TBPN Live - Weekly Recap: Sam vs. Elon, Cluely's Crazy Ad, UFC x Paramount, Apple's AI Robot

Episode Date: August 16, 2025

(00:00) - Intro (00:05) - Sam Altman vs. Elon Musk (25:34) - Roy Lee and Cluely's Curious Marketing Strategy (28:50) - Ads in ChatGPT (38:20) - Perplexity Wants to Buy Chrome (55:10) - UFC’s $7.7 Billion Paramount Deal (01:09:13) - Apple is Building a Robotic Siri For Your Home (01:28:40) - Slop vs. Steel Debate w/ Delian Asparouhov (Varda) & Everett Randle (Kleiner Perkins) 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.devRestream - https://restream.ioProfound - https://tryprofound.comJulius AI - https://julius.aiFollow 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 TV the end. Jordy, what is going on in the timeline? We got a red flag. We got a red flag on the play. The timeline is in turmoil. Elon Musk and Sam Altman are fighting. Mom and dad are fighting. Mom and dad are fighting.

Shots fired. This all started because of Apple actually, not Open AI, not X, not the Everything app, but Apple and the iOS charts. So this started with Elon Musk posting. Apple is behaving in a manner that makes it impossible for any AI company besides OpenAI to reach number one in the App Store, which is an unequivocal antitrust violation. XAI will take immediate legal action. Well, the community notes section took immediate action and added a number of extra context.

that they thought people might want to know. First, in January of 2025, Deep Seek reached number one overall in the app store, similar to how Ramp is our number one sponsor on this show. Time is money, save both. These are yours, corporate cards, mail payments, accounting, and a whole lot more all in one place, folks. Go to Ramp.com.

And just one month ago, on July 18th, 2025, perplexity reached number one overall in India's app store. That's interesting. I didn't realize that. And Grock has hit number one in Japan. Oh, that's right. Yeah. Probably a number of factors contributing to that.

So most of the AI apps live in the productivity section. So that must have been in that. But it's odd because it's like we need a whole new set of categories for the new AI apps. I feel like they should have their own category immediately. What are all the categories? I mean, productivity, I feel like that's everything from like spreadsheets to chat GPT. Like it's a pretty broad, it's a pretty broad category. And so I mean, Apple,

probably needs to redo the, the categories. Where are you the categories? I feel like you can't, I feel like they're hard to find these days. They have editor choice apps, which we'll get into because, okay, so browse categories. They have Applevision Pro apps at the top. That's an odd choice for the iPhone version of the app store. Then Apple Watch apps, then AR apps, then books, business, developer tools, education, entertainment, finance, food and drink. Food and drink gets its own category.

Well, I'm looking at the global top charts right now are global for the U.S. So across all the different categories. And right now, chat GPT is number one. Number two is T on her dating advice, which I'm assuming. There's a new T app. Which is helping men date safe. Wait, wait. So it's the men version?

The male version. It is men's cereal, but for the T app. Rated, but it's number one in lifestyle. And number two on the overall charge. Number three is T dating. Four is threads, which apparently just crossed 400 million. monthly active users. Adam Masseri's not messing around

over at MetaHQ. And GROC is number five. Okay, that's not that bad. This is despite Apple, I do believe that Elon is correct and that Apple's not including GROC in features, which are editorial decisions. Editorial. Yeah. So, yeah, I mean, Doge designer says GROC

is the number two app and productivity, number six overall. So why is it so hard to find? And what he's pointing out is that Elon Musk showed this. Grock is the smartest AI in the world and on the toughest tests and came first by far encoding, but is not mentioned at all under AI by Apple. So Apple did an editorial view on the AI powered apps and they listed out a bunch. Chatchipetech, Google Gemini, Microsoft co-pilot, Lightroom, photo and video editor, which I mean, I use it every once in a while, but it barely has AI features. It does not compare to a foundation model. It's not a chat interface. Then you have

Canva, then you have Duolingo, which of course, duolingo uses artificial intelligence in some ways, but you don't think of it as like a competitor to chat GPT. So this is clearly just like, here are some fun apps. And we're using the AI buzzword over at Apple. And I think it's given, given the series of PR crises that GROC has experienced in the last call it six weeks, I think it is fairly fair for the app store to say, hey, let's let this breathe. a little bit we're not we're not removing them from the app store we're not removing them from the rankings they're still ranked yep but maybe let's not feature it given that it's been saying yeah the other the other interesting thing is like grok usage has to be split across x and grok the

actual app like i bet i wouldn't be surprised if the majority of actual prompts or tokens flow through x the everything app like that's certainly how i use grok When I use it, I usually start with the post, click the GROC button, then I'm going back and forth a little bit there. And then also, they actually have a pretty awesome flow where now on any image you see on X, you can press and hold and say, edit this in GROC. And then you can just type Studio Ghibli and it just Ghibli's it right there in GROC. And they launched a feature to turn it into a video. Video, exactly. So all of those GROC tokens, all those GROC usage, that's.

going to feed into the X app, which again, they've always put X in news and not in social networking because I think it couldn't beat Facebook and Instagram, but it can beat like the traditional news apps. So all of the different rankings are all very, it's all game to different ways. Some of them are momentum based. Some of them are different categories. And I mean, we heard this from Nikita Beer, where he was saying that his last app that went super, viral. He hid in the games section. Those were his words. He hid because the game section is so crowded that people wouldn't see him climbing the rankings, but social. Charts are based on acceleration broadly. Exactly. And total usage. And there are only like 10 dominant social platforms. So

if he had a ton of momentum, he'd probably be in the top 10. People would be screenshoting and be like, what is this? And it would be on Mark Zuckerberg's desk. And Mark would have to be like, what's our plan to kill this? You know, right? As opposed to if you're hanging out in games next to 75 candy crush clones, you could be doing well, but realistically, you're not really gaining that much, you're not drawing that much attention. Then at the last second, he swaps over to social networking where he actually wanted to be, and then he's at the top of the charts. Anyway. So Elon says Apple's behaving in a manner that makes it impossible for any AI company besides Open AI to reach number one in the app store. He starts getting community noted.

Sam Altman fires back says this is a remarkable claim. Claims that Elon is using X to benefit himself in his own companies and harm his competitors. Sam starts getting community noted. Elon fires back and says you've got 3 million views on your BS post. You liar far more than I've received on many of mine, despite me having 50 times your follower account. Elon's getting community noted, but Sam fires back skill issue or boss.

Skill issue or boss. Anyways, based off of that, Sam says, Will you sign an affidavit that you never directed changes to the X algorithm in a way that hurt your competitors or helped your own companies? Wait, who said that? This is Sam. Sam said that. An affidavit. I will apologize if so.

One thing is that Open AI has consistently dominated the narrative on X organically. Many of their... To some degree. I feel like Open AI has been more dominant just in the real world and actually Anthropics done very well on X. And there's been this whole theme of... like Claude has better vibes and big model smell and oh, I would just say from

if Sam Altman puts a post up he can put up a picture of a Death Star and get 20 million views. Right. Yeah. And so I don't believe that he's like shadow banned. I don't believe that anyone in Open AI is like shadow band or being held back in the algorithm. Yeah.

But somebody responded to this exchange. Really quickly, if Sam's worried about Reach, he should be using Restream, putting his content all over the internet, re-stream one live destination, one live stream 30 plus destinations, multi-stream and reach your audience wherever they are. And thank you to everyone in the chat today.

Mark, Saraj, we got Taylor, David. We got a whole crew here. Techno-Chief, I believe, said good morning to me. Hello, Techno-Chief. Good to see you. And it's fun having all the crew assemble in the chat rooms. We actually can see the chat wherever it's happening,

whether it's on X or on YouTube because of Restream. So thank you to Restream. Continue. A friend just message and said, somebody tell Elon to unshadow ban me. Okay. And I think that. Oh, I think I know who this is. I think it's much more likely that, uh, that it's a skill issue.

I think it is a skill issue. Like Sam is saying here, you never know. You never know. Um, but, uh, somebody responded to Sam and Elon's exchange and they said, Grock, who's right, don't be biased. And Grock fires back and says, based on verified evidence, Sam Altman is right. Musk's Apple antitrust claim is undermined by apps like deep seek and perplexity, reaching number one in 2025. Conversely, Musk has a history of directing X algorithm changes to boost his post and favor his interests per 2023 reports and ongoing probes.

Hypocrisy noted. So we'll see how long. Yeah, but this is 4D chess because in general people don't believe GROC because they believe it to be insane. Well, it said some wild thing. It said some crazy things. And so if Grock is siding with Sam, people will be. be like well grok's wrong Elon's actually correct yeah that's the beauty of these things Elon is thinking what have I created a monster this is like the child that uh what what's the what's

what's what's what's that uh mythology where where the the child kills the uh edipus rex of course yes yes atopis rex moment child's coming for the for the father yeah well we'll see how long rock uh last you want to play on that on that analogy it's pretty well It gets pretty weird. It gets pretty weird. I mean, Notipus Marius' mother. Yes. But we'll see how long Grock lasts in the timeline today.

We'll see. We'll see. So, yeah, the Wall Street Journal wrote it up. Apple is behaving in a manner that makes it impossible for any AI company besides opening AI to reach number one. The App Store, which features lists of top and trending apps is a key way for apps to access new customers. Apple doesn't say much about how or why it chooses particular apps to feature.

Among the factors it considers its usability and positive reviews and ratings. Yeah, it's definitely getting more and more complex. It's just important to break out editorial decisions from the App Store team and true rankings. I mean, I really, I think a lot of people have not taken a tour of the modern app store on iOS because it used to be that you just show up and there were, and there was just a list of, like, the charts were like a few clicks away. I'm like seven clicks deep. There's an ad for just Google, I guess, in here. There's essentials that are just top games right now.

Like, you have to scroll and scroll and scroll and then you go over to apps. Then you can browse the categories. But even when you browse the categories, you go to productivity, it's going to give you, like, when I go to productivity, you think I'd be browsing to hit like, okay, show me the top productivity apps. No. It's showing me an app called Sofa, a downtime. organizer. Then it's showing me essential productivity apps that are selected by the App Store editors. Then the best calendar apps, best to-do apps, best email apps, best focus time, or habit tracking. It's going, going, going. Well, the big question is how much, how much discovery is

actually happening in the app store? Is this where people are actually finding the top charts? But it's seven, it's seven clicks deep. And so yeah, if I go to free apps, it's chat GPT number one, then Groch number two, then Microsoft Authenticator. Number three, AGIH, Microsoft Authenticator. Maybe it doesn't get enough love. No, but the question here is, are people discovering various LMs through TikTok and X and Instagram, various platforms? Is that where discovery is happening? Yeah. And I'm sure there's some discovery happening in the app store, but it has to be a very small fraction of the downloads being driven are actually driven by the editorial decisions from the app store.

Of course, of course. Yeah. And games don't even show up in the top. like it's not uh games are not it's a completely separate tab you cannot select games as one of the subcategories of apps because games are not considered apps anymore in the app store to answer the question about like hiding in games um yeah the other the other question is just like how much how fair is it to give yourself a little boost in your app that you paid 70 billion dollars for yeah like I was thinking about this and I was saying like 44 billion

well he was 44 yeah yeah it was 44 it wasn't 69 I thought it was 69 for some reason that was that was the price per share was he paid so ridiculous anyway um I was thinking about like before the launch of Instagram stories I didn't have a way to share Snapchat stories on Instagram like you could screenshot them but there's no sort of like native way to share a link to a story that if someone on my Instagram feed sees it, it clicks and it automatically opens in Snapchat. It was always a walled garden. And then when Instagram stories came out, there was really no way to tie those two platforms together. Like in the pre-meta era, there was a way when you shared a post on Instagram to check a box and automatically share it to your Twitter. And it would not just

share a link it would share the actual photo yeah with the comment and it would work as a native post on x and it could you know not really go viral but it could it could it existed on twitter as like a first class citizen in the sense that the image was there there was no link it was just like you had just actually opened the app posted the same photo with proper crosspost right And then eventually once Facebook bought Instagram, Twitter had to respond by breaking that integration. So early on Twitter had this very, this was like the Adam Bain era, like the early back the Dick Costolo era. Twitter had this idea of like, we're going to be the command line for your life. And there was this idea of like, I'm going to be able to tweet at you to send money to you.

the Everything app idea is something that's over 13 years old at this point, maybe 15 years old at this point, like the Twitter executives were thinking about this a long time ago, like being able to tweet money at you, being able to like use Twitter as kind of this like substrate or this like API for all sorts of things. Other apps would be built on top of Twitter. There was tweet deck and tweet bird and like all these different like the mobile app was by an independent developer. And they just didn't. And they were like, why would we need one? We just develop the protocol. Reddit did this too. Yeah, well, you need one because you want to stuff ads in it, obviously,

and you want to monetize it. It makes a ton of sense. And so Elon came to killed all that. But the other challenge here is, is GROC has a variety of NSFW features. Yep. And when Apple is making editorial decisions about which apps to feature in the app store, that is certainly going to be on their mind. We're having Eugenia from Replica on the show later today.

