico, et cetera. And so basically the idea is just like, make sure that all the customers that are already paid, we already told them, hey, we're going to cover this crazy 14 45% tariff back in the day. Or a couple of weeks ago, we sent them a mess, then you know like that. Obviously it's a little easier for us to do that now.

Still holding to that. But yeah, I think the big thing is like, now at least I've got some breathing room to think conscientiously about what the next steps are for manufacturing of not just our stuff but technologies that we're going to be powering other devices with as well. I mean, I know you're a relatively new company, relatively small, but did you actually have to pay any tariffs or were you able to kind of like do a little bit before a little bit?

You did. Okay. So break it up. Oh yeah, I think we paid the 145% on a couple of things actually. On a couple of things, okay. We, the bulk of the customer orders that are coming in are not subject to that, but like we've started mass production already

and we're a bunch of, this is kind of the beginning of that ends up being kind of samples and like VIP influencer units and other fun things like that. We've definitely paid it on a handful of those. The balance of the balance even that tranche of units is landing like pretty soon. So we mostly avoided all of this. Yeah. We're kind of lucky that this was an April thing, not a May thing. Nice to be to be blunt.

But yeah, there was there was a lot of fun on that side where. I think if our if our battery pack build hadn't gotten delayed like three weeks, there was actually a small chance that we would have had to decide whether or not to pay a very, very large amount of money to get them out of the port. It's better to be lucky than good, right? That's the nature. So the calculation, so I'll give you kind of like what I thought about and what was in my head as this was happening because

I don't think I actually panicked at all. I was like, this is actually an opportunity to talk frankly about what it's actually like running hardware startup in 2025 with a large supply chain with a pretty complicated product with with with with all these constraints, right? Yeah, and Finally people care about me, right? Like, you know, finally, this is the main the main news story of the day So I viewed it as like what's your moment?

Coped and it all worked out. And I get on odd lots and a couple of things. So that was the opportunity I saw. And then the second piece was I was like, okay, so how long does it take for a boat to go from China to the US? And then I was like, okay, so by like the first week of May, there's probably gonna be some motion on something here.

And so I kind of had that in my head of like, there was a shot clock going And what I've heard privately from, I probably can't say who and what, but like, just, just, just in a sense of like, there were, there were, there were, there were, there were well known folks that have complicated supply chains that were not going to want to pay 145% duties on their stuff. Um, I mean, you saw that pretty quickly with Apple, right? Uh, and Apple was kind of like the largest thing they got the exemption pretty early But then there was a lot of other discussion about other companies and at a certain point, you know

The the noise gets so loud It's deafening the climb down from Amazon on the like we won't put the tariffs in the checkout was interesting because it's like I wonder If there was it kind of felt like maybe there, there could have been some negotiation behind the scenes on this where they're like, yeah, don't put it in there because we're gonna just come back in two weeks kind of thing. Well, I think they threatened to do it, right? They actually rolled out the UI and then they got slammed by the Trump administration

for doing that and seeing it as like, hey, you're blaming us, but you shouldn't, yeah. Never has a single- I think the question I have is, does the debacle of the last month or so change your long term planning in a meaningful way? Because we were talking and some we were talking on the show and off the show yesterday around this idea that, OK, what do we get out of this?

Right. And it didn't it didn't feel like we got a lot out of the Geneva negotiations. If anything, we got rare lot out of the Geneva negotiations if anything We got rare earths back, which was a reaction to the initial tariffs And de-escalation is just generally good market obviously likes it But we just kind of like roundtrip back to where we were and John made a point which is that okay? well if a generation of CEOs a point which is that okay well if a generation of CEOs like got it into their head the reality of decoupling does that happening right now but it's not happening but it could and you have a plan around during this chaotic period and so I'm sure during that board meeting

you guys thought really seriously about hey if this actually sticks, what is our plan? Maybe that wasn't plan a but at least it's a plan in the plan document now and so Decoupling they had concepts of a plan so so I actually have this like I I don't want to get super political but I do think there's this like Trump tariff cycle Like image that that there's a meme. There's a me.'s called like the Trump tariff cycle. It's like, I had tariffs. Yep. I like take them off art of the deal. Take them away. Art of the deal.

Yeah. So, so I, I, I actually, there's one interesting wrinkle to this, which is, um, the, the Democrats have been often space, like you can argue they've been off in space with like, you know, you can blame like wokeness or some of the more like Elizabeth Warren coded economic ideas in terms of like, oh, we should just break up all our big tech companies because well that would be. And like there's a bunch of these, these sort of like these, these sort of ideas that have been, let's call it anti-tech or, or kind of on the wrong side of a culture war balance or something like that. Yep.

What's been very interesting is, or like let's legalize homeless encampments in San Francisco or whatever. And what's been interesting is systematically. So like grow SF has like really, and Daniel Lurie and all those, have really reset San Francisco in a positive way because like they had to get the egg in their face to learn the lesson. But I'm actually excited about the Democrats being negatively polarized into a free trade party. Oh, interesting. That's a funny take. Yeah. Because, because, you know, because of the reaction. Yeah. Because, um, because you know, that's a reaction. So just as a reaction. Yeah. No, no, that makes sense.

That's funny. Uh, I w we have five more minutes. I want to, I want you to walk me through. I'm sure you've studied BYD. I'd love to know kind of, uh, the history of that company, what your takeaways are, um, and what it takes to build an American BYD in America and what makes BYD, what does that even mean? An American BYD? Why is that different than an American like Tesla or something? Yeah, exactly. Yeah. So I spoke to, I spoke to an ex Tesla person and I was like, I was like, would Elon ever build stuff for other people? And it's like, and I've actually asked this question

for all, for a number of different folks and I've actually asked this question for a number of different folks, and I've actually gotten a variety of answers, and it's kind of like, he'll do it if it's on the main path of getting something, getting to the vertically integrated goal, if that makes any sense. But unless Tesla was forced by the government to be like, you will build tanks or something like that, like they're not in that business, and they're never government to be like, you will build tanks or something like that. Like that, they're not in that business

and they're never going to be. And so if you think of like what BYD has in terms of capabilities, it's like, it's a car company and a car brand, you can buy a car from them. But like everything inside that car is also like fractally built by them. So like the infotainment system,

they're the manufacturer of that. Whereas like Quanah, like whereas like Quanah or Pegatron or something like that may make that system for Tesla. And this goes down all the way into the battery cells and all this other stuff. So there's like they're like the most vertically integrated company you could ever imagine. So interesting because you'd think in like a command and control economy, you'd be able to force a kuretsu like in Japan, even more, right? You'd be able to force cooperation between a bunch of different companies. But it seems like in China, maybe that hasn't happened with BYD.

Am I understanding the shift? It's interesting because I think it's the DNA of the place more than there is like more than more than the policy side. But then the flip side of it is so BYD makes stuff for other people. And that's like what they do generally. That's what they historically did. They just happened to be a Nickel cadmium battery manufacturer that just kept acquiring businesses and like bringing them into the fold until they basically

had a car business, a lithium ion battery business, and kind of like all of the like IP needed to build any electric device. So like that's everything from like a smartphone to a car, to like- Your dreams, they build your dreams. Or whatever. And so what's really interesting about this is like,

I can, like I could go to a firm like this And so what's really interesting about this is like, I could go to a firm like this and I can say, hey, build me soup to nuts, a whole device. They will commit substantial engineering resources, but those engineering resources, a little bit less like maybe it's, there's like contract manufacturers in the West and stuff like that, but this is like,

no, they'll do it with the BYD parts and the BYD process. It's like they almost have like the best Lego set in the world. And they're able to leverage all of that IP as just a really high starting point to be able to kind of develop all these devices. Yeah. So what does it take to build an American version of that? Should we be even thinking about that as a goal? Is that is that a different company or is that a, you know, a cultural shift in Tesla strategy? Where do we go from here? Yeah, I mean, there'd be one way to do it should be like Defense Production Act says, Hey, Tesla bill for other people, but I think that would not go over, that would go over like a lead balloon and probably is not a good strategic choice. I do not want

to accept that idea. I don't think it's a great idea for Tesla for a bunch of reasons. But I do think that there's, I've been focused on like what parts of the value chain in kind of the electrified device universe. And I say that very broadly, like this is everything from EVs to stoves to phones and stuff like that. Where part of the value chain is like not made in the United States, really high level of integration, both like hardware, software, etc. And if you have better components, you can make better products. And this is where we realized that on the appliance industry, if you go and build appliances in the United States today, you buy electronics from China or Germany. And all the guts inside,

it's kind of like you're getting your graphics card from a Taiwanese manufacturer and your motherboard from another Taiwanese manufacturer. Have you taken any trips to Germany, by the way? They've been asleep at the wheel in many ways. I've actually never been to a German factory, which is saying something that's judgmental against myself and I intend to fix that soon.

I think a lot of what's been going on is all of like, China has been just incredibly good at the final assembly and like that part of the value chain. And it turns out that's where a lot of the software defined technologies start intersecting. It's like automated assembly, computer vision, like building all kind of like the firmware and software to make stuff work in an integrated way. And like, that's the thing that I think people miss about the car industry.

And this is probably the thing to say is the legacy car companies don't build cars like phones, whereas Tesla does and China does. And that's a really broad statement, but it's really like you're building an integrated electronic device, not a bunch of individual boxes designed by different firms that you've like plugged together. And you need manufacturers like BYD, like a BYD or like a Tesla that can actually go and span all of these disciplines

with the same people in these various groups being able to talk to each other versus how a Ford car or a major US appliance company like Stove is put together where in some sense there's a corporate firewall between electronics box A and metal enclosure B, for instance. Can you talk about zooming out in terms of this reindustrialization, reshoring industrial capacity? What's at the top of the priority stock? I mean, there are a lot of memes about like, do we really want to be doing screwing in iPhones and making those here? We've talked a lot about DJI. It seems like there's a huge gap between Chinese capability and consumer drone manufacturing

versus America. Well, guess who makes DJI? Is that BYD? I won't say. Okay. But then there's also like lower level, potentially like higher skilled activities like battery manufacturing with the, you know, mineral extraction, all sorts of stuff. What, how should we be thinking about it?

Not just from a consumer perspective, but from like a industrial capacity, governmental perspective. Yeah. So actually what's really interesting is if I go take an iPhone and I like part it all out on a table in front of it and I say, who's actually doing the core engineering and IP of everything in the iPhone? It's actually like the U engineering and IP of everything in the iPhone. Yeah, it's actually like the US and our Asian allies. Right? Because Foxconn is a Taiwanese company. It's it's it's it's Taiwan. But no, but even all the parts like LG in a tech makes the camera.

