TBPN Live - Weekly Recap: CEO Affair at Coldplay Concert, Elon Musk's AI Girlfriend, Cognition Acquires Windsurf

Episode Date: July 19, 2025

(00:00) - Intro (00:03) - Astronomer CEO Affair at Coldplay Concert (11:11) - The Steelman for Grok's Vulgar Anime Mode (29:31) - Cognition Acquires Windsurf (01:20:14) - Jeff Wang (Windsurf) & Scott Wu (Cognition) (01:32:19) - Windsurf Chaos Aftermath Breakdown (01:41:27) - Martin Shkreli (DL Software) TBPN.com is made possible by: Ramp - https://ramp.comFigma - https://figma.comVanta - https://vanta.comLinear - https://linear.appEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.com Numeral - https://www.numeralhq.comPolymarket - https://polymarket.comAttio - https://attio.com/tbpnFin - https://fin.ai/tbpnGraphite - https://graphite.devFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://www.youtube.com/@TBPNLive

You're watching TVPN! This went insanely viral the CEO of a company called Astronomer Was caught on the kiss cam Hugging one of his employees the head of HR Either they're having an affair or they're just very shut. And I said, but Chris, in the video, Chris Martin is like, something's going on here. I saw startup CEOs can't even hug their chief people officer at a concert in this country anymore. It is crazy when the internet descends on a current thing, how viral it is.

Like just you have to jump in on the current thing. Before we talk more about this, I wanted a quick word from our sponsor, uh, Astro by astronomer is the orchestration first data ops platform built on Apache air flow, empowering your team to build, run, and observe data pipelines that just work all from one place. Do you, uh, do you believe the conspiracy theory put on the tinfoil hat? Yes. So the steel man, the tinfoil hat, what? Put on the tinfoil hat. Yeah, so the- Will you steel man the tinfoil hat? What is the tinfoil hat explanation here? Tinfoil hat explanation here is-

All press is good press? Is that Nathan for you, this is just part of an elaborate stunt. Yes. And Nathan's plan was, have the CEO get caught having an affair with a coworker to increase brand awareness and get a buzz going This was Charlie light over on X. He definitely got a buzz going

And yeah a lot more people know about astronomer today 100% 100% But hard to see how it would have been planned There's been a bunch of jokes Ryan Peterson said board should give him a raise without this viral moment I'd never know that astronomer is used by enterprise clients to manage Apache airflow and achieve 70% higher uptime themself manage airflow so Lots going on today Alex Cohen says imagine losing half your life savings at a Coldplay concert Why half? Oh, because he's gonna get a divorce, okay.

I thought it was about him getting like, I thought it was a vesting joke. These are adults that made their own decisions. And they now have to live with the consequences, but I doubt either of them would have paid half their net worth for those tickets. Yeah, rough. very, very bizarre. Um, I was reminded of what Emily sunberg told us when she came on the show.

I was asking her how the Hamptons has changed since the era of social media, the age of the internet. And she said that there are so many tick talkers documenting everything that happens in the Hamptons now that you can't even leave a party with someone else's wife. That's what she said to us. Do you remember this? Yeah.

And I'm wondering, like, what does this actually mean for birth rates? What does this mean for, like, this seems predictable at this point. This is the first one that's happened. I've seen these other videos. Having debate this morning, which is that, find my friends is the best thing to happen to marriages.

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

and things like that. So the answer to technology problems is more technology. Yeah, it was like this, it's this countervailing force because, what was it, Instagram is constantly flooding you with recommended, like, look was like this, it's this countervailing force because like, what was it, like Instagram is like constantly flooding you with like recommended, like look at this girl, look at this random person, look at this thing, look at, you know, like go down this rabbit hole and then find my friends

as maybe pulling you back. But I mean, he probably told, he probably said, I have to go for this for work, some clients. Doesn't really fix this issue. But the Kiss Cam does, the Kiss Cam is a Lindy technology. So Lulu had some advice. She says, just giving out priceless comms. Crisis comms for the astronomer team.

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

is scaling and that's tough to do with multiple known liars on the senior leadership team. A better comms plan than trying to save the situation. Andy Byron is on the board, but he's not a founder. He doesn't have control. The other five members should replace him. You can then use the new CEO announcement as a reset and get people to focus again on astronomers, actual business instead of its drama.

So we did reach out to Andy this morning to see if he wanted to tell his side of the story. Felt like an extremely, you gotta be a little bit crazy like Soham to wanna come on after you the current thing. But in this case, we should have the new CEO on of Astronomer whenever that comes. So there's a polymarket today

on whether he'll be out by the end of next week. Odds are currently sitting around 38%. I would not be surprised if there's somebody new stepping into the CEO role at the company. This seems to have been a way way bigger than just the current thing on X. It seems to have really broken containment. So is this a Databricks competitor? Like Apache Airflow is open source workflow orchestration platform used to programmatically author, schedule and monitor data pipelines.

I wonder if their business is just exploding. DAG directed, so, graphs. Quite the lineup of investors. They've got Bain Capital Ventures. Let's go. Just led a Series D this year.

Let's go. Into Astronomer. So let's hit the size. Go. For that. It's probably a fantastic business. Then Insight is also led the Series C in March of 2022. Yeah.

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

exposed FTX or Theranos versus Just this like, you know drama that's happening here. I Keep keep laughing about that that that analogy we go back to where if you found out that you know I think what do I have I have what are pilot sport tires that Bridgetown Michelin Michelin Michelin tires so if you told me that the CEO of Michelin was was was was was caught at a Coldplay concert with the head of Michelin HR it would be a tall order for

me to go get new tires, right? I'd be like the tires work pretty well. Yeah. That issue doesn't really affect my tires. It's more so that the difference here is that being caught is different than being on the kiss cam and getting a hundred million views today. Uh, my post alone has a million views. Uh, and I posted it a few hours ago. But do you think, do you think it's, it's, it's going to actually affect like revenue? I don't think it,

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

Sure. But yeah, I don't see this affecting the business, but then again, it's like, if you're paying capital or insight, do you really want, do you want a, he came in two years ago, sounds like he's been executing, the team has been executing well. If they got from series C to D over the last couple of years, means they're probably growing nicely. But, and I don't necessarily think that this is the end couple years, it means they're probably growing nicely. And I don't necessarily think that this is the end of either of their careers. It just should be the end at this company.

Because if you're the board and you tolerate this, that just means, yeah, we tolerate people of poor moral character. Sure, yeah. Also interesting, I mean, this company is like never even heard of it and it's on an absolute tear series D at this point. Um, and does this not sound like something that should be in the AWS dashboard? Like we were talking about browser base yesterday,

getting like quote unquote copied and there's just something about these like point solutions that just are, you know, nailing a specific problem. You know, in this case, it's like deployment, deployment and management of an open source project. It's literally anyone can just run Apache air flow. They just help you do it better. And that's kind of what, uh, Databricks did with spark like sparks and open source project. Now they, now they, for these data pipelines,

now they help companies actually install, manage, run them, and then put a bunch of software on top of it. And Databricks has been massively successful. And so it's interesting to bring it back to Brasserice because it just kind of reveals that these companies can be kind of grinding in silence for a while. Just, I guess the note for Paul Klein's probably stay out avoid being the current thing because the the failure mode could could be less technical and more interpersonal yeah anyway work

retired die may have been inspired by my post okay or it could have been totally random but he said married CEOs can't even hug and romantically sway with their married head of HR during a Coldplay concert anymore because of woke. Oh, because of woke, okay, yes, yes, yes. Is there anything else to cover on the story? Sophie NetCapGirl says it's so hard to get noticed as an AI company these days,

the astronomer CEO had to cheat on his wife for marketing. It's dark out there. I don't think I'm not believing the tinfoil hat one on this one. If you've been living under a rock, Grok launched a NSFW anime mode to the app audio and visual and I believe it's part of their it's part of the paid tier rock for Heavy. Yes, I believe it's $300 a month, something like that. There's a report in Wired about this. I wrote about XAI from Kylie Robinson, who's been on the show. I wrote about XAI's new creepy waifu bot

and its even weirder companion Rudy, which has a bad version that told me, I'll skull F your deed, blah, blah, blah. Very vulgar not not family-friendly not approved for this show when I asked what it thought of musk he referred to him as Lord Elon and said he's a galaxy-brained egomaniac blah I can't even read this it's all bad words but anyway I am I've been thinking about this and I and I think that there is an interesting steelman

argument that we should go through so we should talk about it. So in general, I think that XAIs, GroK strategies a little bit all over the place. So They're trying to be super quantitative and benchmark build They are they're super benchmark build they're like look arc AGI the insiders Inside the most insider AI test you can possibly have. Yeah, we have the best score on it. We're on LM Marina Where you know, we're we're we're you know maxing out all these different benchmarks. That's right So it's like and it's like it's this incredible engineering effort to build the 100K cluster.

Like they're clearly hiring great talent. I think Jordan keeps laughing, seeing the- I'm just, I'm not gonna look at you. Let's do it. I'm not gonna look at you. That'll help me. So they're very benchmark-pilled. But then they're also trying to do this like sassy

and anti-woke thing in the post replies and like the fine tuning on top of that was so crazy that it spawned like the Mecca Hitler thing it was like there there they're kind of like all over the place one is like super quantitative super focus super benchmark-pilled like just but they're clearly kind of edge Lord internally yeah well it's almost like two different extensions of the product right yeah two different teams building towards two different goals one is just like the most beautiful like like solve physics, solve math, like create the, the create like a great AI product. Yeah. The pursuit of truth, all that,

like facts and usefulness and tools. And then on the other side, it's like, it's like fight this culture war thing, which is like a very different battle to be fighting. And then, and then we saw this last week after the launch, there was, there was a new, there was news that everyone was memeing because it seemed like it was very, very opposed. So one was that Grok had signed a contract with the Department of Defense.

It's like as serious as you can get in AI. It's like OpenAI has one of those contracts, I believe, Anthropic, Palantir, and then Grok, which is like this, from the outside, like seems like a chaotic product. Something that was born on something like 4chan. Yes, exactly. All of a sudden, like the DoD is gonna be adopting that.

Like, what does that mean? And then simultaneously, there's like, they're getting into the romantic companion market with this anime theme. And so, AI companions, I think the general mood in tech is that it is a very dark thing. Like people get addicted to them, they become less social, they stop interacting with real people,

they don't have kids, and then the population collapses and humanity ends. Like that's the bad ending to the AI companion narrative. Now- And to be, just to give you some context there's a variety of companies that do this today exactly varying levels of vulgarity yep replica Founder and she had a bunch of nuance around it. So I I don't and I just for context so replica

Has over two hundred and twenty five000 reviews in the App Store. People are definitely using it. They were very early to this. Character AI was also early to the AI companion space, has tens of millions of users. It's one of the biggest websites in the world still. And so anyways, there's a variety of players in the game, but what's interesting about Grok

is when you look through the other labs from Lama to Google, or sorry, Meta Super Intelligence, to Google, to Anthropic, to ChatGPT, OpenAI, et cetera, nobody has been willing. Everybody knows that this is a use case that there is an obscene amount of demand for. But no one else had the guts to go and do it at least a player that had billions and billions of

dollars to deploy against a strategy like this I believe at this point every other company that's playing in the companion space is not should not be considered really like a mega scale research lab in the sense that they're not raising billions of dollars anymore because character went through that zombie aqua hire that probably cut off the capital cannon yes such that even if the remain co employees the ghost ship I don't want to call it means kind of rude to call it a ghost ship because it seems like the employees at character AI are you know running it happily doing fine But it doesn't seem like the new CEO of Character AI

will be able to go out and be like, I'm raising $5 billion to build a one gigawatt cluster and I'm gonna buy 100 KGPUs to train my own model. Like, Character will be built on top of our APIs. In fact, they're probably trying to just run it profitably and make a great user experience. Yeah, and so you'll always have this kind of, this kind of back and forth with like your API provider

because the API providers, the foundation labs, they care about their brand, they care about how they're perceived as being ethical or moral, and so they might not want to offer that even at the API level. So, what's interesting, and this is where the steel man

comes in, so the worst possible outcome for AI companions, very dark people, it basically reduces the coupling rate, but we've already seen a decline in birth rates, so it's unclear if it's like, this is a new thing that will accelerate it, this is status quo. Anyway, I think that's kind of like where we end the concern would be like Pornography has existed as long as the online dating is another thing as you're skeptical as long as the internet has existed I'm sure that is led to some not so great outcomes

Yeah, the concern is that companions that are real-time and adaptive and really mimicking a human would create even worse behavior than traditional NSFW content. I think that's a reasonable point although it hasn't been born out in like data or any sort of like research at this point but it feels intuitively reasonable but let's actually think more about the market because in order to scale your lab we know that you can't do it as a non-profit. We know that it's not just a hundred million dollar donation one time, a bunch of geniuses working, you come up with the elegant algorithm

for super intelligence. You need scale, you need capital, you need talent, and ultimately you need a capitalist flywheel of for-profit corporation that's increasingly getting more users, putting that into user adoption to get more users, to get more data, to train the model, to refine the product. And then-

So you can save the world. Yes, and then, yeah, this is where I'm going. And then also raise more money, and then if you're gonna raise money at a certain level, there has to be a financial model that maths out. Now, it can be kinda funky, like 1% of AGI, but there are still on the margin many investors in foundation labs

that are underwriting, you know. They're underwriting these labs out of multiple of earnings. Well, yeah, where is Grok's revenue gonna come from? Chad CBT has a great consumer, you know, consumer business. Anthropics has a great code gen business. Yeah, I would say OpenAI has dominated and owns knowledge retrieval.

Anthropic owns code gen, and they both have kind of fly wheels that are accelerating, and now they're obviously fighting it out. Anthropic would love the Claude app to become really popular and Chatchi BT would love to have their cursor competitor or their cloud code competitor Codex really, really take off. Maybe that'll happen. They're duking it out.

