TBPN Live - Trump's Tariffs, Market Crash, Zachary Perret, Scott Wu, Sam D'Amico, Peter Goldsborough, Nathan Mintz, Michael Laframboise, Fil Aronshtein, Chris Power, Brandon Tseng, Akhil Iyer

Episode Date: April 3, 2025

TBPN.com is made possible by:Ramp - https://ramp.comEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.com Numeral - https://www.numeralhq.comFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://youtube.com/@technologybrotherspod?si=lpk53xTE9WBEcIjV(00:33) - Markets Crash After Trump Announcement (17:27) - Chris Power (59:02) - Akhil Iyer (01:14:49) - Fil Aronshtein (01:29:19) - Zachary Perret (01:45:26) - Nathan Mintz (01:59:50) - Brandon Tseng (02:14:36) - Peter Goldsborough (02:31:18) - Sam D'Amico (02:46:04) - Sam Wu (03:01:54) - Michael LaFramboise

You're watching TBPN. It is Thursday, April 3rd, 2025. We are live from the Temple of Technology. The fortress of finance, the capital of capital. This show starts now. We have a great show for you today. It's a terrible day in the market. Stocks have plunged. The dollar sinks after Trump's tariff blitz. The NASDAQ down 4%. S&P down 3%. Dow Industrial's plummets 1,300 points. Bad news, but we're gonna take you through it. And it's a little bit of a defense day, little bit of a manufacturing day.

We're calling it America Day. America Day. That was the best word we could find for it. We got a bunch of people joining the show. We're gonna kick it off with Chris Power over at Hadrian. He has been beating the drum on American manufacturing. A lot of people thought he was crazy, thought it could never be done.

Now he has a pretty sizable advantage. It's kind of crazy to watch. So excited to hear him talk about what the tariffs mean for his business, what they mean for other businesses, and break down how he's taking advantage of the new tariff regime. Then we got Deleon and a ton of other defense investors. We got some absolute dogs, John.

Yeah, we also have the CEO of Plaid's coming on, talking about the fundraise that just brought Drop Today. And of course, Scott Wu from Cognition is coming back for a second TBPN appearance. This is a guest record for us, John. I think we have 10. I think we have 10. It's all in a hard day's work.

JD Vance chimed in on the tariffs. He says, we need change. He has a quote here. He went on Fox and Friends, says, a lot of people have gotten rich from American companies moving overseas, but American workers have not gotten rich. And frankly, American companies have not gotten wealthy

from increasing growth of foreign competitors manufacturing overseas. And so this is kind of the trade-off. Like I think we'll go through this again and again and again, but you know, most economists would say that these tariffs are net harmful to humans or like the global economy. But of course there are always winners and losers within these, whenever these rules like, you know, pencil out. And so yes, Nike is getting hit really hard.

They manufacture abroad, they sell to Americans, they're gonna be hit particularly hard. But if you've been running a business that's making shoes in America, and the only benefit you had was just you'd throw the Made in America logo on there and hope that people bought them, well today you have a serious economic advantage,

and so you're probably pretty happy, and you're a winner. And Trump and JD seem to be saying, you know, that's who we're speaking for that's who we're representing with these There's also this argument that over the long term. This would be better for America Maybe this is even better for humanity as a whole We're gonna hear from various people hear them out and see what they have to say I think you and I were talking about this when we Were working out this morning,

just that I'm not entirely black-pilled on these, I'm also not entirely, we're in a golden age. A lot of the timeline seems to be much more split than we are, which is kind of odd. I mean, I feel like I felt very, yeah. It's one of those things, nothing is gonna ever be as bad or as good as you think it is. Yes, but on my point, it's like,

I experienced the Studio Ghibli moment very much in tune with the timeline. The timeline was like, this is the greatest thing ever, and that's what I felt. I was like, this is the greatest thing ever. I'm having so much fun, I'm in tune with it. And then as the mood shifted to like, what is the meaning of this slop is there are there negative consequences?

I was engaging with that too And I was and I was interested in those arguments and I don't know if I agreed with all of them But I was I was here for it and with the tariff stuff I feel a lot more Split and and a lot of the hot takes that I've seen I haven't been like oh, this is this is my belief like this Is now my take it's one of those things where clearly running an experiment on the economy, and we haven't seen the results yet.

So it's dramatic. It's thrilling. It can be scary. But we're going to find out. It's the largest drop in the stock market in more than five years. Since March of 2020. Yeah, since COVID.

And at the same time, I remember those drops and they were more significant and more scary and crazy in my opinion, because there wasn't as much signaling going into them. Like this is very much a human decision that could be reversed, whereas COVID was, it felt like something that couldn't be just, oh yeah, actually we're changing course.

And so the stock market should immediately go up. It wound up going up really quickly and bouncing back. Well, yeah, and the wild thing is the market is, the S&P 500 is up 4.3% over the past year. So we're still. Over the past 12 months. Over the past 12 months. But it's down this year, right?

This year has not been good so far. Sure. Because we have a Trump pump at the end of 2024. It's down 4% over the last six months. Sure. And 7% over the last month. But for the prior 12 months, it's up. But just this one move wiped $2.7 trillion in market cap off of the Dow Jones and the

US market broadly. And I think that what JD is trying to say is like, yes, the $2.7 trillion was eviscerated and eliminated from the market caps of these companies, but we hope that more than 2.7 trillion is distributed in the forms of better and higher, more high paying jobs for Americans. It's an experiment, we'll see how it goes, and we will hear everyone's takes. Interestingly, NVIDIA is down almost 7% today,

even though, even though, well, semiconductors are excluded. Okay. So probably a smart exemption, but still, Nvidia feeling the pain. Kind of second order ramifications where, a company that does business abroad is going to be more conservative, some of them might buy less GPUs because they're,

like you can play all this out to, you know, a lot of goods that are Chinese are bought on Meta, and so maybe Meta makes less money because there's people advertising less e-commerce products because e-commerce is hit so hard by this, and there's just a whole bunch of different knock-on effects. So very complicated, but Max Meyer had a good, the, what is this,

the Norman Rockwell painting of the man standing up saying something contrarian. Says putting 17 to 34% tariffs on high quality industrial machinery from Japan, Germany and Israel, Holland, et cetera, will hurt American reindustrialization and make it more difficult to operate factories and produce goods in the United States.

Hard to argue with this. We gotta talk to Chris about this because he buys the Hormley, like CNC, the six access thing that they have like copy pasted 25 times in their massive facility. And I'm sure the prices of those machines are gonna go up, but maybe there will be a carve out at some point.

Again, this was just one of those like, here's how we're thinking about it. A lot of it did go into effect very quickly but all this stuff is always up for negotiation it's the art of the deal baby this was a funny one from AF Post so apparently Trump has levied a 10% tariff against the herd and McDonald Islands which are inhabited only by penguins. And so if you're a penguin in the McDonald Islands, good luck selling goods to America. Penguins, I mean the traditional legacy media has taken a victory lap on this one.

USA Today says penguin seals and other wildlife only inhabitants of two islands hit with Trump tariffs. NPR, Trump's tariffs are so far reaching, they include several remote uninhabited islands. I'll come out and say it, I will say it. But hey, if you're Switzerland and you just got hit with 31% tariffs, maybe we'll see Rolex move some manufacturing out to the herd McDonald Islands.

Yeah, I mean, I think that it's a little bit edgy to say, but penguins have been free riding on American hard work for years and they gotta pay their fair share. So if you're a penguin, get ready to pay some taxes. The external revenue service is coming for you. Anyway, very, very funny story. I liked Atlas creatine cycle, this is a good one. Get ready to learn how to put together iPhones, buddy.

I love it. It's just very funny. I can't wait. I can't wait. The thing is, if you can put them together, if I could know how to put this thing together, I could also know how to potentially take it apart. Yep.

And then I could swap the battery out. So that's why they outsource manufacturing. They don't want you to replace your own battery. Yeah, yeah, yeah. I get it. That's a good conspiracy theory. Yeah. So we want you to replace your own battery. Yeah, yeah, yeah. I get it. That's a good conspiracy theory. Yeah, so we go through some of Joe Weisenthal's. Yeah, Joe Weisenthal dropped a beautiful blog post

in the iconic orange Bloomberg font because he, of course, is delivering his newsletter, not just through email, but also through the Bloomberg terminal, as any self-respecting financial journalist should. We should really start syndicating on the Bloomberg terminal. That would be the idea. I don't know what it takes but we got to make it happen. He says, once again I'm just going to list random thoughts that are going through my head right now. I want to start with Nike actually. At the time of this typing the stock is down 14% pre-market. As

far as I'm concerned Nike is the perfect specimen of American capitalism the profitable design work is mostly done in the US the manufacturing is done in countries like Vietnam and the whole brand exists as it does because the US is a global powerhouse for exporting culture like star athletes it just makes perfect sense for the stock to get nuked like this as both its basic business model and the American brand values get trashed other American apparel brands like Lululemon and Deckers are similarly getting clobbered this morning. Speaking of Nike and Vietnam, in his chart book today,

Adam Tooze notes that 50% of Nike's products are made in Vietnam. And of course, the Vietnam shift, Ryan Peterson pointed this out, that a lot of companies were trying to be proactive about relocating from China. Also, manufacturing in China has gotten more expensive. That wasn't just tariff risk,

that was geopolitical risk as well. And just economic factors in China. As China has gotten more skilled, it's more expensive to manufacture there. So stuff has moved, AirPods are made in Vietnam famously, and that there are half a million people in the country working for at least 155 factories that make Nike goods. Now we're slapping massive tariffs on them,

but the question is to what end? Do we think there are hundreds of thousands of people in the US eager to work in sneaker and t-shirt factories at the wages that sneaker and t-shirt factories pay? Are there people eager to work in sneaker factories even at good wages? Do we think that the U.S. has the level of robotic capability to replace these factories without having to hire

a lot of workers? And if not, what is the administration trying to accomplish? I think the steel man here is like, there's a learning curve to the robotics capability where if you don't have the facility in America at all, it's very hard to get the reinforcement learning data to train the robots. And so, yes, it makes sense to potentially, in the very long term, if you're super AGI-pilled, you should overpay for human training data, essentially. And yes, maybe because of American working conditions,

the output would be lower, the prices would be higher, but if the tariffs lead to a situation where you're willing to take that trade, that puts us on the learning curve to develop humanoid robotics. Again, I'm just deal manning here. I'm not fully convinced of that. I think broadly, and this is what I'm hoping to get

from a number of our guests today, is for America to re-industrialize, we need to lead with innovation, right? We don't have the skilled manufacturing labor base that is gonna allow us to onshore all this stuff overnight, even if you could immediately snap your fingers and have the facility. So it needs to be innovation led.

I heard a very hot take at some sort of re-industrialized conference where someone was saying, I'm extremely bullish on American manufacturing, but I don't think it's ever coming back. I think we're going to rebuild it with robotics from the ground up, and we will be a manufacturing powerhouse, but it's not gonna be American labor-led. It'll be innovation and technology-led. And that's an interesting,

that has its own problems you've got to grapple with, but I thought it was interesting. Anyway. And to be clear, that still creates jobs. Totally. Because somebody needs to oversee the facility and you're not going to have end to end autonomous factories for a very long time.

I mean, opening AI employs thousands of people. Yeah. Opening AI is still hiring software engineers. Yeah, yeah, yeah. Same with Anthropic. Yeah, and you can imagine a lot of different higher leverage operations where you're puppeteering ten robots at a time and doing teleoperation a lot of interesting paths to Making American manufacturing great. So he says oh

You want to keep going on this we have two minutes. Okay, I was gonna move on to shield He says one dollar was worth one euro at the beginning of the year The dollar is declining in value now worth 90 euro cents. Your European summer just got more expensive. Well, hopefully for the VCs that were planning trips, they can get another fund closed before then and just make up for it with management fees. Should we talk about Jeremy Tsai,

very successful entrepreneur who runs a company that the whole plan was Direct from the factory. Yep to delivery to American consumers so why buy the Hermes bag when you could buy a identical bag from a Yep facility that was built and it's even less Hermes is maybe not the right example Yeah, it's like a luggage and Restoration hardware towels sure sure we'll give you the same towel. Yep, or the same quality of towel Yeah for a fraction of the price and so he says consumer prices are built with percent targets not absolutes meaning cost increases are exponential If the cost is 10 and the price is 50 to maintain product margin a $1 cost increase equals a $5 price increase,

a $5 cost increase equals a $25 price increase. These are multiplicative, and so he's arguing that this will lead to consumer inflation, which of course is a risk. Taking the other side of this argument, Sean Maguire, he says that this is the first long-term thinking president in my lifetime. He's obviously supportive

and it seems like he's excited about it. I'm excited to talk to him about how he's processing this and playing that out. Yeah, this is playing into short-term pain, long-term gain, and that's what you gotta be oriented around if you believe these are good policy decisions. And Paul Merlucky came out in support as well. He said, unprecedented embrace of protectionism, they say.

No, reciprocal tariffs are the opposite. The whole point is to encourage free trade rather than lopsided free trade we currently have with so many countries. It's very simple. If they charge us, we charge them. So, this would be an interesting long-term play. What if this triggers a reduction in tariffs and and and Trump says yeah, we're gonna stick with reciprocal and as you lower your tariffs

We'll lower ours and all of a sudden we go to a truly free trade That would be a very interesting outcome I don't think a lot of people are expecting that or pricing that in but I think Palmer saying that that that could be a Potential outcome here. Anyway, we got we got Chris Power coming in the building. I wanted to play this video first. Do we have the video? We're cultivating Chris Power. Yeah, we're cultivating Chris Power in America.

I wanted to hear Howard Lutnick talk about the tariffs and give us a little breakdown, and then I think Chris could do some analysis for us. Let's see what else is going on. There's some more posts here. Tyler Cowen did not love Liberation Day. He said Trump's reciprocal tariffs impose hundreds of billions of dollars in new taxes on Americans

without public congressional input. So arguing that this should not come from the executive branch. They're based on secret calculations. Okay, I think we got the video. Let's play it on the show now. What happened to the world is the global governments have backed taking our factories away from us. I mean, there's nothing about Taiwan that they should be making semiconductors.

There's nothing about Korea. They should be making all of the appliances and the electronics of the world. What's happened is they had a policy of their governments to let's back our companies and let's take this business from America while America's not paying attention. So our factories went overseas. But what you're going to see is the most modern factories of the world come back here. We are going to start on one of the great training programs of the world come back here, we are going to start on one of the great training programs of the world to teach our employees what tradecraft is,

you know, how to build factories and not the old kind of factories. I'm talking the most modern, the most high-tech factories. When you say HVAC, what we're talking about is cooling a high- tech semiconductor plant, probably one of the coolest jobs you can have, right? Mechanics fixing robotics. That's what's coming to America. The coolest factories, the highest tech factories, they're all coming home and Donald Trump is bringing them home and he's going to create a renaissance of high tech manufacturing in

America. That's why America's going to win. He's news maxing. He's on Newsmax and he's given the pitch for why America is gonna win. He's news maxing he's on Newsmax and he's given the pitch for why these tariffs are good we're gonna hear from Chris Power who's in the Temple of Technology talking about these tariffs. He's back. We're cultivating Chris Power. I would argue that we are sitting in a high tech factory but it's nice to see you on the show again. Fantastic. How did you process the news? Give us the high-level breakdown. I think it's incredible for all manufacturing businesses and I think the pushback

you're seeing from people who've got crappy e-commerce businesses built on the backs of Chinese team who textile facilities are the problem. I mean, what happened since the 70s through the 90s is we offshored all manufacturing to developing countries because we didn't want to deal with it. And all great power conflicts hang off the back of commercial manufacturing being able to pivot to defense what it really matters. And London is absolutely right.

And what people miss is China especially, but all developing countries are not just cheaper in labor. They've been actively subsidizing, you know, basically to make it free, energy, capital equipment, labor. And when they export manufactured goods to the US, often they are, you know, they're getting refunds of the government of 30 to 50% through this kind of export tax. So this is not, you know, us raising tariffs unfairly.

It's just leveling the playing field of what's already been happening. I mean, often what we see with competitive Chinese prices for CNC machining is that the cost of the raw material we can buy is more than the part that Chinese selling to a US manufacturer. And that's just all through subsidies, right? Of all these key areas and these export tariffs. And what that's done to the country is you can think about this as kind of like a balance sheet, right? It's kind of like what DeepSeeker is doing. That obviously doesn't cost a cent per query. They're subsidizing it so they draw the consumer into that platform, they gain all the leverage over open AI. It's the exact same thing with

manufacturing. And then what happens over three decades is you offshore all the skills and the capital equipment to developing countries. And then when we go into a conflict, they've got all the manufacturing capacity. So I think this is a very accurate response to the forced deindustrialization of the US through aggressive trade policies from China

over the last 40 years. And this is just barely making it even. Now, yes, are some goods and services going to be more expensive? 100%. What this is going to cause though, for American manufacturing and bear in mind, I would say 90% of what American manufacturers buy, even if their revenue is on the NASDAQ is offshored. So we're flowing 90% of the volume from NASDAQ revenue or Nike shoes to

developing countries and paying them to do our stuff and then they're subsidizing it by 50 or 60%. So what you'll see from here is this forced re-industrialization of the US because now we're going to have to build more factories, more factories, more factories, more factories in the US, which is going to cause this now huge boom in manufacturing skills and talent to serve those factories. And because our skilled labor in the country is aging out, because you know, we told all the kids in the 80s and 90s that if you didn't have a four-year college degree, you're an idiot, is now we have to build factories that are highly advanced, use the intent of the people,

and are exciting for kids to get into. And it's not about replacing jobs, it's just going to be different jobs. You know, you're going to be a robotics technician, you're running 10 machines at once, versus like, you know, doing absolutely everything with your hands. And this is the way we prepare for, you know, 2029. And this is this is the strategy, right? As you tariff everything, we bring back manufacturing to the US and the next four to five years, you're going to see the greatest reindustrialization of the country so that we actually have

the skilled trades on shores that, you know, God willing, we don't get into a conflict. But if we do, we might have a hope of doing it because you can turn a dishwasher facility into a missile factory pretty quickly. And I think everyone who's kind of complaining about this is like, you know, kind of part of the problem where, oh, we don't want to deal with manufacturing here. Oh, my like team, my you know, shitty rapper over team, who may come as business. Yeah, that's the you part of the problem. You've been like trading

dog and cat pictures on the internet for 30 years. And we gave away the farm China, like what are we talking about? This is a real country, you know, we're going to make stuff in America. We've been pushing through this through Naya and obviously through Hadrian for for a while. And I think the administration has got it absolutely correct. The second thing I think people miss, I've heard a lot of complaints about targeting Vietnam, targeting Taiwan, what people miss is a lot of the Chinese manufacturing volume,

so they get out of the kind of export controls, is they just ship it across the bridge to Taiwan and then sell it to an American company. It's kind of like fentanyl coming from China through Mexico. So this whole cluster of Southeast Asian manufacturing, often behind the scenes, you know, it's like Taiwan CNC is kind of a dodgy wrapper over Chinese CNC, you know, to use a tech analogy. So I think, yes, it's going to hurt some industries that have based their business on selling high-priced goods to consumers while they've got a cost of goods of $5 in China or Vietnam, 100%.

But for the country, it's an incredibly good thing. And the jobs in the Midwest and in places like Ohio are going to go through the roof because we're going to have to re-industrialize based off this balance of trade equation that's just massively correct. I think it's an incredible thing for the country. It's certainly an incredible thing for the business. It's certainly incredible thing for the business. And I can't say enough good things about how seriously the administration is taking the re-industrialized of the country and not through subsidizing companies.

They're just recreating the dollar cost of the market to incentivize all these global companies and American companies to invest in manufacturing. Because now the price equation is such that people need to buy American and then let the private markets invest behind that market signal. I think it's a brilliant strategy because otherwise they would have had to spend a trillion dollars subsidizing a handful of companies to build in America. And now they kind of get that investment for free. And you're going to see this huge multiplier effect of every hundred people who work in a factory.

