TBPN Live - Windsurf's Wild Weekend, SpaceX Invests $2B into xAI, Zuck's AI Data Supercluster | Jeff Huber, Scott Wu & Jeff Wang, Carl Pei, Garrett McCurrach

Episode Date: July 14, 2025

(00:36) - Windsurf's Wild Weekend (04:50) - Cognition to Acquire Windsurf (13:06) - Timeline Reactions to Windsurf Deal Collapse (26:43) - Windsurf Timeline of Events Breakdown (57:40) - Zuck's New AI Data Supercluster (01:10:53) - Space X Invests $2B into xAI (01:19:39) - Casey Neistat Joins ModRetro (01:21:10) - Timeline (01:30:01) - Jeff Huber, a seasoned technology executive and entrepreneur, has held pivotal roles such as Senior Vice President at Google, where he led the development of Google Ads, Apps, and Maps, and founding CEO of GRAIL, a company focused on early cancer detection. In the conversation, Huber discusses the transformative potential of artificial intelligence, emphasizing its capacity to enhance human capabilities and the importance of embracing change to stay ahead in a rapidly evolving technological landscape. (01:59:16) - Scott Wu, born in 1997, is the founder and CEO of Cognition AI, renowned for developing Devin, the world's first autonomous AI software engineer. In the conversation, he discusses the recent acquisition of Windsurf by Cognition, highlighting the complementary strengths of both teams and products, and expressing enthusiasm for the collaborative opportunities ahead. Jeff Wang is the interim CEO of Windsurf, an AI-powered code development startup. Previously serving as Head of Business, he stepped into the CEO role in July 2025 after Google hired Windsurf’s founders and R&D leads . Under his leadership, Windsurf continues operating independently, with Cognition acquiring its remaining product, tech, and team to integrate into its AI platform Devin. (02:12:07) - Carl Pei, a Chinese-born Swedish entrepreneur, co-founded OnePlus in 2013 and later founded Nothing in 2020. In the conversation, he discusses the stagnation in smartphone hardware innovation and envisions a future where AI-driven operating systems replace traditional apps, creating a more personalized and proactive user experience. Pei also critiques major tech companies for becoming overly corporate and losing their creative edge, emphasizing the need for genuine innovation in the industry. (02:41:43) - Garrett McCurrach, CEO of Pipedream Labs, is pioneering underground logistics to revolutionize last-mile delivery. He discusses the company's development of a subterranean network where autonomous robots transport goods through underground pipes to modular kiosks, enabling rapid and cost-effective deliveries. McCurrach also highlights the acquisition of a rapid fulfillment center in Austin to support this network, aiming to optimize delivery methods by integrating drones and autonomous vehicles for efficient, scalable logistics solutions. TBPN.com is made possible by: Ramp - https://ramp.comFigma - https://figma.comVanta - https://vanta.comLinear - https://linear.appEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.com Numeral - https://www.numeralhq.comPolymarket - https://polymarket.comAttio - https://attio.com/tbpnFin - https://fin.ai/tbpnGraphite - https://graphite.devFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://www.youtube.com/@TBPNLive

You're watching TVPN! Today's Monday, July 14th, 2025. We are live from the TVPN Ultra Dome, the Temple of Technology, the Fortress of Finance, the Capital of Capital. We have an amazing show for you today, folks. One of the best shows. I, it's the best day to be a journalist.

It's the best day to be a live streamer. It really is. It's the best day to be a commentator. That's right. Yeah. It's not a slur. To be in the commentary. That's right. Yeah, it's not a slur. To be in the commentary business. Commentary, commentary, that's not a slur. A lot of people ask us to not yell in the microphones.

I'm sorry. We cannot help it. My bad. We just get a little too excited sometimes. But massive weekend. As soon as we got off the stream on Friday, the news broke that Windsurf was being sort of pseudo acquired.

It was a trade deal. It was a of pseudo acquired by it was a trade deal. It really was a trade deal. I believe this broke at 3 PM Pacific, which is just after market close. Just after we went off there. Yeah. Which one were they targeting? That's a big question.