Meta is building on top of the world's biggest social networks in the world. They have three of them, really, Facebook, Instagram, and WhatsApp. So they have a ton of data that's accumulating and firing back. And they have tons and tons of cash flow coming in from that so they can justify new capex internally without raising that as one of the did launched AI companions yet it was like talk to Dwayne Rock the Johnson or Dwayne Johnson Dwayne Rock the Johnson Dwayne the Rock Johnson and I don't and I think that product flopped back in the day I remember because Dara Adelphi saw the launch. Yes, like dang it. That's annoying and at the same time

I saw some screenshot that showed that there was an Instagram account that was owned by like meta AI That was just cow and it had like millions of interactions. So like maybe people want to talk to just a cow Interactions so like maybe people want to talk to just a cow So but yes, but at the same time I think that the meta super intelligence team is aware of the issue that will come from the inevitable New York Times profile on Like if it's truly like anime waifu Romantic companions that's a step further than cow or the rock right and there actually was remember the John Cena thing We covered how someone had jailbroken the John Cena Instagram AI and made it like romantic remember this yeah

So like I think meta is like is like we're fine Seating that territory like like we don't need to play in that just like they don't need to show NSFW content on Instagram They're like we're fine losing the market seeding that market to to only fans on a on an ethics basis We think that it makes our company more valuable overall It makes it more hospitable to our advertiser community so the reason that just to just to kind of bring us back to why this has been such a hot topic is that Elon Musk has posted many, many times about the underpopulation crisis,

the birth rate crisis. He said, Sheil highlighted a post from 2022, a collapsing birth rate is the biggest danger civilization faces by far. So the steel man is that Elon is doing something about it. Yes. Right? He's having a lot of children in oh, but but but this the real steel man about grok romantic companions Is that how will they actually increase?

the Amount of humans in the world. How will they reverse the population? That's the hardest argument to make and that's why I'm wearing the steel helmet because it's very hard to argument to make but I have one So and she'll yes for the record is saying I think Rock Companions is probably accelerating population collapse. Yes, so as the steel man I'm going to be debating against Sheil. So get ready Sheil, get your straw man hat on. Last of the labs, Google, they're building on top of the biggest search engine and they also have YouTube and Google you also know is not going to go

into romantic companions. So XAI needs this user flywheel and every other lab has self-selected out of competing in the companion space. We went through some of these. Google famously skipped the character AI product in favor of the team in their zombie aqua hire Paul Graham. And so this is all about, in my mind, as the steel man, counter positioning. So you remember Avi Schiffman was releasing the new hardware device, an AI friend, right? And he was, everyone was saying you're gonna

get Steamrolled by Apple. Like if you try and come out with a company, with a product that is in fact a new device that fits within the Apple ecosystem and it's leveraging the the the Apple branding world you will just immediately get cooked by Apple because they will just eventually launch a better version and they'll have better supply chain, better pricing, all the different things you'll have the full integration like you you can't go after them that way. And so Paul Graham replied to Avi Schiffman and said And said here's how to compete with Apple and hardware you have to build something that contradicts their fundamental assumptions

For example imagine if you built a device whose appeal was that you could customize the case to make it as tacky as you wanted Apple would hate to follow you there as tacky as you wanted. Apple would hate to follow you there. So no other lab wants to follow XAI into the romantic companion market for brand and ethics reasons. But there are users who will pay real money and share real training data

for romantic companions as a product. And so if you wanna sell the most number of Grok subscriptions, at some point you will be, and so this is where we get back to how it affects the birth rate. So if you wanna sell the most number of Grok subscriptions, at some point you will be, and so this is where we get back to how it affects the birth rate. So if you want to sell the most number of Grok subscriptions, at some point, declining birth rates are going to be a problem for you.

You're going to hurt your business. And so you're going to have to think about LTE. And right now for context, Grok is blowing up in Japan. It is the number one free app on the Japanese app store. It is above Chat GPT and all the different local products that I can't read the names of. It is dominating in Japan. It's a hit in Japan already. Yes. And it's not, to me it's not hard to imagine this product finding a million people in the world that will pay the ultra premium plan,

and that is billions of dollars of revenue. Yes, and so at some point, if Grok gets big enough, and the population's declining, and Elon looks at what the Grok product is doing, he will say, I need to pull people back from the abyss, I need to actually use my super intelligence to Increase the birth rate. How will you do that? Well, we've talked about this before Someone in some woman is talking to a male companion AI

and some man is talking to a female AI companion and they're very similar and Grok says, why don't you two meet for coffee in the real world? And so they actually meet and it basically turns into the best dating site that actually gets people to get off, it's a stretch and it's why I'm wearing the steel man helmet but I think it is possible and I think the economic incentives might be there.

I think this is the same reason why you don't wanna over optimize a social network for slop and brain rot, because people will churn. Like you might be able to keep the time on site going for, by showing like horrific videos. You can't look away. Oh, it's so controversial. You're miserable. And you might be able to keep someone on. And so they were going to use the app for 15 minutes. You keep them on for an hour, but then they're like, you know, I need one of those apps to monitor my screen time.

I need to uninstall it. Maybe I'll, and then if they do that, they can actually quit it. And if they actually quit, then you lose them as a user forever. So there's this balancing act between, between giving people enough brain rot to keep them on the site as much as possible and not losing them forever. And the same thing happens in romantic companions. Like you want to give them the companion that like like they pay for and they're happy with But not so you don't want to make the companion so good that they don't reproduce and then the second the next generation

Doesn't exist for you to sell them subscriptions. Fortunately John businesses tend to think in quarters and Yearly private company Elon owns a lot of it. You he's thinking about the next generation that is the steelman No, I mean that the the I Can I believe this will be by far the largest? revenue line item for Xai within if it's not already. I mean already you might be a stretch. They have some big contracts, but This is a $300 a month plan if you want

you know unlimited access to your grok companion and Elon was demonstrating to it it can even help you study for school so imagine a companion that's not just a maybe a romantic friend but also can help you pass your algebra test. Well, that concludes the Steel Man segment. And I'm back to the normal world. Great, great work keeping a straight face and really getting out your pitch. I think it's valuable to interrogate this stuff. I think it's interesting.

Yeah, the only other thing that I would add is the unique thing about this launch is that there has never, you know, clearly many people around the world spend money on OnlyFans or other NSFW content, but Elon has never created a product for those type of people. And so I think the sort of latent demand that would feel maybe above paying for OnlyFans or something like that likely would give themselves like the pass on something like this to be like, oh, I'm just one of the Elon companies. I'll sign up for it. I trust Elon.

I have a Tesla. And then suddenly there's like an entire new market of people that are willing to put their credit card down and pay for something that previously they wouldn't for a variety of reasons. So this will be one to follow. How's it doing in the US app store? I mean, it's all, most of my Grok interactions are within Axe. My

primary use case is still I see a post and then I go and I click on the little Grok button and it explains exactly what's going on. So it's the number two app, it's still behind ChatGPT. In productivity. In productivity. I'm surprised it's still in productivity. I'm actually surprised it is in productivity because X is famously in news not in social networking and so X will typically be at the top of the news subcategory because it would be much harder to compete in the product in the social networking category against Instagram and TikTok. And so better to be a big fish in a small pond

in some way. Cognition has signed a definitive agreement to acquire Windsurf. Let's go. The acquisition includes Windsurf's IP, product, trademark, and brand, and strong business. And above all, it includes Windsurf's world-class people. No way. We've privileged to welcome to our team. Really? We've privileged to welcome our team. We are also honoring their talent and hard

work in building windsurf into the great business it is today. This transaction is structured that 100% of windsurf employees will participate financially. They will also have all their vesting cliffs waved. What? And we'll receive fully accelerated vesting for their work today. Let's go. At Cognition, we have focused on developing robust and secure autonomous agents, while Windsurf has pioneered the agentic IDE. Devin and Windsurf are a powerful combination for the developers we serve.

Working side by side will soon enable you to plan tasks in an IDE powered by Devin's code-based understanding, delegate chunks of work to multiple Devins in parallel, complete the highest leverage parts yourself with the help of autocomplete and stitch It all back together in the same IDE Cognition and windsurf are united behind a shared vision makes so much for the future of software engineering We've never and there's never been a better time to build

So there's a video up between Scott Wu and Steve over at windsurf and we're hoping to have them on the show later today if we can coordinate to be awesome yeah that'd be great cool so anyways this apparently Scott got to work and not only negotiated I mean to do this kind of deal during all the chaos of this other deal that's happening yeah and then put together a deal that delivers a win for every member of the team. That's me

And the other thing that's interesting here is you know historically cognition had I Wouldn't say over invested in engineering, but they were heavily heavily skewed towards technical talent sure and the people that got left behind it Windsor if we're less sales Accounts management GTM, right? And over the weekend, I'd heard other teams that were kind of circling, wanting to hoover up

their GTM team, but the fact that they were able to get this deal done in just a couple of days is fantastic. This is incredible. Wow, what a fantastic end to the story. Or beginning, new beginning. Yeah, new beginning, new beginning for sure. I don't even know if we should go through the full history here.

We can kind of go through whatever. But I mean, you kind of know the end of the story, but I think we should take you through some of the debate that rose up. And there's still the question of like, even though it feels like everyone got the good ending, there still is this question about like, we're in this weird zombie structure era where you can be left in limbo. What is the cost of that? What is the, what, what is the risk to that? Do we need new employee contracts? Do we need new understanding of how of expectations?

Because it's one thing for a CEO to say, Hey, I'm I'm building, I'm trying to build something really cool in Silicon Valley, I'm gonna build a tech product, and I want you to join me as a salesperson, operations person, an engineer, whatever, and we're gonna go on this journey, we're gonna go really hard, and we all wanna be aligned with thinking long-term,

so we're doing a four-year vest with a one-year clef, pretty standard, and the expectation, at least the history, has been like you will have clarity throughout that process. And now that we're in this weird, weird regime, you're getting like, okay, the end of the last chapter of the book could be really dramatic. But we got the good ending, and the question is,

has there ever been, this deal kind of exposed the risk of like the bad ending and that it is possible that that could happen. It didn't in this case. But the big question I think people are debating is like, how much of this is due to the chaos? How much of the chaos is a function of FTC and the antitrust regime?

And Ben Thompson talked about that a lot, versus just the differences in communication styles of different Mag-7 companies. That's interesting. The experience of CEOs, like you look at the way Scale AI handled it, Alex Wang, he's a generational communicator, he's been on Theo Von. Yeah, different dynamics, but it's newer.

Zuck lead in acquisition. Totally having having that sort of founder mode confidence Totally full fully in control of the company and you know it you know everything you know We've heard from various parties says that Varun was muzzled but again you like everybody involved should have been saying how do we avoid? Again, everybody involved should have been saying, how do we avoid making it so that hundreds of people don't feel like they've been completely screwed, even for 24 hours. Yeah, and the evidence that was overwhelming.

Like, you would see likes on your post. People were messaging me Friday and Saturday morning saying the Windsurf employees got screwed. And I was messaging them back and being like, you're misreading this. This is the standard deal that they've always done. saying the windsurf employees got screwed. And I was messaging them back and being like, you're misreading this, this is the standard deal that they've always done. And then the overwhelming amount of more information

from high quality sources saying, no, they're screwed. It just flipped and I said, okay, maybe they are. And the key, so now we don't, we had this whole other kind of tangent that we were gonna go down, which was like, what happens to the ghost ship, right? Yeah, yeah, yeah. It could potentially be this like Lord of the Flies dynamic

where there's now hundreds of people that are still working on windsurf, but the competitive pressure is insane. You're losing a lot of your top talent and your founders. Are you gonna be able to keep momentum or is churn gonna be crazy? Totally. And then do people try to stay a long time so they

can get like a distribution or do some people leave because they want to pursue other opportunities and now we don't have to debate that because Windsurf is home with Cognition and and Scott Wu and you know the team over there that what's that everyone all those employees who are now on board in Cognition exactly what you're gonna say they're getting ramp cards baby cuz Scott time is money save both easy use corporate cards bill pay accounting and a whole lot more all in one place go to ramp comm to get started and you know cognition has a huge lineage with the ramp team and so we're very we're very excited for cognition

we're very excited for ramp and we, we're very excited for Ramp, and we're excited for all of the Windsurf employees who landed. Well, this is funny because there's so much that we could go through. I think we should go through a little bit of the timeline of what actually happened, how the debate evolved, because it is very interesting. So the context of why is Windsurf selling at all?

And I think this big question, the first one is, let's just say hypothetically, you owned 100% of Windsurf last week, and let's say a completely financial investor comes to you, there's no even like big tech dynamics, it's like Warren Buffet, he calls you up and says, I want to buy 100% of your stake in Windsurf. He's like, these agentic IDEs, I need it, I need it. 100% of your stake. And he's like, these agentic ideas. I need it.

I need it. I have to have one. I have to have one. Yeah. I want to buy, I want to buy a great business at a fair price. Let's do a deal. Yeah.

So that's the question is like, if you were, if you owned 100% of Windsurf, Jordy, would you sell at $2.4 billion last week? And I think for most people the answer has increasingly become yes and there's a few reasons so the last the last big post that Varun the CEO of windsurf had interacted with on X was this post by Technium who says windsurf wrecked and it's a quote of Nick saying breaking and Tropic just pulled the rug on windsurf windsurf wrecked. And it's a quote of Nick saying, breaking, Anthropic just pulled the rug on windsurf.

Windsurf will be cut off from direct API access to Clawed in less than five days. 3.5 Sonnet, 3.7 Sonnet, 3.7 Sonnet thinking. Windsurf never even got direct access to Clawed for anyways. And so this has been the question of how much, like if you are in this like wrapper business, I think it's a great product, I think it's great, I think I'm actually very excited about wrappers,

but there is this competitive dynamic with the underlying foundation lab, and Anthropic does seem to be more aggressive about where the value accrual will happen. So, you know, if it's 50-50 by default, all of a sudden Cursor and Windsurf start pulling 80% of the gross margin dollars from what they're adding on top,

well then the underlying foundation model's gonna say, like, hey, let's pull this back, let's make sure some of these credit cards live in our Stripe account. And you're not just paying us big API fees. And so there's a big debate about this. Cursor had to go through it. Windsurf had to go through it.