Great. You need a coffee station. You need like support and trade services. You know, you're going to get. You need like support and trade services. You know, you're gonna get towns built around these factories and more housing and more construction. And that plus deregulation is a huge boom. What do you, in your world, you know,

obviously semiconductors were excluded from the tariffs, but a lot of industrial machinery from places like Japan, Germany, Holland, weren't excluded. Do you think that kind of those kind of products should be excluded from the tariffs in order to help? You know, Hadrian obviously purchases machinery from countries outside of the US just because you have to. We have to. I don't think anything should be excluded. We said this in the last show is that, why does the US not make CNC machines

or Foundry machines anymore? We offshored it because they got subsidized. So like, let's add it to the stack. And for our business, yeah, my CapEx just got 15% more expenses, but our CapEx is kind of free because we just use leverage debt and financial engineering anyway.

But I think people miss the fact that, you know, American manufacturers are somewhere between 40 and 200% higher than China, right? And we see this because a lot of our customers do source things to China and they competitively bid us if they can't even force to manufacture in America, right? And right now we are as a business because we're highly automated, often 30% more expensive than China. So you add the tariff back on that. And now you've got like a $20 billion machining Tam in the U S now becomes a hundred because all the U S companies are going, well, why wouldn't I reassure this?

Because now my parts just got 50% more expensive. Yeah. So like, let's just bring it back to America. You know, how are you thinking about a polymarket has the chance of a US recession just jumped to almost 50%. There's kind of a narrative that like, the best case here is maybe it's, we're taking some medicine, short-term pain, long-term gain.

Is that a reasonable framework to think about this? Or do you think that there's a way that we avoid any of the short-term pain, other than of course the market sell off today? I think we avoid any of the short-term pain other than of course the market sell-off today? I Think we're going to take some short-term pain But I think that's really like do you care about the SMP 500 or do you care about what actually underpins GDGP? Which is jobs in like the American Heartland who like you know can't get food or you know I mean look I'm Australian right but like here's a great example

American farmers have not been able to export beef to Australia, haven't sold a dollar of it because it's bad. We as a country, I'm saying this now, America imports $29 billion of Australian beef and cattle products. So, okay, all the American farmers are getting screwed. So like, I don't know,

we should probably be eating American beef. Realistically though, knowing the administration, I think what you're going to see is they are forcing a very hard reset to reset the economy, which means deregulate, tariff up, rebuild the United States. So we have the productive capacity. But bear in mind, the interest rate is extremely, extremely high. Right? Right now. It hasn't really been leveraged down. And inflation. and by the way reindustrialization is a deflationary event yes it might make some goods and services come up what you'll see is like wage growth and jobs

growth behind it so that the balance of inflation comes down a little bit what I expect to happen is that everyone complains for about three to six months and I don't know what the interest rate is sitting in now but bear in mind I think it's like four or 5% on the Fed rate. You can notch that down one, one and a half, maybe 2% over the next kind of three, four quarters, and you're gonna we're gonna get back to ZERP mode. And then the S&P will come up as you know, everyone puts their cost of capital in the

spreadsheet. So yeah, I think we're taking some short term track time. I think we've been, I think the, you know, Federal Reserve and the Bureau of Labor Statistics have been lying to the American people for a better part of two to three years. I think we're already in a recession. It's just like refudging with the numbers and not talking about it.

But realistically, no, I think the boom starts in like two quarters or so as the federal budget gets covered with Doge, people are going back into the economy and being productive. Tariffs come up and there's a bunch of volume and activity happening in the country that's producing real GDP like jobs and factories. And then I think he took down the interest rate like one or two percent. I think you got three years of like this earth mode of cost of capitals going down. All the valuation is gonna go up. I think it's gonna be a

banger. We just gotta like sit here for a quarter or all the valuation's gonna go up. I think it's gonna be a banger. We just gotta sit here for a quarter or two. It's gonna be great. It's part of the issue that tariffs and trade balances are just so complicated that it's almost impossible for anybody to fully understand much less somebody who's just sort of passively reading the news or not involved in it

because I've gotten messages today, I got a message from my mom who is just basically seeing everything red, just being like, this is bad. And so there's this sense of this, people are gonna have this emotional reaction to the market because it's the most real time indicator of sentiment. But do you think the administration could do a better job sort of communicating?

JD Vance was on TV earlier. I think he had some pretty good comms around tariffs broadly. But do you think there needs to be better communication on why this is happening and how there might be some, very well could have a, you know, very positive long-term impact. Yeah, and I think they can be communicating

to the American people a little bit better. I think the communication that's come out is actually pretty good. It's just that it hasn't reached many people, and you're right, they just see like, stop, go down. You know? But I think over the next six to nine months, I think it's going to be incredibly positive

both for, you know, SMP and Dow Jones and da da da, NASDAQ and for the actual underlying real economy. But yeah, you know, it's like you feel pretty bad going to the gym for the first four weeks when you're a little bit overweight and then you start feeling good and the first four weeks feel pretty bad because you're like, wow, this is really tough. And then you realize, okay, I'm just out of shape. We're getting new plates. Yeah, and then we'll be repping plates.

Jay Powell will drop the fucking hammer and we will be dead lifting. Jay Powell is the creative. On the top, exactly. As your phone been ringing off the hook from investors that maybe passed two years ago, saying reindustrialization is not gonna be a thing. Anybody capitulate yet? I have no comment on whether or not we're getting calls from customers trying to resource

massive volumes from China and accelerating our factory build-outs. And I also got to drop in a minute and I'm not going to make any comment about future or potential fund raises in case the SEC whacks me on the head with the bad one. Yeah, it's been great having you. We got to have you on more regularly to kind of track this story as it develops. This is fantastic. Thanks so much for taking the time to join. You're welcome, guys. And thanks for having me back to Capital to Capital.

Keep cultivating Chris Power over at Hadrian. We'll talk to you soon. Bye. In the meantime, let me tell you about Ramp. Time is money. Save both. Easy to use corporate cards, bail payments, accounting and a whole lot more, all in one place. Head over to ramp.com and we have a Ramp investor

coming on the show next. Delian Asperruhoff is joining, partner at Founders Fund, co-founder of Varta, he'll be joining us. Many people have called him a global expert on tariffs, trade wars, real war. Yeah. The list goes on. Yeah, I mean, he's really dialed in.

He's nice, he's dialed in. He's also an investor in eight sleep. Nights that fuel your best days, turn any bed into the ultimate sleeping experience. Go to eightsleep.com slash TBPN for an eight sleep. Do it. Get an eight sleep. Oh, I put up.

It's fantastic. I put up 100 last night. You did? Oh, you're killing the majority. But I? Yeah. You're killing it, Jordy. I really. Well, we gotta ask, we gotta ask Delian how he'd do, how he did, because I know he's on one, and I know he hasn't been traveling.

I got a 95, I was a little bit low on time. Proof of work, look at this. I got the 80s. The 95. 95, you got 100? 100, yeah. 100, oh. Look at this, look at this. I was like a hair's breadth away. If I'd gotten two more minutes of sleep, 95 you got a hundred hundred hundred I just needed to be like this

I was like a hair's breadth away if I'd gotten two more minutes of sleep. I would have gotten a hundred two more minutes But you know how to keep the coke had to keep the alarm at 540 a.m Got to get up got to get in the gym got to start right you get up you get up an hour after You've been a bed two hours before me, so it works out. True. Anyway. Somebody's got to be up late just texting

to get 10 guests on a single episode. Yeah. It's not easy. Exactly, it's hard work. Anyway, we'll. Yeah, one thing I wanted to ask Chris that we didn't get to was, what does Nike do here? Do they figure out how to make shoes in America?

I know they have probably some American made shoes, but it's certainly, it's got to be less than half a point of their revenue. Okay, Deleon is out. We just messed up the invite, got double booked, but let's go through more tariff reaction because I want to talk about Tyler Cowen's Liberation Day post because I think he gives, I mean, obviously, Chris Power at Hadrian lays out a very,

like a very reasonable and bullish scenario. And as someone on the ground building a factory, it makes a ton of sense. Like it's his thesis that he's had for years. Played out. And the thesis wasn't actually predicated on massive global tariffs. Yeah, no, no.

It was more so predicated on we should make things in America, specifically products necessary for defense manufacturing. Yep, yeah. Aerospace, sort of super critical industries. But yeah, it's interesting to hear the other side of this, kind of the more buttoned up economists take. And so Tyler writes that markets have responded accordingly with the Canadian currency hit especially hard

and S&P futures sinking immediately. And we saw the market actually did sell off quite a bit. I'm not exactly sure where it is now. Maybe you can hop on public.com and check that out, investing for those who take it seriously, go to public.com and sign up. Because I actually would love to know how is the market trading during the day?

Obviously we saw it opened down 5% and some stocks were hit very hard But I'd like to know overall how things played out That's it is down 4% today. So a little bit of a pop off the bottom maybe bouncing along The dead cat bounces they call it Actually, it's interesting, you. Be greedy when others are fearful potentially or maybe get everything out while you can, who knows. We don't give you financial advice here, we just yap and you make up your own decisions.

Anyway, with President Trump, one never quite knows what one is going to get, says Tyler Cowen, so any assessment needs to be provisional. But that is a big part of the broader problem. High and persistent uncertainty about the basic rules of the game. And this was the question that I was gonna ask Chris if he had a chance to stay on longer was,

okay, I understand that you're excited about the current, like what happened yesterday, the breaking news. But these- And to be clear, it's phenomenal for Hadrian. Yeah, of course, of course. Like I'm sure they will have more customer inbound today. 100%. And probably any other point in history.

100%, because I mean, there are young company, they are using American labor, they're based in California. Like things are expensive. There are a lot of places where, even though Chris is great, he's a really great founder, like there are just structural elements that make his product less price competitive and he wants to get there with software and automation and eventually get to a place

where he's completely price competitive. He's always differentiated on pace of play, time. If you're in Southern California building a defense tech company. Or an aerospace. An aerospace company and you need a part tomorrow, Hadrian will stay up all night, get it done, and you won't have any of the shipping times.

That's been the key differentiator, but now it seems like he could potentially be more price competitive. But the question that I wanted to ask him, and what we were talking to Ryan Peterson about yesterday, was is what's going to happen with this Rose Garden and this reciprocal tariff framework? You might have seen some of these mathematical formulas

floating around. Is this enough of a framework to bring confidence to the market? Because there's a huge difference between, okay, it's 20%, it's bad, we're ripping the bandaid off, but you know that this is the end of the story, it's 20% forever.

You can plan for that, you can update your Excel models, your financial models, you can plan for that. Versus, it's 20% today, then it's 10%, then it's 15%, then it's 50%, then it's 15% then it's 50% that it's 10% like that chaos and Like two people pointing a gun at each other, you know sort of waiting no more no more James Bond day is over Put the squirt gun down And anyways, it's like who's gonna sort of make a move first gonna break first

Yeah, and and what's interesting is that I think that this is potentially enough of a framework to understand where, okay, all I need to do is monitor, what is the reverse tariff? How much would it cost for me to import my product to the country that I'm making it in? And then I can expect that that will be the tariff that goes the other direction.

The question is just like Is this a will these tariff rates stick around for years for four years at least or maybe eight years? Who knows or or is this going to be something where? literally every single one of these countries comes to the table and starts renegotiating immediately and we're seeing Tariffs jump around all over the place week to week and we're seeing, oh, turns out like Switzerland came to the table and they cut their tariffs so that now Switzerland rates are lower and like all of these different things happening.

Like you imagine that there's going to be big discussions between China, Vietnam, like the major countries, but it could be all of the countries. And so that uncertainty I think is something that businesses really, really detest, because it makes it really hard to plan, especially things like capex, right? So this is a good line.

Like a game show host, Trump announced a series of tariff rates on many of America's major trading partners. How did he come up with the rates? It seems by a crude formula. A given nation's trade deficit with the US divided by the nation's exports to the US. There's a base rate of 10% to be applied to the UK, Costa Rica, and some other friendly

nations. For India, it is 26% for Japan, it is 24% for the European Union, it is 20%. The most incomprehensible are those on Vietnam. The new tariff rate is 46% Sri Lanka, 44% South Korea, 25% Cambodia, 49% in Taiwan, 32%. Are those not some of the major countries we are expecting to hold China at bay? Do we not want Chinese manufacturing to end up moving to those in other countries

who are less dependent on the Middle Kingdom? What could possibly, and again, Chris was highlighting that some of these countries are basically sort of producing goods and then passing them through China. Yeah, he was making the argument that some of these countries are kind of fronts. I would be skeptical about the idea that 80%

of what we import from Taiwan is Chinese made at the source, but I think his point is probably correct that there is some amount of product password. He says, what could possibly justify the fact that Taiwan, which is a US ally being threatened by China, now faces almost the same tariff as China, 34%. That is a very, very good question. Trump calls these reciprocal tariffs,

and the claim is that we are taxing foreign nations at only half the rate they are taxing our imports. The numbers are illusory however some of them apparently made up. Brazil at only 10% and others counting a VAT as a net tax on American imports which it is not. In any case we will be moving into a future with higher prices, less product choice, and much weaker foreign alliances. The tanking of the stock market and other possible asset price repercussions may tip America into recession and increased joblessness. This is perhaps the worst economic own goal Tyler has seen in his lifetime. I cannot think of any credentialed economist colleague, Democrat, Republican or independent

who would endorse it. And I haven't even mentioned the risk that some foreign nations will retaliate against American exporters damaging our economy all the more. Pavel Asparuhov had a great tweet about this he said texting all my close friends to go f themselves so I can learn to be more independent short-term painful but there was literally no other way. It's a good it's a good take that it's like we're not making a lot of friends with this policy, folks. This is gonna be rough. Yeah, and one could argue that if you truly

are America first, that means putting America above our even people that are allies. Yeah, yeah, yeah. And Pavel's point is that at some point in, you know, when he was starting his company, he basically had to tell his friends to F themselves. So he could. He's joking there, but.

No, of course. But yeah, I mean, there was a little bit of that for sure. I think this gets to this interesting idea of like, like this America first stuff is not just, people think of it as like, you're either like a nationalist or a globalist, right? Like you're either like, you should be able to manufacture anywhere,

it doesn't matter where the jobs go, have every company be completely global, doesn't matter where the jobs are. And then there's the other side, which is like, everything needs to be made in America, and like, I don't care about Canada, I don't care about the UK. But then there's a pretty wide middle here where you have something

like the five eyes and like all the different allies between, I mean, we sell nuclear submarines to France, right, like they're a very, very close ally. And this is what Alex Karp talks about at Palantir, like the idea of the West and the idea that like, yes, if America goes it alone and China builds a bunch of allies through the Belt and Road, it not only has more than a billion people, but also has a much larger economy when you bundle them together with Russia, Iran, all of Africa, a bunch of other countries, North Korea aside and like tons of other countries are like,

well, if partnership with America is off the table, all of a sudden partnership with China seems a little bit more reasonable, then America could get really, really smoked, right? And so there's this question of like, how important are these alliances? How important is it to have friends in the global community? I'm obviously all for making American jobs viable and lucrative and fantastic, but I mean there is a cost to some of this that I think Tyler's right to point out. So where did you fit,

did you leave off at damaging our economy all the more? Yes. Okay, so you might think there is something to be said for a reciprocal approach to tariffs. Usually it consists of cutting off your nose to spite your face, but it can sometimes work. It requires a president and Congress who is predictable and trustworthy. That's not how foreign nations view the current administration.

If you're wondering about the trade treatment of Canada and Mexico, that remains cloaked in mystery. The threatened 25% rate on those two nations from earlier in Trump's term violates the NAFTA redo that was negotiated by Trump himself. Why trust in reciprocity here? Oh, and did I mention that tariffs according to the Constitution are supposed to be the province of Congress, not the president? Congress did voluntarily turn some of this authority to negotiate again, and we will be in for yet another round of tariff musical chairs. But it's not a game.

There is real money and therefore real lives at stake here. So he was not a fan. And I think that the tariff musical chairs could potentially be the bigger issue and the bigger fear here. Bill Ackman, the activist man posted earlier, sometimes the best strategy in a negotiation is convincing the other side that you are crazy. And it is very possible that

Trump is being very effective there. Logan had an interesting point. It was basically a meme that said, I'm adding tariffs. And it's a guy with a Make America Great Again hat that says, this will create jobs. And then it's, I'm removing tariffs. He goes, art of the deal. I'm adding tariffs.

This will create jobs. I'm removing tariffs. Art of the deal. I mean, it sounds really crazy and copie, but how many times have you been in negotiation where there's back and forth? This does actually happen in real life. It sounds stupid when you say it that way.

Classic negotiation strategy is to start and just be completely extreme and then know that you may be in the middle. On negotiation strategy, do you buy into that philosophy? I have found, and a lot of negotiation consultants that I've talked to have kind of advocated more for, come in with something that's, first, build vision, make sure you're talking to the right decider,

like the person who can decide, build a really clear vision of what you want the partnership or the deal to look like, and then come in with something that's reasonable that you would accept, never bluff, and get a deal that actually sticks instead of just wildly oscillating, saying I think their budget's 100 bucks,

so I'm gonna open with 300 and be prepared to negotiate down, that's actually like a harder way to get a deal done, but I don't know, what do you think about negotiation generally? Strategy. No, I aim for deals that I think are fair and great for all parties involved and then I'm very explicit if I feel like it's drifting into a territory where it doesn't make sense. This is another thing interesting from Ryan Peterson, eliminated from all countries as

soon as the systems are ready And so we talked about this a little bit with the team ooh day minimis shipping tariff from China, but apparently it's being Eliminated from all countries and so this idea of oh well if we can't do the team ooh exclusion in China We'll just do it in Mexico. in Mexico and still slide in under that day Minimus shipping threshold well it seems like it's off the table entirely yeah the markets crashing we're crashing our streaming software but we're back up thanks for paying attention thanks for sticking with us as we continue to run

the show do you know if this charger is working? Yeah, it was working for me. You should get away. There we go. There you go. We're back. So there's a quote from JP Morgan. I don't know if we want to read through this. It's pretty interesting.

On a static basis. Yeah, this was yesterday, which is more or less a lifetime ago. Yeah. On a static basis, today's announcement would raise just under $400 billion in revenue, or about 1.3% of GDP. Static basis meaning if all the goods stayed the same and people just pay the taxes,

which would be the largest tax increase since the Revenue Act of 1968. We estimate that today's announced measures could boost PCE prices by one to 1.5% this year, and we believe the inflationary effects would mostly be realized in the middle quarters of the year. The resulting hit to purchasing power could take real disposable income growth in Q2 slash Q3 into negative

territory with the real risk of consumer spending could also contract in those quarters. This impact alone could take the, could take the economy peril, perilously close to slipping into a recession. We of course saw on Polymarket that the probability of recession is now up around 50%. Headlines about retaliatory measures by US trading partners are already coming out and we expect to learn more in coming days. The somewhat confusing nature of today's news,

coupled with the uncertainty over how long these tariffs will remain in place, should make for an even less friendly environment for investment spending. We mentioned that with the capex stuff, though that is one way to narrow the saving investment balance imbalance and hence narrow the current account deficit. We plan to revisit our forecast later this week.

So JP Morgan is not very optimistic. Joe Wiesenthal highlighted a chart from Polymarket. It's he says the odds of US recession in 2025 just jumped from, they were sitting at 40%, jumped 25% to... Did you see the Restoration Hardware CEO reacting live? Oh yeah. Finding out their stock is down 25%.

So Restoration Hardware was having an earnings call after the market closed, as one does, but it happened to coincide with this tariff announcement, which of course Restoration Hardware probably sources from all over the world, will be very seriously hit by this, and he just has some expletives. Okay, oh, oh, SHITH-I-T, okay. I just looked at the screen. I guess, you know, the stock went down, you know, based on some of the numbers we reported, and then it got killed because of, oh, really?

I just looked at the screen. I hadn't looked at, you know, it got hit with, I think the dairies came out. And, you know, I think everyone can see in our 10K where we're sourcing from, so it's not a secret. And we're not trying to disguise it by putting everything in an Asia bucket, you know, I think everyone can see in our 10K where we're sourcing from, so it's not a secret. And we're not trying to disguise it by putting everything in an Asia bucket, you know? And he's just like having a really bad day.

Rough, very rough. Logan Bartlett took us back a couple months ago from a quote from Stanley Druckenmiller, the billionaire investor. Stanley Druckenmiller believes Trump's reelection renewed a jolt of speculative enthusiasm in the markets and surging optimism within businesses Quote i've been doing this for 49 years and we're probably going from the most anti-business administration to the opposite Druckenmiller said on CNBC Monday

We do a lot of talking to ceos and companies on the ground and i'd say ceos are somewhere between Relieved and giddy so we're a believer in animal spirits. That was certainly the case during the Trump pump shortly after inauguration and the election. But then things have been cooling off, let's say, potentially in free fall because of how rough things have been. Rough.