I think they were more worried about the TBP and coverage than whatever the market had to say about the deal. But the deal was that Demis Hasibis here has a post, he says, very excited to welcome Windsurf AI founders, Mohan and Douglas Chen, and some of the brilliant Windsurf engineering team to Google DeepMind, excited to be working with them to turbocharge our Gemini effort on coding agents,

tool use, and much more. Great to have you on board. And so this was received sort of as like, oh, okay. So here's kind of the timeline as far as I'm concerned. So immediately our initial reaction, we're here at the studio. We were off air. Our initial reaction was, okay,

another one of these quasi acquisitions. People call them shell-quihires. Yeah, everybody's gonna get taken care of, it's fine. And immediately a lot of people started kind of freaking out on the timeline saying that the employees had been screwed. Our immediate reaction was this doesn't make sense. Why would all the parties from the founders

to the investors to Google tolerate something like this. And then call it 24 hours later, I was still getting messages from employees that thought they were getting total zeros. And at that point in time, I started kind of reevaluating, reevaluating what may have happened. And there was a bunch. I think to be clear, the current employees,

they saw the news and they didn't get a check, they didn't get a wire transfer, and they also didn't even get an email saying, hey, we did all the calculation, and based on the share price, you'll be expecting this much money. It might take a month for it to clear, a couple weeks to clear, but here's your expected payout.

There was nothing like that. People apparently were crying, crying in reaction to the news. Well, here's the thing, this was a unique company, right? So, Windsurf launched in November of 2014. The product. Or sorry, 2024, the news. Well, here's the thing. This was a unique company, right? So Windsurf launched in November of 2014. The product. Or sorry, 2024. The product.

But if you had joined a few months prior to launch, worked on the lead up to the launch, launched it, seen this incredible growth, and then scaled to what you originally thought was a $3 billion exit to OpenAI, and then you find out that you're actually going to continue working at the company while dozens of your best engineers and your founders go and leave, effectively to then go and compete against you

in co-gen. And that roller coaster is just absolutely insane. And so really unique dynamic that was different than a lot of these other, you know, the character AIs, the scales, et cetera, where in those situations, many of the employees had been there long enough that they had vested a meaningful amount of shares.

They had certainly reached their cliff. In this situation, you could have joined in August of last year and not hit your cliff. Not hit your one-year cliff, but been there for the entire run of Windsurf as a product. Like from zero to what, 40 million ARR? Yeah, that was the last reported number. So yeah, I mean you watch the launch

and you're like, cool, I got it right. I picked the correct startup, I picked the correct rocket ship, I'm on board. Yeah, in Silicon Valley, these stock option contracts, they're kind of like lottery tickets, but my number came up. And then you go to the gas station or something to cash it in, and you're like,

wait, we don't know how much it's actually worth, and it's not just like a tax issue. And so yeah, a lot of people very upset. And we'll get into kind of some of the debate around this. So what's interesting is that I have Varun Mohan, who is the CEO of Windsurf. He has not posted at all still the last post he posted was on June 20th so I think maybe it was a little bit more recently yeah

to be clear it was completely muzzled yes yeah I mean that's what we believe to be true but it was weird he's not muzzled and he's just chosen silence. He's terrible, yeah. Yes. The last time he really engaged with anything on Axe, at least, was when Nick. Wait, John, I have to interrupt. OK, please. Because it's now live. Cognition has signed a definitive agreement

to acquire Windsurf. Let's go. The acquisition includes Windsurf's IP, product, trademark, and brand, and strong business. And above all, it includes windsurf's world-class people no way we've privileged to welcome our team we are also honoring their talent and hard work in building windsurf into the great business it is today this transaction is structured that 100% of windsurf employees will participate

financially they will also have all their vesting cliffs waves what and will receive fully accelerated vesting for their work today. Let's go. At Cognition, we have focused on developing robust and secure autonomous agents, while Windsurf has pioneered the agentic IDE. Devin and Windsurf are a powerful combination for the developers we serve.

Working side by side will soon enable you to plan tasks in an IDE powered by Devin's code-based understanding, delegate chunks of work to multiple Devins in parallel, complete the highest leverage parts yourself with the help of autocomplete and stitch it all back together in the same IDE. Cognition and Windsurf are united behind a shared vision for the future of software engineering,

and there's never been a better time to build. So there's a video up between Scott Wu and Steve over at Windsurf. And we're hoping to have them on the show later today if we can coordinate. So that'd be awesome. Yeah, that'd be great. Cool.