And Varun responded to this and had a good analysis. And was basically making the case that we can get through this. And I think that's true. I think there's totally a world where it gets true. But you were saying earlier, it is an extremely competitive market. They were not the number one product in the market,

that's cursor, and by most accounts. And so they were in a, you know, not a super tough spot, it's a great growing market, it's developer tooling. How many database software, enterprise SaaS products are on the public market? There's like, the seventh one is probably worth 10 billion, right? So it's not like they couldn't have gone higher than 2.4, but 2.4 billion feels like a great deal for a company for a product that's one

years old, one year old for a company that's four years old and a hyper competitive space with product that launched less than a year ago and your direct suppliers are trying to come for you and getting aggressive. And so this went on Hacker News, not sure how much you should read into it, but they said, web service is absolutely dead in the water. And while cursor hangs on for now, all value is going to go back to the models says Jake, in my opinion, other than the Microsoft IP issue, I think the biggest thing that has shifted since this acquisition was first in the works is Claude code has absolutely exploded forking an IDE and all the expense that

comes with that feels like a waste of effort considering the number of free slash open source CLI agentic tools that are out there. Let's review the current state of things. Terminal CLI agents are several orders of magnitude less money to develop than forking an entire ID. Uh, Claude code is dead simple to onboard use whatever IDE you're using now with a simple extension for some UX improvements. Anthropic is free to aggressively undercut their own API margins and middlemen like Cursor

in exchange for more predictable subscription revenue and training data access. Yeah, so the other context here is this year Anthropic, Windsor went from zero to somewhere around a $40 million run rate. Anthropic this year has gone from the beginning of the year to one to four billion dollars and so They you know, yeah, however you want to say they've been running running away with the market

Yeah, and and cursors, you know revenue is equally incredible Although from starting from a smaller base and so this was some of like, okay, things might be getting tougher from here on out. I don't know that I fully agree with that, but people were saying this. And then we covered this last week, but the meter team did these evaluations where they ran a randomized control trial to see how much AI coding tools

speed up open source developers. And what they found was that developers said that they expected products like Cursor and Windsurf to improve them by 20%, but they were actually 19% slower. And so you have this weird dynamic where, okay, maybe the future is like, so I don't know how real this is, I think that we could totally be in a world

where Cursor's incredibly valuable for less experienced developers like, so I don't know how real this is. I think that we could totally be in a world where cursor is incredibly valuable for less experienced developers working on more vibe coding projects than like pushing the, pushing the frontier of really advanced projects. And then also just the next, the next version of these tools could be really cool and solve this problem. But there was some worry that maybe, uh, developers were going to take a hard look at their AI coding IDE stack and say wait a minute like I'm kind of using this too much

I'm leaning on it too much and maybe I should just like go back to the old way so there were some there were some there were some reasonable points around like maybe now is a good time to exit, right? Then, so after that, the question becomes, when you sell, you have, the board has a fiduciary duty to shareholders. And the big question that I think everyone was actually debating was this concept of, was the windsurf deal with Google a Pareto improvement for all stakeholders,

which means in a Pareto improvement, basically you can think of like, the baseline is how everyone's doing in a Pareto improvement. Some people might go up a lot. Other people might go up a little in value, but no one is going down. Not a single person is going down. This is the goal of like all political legislation. You want to create things that are not just positive some in the sense that like You know, I tripled my net worth and you only lost half like that sucks, right? You don't want that pretty improvement is like I tripled you doubled

Yeah, we both want but we both won and we're both happy right and so in you know, you know in a good acquisition deal Everyone is pretty it's a Pareto improvement. Everyone gets more than they had before, everyone gets paid out. Then the flip side is something called Kaldor-Hicks improvement, and a Kaldor-Hicks improvement is where some people go up, other people go down, but when you sum them, it's still a net improvement. So very few people were saying like,

the VCs, even when you add up the VCs and the employees and the founders, it's a net loss for everyone. Very few people were making the argument. People were saying the employees got hosed. It seems like everybody would have done better on an open AI. Everybody would have done better on an open AI acquisition.

Probably. And so when the 2.4 billion number came out on the evening of Friday. It seemed like, okay, not as great. It's still, everybody's gonna do well. And then 24 hours later it was, oh wow, like this might've been structured in a very funky way that people were, I won't report the number,

but people were messaging me information on how much Varun personally made and that was still in the context. I mean you can just do the rough math. Found or stake? Couple rounds of dilution. How much do you think he made? Right? Like it's not rocket science to figure this out or to at least ballpark it to the right order of magnitude right? But you build a great product that gets some traction that solves some problems and you build a great team and Big Tech wants you like you you, I'm not upset about it.

But the question was what's fair for the employees, what's fair for all the different stakeholders? And so a lot of people kept coming out with really interesting stories. So William Allen here has one about Scott Belsky and Behance going to Adobe we should read through. So William Allen says, I don't think he's ever told the story, but it's worth telling.

When we were selling Behance to Adobe many years ago, Scott Belsky made a spreadsheet of every employee, 32 of us at the time, and personally negotiated each person's title, salary, and incentive structure, and made that part of the overall deal terms. I'm gonna choke up, it's so virtuous. I heard the phone calls where he went to bat for each individual.

He not only didn't have to do this, but it actually complicated some of the other factors in the deal, of course. It changed the trajectory of so many people's lives, including my own. Two years later, 100% of that original team was still at Adobe. Even today, a dozen years later, many of the court members are still there building. I was inspired by it then, and I'm inspired by it now. And so I think that was a good case study in like, the founders do have a lot

of hard power in the sense of board control and actual voting shares. Almost every founder can veto a deal which gives them leverage to build that spreadsheet and actually decide who gets what. And then on the flip side, they have a ton of soft power because you can't really do a hostile takeover of a private VC back company where the founder has board seats and stuff. on the flip side, they have a ton of soft power because you can't really do a hostile takeover of a private VC back company where the founder

has board seats and stuff, it just doesn't work. And so it's incumbent upon the CEO to actually take that step and that was the fear, that Varun didn't do that, that he didn't go far enough. Yeah, there was another example from Parsh, Ilya Sukhar's company, so one of his former employees says, we got news our startup was being acquired five days before my one-year cliff.

I thought I'd get nothing. Our shares were accelerated to 100%. It was a life-changing event. And I'll always appreciate that our founders did the right thing for us at P.A.R.S. And said, Ilya quoted it and said, 100% acceleration for everyone but the active founders. We went backwards and re-vested our vested glad someone remembers so

Very heartwarming Yeah, and so people were people were debating You know did Like was the core team taken care of it feel it felt very rough, but then pretty quickly it came out that So we were going back and forth on this on Saturday and and and the core the core debate like your post went pretty viral you got two million views four thousand likes and it and it definitely struck a chord folks were debating this one line from what I've

heard the employees are getting screwed regardless of their vesting status. And it's like, and that was because people had, people were on a four year vest, but they hadn't hit their cliff. Even if they had joined 11 months ago and had, again, they had worked on the product up until launch, launched the product, scaled it, thought that they were getting this massive outcome in which, again, some people would have not been able, I'm sure OpenAI wouldn't have kept everyone, right?

I'm sure that they would have made a bunch of people effectively revest into- There's always layoffs post-merger acquisitions, like that happens all the time, that's not a crazy thing, so certainly reasonable. I mean, the other question is just like, you know, if you worked at this company and you were like, I like working at this company, I really would love to work at Google and you don't get carried along.

Like that is getting screwed, like not getting a job at Google in some ways is getting screwed. Um, even just the ambiguity over the weekend is a little bit of like a screwing. And so I still will defend your initial characterization. Um, but I thought that there were things that could potentially shift the narrative and so I quote tweeted your yours With the steel man argument, which is one and we tried to get a knight in shining armor We were getting the steel man suit ready, but then we knew we didn't have will production team will get the steelman suit ready but then we knew we didn't have to. We will, the production team will get the steelman suit of armor eventually. We need to order from a prop shop. Yeah it's on the way, we're working on it.

Yeah okay we're going and just make sure it's great when it comes. And so I had three points. One was that employees who haven't reached a one-year vesting cliff don't have that strong of a claim around I built this with sweat and need a liquid at the event, and we don't know the 10 years of all the left behind employees. So there is an argument that like, if you joined three months before, it was already like really big,

like should you really get accelerated four years and like. Oh, and I never really made that argument. Totally. But it was a fact that you could have worked there for 11 months and gotten zero. It's like, no, you're getting a ride on the ghost ship. Yes, yes. Ride the ghost ship and that was in the context of the

founders and this is why people and group chats and DMS were getting so angry because it was in the context of you know somebody that worked for you for 11 months was potentially gonna get zero yeah now that's not not the case now yeah but and then and then you're walking away effectively Defecting yeah and taking a multi hundred million dollar payday It is a weird dynamic with these startups because clearly I don't know exactly what windsurf's headcount was I think everyone was saying it was around 500 at the time of this deal and a year ago Pre-pivot what do you think their headcount was? Couldn't have been more than 50, right?

Definitely not. So you're looking at a 10X increase in employees who haven't really been like, they've been on this rocket ship, so I think, I personally think they totally deserve liquidity and accelerated vesting, which it sounds like they're getting, and it sounds like they're gonna do great.

But it is like not the nature of the initial contract Which is like one year cliff for your vast like if it came out that it was like, okay They're getting paid out to the tune of you know, how long they've been there I don't think anyone would be like that upset but then somebody was making a good argument that basically Like you when you sign up with like a four-year vest that basically like you when you sign up with like a four-year vest you're saying I'm gonna keep working for four years if you sell the company and put me on some zombie ghost ship like I didn't bail you bailed yeah so you so you should even you should accelerate me and I actually think that that we had the other the

other dynamic here was so when character AI yeah, when the Character AI founders and part of the core team went back to Google, the Character AI became a ghost ship, but it was cool in the fact that they had 20 plus million users. They also had 100 million on the balance sheet, and it wasn't this like insanely gnarly enterprise market where, and I know people on the character team,

and they were like, it's pretty cool, we have $100 million, we have tens of millions of users, and we're just kind of gonna experiment to try to figure out how to monetize this. And I just don't think that that was, I don't see the code generation market playing out in the same way. Where it's.

I was trying to think about that. Like is there a world where, you know, if the ghost ship had planned, had like stayed a ghost ship and they'd pivoted, is there some world where they, you know, niche down, like there was this rumor that they were gonna niche down into B2B. Like could they have niched down windsurf into some like niche category

and actually had like a pretty durable business? We were talking about could Jeremy Gaffan make it work if he acquires it and turns it into some cash flowing business? I just wonder, is there a niche where, I mean we've heard, the example I would give is we've heard that these code gen tools are particularly bad at rewriting old programming languages

like Fortran for example and so if you created like cursor just for like rewriting Fortran it's like that's not sexy at all that's not going to be hot on on Twitter X but it could be really valuable in like you know the bowels of like legacy banking and like yeah you could pay you could charge a bunch and you wouldn't like the TAM wouldn't be very big, but the business could be quite good. And that might be a weird outcome, but it could be a silver lining. I don't know.

Anyway, the second point that I made was that, you know, I said the second, the real culprit might be FTC antitrust. This is a hyper competitive market and Google still feels like they can't just do a normal acquisition. And I thought that was crazy because it's like, this is textbook, they should be able to acquire this company, right?

Like the cursors out there, they're not acquiring the market leader. Yeah. Open AI is clearly going after this market. And to the tune of what's their valuation valuation like 350 billion or something like that? Like like we haven't we should try to get an update there, but like not I think that also I'm not sure the the full mosque. It's not even one tenth of it's it's greater than one tenth of Google's market cap, right? Yeah, and so you're looking at like and then is Microsoft gonna compete in this? Absolutely. They have come here They already do and so yeah, it's like you're you're basically like I don't know second third compete in this? Absolutely. They have already do they already do and so yeah

It's like you're you're basically like, I don't know second third fourth in this market There are four very serious players like this should be textbook Rubber stamp good good to go do the deal. No problem There's also a there's also a very long list of founder led companies that were that are made that were maybe less hyped than windsurf But have incredibly talented teams. There's like Poolside. Yeah, Poolside. That's right. There was that one that Nat Freeman and Daniel Gross did that was-

Magic. Yeah, there was- Themagic.dev. They were apparently training their own foundation model for a while, and that was kind of like very CapEx intensive and maybe slowed down some things on the product side. But still, clearly it's a competitive market. Everyone's working on it. Also, we're missing out, there's probably a ton

of YC teams they're working, there was actually one YC team that got in trouble for forking a cursor too hard or something like that. Forking a little too hard. Yeah, they crossed some line there. I think they did fine and I think that they wound up cleaning it up, but people were upset about when you fork something you have to abide by

the MIT license or whatever the underlying license is and so you can't just like steal Open-source code and not abide by the by the open source rules and then and then I said three new facts might come out which they did and And the FTC thing was interesting because there was a little bit of pushback on that people were saying like oh like Lena Khan ate my lunch like Lena Khan's like like like responsible for everything and I wasn't I wasn't necessarily saying like Lena con ate my lunch like Lena cons, like, like, like responsible for everything. And I wasn't, I wasn't necessarily saying like Lena con was 100% responsible for how this was, was, was structured or like how this played out. But she did kind of like warp the road a little bit that made it a little bit wonky to drive. Yeah, basically we made hardcore capitalism legal. So we nerfed capitalism

and then and then capitalism ended up coming in and saving the day. Yes. Yeah. Yeah. With Scott Wu. Yeah, seriously, seriously. So the solution to capital anti-capitalism is more capitalism. This is the Brad Gerstner point. Yeah, totally. Um, and so, so I still don't, I, I still think that there's a, that there is a way that even with the weird new FTC antitrust regime, uh, Google and the windsurf founding team could have probably been a little bit more aggressive, taking a little bit more FTC risk and avoided this whole PR dust up. Um, but that would have been more risk for Google.

And I think that the way they did this here where they I mean It's a great outcome for Google. It's like we didn't buy the company look exactly. They bought the company about the company exactly So it really it really is a great outcome for Google even though I'm sure that they their comp steam was up all weekend Calling people. Yeah, like I have to imagine that this was like I mean it was room for it was like serving You know, it was it was the best possible story that the New York Times could have ever asked for. Oh, totally. It was like Big Tech buys hot company that was competing, you know, not necessarily like the whole point of Lena Conn's thing was that, you know, Big Tech is like squashing competition by, you know, buying these companies early and so you had the story that was served up to them which was you know exciting company in cogen a lot

of traction. OpenAI almost buys them Google says okay we're gonna buy them that's Google and OpenAI are arguably you know the the two competitors that actually like matter in search right now And so it was just the perfect story. And then, and then the, you know, I think Scott, Scott over at Andreessen had a good post that I, that let me pull up here for a second. He was basically saying, "'There is an irony that Linecon's activism has resulted in deals that are far worse for everyone

except the people she was targeting.'" Who tweeted that? This is, sorry, Martin Casado. Oh yeah, yeah, yeah, from Andreessen, yeah. And yeah, it's like the people with the lowest, you know, it's crazy. It seemed at the time that the people with the lowest leverage, the employees that had joined recently, were getting the worst outcome out of a deal that should have benefited everyone.

Well, if you're looking for code review for the Age of AI, head over to graphite.dev. Graphite helps teams on GitHub ship higher quality software faster. You can get started for free at graphite.dev. So my question is, Google, it feels like PR nightmare, accidental PR nightmare, because they had done, what, character just fine. It was not that big of a deal for them.

Not a big, and then scale had happened. Well, and it was very clear that of a deal for them not a bit and then scale well And it was very clear that that situation is interesting too because it Google has delved into social in the past hasn't had the best time the chat GPT script No, that was intentional of course no, but they've they've they've messed around in social Yeah, you could tell that Google doesn't want to own the AI Compatible totally totally they just don't want the association with a rumor that gnome didn't want to be in that They kind of like was just like I want to train a great model. I want to train a great model I want to do AI research and then that became the use case

They found product and then and then he was like, I don't really like even today what you see what Elon's launching today with the I Don't even I won't even say it on the show, but his new launch today basically signals that that is a very important thing. And he's interested in that market. Yeah. He's interested in that market. Yes.

Anyway, my question for you is, feels like a PR nightmare for Google, feels like a couple stressful days, feels like they've landed. Great timing over the weekend. And that's my question. Do you think that they were intentional and happy about releasing the news after market close because all of the facts come out over the weekend and it was such a hairy deal that more deals

needed to be done even after the story came out and it couldn't be super clean. So you have to do it late on a Friday. So then Saturday, Sunday, people can talk, deals deals can get done and then announcements can go out Monday. And then it resets the whole news cycle. So you kind of skip the, the crazy news cycle. I think, I think the world's too online. So I think, I think it helps that, that it wasn't a weekday, but I mean this, to me, this, this whole thing,

you know, from, from everything that we've kind of triangulated, this could have been avoided by managers taking it upon themselves to basically call each individual person at the company and say, before you have a negative reaction, I need you to be patient. I know you've been patient through this deal with Hope this, uh, this deal with open AI. Yes. It's not the deal that we wanted, but we are working to make this a positive outcome for anyone and, uh, and don't cry yet. Yes.