You liked this post by Trevor Scott. Tariffs on Bangladesh slash Vietnam are like a hedge fund manager fighting with his cleaning lady to get the right back to clean his own toilet. Saying that like a lot of the jobs that we've sent over there America doesn't want. That's always up for debate

because when America does something, we do it a little bit differently. We still end up producing the product. Obviously we use a lot of automation and the things that are made here. because when America does something, we do it a little bit differently. We still end up producing the product. Obviously we use a lot of automation and the things that are made here. And there's been a shift to bring auto manufacturing back to the US, but although a lot of that's still done

in Mexico and Canada, but it is interesting to see if there really is big on-shoring efforts, what will those new factories look like? I would imagine that they are highly automated. Yeah, at least hopefully Yeah, that's wild Apples also down nine percent today so far Still just barely over the 3t mark. Hmm rough But hopefully it doesn't affect him cooks package, because he was just scraping by.

Yeah, poor guy. Yeah, poor guy. Poor guy. Should we go to Ryan Peterson? He says, remember that these duties are on top of existing duties, so for China, you have the original duty of 7.5 to 25% duty from section 301, then 20% from earlier this year, then 34% today,

and 25% for China's purchases of Venezuelan oil. So it's over 100% just in the past few years based on Chinese products, and so we should see that work its way through the economy. I do wonder, I mean, a lot of Chinese products, they're just so cheap that even if you double the price, it's like, well, a DJI drone's still gonna be cheaper than a GoPro drone because they were never

price competitive to begin with. But it will be interesting to see, this is all just news right now. It's not really something we're feeling. But the next time I'm walking around a Best Buy or scrolling on Amazon, I wonder if the prices will actually shock me. It's kind of unclear.

I don't think of myself as like shopping that much generally, let alone shopping for international goods. But again, so much stuff comes from abroad. But a lot of times the things, I mean these water pistols that I bought, they were probably like $2.00. And if they go up to $4.00, it's hard to notice that. You're still just like, wow,

that's the cheapest thing I've ever seen. A lot of the prices were suspiciously cheap, honestly. We talked about this with Tmoo, where Amazon launched a clone and they were saying, okay, guys, if you're gonna sell couches, the couch can't be more than $25 to be on this app. And it's like, I don't know if anyone would want to sit on a $25 couch,

that doesn't seem safe. They were like, guitars can only be $8. It's like, I feel like a guitar is like $100 item, right? So if that doubles to $16, would people still notice it? I mean, certainly there would be an effect on the economy. People would buy less guitars. This is just supply and demand. Obviously, demand for guitars is not

fully pricey and elastic, but it is just very funny that some of these prices were so low. I mean, Nike, obviously, the cost of goods is gonna go way up, but I feel like Nike shoes are $100 plus. And so if those go up, people are still gonna wanna buy Nike maybe? It's unclear to me.

I mean, it certainly hurts their margins, it certainly hurts their business, but it's unclear what it actually will do. It's just interesting, again, it's hard because Nike react with how many shoes they need to make and then not having, if this was going to be, if these tariffs were gonna be steady state, definitely they would have to make massive, massive changes.

But if they think they're gonna be rolled back, you know, it's just, it's so. I was thinking about ways to capitalize on this and I think the price of billboards in America, probably unaffected by these tariffs. That's right. So you should go to adquick.com, out of home advertising made easy and measurable.

No tariffs on billboards folks. 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. And yeah, I mean, if you have an American made product, like you really should buy a billboard right now and you should tell everyone because it used to just be,

yeah, rah rah America, America, 4th of July, like we're made in America. There are plenty of companies that have been beaten that drum for a while, but now is like really, really the time it'll drum up investor interest, it'll drum up employee interest. Like if you are long America,

like it's a great time as we saw with Chris and Hadrian. Anyway, there's another post in here I wanna go through. I wanna finish out some of Joe Weisenthal's thoughts. Yeah, let's do that. So, okay, so this is Joe continuing writing in his Bloomberg newsletter. He says, okay, so this is Joe continuing writing in his Bloomberg newsletter. He says, okay, well, maybe we shouldn't set economic policy for the whims of the stock holding class.

Yeah, I'm down with that. But what's interesting to me too is just how reviled all of this seems to be across the board with the only real specific voice of support, the old legacy industrial unions, which are not a big part of the economy. Again, go back and look at the comments from the manufacturers in the latest ISM. They all hate it.

Or go back and look at the comments from the latest survey of oil and gas companies by the Dallas Fed. It's really it's just really hard to find a major material constituency for this level of trade. And the reason it's hard to find big supporters of this policy is because the logical or sequential link between Trashing trade and creating new wealth is very hard to see What are the new growth industries going to be who is going to finance the redevelopment?

China famously crushed its own real estate and internet sectors a few years ago But at the same time it directed its banks to lend more aggressively to its hard tech and manufacturing sectors. And so I think Chris would say, yeah, that's exactly what we wanna do. We want the government to direct the banks and the venture capitalists to lend it more aggressively to hard tech and manufacturing sectors.

And we're kind of seeing that, but it's interesting because we, I don't think broadly in America, people believe in the American dynamism movement. I think in BC people think it's cool. And I feel this way where it's like, we're talking to a kid from Stanford today who makes laser weapons. And I was just like, that sounds awesome.

But when I really think about it, I'm like, look, I don't know if you have a real business yet. You probably don't. You're young and you're just figuring it out And I don't know if there's like a program record and really good easy way for you to scale this business up and create a power law company blah blah blah blah blah But I just think it's cool. And I think that's how a lot of people perceive these hard tech and manufacturing projects They're like it's a cool science project. I don't know if it's gonna work out, but I want to support it So I'm just going at it. Whereas I think China was a lot more rigorous about this is a good financial bet for us.

We're going to lose a lot of money in the short term, but we're going to gain a lot in the long term. And I don't think as a country we're thinking like that yet. Like there's a lot of people that go to the Reindustrialized Conference and they're like, this is awesome. I hope it happens. But like, I'm not really going to pull my money out of fang to do this, right?

I'm not gonna move, you know a hundred billion dollars over for this There needs to be the AI narrative for to get like the masses of the world to do it And then even when masa does it you have plenty of people that are like, this is a top signal This is too crazy. It's impossible. And I don't think they were saying that in China. Yeah, which is interesting It's a fascinating situation right now where so many people in our you know industry Yeah, and in our corner the internet broadly think this is just a terrible idea. Yep We have some people that think it's great. Yeah, a lot of smart people think it's a bad idea and I'm sort of sitting here

Hoping that the admin, you know, as somebody that ultimately wants America to win and thrive, I'm hoping that, you know, we're at a very crazy time right now, but I think I'm sort of hoping that the admin has a crystal ball that the rest of us don't have, and is, you know clearly, they were convicted enough in this initial decision yesterday

to go out and do this press conference. It's not the first time they've been convicted. Yeah, that's true. It's also true. Let's continue with Joe. In fact, oh, I think we got our next guest coming in. But first, let me tell you about Bezel. Go to Bezel.com.

Getbezel.com. Buy a luxury watch, folks. I know the stock market's down, but there's never a brand of time. Yeah, we were talking with Craig yesterday after the show, but prices are going to have to go up. Yeah. If you move quickly.

From ADs, but if you move quick on marketplaces like bezel, it's very likely that people won't immediately reprice their watches. So it'll be interesting to see that. The market goes down, but you still, you look at your beautiful watch and you remember that the point of a watch is not to tell you the time but to tell you the time of your life. That is right.

Shop over 24,500 luxury watches, fully authenticated in-house by Bezel's team of experts. Thank you to Bezel. Thank you to Bezel. Coming into the studio, we have Akele from Shield Capital. I'm very excited to talk to him. Boom. Yesterday. How are you doing? Hey, good, John. Good, Jordy. Good to see you guys. Thanks for having me on.

Yeah. Thanks so much for taking the time. Would you mind just giving us a little brief overview, maybe some of your history, what you're doing now and just kind of generally how your week's going? Yeah, absolutely. And a great discussion prior to, I think, a good tee up to what needs to happen by 2027 and what needs to happen by 2029 When it comes to our own national industrial base, but by way background Akil If you have from from Buffalo originally Did RTC in college wanted to go serve had the opportunity to serve in the Marines as an infantry and special operations officer

Left my time in active duty in 2019 like manyets, Brandon included, that you'll have here soon, both amazed by the type of technology we had that the U.S. and its allies could provide and also incredibly frustrated by the lack of some of the basic commercial tools and had the opportunity via some mentors to connect and help build a new fund, a new venture capital fund, Shield Capital, where our focus is this nexus between commercial technology and national security. We cover early stage, so as early as a dream in a team on day zero across autonomy, cybersecurity, AI and space. That's great.

Jordy, you want me to ask something? I'd just be interested to get your immediate reaction to the news yesterday. And yeah, and then there's, you know, we got a bunch of other questions to go into. Did you have an immediate reaction yesterday? Our point of view, I'm sure you heard is, you know, it's hard, some stuff is gonna go poorly,

some stuff, you know, some groups and companies and industries will benefit, but I'm curious what you thought. Totally, yeah, I guess I'll reemphasize the point that I made to start off it is, we had to look at this near term, 2027, this Admiral Davidson window, for those who are familiar with it,

how do we protect our interests in the Asia Pacific region, and how do we look at it in 2049, structurally, right? So tariffs, whatever you want, has immediate near term structural effects. But a lot of that's not we're we are going to have the industrial base we have by 2027, right? That's not that that's 18 months from now. So we have to figure out what we can do with the capacity we have. And I'm always reminded by Churchill's quote, while America might be first, the only thing worse than fighting without allies, I'm sorry, fighting with allies is fighting without them. So there's an aspect to that. But ultimately, how do we make the

structural changes long term? So as we look at this 2049, particularly as again, looking at this in the national security context, how do we beat and win out technologically, geopolitically against the PRC? What that structure looks like far beyond four years worth of tariffs. Can you break down the significance of 2027 and why why we need to be sort of like orienting our defense planning around that date? Just for obviously people in the industry, you know, understand it. But a lot of our listeners are, you know, in other industries. Absolutely. Well, you know, this comes originally from Admiral Davidson, who used to, prior to his retirement, run

the Indo-Pacific Command. So this is the Asia-Pacific four-star command that's really in charge of protecting U.S. interests and deterring would-be adversaries, namely the PRC, from conducting actions, whether that's Taiwan or elsewhere. And 2027 came about as this sort of potentially vulnerable moment in which we as a nation and those that are willing to support us to be ready to defend our interests. And so you'll see that a lot in the narratives

and you'll see that a lot in terms of what capabilities can we really deploy at scale and at speed to defend our interests come 2027. And that stands obviously that's super near term guys, right? Only so much can get done within that period. And so there's this two horizons, just like any coming from the venture world, right?

You want entrepreneurs to be looking at multiple horizons, the near term one, but then also look for what that long term structural changes will be. And so that's the 2049 and really that aligns with the hundred years of the Chinese Communist Party. Can you talk a little bit about Chinese competition with regard

to robotics? There's some high flying startups in America. There's some just young hacker kids building cool stuff, a lot of awesome demos, but it feels like the financial markets aren't taking humanoid robotics as seriously in America as they are in China. Is that a mistake? What are you seeing in humanoid robotics? Yeah, great question. And I'll tie together with AI just because there's so much intersection between the digital AI world and then AI applied to hardware, right? I grow increasingly concerned that we are just frankly behind in Yeah. In terms of the model development,

the application of hardware and the synthesis therein, both from a hardware standpoint, from the software standpoint, and then critically the ability to test. Yeah. I mean, part of it is just, let's get the things out there. As a prior Marine, I'll always remember, we get taught in sort of military history class,

the French had better tanks when World War II started. But who tested them better? It was the Germans, right? They just got them out there and they just started testing with them and experiment them at a pace and scale that was far greater than anyone else. And so you see this environment now

and a lot of the things that need to happen are actually regulatory in nature, right? How do we reduce the barrier for folks to actually go out and test all sorts of robotics applications, right? It doesn't actually have to be pure humanoids. It can be autonomous systems too. And then how do you combine that with actually getting some of these deployed at a scale that you need to? The last point I'll say specifically around robotics and autonomy is that I don't think, well, let me say from a capital deployment perspective, I think there's a real interest in,

and you had some folks come on last time, last week when we talked about defenses, is being willing to make some really big bets and be able to buy the necessary capital to help them deploy at speed and scale. Obviously we're early stage, small, fun to start off it. We have big dreams, but we want to be a part of that journey,

particularly if that journey is here in the U S that's very cool. Can you talk a little bit about logistics and, uh, just how, how can we increase resiliency there and what startups are kind of tackling that or how should they even think about tackling that? Yeah, great, great question too. Um, let me start framing it by, I look at the defense national security space and again, we had shield, we think pretty broadly when it comes to national security, right? So that is anything that touches autonomy, AI, cyber and space that has an application to build. When I think about the national security context, it's how do you sense, make sense, affect and sustain senses easier, right? That's that satellites like Tofer came on one of our portfolio companies, right? He's sensing the environment and making sense of it. How do you affect it? So what are you actually gonna do about it?

And that could be something physical, that could be branded in and Chilei drones, or that could be non-physical, digital in nature. And then there's a sustainment part. And I think this is just such a huge opportunity. And there's a lot of companies working on it and so much more to do. And I specifically call it sustainment,

not logistics for a a couple reasons. One, this term of contested logistics, while important, doesn't get to the root of the issues, which is how do you both operate in a constrained environment? So how do you do things when you know you're going to run out of fuel or you're going to have these certain constraints? And then what are you going to, how are you going to sustain it more broadly, not just from a physical movement? So there's two aspects. There's a, There's a very physical hardware component to it. We need just more munitions. We need more capacity here to do it.

Knowing though, back to the two horizons, by 2027, we may not have all of that. So you just need to be able to digitally operate and be more efficient with the things that you might have now or within 18 months. And so I think there's just so many opportunities here in terms of how you deploy at the edge. So what capabilities do you decide to go produce

in the edge being some location where it's just easier to get to? How do you combine the two together? And then how do you use artificial intelligence to actually optimize it all? How do you think about 2027 as a wedge for new defense tech companies that are emerging? A lot of companies come in and they're just focused on legacy systems like I want to build a better version of this missile and I think I'm going to be able to get a contract because

the DOD doesn't want extreme vendor dependency on like one or two old primes versus looking at 2027 in Taiwan and saying, hey, we wanna build a capability for this specific potential conflict. And is that an opportunity or is that not even the right way to think? Yeah, I mean, a lot needs to happen in 18 months, right? But that's not the only timeline.

I thought you brought up some great points in the group that came last week about, you know, trying to build a feature within the defense space. There's only going to be so many and rules, right? Yeah. There's only be so many that can that can speed and scale. Now, do I think there's more opportunity to do so? Absolutely. That's why we're in this business. It's not the only business, though. I think there's a opportunity to do so? Absolutely. That's why we're in this business. It's not the only business, though. I think there's a lot of enabling features to your question.

Some of the most interesting things that I found from, say, the conflict in Ukraine, weren't necessarily the missiles and drones. How did they move their administration to a digital environment, using outposts and snowballs to actually make sure that the state functions? You wouldn't necessarily think that it's like core national security, but to me that absolutely is. I'm half the challenge with a lot of the AI applications is, you don't have the models accredited,

you don't have the models deployed in a way that they can actually be used. Obviously, that has a compounding advantage, the more times you can get hardware, the software, and the data together. But directly to your question, I still think there's a ton of room, right? There's a really unique moment in time, especially now with the desire to want more startups

within the ecosystem. And my colleague just testified to the Senate panel with regards to cyber reform. So how do we actually use our small business innovation research dollars to actually incent, not necessarily just small business or ones that are turning that through, but the ones that actually want to go and scale it and go scale to something bigger, like a traditional pilot program should be. Can you talk a little bit about edge

AI? We've seen like the Studio Ghibli moment, we've passed the touring test, Waymo's are driving around. Like, is there something that we should, we've seen those drone shows that seem like, okay, that's a weapon system. What AI kind of Studio Ghibli moments are we waiting for in defense? Is there anything that you're excited about in Edge AI? Yeah, you know, with you guys at Founders Fund, we're investing in a company together called Armada. And it's really kind of giving me a new glimpse

into what not just Edge, so Edge being where am I gonna deploy compute? Again, go back to the sense, make sense of the environment, but how am I going to connect together with some cloud base, right? It's always going to be some disaggregated network there. But what I'm excited about is, I mean, there's just so much that can be done with smaller models and with reasonable compute, knowing that we're only going gonna get so much compute. And we talked about tariffs earlier, right? There's those bottlenecks that exist.

We're not gonna produce the best in semiconductors overnight. And so we have to be able to do more in those environments. And you're always an early pioneer at that, right? In the national security space, how do you bring computer vision and other aspects of sensor fusion with other modalities together?

And that's just only the start. So I'm super excited by that. And I think it meets a lot of the customers where they're at, not just for national security, right? People are worried about cloud bills. People are worried about how much, like what am I actually getting for AI return on investment with all the compute that goes into it?

Do you think there's enough private capital going into defense tech broadly? You know, there's been talk of, you know, you know, we've seen over the last year, investors that have no background in national security, you know, sort of FOMOing into the category, but maybe that's actually good for America because we just should have more private investment coming in. Yeah, I guess as a, let me first say, I'm glad that there's more people interested. I mean, I don't think you need to have

a military background to do this. I think there's amazing American patriots that just wanna get involved and they have really core technical skills elsewhere. I think it's helpful that, you know, folks came from the visceral operating experience, but that's not necessarily necessary, nor arguably is that why you should go pursue that path, right? Go serve because you want to go serve

and you want to go defend the nation. It just so happens that I came out of that experience having some really interesting insights that I thought I could go leverage and go help out within the space and be able to support. Actually, I love, most importantly, I love when non-military, non-national security, just amazing entrepreneurs and technologists just wanna go tackle these problems. And we're able to help them out. I'm not the best when it comes to, you know,

what's next in computer vision or distributed models. But you know what? I can help you find the right customer set or identify the right contract vehicles. That's what our fund does. And so that part's actually most exciting is how do you get, you know, the folks who may go to Snapchat working on, you know, some background filters, actually work on some like really cool problems within national security space

that have the same technical aspects. I think our audience is probably familiar with the idea of like, if you're starting a defense tech company, you might start with some SBIR money. Then you're kind of sprinting towards program of record. Maybe there's the valley of death where you have something that's working, but you're not ready to really start producing it at scale. What are the other pools of revenue that defense tech entrepreneurs should be thinking about? And can you give us a little more granularity or sense of scale of, you know, how should I be thinking about an SBIR?

How should I be thinking about a program of record and everything in between? Yeah, absolutely. I'll keep it quick because I know we're on a clock here. Let me give you a financial answer and a non-financial answer. I think both are important. That's great.

The first is right, it's not just Sibbers and program of record, right? And you saw the Secretary of Defense's memo around use of the newer software acquisition pathways and specifically other contract vehicles or other transactions to help facilitate this. And that's exactly what organizations like Defense Innovation Unit are there for.

So there's this middle ground that I think is being tapped now far, far greater by the new entrance within the national security space. I'll give you a non-financial answer too. Sometimes an unpaid pilot is super helpful. Oh yeah. Going on a Crata, which I think, you know, Saronic and others had done in the early days,

access to data, access to testing environments is just as important, particularly for those within the autonomy space, right? That need to go test and validate, get access to the right data, or just have ranges where you have at least a little lower barrier to entry when it comes to flying, certifying, et cetera.

That's great. Last question. No, this is great. Yeah, this is awesome. Thank you so much for stopping by. Yeah, it's great to have you. Thanks guys. Thanks for having me. Yeah, we'll have to have you back on soon. Thanks so much. Yeah, I would love to. Cheers.