I'm wondering if Replica, I think, is currently in the App Store with 226,000 reviews, hasn't gotten kicked out. I'm trying to think if any other apps. So, like, OnlyFans, for example, does not have an app. I'm wondering if any of the, what Character AI does, right? So Apple's clearly drawn the line at, like, like, AI chat. bots even if they're somewhat erotic are okay but we but that doesn't mean they're going to that doesn't mean they're going to feature they're not going to promote it yeah exactly yeah yeah yeah no that's absolutely correct so and then again i think it's very hard to say how apple makes these

editorial decisions yep but it's very possible that they are talking with people on the apple team and being like what apps do you like what apps are you using making decisions that way I think part of GROC over the last month or so is like figuring out like how do we get strong consumer adoption, which categories are we going to get strong consumer adoption? I'll tell you how they get strong consumer adoption. Sock two compliance. They need to get on Vanta. Automate compliance, manage, risk, prove trust continuously.

Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation, whether you're pursuing your first framework or managing a complex program. No, that is a good question. And how can Grok actually get consumer adoption? The companion space seems like maybe the right move, even if it is a little weird. But is there any other path? I mean, forking it into X and Twitter and, like, having it show up on every post seems like

a reasonable way. I wonder, it is weird that they have two apps. I thought X was supposed to be the everything app. Like, why are they trying to get me to install a second app when they should maybe just say, hey, we're actually going to be the everything app? you can use grok fully and you're all the upgrade and you can get on grok heavy and you can be paying $200 a month for a top tier the super insane level LLM but it all exists and it's all managed within the X app that already has a lot of it a lot of installations yeah it's a challenge your your

grok is is uh top or near the top of a bunch of different benchmarks and yet that doesn't guarantee consumer adoption, right? People don't switch products because something is 20% better in this technical way, right? They develop habits. Yeah. And the other thing, it was only a month ago, GROC or XAI announced a partnership with the Department of Defense, a $200 million contract. So that's serious. But again, you know, figuring out where they're going to ramp revenue with consumers that, when it's not just bundled into X, the social media app. Yeah, I think it's interesting to debate, like, when can a new technology be bolted on and become additive to an existing platform versus you need a new app to actually get it to work? So Facebook actually rolled out a search engine in Facebook, the blue app, like years ago.

and when you would go to search you could search for your friends but then you could also go and it would search the web too and it would say hey you're searching for this thing there's no posts about it out there so let's just pull from the web

and they basically built a search engine team pull up this post from chat GPT I want to see John's live reaction to it okay let me let me see this post whereas whereas like stories was something that was added so they chat GPT quoted

Grock saying that Sam Albin is right and said good bot good bot wow timelines and turmoil you love to see it it's a great day on the internet but there's always yeah so so I think there is something about like the pixel screen the screen pixel real estate that is that is somewhat like screen screen pixels are are like scarce and you can only do so much like it's it's like it's like Instagram was able to add reels as a tab, integrate those in the main feed. They were able to add stories up at the top as a little bar. And it got crowded, but no, but Instagram did not, did not see massive churn. Yeah.

But I think that if they, I'm, I really think if they try and stuff like, okay, yes, this is also like, Claude Code and you're going to like do your, you're going to do your homework in Instagram now. You're going to do your, your, your software engineering in, in Instagram right now. Yeah. here. You're going to have a chat below. I think people will just say no. I think it's, I think it's too, too big of a step. Whereas going from photos to videos to reels to stories, like all of that works within the same kind of UX, UI space. But if you try and bolt on like a productivity tool into a social

network, it winds up being a little rough. And so maybe that's the reason why Elon realizes that like GROC has to be a separate app. Because if I'm using GROC heavy to solve, Olympic level math, I might not want that to happen on the chaos timeline feed, right? Yeah, I mean, if you're a software engineer working at a company and every time you, your boss walks up to talk to you about something, you're in X the everything app, just scroll on the timeline while coding, that might be tough, right? It might be better to be doing those, doing that coding work and, you know, with GROC, right? Put a spreadsheet in there. Put put a database in there. Let me, let me build, let me build an entire business within the

everything app. Tyler, what's your reaction today? Um, I think so, so one thing I haven't think about is like, uh, I forget who it was, but someone said like, um, as a company, you want to like do things that your competitor that like go against your competitors morals, right? Do you remember? Yeah, this was, uh, Paul Graham. Yeah. Okay. It wasn't, it wasn't morals, but it was just like the idea of counter positioning, this idea that like, Avi Schiffman at friend, like he's making a product that is a wearable AI device. And if he makes it look like an Apple product and he makes it like, oh, it's instead of an AirPod and, you know, an iPhone, it's a necklace. Like, and it has Apple design language. Like Apple will totally be able to just steamroll

that by launching something very similar. Whereas if he comes out with something that has such a bizarre design that Apple would be like, wow, if we try and copy him. And he's not trying to make it useful for anything other than being your friend. Yeah. Right. He's also counter positioning against chat GPT, which is a tool. It's not, its default state is not to be your friend. People use it that way. And in some ways, it's designed to function like that. But ultimately, yeah, I think he's found, he's carved out his own.

And Grok did the same thing by coming out and like leaning really heavy into companionship, right? Yeah, that is a, I think that's like a down that path. do. Yeah. If they're going to go like in that like kind of kind of positioning like idea, I think they could also, I could see them doing almost like a cluelly type thing where it's like, okay, you can use this for your homework. Like you make it very good at like you don't have to use like cheating per se. But I think that's like an interesting way that like if they want to go further down that like consumer kind of positioning. Yeah, it's just it's odd that it feels

like they're trying to do a lot right now. They're still in the exploration phase because I have I mean maybe this gets to like the, value of transfer learning in reinforcement learning but I have it I have a hard time believing that many people who are in the market for like a companion are like I definitely want it to be able to ace humanity's last exam like I in fact in fact super important to me in fact I think that you might want a companion not to be better than you at math like I think you might want a companion that just kind of like is like oh yeah I agree man like that math problem is a toxic friendship dynamic people are Like, I want, I want my friend to be great, but not better than me.

Exactly. That, that's real. So they need to, they need to dumb it down. They need to be the inverse of bench hacking. Yeah, the truth seeking. Yeah, the new meta is going to be teaching your AI how to do things. Yeah, yeah, yeah. Teaching it how to do your homework.

Yeah, yeah, yeah. I mean, the Feynman method, you teach and then you learn, you learn, like, I would probably learn more from teaching an LLM the answer to a problem than it trying to teach me. What were you about to say? I was going to say, like, the truth-seeking, like, idea of GROC seems very much, like, opposed to the companion aspect. Like, those seem like two different ends of... The hero of our group chat right now is one of the greatest fabulous in history. He's a serial liar.

Yes. But he's the most entertaining character. He's the court jester. He's the court jester of our group chat because he hallucinates more than GPT2. And it's fantastic. And it genuinely provides a lot of value than just someone who's like, oh, I will only give you things that are 100%, I will only say things that are 100% factual.

I will only say things that are definitively provable. It's like, no, he throws out a lot of wild pitches. But every once in a while, you just slam it into the outfield. Roy Lee is in the news again. He bought a board in Manhattan. and he said, Alex Cohen says, fine. I'm starting to like the Cluelly guys because Roy put up a billboard that says, Hi, I'm Roy, I'm 21, missing an apostrophe on the second I'm clearly deliberate, absolute word smith.

This was very expensive. PLS, buy my thing, please buy my thing, Clurely.com. And John Chu, Coastal Ventures, says, this is why I invested in Roy Lee, once in a generation talent, tapping into culture and zeitgeist. This was a spicy post. People kind of going back and forth on whether or not that should actually deliver. Roy also put out a post saying that like everything he does is for short form.

So he bought this billboard. He expects it to convert on the short form that will be created around the billboard certainly feels like people will create, we'll take picture of this sharing. I mean, when you look at, when you look at, I think what I'm interested to see from Cluelly is where they really get, where they really get long you know retention right because they have the top of funnel is full yeah it's extremely full top of funnel marketing uh but when you look at like it doesn't it seems like if

they just focused on students right they seem to be in this kind of place where they're they're thinking about exploring a lot of different markets for sure in different markets but if you look at the way that chat chipt's usage uh basically tokens generated dropped as summer started that's a good, that's a good argument to say clearly could just focus on products for students that will eventually graduate into the workforce and things like that. Sure. Sure. But anyway, what else? Well, they didn't make the top AI agents by revenue chart that a non-Sanwall shared,

said, who would you put your money today to win in the long term? The top was cursor at 500 million in annual revenue. And they're making $3.2 million in revenue per employee, Gleens at 100 million. Merkor is at 100 million. How are you defining an agent? I think it's just AI startups. Anyone who's used the AI agent like meme basically?

The agents are going to be pissed about this. Stolen valor. I don't know. It's hard to call Merckor an AI agent. That one feels particularly odd. But in Glein. Even Glein is enterprise search. Yeah, search.

But I would say Replit is an agent company. It's kind of like every AI company is now, now an agent company, Harvey, you know, hasn't really branded themselves in agent company. But it's interesting like you're not putting Claude, you're going to put cursor on here, which generates revenue from Claude code. Yeah. And is a gentic IDE. Yeah. And you're not going to include cloud code. It's crazy.

And also not including chat GPT, which has deep research, which is probably the most used AI agent in the world right now. I have to imagine just by number of queries. There, it's missing some stuff. It's missing some stuff, but it's okay. Also, Devin's not on here, which is kind of odd. But that's the nature of these lists. It's CB Insights, folks. They do the best they can.

Let's pull up the videos of Sam Altman on AI ads. And I think it will crystallize a little bit of like what we mean when we mean like monetizing a free LLM, a free AI chat app. It doesn't necessarily mean stuffing display ads in there. just like the answer to Facebook's monetization problem was not banner ads in the right bar. It was in feed ads that look, if you're watching reels and you see a reels ad, it looks exactly like a reel. And in fact, the best performing ads on Instagram Reels feel just like user generated content.

They don't look like Super Bowl ads. They're additive. Yeah, they're additive and people often enjoy them. And so that will be, at least this is the semi-analysis argument that I sort of agree with. that will be the the like what what we say about ads in AI it will be more like commissions for agentic checkout at least at least to start so let's pull up the first video example right now there's a lot of people that have websites that monetize with referrals to Amazon yeah and they're frustrated because a lot of the I mean traffic just like organic SEO is way down yep and the

general read here is that Open AI will ultimately start to earn that same type of revenue that the publishers historically did. Yep. So there was a fireside chat at Harvard Business School with Sam Altman. Let's give it up for Harvard Business School. It's the Harvard of Business School. That's what they've been saying. They've been saying. So he got a question from the audience about ad monetization. We'll hear how Sam Altman responded to it. Although fair, it could be a barrier for early stage entrepreneurs or start-ups or even small businesses. Given this context, do you envision open AI exploring alternative monetization strategy that could include free API access, perhaps supported by advertising or other methods, to

foster innovation in the future? I will disclose just as like a personal bias that I hate ads. I think ads were important to get to give the early internet business model. But I think they do somewhat fundamentally misaline a user's incentives with the company providing the service. I'm not totally against them. I'm not saying open-air, I never consider ads.