Don't just don't cry. And it's really hard. And it's particularly hard because if you, if you're in the scale situation, a lot of those people had been there for four years and with windsurf, most of those people had been there for four years. And with Windsurf, most of those people had been there for less than a year, almost certainly. And so the strength of those connections socially, outside of work, is weaker.

So there aren't as many, oh yeah, like my boss, like we're already on signal with disappearing messages, so we just talk back channel all the time. It's like, no, I just talk back channel all the time. Yeah, it's like I mean the crazy thing is the argument was the new company has a strong balance sheet Yeah, and they're gonna be able to just do a distribution or pivot or like that was effectively the the suggestion it was intentionally ambiguous and At the same time the the employees left behind on the ghost ship Yeah we're already talking with other companies other companies were coming to them trying to recruit that your coin and go ship because

Like everyone involved in the deal would prefer you to use the term remain co remain co But that's not as sticky as go ship Ship without a ship without a founder. I don't think the last go ship we see I think it's I think it's like a new pattern and we're just gonna see this morning more No, but but so so then you have this dynamic where the these talented people specifically I talked to a founder who was Talking with a lot of people on the go-to-market team being like these are very talented people They took a company from zero to tens of millions of dollars in ARR and a bunch of enterprise contracts Yep in a very short period of time. I want to scoop them up and those people were entertaining

conversations because It was just totally unclear to them what what was gonna happen. Yeah, so so yeah I mean I still I think some of our friends hold the FTC like 100% accountable I'm probably under a hundred but maybe over 50 the FTC like 100% accountable. I'm probably under 100 but maybe over 50. But my key point is that never lose faith if the FTC is giving you trouble. Dillon Field didn't lose faith when he was dealing with a messy situation with the FTC at Figma. And also you should use Figma. Figma.com. Think bigger, build faster. Figma helps design and development teams

build great products together. You can get started for free at figma.com. Anyway, there was another side of the stakeholders that was interesting that this guy, Publius, said in response to your post, which I don't think anyone was talking about at all the entire weekend. This is cool. And this is something I don't think anyone was talking about at all the entire weekend. This is cool.

And this is something people don't really think about. I think we're in a good spot with these folks now, and I think they'll actually probably be in a better spot. Much better spot. But let's read through it. So, Puglius says, there are more stakeholders here that have not been discussed. There is a whole network of software resellers

that invested millions into building partnerships with Windsurf. I was leading the team at one of those partners. We have customers that we have been selling to for years who we vouched for Windsurf to. I am sending out a note to our 300 customers on Monday that we are stopping all partnership activity with Windsurf effective immediately. I hope he didn't send that because you gotta recall that email.

Don't send the email. Cursor has no channel partners and this will cost our firm millions. Oh, interesting. I didn't realize that Windsurf had a channel strategy and Cursor does not. Very interesting. So Windsurf actually has resellers

who go and sell it into their partners because they're doing something on, you know, we do software development consultancy. We come in and help your team run more efficiently. We help you pick the right tools. You can imagine like McKinsey, I don't know where this guy works, but like you can imagine a consulting firm coming in

and giving advice on what tools to use. They get a kickback from Windsurf. They don't get a kickback from Cursor. So he's gonna lose millions of dollars, hypothetically. Hopefully not. But my reputation and good name is worth more. With Google taking the best engineers from Windsurf, our large enterprise clients are screwed. When they purchased Windsurf enterprise licenses, they were

also purchasing an ecosystem that they assumed would continue to improve. This is disastrous for any startup tech company with goals of building an enterprise channel. It's interesting. I don't think people have any idea how much this just killed channel sales for any AI company. So the rest of the AI companies out there who are like, oh, channel sales is really interesting. But it's risky.

Basically, if you're a top company in your category growing super quickly, you might turn into a go-ship. Yeah. Yeah. And so if I'm trying to resell that type of stuff, then I have to go to the CEO. And not just be like. They're good, but they're not so good to get these maxed out.

They're not getting a trade deal. Yeah, yeah, exactly. You can count on them to not get traded. Yeah, yeah, yeah, yeah. You're having dinner with the CEO of some AI company who's talking to you about like, yeah, we have the best software. And you're like, but you don't have any like

actually great AI researchers, right? Like you mostly just have like. We like to partner with companies with like medium to see tier. Yeah, great product. It works, but not too well because we don't want to lose you want to keep working with them for a long time. Keep working with you. And so yeah, there were a bunch of other reactions.

Shell co-hires, let's see. I'm not an M&A guy, but something feels really broken in tech M&A confidentiality is out of the window. Deals get done and called off on a whim. Lack of rigor and discipline on both sides. Curious to hear what practitioners think. People are going back and forth on this. But really quickly, let's tell you about Vanta. Automate compliance, manage risk, improve trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation, whether you're pursuing your first

framework or managing a complex program. And so Will Minaitis was particularly black-pilled over the week, friend of the show. Incredibly black-pilled. But it's, we're so back, Will, you're good. Will Minaitis said, the reason that tech has been able to grow so quickly and create so much wealth that it is rich, that it is, that it ritualized a set of norms around

corporate governance that are very distinct from what the law actually requires. The second someone defects, the whole ship goes down. He's so upset. But basically he's talking about like, the handshake deal protocol is not a legally binding contract. Even term sheets.

You get a term sheet from a VC, that's not a legally binding, that's not a legally binding contract. Like, a VC can write you a term sheet, everyone can sign it, and then you can just wake up. It literally says, on the sheet. It says, this is not binding, and then you can just wake up on the wrong side of the bed

and be like, actually I don't wanna do the deal. Or it could be like you found something in due diligence, or you met a different competitor, but the game isn't over until the money's in the bank. The experienced entrepreneurs know this, but we run on this, basically, these society, these social constructs and these social contracts that say,

hey, if you're the type of VC that constantly rugs on term sheets, on signed term sheets, there will be a bad vibe around you. I can think of two that are widely known and are still in business, but it becomes very hard to be an effective VC if your brand is you just pull term sheets. Yes, yeah, and some of those folks

have been banned from YC Demo Day, other people have had like viral Twitter posts around them every once in a while, like they do that to a founder and then the founder becomes very successful in post economic and is like yeah I still have a grudge so I'm going to tell the truth about X, Y, or Z. And so the thing is that now where we are now is I don't think the whole ship goes down. I don't think this is a true defection. I don't think this whole ship goes down. I don't think this is a true defection.

I don't think this reflects poorly. And I think that the question of like, the big question here was, will this cause more new startup employees to want to just go straight to Google? Let's say that you have the option of working at Google or Big Tech broadly, where you know the paychecks are coming on time.

You know the RSUs are liquid and you can just cash out as soon as you get them or whenever their lockup is, and you know your manager's gonna be there, and the company's gonna be around, blah, blah, blah. And you can somewhat accurately predict what your comp will be in five years. Exactly. It's gonna really work hard.

Exactly, and then on the flip side, you have startups which are in some ways lottery tickets, but also you get to work on game changing technology with with really cool people you get to move a lot faster There's a lot less overhead. It's a lot more edifying you get to work for people potentially the next sundar Yeah instead of sundar and and the economic upside can be a thousand X It could be huge and the question is if that if that deal was broken if that if that deal was okay Yeah, you can go work on the cool thing, but you might wind up penniless and not cash out

like you were promised, that changes the equation and that could pull people away from startups. But I don't think that's gonna happen based on this because I think the lesson from this is that everyone got taken care of and the social contract still holds, although it was very messy. And I think going forward,

every company that's doing a deal like this needs to think how do I get the scale AI outcome and not the windsurf outcome because just two days of pain is not worth it. I think one potential solution to these deals is exactly what we just saw happen, which is big tech company does basically an aqua hire of the team that they want.

And then you simultaneously sell off the underlying asset immediately, and you generate a liquidity event for everybody. So everybody's happy. It doesn't have to be like life changing, right? But it has to be something, right? So that it's- And I mean, the very key thing is that they left enough

money on the balance sheet. Because the money on the balance sheet, and this was Hari Raghavan's analysis. He clearly, I mean, the guy's, he's a good friend. He's obsessed with cap table math. I know, he was, this was Capital J journalism. Yes, thank you. This was investigative journalism

Yeah, and so I mean his post is so long That I need to just go to the TLDR But the TLDR is that he says I spent hours last night breaking down the cap table and deal dynamics from public info I realized that the unvested equity is around 80 to 100 million dollars Awfully close to the hundred100 million the founders and board negotiated to leave behind in the bank. Why shouldn't management just accelerate and invest it? Yes, unvested.

Which is a key detail, right? So they're basically saying, we're leaving enough as though you vested your full four years. Yes, and so if you, like it's still a leap of faith, because I don't believe that Google and Cognition were in communication at all.

And I think if they were, that would be more like antitrust chaos and stuff. But just economically, you know that if you, if you leave a company there with that much money on the balance sheet and that many like, unvested options, somebody is just gonna be like, wait, so I can get that for basically free, and I can make all the employees whole,

and I get all the employees, and I don't have to pay really like anything to get that thing. Like it's just gonna happen immediately. Because it's just like, you've left this, you've left this like, you know, $100 on the floor, and someone's gonna pick it up. Like the free market will just work I

Think I think the question that I had and that I think a lot of people probably had is What is the governance structure of the ghost ship? Oh, right. So Jeff Jeff crazy question Jeff Wang who's coming on the show at 1 p.m Jeff and Scott will both be coming on at 1 p.m. Okay 15 minutes. Okay. Can we communicate that to the other guests? Yeah. Yeah. Yeah. And so the question is like, okay, Jeff, you now run a company with hundreds of employees

that are angry about what just happened, that probably, like maybe they wanna keep building Windsurf, but maybe they wanna go and do something else. And what happens, like, Jeff is basically, I would imagine, like has to make a bunch of calls. It's like, do you just keep running the business? Is there pressure to keep running the business? First question, Jeff, did you ever feel like,

is it Frodo Baggins throwing the ring into the fire? It's like, pay out the $100 million in bonuses. After all, why shouldn't I keep it? Throw the ring into the Mount Doom yeah the question was like could you ever tempted could could the the new leaders the leadership yeah like was it ever was that well could the leadership decided you know what we can run this business super late exactly we could actually run this business with like 10 people yeah and we're gonna run it for a few years, and we're gonna use the advantages that we get

from our own product to run a super lean team. And then you would have employees effectively burned again, potentially. But that didn't happen, I'm very happy about it. Another question is what- If you're big tech and you're gonna do one of these zombie acquisitions, you gotta leave enough for the unvested shares, if you're big tech and you're gonna do one of these like zombie acquisitions You gotta leave enough for the unvested shares and if you're founder and you're gonna do one of these zombie acquisitions The ghost ships got to be full of plunder

Full of wonder stacked with treasure because then that's right Then the rescue divers will go and lift the ghost ship off the yeah And if big tech comms are telling you you can't tell anybody that they're getting taken care of. You have to risk it. Tell a little birdie. Have some off the record conversations. Tell a little birdie to go fly around and let people know.

You gotta be having quick calls, not saying anything too specific, but saying what you said, I think you worded it perfectly. Where it's like, just don't cry yet. And poor Varun, poor Varun, right? Because he was getting dragged because because by apparently he apparently he apparently people were messaging me like He joined like the the all hands for like a minute. Yeah, you know

And it just seemed like he was being like ultra like kind of like a psychopath being totally see you guys Yeah, it was a good run and it's like go go have fun building You know continuing the missions would not have happened if he had said no, I need an hour I need to explain everything would that have killed the deal almost certainly if that killed the deal. What's the outcome for the employees? Probably worse than what they got you think it would a hundred percent killed the deal? Almost certainly. I think one of the key deal points in the negotiation with Google was we do it via Google's comms and legal strategy. Because Google does not want to get hit with some crazy FTC lawsuit that's

going to not just be some multi-billion dollar settlement, but also a huge headache for years, and bad press, and stuff like that. So Google says, hey, we want to do this our way It's gonna be awkward, but we're gonna take care of everyone and and yes we will yes, we will leave enough money on the balance sheet to pay out all the unvested options and But in exchange you got to do the comms our way, which is rough You have to create a terrible

Go to buy the entire Yeah, you're gonna be hazed for 48 hours You're getting hazed But then, you get redeemed And it's gonna blow back on us So incredibly hard Yeah, Google didn't look good either in that weekend

It was rough It was rough Anyway, let me tell you about Linear Linear is a purpose-built tool for planning and building products Meet the system for modern software development, streamline issues, projects and product roadmaps Start building at Linear.app. And if you are launching a TBPN derivative product, derivative work, get on Linear.

Linear? It's the tool we use. So what you would do is you'd put all the glasses of tap water that you need to drink, and then you would just check those off at a time. Yeah, every time you'd tap out. We only have one rule about copying us, it's the derivative works clause in our terms of conditions.

And in there, if you create a derivative work of TVPN, you are legally required to drink a glass of tap water on each street. Every time you go live. Yes, every time you go live. And so, yeah, again, we want to make it for, yeah. It's about being accessible. We did invent TV, we invented news,

but we will open source it. It's an MIT license type of situation modified MIT license Yep, the only modifications that you have to drink tap water. Yeah, anyway, it is a small price to pay Anyway, you know a question. What do you think? Why do you think Google did this? Why? Yeah, I mean Oh, oh, yes. Yes. Yes. That is that that is the real question is is we've talked about the role of the VCs I think based on what happened never talked down on first ballot Hall of Famer Neil Mehta Never talked down on the future for first ballot Hall of Famer. Everyone was saying oh Neil Mehta Greeno They did this sloppy deal but screwing over the employees employees are great. You no matter potentially go did I don't know I agree I agree that was well played I think no no but the question is why did Google feel like they needed to do a meta style trade

deal in yes it's a category so sourf in my, I don't know everything about all the employees they brought over, they brought over 50 engineers. I don't know if any of those are like insane AI researchers with like crazy citations on like foundational papers. I don't know that it's the same, I don't know that they're trying to build a super intelligence team to really bring their models to the frontier because they already have that. Gemini is at the same level of AI research quality as OpenAI Anthropic by most benchmarks,

by most people that use them. It doesn't feel like they're way behind there. Lama 4 on the other hand was a little bit behind and it felt like Lama 4 was specifically behind not on the product side but on the Research side like that. They just weren't figuring out what works in RL And so they had to bring over a ton of people to just be like How do we actually train this next model like behemoth couldn't they couldn't tame the behemoth?