We'll talk to you soon. Well, next we got Phil Ehrenstein from Dirac coming in the building. We'll see when he gets here. Any minute now. Do you remember my brutal mispronunciation? Oh yeah. What was that? Never again. Was it that you mispronounced his name or was it that you called him a kid

and he was upset about that? There was something. I think it was probably both. Now is your opportunity to say, you're sorry, Mehaculpa. I did, I did. We made up. Never apologize, I always claim victory mehaculpa. I did I did yeah, we made we made up never apologize I was playing victory. I always came more correctly than you pronounce your name No, I love Phil I met him

Must be a couple years ago Probably through Augustus and I think he moved out to El Segundo was like sleeping in the factory with Augustus getting the company off The ground but has done some amazing work building out his business and we're excited to talk to him today. So welcome to the show, Phil, how you doing? Boom. Living life, life's good, rocking and rolling. We're out here in New York.

Very apt introduction, thank you Mr. Coogan. Yeah, I heard you're in the Empire State Building, is that right? That is correct. Fantastic. We, I heard you're in the Empire State Building, is that right? That is correct. Fantastic. We are in the Capitol building of the capital city of the Empire. You know, what better place

to help rebuild the American Empire? If I take my camera and give it behind me, you can kind of see overhead. Oh, wow. That's the view. I love it. That's Hudson Yards back there. That's lovely.

You can kind of see it. A little bit of a foggy day, but on a clear day, you can actually see New Jersey. Oh, very cool. We've intentionally positioned it such that we can keep an eye on them, make sure they don't invade. OK, OK.

Yeah, yeah. A little Manhattanite nationalism. I like it. Have you thought about getting, have you thought about trying to get logo rights on the building? Yes. Throw a big sign up there. Funny enough, if you text one of those five digit numbers,

you can actually get daily updates on how we'll change the colors for the building. Oh, really? OK. Let me show you. We've got something cooking. Yeah, you've got to get an iconic color way for the company so that when you throw it up in the building,

everyone knows these guys are working late tonight. They threw their colors up on the building. Ramp owns yellow. YC owns orange. You need to pick a color. We're going to be, you know, we're building the blueprint of the future. So some variant of blue. I love it. I love it. Uh, gave me, just, I mean we jumped right into it, but can you give a little background on like the company, what you're building,

where you are in terms of like kind of stage and size? Sure. Um, give everybody a little bit of background about myself. Backgrounds originally in electrical engineering and robotics. I was over at Northrop Grumman for a little bit, you know, got T.S. Clearance, worked on some pretty cool radar stuff over there. Did a little bit of EE work, a little bit of MECC work, a little bit of technician work over there. Just got to see how absurdly archaic all of the infrastructure was on the

manufacturing side of things. Was starting to get the feeling that the West was forgetting the manufacturing side of things, was starting to get the feeling that the West was forgetting how to build great things, and I wanted to make sure that that didn't happen. So got my best friend and co-founder, and went out to go start the rack. So as a company, we are building the first automated work construction plan.

Sounds like a very vague, very niche thing, but turns out everybody actually has had experience with work instructions. If you've ever built like Ikea furniture, a little paper instruction book that tells you how to build a thing, turns out that is actually basically how they make missiles and cars and everything in between.

So that process is like, imagine you're a dude in a factory, somebody says, here is a CAD file or 3D model of like an engine. Go figure it out. Literally go figure out. They will pull this assembly apart. They'll figure out what order to do the assembly in super duper manually, take hundreds of screenshots or photos,

and then throw all that together into a several hundred page document or Word doc or PowerPoint in the course of weeks or months. Super brutal, super manual, sounds as awful as it is, almost as bad as being like a McKinsey analyst with like a hundred page PowerPoint. It's like making an Ikea slideshow by hand. Yeah, yeah, I think we saw this week,

some videos went viral of folks painting artillery shells by hand and the artillery shell moves from one station to the other. And there's the basic commentary was like, how are we still doing it like this? This is not great. But you could imagine some work order system was built at some point for that.

And that kind of concretizes what you're building. So yeah, how's it going? Where's the business now? Are you live in public beta? How much does this cost? Like how does the business actually work? Right, so what CAD, you know, CAD software was for mechanical engineers, in public beta, how much does this cost, like how does the business actually work? Right, so what CAD, you know CAD software was

for mechanical engineers, we're building basically that 21st century update to the process for their blue collar counterpart, a person called the manufacturing. Got it. We priced pretty similarly, we priced 5K per seat per year. Okay. It's a seat-based system.

We actually, great timing for me to come on the pod and chat with you guys, we actually just went live and announced Build-A-West V1. Yesterday, fully live, we are now enterprise grade. I-Target clients. Let's hear it for I-Target clients. We love an I-Target client company on the show. Congratulations. Epic, thank you fellas.

So yes, we can now deploy on-prem to defense customer. We're already working with some defense companies, working with a bunch of automotive companies. We love tier one through three suppliers, OEMs. Got a bunch of really cool companies that are not just aerospace and automotive. These are the only two industries that apparently most people think exist. But we're working with agriculture construction manufacturers. These are companies that like, recent one that we we're working with like agriculture, construction manufacturers, companies that like recent, recent one that we just started working with super cool company called a Sputnik. These guys make the potato harvesting equipment.

It's the Sputnik moment for potato farming, apparently. Yes. So we're off to the races. Product is live. We're deploying. What is it like deploying on Prem? Does that mean you have to package your software up and send them like a CD or something or floppy drive like the caveat here is that they have to

have their own cloud based resources themselves? Got it. You can still interface with APIs as you need to. Yeah. Yeah. It's a little bit more complicated than that, but I'll sort of leave it at that.

Like they have to have some sort of cloud-based infrastructure. Okay. Play it by a Terraform. This is a thing we can now do, Blaze and Gens. Oh, cool. Yeah, it's a specific process for it. I'm sure you've been talking to your customers

constantly as one does, but what's their broad reaction been over the last 24 hours? Are people, I imagine some of your customers are super excited about the tariffs, others unsure, others negatively impacted in varying ways, but give us the update there. Yeah, so on the whole tariff thing,

man, so some of our customers are a little bit upset because prices are gonna go up for them. It sort of depends where you are industry wise. Where you are in the stack. Yeah. So that's, that's like the input costs are going to go up because maybe they're sourcing parts. In the short term. In the short term. You know, they're, they're pretty upset about that on a couple of different vectors, but it,

again, depends. Like if you look at the, what's really cool about like our companies, we get to see the wisest varieties of the coolest CAD files, coolest assemblies you'll ever see. And so if you look at the hierarchy and the structure of a CAD file, it's very tree-lined. And so that hierarchy of an assembly of sub-assemblies of sub-assemblies of sub-assemblies really neatly mimics the supply chain of that product.

There's some really, really neat, novel insights that we get to see. And so if you are like a, one of those sub assemblies, you're called like a tier one through three supplier. If you're making like the top level thing and you're like, you know, an Andoril or a Toyota, you're an OEM. The OEMs are a little bit more upset than the tier one through three suppliers, as from what I've seen.

And so more broadly, like materially put costs are like closer to the tier one through threes than like the OEMs. The OEMs get like the final markup, which is sort of like a pain. And so that's kind of what we see. But I think by and large, people are short-term, like upset, long-term pretty excited because what it means

is it's gonna force a lot of capital to be allocated towards rebuilding domestically, which is honestly what a lot of the folks that we work with want, right? You want your supply chain proximal to you, you want to have expectable lead times. Now, that's been like one of the one of the worst things that a lot of folks we work with have seen. For a company, for an at scale company like, you know, like a

prime like Northrop, what percent for the average product at Northrop, do you have any sense of what percentage of the parts that go into a specific end product are American made today? And do you think that companies at that scale are going to feel like they need to react and even invest in some of these tiered suppliers? So I don't have a perfect number for you, but what I do know is that companies like Siemens, companies like Stellantis, these are companies that are global in nature

and actually not like traditionally headquartered in the US. And we're seeing a lot of them shift more of their production to the US immediately. Like over the past, you know, a couple of months, we've seen huge announcements from Siemens and Stellantis to move production to the US and open up new facilities, triple down on, you know, American based production, because if you are selling to the American market, you want your cost to be

as low as possible. And so it only makes more sense to have your production be domestic. So yeah, yeah, how do you how do you think about, I feel like one of the bottlenecks to Dirac's growth, I said that right, correct? Dirac. Dirac, Dirac, I'm gonna get it this time. It's Iraq with a D. One of the bottlenecks to Dirac's growth

is gonna just be having enough, if you're selling by the seat, having enough manufacturing engineers, right? I don't, I wish I knew more myself. How do you think about kind of like the talent equation to solving, you know, to re-industrializing? So there's, okay, I can get on my soapbox. There's like a couple, there's like two to three pieces.

Get on it, get on it. Get on it. You know, broadly, kind of interesting, the number of manufacturing, I'll give you a little bit of like the history lesson. Please. The blueprint in general. So basically, until like the early 70s, mid 70s, engineers and manufacturers were connected by one thing, and that was the blueprint, right?

Like classic cyanotype blueprint that you imagine in your head when you say blueprint. And then like the late 70s, early 80s, CAD software emerged and became ubiquitous. And basically all of the mechanical engineers who were on the shop floor, super well integrated production, they were more blue collar than white collar generally. All of them basically moved to the back office, went from being generally blue collar to white collar. And basically since then, like the mechanical design had become like totally divorced from reality. You often now have like mechanical engineers never going to shop floors,

oftentimes designing systems that are generally like not manufacturable. And so the blueprint was basically like fractured into two parts. Cat's Offer on the design side, work instructions on the build side. Cat's Offer got a ton of upgrades for 50 years, work instructions never did,

that's what we're working on. And so when that happened, you also saw the archetypal mechanical engineer also fractured into two different people. The mechanical engineer that's your more typical design engineer and a manufacturing engineer. So actually, if you look statistically in the US, they're actually roughly the same number of mechanical engineers as there are manufacturing engineers. So there's like around 300,000 of these folks in the US. So it's actually like a really big popular job. It's just like, you know, this is where you would like get a mechanical engineering degree and like, you know, half the time people will just go into manufacturing engineering. And so there was an enormous, so back to like the portion of like

labor base, these are the folks who will get a CAD file and like figure out how to put this thing together. And their documentation systems suck. I mean, it is like oftentimes if it's not PowerPoint or Word, it's a Post-It or like the back of their head. So what we've been seeing, unfortunately, is, you know, especially post-COVID, you know, a lot of these folks are retiring. A lot of these folks have all this information locked up in the back of their heads as tribal knowledge. And so yes, like we're automating like a good chunk of the groundwork of making work instructions.

You know, we take a CAD file in, we automatically figure out how to put together, automatically generate 80 to 90% of the work instruction, but that 10 or 20% that we can't automate, that is like the tribal knowledge component. And that is what we serve as like a data aggregation platform for. So a lot of what we see is, you know, average age of the American manufacturer is like somewhere between like 45 and 55. I like to say 55 just to be a little bit more precautionary. And, you know, in the US, we do not want cheap labor, right? We want smart labor. That's what we want to be advocating for. We want to build new technologies and we want to build new manufacturing systems that take advantage of automation. But we do not want to replace people in general. We want to augment and aggregate as much of their tribal knowledge

and bake it into the systems that we use for the next generation of American manufacturing. That's kind of how we see it. However, what we've seen like for our customer base, generally speaking, is the classic question of like, oh, like I buy like some direct software now because I can do the work of 10 people with one person, I can lay nine people off. And it's like, no, no, no. It's actually that because nine of your people retired, you're still left with one. Now I don't have to shut my manufacturing facility down. So like that's where we see a lot of the value add and value generation, but also more broadly as a company, we're not just staying in work instructions.

That's just where we're in your deck. What do you think about MBAs buying small manufacturing businesses, rolling them up? Last question. Brutal, brutal is the concept, awful idea. I'm actually generally pro engineers and manufacturers rolling up like SMBs, like mid-market manufacturers. This is, you know, I think a very interesting concept as a whole.

If you were to like, you know, if you as a, as somebody with like a hardware background had a very specific like search fund for like pumps or valves and you like really valves. And you really knew where the optimizations could be generated. If you came in and you were like, we're going on Google Drive, guys. No more writing stuff on Post-its. That could be very interesting. That's useful. But an MBA comes in, they look at the P&L, and they're like, ah, cut everybody over 50. And it's like, no, the tribal knowledge.

That's where those guys knew how things fit together You didn't write it down and now your factory doesn't know how to build shit anymore And now we're serving it with cow town to China and it's over and so But we don't want that to happen never cowtow never cowtow. Well, thanks for coming on the show. This is fantastic This is great. You got to come back and you have more news. I'm sure there's gonna be a ton this year It's a crazy time, crazy year, and we're excited for what you're doing out in New York, keeping Manhattan safe from those New Jersey folks.

Yes, thank you guys for having me, and I will catch you guys later. Talk to you soon. Talk to you soon, cheers. Bye. Hello, Phil, quick dude. Always a- What a guy, very well spoken.

Yeah, just high energy, knows business lots of good takes tapped in You'll have to see it. Well speaking of tapped in we got Zack from plaid. That's right next He had some big news today fascinating story fascinating company if you ever authenticated done o off with your bank You've probably seen the plaid pop up and he is here now I'll let him explain do it because he probably knows him way better than I do Zach welcome to the show. Hey guys thank you so much for having me. It's great having you. Yeah can you give us a little background maybe brief introduction to the company I think most people know but then specifically what are you announcing today? Totally so we build infrastructure for

digital finance broadly the core thesis is banking was built for a world that didn't envision the internet. We wanted to help people be able to get loans, open bank accounts, pretty much do anything in their financial life online. So we created the API for your bank account. You probably utilized it when you linked your Wells Fargo checking account to the Venmo app. Any bank account that you linked to pretty much any fintech company, we build the plumbing for all of that. Increasingly, it's not just fintech companies now, but it's the big banks, the way that you open a checking account with Citi goes through Plaid, and then a ton of enterprises. So the way that you pay your rent with invitation homes or a bunch of

those, all that stuff's going through Plaid. Last few years, we had a big change to our business. We historically just focused on bank account linking. Now we're very focused on utilizing a lot of the aggregate data that's coming through our system to build things like a new version of fraud scoring. If we can see your patterns, you see that you committed fraud in Robinhood. We can tell Venmo that you committed fraud. We can tell your bank that you committed fraud, so on and so forth. We built a credit scoring division that builds alternative credit scores. We built much tooling to do better bank things payments. So it's been a big evolution for the business

over the last two years or so. Yeah. Yeah, talk about the time period. I guess it was like late 2022, 2023. Everybody just said, okay, FinTech is over, but you obviously have like more better data than everyone. And so you can see that like, no, in fact, like FinTech was not over despite VCs, you know, maybe.

Opining on podcasts. Yeah, talking on podcasts. I'm sure you never lost faith, but I guess like talk about, you know, where we were a couple of years ago versus now. Totally. I mean, look, FinTech had a winter. Crypto has winter, as FinTech definitely had a winter. Basically, there's

a crazy amount of Fintech demand pulled forward into 2020 when people couldn't go into their bank. They needed to figure out a way to do financial services online. 2021, zero interest rate environment, you had things growing like crazy, you had tons of ad budgets, so on and so forth. First half of 2022 was kind of a continuation of all of that. And then interest rates started going up in the second half of 2022. And in large part, the fintech market wasn't prepared for that kind of change, certainly not that kind of change at the speed with which it changed. A lot of fintech businesses were predicated on lending and lending slowed down quite significantly and a lot of them were predicated on investing or crypto.

And those markets slowed down quite significantly. And so you saw a slowdown of FinTech in the second half of 2022 and then kind of like a bit of lethargy throughout the first half and almost in the second half of 2023. And a lot of that was the businesses themselves like retrenching, going in and focusing on profitability. It was no longer growth at all costs. You got to build a model in which you're actually profitable. You're

not gross margin profitable, but you're operating margin possible profitable. A lot of it was also like retooling from focusing just on investing and crypto to also doing things like core banking and a bunch of other services. And so you saw this whole rebuild of all of the FinTech companies. And then going to 2024, there was a rebound. In 2025, we've seen very much a FinTech spring, as I like to call it. So things are moving really quickly. There's a ton of startup formation at the earliest stages. In the mid stages, these companies have retold

they're now back to growth. At the late stages, you're about to see a couple of IPOs. So Clarn is coming soon. We think we've heard that Chime is coming soon. I've heard a bunch of others are coming soon. And so, it is very much a sense of optimism right now, but you know, going through these cycles of difficult times,

I think it makes companies and in our sense, I think an industry a lot stronger, but I can't say it's fun to go through. Yeah. Can you talk about stable coins? How are you thinking about that in general? It seems like there would be some cross pollination there, but also like it's a wildly different industry

in many ways. Yeah, and specifically, you know, you don't need to speak to this, but we were covering the Circle S1 briefly. And it feels like they benefited from some amount of a monopoly temporarily, and maybe that's fading, but just creates more opportunity for other fintechs, SMBs and banks.

Totally, well, I haven't read the Circle S one yet, so I wish I could comment on it. Yeah, don't comment on that. Yeah. To be clear. The, like, broadly stablecoin is like a huge opportunity. Yeah. You know, in the US, if I wanna send you money

over the ACH system, it takes three days. That doesn't make any sense. We have this whole new thing that's rolled out over the last few years called Same Day ACH. Great, I can send you money over the ACH system, it takes three days. That doesn't make any sense. We have this whole new thing that's rolled out over the last few years called Same Day ACH. Great, I can send you money the same day. There's an RTP system, real-time payment system, where I could send you money theoretically instantly except not every bank accepts it. It doesn't work universally.

There's still some issues with it. And stablecoins, I can just send you money really easily. And so there is no question in my mind that stablecoins are going to grow quite massively. I think there's still a question on like consumer utilization, how is it going to get actually into consumer payments where no one's going to walk into a Starbucks and buy a coffee with a bank account, no one's going to walk into a Starbucks and buy a coffee with a stablecoin. Certainly not for any amount of time that I can think about, maybe 10, 15 years in the future. But for a lot of the core business to business, especially cross border where it's really messy types of transactions, I expect it to grow quite

a lot. So definitely the area that we're participating, we're working with a lot of companies on and we're excited to support. On that topic of the slow ACH transactions, that feels like something that I understand the value of crypto, but also databases are fast now. Is there a world where if you were put in charge of like Doge for Finance, like DOFE or something and you just had like carte blanche in the government, you could speed it up? Or is it not like a personal issue? You can you think you could do it? Yes. How would that actually work?

It's like the Federal Reserve has a system called FedNow. Yeah. And FedNow is actually just like instant bank to bank transfers. And they're cheap. The interesting thing is it's actually a new revenue line, so the bank would make processing revenue from this. So there haven't been a lot of new revenue lines for the banks recently. The issue is like getting banks to install it, getting banks, like setting up the right

incentive systems to get banks to actually set it up. There are like a few hundred banks and they're mostly small banks that are using it. And I think there are like four or five easy changes. You change the incentive structure, you create a mandate that every bank has to support it. They're like, like this, this, the small set of changes that you could get instant bank payments running in the U S very quickly. Now it's a question of like, does the government have the appetite to force things upon the

small banks? And like, it is costly for the banks to implement it. It's not crazy costly, but it is not zero cost. And so does the government actually have the appetite for something like that? That's really helpful. What are you, it feels like there's so much to build still. I had to go to the bank yesterday to send a large wire

and it's still like, every time you do that, you're like, they're looking at your phone, and they're writing down the wire instructions, and they print it out, and they're like, can you confirm it again? And then they're like, can you sign this, and can you sign that? And then I gotta text the recipient,

and the whole thing still is- And do not copy and paste your account number twice. You can copy and paste it in the first box, but not the second box. I feel like this is such a beautiful time for Plaid, your founder run company. You have incredible distribution, and there's still so much yet to build.

Sort of what gets you most excited in terms of, I'm sure you just spend a lot of time talking to big banks, CEOs, and startups, and your position is just like, how can we enable you to do what you wanna do or improve existing products? But kind of what are you most excited about in the Plaid ecosystem or?

I get to have the most fun conversations in the world with our customers and with the banks. I get to go in and say, hey, what frustrates you about the financial system? And they will just like talk for 30 minutes. I'm like, amazing, we can't solve all that. We can solve these things. And we can work together to solve those things. And like maybe over time, we can as an industry find a way to make it better. So they're incredibly fun conversations. To your point, like financial services is just barely becoming digital.