But I don't like them in general. And I think that ads plus AI is sort of uniquely unsettling to me. You know, when I think of like GPT writing me a response, if I had to go figure out, you know, exactly how much was who paying here to influence what I'm being shown. I don't think I would like that. The knowledge engine should go on. I think I would like that even less. So there's something I really like about the simplicity of our model, which is we make great AI and you pay us for it. And it's like we're just trying to do the best we can for you. And then given that that

has some inherent lack of access and inequality, we commit as a company to use a lot of what basically the rich people pay to give free access to the poor people or the poorer people. You see us do that today with the chat GPT free tier. You'll see us do a lot more to make the free tier much better over time. And I'm interested in figuring out how we bring the equivalent concept to the API. But I kind of think of ads as like a last resort for us for a business model. I would do it if it meant that was the only. That's where he says, he says, I kind of think of ads as a last resort as a business model,

but recently he dropped a new podcast. This was from, I think, a month ago. And it's from the Open AI podcast. So you have to imagine that the run of show and the talking points in here are very carefully selected to, you know, move the narrative forward and kind of educate the community on where the company is going. And so we'll pull up Sam Altman's interview on AGI, GPD5, and what's next from the Open AI podcast.

So that brings up the other question from people who are using this or skeptical is that OpenEI now has access to this data. And there's the concern one was about training, which OpenEye has been very clear about when or when not it's training. You know the options to turn that off. The other thing is like advertising, things like that. What's open eyes approach towards that? How are you going to handle that response?

We haven't done any advertising product yet. I kind of, I mean, I'm not totally against it. It's not totally against it. Yeah! I like ads. I think ads on Instagram. Kind of cool. Yes, that's on Instagram.

Very cool. Let's go. I am like, I think it would be very hard to, we take a lot of care to get right. I have faith. I think you can do it. People have a very high degree of trust in Chatsy BT, which is interesting because like AI hallucinates, should be the tech that you don't trust that much.

My friends who read it too, so I trust them. People really do. But I think part of that is if you compare us to social media or, you know, web search or something, where you can kind of tell that you are being monetized in the company is trying to like. Yeah, you can see. No doubt, but also to kind of like, this is the monetized block. This is the non-monetized block. Whatever.

However, like, you know, how much, how much do you believe that, like, you're getting the thing that that company actually thinks is the best content for you versus something that's also trying to, like, interact with the ads? I think there's like, there's a psychological thing there. So, for example, I think if we started modifying the output, like the stream that comes back from the LLM in exchange for who is paying us more, that would feel really bad. Yeah, this is a great solution. Give you the actual answer you want, but, hey, these are the best headphones for you, but if you want me to buy them, I'm going to have to go cook as an agent. I'm doing the work, and I'm going to take a cut of that. That's amazing.

I'm so down for that. The agent's like, I'm getting paid either way. Yeah, exactly. And I could say, okay, which headphones do I want? Do I want the Sony's or do I want the, or do I want the Apple AirPods maxes? And if I decide the Apple ones, it goes, checks out, it uses some coupon code to get some Yeah, I mean, comparing this to the other ways that people discover products and services. Yeah.

If somebody searches Best Luxury Hotel in Hawaii, they're going to get ads against that. And then they're going to get organic rankings that aren't necessarily the truth, right? Because the truth is for something like Best Luxury Hotel in Hawaii is very subjective. Yeah. Then they might go and try to. to get recommendations from an influencer. Yep. Hopefully, the influencer is disclosed.

Yes. Whether or not they're being compensated by the advertiser. Yeah. And so if I were to ask you as an influencer, like what design software would you recommend? Like, what would you say? Just honestly. Figma.com.

Think, figure, build faster. Figma helps design and development teams build great products together. This is a paid advertisement. But the disclosure is super important. Exactly. And if, and if the influencers, saying like, oh, yeah, I love this hotel, but that hotel is giving them like, you know, two weeks free a year, then like that's not, that's not a super ethical. Totally. Yeah,

it needs to be disclosed. And then also, also the beauty of the LLM is that, is that, like, the, the recommendations are going to be able to be tailored. So best luxury hotel. Well, if you're, if you really want a certain type of pillow or you really want, you know, a pool in your unit or you want it to be wheelchair accessible or you want your high ceilings or you want you know beachfront access like there's a million different parameters that could go into that and the thing the thing that chat chabit and then it could just and then it just saves you the time at the very last step well the thing that chat chabot he needs to navigate is maintaining that trust yep right i trust that instagram is going to serve me ads yep that that that i i trust that they're going

to try to serve me ads for things that i will want to buy yeah right sometimes they serve me an ad i'm like this is this looks garbage i'm not going to buy it other times they serve me an ad and i'm like this looks great you're actually good good call i i am interested in this product and the thing is is like if chat chpt has to maintain that trust because if they recommend you a hotel and they're like you're going to love this i know i know what you like you're going to love this hotel and you go there and you spend all this money and you stay there and it's and it's terrible it's the same thing if you go to a friend for a recommendation for a hotel they recommend you a hotel you show up there and it's like this is terrible like why did you

recommend this. And if they go, oh yeah, I recommended it because I was getting like a 7% referral fee, you're going to be like, what are you doing? Why are you monetizing me? Right? So I think it's a very, it's an interesting challenge that they have where they're going to be directing, already directing so much economic activity and how do you monetize that in a sustainable ethical way. Exclusive from the Wall Street Journal, AI startup perplexity made an unsolicited long-shot offer to buy Google's Chrome browser for $34.5 billion. This inspired me, John. Everybody needs to be making long-shot offers.

TBPN. Let's submit an offer to buy the Golden Gate Bridge. Privatizing. That's a good one. We've got to be thinking bigger. What else should we buy? I don't know. It's tough.

Yeah, it's really, when I saw this, it's funny to think that Sundar has to go to the board. Or like, it's probably send them an email and say, like, I'm required to let you know that we've received this offer from perplexity to buy one of the crown jewels of our product ecosystem. I wonder, I wonder how, how real this is. Like, it seems like we would, like the reporting is pretty loose. We can read through this Wall Street Journal article and then kind of like dig into it a little bit more. So perplexities offer a significant. more than its own valuation, which is estimated $18 billion. Has this ever been done before? Has any tech company been able to pull off an acquisition that's bigger than their own valuation? Totally.

I mean, what was the slow ventures company that Metropolis, right? And they buy a company that was much larger, you know, basically more traditional. Kind of reverse merger almost. Yeah, exactly. Interesting. These things happen. So there's also pressure. So estimates of Chrome's enterprise value very, very.

widely but recent ones have ranged between 20 billion and 50 billion. I have no idea how you got that. I feel like Chrome is probably more valuable than that just on, I mean, I imagine that the default search engine in Chrome has got to be as valuable as the default search engine in iOS, Safari, right? And how much is Apple paying Google every year? 20. 20 billion? Per year. I mean, you'd pay like you'd pay way more than 50 billion. dollars to get 20 billion dollars a profit every year it's crazy so that feels low i don't know where i don't know where there's estimates came from but they are apparently under pressure u.s district judge omit meta is weighing whether to force google to sell the browser as a means of weakening google's

strangle hold on web search uh it's so it's so interesting that like we're having this debate now like google's had 99 percent of the web search market for two decades and they find finally have a crack in the in the in the in the in the foundation with chat GPT actually eroding things AI LLM's kind of upending web search dominance like yeah we're having we're having James from profound on later today which which is built a big business very quickly because consumers are now using something besides Google search to to do web searches yeah this is like the last this is this is like completely the wrong time to be focused on this like the ship has completely sailed but that's kind of the

It's kind of the pace that the government operates at. Yeah, the journal says perplexity offer could be an attempt to signal to the judge that there's an interested buyer should he force a sale. I think there would be a lot of interested buyers if there was a forced sale. Yeah. Who else would buy Apple? Meta? Microsoft? Get Bing going again?

Bang. It's Bing. Bing it? I mean, Microsoft would have a wild strategy because they'd have all the code to chat GPT, all the open AI. intellectual property like they could do they could do what perplexity is thinking about right yeah I mean what is this say what does this say about I mean so they just launched the perplexity Comet browser Daniel says Crumbsworth at least 90 to 120 Billy I agree I think 20 is a 20's too low but yeah so they so perplexity just launched comet we had

Arvind on the show he said this is a big important bet for the company if you're if you just launched a browser and now you're saying that you want to buy to compete with chrome and now you're trying to buy chrome yeah what does that say about the state of your new product distribution is king yeah it's very clear that that even if you built a better product the best product is not going to win and we see this with the with the lMs like like the the the leaderboards and The vibes shift constantly, but the consumer adoption is just around chat. Everyone just uses chat. That's the one that's broken through.

That's the one that people are familiar with all over the United States and all over the world. And so it's very hard to break through, even if, even if perplexity can like rocket to the top of the app store in India for a little bit, like it's hard to hold on to when when the chat GPT snowball is just growing bigger and bigger every single day. Yeah. Much like the graphite snowball. Code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. Get started for free, graphite.dev. Is there a polymarket on perplexity, by the way?

Can you look that up? I will read this. Will perplexity acquire Chrome in 2025? What's the, what's the market on it? When I posted about it earlier, it was at 12% and I said 12 seems quite high. And it's now at 3%. It went down, even though they're in the

journal saying they're gonna do it they're like insuring offers the market opened at 34% okay like 9 a.m. when the news dropped and it's now down at 3%. So we just today it went from 34 down to three wow so this has basically been like debunked yeah makes sense yeah I mean there's um I would I would put the odds of this deal happening closer to 0% than 1% that sounds fair but great way for perplex to get in the journal. Call me. No, this is great for SEO. It definitely puts perplexity and web browser in the same keyword suit.

Perplexity was also bidding on TikTok earlier this year. Arvin loves a long shot bet, a long shot bid. I invited, I invited him on the show this morning. He, I don't think they want to. He's not ready for press. Not ready to chat, but we love a size Lord long shot offer. Keep throwing these out. I think one star should do this.

Google hasn't indicated a willingness to sell Chrome. In testimony this year, Pichai told the judge that forcing the company to sell it or share data with rivals would harm Google's business, deter it from investing in new technology, and potentially create security risks. Chrome has roughly three and a half billion users worldwide. It's like, it's like a perplexity has probably like millions of users, but it's just going to take decades, even at reasonable growth rate to hit. three billion. It's just so many people. And it accounts for more than 60% of the global browser market. That's lower than I thought it would be. Found in 2022, San Francisco based perplexity recently released its own web browser called Comet to some of its users. Tyler, you've demoed these. Yeah. What do you daily drive in these days in terms of the web browser? I'm using old

reliable Chrome. You're using Chrome. Yeah, I don't know. None of the agent browsers really seemed very helpful to me. Have you churned from Cluelly too? Yeah. Well, I started using that, like, you know, right after the show and it. Yeah. I mean, I'm not doing interviews. I was thinking about like the Cluelly pattern. What if Tyler was like, been using Cluelly every day, hours a day? We're like, wait, you've been interviewing with other companies. Well, that's the thing is that I, when I was thinking about Cluelly, I was actually wondering, like, if we ran the show through Cluelly and we had like this, just this idea of like, stream. streaming audio, essentially, and streaming pixels, and then just somewhat random LLM queries firing all the time. Like, is that a good pattern versus chat GPT where you have to decide, okay, this is the time to query it?

And so when I think about like the going to you and saying like the pull the polymarket up on perplexity or tell me the market share for Chrome, like if we could have something like clearly running and it's just a big. screen there that I can see and it's just pulling up answers to questions that it thinks we're about to talk about or ask or just adding context like that actually might be kind of useful to us but I don't know if a tool like that exists it also just might be so sloppy and so noisy and so it's heavy that it just doesn't math out I don't know are there any are there any value or like what what what's actually seeing breakout for you in terms of AI adoption I mean most of my time using AI tools is just like coding stuff yeah So it's like Claude Cursor a little bit.