Yep. Right. Yeah, a lot of Korean tech in there for sure. A lot of Korean Japanese technology in there. So so so the point though is where was China really good? It's like it's the assembly, the integration, being able to kind of span all of these disciplines. So if I was to folk, if I was saying what I think is really important is I think Noah Smith has a he's my tenant, so I have to show him. But I think Noah Smith has a good take on this, which basically like the US is missing out in the technology of the future. And China actually has explicitly said this,

where they believe that the tech stack of the future is the electric tech stack, basically. It's like batteries, power electronics, motors, that whole thing. And it's like, you can build a robot, you can build a drone, you can build a car, you can build smartphones and consumer electronics. That spans the gamut of like that is the technology stack.

And in some, it's rare earth magnets, stuff like that. For some reason, the US just like, I think it's basically the 08 recession and like a lack of manufacturing investment afterwards meant that like we never actually picked up that stuff with one notable exception, which is Tesla. And so, and actually SpaceX as well. So like, Elon did this twice,

we should reverse engineer why. Well, that's why we're talking to Elon Musk of stoves. We're very happy. Many people have been saying this. The other people have also been calling you Noah Smith's landlord, after you dropped the user tenant. That's a big effect out there. after you dropped the, he's your tenant. Sound effect on there.

Thank you so much, Sam, for joining. Sounds good to have you. This is great. Yeah. Before he could even say goodbye, just sound effect work. What were you gonna say? What were you gonna say? Beep.

Beep. Thank you so much for joining. It's great to have you, Sam. I'm excited for you and the team. Yeah, and keep us updated. I know there's big news coming, so drop it here first. Yeah, yeah, yeah, yeah, yeah, yeah. We love to have you back on I'm excited for you and the team. And keep us updated. I know there's big news coming, so drop it here first. Yeah, yeah, yeah. Talk to you soon.

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They didn't say that. I said that, because I've used Vanta. Fantastic. Well, we got Vincent from Prime Intellect coming in the studio next. We're talking about a bunch of stuff related to crypto and AI GPU mining. I think this is gonna be a very interesting conversation.

We talked, well, welcome to the stream, Vincent. Love to hear from you. How you doing? There he is. Perfect. What's going on? A couple months ago. Yeah, thanks for joining. A couple months ago, we had Bridget from Founders Fund on,

gave us the high level overview, but I'd love to get it from you. Can you just introduce yourself and the company to kind of kick us off? Yes. So my name is Vincent and like I'm the founder, like co-founder of Prime Intellect and basically our goal really is to commoditize AI and compute more broadly, really also by almost like networking all the computing world together and making sure like no GPU goes idle, but rather can contribute to almost like an interplanetary like compute cluster that can like fund for example, source AI models, but also that people can just like use to ultimately save on like compute.

Like ultimately the goal really is realizing that computers is this gigantic market which will ultimately power all of those different areas and it's quite inefficient and very distributed. So a lot of it is ultimately research challenges to make sure we can network compute that is quite distributed throughout the world, but also verify it.

It's like you can't trust like the thousands or like millions of different like data centers and like GPU nodes distributed across the world. So there's basically like a challenge to scale trust. But it's like you can trust one data center or one company but it's hard to do so at scale. So basically we're attacking those two problems. Okay.

Why don't you talk about the launch Sunday? Yeah. You guys, I hadn't seen, I hadn't seen the launch like that on a Sunday since the last seemingly few Trump executive orders. So you guys kind of realized Sunday. Yeah. Superbowl Sunday. Why not launch a new model,

but break down the launch just a couple of days ago. Yes. So basically we like kind of like to take a step back but break down the launch just a couple days ago. Yes, so basically we kind of like to take a step back, almost like did this first very large scale distributed pre-training run, Intellect One, which was building on DeepMind's distributed low communication training to train basically a model across the internet,

across multiple data centers, in similar efficiency as in a centralized setting where all the computers network in one data center. And now that we switched to this kind of like, oh, one, like post-training, like reinforcement learning paradigm. It's actually kind of like a paradigm that is like perfectly set up for distributed training because most of it is like those roles and basically you can distribute them extremely well.

Like there's basically less needs to communicate every training step. So what we did with like intellect2 was really scaling to like the larger model size, like a 30, roughly 30B model that we basically trained distributed across the globe with different people contributing compute. And we basically built this on top of Quen. So basically the goal was also to take the best open models out there and improve them further for actually quite small amounts of compute. It was honestly more like a proof of concept where we basically proved four different pieces. On the one side, basically we proved this verifiable compute piece that

basically anyone in the world could join with their compute. We don't need to trust them. There's very efficient ways to make sure that they're basically an honest compute contributor. And then the other piece was really making distributed reinforcement learning work. So basically decoupling those role generations from the training itself. So you basically can train across the globe with less frequency of communication. And what we basically proven is that with quite a small amount of compute,

like roughly $100,000, which is not comparable to obviously kind of like the more like closed AGI labs. We've basically been able to like improve upon Quent and it's kind of like sets the foundation for us to actually scale this much further and ultimately actually have kind of like a repeatable recipe to get like basically improve like the strongest open source models out there continuously for quite like small amounts of capital across different domains. So we made it much better on math and coding but the goal is also to

make it much better on like other domains and really like how to do so is like really scaling those like reinforcement learning environments I think yet will Brown on like he joined us to work on this. Yeah I was gonna ask what was the what was the process like recruiting the big dog WB? Absolutely. I mean I just have to imagine he's such a good poster. He's such a great guy to chat with. He could have gone anywhere, but he ended up with you guys. Yeah, I think it's two things.

You should ask him himself, but I think a lot of talent is gravitating more towards open source AGI and to basically building the open, to publish in the open, to be able to also contribute to the frontier of the most exciting research. And in a sense, I have friends at OpenAI and who's never heard because they can't publish, don't really talk about their work.

So I think there's this component, but I think then we are basically, I think now, especially in the Western hemisphere, I think one of the only places that is really catching up to the frontier, right? There's obviously Quan and DeepSeek and others in China, but I think it's really a fumble by America, I think, to basically be the close guy that is not really almost standing in for the values of democracy and freedom to the same extent.

But I think he is obviously extremely passionate about like um open source AGI and kind of like distributed like reinforcement learning. So like he immediately hit the ground running on on basically scaling this much further. So we'll have more like yeah like work we are building on top of like this direct jump distributed reinforcement learning like in the next few months already out which should like scale this much further. I remember a couple years ago I was was using Octane render and they have a distributed rendering network where you can render CGI images on GPUs all over the world. And they actually have a crypto layer for render tokens as well.

But this idea of distributed computation makes a ton of sense in that context because each frame is unrelated to the other frame. So you can, if you're rendering a 90 frame sequence that's a few seconds long, you can just send, you know, each frame to a different machine. What have you learned from the successes and failures of the render network and what Otoi did with Octane? And is there any difference between those discrete individual frame generation

and something as complex as training a whole model where, you know, you might be, in theory, you'd need to load it all into one instance every single time. Yeah, like, great question. I think there's a few players like them and others that have tried this in the past. And I think they've been almost like, in some ways. I think too narrow and like strong ambitions, right? It's like rendering like it's nice, but like it's not like the general purpose like yeah use case that we now have with AI Right, so I think there's basically like our goals really making this much more like general purpose useful for like every single like computer Now I use case. And I think that has been one big learning. It's basically being, most of our team are AI researchers and they come from the AI world,

including the people that build, for example, the verification mechanisms. In our case, it's tiny overhead, like 1%. The more crypto-native verification mechanisms have more like a 1 to 10x overhead, which then make it completely unfeasible to compete with centralized clusters. So I think that has been like a big learning is basically being very pragmatic and close to the AI researchers. So that's like the main community we're like building with and engaging with and basically building for right. So like all of our users are AI developers. And ultimately, I think the biggest lesson has been just creating value for them from day one. It's like we launched basically our compute platform like two or three months in with

like two or three people and immediately got like a lot of users and scaled since then like basically that any kind of like AI startup or developer can just like basically with our platform almost like like have like a global market on the one side. But like we aggregate all the hyperscalers, all the different data centers, even working with like folks like Aaron, like later on from Hydra, like all these guys to basically aggregate and orchestrate like all these different data centers and hyperscalers. And I think that has been another lesson that we're not trying to be like the

exclusive, maybe marketplace where supply on boards, we just aggregated all the supply out there, which gave us a huge kind of like wedge maybe to like enter the market. Okay. Talk about some of the hardware where this is actually running a 30 billion parameter model. Uh, it, it floating point 16, you're going to need 60 gigs of RAM. You're probably going to be on H100, not gaming cards, but are you thinking about bringing residual capacity

online in the gaming market? Or are these like small data center operators that just have a stack of H100s that are not using it and then they're bringing them online? Yes. So basically I think what's been exciting is like actually just run was here to genius. So H100s and A100s could join. And I think it may be even like H100s.

Um, and like for future ones, like actually for next one, we're starting like even 3090s and, and like gamer cards can join. And I think what's interesting is you can basically with like, uh, this role generation and like basically synthetic data generation, you can distribute the tasks basically based on their difficulty to different cards and to different models. The goal really is to have a full tolerant, heterogeneous pool of compute. What's also a big one that we did already in the first round, but also in this one, is full tolerance.

It's not only that you have H100s joining and A13090s, but they can also drop out. They can join for a few hours when they idle. And I think that's the border thesis. It's almost like every GPU that is idling is a market failure, especially in a world where increasingly my theory is the biggest almost commodity in the world will be compute. And it will be one of the biggest slices like commodity in the world will be compute and like it will be one of like one of the biggest slices of Gdp and it's like unfortunate like half of that is like sitting idle instead of like curing diseases generating like movies or like some like creating libido technological progress, right?

And I think the goal is to basically just get to like a hundred percent utilization of compute and we're very very far from that Yeah, yeah What what are you seeing in like the trend in chip size and scale, you know? of compute and we're very, very far from that. What are you seeing in the trend in chip size and scale? Obviously, Nvidia is pushing those DJX, rack mounted units, racking everything together with NVLINK so you can do even bigger models. Cerebris is scaling up the single chip size to wafer scale. The theme of the last few years seems to have been,

let's not decentralize, let's actually centralize further. And so where does this go? What is your take on kind of the ever bigger racks and ever bigger chips for larger compute training? Yes, I think we'll see both. And I think actually, ironically, like an NVIDIA actually has an incentive to fragment the market. Like they don't want one buyer. They don't want AWS to be the only customer because AWS is building their own chips or like the big tech clouds basically have their own chips competing with NVIDIA, right? So NVIDIA is very happy to give a bunch of chips to Cori, a bunch of chips to Cruiser, a bunch of chips to Lambda and all of these other guys, right?