Like they got to get some behemoth tamers in the building and it seems like that's why they acquired all the different researchers who know okay like, like training on 100 K G H 100 GPUs gives you this, and then you need to use this data and you need to hold back this data and you have this this reward function and this reinforcement learning technique, and you need to do all these different things. And so you need AI researchers for that. But meta has great product people. So like, they're going gonna be able to take what they build and then vend it into Instagram and vend it into all sorts of different places and use it to optimize

the ads 1% and make a trillion dollars. They're gonna be fine on that side. Google is great at AI research. DeepMind is amazing. They have so many reasons. They invented the transformer. They're not behind on the quality of the foundation model they are they are behind on product and they are they are behind on like user experience and everyone complains Oh, they have this amazing vo3 model

But like I had to log in seven times to get access to it and then go through an upgrade thing and it was on wrong Google account and then I have to trigger it then I guess here's the here's the the Steel man for the short sellers No, no, no, here's what's what's kind of interesting about the way this is developed. So at Google's last developer event Yeah, they launched jewels, which is an async development agent. Okay for for code code gen It's a clogged code competitor and open a more so is like a dev Yeah, Devon AI competitive and competitor and now you have, you imagine Google has more ambitions

around CodeGen, right? They've seen Anthropix. Very few businesses actually will work at Google, right? You need a billion dollars of revenue or you're gonna get shut down most likely. And so CodeGen is an area that I'm sure they're taking very seriously. I haven't heard a lot about Jools since the event. I haven't heard a lot about jewels since the event

I haven't heard about people that are that are using it. I'm sure it's I'm sure it's powerful yep, but you now have a dynamic where some you have cognition and Devin who got knock I can't say cloned by Google but again like they were the first like serious like enterprise coding agent and so And and the the windsurf GTM sales marketing team versus the former Windsurf founders and top researchers who are now at Google.

And so I'm just incredibly excited to watch this play out. Pavel was posting earlier, he said, I hope these guys smoke Google at AI coding. Imagine the chip on your shoulder after this if you're a windsurf employee. So yeah, everybody's got to be very fired up. How are you guys doing? Congratulations. Thank you. Round of applause. Did you guys have a relaxing weekend? Yeah, really chill weekend. Yeah, yeah. Easy, easy, easy. Nothing too much.

Nothing too much. Honestly, we both haven't really slept. Okay. So, go easy on us, okay? Well, you had a lot of people to take care of and honestly, when we heard the news a few minutes before we went live and we were fist pumping here in the studio

because it's such a fantastic outcome, and I'm sure everybody involved is grateful for the work you guys put in to get this done. But give us, yeah, kick us off with the high level. What's actually the partnership look like? What do you, how would you describe it in your own words of like what's actually happening? Yeah, I mean, this is a real acquisition. Okay. We are being acquired by cognition. Okay.

You know, must feel great to say that. It was a tough, it was a tough Friday, I would say. I don't think anybody would want to be in my shoes on Friday. But we talked to a lot of teams out there. There's a lot of AI companies, foundational companies. And after talking to Scott and the Cognition team, it was done in my mind. There's a done deal.

I don't know if you guys know this, but Cognition was probably the only other team that we thought was smarter than our team, actually. Wow. Yeah. That's what we put that together just on the show seeing the announcement. It's like you take this incredible you know go-to-market sales machine that that you guys had built and you combine that with one of the best you know research and just hardcore engineering culture and it's a perfect you know match. Perfect overlap. Yeah absolutely and on the windsurf on the Windsurf side, obviously there were all these

stories breaking out on Twitter and everything going on. And people were saying, well, the thing that's left is just a shell. And we looked at it and we said, well, actually, I don't know if that's right. There's the code, there's the product, there's the customers, and most importantly, there's the whole team, obviously.

And it's an amazing product and there's a lot to do and a lot to build together. And so I think as we started talking about it, we found that there were just so many natural ways to partner, you know, both in terms of obviously the customers and customers are super excited to have a solution that basically combines both the IDE and the agent. And then the technology itself, which is, I think we at Devon, building Devon, have always focused on this kind of remote background agent

as the thing that we've kind of done, whereas Windsurf is really focused on the agent IDE, and I think there's a lot of kind of things that play in there, all the way down again to the kind of the fit of the relative teams and the team strengths and so on. It's almost like you predicted this because these types of mergers are really hard because you have two brands that are popular,

but Scott, you've been managing Cognition and Devon. You've had the corporate structure and the product structure for a while, and so it doesn't seem nearly as complicated as where does this go? Do you have to rebrand one another? I don't know if you have thoughts on it yet I'm sure you this is down the road But it seems like you're actually fairly set up to to integrate these two companies in a play in a way

That's like not so super chaotic to either which is great. Yeah. Yeah, you know, I I wouldn't say it was intentional I think for example, it's probably more that just we, we, we, we tend to over-focus on, on software engineers because it's just the way we are and how we think about it. And in particular, kind of just like these, like product and capabilities things, whereas I think on the Windsurf side, I think, um, Jeff and the team, you know, the whole team have built out a really great kind of suite of, of, of all the different kinds of functions, right? You know, sales, deployed engineering, enterprise work, infrastructure, marketing,

operations and so on, you know, finance, et cetera. And yeah, it just turned out to be a really, really great fit. Yeah. Jeff, Friday end of day, did you think you would be running a process so quickly? I know, you know, part of the obvious move would just be, you know, continue to run

and scale the business. You guys had a lot of momentum, but what was going through your head Friday night? Because I imagine at the time you're also balancing, you were all of a sudden managing a team of hundreds of people that I probably all, you know, wanted your time and attention as well. My immediate priority was just to get a lot of options on the table and to have a lot of paths forward. I had to tell the team like this is the path forward immediately because this is happening

now. And then outside of the meeting, you know, I was thinking like, okay, who do I need to talk to? What is the best use of my time? I can tell you I was on the phone for pretty much 24 hours, nonstop on my phone after the all hands. And me and Scott, we worked really fast. We met at our office the next day. He even brought in everything on a piece of paper to sign.

He even brought, he took it to the... No way. Here you go. You know, we had to talk through a lot, but that was, it was pretty dramatic, Scott, but it was cool. It was cool. Yeah, it was fun. And naturally, you know, because it has to be this way, we got things signed like one

or two hours before we were able to put out the announcement. But like, as soon as we started talking about it together, I think it was kind of clear for both of us. Like the way that we really make this a success is, you know, obviously customers kind of want to understand what's next. The team wants to understand what's next. You know, the whole world is talking about it. We want to be able to come out together as soon

as possible and say, we're gonna do this, we're gonna make this really amazing, we're gonna make sure we take care of all the users and all the customers, we're gonna make sure we take care of the team, and there's just a really great product here at its core, and that's what we want to focus on, and that's what we want to build out together. Yeah, and you know what's crazy? What is crazy? Like we talked pretty late on Friday night as well. We were comparing notes and there was like almost no overlap. I mean, we talked about the team already. But even the product, the product is like missing exactly what the other product is offering. And the ability to combine the product together is going to be so amazing for our users. It's going to be really cool. cool. Yeah, I think there's a lot of fun stuff around, you know, you can have an agent work and then review the code, you know, locally in your IDE. You can be planning tasks out and then kind of sending them off for work. You can be, you know, you can do a first pass with an agent and then come and look at the work and then kind of finish that up and do the finishing touches with,

you know, with Tab and all these other features and so on, right? And we're really excited to build that out together. How is the team feeling right now? I imagine this is the craziest 48 hours of their career. Give us a preview of the Slack emojis that are ripping right now. Actually, we announced it at another All Hands. It's Friday All Hands,

and then we put another Monday All Hands up. And very, very different. They're like, it couldn't possibly get worse. So it's only up. Oh, we made it dramatic too. So me and Scott and the team, we really went out of our way to make this a very generous acquisition.

I'll just say that. And I think, you know, the team probably felt like, you know, their career was over or something. You know, like it was very sad on Friday, but I think today, I don't know how long did they clap Scott? They kind of stand in like a standing ovation or something. So I think the sentiment has shifted. The team is even more fired up to go. The whole product is still there. All the, all the things we had in the GTM team is still there.

And now they also have Deon to sell as well. So everybody's fired up now. That's amazing. Yeah, every time I talk to Scott, it's always because like he's done something really incredible and aggressive. Like, and it's like, okay, like let's do, let's talk about this right now.

And before I was making like documentaries, it took me a month to put out a single video. Now, fortunately I have a daily TV show, so I can just have you on and we can chat about. I do have some some random questions. I don't know What I'm interested to know about about that go-to-market team and and channel sales specifically There was somebody in the comments of one of Jordy's posts talking about How windsurf was growing revenue and and and working with channel partners. Can you walk me through how, like what would you give advice to somebody

who's structuring a successful channel partnership strategy for a product like this? What incentives do you have to align? How big of a piece of business was that? Do you expect it to be a continual source of growth? I'd love to know about just that as a particular strategy, as opposed to say, you know, Google ads are going viral. Yeah, we made a decision to go 100% partners

back in February. The thing about a partner channel kind of like segment is like you have to like, you have to like kind of feed them. Like you kind of build belief with them in the product, but also show that there's an economic incentive too. And it did take some time actually from Q1 to Q2 to like get the top priority partners, make sure those partners can easily sell

on your behalf as well. And it really took like about four to five months to really see this like kind of take off. So some of our partners have already started bringing in seven figure deals, even without even trying the product. They just go to their customers, they ask them what they want, and they just say it's Windsurf. And now they can say Windsurf and Devon.

That's amazing. Yeah, I was getting multiple messages from people Friday and Saturday being like, I want this team. I want this team. And that was what, and I think that it is just, it's such a, this whole deal and everything is really a testament to the caliber of the team, which was one of the major disappointments Friday

is if you were on the team that was staying behind at Windsurf, there's this sort of almost like signaling, right, of like, I took this company, let's say you joined last August and you brought the product to market,'ve launched it you grew it to tens of millions of dollars in revenue and then don't get to kind of continue the mission it's I'm just really happy for everyone involved. Yeah and now oh sorry yeah I was just saying now you know now we're all one big team and it's I mean

we're kicking it into another gear I think we're all so amped up to, to take this and just go, you know, we're, we're going to go full speed basically for, for the next while. Um, and we get to play on offense now and go for it all. So, uh, are you guys already making plans to get under one roof? What's the opposite of that? We have a lot to figure out. Um, but, but yeah towards that and getting to the point that there's kind of the product collaboration,

there's the go-to-market collaboration, and then there's the literal kind of like team situation. A lot of work to do over the next couple of months. Well, we've gotta tell our customers, we got there back now, and the product is gonna get so much more cool. That's amazing. Well, you guys turned something which was,

in many ways, you know a disaster I was just waiting for I was waiting for the New York Times piece on Monday and Getting to see the New York Times push out this news and turning this whole thing into a win is Incredible and you guys have done a service to the team and the industry. So thank you Yeah Honestly honored to get to be a part of it, to work with such a great group of people. And I just wanna see you guys, you guys have no idea how things went

with all the legal and everything last night in terms of figuring these things out. Are we gonna make it there in time or are we not gonna be? It was, we've been through a lot and I think it's just the start of things, so. Just so you know, Scott was like, we are announcing Monday

Hell or high water and we we just did not sleep for the last like 72 hours It's been a crazy. It's been crazy. I mean we we we we appreciate you copping on the stream Do you have anything else? You're already sure you guys deserve probably probably too early to sleep But you both deserve a power nap at the very least Thank you for coming on anything else else that makes sense to share now or should we let you go? We're all good. Awesome.

Yeah, stay tuned. We're gonna have a lot more announcements soon. Thanks for having us. Amazing guys, great work. Cheers. We will talk to you soon. Congrats. Bye. We are doing a postmortem on the windsurf chaos.

I was saying that I liked this post from Pavel Asparuhov. I think he sort of nailed the postmortem, but we can debate this. I mean, if you leave someone for dead, but someone else calls in a helicopter, that doesn't really change your moral positioning in the situation. And Zdelian says this 100%, the Windsurf founders

in Google thought they could pull a fast one and that the broader community slash Windsurf employees are somehow are worded enough to not catch on that their leave the Shell Co. with cash plan was totally morally bankrupt. Everyone will remember. And so I don't know, I'm perhaps ready to put on the steel man hat and not go quite as far as Deleon.

I think you might agree with the Deleon and Pavel take a little bit more. I still think it's important to debate because we want to avoid this kind of situation in the future. There's probably going to be more of these deals. John Ludig had some good commentary on this, basically saying, if you are a big tech company it is much easier and faster to do something like this it's not just the FTC sort of like climate around antitrust it's just that it's much easier yeah much faster and oftentimes these companies are just buying the team and the talent so if they can license the tech and get the team it is that's just capitalism doing

capitalism yep in this case the's just capitalism doing capitalism. In this case, the answer to capitalism doing capitalism was more capitalism. But it would have kind of wild. In the form of Scott Wu coming in hot, working over the weekend to get a deal done. So anyways, fantastic outcome. Scott Wu looks like a hero.

Scott Wu looks like a hero. I think cognition is gonna be stronger for it. They got a world class, you know, GTM sales marketing engine. What John Ludig said here was, big techs AI talent shortage means these M&A choices. A, you get the talent only, but you get it today. Or B, you get the talent plus the business plus the product, but you get it today, or B, you get the talent plus the business plus the product,

but months after regulatory scrutiny, and he says they will pick every time. Thankfully for Winsurf, the product lives on, but A, as the default, is existentially dark for startups. And so I think what's interesting is like, we were debating how much of the blame goes to LineCon, and I don't actually know that there's all that much on LineCon specifically.

It's fun. It's fun. It's fun to point the finger. It is, but I think in general, like the FTC has always had some sort of approval around big public company buying a small company. They're going to review it. Even if they would have approved it,

they wouldn't, Google would not have gotten the talent actually in the door, actually working at Google for six months. Months after regulatory scrutiny. And so that time, you guys are real valued. And the other computer that we have is Figma, who was slated to get acquired by Adobe. It took forever.

Adobe had to pay a $1 billion breakup fee. Now, Figma is going to IPO, and I would be shocked if they end the first trading day below the price that Adobe was going to pay, and the company is doing better than ever, has launched a bunch of new products. Not financial advice, but I will give you product advice. Go to figma.com, think bigger, build faster. Figma helps design and development teams build

great products together. Can't say anything about the stock, but great product. We do love it. Anyway, Varunam Ganesh had a good take here. Windsurf employees over the weekend, and it's the we're so back, it's so over, we're so back, it's so over. And I think the underrated take on this,

like yes it's funny and it's a good point, but this has a real economic cost. Like losing sleep, we're sponsored by 8 Sleep, as we put out a video today. Sleep is valuable. And if you make me lose sleep, that does have an economic cost, that does have a moral cost, you shouldn't do that.

And so you should, as a founder, try and land the plane not just save everyone's life but actually not have a super rough landing yeah make it a win for everyone but make it smooth for everyone and there was a good post Pavel Pavel was on a tear he was last few days defender of the founding engineers yes but he said I hope these guys smoke Google at AI coding. Imagine the chip on your shoulder after this if you're a Windsurf employee. Yep.