Sometimes I just go raw chat chitb t.com. Oh, that's raw? Yeah, yeah, just straight prompt. Like no, raw text file, what happened to what happened to good old fashion just handwritten code, farm the table code, apparently not. Yeah, it has to raise code. But yeah, I don't know. I mean, like, clearly I'm not like doing,

I'm not doing like sales calls or like anything that really requires that kind of like interaction. Yeah, yeah. So not to be useful for me, but. Yeah, I wonder how the product will change because, like, the marketing is not going to stop. Like, they are definitely going to keep filling that top funnel until they figure out the bottom of the funnel and the, in the churn. But I wonder what retention is like. I mean, I imagine that, you know, you bring in such a broad top of funnel, like there's probably people that are sticking around.

There's probably people that just sign up and forget their credit cards are down and they just pay for a while. Like, like the nature of just getting someone to convert for $20 a month, they don't even have a free tier, right? like you have to pay to like get get up and running no they do have a free they do okay yeah interesting um there was something um oh yeah uh tyler did you see vibe sort someone wrote a uh sorting algorithm it uses an llf you have to put in your you have to put in your open ai uh API API key and then it just passes the random list or the array of numbers to chat GPT and asks chat chachypt to sort it and it just comes back with whatever it can do um And I was thinking that, have you ever, did you ever have to do FISBuzz back in the day?

Have you ever heard of this? Yeah, I've like heard of it. Yeah. We should, we should definitely do vibe FISBuzz where it, it, it, it, for each, for each number between one and 100, it queries the GPT5 API to ask it, should it respond with the number, fizz, or buzz? The most, the most inefficient and most inference heavy, the fizz buzz answer possible. Anyway, back to perplexity. Perplexity told Sundar Pachai as part of the proposed acquisition, it would maintain and support Chromium, the open source project,

that supports Chrome and other browsers. It also said it would continue placing Google as the default search engine within Chrome, though users could change settings. That's crazy, because you would think the first thing you would do if you own Chrome would be, change the browser to mine. I'm getting those ad dollars, but I don't know. Maybe it's a nice olive branch in this somewhat, somewhat hypey

offer. The Justice Department filed the antitrust case against Google in 2020 and just a few five years later in addition to they're here. In addition to forcing a sale of Chrome, the judge is considering limiting Google's ability to pay to be the default search engine on devices and browsers and requiring

it to share data with rivals, among other things in weighing potential remedies earlier this year. Meta questioned how much new AI chatbots might be whittling away at the traditional search business of which Google has 90% market share. So 60% share in browser, but 90% in search. So even for there's 30% of people out there that are using Firefox or Brave or Edge, it's Edge, right, is the Microsoft one.

Yes. But then they use Edge, but then they still set their default to Google because Google has dominant. Or maybe they're just Google users are querying more. I'm so fascinated by Yeah. And I can't wait to see what, it's perplexing. It's perplexing and I can't wait to see what ultimately becomes of the business. They're offering to buy TikTok, they're offering to buy Chrome, they're rumored, you know, there's a rumor mill saying that Apple's kicking the tires on it. It's hard to tell where that's coming from, right? Is that just more marketing? Yeah. complexity. They have, I think the last reported number or the alleged number is something like 30 million monthly actives, which is a lot, but they have such a tiny share of overall queries

that it becomes, and it's just clear that search feels like it'll be a winner take all market. And it's, they're not going to, you know, two years from now, if they're sitting at 30 million, in monthly actives or even a multiple of that, it's hard to see it, you know, being worth, you know, significantly more than Snapchat, for example. Yeah, and I think that's why you're seeing Arvin talk about potentially maybe pivoting to B2B contacts with the Bloomberg thing. It feels like if you're in a winner take-all market and you're in the writings on the wall that you're not going to be the winner in that market, a B-to-B pivot feels like,

a decent move. You could even put kind of anthropic in that bucket where there was a time when it was like, oh, is everyone going to switch to clawed like the app on their phone? And then it didn't play out that way. Now they have a dominant B2B business. So you can imagine the perplexity niches down. Like the perplexity interface, the perplexity ability to, to, you know, like answer questions, act as a search engine. That feels valuable in enterprises. It feels value in in finance, it feels valuable in medicine if you fine-tune the service for that. But it's just a very different business. So they have to go through a little bit of a rebuild or kind of read readjustment maybe.

I don't know. Yeah. Yeah, I mean at the end of the day when Elon bought X, it took it took someone like Elon to be able to put together the amount of equity and debt to buy that business. And he had to put a lot of his own. capital on the line and in this situation and that was buying a business that generated a lot of advertising revenue right it wasn't it wasn't known as uh it was a bit of a dog in some ways right maybe maybe never was living up to its full potential where in this case if you offered a buy

chrome and then in theory you have to create an entire new economic model for the business because you don't have the Google Ads engine built into it it's it's hard to see it feels like basically impossible to pull that amount of cap to define people yeah call me when the morgan stanley associates are losing sleep good point unless unless Morgan Stanley is uh is burning the midnight oil uh this deal probably isn't happening i'm remembering that exchange between Alison and Musk basically saying how much Ellison's like how much should I do a billion and Elon goes I don't know I think you should do like two yeah it's great yeah so I mean Arvin's got a got to get some Ellison got to get Larry get a few of those guys on board for sure

34 Larry's well we have some big news in the TBPN world we are officially partnered with Waymo via Spotify because Spotify has a partnership with Waymo so you can listen to TBPN in Waymo's now. No way? Yeah. This just dropped. Very cool. There's a new upgraded Spotify in Waymo launching today.

Waymo put out the post two hours ago. You connect your accounts and you can vibe. You can listen to TBPN in your Waymo, which is probably the most tech thing you could possibly do. A little birdie just told me that they spoke to a number of bankers that have not heard of the perplexity deal. Mm-hmm. which I imagine as it, as it firms up, if it firms up, they'll certainly hear about it. UFC landed a $7.7 billion deal with Paramount after a whirlwind,

48 hours, according to TKO executives. But zoom out for me, explain UFC. This is the punching one or the punching one and the kicking one. This is one of your best bits. So, Senra and I love UFC. Yep. And we'll text John and say, hey, John, do you want to watch, you want to watch come over and watch, like, the pay-per-view tonight? Yeah, the game. I love watching the game, my boys. Who's playing tonight? Yeah, I mean, I'm there if the teams are good. Yeah, if there's a good matchup. Yeah, but it depends on who's starting. I want to know.

The starting, it'll depend on the starting life. I want to know who's playing. So, UFC. The kicking and punching one. The kicking and punching one. They can do both. And wrestling. They can do wrestling, too. And choking. Okay. Rear naked chokes. Got it. Got it. Got it.

Kind of a mixture of experts model in fighting sports. Yes. Yes. Multimodal. Yes, exactly. So, long relied on the pay-per-view model. Worked well before the internet and illegal streaming. And the paper view model has been in decline.

UFC has also struggled to surface new American superstars. A lot of the biggest stars are international. but UFC's biggest market is in the U.S. International stars have a lot of fans in the U.S., but they're not driving pay-per-views, right? People in Brazil are not paying $100 to watch a single card, right? And so the pay-per-view model has been in decline. The UFC's relationship with ESPN has been a little bit rocky.

Paper-view model in decline, is that just because of the trends in, like, how yappy and how popular the fighters are or is there something else going on at like a technological level where like I don't have to click any buttons to open Instagram Reels or TikTok or YouTube and with pay-per-view it's like technically difficult it's kind of janky tech systems is that like a real a real headwind or is that like fake news so there's definitely friction to buying pay-per-view you got to like be on a traditional television it's not like in-app purchase like double tap and face ID like that level okay It's not that easy. I mean, I think you can go in the ESPN app and, like, buy the pay-per-view, but a lot of people aren't buying the pay-per-view to watch it on their phone.

Sure. I think the bigger challenge and something that... And Apple would take 30% if you paid it on your phone. So even then... I don't know because it's digital. It's a real world. It's digital. Oh, because it's streaming. It's for sure. It's for sure digital.

So there's a ton of friction. Dana's been in this challenge because he gets very frustrated about illegal streams. And every now and then he'll be like, if you're watching a stream tonight, a legal stream tonight, we're coming for you. And everyone's like, okay, I don't know how you're planning to do that. But they try to take, I think that they try to, like, DDoS the various streaming sites. Oh, interesting. Like, you can just, like, send a ton of traffic to take it down.

And then they probably have someone like talking to Twitch and being like, we are going live right at this time, you need to have someone searching and taking down streams actively. Yeah, but there's plenty of other, like, more decentralized illegal streams that are happening on, like, random URLs. Yeah, yeah, yeah, yeah. Even just somebody spinning up like their own thing, right? And so Dana was in a tough position because the more he talks about illegal streaming, affecting the business, the more people are like, wait, I can stream it illegally. He's a little stric end effect, yeah. And so he had been looking for a new home for UFC.

People had debated, you know, would Netflix be a potential buyer? there. There's a lot of potential candidates. Meta Quest. You have to buy the headset. You got to watch it in VR. I'm sure. I mean, Dana's obviously on the meta board. And I'm sure that that idea got, I mean, $7.7 billion. That's one researcher. Just cut one head count from MSL and you're good. And Zuck can just own all of UFC and be like, look, put on the headset or you don't get to watch. Yeah. Well, the deal that was reported were in Yahoo Sports. How the UFC landed at 7. $1.7 billion deal with Paramount after a whirlwind 48 hours, according to TKO execs. So beginning in 2026, all UFC events will stream on Paramount Plus with select events also airing on CBS.

And so anyways, Ben Folks is reporting just how big of a surprise was the UFC's bombshell $7.7 billion deal with Paramount and CBS so big that even UFC CEO, Dana White, didn't see it coming. No, this is a quote. No, I didn't think this is where we'd end up. said Monday during an appearance on the Pat McAfee show. Shout out to Pat. That's good. To discuss the new broadcasting rights deal. But this sort of, this is sort of how it played out.

I love it. These guys are obviously smart guys, very aggressive. He's talking about the team, the new team over at Paramount. So in an interview with CNBC, TCO, president, and CEO, Mark Shapiro said he initially expected to make a deal that would bring only the UFC fight night events to Paramount. But after Skydance and fight night events have always aired on ESPN, just fully ad-supported. Yeah, got it. But after Skydance Media completed its deal to purchase control of Paramount last week,

Shapiro said the deal for the entirety of the UFC's U.S. broadcast rights came together in just 48 hours. Now, instead of just the 30 UFC fight night events per year, Paramount will feature. And the fight night events were events that wouldn't draw big pay-per-view buys. Those were not the numbered UFC events. Correct. So the UFC 776, that's like pay-per-view, fight nights just random on the... And there's only 13 of those events per year. 13 numbered and 30 fight nights.

So almost every week there's something if you're a U.S.C. fan. But you're really, once a month is when you really want to tune in. But they sort of depend on more casual fans historically to drive pay-per-views. People that are like, I watch UFC when Connor McGregor is fighting, right? Yeah, that's what really spike the pay-per-view and have kind of a power law outcome that day. People getting together being like, hey, we're going to buy the pay-per-view, and we're going to watch it. Sure, sure, sure.

That kind of thing. So possibly the biggest news in all of this for fight fans is the end of UFC's pay-per-view era. Ever since the first UFC event in 1993, pay-per-view has been a vital part of the UFC strategy. Remember, UFC, when it started airing on TV, was thought to be, it was so shocking and violent to people that even politicians wanted to get it banned.

Wow. Like, they were like, this should not be on television. So it had to be in that bucket. Oh, it had to be paper- because it was like, yeah, it was like adult restricted anyway. Do the fighters need to sleep well before the fights? Of course. They have to be on eight sleep.

Pod five. That's right. Five year warranty, 30-night risk-free trial. Free returns, free shipping. You got to make sure Bo, Nicole, friend of the show is on an eight sleep. I'm going to message him after this. Okay, perfect. Let's figure this out.