But then, so I think we'll see both at the same time. I think we'll have thousands and millions probably over the next few years of data centers. There will be these gigantic clusters, right? Like Stargate from OpenAI. But I think at the same time, there's increasing amount of capacity in almost like the mid-tier of smaller data centers.

But then I think also on the other side, there's a lot of compute sitting idle everywhere, right? Soon whatever, autonomous cars, robots, everything else. So we actually, some of the biggest car companies in the world reach out to us, or phone manufacturers, that are like, oh, we're sitting on hundreds of millions, billions of phones or cars that have idle compute capacity. And I think we're not there yet,

but I think we'll have just much more compute everywhere. We'll have more mega clusters, but we'll also have more mid-tier and small clusters. Mega clusters. Mega clusters. Mega clusters. I have a question before you leave. Can you give any expectations around DeepSeq R2?

I've seen some crazy rumors flying around online. Do you have any expectations around Deep here, again, I think to some extent, I think they'll probably be not as good, would be my guess, as Gemini or OpenAI. But I think there's obviously this trend where I think all the closed labs have admitted it, that open source has caught up very uncomfortably close to their lead. And I think that will continue. I think the closed guys obviously have some advantages, but I think there's also huge advantages obviously to open source AGI space has. So I think like the trend will continue that ultimately like the Deep Seeks and the Quants of the world, but hopefully also like players like Llama will like catch up a bit more. Like obviously

they've been a bit disappointing with their like Llama for launch, but I think they might also actually like catch up again. And then obviously I think our goal is to be able to basically build on all of that progress. Basically we kicked off our largest synthetic data generation run the day DeepSeq dropped and generated basically a lot of verifiable reasoning data that we could then use, for example, in this recent model. So I think what I see more is basically that we can improve open source AI progress

literally day by day, week by week. It won't be a thing where we need to wait four months for some progress to come, but it's more like continuous basically progress. Well, thank you so much for joining. This was a fantastic conversation. Yeah, I really enjoyed this. And congrats on scooping. Yeah WB

Legend it's really truly Deal yeah But come back on again soon. I know you guys are gonna have a bunch of launches coming up and appreciated your Perspective well talk soon we should And if you're looking for distributed compute go to prime intellect if you're looking for distributed advertising good adquick.com 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 across the globe. They just make it too and I want to spend every single dollar Anyway, we got the CEO of Backbone in the studio.

Let's bring him in Manit. Excited to have you here. Welcome to the stream. How are you doing? Thanks for having me. Appreciate it. I feel like I walked into the middle of an ad read. You did.

You did. You did. We are 100% corporate sponsored. Independent Media is dead. The future is corporate media and we are leading the charge. But good to have you here. Can you introduce yourself and explain what Backbone is? I'm a fan, but some people might not be aware.

Sure, my name is Manith. I'm the CEO and founder of Backbone. Backbone is the leading platform for the future of gaming. The way I describe it to people is that every time there's been a shift in streaming media, it's resulted in some of the biggest consumer businesses. So like music streaming, you had Spotify and Sonos, and then in TV streaming, you had Netflix and Roku. And you can think of Backbone as the analog company for streaming games. We have a number of products. We sell devices

that you can use to connect to your phone or any screen and play games on them. And then we also make an app that aggregates all the different streaming services like Xbox game pass and others. Uh, so you can access them all in one place. You can buy our products in any major retail store, Walmart, Target, Best Buy, et cetera. Uh, and we're backed by investors like index and, um, sound ventures. Yeah. So I got one a couple years ago.

I was not getting a lot of time in front of the PlayStation 5, and so I would drop my phone into the backbone and stream from the PS5 over the WiFi to the phone with the backbone. It gives you the whole gaming experience, very fun. What has the relationship been like with the big console providers? Can

you break us down the different strategies? It seems like Sony has been very competitive launching something that's kind of like a competitor with the PlayStation. I forget what they called it but it has a screen and device and does remote play. Microsoft's taken a much more open approach, letting you even stream Xbox games on PS5 and Forza Horizon is on PlayStation now. And so what has been the relationship with the different major gaming platforms been like over the last few years? For sure. So I think, of course, each one has its own strategy. Microsoft in particular is really interesting because they're running this campaign now

called Xbox Everywhere, where the idea is that you can turn any device in your life into an Xbox and run games on any screen. And the way they're doing this is through streaming games from the cloud. So Microsoft's subscription service, Game Pass, if you subscribe to it, you can basically access the entire Xbox games catalog

on any device that you own. And of course, the devices and software that we're making work great with Game Pass and make the experience work really well end to end. So you can do it on things like smartphones. So I think in Microsoft's case, their goal is really to drive more Game Pass subscriptions and just gather more Mal and Gal for their service.

And it's super strategic to, you know, their overall roadmap with cloud and all that as well. Why wasn't Google able to pull it off? I feel like they were early to that party, a game streaming. I can't even remember the name of the product, but it never really hit like major takeoff or do I have it all wrong? And actually it's better than ever. I don't even remember. So you're talking about Stadia. Yeah, right stadia yeah yeah is stadia still around what's that is it still around no no it was uh unfortunately yeah classic google

classic but but i mean i mean you would think they have all the resources they're hyperscaler they have gpus in the cloud they can do rendering and they're also somewhat platform agnostics to any game developer could go to Stadia. It just seems like super additive. I'm sure you had intimate interactions with them as Stadia as you were building the company. Why do you think Stadia didn't take off? For sure. So I was at Google when they were working on it. That's actually was sort of part of the basis for the idea. Yeah. I went into the office one day and there was a demo that an engineer had built where you could use

Google's cloud technology to stream games to like basically a two generations old Android phone. So you read GTA and like a two generations old Android phone. And I picked up this demo and I tried it and I completely lost my mind. I was like, we've seen disruptions in gaming across every single vertical, right? Business model, audio, content,

but this has gotta be the single biggest disruption in the history of the games industry, at least that I'm aware of in a long time. And so that kind of became the basis for the idea behind Backbone. I basically made a slide deck on why I thought it would be like a really big opportunity for Google. And I sent it to the head of product for YouTube gaming. And then I realized it could go a bit wider. So I sent it to a bunch of the vice presidents internally. And basically,

a bunch of people ended up reading it and it became one of the most viral slide decks internally in the company, like 15% of the company bred it by my last day And so I got to meet with some of the executives that working on Stadium and other initiatives. I think there's no doubt that this technology was incredible Yeah, but I think other players like Microsoft just had a better go-to-market strategy and more content Yeah, that makes sense. I mean the contents really really key switching gears a little bit how have you seen the industry react to the news last week around the App Store sort of payment policies?

I imagine you've been hearing a bunch of chatter. Yeah, I mean, certainly if Fortnite were to return to the App Store, it'd be pretty big. I think it's been like- It's under, it was resubmitted, right? It hasn't been approved yet. Normally Apple approves in 90% of apps get approved in 24 hours. We're on like hour 46. So everyone's saying Apple, what's going on dragging your feet anyway. Um, yeah, I mean, I think it's huge. I mean, it means that if you're able to link out

to external payment systems, you're basically gonna be able to take in more margin as a game developer. And I think it'll, you know. But how do you expect users to actually respond, right? So like, let's say you download a free game and you're like, okay, I'm willing to pay for this game. And you get the option to just subscribe in the app.

Maybe it's at one price or subscribe outside of the app at a lower price, right? You'd have to offer, I imagine have to offer some type of incentive to get somebody to want to go to a separate webpage, right? So I can go outside of the app and I get maybe some, so you're sort of, yeah, instead of, you're splitting the difference. You're splitting the difference kind of, but then I imagine some outside of the app and I get maybe some, so you're splitting the difference. You're splitting the difference kind of,

but then I imagine some users like the fact that their subscriptions are native and they could go into the app store and churn if they're not using something. And so how do you expect that? How do you expect developers to actually play it? And do you think it's, are they really getting back 30% or is it more like, again, splitting the difference?

So I think what we're seeing right now and in Epic's implementation, they posted a tweet online like the revenue cat CEO replied to Tim Sweeney's tweet and I was asking like, how did you implement this? Did you use in-app purchase? So in Fortnite's case, they show an option to do in-app purchase and they also show's case, they show an option to do in-app purchase, and they also show the web flow through Stripe or whatever.

And that one is 20% kind of cash back or something like that. You get like 20% back in Epic credits. And so there's like an incentive. People might have to incentivize customers to transact through the web. And that will- But giving them back free credit

free credit like points in a game which they're gonna value on a cash base absolute dog I want to talk about the the actual technology roadmap or tech tree to make mobile gaming even better? What's more important? Better devices, faster chips, more memory, better screens, or just ubiquitous 5G, Star Link, better connectivity, lower latency. Because Call of Duty, you can stream it on your phone. Probably Xbox Game Pass allows you to do that. There's still a Call of Duty mobile that's optimized for the phone. And I think people probably play that one more on their phone than the streamed one.

And so we're still not in this fully streaming era. What are the blockers to get us to just one installation of the game everywhere? So I mean, both of those things are bottlenecks. And we often used to get in these like serious debates internally over like which one was gonna overtake the other. And then we kind of realized after a while it was a bit aimless because we just want the overall

basket to succeed. And I think you'll see a lot of like hybridization where you'll have, you know, games that are relatively like thin clients, but like a very significant cloud component to them versus right now we think of this dichotomy of like fully streamed versus native. And I think maybe there'll be Some games that foot across the boundary line

I mean for that is one such example of that where there's a pretty heavy cloud component to the to the game What are you playing right now right now? So I don't know if you've heard about expedition 33. Oh, yeah I haven't played it just I heard about I'm just about to get into that. Okay. That's been popping off on the internet. Yeah. I've been playing a lot of Fortnite. Yeah, that's good. Were you surprised about the GTA six release date? It seemed like the market had been pricing

in a 2025 release and then all of a sudden it was like, no, 2026. I mean, these games take forever now, the production costs of, there's some really great articles online talking about how the development costs for these titles have ballooned because of this need to have really lifelike graphics and realistic gameplay.

So not surprising, no. What about tariffs? I imagine that that was a tumultuous time for you. Obviously sigh of relief recently, but what's your outlook and what did it mean? Take me through the emotional journey of the last couple of weeks of the company. Yeah, I mean, definitely short-term painful.