And you know, it's crazy to say that. And because have online banking and you know, maybe use Venmo and maybe you buy some Coinbase, Bitcoin or Coinbase and you can make a trade on Robinhood, that seems really easy to you. But to most people in the US, most of their financial life is still not fully digital. And so I think just the core, the core of our business has a lot of room to grow a long way to keep running, like we got to get rid of that, like hold your phone up, like typing your account number, all that stuff can become instant and easy.

I would say the two big areas that we've really been investing in that I think will be game changers kind of over the longer term. So obviously the core business matters a ton, but the two new areas, the first is fraud detection. So online financial fraud is going up at somewhere between 20 and 25% a year off of a gigantic base. Deepf are having a big impact on this a lot of AI tooling is having a big impact on this I mean, there's like you've probably heard of like the pig butchering stuff that's going on where like people are like You know calling folks and tricking them into sending these L payments to take crazy places so and so forth Like that is at an all-time high and going up really quickly And so we've built a set of tools that look across all the data in our network, they ingest a bunch of third party

data, we have customers reporting fraud data back to us. And you can kind of think of it like Palo Alto networks for financial services. So like, how do we notice if something is weird over here and then tell everyone over there that they should maybe be on alert for it. So that's one big area that we've been focusing on. The second big area is around credit scoring.

So right now, if you get a new job tomorrow, your income goes up by 3x, and it will take a very long time for that to show up in your credit score. Right? And you know, because you have to get loans, you have to then repay the loans, and like the whole for the whole thing to trickle through the system, it doesn't make any sense. But you are a better credit risk today because you got that new job. And so we've built a series of tools, including our own our own credit score, that looks at real time data and brings it into the model, and then increasingly will allow more and more people to get loans that are based on today's data,

not five years from now's data. So that's what I'm excited for. Yeah, on AI specifically, in Plaid, just in FinTech generally, do you think it's, it certainly hasn't felt like the most hyped category, and maybe that's's, it certainly hasn't felt like the most hypes category and maybe that's because, you know, 10 years ago people were promising sort of like AI based lending

and all that stuff and maybe it was AI, maybe it wasn't. Do you think it's getting enough attention? I'm sure you guys are taking it seriously internally. Yeah, we're taking it very seriously internally. Look from an internal efficiency standpoint, like leaning in hard and frankly, a internal efficiency standpoint, like leaning in hard, and frankly, a lot of the banks are leaning in hard. And so I think that'll be a big step forward.

I don't need to talk to you about that. You've talked to everybody in the world about that kind of stuff. For me, financial services, product specific lens, other than like, you know, AI causing fraud and then using AI to fight fraud, but like from a like core banking product standpoint, I don't think you're going to see a lot of changes fast.

I think behind the scenes, if you go to a bank and you talk to a teller, or more likely you do a Zoom call with a wealth advisor, they're going to have an AI dashboard and a bunch of AI tools that are real time telling them, hey, what's going on with John's portfolio? What recommendations should we be making? How might it be different?

But you're not going to get that direct AI bot style interaction for, I recommendations should we be making, how might it be different? But you're not gonna get that direct AI bot style interaction for I think a long time, mostly because there's so much regulatory overhead, so much trust overhead that goes with it, that I think the bank's gonna be hesitant and slow to launch. Look, I'm on the furthest edge of this. I would love to have a set of AI bots that just move my money across my accounts,

leave it in treasuries until the minute that I need it to pay whatever bills I need to pay, you know, whatever bills I need to pay. And then if I had excess leftover, like move it back into treasuries or balance across my loans to pay the lowest interest rates. But I'm probably like way on the furthest edge of that. I have two questions out of the big bank CEOs. Who's the best DJ? Well, you know, only one of them plays a good bill. On a serious note, I feel like there's this interesting dynamic with Plaid where you guys have, it's a financial infrastructure company, but you take design incredibly seriously.

Where does the design chops come from? Like how did that become so instilled in the company? So from the earliest days, our mission has been unlock financial freedom for everyone. It is a consumer-centric mission. Our goal is to help consumers and small businesses that have a greater amount of financial freedom, have more control over their financial lives,

and be able to do things that they wanna do that are out there. And so we took the position that we need to fight for the consumer, even though we build a B2B product. And that's where B2B to C or like B2B to small business. And, and with that in mind, we knew that we needed to build a brand that resonated with consumers. And it doesn't need to be the loudest brand. But like, in a lot of instances, we take inspiration from Visa, like a

lot of consumers don't know what Visa does, but they certainly know that it helps them make payments. And all right, well, we want to learn from that, like, we would like every consumer to know what Plan does. We're also realistic to understand that not every single one is necessarily going to fully understand it, but we want them to have tools that come from us. We want them to have trust in us.

And so we focus a lot on building that type of consumer experience. And then you see us also in the press and in the media, try to go fight these battles on behalf of consumers. So fighting the open banking battle, fighting against the debanking stuff that's going on, like being very public about saying, like, hey, we believe that every consumer should have access to every financial product that they might want. And like, we think that if we continue to live up to this, like, this somewhat idealistic

view that consumers should be financially free, that's going to drive a lot of value for the company. And that then flows through into the products that we build, the way that we act, the design sensibilities, and so on and so forth. Last question on my side, do you have any advice for founders in maybe defense tech or AI that are sort of like riding

the high that FinTech maybe felt in 2021? Like, is it time to, you know, I'm curious, cause like, you know, this is such an amazing moment for you and the team to come back. You obviously, you know, the company has been marked up. You have a bunch of, you know, a world of opportunities, but you had to go through a couple darker years. Any words of advice?

I mean, as I was saying, things are never as good as they seem, nor as bad as they seem. I would say that the dark times, honestly, it's my favorite and it's the time that really forms the company and it lets you know who you are, it lets you know who's really on your team, and it forces you to make the most important decisions. Nothing's ever going to be easy in startups, nothing certainly is ever easy for Plaid. But knowing that we've formed an amazing team, a good set of customer relationships, we've made good product decisions

in the times that are really hard, and allow us to go fast in those times where it gets a little easier. So I don't know if I have any specific advice other than just keep on keeping on. That's good. Yeah, I mean, that is the best advice you can give, I think. No, I'm genuinely excited,

and I can't wait for you guys to build more products. Cause every time I use Plaid products, it's a breeze and every time I use anything from the legacy banking world, it's absolutely brutal. So you're doing- Don't talk too much trash about all those partners. We don't want them to see this.

We love the banks and our goal is to make things better. We're very thankful for everything you're doing. Make the banks better. Good luck and congratulations on the round. Yeah It's great having you on always welcome and congrats to the whole team. We'll talk to you soon. Thanks for having me Bye Next up we got Nathan mince coming in from CX to very excited to talk to him going back to defense tech had to give You the update because there's some breaking news about plaid

Not a defense tech company, but still snuck in a defense tech question, Geordie. I like how you did that. That was very good. You got to bring it back. No, it's just that we're at this moment. Plaid was started, got to form itself when Fintech maybe wasn't so hyped and then went through this period

of exuberance and insane valuations, the same multiples we were seeing in AI today, FinTech companies were getting, even lending companies were getting. Yeah, well, we're talking to a veteran of defense tech, Nathan, welcome to the show, how you doing? Hey, good, John, good, good to be here with you. I was just listening in and I'm bummed that I don't have as good a hair as Zachary

or around the top of my house. He. You know, we get some compliments on our hair every once in a while, but he blew us out of the water, I think. So, you know, the fans are just going to flock over to the plaid now. Yeah. But but yeah, how you doing? And can you give us a little intro on yourself and some background and what you're building now? I'm doing great, actually. Yeah. So, you know, right now, it's sunny and 72 degrees outside and in El Segundo. And, you know, it's, it's, it's a great day to be in defense.

We're seeing just, you know, it seems like every hearing that I watch of these appointees for this new administration seem to be echoing our talking points. So it's kind of nice to know that the last few years of pushing for a transformation and the way we do our force mix and how we fight wars is actually, someone's actually been listening. So as you know, I've been in defense for about 20 years. I started out at the big Soviet tractor factory primes. I spent 14 years at Boeing and Raytheon as a radar systems engineer, electronic warfare engineer. I worked on you know programs with names like Next Generation Jammer

and the radar for the F-15 and the F-18 and a bunch of space programs and stuff. And then in about 2018 an old friend from college, Joe Lonsdale called me up and said, hey, we're starting a defense vertical. Do you have any ideas? And I came to him a couple of months later with the idea for what turned into EPROS, which is a high-power microwave to kill drones

and other electronics. So got that started, ran that for a couple of years, then moved over into the automotive radar space, started a company called Spartan Radar that does software that makes automotive radars have higher resolution. That one we ended up selling to a major equipment OEM in the past year. And so we've exited that one at this point. And then about a year ago, I got together with my co-founders Mark Trafgar and Porter Smith and Lee Thompson, and we started CX2 with the goal of transforming the way that the U.S. fights warfare in the electronic warfare domain.

So that's where we are today. The company is about 24 people. We're here based here in El Segundo. We're backed by ATVC and Andres Horowitz. And right now the office is pretty empty today because most of my team is out participating in an exercise. So exciting times abound. Yeah. You know, you see those viral videos of the Chinese drone displays where it looks like a dragon and everyone

immediately quotes it and says like, that's a weapon system. At the same time, as scary as that is, it feels like between Epirus and Anderil and Alan Control Systems is just pelting bullets and we're talking to a company today that's building laser weapons to take down drones. There's a lot of different companies that have addressed this. Is it as dangerous as we think, or is it more of a solved problem maybe than we already know, or is it just like we need to scale up the systems we have?

So I'll give you a couple statistics. When I was over in Krakow at the NATO Innovation Summit last year, the Ukrainians threw out a statistic that 30% of the Of the casualties that they were experiencing were due to drone strikes I think today in the Kursk offensive for the Russians It's the majority if not almost all of them for it certainly for the tanks and vehicles. So it's become A mainstay of modern warfare and right now that's where we are today

It's just the beginning. Most of the systems that we see used, it's these FPV, first person view, with some guys sitting there with goggles like he's playing a video game, but it's very 1v1. Well in the next few years it's going to become 1v many. And at that point those command and data links that today are essential for that drone to get there and we're figuring out how to make them work more autonomously because there's all these countermeasures like you mentioned to try and jam that data link or deny it. It's going to become even more vital because one person suddenly that archer is going to

be firing 100 arrows, right? We're kind of taking a step past that at CX-2, and we're trying to develop the systems that shoot the archer, not the arrow, with that in mind. And a lot of it comes down to finding the drone controller, which becomes an increasingly harder problem as the cat and mouse game continues in modern warfare. So what does the device look like that's sending out the signal to find the drone operator? Are you putting up your own drone or is this something that can be tracked from satellites or UAVs or any sorts of other devices or can you even talk about it?

Yeah, so we're building our own electronic warfare stack to find, fix and finish on those emitters of interest. And that starts with a drone that does SIGINT and finds and fixes on those signals. We call it Wraith. It's a group two drone with about 45 minutes of later time or 40 kilometers of range, depending on how you think about it,

that takes off and geolocates those emitters. And by that, I mean, it finds the position of those emitters. It's a little different from systems on the ground today that mostly kind of give you a line of bearing and say it's out there. We'll actually give you a fix on it and identify what it is. From there through our Nexus operating system we'll hand off to an attack drone called Banshee and it'll go out, it's a loitering munition with a home on emitter seeker that'll go out and take that emitter out.

So you go find the controller and then you have another drone that follows it and actually takes it out kinetically. So that's the full attack stack that we're building. Alongside that, we've actually built an FPV kit with a version of the Banshee Seeker that can snap onto another drone, we call it Baderis, that will actually go out and seek that emitter out. And it provides an overlay so the FPV user

sees a line of bearing and kind of the strength of signal on you're getting warmer, you're getting colder, no, no, no, fly left, fly right, and can home in on a particular signal. So that's kind of our product mix. Wraith, Banshee, Baedra's Nexus, you're kind of seeing a halo theme in here. Yeah, I like it, very cool.

You have a question? Or I have another one. Yeah, as you're talking, it feels like there's some, there's plenty of companies in the gundo and just defense tech broadly that can just sort of like think long-term about capabilities and trying to win these bigger programs. It feels like you have to take a much more

iterative approach because things are kind of evolving in real time and potentially that's like gonna be the case for the entire lifecycle of the company, right? Where you're just always trying to stay, always trying to stay whatever a step ahead of adversaries. Is that different than you think working at, you said, Boeing and Raytheon back in the day, where they're just sort of thinking and sort of big programs and big

capabilities and you're now having to be like nimble and constantly trying to stay at the edge? Yes, absolutely. The way that we used to do product development in aerospace was very much a bell curve with a long tail of sustainment, right? So pretty much all the effort would culminate around critical design review. And then at that point, most of the systems engineers and stuff would roll off and the program would go into manufacturing sustainment. Whereas if you look at software products,

if I was to look at how Facebook does a rollout, or Google or any of these others, for instance, it's much more of kind of a logarithmic plateau. It gets up to a certain point. There might be a little bit of a hump in effort once the posts are kind of put in on the house, so to speak. And at that point, there's a software sustainment tail that's much larger that takes place over time.

And that's what we see in Ukraine with the drone manufacturers that are over there. There's like 200 drone companies in Ukraine that are out building the million or so drones that they're putting to use right now. What they're able to do is they're able to rapidly iterate using commercial CICD, constant integration, constant delivery type of processes. The most extreme report I've heard of this is they had cases where the Russians were rapidly changing tactics and employing new systems, where they were updating software at a rate of six times a day. And like with the systems I used to work on, I mean, the missiles would get software updates

so infrequently they called them tape updates because they had to go out there. And so, you know, they were lucky if they had an update every two years, much less, you know, six times a day. So the way that we do software acquisition in the DoD has to fundamentally change. There's been some good signs in that respect with the rules that the SECDEF has pushed out for software acquisition pathway, where they're saying,

we really need to buy software using commercial processes as a default, as opposed to still using the traditional waterfall, you know, I call it the Soviet tractor factory way of procuring things, right? And you know, I think on the hardware side we eventually need to move that direction as well. It's a little harder when you're building a multi-billion dollar aircraft, I mean just realistically that is building a drone, but let's start with software and iron that out because that's where the most palpable need is right now.

I love all those phrases. They're going to stay in my mind forever. Can you break it down for us about DJI? There's a lot of fear that we're never going to catch up. There's also just a general fear of like, are all the DJI drones going to rise up one day and attack us? You've probably seen like the internals of these drones, you know how to probably take them over, the drop of a hat, you can probably do it on your phone

if you wanted to. How much of a risk is DJI? We've had other guests on the show say, maybe we should ban the importation entirely. Where do you stand on DJI? I mean, we already have export or import controls in place and like they're banned from use from us government agencies, for example, with, with exceptions.

Yep. Um, the solution is we got to build our own drone, uh, you know, industry here in the States, I think we're doing a good job in that the, uh, CX two is part of that, but we're also partnering with Ukrainian drone firms. I don't know if you saw, there was a big piece in the Wall Street Journal talking about us and Skyfall, which is a Ukrainian drone firm. And so partnering with the guys that are already building a million drones a year overseas and trying to take their lessons learned and scale it over here is one cheat code that

we can apply to catch up faster, right? The big advantage that the Chinese have is they applied consumer scale technology and manufacturing to the drone problem and they took advantage of our own regulatory, you know, blockers that we're putting in place. I don't know if you're aware of this, but to fly a drone in the US, you had to have a, I think it's a FAA type 109 license

that's what it's called and the Chinese got around that by labeling what they were doing a toy. So anytime the US drone manufacturers you know we've been building FPV drones since 2005-2006 but nobody could get funding to actually scale it because of these regulations and the fact that oh it's too hard to train the pilots, it's not scalable. The Chinese, on the other hand, found the loophole and they scaled up as a result, right? So our own barriers from our own regulatory infrastructure are what need to be revisited and that'll unleash us innovation and allow us to compete with them toe to toe. Got it.

Are there any considerations for Indo Paycom versus what's going on in Eastern Europe? Clearly, you're very focused on Ukraine, but are you looking ahead to any other theaters? Yes. I mean, in Indopaycom, the ranges are just a lot larger. So you're going to have bigger drones with larger scale. That's the main difference. Also, the Chinese are just more likely to bring out more sophisticated systems. I mean, the Russians, for all the talk about the ZU-57 fell in,

the reality of it is they filled it all of 12 of them. The Chinese J-20s and J-31s are starting to get into the hundreds. That's their, quote unquote, fifth generation stealth fighter. I can make an argument that it's not quite fifth generation but anyway and then just the amount of drones that they're talking about bringing it scale. They recently disclosed that they have an order for a million kamikaze drones that they're putting forward right. In Indo-Paycom right now our plan is to deploy a whole bunch of legacy Battlestar Galactica assets with names like Rivadjoint and Compass Call that are mostly on older aircraft, some are on 707s, some

are moving into Gulfstream 5s to do a lot of these capabilities and they're going to be pushed way back from the Taiwan Strait. The only thing we have that can really get close is the Growler and all of our missiles that we're using to do this mission cost millions of dollars. That's what we're seeing over in Gulf of Aden right now. You need a $6 million missile to get a $20,000 drone. So we're here to help bring the cost parity back. Well, thank you for everything that you're doing.

We certainly appreciate it. And we appreciate you stopping by. You got to call back in when there's more news, more updates. Those are some great tips. We could keep going for another hour. I'm sure we're just going to go into it. I mean, it's the most fascinating geopolit I mean, it's the fact It's the most fascinating geopolitical situations the most fascinating technology and yeah We thank you for taking the time to chat with us today. I'm sure we'll have you on for what you do again soon

So thank you Absolutely happy to be here. Thanks for having me on have a great day. I'll see him talk soon And we got Brandon from shield coming in to the studio in just a minute I believe he's here. Let's bring him on in. We got one minute. If you're not familiar with Shield AI, develop, test, and deploy autonomy faster than ever,

autonomy for the world, another defense tech company. And he is here now. Brandon, welcome to the show. What's up guys? How you guys doing? We're doing great, how are you? Doing great. Fantastic. Fantastic Thursday afternoon.

That's great, yeah. Thanks for taking the time to be with us. For those who don't know, could you just give like a little intro on yourself and the company? Yeah, sure. Quick intro on myself. Mechanical engineering background. I went to the US Naval Academy, became an engineering officer on board a ship, deployed to the Arabian Gulf on that ship,

then laterally transferred, became a U.S. Navy SEAL, and did three deployments, two to Afghanistan, one to the Pacific, got out in 2015 while concurrently going to business school, started Shield AI with my brother and have been at it for the past 10 years. That's background on myself. Quick background on Shield AI. Mission is to protect service members and civilians with artificially intelligent systems. In pursuit of this mission, we've been building the world's best AI pilot.

Easiest way to think about an AI pilot. The easiest way to think about an AI pilot is self-driving technology for unmanned systems. It enables them to maneuver without GPS, without communications. It enables them to maneuver without a remote pilot, enables the concept of swarming or teaming. Notable milestones along this journey. We're the first company in the world to put an AI pilot on the battlefield. In 2018, we put it on a quadcopter. It would go inside buildings ahead of special operations forces. That was deployed through Iraq, Afghanistan, Syria, most recently used in Israel to rescue hostages, which was really cool. Have the text messages back Israeli counter-terrorism forces from October 2023. And then also we were the first company in the world

to put an AI pilot on an F-16 and fly an F-16 autonomously. We won the DARPA Alpha dogfight in 2020 and 2022, did the first F-16 flights in 2023. We did the first ever AI piloted F-16 versus human piloted F-16 dogfight. And then in 2024, the secretary of the Air Force flew our AI piloted F-16. We're finalists for the Call Your Trophy, which is given to the greatest achievement in aeronautics or astronautics. Wright Brothers won it.

Chuck Yeager won it for breaking the sound barrier. We were finalists and lost to some NASA asteroid mining thing. Cool, whatever. Yeah. But yeah. He's paying attention. Yeah. I mean, it sounds like an overnight success,

the type of overnight success as we like to highlight it on the show. I mean, it's an overnight success. That's always the way it goes. Although all the greatest overnight successes take decades in my experience. Yeah, it's a 17 year overnight success. Yeah, you count the naval

experience. Exactly. What's it like going? Having your your first real startup become a multi-billion dollar company. Most founders have the benefit of starting a couple of things that don't maybe, you know, real startup, you know, become a multi-billion dollar company. Most founders have the benefit of, you know, starting a couple things that don't maybe, you know, little ideas or things like that.