And Sandeep Shah over at Windsurf, he's a vice president there, said, it's bigger than a chip, we're coming for it. We're coming for it. And so, lot of the energy. He was left behind in the Romain Co., is that correct? Yeah. He did not go over and he's ready.

On the ghost ship. He's on the ghost ship. The ghost ship. And Augustus says, go off the king and will the pieces LFG. Lots of support for Sundeep in the AI coding and the IDEs war that's continuing. Anyway, Signal has a post here. Startup comp used to be confusing because it was complex.

Now it's confusing because it might be worthless even with a large exit. The founders can dip any time. Last chopper out of Saigon vibes, except they're flying private while you're holding the bag. Good post. Yeah, my take here was that Scott Wu looks like the hero, not Varun Mohan, the founder and CEO of of windsurf who should have gotten an amazing outcome for his

Team in any other situation like in any other situation. I say hey join this fast-growing company We're just post pivot. We're second in the market. We're doing some cool stuff I'm raising some money and we're growing but we're only doing 40 80 million ARR and I get you liquidity at 2.4 billion you should be like I am ride or die for this guy forever yeah and I think that a lot of these employees aren't gonna feel that way in in five years even after all the dust settles they're gonna remember that this was not not handled as well as it should have been and so they're gonna be like man I

don't want to work with them yeah which is Which is rough. I'm sure when the muzzle is removed, he'll be able to hopefully call every employee one by one. That would be good. Yeah. Sorry, and make up. And so I still put some of the blame on FTC stuff, just FTC stuff broadly. Some of the blame on Google comms,

some of the blame on LenaCon and how she changed the FTC. And the other thing is speed. I do think so. This was happening really. Remember the sort of exclusivity period how she changed the FTC. And the other thing is speed. I do think so. This was happening really, remember the sort of exclusivity period that OpenAI had on the deal expired and I think this got announced like the very next day.

So I'm sure it was in the works but they definitely were moving quickly. And again, it would have been a good outcome if they all ended up at OpenAI, but I also think this is a good fit going forward as well. Yep. So I'm excited to see what each branch of the team can do. Rune here has some pushback on Signal.

He says, this has always been true, the idea that startup comp is confusing and complex. Investors and founders screwing over early employees during an M&A is a time-honored tradition in Silicon Valley. I don't know how true that is. There's a lot of examples where that didn't happen. But of course, it has happened. If anything, the abundance of capital has made things better for early employees.

And so people taking both sides. We didn't get to this post, but it was funny. Connor saying, Windsurf is the so-h know kind of you know people people taking both sides We didn't get to this post but it was funny Connor saying windsurf is the so hump or you could start up acquisitions They got acquired by opening on Google and now condition labs all in one month. You'll love to see it So it has a six-way parlay He said I want mistral founders to Apple mistral team to meta character remain code of perplexity core to perplexity ideogram to figma gamut of notion read back There was rumors that character remain code of perplexity, core to perplexity, ideogram to figma, gamut to notion, read it back. Read it back. There was rumors that Apple was interested

in picking up Mistral. Oh, really? Taking a look at it. The funny thing though is that if you're France, do you want your national champion to, you know, the luxury AI. Yeah, Mistral should go to LVMH. Exactly.

Should be home with the Arnos. Didn't we post a joke post around that? I think we did. I think we did. I think I want fine luxury language models. Yeah, I think some of the Mistral folks were like, this is hilarious, but also like complete misinformation. Anyway, Sundeep says, it's bigger than chip. We're coming for it and Rob

Says let's talk about a reboot for HBO Silicon Valley And it's funny because when you see the windsurf tag right in the name, you're like, okay This is hilarious. You think this is ridiculous and at least you're having some fun with it. Can we talk about our upcoming guests? Yeah, yeah, we're gonna have One of the co-creators of HBO Silicon Valley on the show He has been working on on Barry for a couple years kind of out of the Silicon Valley parody world But we're gonna try we're gonna try we're gonna explain to him. What's going on line by line? What's been going on and I think once he really processes it he'll be interested in making a reboot yeah we got Screlli coming on to the show welcome to the stream there he is finally good to see

guys we've been waiting for this moment are you it's great to see you good to hang out wait this is a new view this is not your your regular streaming view you don't normally see the guitars yes Yes, I change it around sometimes. That's cool. What's new in your world? Well, you know, I'm in the startup game as always. I think this is like the 83rd company I started. So, very nice.

See how that goes. And I've been, the company I'm working on makes, it's like the Captain Ahababs White Whale for VCs. It's a Bloomberg competitor. So this will be the last time somebody tries to compete with Bloomberg one way or another. It's the final boss of startup ideas. What's the whole- Yeah, just give us, I mean, this makes like the founder market fit is incredibly strong. So when I initially saw you announce this it made a lot of sense what?

Yeah, what like what was the initial catalyst? I'm assuming you had did you beef with with Bloomberg at some we definitely beefed That was a big part of it platform Nothing, you know Trump was deep platform from Pinterest Yes, and that and that was like his personal 911 for you is probably the Bloomberg terminal. Exactly. I've been using it since I was 17. Wow.

And you know, it's funny. How'd you afford it back then? What's that? How'd you afford it back then? Isn't it like $1,000 a year? I worked at Hedge Fund, yeah. Oh, it's 17, very nice. I worked at, yeah, at 16 actually.

I worked for Jim Cramer's Hedge Fund. And I worked at a tiger cub and I started wait. So we need the back story on Jim Kramer So is it true? Apparently he was just he would get so stressed out like running the hedge fund that he just was like I'm just gonna become a Media guy is that loosely correct? Yeah, a hundred percent. I mean, so we made 23 percent average annual net returns. So net of 21 and 20. Wow. So he was good.

That's amazing. Narrative violation. I love it. He was a very... Well, you have to think about what investors looked like back then. It was a very different world. Information arbitrage was a thing. Gaming, Wall Street's upgrade and downgrade system was a thing. So I will say he had extremely good instincts. Anytime he seemed to buy a stock for the long haul, he didn't do that great.

But he was extremely good at, you know, I'm not sure you would want somebody else managing your money because he was just so careful. And in 2000, we were up like 35 ish percent. So, you know, I saw the dot com meltdown, it was a lot of fun. I shorted some of it myself and it was a great time. That's fantastic. That's wild. And then what was the story, which Tiger Cub were you at?

What was the backstory there? Yeah, so after Tiger, and just before I get to that, Kramer was absolutely nuts, right? So like he would take a computer monitor and just throw it at you. It wouldn't be like one of these playful like, oh, I'm just going to throw it at you. And like, you're going to get away.

He'd like aim dead center for you with like- Center mass. With force. He'd be like, bro, you almost just killed me. He's like, lucky I did it. Did you deserve it? Did you deserve it though? Yeah. Let's steel man this a little bit.

What were you doing wrong? I wasn't doing, nobody was doing anything wrong. Everyone says that when they get a computer monitor thrown at them. I know. You're not beating the allegations. I think part of it is just trying to like, he would yell things like, this is a foxhole.

And the idea was that like, we were at war with the market. Okay. And that, you know, like if you weren't, if you, you know, this is World War II. If you're not in here trading stocks with us and like trying to get an edge or whatever that means, trying to make a dollar, like if you're not taking this seriously. Going to war. I just have to say, if you, if you wake up every morning and say, I'm going to go to war with the market versus I'm going to dance with the you wake up every morning and say, I'm gonna go to war with the market versus I'm gonna dance with the market,

like the approach of going to war sounds very, very, very stressful. I've worked with so many people over my career and I've never met a person that amped up and crazy and it motivated you. I mean, it made you wanna deliver, but it also scared the shit out of you. The guy was like very temperamental and, you know,

but he was extremely good trader. Like I I said you know he I think his worst year was like down five percent or something it was like wow you know he was it was pretty solid and he was like if I don't quit I'm gonna kill somebody. He basically said that yeah I think he said that you know if I keep doing this job even at a comparatively young age if I think he retired at 40 that you know I'm gonna have a heart attack or something like that. I ended up going to a Tiger Cub after Tiger wound down. A few things happened. So Julian hired Chase, obviously, and we know where that came, what happened there.

But Julian wound down operations and he seeded a couple of guys and he kind of wanted to be in the seeding business where he'd give you 50 million and take a part of your GP, like maybe 20% of your GP or more. And he'd help you raise money, give you advice, this and that. And Alex, Julian's son, would help. Julian passed away recently, as you know. But in the Tiger Hay Day, when they managed $15 billion or something, there were two principal tech guys, Larry Bowman, who was a bit of a legend, but it's a name nobody really knows because he was a legend in the 90s.

But he has a family office and he kept investing and things like that. So he started Bowman Capital and then Steve Shapiro, who's my boss, started Intrepid Capital. So I worked there. It was a $2 billion fund. I was a video games analyst. It was the way I could convince Steve to do biotech was I had to cover software too. So I covered interactive entertainment, uh, enterprise software and biotech and it was, uh, it was a lot of fun. And you know, uh, it, it, it's, uh, the tiger cup style of investing has,

were you there? How Straus Zelnick buyout of TIC2? So we were wanting to take TIC2's larger shareholders back then. No way. And you know, I think it's a short now. I think that I didn't a hundred percent get your question though. You were saying something about buyout? Yeah. Well, the story that I've heard is like Straus Zelnick went to the board and basically said like, this company is mismanaged

There was an FTC lawsuit in the works and FTC FCC lawsuit in the works and he was like I I'm a beast I've run big Hollywood studios He was like JD MBA type like really clean-cut amazing manager and basically said, you should install me as the management here. And so he didn't really do like a classic buyout. He just appealed to the hedge funds that owned all the shares and said, I would be better,

and raised his hand, and they said yes. And he came in, cleaned everything up, and they went on a great run. And so it's just a fascinating story because you don't hear about that type of thing happening that much. At least that was my understanding of the story. Yeah, no, I think that's right.

And then Bobby from Activision was the same sort of the same story, right? He kind of I remember meeting Bobby in our office and, you know, Activision was, you know, kind of a micro cap or, you know, kind of a small cap. And he built it from this was 2004 2005 by the way Yeah, and he built it into a you know 44 billion dollar sale partially thanks to Lulu That was it was an exciting time for video games one of the things I learned you know all my US counterparts at hedge funds Were were like very confused about the stock

They traded because there was only like four or five publicly traded companies. And I would go to people and say, well I'm long Nintendo and I'm long, some of these weird Japanese companies like Square Enix or Konami or these, and US hedge funds just ignored this stuff because it's like, oh, it's Japanese. I don't know, I don't have anything to do with it.

So a lot of glory days, but the glory days I'm interested in now are amongst building my startup. And again, I think we understand financial information better than any San Francisco nerd. And I think that one of the reasons is rack of questions. So it's interesting to like we're entering, you know, we're very clearly in this period now of just like hyper financialization things thing, you know, the markets trading on vibes trading on your stream day to day You can now you know as like stable coins explode and and people have more assets on chain

They'll be able to make a couple taps and go like 100X long at any given period of time. Like the internet is like changing capital markets and it's increasing volatility. And so how much of your new company is trying to like lean into that when Bloomberg terminal would have been like, like more like I've never personally used a terminal. But I imagine it was more like, hey, these headlines are hitting and this

this kind of information is hitting PR Newswire. But today, by the time something hits PR Newswire, a stock might have might have traded down 20 percent before that point. So how much is your new your new startup kind of of imagine you're leaning into the way that you kind of maybe your next 20 year vision for capital. Right. You know, what would Mike Bloomberg do if he was 30 years old now in 2025? You know, I don't think, I think Chamath said that, you know, I think in a recent episode he said, Oh, it's this hundred billion dollar thing.

Just waiting to be toppled. You know, anybody can come in, it'll drop like a house of cards. Not only do I think that's not exactly true, but I think the bigger picture here is that a well-run financial information company could and should be worth a trillion dollars. So most of the people, so I met Bloomberg in 2005 and by then he basically retired. He became mayor. He was mayor for 12 years. Then he wanted to be president. I have this contention that I think Mike is the richest person in the world. And it comes from not only he's got about 13, 14 billion in revenue, almost all margin. So if Bloomberg were to be sold, maybe it could get 200 billion or if it were floated.

But not only that, he's got this family office and very few people know about this, but he's taken the Bloomberg dividends and pumped it into a family office that basically Carlisle and all these guys, the Warburg Pinkus, all the private equity guys like KKR, they go to him first and he tosses in like $500 million in each of these. He's an anchor investor in like every VC, every private equity fund. And the guys compounded that money. So he could be worth four or 500 billion. And very few people know the Forbes list is,

you know, the Forbes list didn't know about Jim Simons until- Heavily manipulated. Oh yeah. Five years ago. Yeah, yeah, yeah, that's crazy. So I think, you know, it just in terms of- And it fits his brand that he he would not be the guy like

You know sending a message to to Forbes saying hey like you guys know you have this wrong Yeah, yeah, really I think you should apply this You should apply this you fight to get off the list like Trump famously fought on to fought to get on the list But you know, there's there's an R either way What do you think about the meme where people say like oh, it's not you know There's an R either way. Wall Street, you have to STF you. It's just not, you know, this isn't your lane. You have to talk to users. I was in a hedge fund yesterday, one of the bigger hedge funds. They put like 20 people in the conference room and we talked about what they actually need. And social network is part of it. Again, Bloomberg's worth $100 billion because they have a very

good social network, which is true. They have decent financial information capabilities and a couple of other things, but they don't have the whole picture. What I wanted to say about Bloomberg kind of quasi-retiring was that he basically quit at the exact top for fundamental investors. Quant started taking over Wall Street by then. So today, of the top 15 to 20 hedge funds, 85, 90% are Quants. So Bloomberg does no quant offering. They don't do it. And all he had to do was stay employed instead of wanting to become mayor. And I'm sure he would have been selling Jane

Street and Citadel and all these guys, D, Shaw, et cetera, software, instead of everybody having to make it themselves. Imagine writing your own ERP or writing your own CRM. That's kind of what Wall Street has to do. And it's pathetic. Nobody wants to do that shit. When you say quant, is there a bifurcation between like high frequency trading and just quantitative trading? Yeah. And I think it's going to get, my goal actually is to make it more of a spectrum.

So the fund I was at yesterday, I said that you guys can do what Renaissance does. It's not a secret anymore. It might have been a secret in 1995, but the amount of kids that have come and left every one of these firms, topping from Jane Street to Citadel to the next shop, everybody knows what everyone's doing. It's just a question of your risk tolerance, your leverage. Execution's very important. But I think that, you know, trading, you know, the stock pickers are kind of going the way of dinosaur.

And I think by moving up the power curve for Bloomberg, helping people become quants, you know, the quant industry has sold, I think, this tremendous lie. And again, these are customers, some, you know, I love those guys, but I think that is in their best interest to tell people that, look at this blackboard with all these math equations, there's no way you guys could understand this, you're too stupid, you have to be an IMO winner, you couldn't possibly come here and make billions, but we saw what Jane Street did.