It was awkward timing given the Backbone Pro launch, which just occurred this past week. This is a huge launch for us. We generated, I think, around 700 million media impressions, which is more than Beats and Aura and Sonos generated for recent product launches. It was a big launch and it was an awkward time because of the tariffs and made the pricing strategy that complicated That being said we think in the long run anything that promotes, you know free trade or reduces tariffs like globally Is beneficial to the company because then we can offer our products in more markets Than we do today at you know more of a fair price to consumers Yeah, I gotta pick up a backbone pro.

I'm looking at it right now. I'm adding it to cart. John has always said the biggest risk to the show is that he just gets sucked into some specific game. It's like my one vice. You'll never find me passed out drunk, but you will find me 70 hours into Metal Gear Solid for the third time.

Metal Gear. Yeah. Anyway, this is fantastic. Anything else, Ben? Yeah, no, I'm happy for you and the team that you get a little relief on the tariffs. Yeah, congratulations. And congrats on the new launch.

And good luck, I know you guys are shipping in about a week now. So, I'm sure there's a lot of work to get to that point. Head over to backbone.com, pick one up if you're a gamer. Check it out. Anything else? That's all, thank you. We'll talk to you soon.

Have a great day. Bye Speaking of sleeping easier post tariffs eight sleep go to eight sleep comm five-year warranty 30 night risk free trial free returns free shipping pod for ultra I got an 88 last night seven hours and 11 minutes. Not too bad. What'd you do? Jordy? Did I beat you or did you smoke me? 100 100 he knows Brian Johnson's coming on the show. He's prepping proof of work prepping Anyway, we have our next guest coming in put it up put it up 100 see it's not a screenshot. I'm moving it around. There you go. Yeah, the new app is beautiful. Go download it Anyway folks, we got Aaron gin coming in breaking down a new Wall Street

Journal article. Boom, boom. He's back. Yeah, doing well, man. Can you put on those sunglasses? You already I can't recognize them. Yeah, yeah, yeah. These ones, these ones, the pit vipers. Unfortunately, so so there's some crypto, there's some crypto coin that that people are using pit vipers to promote. So we got to be careful But we were sent to us from a CEO pit viper he's just likes TVP and he said have some pit

Viper it's pretty cool that they like rotate up and down like this. Yeah, I've never actually worn any of these Anyways, it's great. It's great to have you on Always great the prime intellect CEO was on earlier and he said that you guys. Oh, it's great. The Prime Intellect CEO was on earlier and he said that you guys are working on some stuff together, which is cool. Yeah, yeah, yeah. Yeah, like they're handling the higher level like training layer if we're doing

the underlying infrastructure distributed layer. But yeah, like going back to about the op-ed that I wrote, I've been more or less battling slash encouraging the administration to take a more reasonable approach to the threats that Huawei has against our dominance on AI. And when I met and know the people who under my administration that wrote the January 15 ruling that we don't really know, by the way, like what's going to happen. We just heard rumors that things are gonna change

and they're gonna be more positive towards Jensen and Nvidia. But generally speaking, they wrote this, kind of the precursor framework that people understand is it created a G18 of AI countries, which included like Japan, South Korea, Taiwan, America, Canada, and some European countries by half of Europe. And the original Biden ruling, these are bureaucrats, it's very vague law, very under governance.

They're basically operating under 1980s missile technology proliferation law that was written back whenever we had Soviet Union. So they're kind of regulating that, and the Biden administration, a couple of days before they're leaving, decided that they would create this kind of G18 of countries and then a hundred-ish other countries that were going to be basically prohibited or require a license. And then absolutely no good countries, tier three.

The tier three countries are quite logical, right? They're like Libya, Venezuela, right? It's like, oh, okay, this makes sense. But the tier two countries that required license was like Greenland, Portugal, Switzerland, Austria. All of Eastern Europe was on the crap list. All the presidents right now in Jetsons in the Gulf region, all of that was on the crap list. And then like kind of random countries like Mexico, Mexico makes all of our servers. And the original kind of premise around this was regulating cheap power.

So it was mostly anti-competitive. They didn't believe that Mexico got GPUs or was into China. They just thought, oh, they have cheap power. So we should just say, oh, that's bad for America. And so I've been advocating for this kind of idea like this Newman Road a doctrine thinking that AI is more of a forward operating base of America.

Due to the neocons and neoliberals, we have over 300 operating forward operating bases of the world where our special forces are active and doing things that they don't tell us. And so I basically was trying to like kind of, you know, think about the AI is kind of something similar, where every deployment that is an American deployment is real estate that we own. And that running the world growing, like growing on our infrastructure is better

than growing on Chinese infrastructure. And it's either or. And I think that under the Biden administration, there was this view that they couldn't do anything like, oh, they just make icons. It's not to be overly trite, but I think they had a kind of a less view of where China was. And as the data came out with more and more advancement on the ascend line under Huawei, more advancement under Deep Sea, it became very much clear that this is actually was a race and that they were significantly closer than we thought. And so the goal then is proliferation. And that's essentially what the Trump administration,

the Congress Department announced last week, was that they were gonna embrace a trusted proliferation model, which is what I've been advocating for, of this forward deployment of NVIDIA gear, running on an infrastructure, running on our frameworks, because it's either us or them. Either world uses dollars or uses something else.

There's not this kind of secular world where trade happens and it doesn't include a country, it involves us or involves somebody else. And that's becoming more socialized and more accepted. And so now they're trying to think of other ways to try to advantage proliferation, Tom Cotton entered just a bill to track GPUs, for a bullish on that, but you know, like there are other ways people are trying to think about doing this rather than just saying, hey, Portugal, you have good beaches, but no GPUs for you. Saudi Arabia, we can sell you up 35s, we can sell you even ICBMs and no Dukes on it, but

hey, you can't get the Blackwell series. That's too risky for us to do for you. So it was a great resetting that's happening. It was good for you. So it's a great resetting that's happening. It's good for America. Yeah. Yeah. What is your take on the recent Saudi Arabia deal? Eighteen thousand Nvidia Blackwell chips going in with hundreds of

thousands of dollars on the way. It seems like it's an affirmation of everything you've been saying. But what's your interpretation? Yeah, I think it's one way Huawei is already deployed there. So I think that that was a wake up call and there's also a ton of Chinese

cloud companies that are doing deployments in the Gulf region. But it's positive because again, you have to realize that people are gonna get this regardless. So another good framework is because this is all like leading edge stuff and people get confused about what's actually happening. They also overly express our actual dominance on a particular area. But think of it as like a mid platform versus Lockheed or Boeing.

Like you're not going to tell a country, hey, you just can't have a fighter jet. They're like, we're going to get some mix. We're going to go get some, I forgot the rain of the French one, right? That drops baguettes from the airport. Whatever that French land, right? Whatever that one is, right? I forgot the name of it. So it's like that. It's an either or question.

So we either have a decision to engage with the country or not, and then if they don't, they're gonna go somewhere else. And with Saudi Arabia, which is a very clear ally of ours very clear ally Israel the leader in the region with Israel I we have to be in a position of they understand this like like like the Gulf region kind of gets Real-estate input crap in the in the building They kind of like they understand that right and so it's something they can feel they can be very successful in. And as well as it gets to the Jetta Tower, Burj Khalifa thing of we're ahead, we're winning the line,

all these crazy projects that won't happen until I don't say that again. Yeah, but our data centers, but our data center, and obviously, Saudi will have fantastic partners in Nvidia and I'm sure many other hyperscalers for their new AI factories, that's the new aim. We gotta stop saying data center, it's AI factories. Yeah, tokens.

We love some of your brand names. But yeah, isn't this not, is it correct to call it real estate today or is it something else? Well, I think the dynamics behave like real estate. Like that's how the actual investors think of it. And that's how they get finance. The execution is different.

Yeah, yeah, so I, like the way that this flows out, what I believe, is what like the premise of our model, why we're a part of like over about almost a dozen sovereign rate projects, we're kind of the, for Nvidia, they advertise us to a lot of their growing data centers internationally as Hydra is the best sovereign AI go-to-market provider in the world. So like we're really, really good at this.

And our operating model is much more, I think I mentioned this last time, they think of it as like the airlines industry, that the commercialization of AI is really resides in the platform. And that platform is Jensen. It's not anybody else. It's Jensen. And that's just like Boeing.

And you have these kind of like rare birds that are coming out, which is OpenAI. But the technology model around OpenAI, as we come knownly accept, is relatively commoditizable. So its real value is the brand. It's the accidental consumer product company that's been Thompson likes to say. So when you have the commercialization happening at the platform hardware layer, like Boeing,

you create lots of billion dollar companies, you know, American Airlines, et cetera, Emirates, whatever, but you don't really have this parabolic power law outcome like you had with software defined nodes like Google or Airbnb or Twitter or something to that effect. So when you have a world of what works like that, Jensen becomes the play. Jensen is the platform. You can still create lots of different successful companies that are very large.

But I'm very skeptical you're going to see this huge outlier into the stratosphere like we saw with other software-defined modes. Rather, it looks more like the airlines industry where there's lots of very successful people, lots of very successful winners, but there's no clear category leader. There's no clear, like, so far ahead that nobody kind of will ever touch it

because the fundamental product is a product that gets deployed in a data center, that gets run and commercialized and all the value is created there and everything else just kind of plugs into. It's the fastest way to become a millionaire. Start as a billionaire and buy an airline. This is a famous thing because like, yeah, the value doesn't really accrue to the airlines in the way that it does to

consumer tech companies. Of course. I want to talk more about, uh, this, this idea that like it is valuable to America to have foreign AI models running on American infrastructure and maybe we could go back to the f-35 if we send an f-35 over to another country, they have the ability to use that however they want. We don't really have control over that. We don't necessarily have a kill switch Obviously, it's good economically because we sold it to them. We get some money. That's nice But is there is there is there some downstream benefit to well now? We're really allied with you because yeah, we sold you the planes

But you're still gonna have to remain friendly with us as we resupply and send you more screws and bolts to maintain these planes. Is there a similar analogy in AI factories or data centers where, sure, yeah, you bought 18,000 Nvidia Blackwells, but if you don't keep working with us, those are gonna die, you're gonna need to replace stuff, and you need to keep us an ally.

Is that the goal? Yeah, that's my goal, because I believe America should win. I don't, I don't believe in a multipolar world. I believe in the new Monroe doctor and I believe that we should reshort to the Americas and, and some of that will be here. Some of them be Mexico. Some of that will be in El Salvador. We're already, you know, monetizing El Salvador with prisoners. So like, why not then make fiber optic cables? Why don't they make fans?