Is it, you know, going back 10 years ago at this point, I guess, nine years and 11 months, did you feel like you knew what to do from the beginning or you had good people around you? I'm curious, you know. what to do from the beginning? Or you had good people around you? I'm curious, you know. One is you don't know what to do in the beginning. You wanna surround yourself with great people

just to be directly responsive to those aspects of the question. I don't think too much about like, you know, that aspect of like the aspect of Oh, it's now a multi-billion dollar company, principally, because it's a knife fight every day. It's a lot of pain and suffering. I tell everybody that like, when Jensen Wong from Nvidia talks about pain or suffering, when Elon talks about

the pain and suffering that goes into building these, these types of businesses, it's absolutely true. And so there's a massive amount of stress. There's a massive number of times that you fail. There's a massive amount of embarrassment when you fail in front of customers or when you disappoint customers along that 10-year journey. And so I think one of the reasons I think we've been successful

is the resiliency, the ability to keep moving forward, the ability to pick yourself up once you get brought to your knees, like when you get punched, and it certainly happens. And so, you know, in that sense, you know, I think we had that when we started, I experienced that in the SEAL team. So I was, you know, grateful to have those experiences and, and basically used to the life of suffering. So you know, that's that's paid off well over the past several years. Can you talk a little bit about the path to full autonomy for fighter planes?

We saw this with chess where, you know, deep blue beat Garry Kasparov, but for a long time, a combination of AI and human would outperform, they called it like centaur chess. Some people say we're in the centaur era of AI image generation, or a lot of people use chat GPT, but then they're editing it themselves, it's not a pure AI creation it's not pure human. Are we in the Centaur era of air supremacy right now or are

we getting there and how long do you think it'll last? I think at this stage in the game autonomy is at superhuman levels of performance and so so I don't, yes, people will always augment machines and make those machines better and more useful to the people, but the level of involvement in doing that is becoming minuscule in terms of like what's required. And so, look, you know, that journey, right, for us to flop starting to fly in F 16. Unfortunately, in 2015, when you're, you know,

three person founding team with zero money, zero track record, they don't hand you to the keys of the keys to the F 16 right away. And so we had to earn our right, you know, our path, you know, our right to fly that aircraft. Um, that took a long time and we stair stepped our way to get there. Uh, right. Took seven years before first flight, F16, proving it on a quadcopter, proving it in simulation, uh, with the dark alpha dogfights, uh, proving it on our VBAT aircraft and eventually, you know, they, you know, more and more people now are

giving us quote unquote the keys to, uh, you know, more and more people now are giving us quote-unquote the keys to their jet aircraft. Yeah. But it's, I, yeah, I'll just say like, autonomy is a really, really hard problem. It's also a really, you know, valuable thing to create. And we're at the stage now where, you know, I, yeah, I'm a big believer. I think the entire future is gonna be an autonomous future. I think I agree with Elon Musk when he says there's gonna be, you know,

millions of autonomous systems in the world. His goal is to put a billion humanoid robots on the planet. You know, we'll have millions of self-driving cars. I believe there will be millions of self-driving aircraft and millions of other autonomous systems in Shield AI. Our objective over the next 10, 20 years is really to enable that feature. Can you talk about the developer platform that you guys were building? I know that's part of the announcement that you did with the new round at the beginning of last month.

at the beginning of last month? We asked ourselves the question, you know, how do we put a million AI pilots into customers' hands in the next 10 years? We spent 10 years building the world's best AI pilot. For all the reasons I mentioned, I feel like we've checked that box. And then it became, how do we put a million AI pilots into customers' hands? And the answer was, we have to supercharge the aerospace and defense market. We have to supercharge the autonomy industry.

And we took a page out of Amazon Web Services Playbook. If you're unfamiliar, Amazon Web Services, they had basically built a great internal product. Teams said, hey, what if we brought this to market? What if we commercialized it? Would it be valuable for other people? All this infrastructure, these data pipelines, these developer tools, and obviously the rest of this history

massively valuable for Amazon Web Services, most profitable business unit they have. And so we basically said, let's package up all of our developer tools, our infrastructure, our pipelines, and enable the rest of the defense industrial base, and again, the rest of the autonomy industry and those interested in autonomy to actually develop,

evaluate, test, and deploy autonomy. So spent the better half of last year or more than last year really focused on building that product and rolling out to beta customers. And we're going to general availability here in May for that product. And the response has been game changing. It essentially enables you to reduce the number

of engineers, reduce the time to actually build autonomy and take it to market by 10 to 50X. So it's just massive improvements. We're flying first flights on a jet aircraft, two engineers in six weeks, right? Wow. If we had these tools back in 2015,

they may have let us fly the F-16 right out of the gate. So it's incredibly powerful. Yeah. Speaking of the F-16 right onto the gate. So it's incredibly powerful. Yeah. Speaking of the F-16, what is actually the hardest part of flying an F-16 in a military scenario? I can imagine that dogfighting feels like the most intense, the most high stakes. But then it also sounds really hard just

to fly an F-16 into the theater for six hours straight. You get tired. And then landing on an aircraft carrier in stormy seas, that seems really hard. Are you trying to do it all? Is this the idea of self-driving, you kind of turn it on when you're on the highway? What's the most difficult?

So just to be clear, the work on the F-16 was to burn down the tactical risk for this next generation of uncrewed fighter jets. But in terms of like what the, you know, the most technically hard, like the technically hardest part about it is actually around safety and certifiability, right? The US Air Force, the US Navy, they're not putting up 20,000 pound aircraft aircraft in the air that are just going to not perform, especially in the dogfighting scenario when we have relative closure rates between two 15,000-pound aircraft going at 1,200 miles per hour closure rates within, call it 50 meters of each other, you have to be able to say, I

can guarantee the safety aspect of what's going on here. Yes, there's risk, but this is how it's been burnt down. This is why it's safe. This is why we believe it's going to do exactly or why we know it's going to do exactly what it said it's going to do. So as people think about, you know, and I think that's where shield AI has really shown is our understanding of not just like the autonomy aspect, but that intersection of autonomy, jet aircraft, safety, reliability, certifiability. That's where shield AI stands out. Do we need to spend a long time working on? Do we need a new Top Gun movie where the protagonist is a software developer?

It probably won't be as entertaining as Maverick too, but we're open or as Maverick, but I'm open to it. Yeah. I'm open to it. How do you think about M&A going forward? I think you guys have made a couple, or at least a couple acquisitions to date. There's now a ton of new investment,

but you guys have spent 10 years winning customer trusts, winning contracts, et cetera. And I imagine there's gonna be some companies that develop cool technologies or have great talent, but don't quite reach where you guys are. How do you look at that opportunity going forward? Certainly we've built in acquisition muscle and acquisition arm in our company and we are constantly looking at opportunities. And there's just a very, very, it has to go through a lot of different wickets for us to say, let's get serious about something. Ideally, it's strategic because it takes up a lot of executive time if it's truly going to move the needle for the business. At the same time, you'll see

us do smaller acquisitions. We'll, a smaller IP type acquisition here in the next several weeks And so there's that range but in the ideal world You know strategic needle moving for the business You know gives us better market access gives us Enables us to build a better product one. That's aligned with our Strategy roadmap with our product roadmap, with our vision for the business. And so we're always on the lookout for new companies.

That's fantastic. Last question or we're good? No, that was it. I mean, come back on when you have more news. This is fantastic. I mean, such a fascinating business and like such an entertaining and just dramatic in so many ways. I mean, we could go way deeper, but thanks so much for taking the time to talk to us

Really fun conversation Thank you. Thanks guys. I'll see you. We'll talk to you soon. Bye Jordy's Hit in the bathroom, but in the meantime we have Peter from rune technologies here Let's bring him in and I'll have him do his intro and then Jordy will hop on in just a second So Peter, are you there? Can you hear me? Hey, Peter, how you doing? I got you.

Cool. Yeah. Thanks so much for joining. I've heard a lot of great things about the company. I actually haven't gotten a chance to really dig in too much. So could you just give me a brief intro on you, your backstory and kind of what the company does today? Yeah, absolutely. Absolutely. Happy to give you an intro and then tell you more about the company. Great. But myself, I'm the CTO of R ruin. I lead the product engineering team here and Before ruin I was an annual for four years as a software engineer

I had some incredible opportunities there were some amazing teams and before that I was at Facebook for three years Facebook a research you're the meme you're the meme of like you were building ads and then Palmer said, hey, come do something meaningful with your life. And I got covered over by Walmart. I love it. Yeah, it's amazing. It's real. And I actually dropped out of college to join Facebook when I was 19. I turned 11 at the time and I'm originally from Austria.

So I like to consider myself the most patriotic Austrian-American since Arnold Schwarzenegger. Arnold Schwarzenegger, I was going to say. Exactly. But yeah, I had the opportunity to come here when I was 19 and participating in the American Dream, and I'm grateful for that ever since. That's fantastic. What about Rune? Can you tell me?

Yeah, so about Rune, in short, we're a military logistics technology company. And really, the realization was that over the past few years, as defense technology companies have invaded on drone swarms and hypersonic missiles and autonomous submarines, what they haven't had the focus to think about is, well, if that drone breaks down in the fight, where do its spare parts come from? Or if you shoot one hypersonic missile, where do the next 30 come from? Or if you have a collaborative combat aircraft, where does the fuel to charge the battery to get it off the ground come from? Those logistical considerations.

And as I looked more into logistics, I realized that it was sort of the forgotten part of the military, especially at the tactical level. And I realized there was an opportunity to bring, you know, the great innovation that other companies have brought to intelligence and command and control and fires, but now bring it over to logistics, because, you know, I also knew that, you know, the great quotes of amateurs talk tactics and professionals talk logistics. And I knew how much logistics mattered to Patton's third army. And so it was just such a stark contrast between logistics really matters. But then when you look at logisticians in the field, they're using whiteboards and Excel spreadsheets and scraps of paper.

And there was a gap. And that's where we found it ruined to fill that. Yeah. I don't know if you ever played like Hearts of Iron IV, but it's very funny that, you know, Call of Duty is wildly popular, but Hearts of Iron IV is this like intense military simulator where you can spend 12 hours just optimizing like the flow of oil to the front line. It's very logistics based and people say it's like never never play the game because it's too addictive and you'll just be playing it all the time, but you're playing it in the real life.

Can you talk to me more about what contested logistics mean? I've heard that term thrown around, but I don't really understand it. Is that relevant to your business? Yeah, it's an interesting term because when I started out with Rune, I also really trudged it into what does contested logistics mean?

Because it's a buzzword that's out there. The more and more I spoke with logisticians, they actually laughed when they heard that term because all the logistics in the military they've ever done is contested, right? The military operates in contested spaces. So the contest logistics is really not, it's actually not necessary. It's just logistics. So what we're building is not software for contest logistics. We're building software for logistics. Got it. Can you take me through some of the history of logistics? Obviously it was like pen and paper and I don't know even before that probably like carrier pigeon

But then of course, you know We've heard that like Microsoft has actually been a great partner to the DoD and they've vended in everything from Microsoft Outlook to Excel and those tools although they seem of silly They're probably very helpful in terms of just understanding like how many bullets do we have in the bear in the in the armory or how many rations do we have? But but has there been what has the progression of technology and the adoption of technology look like over the last 20 years like post global war on terror? Yeah, I mean, logistics always has mattered, right? There's actually a great quote all the way back from Alexander the Great, where he called his logisticians a humorless lot because they were the first to be slaughtered if anything went wrong.

Right. So it's always mattered. It's always been important. You know, when it comes to technology, one thing that's interesting about the global war on terror is that logistics wasn't actually really the focus there because, you know, we really had air support so every shipment from Germany or the US that had to get to the Middle East made it there in one piece. It really wasn't the primary focus. And it's really now more so as we're looking towards Ukraine and future conflicts with the European adversaries, logistics are starting to matter again the way it did in past large scale conflicts. And seeing Russia, for example, really almost fail at taking TF in large part because of logistics, where it's like, you know, what people have to that problem again. Now in terms of the technology, there's been less focus on it.

And, you know, of course, you know, Excel and PowerPoint are great general purpose tools. But, you know, logistics is a really focused specialty with lots of doctrine and tactics and procedures. And so, you know, you can solve any problem with PowerPoint, but that doesn't mean you should and so, you know The software we're building is really focused on what does a logistician need when they're in the field and solving their problems? Yeah, how do you think about the trade-off between? flexibility of the design of your system versus Creating something that's more deterministic more enforcing rules on the user.

Obviously, the worst thing when you're building software is like, yeah, we did the demo, we did the install, and then a week later they fell back to Excel, right? I'm sure you want to avoid that. Yeah, working with your customers, it's often a back and forth between understanding their current workflows and supporting them,

but then also showing the art of the possible of what new technology can bring to the fore, right? What you can do in Excel isn't what you can do with AI, for example. And so it's actually showing them as possible as well as supporting their current workflows at the same time. And when it comes to generalizing the software, that's where we work with a lot of different service branches now, with the Army with the Marine Corps, you know, we're looking, you're looking very closely at the airports on their branches. And so looking at how logistics is done in different parts of the military helps us build really general purpose software that can even scale

beyond just the military one day and disaster and rescue, you know, oil and gas also have similar logistical needs. And also comment you mentioned earlier, you know, Microsoft, there's also something that is a unique realization for us is that, you know, the military doesn't always have perfect infrastructure available when it comes to its internet bandwidth and whatnot. And so we've also really focused on, you know, building the software to run on a laptop in the jungle in the Philippines in the trenches, and

the way you would write your software in that kind of environment is very different than in a stable, you know,, in the trenches. And the way you would write your software in that kind of environment is very different than in a stable data center with infinite bandwidth and infinite resources. And so supporting that tactical trench warfare kind of environment is also what's unique about what we're doing. So you're not melting GPUs every time you fire up

a query in Rune. Yeah, to me the interesting thing is, if you look back at the start of the Iraq War, the iPhone didn't release for years after that, right? So I'm interested to think about how you think about mobile. And now there's just, in theory, an order of magnitude more devices out in the field that theoretically could

be used to make the logistics operations more efficient. So is mobile widespread with these systems to date or is it again, the laptop scenario in the jungle and just, yeah, I'm curious how you think about mobile broadly. Yeah, mobile is popping up a lot, especially at the lowest levels where you really have soldiers or Marines with their phones typing in logistical reports that's happening right now and we're working on projects to integrate with that But you know what?

I think even more interesting is how do you get away from humans even doing the county right now? So you're very honest the way the military right now knows how much fuel is in a certain place is that you have You know private dip stick in and see how far up it goes, right? place is that you have a private dipstick in and see how far up it goes. Right. And so that's how it's done right now. And your phones get you to, you're reporting that perhaps more quickly. But what we also want to get to is how do you not have a human loop in there at all with sensors to just measure that, you know, whether it's ammunition and a

base or a fuel, you know, ideally that's all automated. How do you, how much? How much you talked about Ukraine and learning maybe what not to do from the Russians. How much do you think that the US has to learn in Ukraine around logistics? Or is Ukraine doing anything really well? Are we being sort of efficient there from a logistics standpoint?

We heard from Nathan that they're making a million drones a year already, so it seems like there's some industrial capacity there. And then I've also heard those reports that Russia was ripping semiconductor chips out of washing machines in old Ford F-150s because they were so out of supplies. I never know what to believe with these stories, but I'd love to hear your take. Yeah, I certainly think the United States would have fared better in Ukraine, right? The way we fight is different. But what's not too different is how we track logistics at the tactical level right now.

The Ukrainians are using papers and whiteboards, and that's why there largely isn't data at the tactical level and what they're actually consuming. And the United States military isn't too different from that right now. So even when it comes to tactical logistics, the US military has a lot you can modernize on that front and that's what we're interested in doing right now. And so that's what our focus has been. Who do you connect with most on the customer side? Are there people within the DOD that are just clearly logistics nerds and you guys just have a 30 minute call and end up going two hours. And it's just like, you know, you finally are like, yes,

like you get it. Because I feel like if you're, you know, anybody that's a true sort of student of history, you know, could get to the point where they're like, yeah, I'm actually, I care less about like the sixth generation fighter and more just like the basics of like how we get one thing from point A to point B. Yeah, you know, honestly,, honestly from the get go,

the one thing we've never had to convince somebody of is that what we're tackling is a problem. Everybody understood that logistics matters. Everybody understands that, you know, the technology that logisticians have in the United States military is not where it's supposed to be. And you know, there's obviously the logistician branch

of the military and when we worked with them and they've been our closest design partners so far, they understand these problems because they live in them every day. But even other war fighting functions and other military members understand the problem as well. They sometimes need to understand why logistics needs to matter to them.

When you're talking to an artillery officer, for example, they do sometimes have to be allowed to understand how can AI for logisticians allow them to be more lethal, right? Because they're going to have munitions when they need them before they need them in the right place. So that's sometimes something that we show the art of the possible, but in general, everybody understands this really matters. How are you thinking about the go-to-market and the revenue side of the business? Is this the standard, get some SBIR money, then make it through the Valley of Death, land it program of record?

Or is there just a very different model because you're selling software in logistics? The good thing is that over the past few years, the military has woken up to logistics really mattering a lot. So there's a lot of buzz around it now. And, you know, in terms of what that allows us to do is one, we can both go to operational units in the field who actually need the

software, right? They'll most often be our design partners and help us develop. That's not going to be the big dollars, but it's really important for us to build the best product. And then we're also going to the innovation labs, you know, across the services, there's organizations that, you know, help field technology, you know, from the innovation labs, across the services, there's organizations that help field technology from the innovation stage. And then there's also the program offices themselves. And across the services, there's very large projects or programs underway that include sustainment now. They maybe wouldn't have two years ago, but they do now. And so it's really across the board from the largest

modernization projects in the army to the innovation labs, to the operational units, we're going to all of them and having successful all of them as well. What kind of skillsets are you hiring for right now? It feels like AI would be really important, but maybe not today. What's like the kind of the type of engineer that fits in really well at Rune today?

Yeah, you know, obviously we've been scaling rapidly. We're 12 people now and we have had an engineer onboard every single week for the past four weeks. Nice. So that's been really exciting growth for us. We're actually now looking for more product-minded individuals or product managers that have lived the dream and perhaps were veterans themselves,

but now want to build technology and understand that as well. So we're looking to scale our product team right now. And as we grow further, engineering will always be our greatest asset. So engineers that have really cared about the mission before, right? We both care deeply about the mission, what we're building for, as well as having the right engineering skill sets. So engineers that identify with wanting to, like I did, not build ads anymore,

but build military technology, we're always looking for those. Dere, got anything? That's it. I had one more question about kind of, just on the data integration side, is it important for you to build integrations into different data lakes, data warehousing?

Is it important to just do really great PDF ingesting? How are you thinking about actually getting, I mean, I'm sure as you grow and scale, there will be times when you run into like, okay, there actually is a lot of data here, let's bring it in and onboard it. Is Palantir a piece of all this? How do you see Rune playing into the broader ecosystem of military data broadly? Yeah, so it's important about logistics that it does really require very holistic decision making.

And then you can't just know what you have on hand, but also what transportation you have to get it from A to B along which routes, with what crews to actually move that equipment. If you don't have any of those pieces, you're not making a holistic decision and it might actually just break down when it comes to the real world.

So we're very interested in integration. We have a super open architecture that lets us integrate with programs of record, other systems. We're talking to lots of other companies that want to integrate with us. And then we're also allowing manual inputs as well. Like you said, whether it is PDFs or Excels or your manual inputs too, it's kind of like a mix of other integrations, manual input, and you're combining all of that

to give that real world recommendation that connects all those pieces that I just mentioned. Yeah, that's great. Well, good luck to you. Thank you so much for stopping by. This is a wonderful conversation. We'll have to have you back when there's more news. Yeah. Yeah, thanks.

Great to meet you. Yeah, have a great day. Very cool. We got Sam. We're switching gears here. We're going into From defense tech into hard tech impulse stoves. I want to talk to Sam about what big stove is doing in reaction to The tariffs. Well, before we get into this, you know what somebody that's selling stoves online should use Oh, I know I think you know John numeral numeral for sure put sales tax on autopilot Yes, they put it on autopilot for thousands of leading e-commerce and SaaS businesses. It is the platform for sales tax

Yeah, I want a guy like spending any more than five minutes per month for sales tax compliance. Five minutes is honestly the perfect amount. You want to be dialed in, you want to be paying attention to it, but you don't want to be over investing. Reverse searing a stake and posting a great video and doing interviews.