Ever since the first UFC event in 1993, paper view has been a vital part of the UFC strategy. Under the current deal with ESPN, each UFC pay-per-view costs $79.99 in the U.S. plus the cost of the ESPN plus subscription. on top of that. So you've got to subscribe, and then you've got to pay per event. With the pay-per-view revenues reportedly in decline, it makes sense for the UFC to finally ditch that model. The fact that it's doing so as part of a deal that will essentially double the roughly 550 million per year the UFC currently receives from ESPN, likely only made that calculation easier. This is crazy. This is crazy. When they find out, wait, if I just sign up for Paramount Plus for

$12.99 a month, I'm going to automatically get UFC's numbered fights and the rest of of the portfolio. That's a message we want to amplify. That is a crazy, crazy value change. Because if you were doing, if you were doing all 13, if you were the hardcore UFC pay-per-view buyer, you're up at $1,000 a year on UFC pay-per-view, basically. Like, $700, $800. Like, that's a lot of money. And you're going from there down to $12.99 a month. That's $150. That is a steep, steep savings. Yeah. The hardcore fans are. going to be excited. Yeah, and a lot of, a lot of fans would, you know,

somebody's hosting the pay-per-view one night. They split it or something. Yeah, it makes sense. But still, I mean, that's a big, big savings. I do wonder what the ad load will be like, because when we watched UFC that a couple months ago with David Center, I noticed that it felt extremely, extremely content rich and like the flow of the show

was fantastic because you just be watching a fight and then it would cut to the commentary the post show the in ring Joe Rogan's doing an interview and then pretty quickly they start telling you who's coming up next and the actual fight to like you're only watching maybe like a half an hour of a fighting over an hour or two of content but it didn't feel like oh I'm not crazy commercial break and I'm totally taken out of the stadium like even even the they did a really good job at the production to show like when they show you the stats it's virtually laid over in the stadium. Like you're watching a camera pan around the stadium. So it actually kind of feels like you're there the whole time. It was really well produced. I wonder if they'll lose any of that by stuffing ads all over the place. Yeah, we'll see. I mean, and you compare that to NFL. NFL's like roughly, I think, 25% of the time allotted to NFL is advertising. Yeah. And that's not the case. That hasn't been the case for pay-per-view. Yeah. And it certainly feels like it's, yeah, it's like a shift in the type of content. Yeah. They just got to work on making seamless

transitions to advertisements like we do here with Finn AI, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bakeoffs, number one ranking on G2. You can get started at fin.aI. And anyway, so Paramount is, or Skydance, young Allison is just getting aggressive across the board, right? There's been rumors of this free press acquisition

that I'm sure is still in the works, but it had been reported it was a quarter billion dollars for the free press, from our sense they have about a million, a million people subscribed to their newsletter, most of which, vast majority of which are non-paid. And so that just says that Paramount, CBS, Paramount, you know, the combined and Skydance, sort of this combined entity, just see the free press and as highly, and Barry White specifically is just highly strategic. Yeah. And then CBS also cut the late show, which is losing 40 million a year. So they're really like kind of really like shuffling the chips around like really restructuring the organization. Like what does CBS actually do? Well now it's potentially UFC and Barry Weiss as opposed to Stephen Colbert, I guess, in terms of like headline stuff. I love this. I love this article. Back in back in 2009, Dana White swore that if UFC 100 did a million, pay-per-view buys, he'd bungee jump off the Mandalay Bay. It did. He didn't.

When UFC 151 was canceled after John Jones refused an opponent switch, White called Jones' coach Greg Jackson a sport killer. He left a crater in the UFC schedule that only MMA fans could fully appreciate. A few years later, when Connor McGregor and Nate Diaz shattered the pay-per-view world record at UFC 196, it was a testament to how big the sport had become. We cared about those numbers as much as we did the outcome since UFC one when people paid out of morbid curiosity this is what you were talking about earlier paper views have been a vital part of the identity of the sport it's hard to get nostalgic over being gouged but what follows here should shouldn't be mistaken as such but monday's news of UFC coming uh 7.7 billion dollars

partnership with paramount came with a small pang of sadness upon realizing the paper view model will soon belong to a bottom. Yeah, I'm interested to see how this impacts the fighters because early in their UFC careers, they don't get any exposure to pay-per-view points, which is like a percentage of pay-per-view sales that top fighters would earn. So if you were a rising fighter and you got on a pay-per-view card,

you weren't necessarily getting cut into that revenue. But if you were Connor McGregor or a true superstar, you were actually getting some percentage of the sales, right? They call these pay-per-view points. And so now that that model is going away, I mean, I'm sure the number one thing on the fighter's mind with this new deal is how are we going to actually, you know, basically get cut into the, to this new structure, right? Because historically, a lot of fighters have critiqued the way that UFC fighters are comped. But this is such a funny nostalgic article. This writer clearly really loves UFC.

back in the mid aughts the UFC combined the tuxedo affairs of 1990s boxing with the vibes of an underground temptation from there it slowly stockpiled its greatest passions behind the paywall remember how red Dana's face would turn as he tried to sell the paper view at the end of the televised portion of the card remember the names he goes through BJ Penn Matt Hughes Chuck Liddell Tito Ortiz Randy Couture Connor McGregor Rhonda Rousey go through the poster of the past and they were the special, they were the special attractions. The names on the marquee for the numbered events. Those were some good parties we shelled out for. As a MMA fans, they were ours. Well, end of an era. Yeah. And TKO Holdings, the company that of course owns WWE and the UFC, uh, is a 36.8 billion dollar company as of today. It's up 11. Let's take it over to Mark German himself. He has some new reporting.

Apple plots, expansion into AI robots, home security, and smart displays. Apple, Inc. is plotting its artificial intelligence. Comeback. Don't call it a comeback. Actually, you can call it a comeback. I'll give you. I mean, it makes sense. They've been, they've gotten a lot of hate over the last few years for the role,

just particularly the rollout of Apple intelligence, very hyped. A lot of features on display at WWDC that didn't ship when the new iPhone launched. They sold the new iPhone against it. Yeah, exactly. And so I think that there were high expectations because of Apple's position with on-device inference being very cool. I gave you Gen Moji. Are you not entertained? They shipped a few things.

I think that I would love to see the Gen Moji actual usage data because I feel like even though it's not popular in teapot and on X and in the Technorati, it might actually be seeing like decent adoption. enjoy. I mean, I've seen people share generative imagery from Microsoft copilot, which I had no idea was a popular image generation platform whatsoever. Facebook crowd. Exactly. Exactly. So I wouldn't be so sure that Gen Moji is producing zero value. But at the same time, it's clearly been a tumultuous time for the company. They've been kind of on defense in terms of public relations. But Mark German is still scooping every single day. So Apple is plotting. It's AI come back with an ambitious slate of new devices, including robots,

a lifelike version of Siri, a smart speaker with a display and home security cameras. A tabletop robot that serves as a virtual companion targeted for 2027 is the centerpiece of the AI strategy, according to people with knowledge of the matter. The smart

speaker with a display, meanwhile, slated to arrive next year, part of a push into entry level smart home products. Tabletop robot that's a virtual companion. Yep. That's big. A lot of software they got a right to make that work. They got to get on graphite. Dev code review for the age of AI. Graphite helps teams on shit and GitHub ship higher quality software faster. Tim Cook, if you're listening, get on. Get on graphite. So this is big too. Home security is seen as another big growth opportunity.

New cameras will anchor an Apple security system that can automate household functions. The approach should help make Apple's product ecosystem stickier with consumers to the people who ask not to be identified because the initiatives haven't been announced. I mean, this seems like something that they could knock out of the park like just true the smart thermostat like these these patterns have been defined for a decade and that's like the sweet spot for apple to come in and like the sonos home speaker where we were saying like it they're just like the speak everyone knows what they want out of a connected speaker system they just want it at the level of apple execution it doesn't require going zero to one in some new territory and so

I feel like they could be very successful in the home video monitoring, home thermostat, home speaker. So I think I like this overall. The robot is where it gets funny because this feels crazy. But I'll let you keep doing. Yeah, they're going into companionship feels interesting. I don't think it's a companionship. I don't think of it like that at all.

A tabletop robot that serves as a virtual companion is the centerpiece of the AI strategy. I mean, so let's read what the actual report is. this robot. The tabletop robot resembles an iPad mounted on a movable limb that can swivel and reposition itself to follow users in a room like a human head. It can turn toward a person who is speaking or summoning it and even seek to draw the attention of someone not facing it. The hope is to bring AI into life. I don't think of this as like companion necessarily. This could just be Jarvis assistant. Yeah, Jarvis. I mean, I guess Jarvis isn't a companion, but companion has a bad flavor to

it right now a bad a bad vibe because people are saying like I married my companion and that feels very black mirror I do think that there's a serious black mirror risk but I'll go into that in a second but what were you about to say yeah I'm not going out and saying this this feels like a competitor to friend dot com or any other players that are actually focused on companionship but this does feel like giving Siri a presence in the home yeah I can always on presence in the home it will be interesting to see how they solve it. A partnership with Open AI or Anthropic seems logical, but Apple Siri partnership with Open AI Anthropic before September on Polymarkets is a 6% chance.

By December, it's at a 44% chance, though. So, but this is a very low volume market, but still, it feels like we haven't seen a lot of messaging from Tim Cook that they're going to be building a huge data center, going to be training a foundation model. It feels like they're going to need to partner on some of the under. underlying infrastructure for that because I would not I would not want Siri hanging out in my kitchen talking to me like Syria is just not reliable enough but I would I would welcome Claude or or chat GPT into my house but I would treat it specifically as a like an Alexa what's the weather like what's on my calendar look up the history of the Roman Empire I would ask it questions like that and I would use it as a knowledge or treat tool. I might start to trust it in some agentic contexts. And the question is, do you want, do we want a robot iPad with an arm swinging around your

kitchen? And so, and hopefully when you want to know the weather, it's, you're, you're within earshot. I think, I think this could be really cool. I think it could be really cool. I mean, they say FaceTime is going to be. And it's just funny because you're competing. They're still competing with their own. Yeah, but if you're ever in the kitchen, like, this is an example. So face time calls will be a key function of the device during video conferencing the display will able will be able to shift to lock on to people around a room and so as you're walking around the face time is just following you that actually feels more social I remember during COVID I bought Facebook's camera they had some sort of device that you would mount on your TV and it would

act as a as a video conferencing system yeah and I used it a few times I ultimately churned but it was but it was it had a really wide angle lens and it would like zoom in on the people it had really good face detection and so it would center you no matter where you were in the room but as soon as you walked to the other side of the room it wouldn't be able to follow you because it didn't have any motors in it um and i feel like we pull up the link in the chat this all reminds me of the meta portal yeah that's the one i'm talking about the portal yeah basically i don't they didn't market it as a robot but it would sit on a table and it would sort of follow you around the room and meta is no longer selling meta portal uh i guess they wound it down

so anyways uh tim cook told employees i i gifted some of these and they were pretty well received uh most of them wound up being used as uh like uh digital digital photo frames though yeah and they weren't actually used that often for calls i don't know if putting it on a robotic arm is enough to make it useful i think you do have to nail the underlying speech recognition and in the in the conversational nature like it has to be powered by a frontier LLLM you know what's funny what is I feel like the product I could imagine them having a mood board internally with the Pixar lamp hopping around that's literally listed here as like one of their inspirations apparently so Tim Cook told employees in all hands meeting this

month that Apple must win an AI and hinted at the upcoming devices the quote the product pipeline which I can't talk about. Thankfully, Mark German has his malls and Apple that are talking. Tim Cook says it's amazing guys. It's amazing. Some of it you'll see soon. Some of it will come later, but there's a lot to see. Yeah. So Apple obviously always is cooking on moonshots. Very little of it surfaces to Mark German and even less actually services, you know, publicly via Apple's own channels. Mark German, if you have a little extra time, you should leak Julius's user numbers because Julius has over two million users now. They're trusted by folks at Princeton, BCG, Zapier.