Why don't they like for in the, in the service supply chain or textiles? Like Mexico is the cheapest place for us to manufacture. It's been that way for over a decade, but they don't have the technical capability to do it, which is why you don't see that there. But in the Newman-Roe Doctrine, my thesis is that we reassure critical things to the Americas. And then we have these external allies that reinforce that just like the old minimum doctrine was Americas and we had Britain that enforced it and with us. And so the same thing goes with the Ring of Fire from South Korea down in Singapore that becomes our allies in that region. We ship America goods there. They

become America enclaves, but they're relatively sovereign. They're their own identity, they're their own military. and partnerships like that Not only advance, you know, like you said like sell goods like there's an announcement with the bowing like I mean They already bought bowing like it so it wasn't It both riad air and sida. They're they're bowing platforms They don't they don't have as many airbuses out there because everyone says is like just so you know Like this will be our technical thing, but their engine design is not really compatible with sand that well, so that's why they prefer belly,

because it's more adaptable to high heat. So either way, that's an advantage to us, because it's a form of soft power that we can allow the proliferation of not only safety for Americans globally, but it makes us rich. Trade is American. It's not secular.

It's not something that just happens. Like if we define it, the dollar is a platform, trade is us. We define, we really open the oceans because we say that it's important for us to trade. So there's kind of like this weird thing happening on the right that there's like these two types of like China hawks.

There's like OG China hawks, which is like me, who believe that the way you beat China is you win. Then there's these new China hawks, which are like protectionists, semi-socialists, and want to withdraw from the world. They believe in a multi-cultural world. And they kind of crept in, but they're actually a little, they're more on the left side of the spectrum. And the terrorists and kind of attitudes around Nvidia, that's when you hear

these things of like, we shouldn't sell the world, like kind of can wait on us or we don't need their goods. We shouldn't trade versus the original OJ John Hawks were like, no, we should trade. Trade is peaceful. It's great. It decompresses issues between countries, but it doesn't mean we give away the farm. It just means that we rebalance and we make it there. And it was kind of this hot minute where it's like these like new neo-China folks got in charge and started doing this kind of crazy things with terrorists where we had no idea what was going on. Like believing that terrorists make us rich is one of the most profoundly

illiterate things like I've ever heard from my background as an economist. But like it's literally stupid. The places that have highest tariffs in the world are absolutely poor, and the places that make tax dollars are poor. But it's the external revenue service. No, again, I'm pro that, right? I don't want to pay taxes, but taxes are fat.

I'm willing to engage in some type of thievery if it means that I'm safe when I go to, I just came back from Belize, but I'm safe when I go to Belize. I'm okay, I'm okay engaging in that. But America only wins when we have this peaceful economic transaction that occurs in countries that want to adopt more pro-Western frameworks. We should support that because when the world becomes more West, it becomes safer, it becomes more prosperous, people have rights.

We had Sam from Impulse Stoves on earlier and he was saying that free trade is almost becoming a liberal policy. It's a liberal position now to just be like free trade, just from a reactionary standpoint. I'm curious if you, what you're expecting out of the Qatar visit, which I believe is happening in the next 48 hours. Yeah, like I was a cutter. We've already been talking to the

world family there. Like they they definitely want to get in GPUs. They're there. Have you ever been to Qatar, by the way? So you have you have? Yeah, briefly. It's it's absolutely bizarre. It's a imagine like have? Yeah, briefly. It's absolutely bizarre. It's imagine like the largest country club in the world as a country and there's like, everything is clean and well done, but like in the street and you're walking,

it's mostly just like servants. There's like no people. It's like, it's very weird. And they have so much money. It's, they even build like the Qataris, right? There's only I think 300,000 total citizens and the total number of like the broader servant class is like around 3 million in the actual city. But they're so wealthy. They have, they do these sand duning thing, which I went to go do, and they build these

homes in the middle of the desert, like these massive camps. And they just like have these $100,000. They just going up and down sand dunes all over the place. Or there's like these huge encampments like that. They have so much money. And they're they're trying to get into power and energy as well as the data centers. But there's a there's a tricky problem, which is that they have a habit of being anti-Israeli. Obviously, something happened to Benji and Trump.

Nobody really knows that something happened. Benji could not be the most friendly person to deal with. So something happened there. But the Qataris like to think themselves as like the Switzerland of the region. In reality, they're just more pro-Iran and pro-Al Qaeda. And so that's a, the one thing they'll never underestimate is that the ultimate goal of every Trump conversation is a deal, that's what he loves, he loves deals.

And so us being particular hawkish on any type of country, I think is kind of not who we voted for. It's we voted for somebody to make deals for America. And that includes a jet, which I don't know if it does or not. I heard it was. It was not. Yeah, it was a new 747 or something. Yeah, just it seems like a rumor at this point, like no one really knows one way or

another what's happening with that. But it's an interesting story, certainly. No, I had no problem. Like he went to go see Kim Jong-un. Like, whatever. No, no, I completely agree with this. That's a great take. Yeah. So like, I have no problem meeting with people. And if that means more, I want them to be more pro-Israeli and I want them to, they will get their release last American. That's a win for our country. And that's what I voted. I voted for Trump and I wanted him to do deals. I wanted him to break the mold, reset relationships

and make it more pro. And create more allies, like swing more people to our camp, regardless of the history, figure out how to how to do deals and build more allies in the American sphere. I want to talk about the learning curve, Huawei versus Nvidia, specifically, is that a see on the learning curve. But but what is your take on the Huawei ascend versus Nvidia, hopper, Blackwell kind of fight that's unraveling right now? It Americans didn't realize that like, like, lithography is not like a white technology. It's not like white people like own

it, right? It's a technology, it's available to anybody that can work on it. And their ability, yes, it's not TSMC level. They're probably at five nanometer. They're more likely at seven, but probably stretched at five. TSMC is at two. It's about to go to like 1.5, I think, or something to that effect. But the thing you don't ever underestimate is that China, from a supply chain perspective, is almost completely sovereign.

Not only do they dominate rare earths, but they have the entire manufacturing infrastructure to make Huawei. And that is a type of competitive advantage that we don't have. And so now again, like it doesn't mean we become central planners and like drift into Linus or Trotsky thinking that like, oh, we should just centrally plan this entire thing. Like that's not my view. I view as comparative advantage. It works. Like as Jordy was saying, like all of a sudden liberals remember that Adam Smith exists and you know, that TDS has benefits, right?

It pushes people to, because it's not a philosophy, it's a psychosis. So yeah, yeah. So it doesn't have an orientation. It's just not that big. But you know, like we have the ability to win because we still are the best, but they're just going to take a different approach. Like they're going to take advantage of their power. They're going to take advantage of the fact they move fast and they're cheap.

But a new AI Belt and Road initiative has already started. They're already around the world. We know this. We see them at different data centers that we work with selling their stuff. And it comes as a fully complete solution with DeepSeq open-source, like a Manus models, combined with infrastructure, combined with support.

Manus has that kind of distribution already? No, like Huawei is designing for their open source ecosystem. So Huawei is being the hands of heat that they're building. I think what Jordan's asking is like, have you ever run into a country that's not China that's like, yeah, we have Huawei ascend

and then we have DeepSeek and then we have Manus because Manus came out of nowhere just a couple months ago, feels like that would be a very quick ramp to be like, it's deployed in another country as a part of the AI Belt and Road initiative. DeepSeek, I can believe, Manus, I would give it. So yeah, give us the update on that. Yeah, yeah, yeah. It's the point. DeepSeek and Manus are everywhere in Europe.

Like they're everywhere. And again, it's open source. Open source works as a distribution strategy. They're not open source because they give they try to care. They don't care about open source. They care about defeating us. And so the approach that, this is why OpenAI made that announcement of,

we're gonna do this combined deployments of software plus infrastructure, is because they're mimicking what China's doing. But the proliferation of the open source models, go look at OpenRatter. You can just see the growth in other models. Those other models are Chinese. So it's a race that actually is a legitimately an arms race where there's not much of a...

What is the ceiling? We have to kind of think of it as imagine you're multiple countries that someone invented a new technology like the nuclear weapon. The reason why UK, France, Israel, USSR, India, it's a basic proliferation that happened was because America said, no, we're not going to give you any intel. Even though we promised by treaty actually, that the UK and France would have our intel after Oppenheimer did what he did. And that's what started the race is like, okay, well, we can't just have America have it.

We need to have it. Right. And so what is the actual breakpoint at which all of it stops? It's like, how do you, it's like, it's like, it's a kind of different, it's not an economic question, right? It's a sovereignty question. And that's why the Gulf region announcements are really exciting is because fundamentally that region is going to serve Europe. It's probably not going to serve America. It's really going to serve Europe because they can say all they want they want to build this many data centers or whatever, but trying to make the EU do anything is trying to convince an OPEC person to stop eating. They'd rather just use OZEMPEC. It's not going to go anywhere. They need some kind of injection to finally do something. the Middle East region and Gulf region is just really good at this stuff. They're good

at real estate, building power, deploying crap. And in the airlines world, that market is dominated by Europeans. Europeans use Emirates and Qatar to fly to Asia, to fly the region. I think it's going to be really similar. So we'll be able to dominate Europe through those relationships. But if we weren't going to do it, my guess is like a year or two, Huawei would have some big announcement of doing with probably Qatar, probably the country I think of first, maybe Kuwait. But yeah, and we still have to lead. But we have to realize that Huawei is going to make inroads and places that we have decided to not. And we just have to realize that Huawei is gonna make inroads and places that we have decided to not and we just have to accept that We can't stop Yeah, I've tried to give another like

How did the how did the manis investment from benchmarks it with you a lot of people that are a lot of people have Pretty much everybody has an opinion as per hoover about it. Yeah, everybody's got an opinion on it, but there's varying... A lot of no comments, actually. I think everyone has an opinion, but not everyone's willing to share them. A lot of people have opinions offline. Oh, really? Why not share it? Why not share it?

Oh, it's because of competitive dynamics and benchmark that don't necessarily want to talk trash about another firm. Yeah, if you're competing. Yeah, and I think that's the right stance, generally, for the most part. Yeah, but we let them be out. Unless you're doubting. I mean, I don't care. We could free exchange it. If they wanna do that, that's the prerogative.

If the Georgia department wants to go after that investment, as I told me they're going to, that's their decision. Like, is it the free market, free exchange of ideas? I believe your capital is your capital. And if you wanna deploy it to a Chinese model, then what I question your patriotism, probably. But you know, it's your right to do that. And it doesn't need to go much farther than that.