You don't want him wasting time on sales tax as he sells these all over the country. We should film an ad where we give an ad for Numeral while searing a steak. You could probably do your sales tax faster than searing a steak on a whole stove. You could maybe make it a ritual. You could maybe make a ritual and just say every month,

I'm gonna spend five minutes on sales tax compliance and while I cook a steak. And you know where I expect to see a lot of these stoves installed? Where is that? In Wander's, for sure. That's right. You check into a Wander, you find your happy place.

Find your happy place. Find your happy place. Book a Wander with inspiring views, hotel-grade amenities, dreamy beds, top tier clean, 24-seven. John Andrew, Kyle, let's get some impulse stoves in Wander's. I would love that.

People are gonna be begging for them. I wanna be able to filter for it. They have a bunch of filters you can filter for. Great Wi-Fi, has pool, King Bed, all these different things. I wanna know if there's an impulse stove. Anyway, we got the founder of Impulse coming into the studio. Welcome, Sam. Boom.

How you doing? Hey, great to chat with you guys live. Yeah, yeah, I'm so glad to hear. I think we featured your post before, we've talked about you, we've always said that it's, it's interesting that I feel like in some ways, Impulse is kind of like a dividend of Anderil. It's not Anderil for stoves,

but it's something that like people didn't think that you could start a new stove startup in a few years ago and now you can. And so give us the pitch. So basically for context, though I think I overheard you guys talking about me before, startup in a few years ago and now you can't. And so give us the pitch. Basically for context though I think I overheard you guys talking about me before but basically we make a stove that's about six to seven times faster at boiling water than most other stoves. So like you can boil like 10 cups of water in a minute and a half or something crazy. So like your mac and cheese is immediate. But then it also lets you set an exact temperature

sort of like an oven. So it's like instead of low, medium and high, you can turn our like cool magnetic knob to an exact number and you don't get smoke. You can like fry with seed oil without seed oils for all of your esteemed health conscious followers. And you can buy it right now at impulselabs.com. We ship about 12 weeks. That's amazing. And you can lock in, you know, you know, current pricing at that point.

I'll talk about that later. And and and just like the technological innovation here is that there's like a massive battery pack. So basically it's like value prop is you get this cool stove and it has all these capabilities you can't get in there. So it's like a fundamental leap in performance, but it wedges a battery to your house. And once we install enough of these, we actually deploy a decentralized battery network across the grid.

And you can actually get more distribution of batteries than Tesla Powerwall relatively straightforwardly if you essentially intercept the 55 million major appliances sold every year in the United States. So there's been 400,000 total Powerwall installs in the US and Canada, apparently. But like, there's always an appliance installation truck on your block like every couple days. So like, it's actually this really interesting thing of you can actually deploy

a crap ton of battery stores that way. Yeah. And so that's the big vision, right? Yeah. And then we've actually figured out how to get the distribution unlocked. And one is you can buy the stove at impulse labs.com. It's awesome. But we're also partnering with a bunch of major appliance OEMs to get the tech in there. And so that means that you can go to some random appliance showroom,

like Joe and Bob's appliances, buy a brand you already know, and it might come with Impulse inside. And so I'm starting to roll that out over the next year. Are you thinking about even, I'm sure you've thought about this, but I'm curious if you're doing it, partnering with people that are building homes,

because it's a big... Yeah, so it turns out interest rates being high means that that's a little less like high volume. It turns out that you want to intercept the like, you want to intercept where expensive appliances are made to start, because you're putting a battery in it. And we managed to push the battery cost down substantially, but it's still something where it's like,

there's an item that's not in the bomb of a normal stove And so you kind of want to start high-end very similar to Tesla and all their stuff But then where the high-end appliance is sold kind of diffusely so getting into these brands Having a standout brand of our own but then also getting into brands that people are already buying lots of Is is is the way to do that and like I then have to talk to like 10 different OEMs versus thousands of developers basically. It's actually, and then you monetize the battery the same way either way.

Like once the battery's on, once the thing is installed, the battery's under our software control. And so we can sell that battery to utility. We can rent that battery to utilities for grid services and stuff like that. So we get access to revenue either way. Awesome. Wait, talk more about that.

Talk about the grid integration and getting that extra leverage and specifically recurring revenue. I mean, is the base value prop even beyond selling energy back to the grid, is it more just like if the power goes down in my neighborhood, this stove could potentially power my house for a couple hours a day? What am I thinking?

The stove itself works and it's got an inverter so it can share power with the rest of your house. So if you've got like whole home backup, it will support that whole home backup. So it'll add like, it's like a quarter of a power wall basically. And so the vision is once we've rolled this out to multiple appliance categories and multiple brands, like you could just turn this thing on and you'll have like, you won't have to

have a power wall. You'll just have this tech. How do I love the design of the product? How do you think about making smart tech stupidly sort of easy to use? Right. I have this. I got a, uh, the other day app on my phone. Right. I have this. I got a app on my phone.

I'm not the other. No. So the other day, the other day, I walk into my bedroom and I go to like raise the blinds and it doesn't work. And I ask my wife about it and she's like, oh, yeah, we need to charge the blinds.

What do you mean? And I look up, there's like a court, I got to like charge it once a year. I'm like, give me a break. I don't want to think about charging my blinds. It's hard enough keeping this thing charged. Yeah. So I think like we're entering into like there was the last 10 years have been like the smart home era. Yeah. But everything going back anyways, we need to get smarter but also dumber.

Yes. Yes. Yes. We've been in the midwit, the midwit home era. It's the midwit home. It's the midwit home. It's like, it's like, okay, does your smart home require someone who's like an IT expert to set it up? And then you don't want to touch anything because you'll like disconnect your light switch. And then by the way, like Google home

still doesn't have an LLM to it. And it still doesn't know how to set an alarm properly. And if I ask it to play a certain piece of content, it thinks that I mispronounced it, even if I always request that content. It is actually crazy how bad this stuff is. Yeah, it's wild. What we realized was, okay,

people hate these touch panels on the stoves and stuff like that, so we figured out a way to do knobs where they're magnetic and removable, so you can clean all the gunk underneath them. Oh, that's cool. Yeah So that was pretty cool. But then Basically, the UI is really simple. It's like you it's the same as like a gas stove It's like you basically push in and twist and you get you get heat like it's not like any sort of

Crazy, it's like it's like and then the smart feature we realized was make it hold temperature accurately So instead of like you can say low medium high accurately. So instead of like, you can say low, medium, high, we still have that, but like, you also can say three 15 degrees. And then like your eggs come out exactly the same every day. Um, and the butter doesn't burn. Maybe it lightly Browns. If you don't want the bottom of the egg to Brown, you can set a lower temperature. But like, basically we just give you like direct control over the thing that

people actually want to do, which is not. Playback a smart recipe and like be on rails with New York Times cooking. It's like, no, I just want to be able to do the thing that good chefs are able to do by like hovering the pan over the burner and like doing all the right motions. That they teach you. How do you think about,

what's your vision for humanoids in the home? Cause I, it's not hard to imagine, you know, my humanoid going, grabbing the steak out of the fridge, slamming it on the impulse, and then just doing that. But maybe they don't even need to touch the knobs if you just have the integration. So you don't really have to touch the knobs with our thing either because you just turn it on once,

and then it's just at the temperature. You don't have to mess with it. But I realized that the number one automation in cooking was actually just holding temperature consistently on a pan. And if you can do that, you elevate a mid-wit cook to a decent cook. And so do that. And then that's that's kind of the 80 20 of that's the 80 20 of kitchen automation. Like I cook at the office. I made some like crazy braised thing. It was like super simple.

I made rice without a rice cooker. Like you don't even need these accessories. Do you have a rule with your team where it's like you can't order out, like you have to use the product every day at lunch? Yeah, I gotta tell everyone that the tariffs are cutting into the lunch budget. I'm sorry. Yeah.

Yeah, let's talk about the tariffs and your supply chain, I'm sure you're impacted. It's impossible not to be. Yeah, and one thing I'll lead with is like, we're in an interesting space because all of our competitors are also impacted. So like basically even the US made appliances, like so if you go to like a Whirlpool factory,

all the circuit boards in there are actually like made by like German or Chinese companies. So, or a German company in China in many cases. So it's like, basically if you tear down any induction stove, you pretty much like see Chinese and German components inside, even if it's made in the US. And so for that reason, it's like, okay, we're building our stuff overseas. We're going to figure out, hey, what the lowest tariff regime is, you know, make it a Vatican city or whatever, whatever, whatever, whatever works.

Hopefully blessed by the Pope. Yes. Yeah, we can commiserate over our Italian heritage, but the, our shared Italian heritage, but basically, but basically the point is like, everyone's going to be impacted because inputs are impacted. So like, even if I go in, if I build a factory in, in, in let's call it like Phoenix, Arizona, I'm not like my sub suppliers have an onshore yet in volume. Like an example is like, I'm like an investor in Hadrian, like Hadrian like does not have enough CNC machines to make all the world's iPhones yet.

For instance, like it would take them, it would take them a second. I'll overestimate, I'll be optimistic here, it'll take them at least a second to get that capacity up and running. And this is going to happen across the board. So like the lesson from the last wave of tariffs was Vietnam. Um, basically Vietnam was this like kind of quote unquote,

loophole country that now is seeing like 45 plus percent tariffs or whatever. But Vietnam was the tariffs were only on China. Um, there was a lot of Chinese manufacturers that just basically just drove across the border and set up a factory. And all the engineering staff Chinese, like they're just flying in. It's kind of like two hour flight, one hour flight situation from Shenzhen,

but effectively it's a Chinese run factory. Now to get them made in Vietnam, you had to actually get make some of the components there. But what this meant was all of the large format injection molding machines, because when people move there first, televisions. They moved all the TVs, like $600 TVs and stuff like that, they moved them there. But that meant all large format molding machines are just completely occupied. And so if we want plastic parts like our induction coil assembly or something like that, we want

to do that in Vietnam, we probably couldn't find the machine. We'd have to import that part from China regardless because the machine would be occupied. And then there's a backorder of those machines and all this other stuff. So it ended up, even to get to this point where a ton of consumer electronics from Samsung, LG, Meta, et cetera, moved to Vietnam, years or 5 or 6 years from when those tariffs kicked off. And so if you want to like a preview of what like US reshoring would look like, it's going to be something of that nature. War prices are just going to go up a bit, and people want to put it in the line I'm going to check out.

So like weirdly enough, it's like we're insulated from this a little bit by making a high ticket item that's cool. And like maybe we'll get permission to raise prices by by other folks or whatever. I don't want to be the leader in that space because I think that would stick my neck out. But it's something where and then additionally like as a component supplier to all these appliance OEMs where we actually make our money in software and recurring revenue from the battery storage. We're very insulated in that respect of the business. But it's something where, like, I had kind of a reaction to this being like, it would be really cool if I would have a different approach to reshoring manufacturing in the US, and it would be more around, like, making it legal to

build a factory in San Francisco again, and stuff like that, or the San Francisco Bay Area again, without getting, like, angry NIMBYs on your ass, or having to build and stuff or the Bay Area, the San Francisco Bay Area again without getting like angry Nimbus on your, your ass. Um, or having to build a tent in the parking lot like Elon did like five times. Uh, I mean, he was the only guy who did it because you have to basically operate it. It's like legal gray area. Yeah. Uh, where else are you seeing the most opportunity in home appliances or just like tech for the home. Uh, ovens seem adjacent. I don't know what you take on. You think so? That's fun. Uh, anything else come to mind? Yeah. So, I mean, I think there's actually, there's some interesting,

the home tech and the humanoids come to mind is like, I think just making a laundry machine that folds stuff at the end would be sick. It would be amazing. It would spend like five grand on a laundry machine if it did that. Totally. Yeah. And we'd basically reprice the whole like laundry market if you, if you like, I think, and I think the tech for that is going to exist like next year. Yeah. I think you just spawned like five YC companies with that.

Yay. And then they can go license P like Pies models or whatever. But I'm excited for that. That sounds amazing. Yeah. But so, so you can do that. We're actually thinking like, I want to be the index startup for anything with a power cord effectively. So anything with a power cord, realize that most appliances are used intermittently.

And even within that intermittent use, they're not used at full power. You're not blasting a turkey fryer level of power. We can actually fry a turkey indoors on our thing, but you're not, even when you're frying a turkey, you don't need full power all the time, you just need it to boil. And so, and so-

I'll be able to blow dry my hair in two seconds. And it's just like- It's a problem, it's like maximum temperatures and you know, you don't want to burn your hair and stuff like that. They've tried it, they've tried it. They've tried it. But basically, I think that there's this play where you can essentially realize that energy is used super intermittently, but the greatest size for peak use all the way around.

I think our companies had a really good explainers on a bunch of these things as well. But basically we solve a similar set of issues, kind of like even at the more hyper local level than even at the home panel or something like that. Sure, sure. But it turns out you can basically, any device that kind of has like high peak, low average draw, shove a battery in it, and have an inverter in it, so when the device is not active, it's able to share the battery with the rest of the building. That's very cool. And so that's the vision,

get that into as many devices as possible. Turns out stoves are kind of a juicy target to start, and then go from there. And why don't you just drop the link one more time for the fans who wanna pick one up. Where do they go? ImpulseLabs.com why don't you just drop the link one more time for the fans who want to pick one up. Where do they go? ImpulseLabs.com and if you order it now, it ships in like, I think it'll ship like early summer.

And we just got most of our compliance certs all like officially granted and the rest of them should come first, like momentarily. So it's legal to install in your house as well, which is exciting. Fantastic. Well, thanks so much for stopping by. This was fun.

Thanks for hosting. I'll be around for peanut gallery on tariffs and trade and all other stuff whenever you want. Fantastic. That'd be great. You're a takesmith, I can tell. Yeah. A takesmith.

That sounds terrible. OK. No, it's a good thing. It's a good thing. You got good takes. Ready to fire them off. Yeah, we need to slap an impulse. We're getting a new studio soon.

You just put the stove in the middle and you guys can do some pot pot or something. It'll work. Yeah, yeah. I just want to be eating steak all day long throughout the show. That's my future for sure. Do let me know if you want one down in LA.

Yeah, yeah, yeah. We'll figure it out. Awesome. Awesome. Thanks so much, Sam. Great to talk to you. We'll see you soon. And we got Scott Wu from Cognition coming in to the studio.

He's not here yet, but I did get an interesting question for him, I posted, tune in to TBPN today at 145 Pacific for our interview with Scott Wu. If you have any extremely complicated math problems you want him to do in his head, leave it in the comments. And we got one. Someone said- Is it from Aaron? No, no, no, no. That was more of a

joke. Brian Chow says, Ask him if he really did cheese IOI 2014 problem six. He'll know what I mean. Scott, welcome to the show again. Great to have you back. We will get to the amazing cognition news, but I got to know. you cheese? I oh I 2014 problem number six, you know, I can't answer that question actually But but no, it's great to be back and it's great to see you guys We're doing great and I mean congratulations on the launch can you break it down for us? What what is different about Devin and cognition today? Yeah. Yeah, absolutely And so what we rolled out today is essentially an agent native IDE.

What that means is, I think there are a lot of great products out there that are about really accelerating you in a synchronous workflow. What we've always built Devin for is to be truly asynchronous and to be able to delegate and to have your own team of Devins that's taking on tasks and to be able to manage several Devons at once, or to be doing other things while you're working with Devons at the same time.

What we're rolling out essentially is a way to really cleanly, interactively work with your Devons as you're using it. So it's a full IDE experience, it's a collaborative planning experience at the start of each session, and then some of these other features like Devon Surge and Devon Wiki that we've been rolling out. What else do you have? I want to...

No, no, go into it. Well, I want to just get into your overall thesis for AI and how the market's moving broadly. Almost 10 years ago to the day, Sam Altman posted a blog post called Bubble Talk where he said, everyone was saying we're in a bubble, here, let's format it as a bet. And he said, the top six US companies in terms of unicorns are Uber, Palantir, Airbnb,

Dropbox, Pinterest, and SpaceX. They're currently worth just over 100 billion. He thinks that in 2020, those companies would be worth over 200 billion. There's a few of those companies would be worth over $200 billion. There's a few of those companies that are worth over $200 billion alone. He also said Stripe, Zenefits, Instacart, a bunch of other companies will be worth more than $27 billion. And he was, I think he was off, but only by a few weeks.

And it was this interesting thing where everyone felt like it was a bubble. He formulated into a bet. He was correct. But how are you feeling about the overall murmurs about, oh, is AI a bubble? Yeah, yeah. And I think he was forecasting a 3X or something in just a few years. And so whether he was barely off or barely made it, I think it's like, certainly if you just hear that list of companies, Uber and Airbnb and SpaceX and Stripe and all, I think it's like, you know, certainly if you just hear that list of companies, you know, Uber and Airbnb and SpaceX and Stripe and all, you know, it's, it's, I think the

point was very clearly there that those companies did have real merit and real value and they proved out a lot more of that actually. I mean, it's almost comical to it's, it's been 10 years now since then. And to just think, wow, like these are, these are some of the great public companies, right? And I think that, you know, we were talking about this, but I was thinking about it a lot because it's been almost exactly 10 years. And it's also, I mean, super cool. Sam was running YC at the time, which is why he put that out. Obviously, now he's running OpenAI. But yeah, I mean, I think people talk about bubbles so much in AI. And it's almost,

I feel almost the exact opposite, where the value that we are suddenly proving out in AI is almost underrepresented in what we're seeing and what is going on. And you see this in all these different spaces. I think, as we were saying earlier, code is one of the first ones because it's so nicely automatable. There's a clean feedback loop and all of these things that you can really train models to get really good at code. But I think we're really starting to see it basically everywhere.

And it's a crazy thing to think about, but a lot of these businesses that we just mentioned, these are really, really amazing businesses and really powerful businesses, right? And a lot of what they do, arguably, is they make particular flows of your life 1% easier, something like that. They come in in this like particularly painful process and solve that hard part for you and deliver this. And obviously these are incredible, incredible businesses. This is less about the businesses and more just about

just how big the world is out there, you know, and how much value that there is to provide, right? And now when we're talking about AI and we're thinking about what AI can do, you know, for consumers, it's, you know, an AI assistant that does all of your work for you, you know, it does all your hobbies and takes on all these things. And in enterprise, obviously, we're talking about multiplying every single person's output

by 5x. I was thinking about it especially because it really does feel like, across a lot of these different layers, the foundation model layer, the application layer, and so on. Sure, it's a tough question to decide which one is going to succeed, which one's not going to be. And only a few companies get to be the Google and Amazon, and a lot of companies, obviously, have a tougher time. But if you just ask the question overall, is AI as a space going to deliver massive, massive value?

And is it going to build these multi-trillion dollar companies? I mean, I think at this point, it's pretty clear that it will. Yeah. Can you talk a little bit about the Studio Ghibli moment happened last week? And I'm wondering, like,

with the Levels I.O. flight simulator vibe coding, Andra Karpathy coined that term, it kind of took fire, it really was a great term for something everyone was kind of dancing around. Are you expecting a Studio Ghibli style moment for programming? Because I think what was so magical about Studio Ghibli

was that it took the onus of creativity out of the process and it made it personal. Because you could just take any photo from your camera roll, any selfie, you could take your own dog or your own profile picture, type one word and you get something that feels cool and different. Is there a world where we get something where it's like, hey, make a video game about my life or something and it just does it? What would a mass adoption moment for AI driven programming look like? For sure. Yeah. So I think there's two kind of different categories, I would say, within AI

coding. And one is, I'll call it kind of the more general purpose, let's say single use software type or more hobbyist type work, right? Where you wanna build a cool website, you wanna do this, you wanna make a nice game, or you wanna put a lot of these elements together. And I think that's going to, I mean, honestly it's already taking off pretty massively.