What analysis do you want to run? It's the AI data analyst that works for you. Connect your data, ask questions in plain English, and get insights in seconds, no crowding required. We need to get our logo up there. Yeah. The fourth logo. For sure, there's a lot more.

So Apple is planning to put Siri at the center of the device operating system and give it a visual personality to make it feel lifelike. The approach dubbed bubbles is vaguely reminiscent of Clippy, which we are super bullish on, and we think Microsoft should totally bring back clipy, an animated paper clip from the 90s that serves as a virtual assistant in Microsoft Office.

Apple has tested making Siri look like an animated version of the Finder logo, the iconic smiley face representing the Macs file management system. The final decision on its appearance hasn't been made with designers considering ideas that veer closer to Memoji, the playful characters that represent Apple user accounts. Device prototypes use a roughly 7-inch horizontal display approaching the size of an iPad mini, the motorized arm can extend the display away from

the base roughly half a foot in any direction. So that's not going to snap out. I was really hoping five. I was really hoping at least five. Across the room, it reaches across and pins you against the, against the fridge. Yeah, I think Apple should be able to nail delivering this in a way that doesn't feel black mirror and dystopian. Oh, that's funny. So I actually didn't see this, but there's a quote in here. Some people familiar with the product, call it the Pixar lamp. Yep. Exactly. I think it could work really, really well. Now, they have to be cognizant of the Black Mirror vibes. That would be very cool. Is that if it could hop off my kitchen table? It can definitely hop around. That's Nat Friedman Corps. This is, this is, this is, this is doable with modern technology. But the risk is that they, they botch it because Apple's had a rough go with the recent marketing and they've had a couple real like backlashes. They had that one where they smashed all the pianos and the press. Do you remember? remember this? So they had a huge hydraulic press and they pressed like an easel with paints

and a bunch of paint buckets and pianos and violins and all this. They got a ton of blowback from this. We can try and pull it up. Do you remember this? You remember that? People were saying that they're like destroying these timeless pieces. Yeah. It's just like the things that I instruments and stuff like that. Yeah, the thing that I love, you're literally, you're destroying it for this particular shots fired Bill Bishop from the substack stream. You need better guests to talk about China and chips, not just Nvidia partners who are regurgitating invidia's talking points. Bill Bishop, get on the stream. Call in. We'd love to have you. Bill. Bill, you're welcome. Hop on. Of course, Aaron is riding with Jensen. Yeah, he is the Jensen surrogate. He's a surrogate. He's a surrogate. He's a

surrogate. The other ad that didn't go as viral and result in major backlash was the launch of the Apple Vision Pro. So when the Apple Vision Pro launched one of the videos that they showed was of a middle-aged man looking at VR video of his kids, but he was alone in a dark room. And Ben Thompson was like, it feels like he's divorced or something or maybe like the kids died. It felt like Minority Report, which is a movie I know you haven't seen. But in Minority Report, Tom Cruise's son goes missing from the pool one day. And he has a he has a virtual 3D video that he plays back and gets very emotional about and and the the imagery was very similar in the Apple Vision Pro but it wasn't an optimistic scenario it was like yeah like I guess if my son passed away I got kidnapped like I would want to relive that but that's not like they're gonna inspire me to to buy an Apple Vision Pro and so with with this like Pixar lamp this this this robot in your in your kitchen or in your house like they really I think they have to lean into to light mode not dark mode they have to really be aware

and reality check themselves on the black mirror effect because the the idea of of someone hanging out in their kitchen being lonely and having this be the only companion that they ever talked to that's a lot less fun than hey we're all cooking together in the kitchen and this is helping us keep track of the ingredients or my idea was teach it to teach it to pour some beers and get it at the fraternity. This thing needs to be tending bar at a frat house and inspiring dancing silhouettes like the original iPod commercial in order to be successful.

Get the I-Robot, a stack of red solo cups ASAP. Apple's canceled for fraternity-coded marketing. I think that would be amazing. If this thing could pour a beer without foam, I think they got a winner because it needs to inject itself into social. Even the iPod, like, yes, you could put it in the headphones and you could tune out the world and be that dancing silhouette during the iPod commercial. But also, you could say, pass me the ox cord. I want to play a song for my iPod that everyone can enjoy.

And it's a social experience. And so it's important to show both of those sides now more than ever. And in chatypte demos and any AI product demo, there's always going to be the user who uses the product to be more isolating. but the marketing should always be aspirational and pro-social, just like social media. Social media, it's at its best when we're highlighting the fact that, like, I have so many friends that just send me a random Instagram reel every single day. And, like, that's our interaction. And it's, and for me, it's a way to, like, check in with a friend and, and like, share a laugh.

And it's a laugh. I can imagine the ad creative for the Apple Pixar lamp, you know, it's sitting on the center of a kitchen island, a family's. hanging out and they're FaceTiming somebody Exactly, yeah One of the family members I can actually imagine us having a Pixar lamp

Here on the table Really really it's like yeah it's like You want to be connecting two families Or two two sides of the family The East Coast side of the family The West Coast side of the family They're both having Thanksgiving and they're able to connect But there's everyone's being extremely social

Do not film this thing With the lonely the lonely person You know Having the Pixar Lamp be the only thing to keep it company. Anyway, that's my advice right. What else is in here? The projects coded Linwood and Glenwood. Core to the new home devices are current products like, and current products like iPhones and iPads is an overhaul to the underpinnings of Siri. Engineers are working on a version code named Linwood with an entirely new brain built around LLMs, the foundation

of Gen A.I. The goal is to tap into personal data to fulfill queries and ability that was delayed due to hiccups with the current version. It should be able to do it. Hopefully, this team They should have a moonshot division just trying to solve iMessage search. They could probably start there. Every tech company is that. Amazon search is rough. Google Gmail search is rough. Search has gotten so, like, dominated.

There's a billion dollar business in figuring out search. I mean, that would be the killer. There might be a killer app for Comet and some of the browsers is just, like, actually being able to search my Gmail inbox better. That would be pretty fantastic. I feel like it should be at the app player. Anyway, whatever they're building, they're building products. They've got to get on linear.

Linear is a purpose-built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product roadmaps. Open AI is on linear. Let's get Apple on linear. Let's get the Siri team on linear. They very well might be already. So somebody, Craig Federigi, who you all know, says the work we've done on this end-to-end

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

heavy use of chat GPT and Google Gemini to build and test features within Apple AI and Siri teams as a whole software developers are increasingly using third-party systems as part of their development process. Getting into a ring competitor here, Apple is working on a camera code name J450s designed for home security detecting people and automating tasks. The device will be battery powered. could last for several months to a year on a single charge.

That's interesting. If they can do this for, they can do this for a random home security camera, they can't do it for you. So they have the, you're telling me they have the capability to have an always on camera. Put the tinfoil hat on.

We need a tinfoil hat. The device has facial recognition and infrared sensors to determine who is in a room. Apple believes users will replace, will place cameras throughout their home to help with automation. That can be turning lights off when someone leaves a room or automatically playing music.

So Apple, you're telling me that you can make a home security camera, of which I will purchase multiple and put them around my house, and it will be able to have a single battery that could last for several months to a year on a single charge, and you can't make an iPhone. It's a little bit different. The screen's pretty bright. The screen's bright.

But an always on camera. How long do you think your phone battery would last if you just constantly had the camera? I actually think running the camera sensor is a lot less power-intensive than running a screen, for sure. And obviously a bunch of different applications, so. But still, pretty powerful, pretty exciting. I don't think people want always on iPhone. They want the thrill of charging the iPhone every night. If you're an adrenaline junkie, there's nothing like being on 1% trying to fire off that last I-Mess.

You know, I actually had a moment yesterday. my my one-year-old is starting to walk and I had this moment yesterday where I was I was I was I'd filmed a video of her walking yep for about 10 seconds everyone's in in the house is like laughing enjoying the moment and then my battery died and completely lost the video because I didn't hit I didn't hit like end the video so the battery died right in the middle of this memory gone forever there is actually that that has a something to do with the encoder. There is a certain file type that you can use when you're filming on one of these cameras that if the battery dies, it will actually save the last of the

file. But there's certain there's certain codex where if you don't hit finish recording, the whole thing will be corrupted. It's very annoying. We have the debate of the century, the debate of the year, a showdown between former founder fund, founders fund colleagues. Friends turned foes. Friends turned rivals. Everett Randall, he's been on the show before. Delian Asperuhov. He's also been on the show. They haven't been mincing words, John. They haven't. They have been throwing shots. Yes. Back and forth. Every TBPN appearance. Yes. They're calling the other one out. Yes. And so and right now we're going to settle this strategies. We're going to settle it today on the stream. The slop versus steel debate, which is better high margin software or capex intensive reindustrialization efforts.

that's right we will bring in delian and everett into the studio welcome to the stream how you guys doing i like that background very good energized here we go we're going to be breaking it down live here yeah we're going to be breaking it down live all all every time one of you gets a point i'll put a put a little point if if things get out of hand we'll be banging the gong and bringing order like it's a gavel uh but i'm sure i'm sure this will be uh i'm sure everyone will be civil oh i'm sure keep the name calling to a minimum. Good to have you both. Thanks so much for being here. Let's kick it off. Let's start off. What's your least favorite thing about the other person? I'm kidding. I'm going to kick it off with the original story. Like how did this all start

basically? Give us a backstory. Yeah. You want to give it? Yep. I'm happy to. So we were back at Founders Fund. We were starting to beef up our CRM and data science efforts. And so we were We were integrating some external data into our CRM, figuring out how we could filter opportunities better to each of the investment team professionals. And we were looking and we were looking at the different data. I was like, ah, it would be really nice if we could filter this by gross margins so that all of the negative gross margin companies that come into our CRM, we could give them all the Delian because it seems like those are the types of companies that he loves to invest in.

the the uh the the the the the the the rivalry between um between you know the the low gross margin side of the house and the high gross margin side of the house was born then okay uh and delian justify what why why do you like these businesses is that is that even a fair characterization um fair characterization i think um you know my sort of one liner would be i'm not sure that you know gross margin is actually like the right thing to to focus on in a business, especially, you know, sort of early on. What you want to be thinking about is obviously EBDA margin, in particular, terminal EBITO margin. And so when I think about the, like, at least founders filled ethos to, you know, sort of investing, we think that that terminal EBITO margin mostly is determined by ultimately how much about, you know, monopoly, your company can either be in the long term. And so if you look at, you know, sort of MAG7 today, obviously there's a decent chunk

of them that, you know, have some phenomenal, you know, sort of gross margins. And those tend to be the ones that are a little more software oriented. If you look at the one that is at the biggest scale and has the best EBITO margins, it's the one that is the most, you know, basically hardware-oriented. For sure, some of it propped up by, like, Kuda, and they're like, you know, sort of software side of the house. But, like, InVIDIA is the one that is performing the best of all of those. And then even if you study within those, you know, which of those, you know, companies

on the hardware side have monopolies versus, you know, sort of not, you see it's the one that with the monopoly, you know, clearly outperform the ones that don't, right? So Tesla, obviously, in that, you know, sort of mag-7, but a part of why they, you know, sort of suffer much worse margins than, like, an Apple or Nvidia is because, like, they actually do have, you know, competition. And so my general characterization of, you know, sort of SaaS is. is people always, you know, sort of study their original gross margin, but weren't burdening in the, you know, sort of cost of sales, marketing, et cetera. And because you just have much less

of a monopoly typically in SaaS, that ends up totally, you know, hurting your EBITDA, you know, margin profiles. So take like the like the favorite, you know, terminal scale thought of as a monopoly, you know, sort of SaaS company that, you know, I'm sure loves, Salesforce, their market share and all things CRM is 25%. And so that's why you end up seeing like, yeah, gross margin profiles only burdened by like, you know, cloud, you know, sort of cost. But their ebidot margin profile that is like, you know, sort of 40%. And so, you know, the reason that I like these negative gross margin businesses is, yes, they're like tougher to start. They may be more equity intensive at the beginning, but end up with way better, you know, sort of terminal margin

profiles versus, you know, Ev loves to, you know, invest in the, you know, AI slopcos that might have early gross margins and revenues, but. So, Ev, what's the bull case for software? What's the bull case for SaaS? What's the bull case for AI slopcos? Look, so to quote the godfather Neil Mehta himself, the laws of great businesses are the laws of great businesses. The job of a business in a capital society is to maximize and find the efficiency frontier for three things. Royke, aka return on invested capital, the amount of capital you can actually deploy, and how long you can deploy that amount of capital at and above market Roik. There's a lot of different framings for the paths to do this and how companies can actually do this. The one that people like in tech circles is Hamilton Hemler, Seven Powers.