Vanis has serious adoption. And we should think of it as, I think that's a main benchmark we think about it, is like, you know, one that they're gonna create, you know, a TikTok style like relationship. It's not real. All this stuff is a figment of our imagination. I think it actually matters to Chinese. It doesn't. But that's just an excuse.

The reality is like they want to win. They want to make money. And in some respects, I understand that. I mean, we're capitalists here. And in other respects, you have to think about it from the patriotism perspective of like, we're not really interested in, one thing to like, maybe even allow GPUs to be sold there, which is gonna happen, by the way. GPUs are, all the trade deals include GPUs, man.

Like to think that we're really that serious about like, we don't want them to have infrastructure. It's like, it's total baloney. Like they, it's such an easy gift for the administration. We're the best, we wanna make a crap ton of money, we like that Nvidia's rebuilding here. It's an easy gift, it's not even hard to debate over. It's like, oh, you want that?

Sure, now give me reduction of fentanyl, give me stop terrifying auto imports 500%. That's the stuff they really care about, so this is an easy win. But there will be a separation is happening to where China clearly is embracing and winning open source. They will have comparable advantage, at least a reasonable alternative on Huawei, probably in like 12 months, which will basically be like an H100 ish. Uh, and it'll be cheap, large scale, easy to install all open source. Uh, so the next phase, if we want to actually win China is what the

Trump administration is doing now, which is trusted proliferation. The second phase, like we gotta get serious about open source and we have to be, we have to be very intentional that the closed model thing is just not going to work. It's not a serious durable mode. I think most investors would probably agree with that now. It's a myriad of models approach and we have to be in this game otherwise it doesn't matter if we have the best infrastructure in the world. If the LLMs themselves are all caught behind closed doors, we're just never gonna reach this traction, we're just never gonna reach this level of adoption.

And there are so many levels of advantage China has on open source right now, that we have to be serious about. Yeah, what are you expecting from DeepSeek R2? We've been, we just asked the prime intellect CEO that he had his own take. What are you expecting? I think you'll be, the rumor is like mostly on Huawei.

I haven't validated that. That's the rumor I keep hearing. I think it will be very good because this is accessible. This is math, it's open research. It's like physics. It's like thinking that we can control physics. Like if physics is available to everybody to explore discover I think it'll be very good. I think I think it's a Quinn 3.5 was very good

And managed to set an update again. It shows that I Unless we were heavily invest with I guess, you know Gemini or or or llama to really like up their game that Europe's and they continue to use that. The Middle East is continuing to use that. Um, and it just is what it is. Like we can't stop people from doing this stuff. Uh, it's available to everybody. Yeah. So, I mean, walk me through this hypothetical scenario where, uh, let's just use like Switzerland as an example or something like Switzerland, uh,

wants to control their own AI for their own population. So they build swiss GPT.com and every Swiss citizen is going there as the front end to their AI experience. And but that in one scenario, you know, that is run on air gapped while way ascend data centers-seek and mannus to actually do the computation But the data is not being exfiltrated What is the risk there? Is it just that we're losing the economic power from selling into? Swiss the Switzerland Switzerland market or or is are we worried about some sort of like manchurian candidate in the weights? Shifting the minds of the Swiss population or something like that? Like what is the risk

of the power occurring in that scenario? I mean, I don't really worry much about like, everyone knows it happens in 1989. Like you don't need your cannabis score happen. It's not them when deep sea tries to delete itself. Like everybody knows,'s very obvious uh like you know is president chi you know wendy the poo would possibly be like you know we don't really know right he did so he did disappear for six months after covid so maybe he's winning wendy the poo in a little outfit so yeah like the the the issue with the what i believe about sovereign AI is that most of the content on the internet is American English.

The estimates are like 70%. That's most of the training data. Although if you look at the proprietary data, what does that mean? I just did it. 70% of the internet is American. We're just excited about that. So they think of like sovereign AI, what is the data that they're going to be training on? Yeah.

And because the internet is English, American English, it's our slang, it's our, you know, the second is Spanish and the third is Mandarin. It's actually government documents. That is how most people are training, the governments are training their own subset sovereign AI, legal cases, law, right? And none of that crap is going to Amazon. None of that crap is going to Cori. They're going to build that to their liking. So then, okay, so what is the end use case? One is that most of this is mutual destruction sort of frameworks that

if Switzerland doesn't do it, then maybe Austria and if Austria does it they have a lot of Switzerland so they're like well I can't have that so I have to do that. They give it as a uh did you ever watch show billions? Yeah. I love that show. So so Axelrod right everything he thought about was like both him it's like it's like two lanes of thought it's like him winning and him not being owned by one of his competitors. And that's the way GPUs and AI works. It's like, I think from the perspective of like, sure, there's an advantage to my country, like I was doing investment,

but most of it is just like, I wanna screw over that other person. And investing like traders today, they're doing GPUs AI stuff, not necessarily because necessarily as a return today, because they're trying to figure out, is someone gonna screw over me somehow? Because when you put something into an LLM,

it's immediately everywhere, right? Like anything now, like private information is even more valuable than ever before because LLMs make information so accessible and can substantiate content even easier. And so private information becomes significantly more valuable. And so how information becomes significantly more valuable. And so how Switzerland would deploy that, in my view,

would be basically spying other people to providing an alternative within its own government about how to actually use LLMs internally. I think we, as Americans, need to just take a step back and realize that not everything the world does has to make money. People just kind of do stuff sometimes because they think they should do it. And we as Americans don't really get that. It's hard for us to kind of put our hands around.

So commercial. Exactly. We're so far away from Reagan where we just built crap because we're like, Soviet Union could do this to us. We're just going to do it. We're so far away and we're so dominant for so long that we're lazy. We're self-absorbed, lazy people who think that Pope Leo is a Chicago Democrat. I'm not a Catholic, but he's certainly not. And like, oh, he said this about immigration. And I was like, do you know, is a Chicago Democrat. It's a, you know, I'm not a Catholic, but he's certainly not. And like, oh, he said this about immigration. And I'm like, do you know anything about Catholic operant? Like, do you read anything?

Like, do you know, like, it's, we, what I mean by that was that we define so much international dialogue by America's framework when the world doesn't work that way. Yeah. Yeah. Real quick, I want to have a couple, a couple more questions, and then we have a pretty hard stop here.

But who is going to be the American open source AI front runner? XAI did an open release of Grok 1. Open AI is planning to have some strategy around open source. Do you have any type of, do you have any expectations here? I don't think it'd be open AI. I think it's either gonna be Zuck, Elon, or somebody else that we just don't know about yet.

Yeah, cool. Last one, do you expect to be satisfied when a TikTok deal gets announced or extremely disappointed because the rumors that we've heard so far are that it doesn't necessarily get at the core of the issue. What's wrong with that? The inference is the important part right? Yeah that's a good question. So do I think it's propaganda? Oh, absolutely. Do I think it matters in terms of the trajectory of our culture? No. Like creating, blaming Chinese

boogeymen, but like on the fact that our kids are lazy and stupid is asinine. It's classic like white guilt, sort of sucking Freudian frameworks. And like the reason why is that it's actually, you know, like your kids will actually be fine. They're leaning very heavily libertarian. So they're actually good. This kind of like late millennial, because I'm a mid-life millennial, so I'm more Gen Xer. So it's kind of like late millennial, early next gen that are very Marxist in their kind of like frameworks. And they've been told things about, there were objectively lies about our country

and how like life works and success works. And yeah, I feel bad for them, like, cause they were told things that were not true. But like saying that, oh, the reason why, you know, Chinese kids are doing math, it goes ticked off like encourages math, is pretty stupid. Like, it's like, no, but you're just like.

No, my frustration was, you know, if you're in the middle of an ideological war, trade war, you know, sort of great power conflict, we're not, you know, multipolar is not possible. It's just sort of like the US or or nothing. Why would you allow your adversary to own what is effectively like the one of the largest news channels into the US population? And why would you kind of ignore that? Right?

Because even even, yeah, getting, you know, delivering brain brain rot, like Americans are going to get brain rot from somewhere, right? They have an insatiable American made brain. you know delivering brain brain rot like Americans are gonna get brain rot from somewhere But I'd prefer to be prefer to be an American made brain rot, but but you know, you know these platforms do influence public opinion and and but anyways probably a longer conversation we'll have you back on when the news gets announced and Always a pleasure. Yeah, have a good day. God bless guys. Cheers I want a hat. I want a hat.

Oh I got you. I got you. You get a jacket too. You're gonna get the full set. You're gonna get the full set. Thanks Aaron. Great chat. Talk to you soon. Bye. Find your happy place. Find your happy place. Book a wander with inspiring views hotel grade Dreamy beds top tier cleaning 24 7 concierge service It's a vacation home, but better folks also head over to get bezel comm your bezel concierge is available now to source any watch On the planet seriously any watch and our next guest is Dan gray I have been following him for just a few days but I wanted to have

him on the show. He's put out some fantastic posts about venture capital market dynamics and I thought it'd be interesting to have him on the show and pick his brain and have him break down what he's seeing in the venture capital markets. I want to talk to him about large scale of VCs, the cram down and the angel and seed market, all the fun dynamics. So welcome to the show. Dan, if you're there, can you hear me? How you doing? Long time listener, first time caller. Glad to be here.

Yeah, great to have you. Actually, first, let's kick it off with just the introduction. Who are you? What do you do? Break it down for everyone. Sure. My kind of day job is head of insights at Ecuador and we're a startup valuation platform.

And that's kind of the perspective from which I come at all of this. Yep. Um, I think what I'm, what I'm most known for is like long walls of text on Twitter about the venture industry. Uh, and what was the most recent long wall of texts that you put out? Uh, yeah, that was kind of like a summary of the like the last year or so of observations. Like not a very optimistic title.

It's like the venture capital and ailing asset class. So that's a lot of the challenges that we've seen. Yes. But it moves towards like solutions, you know, better practices, some ideas for how the industry can evolve. So everybody comes out of it better. LPs, founders, GPs. So what are the key cracks? Why is venture capital ailing?