It's, you don't have to know how to code anymore and you can put together like a really cool website and set things exactly as you want them and so on, right? And I think there will, I'm sure there will be more exciting moments to come where, you know, as we cross these new tiers of capabilities, you know, the interface is going to change for that and the set of things that you can do. On the other side, I would say is kind of the massive kind of just software engineering

industry, which is a little bit more, obviously is a little bit more oriented towards, a lot of big companies that are spending maybe millions of hours of software engineering time developing like really, really great software, right? And making it super resistant to all the different things you can think of, figuring out all the little details of architecture

and so on. And I think on that side, I think for the time being, that's going to be primarily focused on software engineers. Just because while we're still working with these layers of abstraction, you still really need to have all of these concepts in your mind and the ability to really just reason with the computer architecture. But there, it's kind of like, we'll see a 5X there.

So maybe one way to describe it is like, I think there will be a level of kind of programming and being able to interact with the world through code that everyone will have access to, which is super, super exciting on the one hand. And then on the other hand, I think for a lot of the deep technical work that we do, I also think that, you know, engineers who are focused on that and working on that are going to be able to do like 5x more. So we're kind of seeing both of those sides at the same time. How do you, what advice do you give engineers that are gonna be able to do like 5x more. So we're kind of seeing both of those sides at the same time. How do you, what advice do you give engineers

that are just joining the Cognition team? You guys have such a ridiculous sort of, you know, sort of probably, I would assume the average engineer at Cognition is a 10x engineer in any other organization. And so you're looking for like, you know, there's, there has to be this pressure of joining your, your building the tools that build the tools. You know, how do you think about sort of ramping people to the sort of, to the output that you want to see

out of engineers at every level of the organization? Yeah. Yeah. I was going to say, I mean, there's very little advice that I can give cause these folks are always smarter than I But no, I mean I think it's you know, it's it's interesting I mean one thing that that comes from is, you know, people ask me all the time like should I even be studying CS? Like should I even be you know, what how do I even think about software engineering? and and I think that the main thing I would call out here is just

You know as the capabilities change the the the interface of AI product changes a lot as well, right? And so it's one thing, you know, it's, for example, like, you know, there was a phase where text completion was the main thing, and that was where the model capabilities were at, right? And you could get a lot of value from just pure text completion, right? And I think we're already past that,

and, you know, pushing into a lot of new things, but each new era that we get into in terms of capabilities is going to unlock a new product experience in AI code. And I think that the main thing to call out, because I think a lot of this is going to happen so quickly, is just it's really, really important as an engineer to stay on top of all these tools and to understand how best to work with them. I think at this point, there's no shortage of things to do in code. I don't think we're going to run out of software that we want to build any time soon. So I think it's more a question of how do you

stay maximally effective at building software? And a lot of that is just really being up to date with everything that's happening and understanding each of the new waves and learning how to use these new technologies. Because it does take time to learn. How do you think about AI adoption among engineers broadly? Or has every, there has to be, I think about the example of the Japanese soldiers that didn't know the war ended.

They were just on an island and still in war fighting mode and it would have been 20 years or something like that. And so I think there has to be engineers out there that maybe they don't know, that maybe they don't know about cognition or they don't know about open AI or any of these other tools. And, but it has to be some, like, I would imagine like 90% of people that are just obsessively writing code every single day, 90% plus are sort of aware of these tools. But how do you think about adoption broadly? Yeah, yeah, for sure. No, and I mean, I think at this point there's a, yeah,, there's a pretty significant fraction of all the top engineers in the world that are using these AI tools every day.

And they're getting a lot of value out of them. The main thing I would just say here is this is where folks sometimes like to get a little kind of wishy-washy about AI is going to come in, and then suddenly all of our problems are going to be solved. And I think one of the things that we're finding even in code is there's just a lot of practical work to do out there in the world, right?

And so I think it's one thing to be able to solve these theoretical problems in a vacuum. It's another thing to, all of these different code bases out there, all of these different development environments, all these details. There's a lot of COBOL out there in the world still. There's a lot of all of these various different languages, or all of these crazy idiosyncratic setups.

And so I think one of the big things, honestly, that we're solving as a space is actually not just the capability itself, but just solving for a lot of these practical constraints and getting the technology to the point where it works for everyone and not just the subset of people who are building the latest and greatest apps in Python and TypeScript or whatever it is.

So. Can you talk a little bit about the importance of multimodality and image diffusion and understanding images in the context of coding? I think a lot of people assume that, well, it's just code. You don't even need to think about the advantages of being able to process images effectively.

But at the same time, it feels like the more data you throw at these models, the better they get, even if it feels completely tangential, just having the ability to not just know Python, but also speak Russian and Chinese and Japanese and all these different languages, it seems to increase overall intelligence, even though it's not the narrow set that you thought it was. Yeah, and by the way, it's actually a fun exercise if you've never done this before,

to basically, you know, a lot of the queries that we feed language models of just like raw, massive blobs of text, to try to do those yourself, like as a human. And one of the things that you find is like, wow, it's actually really hard if you're just looking at some massive chunk of text of just finding the thing that you want

and getting the right thing. Like humans naturally, you know, there's just like a lot of systems and how we process information visually and all of these things. And what I would say, yeah, I mean, I think in terms of code, for example, the, I think it's one thing for it to be, call it like theoretically possible, you know, it's from the set of information I'm giving you, it is theoretically possible to extract out exactly what needs to be done. And you know, you could say this, for example, with,

with let's say you're trying to build a new feature and you just say, all right, here's the entirety of my, you know, one million line code base. Just tell me what I need to do to build the feature. And obviously no human can do that on the first try and just tell you exactly what needs to happen. And really, and for most of these more complex tasks, no AI can either.

And in practice, the way that we solve these things is obviously through a much more iterative process that involves using all of our different tools. And it might involve, for example, running the front end locally and then clicking around on the website and seeing what happens. And you're trying to fix this button, so you go around and click on it, and you move around and you see what errors come up in the logs when you do that. That's how you solve your problem. A lot of it I would describe it as almost like setting the stepping stone instead of

the rock cliff face where you can make the incremental progress towards a solution. This is what we do all the time in software engineering. Similarly, I think being able to use image or being able to interact with these other data sources is what really gives AI that same capability. Please. One question that you are uniquely suited to answer, do you think we see an AI win an IMO gold medal this year? It was silver last year.

Yeah. And I imagine we made some progress since then, but what's your take? Yeah, I'd be pretty surprised if we don't. We have a... So the greatest competitive programmer of all time is a guy named Taurus. His name is Gennady, he's from Belarus, and he works at Cognition actually. You can look this up.

No, it's true, it's true. It is objectively true. It's... It's objectively true. And so, Gennady, we have kind of a bet going internally on mainly the question not of whether it will be like a top-level high schooler, which is essentially what the IMO or IY gold medal is, but whether it will beat Gennady, who's the greatest of all time. And I think most folks think it's probably gonna happen this year, yeah.

And if not this year, then next year, yeah. I think Gennady is, he's pretty adamant that he'll still be able to do it. And so I'm kind of looking for, I mean, I feel like we should have the, we should do the whole show match, you know, Gary Kasparov style and do it with him. Let's do it live.

Let's do it live on TVPN. Well, can you give us the call to action? It sounds like Cognition and Devon are much more accessible. How can people get started? How can they sign up? How can they play with this tool and see if it works for them? Yeah. So we rolled out a whole new experience and then on top of that, we've really left to

hear what folks think and so we're making it a lot easier to try out. And so we have a new plan that starts at the $20 minimum. And it's all available at app.devon.ai. So you can sign up immediately. It's fully generally available. And you can try it out on your code base. Very cool. Well, I hope those GPUs don't melt.

Hope the servers stay online. And good luck with the next couple of months, as I'm sure it's going to be a continued rocket ship. Yeah, congratulations to the whole team appreciate Thanks a lot Scott talk soon. Bye He's like Yeah, he's actually on the team. Yeah I've met Gennady cuz he worked at ramp and I interviewed him and

a lot of what he said went over my head if I'm being honest, but yeah, he's a beast and it's crazy So it's on poly market. There's it's only at a 59% chance that AI wins an IMO. They're selling dollars for 59 cents folks not a financial advice but you heard it here it seems pretty obvious anyway we got Michael from Aurelius coming in the studio welcome to the show Michael what's up how you doing how are you breathing today you got the nose strip is so much. How you doing? How are you breathing today? You got the nose strip. Is the oxygen coming in? Good, how you doing?

Going well, dude. One of my nostrils barely works. It's just all checked out. I gotta figure that out at some point. But you're out for a while if you get an ENT fix. Oh yeah, yeah, yeah. It'll be fine. I think I had the same thing.

I should have dressed up, dude. I've tried the nose strips for sleeping at night. They're pretty wild. This guy's the Alex Rozi of laser weapons. Yeah But yeah Yeah, I appreciate you DMing me you just said hey, let's talk about laser weapons And I was like I've never heard of this guy before this company But I'm in and and and so I did a little research. I want to hear about your experience at Stanford

I want to hear the basic pitch for the company your background Can you just take me through kind of the the 101 level of who you are and what you're building? For sure. Yeah for sure. So I'm an engineer worked all across a bunch of different heavy industrial systems. I've worked in a Lot of my time was spent in electro optic system development I helped work at the biggest US laser company on laser weapons systems and an R&D capacity and then went into sales and I sold a bunch of systems including some components into a lot of the primes for the big laser weapons that are out there. I didn't go to Stanford but at Stanford we were essentially, when we first started the

company we were hiring the first round of engineers. We had sent out hiring calls to a bunch among LinkedIn and X and stuff, also to a series of universities. And all of them were cool with it, except that we got kickback from Stanford where the Stanford hiring board was like, you cannot post here because you're a weapons company. And that's really bad, I think, for Stanford students. But great for us, because we just start posting it.

We're like, dude, this is a BS. This doesn't make any sense. And it's great. That was, you know, Lars and Jensen made a bunch of posts about it, and we'd continue to kind of chat about it and got a lot of interest on that, especially for hiring.

Like if people want to work in defense, there just aren't that many companies and the one that's getting flamed because they make weapons systems. You know, if you want to make weapons systems, there's a good chance you could blood at our company. Can you talk about the history of lasers and defense capacity? I was going to ask the same thing.

You said the big laser weapon systems? Yeah, yeah. Are there laser weapon systems right now? And after you talk about the real history, maybe you can talk a little bit about it. I have a big tin foil hat here. The Death Star is real. And no so there's been a lot of there's a lot of conspiracy theories about directed energy Space lasers things like that, but talk about yeah, yeah the sort of the the the history from your point of view

Yeah, definitely. Well, you know the the death star doesn't exist yet But the death star and stuff like it is how would become you know, like a trillion dollar company Star and stuff like that is how we become like a trillion dollar company. Eventually we become an orbital weapons platform company. So probably the only way that you do like low earth orbit, trans lunar or trans Martian warfare is through light. If you're going to take the missile system up into low earth orbit and there's 50,000 Chinese satellites, there's almost no way that you can do it shooting down in a cost effective way.

But orbital weapons platform is great. But history of directed energy weapons, maybe know, maybe 40 years ago, when laser started to kick off in the commercial space in terms of cutting and welding and then also in the communication space, people like, wow, I can cut sheet steel with this. Can I shoot down a missile from like 1000 meters away? And that kind of kickstarted a bunch of effort and interest. Those systems haven't necessarily panned out over the last 40 years. I think in the last 10 years years we started to get a series of systems that are deployed by Lockheed and Northrup. And so, you know, there are massive warships that will have, you know, when you're building the ship, you have to build a laser weapon system turret into it.

But we've deployed, I think there are eight ships that have a series of like multi hundred kilowatt laser systems on it. And you can cut the wing off of a plane from 10 miles away with those systems in about 10 seconds. So they're pretty metal, they're pretty red, and that's what a lot of the directed energy supply chains look like. The direct energy R&D development is looked like in the country. Does blue, is blue effective against lasers, the color blue? I know that like, isn't there something about like a specific frequency of blue that sort of prevents damage from lasers? Am I making that up? To the power density and the lasers we're talking about, like you need some very, very specialty materials to kind of defend against them in any kind of, you know, scale capacity.

So like the color blue, I'm not sure about that. I mean, you could like you have mirrors that reflect the laser light, right? But they're very small and they have they have extreme like extremely expensive rare materials that are kind of doped in those mirrors for reflectance. It looked like one of the first things you were starting with was anti drone counter UAS systems. We've seen a lot. We talked to a lot of these companies, Allen Control Systems, kind of putting a gun on a truck. There's electronic warfare attempts. We just talked to Nathan Mintz. Anderol has a variety of systems for counter UAS projects. Why is that the landing, why is that the beachhead for you? Why are laser weapons so effective against drones? Yeah, definitely. So fundamentally directed energy systems, the promise there is that if you are using electrons

as your ammunition, then you have a extremely low marginal cost to shoot down. Like you bring the price to shoot down a drone. If you're using a missile, it can be millions of dollars. If you're using an ender drill drone, it could be a hundred to $250,000 per drone shoot down. That's an improvement, but it's still extremely expensive

and you don't have a cost differential on your side. If you turn a laser for three seconds to shoot down, you know, that's an improvement, but it's still extremely expensive and you don't have a cost differential on your side. If you turn a laser for three seconds to shoot down a drone, that's like 25 cents in electricity costs to, to, to shoot those down, uh, essentially. So that's, that's really, that's really what we're looking at. Um, on, on that front. And then your second question was, there was a second one. Oh, I mean, I, I just love to know know, like, it feels like this technology is still somewhat sci-fi. I mean, you said that they've been deployed, but we haven't seen videos of this.

Oh, in the Ukraine, it's changing the battlefield. Or like with the, what was it, the shoulder mounted rocket during the Ukraine war, when that broke out, we were like, like, there's not enough in the supply chain. Like it was like not just it's real. It's like it's having such an impact that they're using too many of them. And now we need to figure out the supply chain. I haven't seen any stories like that about laser weapons or directed energy weapons.

So where where are we actually in the rollout of this technology? Yeah, so there are large like we were talking about earlier, there are large laser weapon systems that are deployed across the Navy, for example. Those are really, really big. Prime's generally are interested in making extremely expensive bespoke systems. This is like the end of a play, right?

Is that their business models do not allow them to do anything other than the particularly heavy, expensive bespoke system. What we're doing is we're coming from the bottom up and saying, what is the lowest swap? What is the lowest weight? What is the lowest size? What is the lowest cost for a directed energy system

coming from the bottom up and doing it? We're approaching our target for distance very rapidly on our RD systems that will then go out and we'll look to deploy early to mid next year in fielded capacity through some of the DOD units. I think a really salient part of what we do is when you're talking about some systems, like maybe microwave systems or radio frequency systems

or even bullet systems, is the range is extremely limited. I mean, when you're firing a round out of a M249, the muzzle speed's like 700 meters per second. So you have to lead something. When you get at the 700 meters, it takes one second for the bullet to land. So you're arcing a bullet, the drone is flying dynamically. That's a very hard control problem. We are shooting things down at the physics limit, like the speed of action, essentially. When we shoot a pulse of light at something a thousand meters away and it's moving left to right at maximum speed,

say at a hundred miles an hour, the drone moves at 30 microns, 20 microns in the period of time that it takes for the light to hit it. So we have some salient control benefits and we also can continue to move out further and further and further, as we kind of build out the system and build more products on top of it.

The pathway that one, two, three, four, five kilometers is, is right there. Have you, uh, I'm curious. You've thought about defending various assets against drones that are non-military. So you could imagine if, if somebody has, uh, let's call it an oil rig somewhere. And, and, uh, it's threatened by drones for one reason or another. And, and, or, or potentially a better example is something like, you know, an NFL stadium that's worried about, you know, potential drone-based terrorism.

Have you thought about, you know, putting these, you know, turrets? Because one of the issues with traditional kinetic anti-drone weapons is you're sort of shooting bullets into the air. Those bullets are going to land somewhere. Theoretically, with lasers, you could take the drone out without any risk of undesired damage.

Yeah, definitely. So in an urban environment or at the border, you're not going to shoot a missile or a bullet in an urban environment at some drones. But there are, I think, that the Super Bowl had something like 50, 50 to 100, something like unseated airspace, like injections of drones where that we're not supposed to be there and you couldn't really do anything like DHS couldn't really do anything about it. So, you know, we go forward and we become an option where we're probably the only

option in an urban environment where the laser is invisible, it is silent, we can autonomously target, detect, track, and destroy drones that are threatening civilian infrastructure. So that's a great point, that's exactly what we want to do. And you know, when you focus the laser onto target to get a high density, there's a small depth where you get a very high density, you also de-conflict and de-focus past targets. So we have this kind of depth where it's fairly lethal to targets, but then we can de-conflict pretty easily as well.

Interesting. Do you... Yeah, this is sort of a scary thought, but do you expect there to be drone-based terrorism, like some type of drone-based terrorism event in the next five to ten years, it seems like a huge threat that we don't necessarily have any it's not like a police officer standing outside some you know soccer stadium somewhere is gonna see a you know Drone coming in and take it out with a handgun. So it doesn't seem like we necessarily have any defenses for that kind of attack And you don't need such a sophisticated actor to pull it off necessarily doesn't seem like we necessarily have any defenses for that kind of attack.

And you don't need such a sophisticated actor to pull it off necessarily. Yeah, definitely. I mean, there's almost certainly there have been attempts that the FBI has thwarted. So I think maybe three months ago, someone was planning an attack in Tennessee on a on a power either a power plant or nuclear reactor, I forgot which, but they thwarted the guy in advance. They found him, checked his communications and stopped him. But almost certainly, I think one of the main dangers and what people are afraid about with

joint warfare is that it allows non-state actors to inflict massive damage on trillions of dollars of human infrastructure assets. So I don't think that we're too far off from a major attack happening. Obviously, our state defense apparatus is doing everything that they can to stop stuff, and they're fairly successful. But like if you miss one out of a thousand, that's pretty damaging. How are you thinking about the revenue and growth side of the business? I can imagine pulling in some SBIR money.

I can imagine this being kind of like a DARPA project almost. Long term, you probably want to be a program of record, but how are you thinking about staging things out and what does it look like so far? Yeah, you know, we have a lot of interest from a lot of the from a lot of the national labs in terms of going straight to OTA in terms of procurement contracts. We are moving like people didn't really think that this could be done. No one was looking at small-scale lightweight edge-deployed directed energy. And at this point, we're moving so quickly like it'll like by the time a Sibber is written for like exactly what we're doing right now, we'll be like a year down the line

and we'll be ready to produce like 50 to 100 units. So at this point, you know, our customers are pretty pretty well receptive to that if you're deploying directly to If you're deploying directly to to DOD and then we just have an unending list of people that want to Want to demo the turret on their vehicle platforms like so existing vehicle companies Like all the way like small startups mid startups prime stuff like that And so I think we're trying to find that sweet spot where you know, where do we deploy? We have it's like we have we've done a good job building for system everything think we're trying to find that sweet spot where, you know, where do we deploy? We have, it's like, we have, we've done a good job building for system, everything

that we're doing makes sense. And then what we're going at is like, where do you go from here? Which of the which of the promising opportunities do you tackle with limited resources? Yeah, well, I'm a potential customer. I'm big into big game. Okay. And I'd love to take this on the next hunting trip. And it'll be cooked. It'll be cooked. Yeah, that's what I'm looking for. And shoot here and then you can just like eat it right there. Yeah, that's, that's exactly what I need. I'm sure Peter will love that.

So thank you. It's great. It's great to meet Michael. Thanks for doing what you're doing. Thanks for the message and thanks for hopping on. Uh, really fun chat and good luck to you. Thank you guys. Thank you. Of course. Thank you so much. Yeah, we'll talk to you soon. Cheers. Uh, well, what a fantastic tour of, uh, defense tech. I feel like I learned a lot about all the different companies and got to talk to some really interesting people. Uh, do you have anything else you want to cover before we jump off for the day?

America day. America day was a success. I just want to say that America day doesn't end when, uh, when the stream stops. It's gonna keep going forever. Forever. It's sort of a perpetual day. Yeah, regardless of what the market's doing. Yeah. But no, I want to say thank you to Ramp,

Polymarket, Public, Bezel, Numeral, AdQuick, 8 Sleep and Wander. They make the show possible. We are 100% corporation supported. Yes. And we're very grateful for it. Yeah, thank you everyone. We will see you tomorrow.

Can't believe it's Friday tomorrow, John. It's crazy, flew by. One more stream this week. Yeah. It's gonna be a rough weekend. It's gonna be great. Thanks, John. Thanks guys, cheers.