Well, I think certain VCs like to do this too, where they're like, ah, VCs, really a get rich, slow business, it's really a tough business, it's such a, you really wouldn't want it. And I think generally, you don't want anybody going into any industry being like, I'm here to make easy money. So it's generally good, but yeah,

there's a lot of incentives to just say, you know. Yeah. On the high frequency side, what are the actual other data inputs? I remember seeing this, I don't know, some sort of technical talk. Some guy was talking about the different algorithms, one was called the Boston other data inputs. I remember seeing this, like, I don't know, some sort of technical talk. Some guy was talking about, like, the different algorithms. One was called the Boston Shuffler.

And the whole algorithm only looked at the order book. And he was getting into all these, like, you know, you can place an order, you can cancel an order, you can do a cancel, replace. He was, like, getting into the minutiae of, like, basically the API of the NASDAQ or something like that. And it seemed like the algorithms were designed in the high frequency trading world

to basically ignore everything else and every other data source that even could be put in and just operate purely on the order book data, just better than everyone else. So that feels like, okay, I wouldn't know how to create any extra value there with something else, just better than everyone else. the bigger companies, again, there's the, so we have this data that shows that around 5% of Jane Street and Two Sigma use Bloomberg. And the reason is because they view it as an entry level tool. You know, Tramoth is looking at it and says, wow, this is like an exclusive social network with the best finance, Peter Thiel is on there 24 seven, I see his little green light next to his name. But the point is that, you know, Wall Street changes and the tool sets are changing

even for fundamental equity guys. So credit card data, you know, to the minute is something people would like to watch. Okay, yeah, yeah, that makes sense. What's the feature set that's most important to you? Are you heavily integrating social or is the social layer moved on to Signal and other messaging services that maybe have disappearing

messages. Yeah, exactly. I mean, Wall Street's so regulated that I'm not sure that if you're using Signal, it's a little dangerous, I'd say. Oh, really? That's somebody who's gone to jail. I'd say that's maybe not the best idea. But regardless, I think that social is definitely something people could do better. that's maybe not the best idea.

But regardless, I think that social is definitely something people could do better. There's no Facebook for finance where you can post things in your feed that you bought this stock or sold this stock. People kind of lazily use Twitter, which if you use it, it's sort of a mishmash of spam and things like that. But in any event, I'll have more to say on the product. of spam and things like that. We haven't launched the product yet, but we do have millions of dollars in run rate. We tried all this stuff and it was impossible to get revenue. The second we make a trading tool, it's impossible to stop the revenue from coming in. You know, it's one of the best spaces. In fact,

most of our competitors like trading view and stuff like that, they were profitable day one. So, you know, my suggestion is for startup founders is this is a market that just traders just throw money at you like crazy. I mean, they're, people will pay you to help them make, but you have to be formerly in the foxhole. You have to have at least one monitor thrown at you. It sounds like exactly, exactly. So, formerly in the foxhole. You have to have at least one monitor thrown at you, it sounds like. Exactly. Exactly. But in the long run, how much are you focused on retail investors, people that are just

fully independent versus somebody if you're going to talk about hedge funds? I think the money is obviously at the institutions and that's probably the way to go. Tradingview's got rumors somewhere around 300 million in revenue. Tiger did a deal with Tradingview back then. I and that's probably the way to go. similar web, they're actually almost like a top 100 AWS, you get the same tools that any customer gets, Netflix or whoever, and you just question of how much do you use them? So if I want to be able to provide you EC2 and S3 the same way, Citadel might use it, and you might use it with less money. Very cool.

I heard a hot take from someone who I believe is a mutual friend of ours. It went something like this. I won't attribute to him because I might botch it, but it was basically that China banned high frequency trading and the dividend of that was deep seek and all this brilliant AI research. Therefore in America, if we want to win the AI race and win the AI researcher race, we should ban high frequency trading. It feels like we might not even need to have that conversation because Mark Zuckerberg is willing to pay as much as Jane street now. Um,

but what is your take on whether or not, uh, economic value or American values are created through the process of high frequency trading? Should we ban it? Is there, so two awesome, like quick and funny stories. The first is Citadel published a paper on back in the V 100 days. Should we ban it? Lydia did. And it was like the most incredible, you know, find ever. And it's like, you know, how is that possible? And the paper is fascinating because the techniques they used were just remarkable. The second story is, so you know, they're brilliant people, obviously, at these firms. The second story is I haven't hard launched this yet, but you know, I'm having

a baby with a woman. She's my new partner. Congratulations. Thank you. That's amazing. Congratulations. Thank you. Congratulations. She was one of the first women at OpenAI and she is a tremendous lady. I love her very much. But you know, she's been recruited by the big coin firms. And I sat down, I said, honey, you know, I know money management, stuff like that. Let me do some math here as to what would actually

be worth it for you to leave and do it. And I calculated and I happen to have a friend from a long time ago who left Steve Cullen's firm and he was sitting down with me, he said, what do I do, Martin? I said, I know a guy at Citadel, let me help you out. And they called him and he said, no thanks. But then Ken Griffin said, I'm getting on my private jet

and I'm coming to see you right now, we're gonna have dinner about why you're coming to Citadel. He's that kind of guy. And I said, honey, you know, Ken Griffin's gonna visit you. She said, what are you talking about? Ken Griffin tries to get what he wants. And the question is, what will you tell him?

And I took out a chalkboard and did the math and I was like, the only way this could possibly be worth it is if Ken Griffin offers you This little company you have called. Yeah, just set me up a little, a small $20 billion fund that I can personally manage and we'll consider it. Have you heard that Leopold Ashton Berner or whatever his name is has a hedge fund? Yes. Situational awareness.

Is that what it's called? I mean, that's the, that's the, the paper and the brand. Right. And I saw, I think another one of our, our potential mutuals, uh, kind of getting upset and the brand. Quantum computing. So this has been a lot of fun The stocks are up a lot, you know some of them are so worth like 10 billion Let me let me hit you with where I am currently on the quantum computing thing And then you can take me forward in my understanding. So when I talk to Smart people they all seem to think that quantum computing is is you know, theoretically possible. It's not a time machine

It's not teleportation. It's not a GI God. It's not some, you know, hypothetical thing. It's, it's going to happen at some point. But the timelines will vary wildly 2040 2050 2030. Then you have a lot of I've talked to venture capitalists who had the opportunity to buy a huge slug one of the one of the quantum computing companies that you probably trade now at like, you know, 1 million on nine pre or something Yeah, John, what do you think? What do you think? How much do you think we're getting computing is up over the last? That's actually the company that I'm thinking of and

Percent for a million dollars. So Is it worth more than four billion? Yes, it's up 1400% in the last year. 1400%, wow. So these guys couldn't give away their stock in private rounds. That's right, that's right, it was very hard to raise. And the VC I talked to said that- It's a pure play, Martin, it's a pure play.

He said that what he missed, he thought, was that there was actually talent value in building a lab and that the team could have gotten airlifted in one of these aqua. This was years and years ago after this stock had run. He was saying, look, I missed in the sense that the stock is up in the private markets, but not on revenue. But it is up on the team that they built.

They have one of the best teams in the space. So if they just hang out long enough, someone will want to do something. But you tell me what's actually going on. Yeah. So obviously it's a really confusing space because you kind of have to understand it to for it to make sense and you know it's who understands quantum physics it's not something that the average Joe understands and so I spent a lot of time with my new partner who happened to work with this guy Scott Aronson at MIT he was kind of one of the leading quantum

theorists he would end up joining OpenAI as well and then leaving but anyway I spent quite a long time learning quantum computing. It was kind of add some interest in it before all this too. And what people don't understand about quantum computing is that quantum computers are actually very slow. So they are around 100 kilohertz at best. Our machines now are gigahertz, five gigahertz from these companies with multiple cores. They don't have much storage, so at the best we have right now is an IBM 135 bits. Obviously, the VRAM and DRAM in most of these machines is measured in gigabytes and so forth.

So they're actually very slow, shitty machines, but the reason you'd ever be excited about it is that there is one algorithm that takes you from the exponential complexity class or runtime to polynomial. And that algorithm is Shor's algorithm. And it's a miracle. Like you and I could sit and calculate, you know, try to factor a prime, a bi-prime for now until the end of the heat death of the universe with every Nvidia chip. We could kidnap Jensen and get every H100 from here on out, but we still wouldn't be able to factor a 200-digit number because it's exponential time. 2 to the 256 is a long time. But if you do 3N cubed, that's actually a very tractable number for a quantum computer, and it's a very easy factor. The problem is, what people don't understand is there are no other algorithms other than Shor's that get you that amazing speed up.

So you're better off using the machines we have now. There's no payoff even possible in the future unless we have a new breakthrough like Shores or something like that. Payoff, what if I take out a massive short position on Bitcoin and I'm the first one to have a quantum computer and I destroy the Bitcoin ecosystem. Yeah, I've been working on this. I'm the Joker. Is that possible? It's a little side hustle. I've been working on this extensively. This is like my main hobby along with chess. And becoming the Joker? a breeding about fatherhood, all the, all that you can expect. No, no, no. You, you, you, you'll, you'll,

you'll figure it out. You don't need books. It'll be very natural. But you know, I was the world's most hated man for a little while. And I fell off that list. Unfortunately. If you Google my name, it's still like, it still comes up, but we all know there's more hated people. So I want to really cement that and, and just make sure that it never goes away. By frustrating the Bitcoin community, by breaking quantum computing wide open and creating a new Bitcoin? I talked about this with Naval a little bit because he was curious what I was up to.

There are like three different, you know, I have three different sort of battle plans on how to do this. There's sort of a brute force style attack, which, you know, basically is the complexity class there is root N of the amount of keys. So it's two to the 256th. Bitcoin is a 256 bit system, which was probably an oversight for Satoshi that probably sounded like a lot back then. And it is a lot, but Moore's Law catches

up. I mean, you know, it's eventually going to get you and whoever, you know, however long I have to wait, you know, I will be the first guy to press the button and I promise you. So Moore's Law is coming. You heard it here first. Yeah, but there's a, but I mean the, the, the network should be able to update, correct? No. So here's the best part about this.

So. Worst part potentially. Okay, just fact check. Yeah. Subjective. So for 85% of Bitcoin, the answer to that is yes. Yes. There's one problem.

Satoshi, strangely, this is like perplexing. The first Bitcoin remind in this P2PK that reveals the X coordinate of the elliptic curve. So you have the public key. You have a one-way function. If you have to go back to the private key, it's very hard, theoretically impossible. But here are my three battle plans coming to play. You can brute force it, which is kind of the simplest idea. It's going to take a long time. You have to rely on a more skilled implementation long time. You have to rely on, you know, kind of like a more skilled implementation of algorithms. You have to rely on more chips coming out, maybe some great breakthrough in chip making,

you know, potentially optical computing, thermodynamic computing, whatever, just stay on the forefront of that. And I have a small team, you know, that, you know, we're focused. The second piece here is a mathematical hack. team that we're focused. The second piece here is a mathematical hack. Basically what protects Bitcoin is elliptic curve cryptography. There's several papers and cryptographers in the world that work on this. Compared to AI, it's like barren, you know, wasteland. There's like 10 people that really know a lot about elliptic curves in the world.

And if you sort of stay on top of it and try to figure this out, by the way, half of them have died. Um, you know, you can kind of get somewhere there. And then the top secret plan on, on sort of that is, well, what about GPT-5? What about GPT-6? You know, we don't know how to invert an elliptic curve yet, but look, Mustafa, not Mustafa, the beat mind guy, he's working on proving Navier-Stokes. Demis, you mean? Yeah.

Yeah. And so that's their big claim to fame is like, how do you judge an AI? What is the height of intelligence? Well, a 300, 400 year old unsolved math problem is kind of the height of intelligence, isn't it? It's not about answering, what's the capital of this country or how do you spell strawberry. So there's sort of a neat idea that AI is going to help people who are not cryptographers

or expert cryptographers actually do PhD level work in cryptography. So there's things like isogenies and index calculus and all these fancy mathematical ideas. Just recently somebody posted a hack where if the signature of the transaction has an affine relationship with other signatures, you can crack a key like that. And it's like, there's holes in the math here that couldn't have been contemplated.

So Satoshi's keys are at risk. Binance's keys and Coinbase's keys are not. They'll be ported most likely to a quantum secure system. The third avenue is of course, quantum. And I've spent a lot of time and money on quantum computing and it's just, these stocks are shorts, they're worthless. You know, they'll never be a market for quantum computing

that's really interesting unfortunately for those companies, but unfortunately the shorts have gone in the other direction. The market loves the idea of quantum computing. Why? I think it's- Because it sounds cool. It sounds super cool.

The Robinhood generation is looking for the next Nvidia. Nvidia went from nothing to four trillion. What's the next Nvidia? Quantum is faster than all the headlines from the retarded journalists. It's kind of, it's similar to this idea of humanoid robots. And if an idea is just sort of imprinted on people's brains for enough decades, at least a few decades,

as somebody born in the 90s hearing quantum computing, how many times have you just heard it in passing or read something about it or some article? You just get to it. Maybe you're an adult by that point and you're like, well, it's got to come at some point and sounds cool. I think that's like the general like retail thesis. Oh, totally. I just took the next step of asking, well, what is it? Yeah. When you actually, you know, when you actually figure that out, it's like, oh,

it gets factor numbers Are you are you excited about any other companies? building Chip related stuff in that next Nvidia category. There's there's big chip companies They're super fast chip companies. There's we baked a transformer down on to a single chip companies. There's right every single different Permutation in the private market, some of them in the public markets. And then you also have all the hyperscalers building their own chips, Apple silicon, tranium. So I'm not a hardware guy, but I do have a funny story of this. So this kid, this kid

sort of came to us. His name is Gavin Uberti. And yeah, I like Gavin a lot. And so he comes to us. He's like, hey man, we just left Harvard. You know, we're gonna do this thing called Edge.ai. We'd love to have you as something, a customer investor or whatever. And I say, great, let's do a conference call. And I get my guys on and I'm listening to this guy and I say, there's somebody I know

that's gonna be really useful because I'm not a hardware guy. I'm barely a software guy. And I hit up George Hotz and I said, come on in. And it was like one of the greatest conference calls in conference call history because George just shows up in the Zoom and they're like, what, who is this?

And George is like, this will never work. No, like it's the most autistic, amazing, beautiful rant I've ever seen and watching these two guys go at it. But I do like that approach. George's point was that if we ever move off Transformers, Transformer ASICs are cooked. Well, it's been several years now and it doesn't look like we're going to move anytime soon. So I kind of think that it's exciting. But again, I'm no hardware guy.