What are the key problems that you're seeing? What are the indicators? What are the metrics that you're tracking? Because a lot of people have been saying, we're so back, it looks really good. There's big funds, everyone's doing well, everyone's making money. It seems like it. So this was kind of an odd take to see, but open to hear the argument. Yeah, I think kind of what we see at the moment, uh,

if you look very broad, big picture is like stagflation. There is, I would say less activity than before, but prices in concentrated areas are much higher. And for a lot of people, that's a very bad thing. If you're a founders fund and you can win on merit and get into any deal you want, you're doing fine at the moment, that's okay. If you're Andreessen Horowitz

and you have the scale to buy into any deal, you're also doing fine. But a lot of my writing is actually really aimed at the middle of the market. GPs who could be doing better maybe if better practices were more accessible to them or if the market was a bit more stable. And similarly, LPs who have a difficult time picking,

if they're not already in the founders funds and US fees, how they can be guided towards better decisions and better returns. So yeah, is this just affecting new managers who raised funds maybe during ZERP or are you seeing cracks in kind of the legacy firms that have dropped out of the public eye? They're not as competitive,

but they've been in the game for a decade. They have kind of an institutional structure. Maybe they're not raising multi-billion dollar funds, but they have a model where it's like, yeah, $300 million fund every two years. You deploy it. It's great business. All the partners are going to retire wealthy. Um, or is there risk for that type of a mid market VC firm?

I think the, the ones that are struggling the most at the moment are perhaps the ones that like haven't evolved as quickly as the market has shifted in the last year. So we've seen this much talked about bifurcation into what I call venture banks, like Andreessen Horowitz and Thrive, etc. And the traditional model of VC, which is contrary in investing, a bit more disciplined, you could say, on that front. There's a few people, a few funds, kind of stuck in the middle. And they're a mid-sized series A firm who's still trying to invest their AI and they're having a very difficult time right now.

So you kind of have to pick your lane a little bit these days and lean into the strengths of what those two different lanes offer. Did you ever read Everett Randall's post on like the Tiger Global and the and like the squeezing between what was he calling it? He had some great phrase for it. Playing different games. Why Tiger is eating your lunch and your deals. It was kind of talking about how Tiger and the crossover investors came in and they were just commodity capital

that you just show up with a deck and get a term sheet same day and it was very much like Venture Bank versus the, well, how do you describe it? He said the, he described one of the funds as like JCPenney funds, which is very rude. That is the dead zone. So there's Tiffany and Co, which he said was like benchmark,

founders fund, like the really like prestige sequoias of the world, low velocity, higher IRR, main advantages signaling, building a board of directors, but it's expensive capital. Then you have the Walmart, which was Tiger Global, higher velocity, lower IRR, but they're built to accept a lower IRR. Although that didn't play out very well for Tiger specifically, but in theory, these venture banks are kind of playing this Walmart category.

But the dead zone was the JCPenney, where you're not super differentiated, sending a really strong signal to the market that we have picked the winner, they're going to the moon, and so get in or get out. But you're also not super founder friendly, not taking a board seat, just dumping cash in a company. Is that dynamic still real in your mind? Has it grown or has things changed? Yeah, I think it's very real.

It's definitely real. And you can see that in a lot of the liquidity issues today. So you have the big like venture banks, let's call them. They're finding more opportunistic liquidity through secondaries for the huge winners that they invest in who have the strength of brand and the size to generate a lot of liquidity in that manner. Where other VCs would traditionally get liquidity, IPO and M&A, we all know has been very slow. And that slowdown for a range of reasons, but it's part of because the industry became so bloated

and confused for a while. Hopefully as this bifurcation is better understood, those more traditional managers are like teeing up companies for exits in a healthier way. They better understand the kind of exit metrics you need. Yeah. As opposed to the venture bank model. Do we need to kind of re redefine these terms of venture capital?

Cause it used to be there was like angel investors, then venture capitalists that would do series days and maybe series B's. And then there was growth equity, private equity. And then like, uh, yes, a hedge fund might take a large position in a late stage firm, but they weren't seen as VCs. Now you can have a VC firm that, I'm pretty sure there's venture capital firms that have never invested in a company

at less than a $1 billion valuation. Because their whole business is maybe we buy secondary or we buy common or we do growth stage. And we're really only trying to be along for the unicorn to $ hundred billion dollar ride. And we'll do that all day long because there's so little downside. And by the time we're investing, the company has durable revenues is growing product market fit.

So we're not even trying to underwrite the founder or their ability to explore the idea maze we're just piling in. We still call that venture capital. And maybe that's is that a problem? Or do we need to think about the, the market differently? I think it's definitely helpful to think about it as a slightly separate beast. You know, venture capital in my mind is finding the non-consensus companies. And then you, you fund them through into like legibility into growth,

growth capital, and ultimately to an exit. That's how you generate your current liquidity. The new game today is kind of like this financialized version of venture capital where it's not necessarily about like finding great companies and taking them to exit. It's about like funding through the like the incremental milestones and hitting those incremental metrics to raise bigger funds.

You know, and you do that through pursuing TVPI in a way that like is slightly disconnected to generating value in the traditional sense. You know, TVPI has slightly different drivers, you could say. Yeah, do you think that part of the reclassification as somewhat other asset classes into venture capital is driven by a desire to mimic the fee structure of

a traditional venture capital firm in other industries. So I'm basically doing public markets investing and I might be able to get one in 10, but if I call myself a VC firm and I play a little bit differently, I get two in 20 or something like that. Do you think that the branding matters when VC firms go out to LPs and try and raise money? That's a good question. I'm not really sure about that to be honest.

I mean, I'd hope LPs were scrutinizing that a little bit more, but perhaps not. Do you look at any data on the health of the sort of retail in the private markets, right? Like the everyday angel investor, are you seeing more or less activity today than in 2021, early 2022? I would say quite a bit less, probably like a third less at the moment. Because so much attention is concentrated on AI.

And I think a lot of angels, frankly, have just resigned themselves. They're not gonna get in on that game. Yeah, interesting. Yeah, I was thinking, I was even gonna consider doing a poll to anybody within just a poll on X or whatever, but I think if you ask the average angel investor,

would you sell your entire angel investing portfolio for 15 cents on the dollar today? And I bet you that, I bet you the honest answer is that like 90% of people would because angel investing is this like weird dynamic where to me, I legitimately feel addicted to angel investing. Like it's a weird thing, but, and I joke about this, right?

It's like all these kids that grew up in San Francisco and their parents are addicted to angel investing, just like refreshing their email on the first of the month, waiting for the update. But it's this interesting dynamic where, it's honestly one of, to me, it's one of the most interesting dynamic where it's honestly, to me, it's one of the most interesting ways to spend free time, is just meeting exciting founders,

but at the same time. It's a liquidity timeline. It's so long. Literally. Even if you make money, it's like, well, I didn't get to enjoy that in my 30s. Yeah, totally. Maybe it's for something.

And I have buddies that are towards the end of their careers or maybe even retired that are basically, somebody recently said to me, I don't want to make net new angel investments because I don't wanna deal with this when I'm potentially in a retirement. That's crazy. Potentially retired to Hawaii, right?

I don't wanna be worried about figuring out, oh, when should I retired to Hawaii, right? I don't want to be worried about, you know, figuring out, oh, when, you know, when should I try to exit this position? Dan, can you break down this idea that most venture capitalists don't understand risk management and only 10% of venture firms are making it to fund for? What do VCs get wrong about risk management? What does risk management even mean?

I thought the whole point was to be risk on, swing for the fences. Man, that's a great question. It's a real fundamental point as well. I talk about the importance of risk management in venture capital and people do give me a slightly crazy look, like the point is risk. But if you properly manage risk, like in a systematic way,

you can take more risky bets. That's kind of the point. Like if you understand the maths of portfolio construction, how big your checks are going to be, you know, what the outcome is likely to be, how many you have to write, what maximizes your exposure to potential unicorns, you know, what, what discipline across the whole portfolio looks like you can take more risk on an individual investment basis. And yeah. So what does a, what does a poorly risk managed fund look like? Is it just not building concentration

in the winners, not leaving money in the fund for pro rata and follow ons to kind of ride the winners up as they become outsize winners? I feel like that was something that we heard from like the last generation of managers that got a $50 million fund, then everything got marked up in ZERP, and all of a sudden they had to make these decisions on huge pro rata checks out of their main fund, where there really was no new data about the company

and they were still at a seed level, but some big firm had come in and preempted a Series A or Series B, and so all of a sudden you can't do the normal thing of wow. There's so much traction on this company I need to really make sure my fund has a significant ownership because I did get a foothold in But I need to build that position. Is that what's going on? Or is there something else some another dynamic? Yeah, that's a part of it. That's quite a big part of it I think like the fundamental thing is the,

having a right sized initial portfolio, the number of investments that you make to begin with, that should be diversified enough. And the average might be like 25 today, maybe it should be 50. How do you even calculate that? Is that based on like historical trends in like the number of unicorns or something?

Like how are you thinking about that? Yeah, exactly. There's, there's great work done by a few people. Dave McClure from 500 startups. He has an article on this. He talks about, you know, a hundred startups should be the portfolio size for a seed fund. Wow. Because of the small percentage that eventually become unicorns or dekakons. Yeah. And you fundamentally don't know to begin with which which ones are gonna work out that's kind of the problem is

VCs over concentrate and of course if you're You know I've spoken to some great GPs about this concept and they always push back because they have 15 companies and they're all doing great And that's like fine good for you. You're in the top 2% It's the other 98% that I'm kind of thinking about. But is that really a way to get to, like, by definition, the don't you to be in the top 2%, don't you have to behave like the top 2%

and just actually like consider it a skill issue and just make sure that you're trying to get, you know, I can see the argument. If you're trying to get past fund four, which is like the milestone, you need to have bangers in the first fund, right? Like even if you're not necessarily, even if your ownership is not amazing,

you need to be able to prove that you can get into winners at all to some degree. And so I've seen that strategy play out fairly nicely where as long as you're in a handful, just showing that you can get in is kind of like key points even if you're not able to concentrate 5% plus of your fund in a single company. Yeah, do you think LPs are more willing to forgive

on mistakes of portfolio construction, not sizing into winners, easier than missing winners and having like, okay, yeah, you built the portfolio perfectly, you got concentrated into your winners properly, but you didn't have any of those really sexy companies in the portfolio. Well, I'd like to think ultimately what matters is, you know, the end multiple, the IRR, the

performance of the fund, and everyone, you know, the majority of emerging managers come out swinging for the fences every single time they want a 10x fund. And in doing so, they are like are themselves boom or bust. If they fail and it's less than returning capital, they have no room to learn. They can't improve for the next fund. You know, there's, there's no step two. If they are a bit more conservative, a bit more diversified, and they return like 2.53 X, maybe they get a fund too and they learn and they can improve and earn

concentration over time. Isn't there something beautiful about the fact that both startups exhibit a follow a power law and venture both startups exhibit a follow a power law and venture capital firms exhibit a power law? Like there's a kinship here that it's like, hey, we're all either going to be rich or poor here. There's no median outcome. You're not just a bank to me.