A company accumulates power in the form of scale economies, network effects, whatever power you want to take, and then uses that power to produce above-market Roykes for as long as possible and with as much capital invested in the business as possible. There are great Adams-based businesses that do this. There are terrible atom-based businesses that don't do this. There are great digital businesses that do this. There's terrible digital businesses that don't do this. I mean, you want to hear about a great Adams-based business that does this, listen to the Acquired Pod on Costco. Like, it's certainly not like a Adams versus SaaS thing necessarily.

The advantage that digital businesses have is that in this process of producing above-market Roik for a long time, is that their product form factor and the way that the distribute their product lends itself more to the process of creating power, I'd argue, than most Adams-based businesses. So if you think about like network effects, the best place to create network effects is in a digital marketplace like an Uber and Airbnb or a DoorDash. And so there's a lot of these forms of power that naturally lend themselves to digital products and the scalability of digital products tends to be a lot greater than than physical products. And so you can see these rapid growth trajectories like we're seeing from OpenAI and Anthropic and many others. When did you guys find common ground? Was it in the e-scooter era, the sort of 15 minutes?

delivery era were you ever able to kind of come together and say like yeah this is you know we can both agree that this is uh this is not good or good i mean uh to be fair clina perkins founders fund both invested in figma stripe Airbnb there is some portfolio overlap rippling too right rippling as well there's a modern health i believe as well there's a few others um but yeah well to jordy's point where else is the common ground and where where where else is the divide or or the consensus in the disagreement is you say you know ever we're texting before this of like you know what are you know sort of two companies that I think you know both of us were enthusiastic about in you know sort of 2021 that actually both of you know

sort of trended well but are you know sort of counterpoints our two arguments and the ones that we kind of came up with were you know 2021 I was really you know high conviction on Hadrian in 2021 I was super you know sort of high conviction on rippling both those investments have you know sort of performed quite well over the last couple of years but look you know sort of wildly different in terms of profile, you know, rippling, like many other, you know, sort of SaaS companies does end up having, you know, an initial, you know, very high gross margin, but does still have to spend a lot on sales and marketing to bring in, you know, sort of net new customers. Hadrian on the flip side, deeply, you know, sort of negative gross margin to start.

But now as they've gotten to scale, they actually have like super limited, you know, sort of sales and marketing spend because there's only like, you know, 10, 15 customers that matter. And the moment that you're delivering for them, they just proactively start, you know, sort of throwing revenue, you know, at you. And so, you know, I think there are times where, you know, both of our, you know, stories, obviously, you can play out. The thing that I'd be curious to hear from, you know, sort of Everidge is to actually, like, compare, contrast, you know, you know, you're bringing up, you know, some of these digital businesses, you know, that end up having these, you know, network effects. I would kind of argue that, like,

you know, the like, you know, the like, you know, gross margin businesses, like, you know, the, like, Uber, DoorDash, you know, types. I think of as more as, like, you know, Adams businesses, but there was a whole set of investors in, like, the mid-2010s that were generally unwilling to approach both Adams-based businesses that started with negative gross margin, but even some of these local marketplaces that started with negative gross margin that they swore off of the Uber's, the DoorDash, et cetera. You know, it's very clear that Uber DoorDash, through, you know, lots of investment, through building out these local, you know, sort of networks of, you know, both supply and demand, we're able to, and, you know, drivers were

able to eventually get to a point where now they actually, you know, have very attractive, you know, sort of financial profiles. Today, the equivalent of that is like, there's all these investors that, you know, back in the 2010s would have refused to invest into any company that had negative gross margin and are all now pouring cash into both the, like, AI application layer companies and then, like, you know, foundation models that all have, like, ridiculously. I mean, I forget, I think it's, Gurley is nonstop, you know, not my favorite person in the world, but Gurley is nonstop talking about, like, you know, what is going on here. They're selling a buck for 90 cents.

So, so I think, I think it's an important example because you had that, you know, plenty of examples of these chained losses during that, that era. where a restaurant was selling something below cost to a platform that was selling something below cost to a logistics provider, an individual contractor that maybe wasn't actually making money if you factored in depreciation and fuel costs of their vehicle. And that ultimately worked out, right?

DoorDash is a massive, fantastic business based on the power of the American consumer. But when you compare that to today where a lot of the conversation on the timeline this week has been the margin profile of this, new generation of software companies that has to pay a lot for sales and marketing, but also inference. And so I think like the debate should really be, you know, continue to be around just how quickly will the cost per token fall? And I think a lot of people have a lot of

confidence around that. But I think that that is the key thing that Everett's sort of like broad investment thesis right now is dependent on. yeah like fd you think there's going to be at same path of like uber for a while had a bunch of negative gross margin people going into it like do you actually think that a cool i want to pull this post up uh everett actually posted this in january 31 of 2024 so over 18 months ago he said i'm making a real effort to not take for granted the three dollar uber across town era of AI and i hope you are too uh and so i i i guess the question is uh and it's funny because because then then a bunch of people, I thought it was a good point. I thought it was a hot take then, and I think then, you know, a bunch of people kind of parroted that take all over the timeline. Stole your whole flow, as you'd like to say. But I guess the question is like, are we in some sort of different regime right now where the traditional gravity and like fundamentals of software investing have changed because we are out of the zero marginal cost era? And does that impose

risks to the strategy that, you know, have you sort of employed or like we're kind of putting you in this whole in this box. But if the if the fundamental structure of zero marginal cost era is going away, that that presumably forces like a rewrite of your logic around investing, I would imagine. Yeah. I think that I think the biggest variable that's changed from the 2010s SAS era to today is that in the 2010s, and you basically made this this point without making it Delian, though, is that the thing that was missing from your talk track is that the competitive intensity of SaaS during the 2010s was much, much, much lower than it is today. Like, during the 2010s, there was an entire crop of companies in the 2000s, but then especially

in the 2010s, you could basically pick either a vertical segment, you know, like HVAC or car dealerships, or you could do a horizontal function like the CRM or, you know, some very niche workflow for like the finance team, you could build a software product around that workflow around that vertical. And you really only had to deal with typically like two to three competitors. Like there really wasn't that much competition relative to what there is today. And there was less just like general pricing pressure, competitive pressure, just the general pressure that you actually had a lot with some of the digital marketplaces early on. And so like I think there was a whole crop of investors then and like the SaaS investors then, we're like, well, we

don't need to, we don't need a bunch of cash burn. And it's actually, it's a really unhealthy indicator if these SaaS companies are producing a bunch of burn because they're not competing with anybody. So if they can't like sell their product for good union economics on day one when the competitive intensity isn't very high, then they're probably not a very good business. I think the thing that's changed now is one, you have the change from zero marginal cost to actual meaningful marginal costs in the form of inference. And it's also just a hell of a lot more competitive than it used to be. And by the way, there's an immense, it was probably 10x more capital than there was 15 years ago to go into these companies. And so like every single

category now has become like me, like mini ride share or like mini Uber market where it's like, hey, there's probably a really big pot of gold at the end of the tunnel. And we need to be the ones that get first to scale. And in a lot of these categories, the ones that have gotten first to scale, have gotten a lot of brand equity out of it and have gotten a pretty resounding lead. I think the only other piece, I would say, I lost my sharing of thought. Yeah, yeah, but it's going to be basically it's going to be like a capital fight now on the SaaS side. I wonder if the contrarian trade around hard tech is entering a similar era where it's become consensus. And so we're going to see more capital fights. And when a founder

goes out and says, yeah, I'm going to do something crazy, but I need to spend a billion dollars of capex, people are just like, yeah, this could be the next base. Yeah, it made sense to have a capital war in ride share, but now we have a capital war in like this niche agentic workflow in some industry that most people have never heard of. And then also a capital war for $200 million for funding military boats and UAS and UAPA, like all these different sub segments are going to wind up. If capital war start popping up there, that could potentially be a headwind to Delian's model. Is that roughly correct? How would you, how would you, how do you, uh, would you fight back against that? Look, I think it's always, you know, sort of important to talk

about, you know, sort of specifics here, right? Yeah. You know, one of Eves, you know, sort of major investments in the last year is this, you know, company called captions that basically does AI captioning of, you know, various, you know, sort of videos on social media. When I think about, you know, handing, you know, sort of two Stanford grads and $100 million to go try and, you know, sort of replicate that, yeah, feels like, you know, they could, you know, go do something like that. There's like, you know, clear, you know, voice recognition models. They can go, you know, sort of pay on ads on TikTok, et cetera, and you could probably go and replicate that. And so, you know, our one line, our founder's fund is competition is for losers.

And so, you know, I think I was a loser for investing in food. Now, shots fire. And you just delivered Deli, so thank you. Now, you know, if you take, you know, sort of two Stanford grads in $200 million and tell them, hey, I need you to go replicate this manufacturing facility and go start building a bunch of, you know, sort of satellites, reentry vehicles, you know, bioreactors that can actually survive the environment of space. Most, you know, sort of staying for grads, you know, can't go, you know,

as chat, GPT, how to go do that. And yet, yet, um, yeah, but I haven't really faced significant competition, irrespective of the fact that, you know, all things space factories are thought to be, you know, sort of the hot new thing. To be clear, we use captions here on clips. We enjoy the captions app. We thank, uh, for making it possible and subsidizing our. And there is a YC, there is a Y, uh, a Varda ask YC company.

So yeah, coming for you know, Indian Varda. I think will be a little bit less competitive than Indian captions. Also, if you're the caption CEO and founders fund is trying to invest in your next round, please still let us do that. Helpful counterpoint for me. Delian, you were correct that it was getting too friendly of a debate. I did want to make sure I could pin this one on you. If you can recite the equation for a return on invested capital,

I will see victory to you and I will donate $5,000 to a charity of your choice. Let's go. Cluelly. Hopefully he's got Cluley running. Yeah, yeah, exactly. My like, you know, equivalent for ever, it will be if you can explain, you know, basically why you can't create microgravity down here on Earth, I will also donate $5,000 to a charity of your choice.

But I don't think of it, you know, I may not have the, you know, basic understanding of business physics, but you don't have the basic understanding of physics and one's more important about understanding the universe around you. Okay. I mean, I'm pretty fixated on the 2035 midas list. Yeah. That's really kind of the final. It's the bigger.

That's this. Have you been on lighting brink yet or I forget whether or not you've made it up there. Oh, taking shots. Not even on the brink yet. You know, we rejoins the KP after you and she beats you. He's laughing me. It's okay.

It's okay. Eventually we're going to bring back the extra names in Kleiner Perkins. It used to be Kleiner Perkins, Coffield, buyers. It's going to be Kleiner Perkins, Randall, eventually once we're working on it.