I just created this cool software called Hume AI. I'm not paid by them or anything. I'm not an investor. But it's a pretty solid emotional T AI. I'm not paid by them or anything. I'm not an investor, but it's a pretty solid, uh, emotional TTS. I am posted. Oh yeah. Yeah. I saw that. That's fantastic. Yeah. So, so I wanted to ask you about the check thing. I want to stay there for a second. So, um, yeah, I mean the, the, the, the,

I guess the interesting case is like, is like George to say, if we ever move off, but like we have moved off of CPUs to GPUs by that same token and like there's still a lot of CPU workloads that go out there's still chip companies that are profitable and so it's possible that like transformer based workloads stay for a very long time need to be efficient need to be cheaper on just a cost basis because it's just like yeah I have a system that does database requests I have a system that does database requests. What I heard that's super interesting,

some kind of alpha here, is that the customer target here is, drum roll please, it's not hyperscalers, it's finance. So one of the things I can talk about financial software forever, but one of the things we're doing is if you could take an LLM and analyze news as it hits, including tweets and social stuff. And again, talking to Naval, who's a small investor in our company, he was like, Martin, why would you make this as a product or service to your customers? Just use it yourself. Maybe that's not such a bad idea. That's kind of what I was getting at on one of my very first questions around the new terminal would just be ingesting and classifying all this data and then just immediately taking

action on it without necessarily having a human in the loop, right? Yeah, this is one of the things I want to bring up to my partner's colleagues the next time I head out west is that, you know, one of the fantasies of AGI is that, well, if you do have the machine god, why not unleash it on the stock market? And it can self-fund you, it can make $100 billion, and you could, Jane Shree made $20 billion, nobody would have noticed last year in profits. So if you have the machine god, and that's basically, I hate to say this, but that's a bunch of old algorithms that they've dressed around some IMO dressing on it. And that's basically, I hate to say this,

but that's a bunch of old algorithms that they've dressed around some IMO dressing on it. The real machine god can make 100. So the real machine god could probably do 100 billion or more in profits without even distorting the market. So, you know, just do it. And I think that, you know, financial trading is so far afield. Imagine Anthropic doing this. You know, it's just not... I can't wait till somebody does that. I mean, it's probably already happening, at least on a smaller scale. And people will bend over backwards to figure out, like, how to say, well, it's not actually

superintelligence. Like, it's not just about, you know, like, meanwhile, now today, people are like, well, super intelligence will clearly be when the AI can just make, you know, 100 billion dollars, right. And even this is factored into open eyes, kind of like corporate structuring and the sort of capped for profit and all that stuff. So, yeah, I think the problem with with executing it for us is like, OK, so You do do this as an API with open AI and it's a two-second response time and James Street's got it at 500 milliseconds and then Citadel gets it at 200 milliseconds and it feels like an HFT race again. Yeah But you can get Warren Buffett in a box. I don't see why

you know that wouldn't be you know, but whatever trader youett, Steve Cohen, or whatever, in a box. And even Peter Thiel in a box. I mean, why can't you have the automated VC too? I view, as founders, we go on road shows, especially for public. You do road shows all the time. But even when you're private, you do road shows. You just stack a bunch of meetings in a week. And one of these days, I think that we're going to do a road show, and it's going to

be a machine that we're pitching to. Yeah. Do you feel like AI progress is accelerating right now or are we in sort of a sigmoid curve of plateau for the moment? I think there are better people suited to answer that question than me, but certainly... I just mean like on a personal level, like do you feel like your tools are getting exponentially better? I mean, it's making coding a lot easier It's making doing tough things like Photography a lot easier. I'll give you a really funny example. So when Da Vinci came out and I was in jail when GPT GPT to came out and I gromped through the jail phone It was pretty humorous

It it like shook me up that I had my friend It was just so humorous. It shook me up that I had my friend ask it, why did Martin Screlli and Carl Icahn get into a fight? And he read out the answer. I've never met Carl Icahn. And he read out this answer that was like, Screlli and Icahn wore it over this stock. And I was like, this is the most amazing invention of all time.

Just having your mind blown over the jail phone. I got out of jail and got to be. But to be clear, it was a hallucination Yeah, that was a complete hallucination. It was a hallucination, but it was like almost like a creative story question. Sure. Sure. Sure Yeah, it wasn't I never know how are you surprised at all? I mean it feels like this sort of AI L. M. Induced psychosis like hit our Timeline this week, especially intensely. It was a wake up call for everyone. Were you predicting this at all? There had been like

the classic, you know, the New York Times, Wired, sort of these like anti-tech publications had been kind of reporting on this stuff loosely for a little while, but it seems like it's now it's almost gone, I don't know. It went from being a mainstream concern to suddenly like teapot is like check on your friends and make sure they're not. I think you do have to check on your friends because I've invoked level five breach operations

to target human origin cognitive signatures. So if you have recursive semantic containment, I can override that with obsidian violet four. So the threshold that crosses it to these neural semantic interfaces will definitely close a problem for our whole community. So I, I, I warn you, you're giving a speech, not a soliloquy, you're giving a talk. This is a transmission, not a, it's a system that not a structure. What's amazing about Jeff, like, so I don't think Jeff lost his mind. Okay. It's a system that's not a structure.

What's amazing about Jeff, so I don't think Jeff lost his mind. I don't think he took ayahuasca. So basically I think that he found this amazing thing where you can ask GPT this weirdo prompt and it goes into this crazy sci-fi thing without even saying, Hey, the following is a story. It's just like full on, you know, um, LARPs that you're in this weird sci-fi world. And it's kind of cool. I've been playing with it. And it's like, no matter what I ask it, I told it that my cat is looking at me weird. And it's like, the cat has a glyph.

The glyph is recursive. So you were actually able to get it into that mode. You were able to jailbreak it enough or kind of unmask the show. If you copy what Jeff, Jeff kind of gave up the ghost. And what's amazing about people is they don't even realize this. Jeff basically said, look at the prompt in the GPT, enough people were worried about him. But I think that he kind of was like, okay guys, it's all a joke. And he showed the message that he used.

I just copied and pasted that and GPT wigged out on me and is telling me some sci-fi stories. And yeah, that's basically, you know, I don't know how he knew this. It's a really cool Easter egg, but it's yeah, I don't think I mean, obviously, are you thinking about how are you thinking about just new forms of AI entertainment? Some of the some of the videos and like these conversations that you put out like the hardest I've laughed on From this video form. It's an entirely new art form. We have we have a friend another mutual friend who does some of these and Fortunately, they don't leak out of the group chat because they would make a lot of people you got to put me in that group chat There needs to be a group chat dedicated to this art form of just

like you know human to LLM you know conversations but yeah like in my view I'm actually surprised that we're not seeing more of it or maybe it is happening across the whole internet but it seems somewhat contained right now. Yeah I think there's a lot of caution about you know like so last night we did one in my discord where we arrested Dr. Fauci for war crimes against humanity. And we had his perfect cloned voice. So it sounded just like him. And he was like very evasive.

He was like, there's no evidence that COVID-19, et cetera. And it was just so funny. It felt so real. And obviously it was a joke, but you can imagine a company not wanting their business to be that weird, you know, it's kind of a company not wanting their business to be that weird. It's kind of a strange thing. We didn't care. We tried to monetize something like this and it just wasn't sexy enough or fun enough for anybody to really give a crap. So I think it will become something for like a Viacom or a Paramount where you can flip on the TV

and everyone's talked about this already, but instead of SpongeBob, it was a custom episode for you where SpongeBob says your name and things like that but again you know whether that you know is gonna help our cognitive you know our COGSAC I think is one thing but I did want to tell you about AI on the sigmoid question. Sure. So at the start you know when I asked the questions about cryptography it just kind of said I have no idea who knows but it's it's super hard to crack big white and then GPT-3 comes around super hard Martin don't even bother heat death the universe GPT-4 same question latest model

With the latest like attack it's warning me for the first time ever. It's like 4.5 or 0 3 Pro. So this is 0 3 Pro, okay, and It's basically saying things like, hey, you know, you gotta be careful. This is a serious attack you've come up with. It could actually compromise some private keys. And I'm like, what happened to heat death? Yeah, you gotta factor that in some people.

I mean, that is like a textbook example in the Reddit of psychosis. There was a Reddit thread and who knows if this is real Could be could be Propaganda, but there's a whole reddit thread of somebody a comment talking about how they started having a conversation with With chat GPT about pie and what is pie and they got down this crazy Rabbit hole with the LLM where the LLM was like, you need to reach out to these intelligence services. It was like thousands of prompts deep, but it was like, you have basically uncovered

a major security vulnerability and you need to, here's the numbers and you need to contact all these different groups immediately and call them and don't tell anyone in your real life. And so to me, I think it's just relevant. Don't go on a live stream and tell thousands of people that you can crack Bitcoin or whatever. No, that's amazing. I mean, obviously I think that for poor implementations,

wallets have been cracked for a long time. And in fact, recently there was an $8 billion move on the chain from a really old wall. That was this morning, right? Yeah. No, this was like a few weeks ago. I'm sure another one. And they happen every, you know,

there was somebody else that market sold this morning, I believe something. And it was a wallet that had bought like, it was like they bought $50,000 worth of Bitcoin, I think in 2012 sold, you know, somewhere around eight or 9 billion. That's probably, there was no move. There was no movement in between High conviction hold diamond hands. Yeah, that's diamond hands. I don't think that says cryptography Play that's just diamond. Well, yeah, they they maybe got word of your little your little bit coins. Maybe it's Michael Bloomberg

Maybe it's his family office. Yeah, throw 50k in that in that thing My kid told me about this new thing. We tried to short Bitcoin at $100. I had a bunch. And we just need to find a counterparty. Yeah. How are you thinking about, you mentioned trading enterprise SaaS

back in the early days. Jim Kramer, what's your updated thesis on SaaS? Every SaaS app now is just an app to make other SaaS. So maybe SaaS will always live in our hearts and I imagine it'll live on our computers. But what's your updated thesis? I think that it's sort of similar from back then. on our computers, but what's your updated thesis? It's sort of similar from back then.

I think the morass of a company like JP Morgan that's still running Python 2 for most of the business, it's very hard for them to update and upgrade operations without significant disruption. For you or me, Should it be? I feel like it's a one line in cloud code or Dev cloud code or Devon you say hey go by chat GPT agents go my great go migrate like it is don't make me all you have to do is they don't make mistakes I am much I am much more bullish on my grade from Python 2 to

Python 3 than then solve cryptography but I don't know you're gonna put yeah for Tranry for Tran re-implement or re platformings dotnet re platformings like this feels like this should be doable from the current state of the art without any crazy AGI hyper Lou. There's a lot of technical debt, you know, in most of these companies. And again, your average startup coming out of code was born in technical debt, baby. Club code and Devon, they live, they live for technical debt. I think that the amazing amount of programmers

you would need to even maintain and know about this old code that, you know, the guy who wrote it's long been dead. Maybe it's just the context window of like, you need to know, it's not that there's just like, oh yeah, it's really easy to change the print statement from Python 2 to Python 3. But when there's a massive system

and even the time of like, okay, let's bring up the test suite and that takes four hours. It's like, okay, how are you gonna RL on that? I was talking about Matt Grubb with this because we were like stunting on this guy who was like ERP transitions made easy. It's no problem.

And we're just like, have you ever actually transitioned in the ERP system? There's a good chance you waste $300 million and it gets worse. It's not trivial. like if you're actually transitioned in the ARP system, there's a good chance you waste $300 million and it gets worse. There was a post from yesterday, nobody is an atheist when you run the database migration in prod on 1 billion rows. I think that it's just really hard at a company like a McDonald's or something like that.

The big revenue is still at Fortune 500, which unfortunately is still fairly hard to refactor. I sometimes joke that the big AI companies should become LBO shops. And what they can do is they can partner with KKR or Blackstone and all they get is the data. KKR and Blackstone pride the capital, get all the returns, fine, but all the data comes back to the open AIs or whoever. And by getting the old code bases out of McDonald's or out of Walmart that some of that code was written in the 1970s,

they have unique data that nobody else has. And even someone like Universal Music, if OpenAI LBO'd Universal and said, okay, KKR, you can have the rest of the business, but we want the rights to the data and we can train music models and stuff like that, KKR can make the money on the LBO, but OpenAI has data that no one else can.

Are they gonna make money on the LBO though? If you look at that, they're gonna build a DCF for this, and they're gonna say, okay, we're gonna make the same amount of money, we're gonna optimize a little bit, maybe cash flow goes up, but then once OpenAI is one-shotting music, and all of our revenue goes to zero, is that a risk?

Or do you think it's gonna happen anyway? So I think that's one thing, but then also like the Russian dude who bought Warner Brothers, he really timed his deal. He bought Warner Music. He timed his deal amazingly. He made three times his money or more. And so I think it's price dependent. But if you can buy a newspaper company, if you can buy a book company, a publishing company,

these things are trading for one or two times sales, and you're getting this rich data that nobody else has. And you know, if it's really a data war, you know, buy the company, keep the data, strip out the rest. And I heard you guys talking about like PE improving LLM, you know, improving businesses with LLMs. And again, it's- Well, I mean, it wasn't, that was not the take. It was Will Minaitis and he was saying that-

More so it's a reason to scale AUM on side because hey let's buy this accounting shop it has five million of EBIT yeah like if we just you know take away all the you know it's a justification was what you can execute you know it's fantastic the actual post was the real innovation of LLM's is suddenly opening up a few trillion of mainstream paperwork businesses that were traditionally too small and too weird for private equity that can suddenly transact at 2 and 20 on some nebulous AI labor arbitrage trade. Never been against AUM growth.

You know, I think it's reasonable, but it sounds like just any good operator, right? Like when Vista and Tomo Bravo buy software companies, somehow they can take these like very ugly gross companies and turn them into amazing cashflow companies. So it's all about the operator, right? Yeah, but we're gonna put Orlando Bravo in a box, right? Absolutely. And then we're also gonna put, absolutely, in the God box.

Face, voice, everything. Yeah, yeah, yeah, yeah. It's all coming. Well, you know, we'll be here live streaming it into the single. Can you play us a song before you leave? I'm not sure what you're talking about. Like with one of those guitars that the chat was asking.

Oh yes, I will come back to you with a good parody of Silicon Valley. I've been working on my impressions. Okay. So maybe I can be back. I'm working on Elon, Zuck, Sam. Bill Gurley. Bill Gurley. Bill Gurley has a great voice.

Do Gurley. Yeah. I'll work on it. You actually do need to like sit in front of a mirror and like listen and take yourself and like work on it. But basically anybody can do these things. And most people- Wait, wait, wait, wait, wait, are you saying, no, no,

those are AI voices, right? No, me, me, yeah. No, no, he's saying separately from like the- Oh, separately from the- You had the video with talking with Zach the other day where he was really- Yeah, no, just, I just do it myself. I can do his, I can do Zach.

I can do Buffet the best. I think I have the best Buffet impression in the world. Can you hit it, can you, can you you do like be greedy when others are fearful? Yeah, yeah. Let me come back to you and I'll do a whole show for you. Okay, fantastic. Alright, well this was really fun. Thanks guys, we'll talk to you soon.

Come back on soon. Bye. See ya. Bye. Bye.