You're not going to be around unless this works out. You're living under the power law just as much as I am as the entrepreneur. I would disagree with that to be honest with you. Please. you're living under the power law just as much as I am as the entrepreneur. I would disagree with that to be honest with you. Please. I think it's a better world for everybody if the VCs are more stable. Okay. They are very power law, they are boom and bust.

They don't really have to be. They don't have to be. Interesting. Interesting. Well. Yeah, this was great. This was great. Thank you for coming on and sharing.

Next time you have a report, give us a heads up and love to have you back on. Yeah This is great. Cheers. Thank you Let's run through some Timeline let's give some updates. What else is in the news? I've got an idea before we jump into the timeline Should we talk about figma? Of course is we talk about Figma? Of course. Tell us about Figma. Figma is the design tool of my dreams. It's a tool that I've used for my entire career at this point.

Think bigger, build faster. That's great. Good check. We should hit an airplane for that. We design how you design. Explore your ideas freely and iterate quickly. We should make an actual old school style radio ad for this.

But anyways, Figma launched a bunch of new features last week at config, one of which is very cool. They allow you to generate marketing at various types of assets based off of your brand book. It's called Figma Buzz. So exciting new feature from them alongside sites and kind of the core design tools that you probably already use and love.

So go check out Figma Buzz and Sites and thank you to Figma for the show. Should we talk about some timeline? Let's do it. Jason Calcanis of the All In Podcast is taking the movie industry to task. He says the movie industry is effing clueless Make a $19 a month all you can watch $10 plus $10 for each kid and

$49 for a family of five watch the money pour in he wants a subscription Movies would be huge if you made it a season pass likes the ski industry did with the epic pass Show old movies to for bonus points AMC will slash prices on Wednesday is the news by 50% starting in July the goal is to get more people in theaters between weekends which interesting is that I saw a separate article about how the modern instantiation of movie pass is wildly successful have you heard of this yeah I think it's well yeah apparently AMC has a subscription product already they do I think the interesting thing that Jason called out is showing old movies.

I think one of the challenges is that there's so few new movies coming out that people are genuinely wanting to get up and go see. Yep. I don't know if old movies would do it, but. They do re-releases all the time and they are available and I don't think they build as much hype because I think there's some weird dynamic in the movie industry where I think unless you see the billboard and the hype and like you're texting your boys I think comes down to scarcity

that they need to pull movies off of every off the internet entirely yeah for a year it's good and then just build it up and being like we're bringing it back. You know, the people, some people will be like, well, I have a DVD. I can watch it anytime. Good luck playing a DVD on your home entertainment system if you got it in the last five years, not going to work. Um, anyway, Stan with the all in podcast, Chamath Palihapitiya says not nearly enough

people are talking about the implications of Klarna rolling back some of their AI bets Not knowing any of the details I can guess why Replacing determinism of Hugh or humans with probabilistic code is fraught with edge cases and require new ways of software development and process engineering That aren't well solved the implications to an entire generation of AI apps will be as severe Will be severe as no as more companies come to terms with the difficulty in getting products to work reliably in production with AI in the loop. Customer service may be the first funeral signpost.

The result will be that many startups need to pivot to simply use AI for narrow use cases and otherwise act deterministically. So what will, so what have people funded then? An AI company? No, not really. Just a really overpriced SaaS company at AI valuations. Interesting.

What do you think? I mean, I thought the conversation with Owen yesterday from Intercom was super insightful, right? They are incredibly well positioned to deliver AI to CX teams and unlock the power of it, but they're not saying, he wasn't coming on and saying, 99% of tickets are solved by AI today. He believes that we can get there over time,

and his hot take was that AI was better than humans already at a lot of things, right? It stays on script, it doesn't get tired, it doesn't get short, it's not temperamental. All these things that end up creating a better customer experience once the quality is at a certain point. It's this idea that we overestimate

what can be done in a year, underestimate what can be done in a decade. You got superhuman autocomplete for every single one of your customer service agents. You got much better ways to navigate a knowledge base effectively and just serve up a better Google search, use it as a knowledge engine. And so that should drive those. But trying to go full Klarna mode and saying, you know, we're not hiring anyone. We're going to be a one person company,

probably a little aggressive. Yeah. Anyway, Avi Schiffman, founder of friend.com says, I met my investors LPs and realized I'm just working for college endowments and family offices. Activate, gold, gold and retriever. Gone. Yeah, you are. And it's good. It's an opportunity.

It's an amazing blessing. I mean, we heard about this from Andrew Reed talking about when he was pitching Dylan Field at is figma brought him into the the Brown Conference Room and said, Hey, like we work for brown opportunity to run it up for brown. Yeah, you run it up to go long brown. Exactly. It's not just college endowments. It's it's teacher pension funds. It's, you know, you're supporting firefighters, all these things. so you're supporting,

you're helping big oil, right? You're... I mean, that is part of the beauty of the intertwined financial system is that losses are born across the entire economy so that any one company that blows up doesn't destroy everyone's pension. But when there's big winners, everyone kind of benefits if you have a pension or you go to one of these schools,

like their endowment is enriched and they do more research and science and all sorts of stuff. And so you have kind of a, I mean, it's just diversification, right? It's just diversification. And so you don't hear as many of those stories about an individual Main Street investor

that lost all their money on a risky startup bet, because angel investing is, while addictive, it is for high net worth individuals and accredited investors only, but they still have exposure to the venture markets through LPs. Yeah. Prime Video has renewed Beast games

for not one but two more seasons. Y'all are not ready for the big stuff We have plans as mr. Beast This was one that was like hotly About whether whether whether it was good It's hard to track because you can't just you can't just look at the YouTube metrics to understand if these games is truly successful for Amazon Prime, but we have the data now season 2 and season 3 confirmed They probably wouldn't have done that if it underperformed. So interesting watching a YouTuber transition to mainstream media or, you know, bigger platforms. I mean,

Amazon Prime's new media, but still, you know, a huge company, major network. He's clearly worked out a fantastic deal. And we've seen a bunch of this and it feels like it's more of a increasingly social media is a proving ground for Hollywood. Talk about Pat McAfee, what he did with his podcast, took it to ESPN eventually. I think we're going to be seeing a lot more of this as people build independently and then ultimately leverage the distribution that comes from something like Amazon Prime. So congrats to Jimmy. We should have him on the show. Dalton Caldwell says, the S&P 500 now has three YC companies, DoorDash, Airbnb, and Coinbase.

Let's hear it for YC. Can we get a size gong or some clapping or something? This is amazing. Congratulations to YC. I can't wait to go back to the next demo day. Yeah, me either. It is actually crazy how big that YC has done this because no other incubators even close, right?

I'm excited for the update in 2055. The S&P 500 is now 60% Y Combinator company. For sure. Certainly, if you expand that to YC founders running companies, probably even bigger. Yeah, PJ says 497 to go. 497 to go. PJ PJ I like it on a conquest good job and all our consumer tech yeah everybody says build b2b sass until you see some of the biggest outcomes just wait I mean a couple of those payroll companies will be in the S&P 500 pretty soon I'm pretty sure

all three Aidan says u Uber would be a lot cooler if it was called American Express. I just love this guy, he has seven likes, low tam. Low tam banger. He also had another post that we didn't get to yesterday that was like, if the airline's calling your name personally as you board the flight, it's basically like flying private. I thought that was funny.

Anyway, shout out to Aiden. Great programmer Great hacker Airbnb is launching. They're unveiling their next chapter. This is going live today. I don't actually have the update but Founders so they're launching new services. Okay businesses There's a redesigned app. So remember they condensed a bunch of launches into one. Yep Experiences for a while expanding beyond homestays. And I guess they're going to invest a quarter of a billion dollars into this new sort of business line. Like, it seems like an extension of their kind of experiences product. Sure. But anyways, hopefully they can.

Hopefully they don't crush under the weight of competition with Wander. Yeah. Honestly, that's my only hope. The rumors of the Wander series B. Founder mode CEO, love him. But they're gonna be feeling the heat. They're gonna be feeling the heat from Wander for sure.

Adam D'Angelo said, "'A Quora we recently tested switching from Zoom to Google Meet for a week. Google Meet is better in many small ways, but bit worse in one big way, audio quality, particularly background, audio noise cancellation, echoing. That kills it.

So we're staying on Zoom. Those are funny, just like, hey, I did this AV test and we're sticking to Zoom. And Sundar Pachai responds. Sundar. It says, Hounder mode. We'll follow up offline as we have sticking to Zoom. And Sundar Pachai responds. Sundar, founder mode. We'll follow up offline as we haven't explained this. As read notes below, it works pretty well in my experience.

We will debug to understand the root cause and fix. Thanks for flagging. Thank you, would love to switch if this is fixed. And Nathan, a buddy of mine says, I have the inverse experience. Zoom is well rubbish in it. And he's British or French maybe, I don't know. He's over in Europe somewhere. I don't really know it. He's British or French. Maybe I don't know. He's over in Europe somewhere. I don't know the specifics of that.

Well rubbish in it. Hilarious. Anyway, Teddy Blank had a coinage once your VC has, what was it? The actual coinage was something about once your company's LinkedIn profile picture is the founder holding a microphone at a conference, you're caught. With one of the, with. Yeah, with one of those. Which I don't think is really true necessarily

because a lot of the big CEOs, they wind up doing that anyway. Bezos, Steve Jobs, I'm sure all these guys have been pictured with lav mics. But still, funny to see that, yeah, if you grow up too much. So anyway, shout out Teddy. Anything else you wanna cover?

Should we get outta here? It's 2's 205 thank you for watching two oh five more plugs at Aurora comm you should always go to you should always go there eight so but but uh no I'm excited for the show tomorrow we got Brian Johnson calling in as well as Matteo from 8 Sleep. That should be great. And yeah, go and leave us a five-star review on Apple Podcasts or Spotify. It helps us, I think it helps us, I don't know what it does, but if you do leave a review, we will talk about it on the show.

And head over to PolyMarket. Keep tracking the largest company at the end of May. This is the Super Bowl of big tech. Microsoft's at 60% right now, but they dropped just recently down from 80%. This chart is actually- Nvidia is climbing fast. Apple's climbing as well.

It's a knockout, drag out fight for the largest company at the end of May. Head over to PolyMarket to check it out. Anyway, thank you for watching. We will talk to you soon. See you tomorrow, goodbye.