We're working on it. We're pitching it. Where should we go next, George? I guess, uh, Everett, how are you, how quickly, like, how much should people be fixated on the cost per token with these frontier models over the next six months? Like, how long can venture capital

sort of like backstop these chain losses? Yeah, I think that the way to delineate the whole, so obviously, like, I think there was this kind of consensus narrative that like every, you know, 12 to 18 months token costs were going down an order of magnitude. I think that did hold for a while. I think what you've seen now is like actually for frontier models that started to peter out a bit. And like pricing has actually started, it's still going down. It's not going down nearly as much as it used to when when we were kind of in the in the meat of the curve of capability improvements on frontier LLMs in terms of pricing curve. So I think that the way that you want to delineate it is like there's a certain, like what I always tell everyone is that like there hasn't

been a chat GPT query since GPT4 that like my mom hasn't been able to ask and have it answered by the model. So there's like the mom test of models where like there's a growing subset of tasks like economic or knowledge tasks that the models are tasked to do that no longer need frontier intelligence. And when you're not on the frontier, either through open source or just like the cheapening and desilling of older models, like the price still falls off a cliff. There's going to be a very, very large set of tasks that models do that are not on the frontier, and those are going to continue to get dirt cheap. I actually think that at the frontier, you're probably going to see continued price decreases on a per token basis, but nowhere near what you saw before, which was like this order of magnitude decrease on a very regular cadence. And so I think for like depending on the company, it's going to depend on one, if you've actually built a company that has enough power where you have pricing power where you can price above the kind of marginal token.

price from the actual model providers, and then two, like how much of your inference actually needs to be at the frontier? Like, how much of your inference can be an older model that's much, much cheaper versus how much do you need to do on the actual frontier? I think that's what you're seeing. Like, you know, everyone loves to talk about Curser and Chris Peake over at Pace Capital had this really great kind of like mini essay. I think only like last night or a couple of nights ago. And he talked about like, no one knows if cursor has power yet because, you know, coders and developers, they're very, very, like they're taste makers. They're good at understanding the quality of the models and how much inference they're

getting. And there's a lot of price sensitivity for them because they have a really good understanding of how much inference they're getting. And so no one really knows, I think no one can definitively say whether a lot of those types of companies have actual power with their users or if they're just drawn to an interface for frontier models or not. And so I think that's what everyone needs to be looking out for is those two things like, do you actually have power? Like will people give you margin above the marginal cost of tokens? And then two, like do even need the frontier inference for the vast majority of your product, or is there a lot that

you can offload to cheaper models? Yeah, I mean, I guess your counter, you know, said there, Everett is that, you know, a majority of what the foundation models are providing in terms of the, you know, sort of value there in users is starting to be, you know, sort of obviated by the, like, you know, historical generation, even some of the ones that are, you know, sort of open source. So it seemed to imply that where value is accruing and where you'd expect to, like, the highest revenue growth wouldn't necessarily be at the foundation layer, but you'd see it more at the application layer since those folks can squat models out.

But in reality, that's literally just not what actually is happening. Like, if you look at which companies are sort of fastest on user growth, user growth, et cetera, it is the foundation model companies. It seems like a part of it is that they also have, you know, sort of the most pricing power where, yes, you know, your mom, you know, uses GPT4, but like she's not the one that's necessarily paying

like, you know, $100,000, $10,000 per month versus the true frontier capabilities on like, you know, AI coding, the pro users, is the one that actually do care about, you know, maybe your mom is fine with 115 IQ model, and that's, like, fine for the rest of her life because she's just, like, not asking it that difficult of questions versus the people that actually are willing to, you know, sort of pay are the ones that actually do care about the 140, 160, 180 IQ. Again, maybe at some point that gets, you know, should commoditize as well.

But my sort of counter to you would be, you've made this argument that it seems to imply, hey, you know, things will accrue to the AI application layer, which if I understand your guys' portfolio is largely where you guys invested. But in reality, that's not what's played out. the like places that have captured the most, you know, revenue growth, the most market share have been the ones that are actually pushing the true frontier, you know, of the, you know, technology forward. And so, so far, at least in last 18 months, your thesis is not playing out at all. Well, to be clear, isn't, isn't it somewhat widely understood that Anthropic has negative

gross margins as well? So it's, it's not like they're doing. Like, I have a point was that you want to invest in these companies that have the, you know, their seven powers and like you know in the you know days of like uber you know door dash et cetera that did end up user translating it seems like invidia is the most power then the foundation model labs maybe then the application later we'll see how much power develops in the application later but we'll let we'll let you respond oh yeah I was gonna say that that basically what Delian said was just wrong because even though it is even though like if you if you think about okay

like let's take like whatever open AI and Anthropics recently reported revenue run rate is the majority of all of that or at least the plurality of all of that is chat GPT. And chat GPT, even though it is served by a foundation model company, is an application. It is a consumer subscription that has an immense amount of power. It has an immense amount of branding. Like, you know, it is the first billion plus user

consumer application that's been developed by a new company in a really long time. And so I think that, like you could put whatever models you wanted through chat GPT at this point and it would not knock it off of its perch. I think that is power. Like you could run Claude Three Sonnet through chat GPT and I guarantee people,

like the average user wouldn't actually know the difference. And that to me is power. And just because the foundation model companies are producing apps themselves, doesn't mean that it's not the application layer that is accruing the value. Okay, then my question is, you know, you've got opening eye with the best possible

consumer application layer. You've got Anthropic that like shifted over to positive gross margins and those margins that are expanding. And yet, Kleiner's not investing into either of those foundation model, either of companies. Why?

I cannot comment on our current investment activities. Okay, switching gears, can you call on down, go on, yeah. I mean, look, I just, do you like making money or do you like, you know, yeah, can you comment on Donald Boat? Have either of you bought anything for Donald Boat, the notorious e-begger on X.com, the everything app? Like my little brother, you know, you know, played the unal reverse card and I tried to get Donald

boat to buy him something. Oh, smart. You know, contrary and as bro of nature. Let's talk about, uh, revenue quality. because I think that you guys run into this in your respective domains every single day. Just like in AI, you can have low quality revenue. Like that might be the explosion of like consumer prompt to app activity, you know, might not be the highest quality revenue.

Meanwhile, on the hard tech side, if somebody gets like a random, like, sibber or like experimental, gets like experimental budget from some branch of the military. And it's like a, you know, fixed length contract. It's not necessarily the right strategy to slap like a 50x revenue multiple on it. So like what's your view on both of those? And then I want to talk about if we should get into if accounting rules even matter at this point. Yeah, yeah, for sure.

Yeah, I mean, in hardware land, we think about this all the time of like there's clear differences in quality of revenue, everything from like, you know, defense, you know, program of record. You have to value that very differently than even like a $50 million, you know, SBI. are. And so it has been interesting to see a bunch of investors coming into this field where I think there's a lot of pre-existing 10 years of rules around software of like what healthy revenue looks like rule 40. There's all these things that like, you know, even if you're somewhat unsophisticated, infinite blog posts, when you look at that in the world of like hardware and defense, you know, sort of investing or aerospace, there aren't like infinite blog posts for people to study. And so I admit that I'm sometimes amazed when I watch people

come in, even for I should never, you know, sort of trash my own portfolio. But sometimes even my own portfolio companies. I watch people invest in them. And I'm like, wow, like, you just have a deep underappreciation for just like how long this company has until gross margin flips to like positive, how long it's going to be until they're actually either sort of a ready to go scale revenue. Even if it on the back end, it might be attractive. It may be years and years for them to sort of get there. And so, yeah, I see huge variation on that. And then mostly what I end up, you know, sort of seeing is people just come in and like slap a 10 to, I even saw 100x rev rate multiple on this like hardware company recently. And I was like,

Holy shit. Wow, people like not having an RR for a long time. Yeah, I think so Delian's hero and close mentor, Bill Gurley, had an essay a long time ago called the 10X Revenue Club. And I think it's like a good abstraction for kind of like tech revenue quality and like what makes up revenue quality. And it's things like, you know, how durable is the revenue? Like if you sign a customer, are they going to stay for a year or 20 years? you know, how much contribution profit is going to come off of that revenue stream over time, all the basics.

And I think you can take those same building blocks and apply it to AI. I think there's several things that are worse for AI at least than relative to SaaS for now. So generally, like gross margins are lower, which means contribution profit coming off is lower. I actually think that like depending on the category, you could have customers that are more sticky or less sticky. Like I know the meme is that everything's experimental run rate and none of these customers are actually sticky. I think we see something very, very different. among our group of portfolio companies. I think that the biggest lever that didn't exist in SaaS,

that exists in AI, that could be a huge call option boon for the revenue quality of AI, is the actual contract sizes as people start to eat into potential labor budgets. I know this is still kind of like inning one and ending two, and it's also like a little bit of a meme where everyone's like, oh, it's going to replace labor and labor's 10 times SaaS and it hasn't really happened yet. But I think if you look at some of these coding tools and you look at something like ClaudeCode, that is the first place where you can really actually say, like, no, this is replacing the labor that a developer would do. And it is paid for on like a

metered consumption basis. And the monetization numbers we're hearing around developers using cloud code are pretty crazy in terms of like, wow, that's like you're paying like one-tenth of like a developer's full in cost to a company on an annualized basis for this product. And so I think that the like the thing to watch is like durability of revenue plus the amount of actual revenue that a customer can give you. And I think that you're going to end up, or the amount of gross profit that a customer can contribute over time. And I do think as some customer crack these agentic products that look and monetize more like labor, AI revenue could actually exceed the quality of SaaS revenue just because you're getting so much more gross profit

per customer or like customer relationship than you would on the SaaS side, even though there are clearly things that are worse about AI revenue at this current point in time than there are about SaaS revenue. Dylan, how do you think about the moral imperative of a venture capitalist to invest in positive of some versus zero-sum markets, this idea that, you know, you're re-industrializing America, you're saving the West versus moving chips around, you personally, versus moving chips around the poker table, taking, taking from some legacy, you know, Web 1.0 company and putting it into an AI company. What's your, what's your thinking and argument there? Is, is, is, a, a

the market beating ROIC all that you need. Yeah, I, you know, I think Peter always reminds us, like, you know, our number one job is deliver returns for ESRLPs. And so I actually tend to not try to, you know, sort of overly moralize when, like, analyzing the things that I want to, you know, sort of invest into, for sure, when it comes into, like, policy and I'm in D.C. And I, like, need to, you know, sort of report to, you know, the Security Council that, you know, Bill Gurley is at, you know, sort of Chinese spy and, like, their investments that

he's making should probably be banned from the United States. Yeah, for sure there, I have, you know, sort of more. imperatives and things that influence that may end up, you know, shifting R.O.C., right? So, you know, but when it comes to, you know, like which literal investments are we making, I think of it is just like, yeah, you just have to, you know, sort of make the, you know, sort of possible investments irrespective of, you know, sort of moral imperatives. But in some ways I tend to think, it turns out, actually, if you, you know, go to immoral, then that ends up, you know, sort of affecting RICs. So, you know, and the last thing that I

at least, you know, close on, you know, for my, you know, sort of question, you know, for Everett is, you know, one of the upsides of Founders Fund is, you know, we're very, you know, sort of the, you know, let's say, non-centralized, distributed, you know, not many, you know, sort of rules, which, you know, ever, for some reason, you sort of chose to leave. And so I know nowadays, everything that he says publicly, you know, probably, you know, five comms people and five compliance people that need to, you know, sort of approve it. And so I have my only request to you is, you know, sort of blink twice if somebody's, you know, got a gun behind the camera. I'm trying to shoot you and never say anything that you go to do off script.

That's all you got to tell us, brother. Let us know. Hey, our wonderful marketing partner, Allie, is behind the camera with a green and red paddle. And she has to raise the red paddle yet. That's great. That's great. Well, thank you both for joining. Last question.

Are you worried about Uncle Sam potentially having sharp elbows now that we're hearing about the federal government taking a stake in Intel? Any concerns about him going down to the government? the stack into the early stage game competing for those seed and series A allocations. Look, if Trump Capital wants to, you know, sort of mark up some of the, you know, reindustrialization companies, I'm all for it, baby, cheap cost of capital. You're all for it. Yeah, I'll say two things.

I'd say one, I think the EV of like the enterprise value of founders fund, probably three X the night that Trump got elected. So I don't think Delian would complain about that. And then as a parting gift, Delian, you know, I think this conversation's been great and It's made me realize why you want to build factories in space, because your math on Earth doesn't make any sense. Well, thank you both for joining. You're both good sports. We'll have to do this again.

I think it might be a draw. We'll have to have you both back soon. Thanks so much for hopping on. Great stuff. We'll see you guys later. Cheers.