So anyways, this apparently Scott got to work like basically Friday. And not only negotiated, I mean, to do this kind of deal during all of the chaos of this other deal that's happening and then put together a deal that delivers a win for every member of the team. And the other thing that's interesting and then put together a deal that delivers a win for every member of the team. And the other thing that's interesting here is historically, Cognition had, I wouldn't

say over-invested in engineering, but they were heavily, heavily skewed towards technical talent. And the people that got left behind at Windsurf were sales, enterprise, account management, GTM, right? And over the weekend, I'd heard other teams that were kind of circling, wanting to hoover up their GTM team. But the fact that they were able to get this deal done

in just a couple of days is fantastic. This is incredible. Wow, what a fantastic end to the story. Or a beginning, a new beginning. Yeah, a new beginning, new beginning, for sure. I don't even know if we should go through the full history here. We can kind of go through whatever.

But I mean, you kind of know the end of the story, but I think we should take you through some of the debate that rose up. And there's still the question of, even though it feels like everyone got the good ending, there still is this question about, we're in this weird zombie structure era where you can be left in limbo, what is the cost of that?

What is the risk to that? Do we need new employee contracts? Do we need new understanding of how, of expectations? Because it's one thing for a CEO to say, hey, I'm building, I'm trying to build something really cool in Silicon Valley, I'm gonna build a tech product, and I want you to join me as a salesperson, operations person, an engineer, whatever,

and we're gonna go on this journey, we're gonna go really hard, and we all wanna be aligned with thinking long-term, so we're doing a four-year, vast with a one-year clef, pretty standard, and the expectation, at least the history, has been like you will have clarity throughout that process. And now that we're in this weird, weird regime, you're getting like, okay, the end of the last chapter

of the book could be really dramatic. But we got the good ending, and the question is, has there ever been, this deal kind of exposed the risk of like the bad ending and that it is possible that that could happen. It didn't in this case. But the big question I think people are debating is like, how much of this is due to the chaos?

How much of the chaos is a function of FTC and the antitrust regime. And Ben Thompson talked about that a lot, versus just the differences in communication styles of different Mag-7 companies. That's interesting. The experience of CEOs, like you look at the way Scale AI handled it,

Alex Wang is a generational communicator. He's been on Theo Von. Yeah. Yeah, different dynamic too. Great guy, but it's newer. But you, too, having Zuck lead in acquisition. Totally. Having that sort of founder mode confidence fully in control of the company.

And everything we've heard from various parties says that Varun was muzzled. But again, everybody involved should have been saying, how do we avoid making it so that hundreds of people don't feel like they've been completely screwed, even for 24 hours. Yeah, and the evidence of that was overwhelming. At first, I was pushing your post. People were messaging me Friday and Saturday morning saying,

the Windsurf employees got screwed. And I was messaging them back and being like you're misreading this this is the standard deal that they've always done and then the Overwhelming amount of more information from high quality sources saying no, they're screwed. Yeah It just flipped and I said, okay, maybe maybe they are And the key so so now we don't we had this whole other kind of Tangent that we were gonna go down which is like what happens to the ghost ship, right? Maybe they are. And the key, so now we don't, we have this whole other kind of tangent that we were gonna go down,

which is like what happens to the ghost ship, right? It could potentially be this like Lord of the Flies dynamic where there's now hundreds of people that are still working on windsurf, but the competitive pressure is insane. You're losing a lot of your top talent and your founders. Are you gonna be able to keep momentum or is Churn gonna be crazy?

And then do people try to stay a long time so they can get like a distribution or do some people leave because they wanna pursue other opportunities. Yep. And now we don't have to debate that because Windsurf is home with Cognition and Scott Wu. And you know the best part about that?

What's that? Everyone, all those employees who are now onboarding to Cognition. Oh, I know exactly what you're going to say. They're getting ramp cards, baby, because Scott. Time is money, save both. Save both. Easy to use corporate cards, bill pay, accounting, and a whole lot more all in one place.

Go to ramp.com to get started. And Cognition has a huge lineage with the ramp team. And so we're very excited for Cognition. We're very excited for ramp, and, we're very excited for Ramp, and we're excited for all of the Windsurf employees who landed. Well, this is funny because there's so much that we could go through.

I think we should go through a little bit of the timeline of what actually happened, how the debate evolved, because it is very interesting. So the context of why is Windsurf selling at all? And I think this big question, the first one is, let's just say hypothetically, you owned 100% of Windsurf last week. And let's say a completely financial investor comes to you,

there's no even like big tech dynamics, it's like Warren Buffet, he calls you up and says, I want to buy 100% of your stake in Windsurf. He's like, these agentic IDEs, I need it. I have to have one. I want to buy a great business at a fair price. Let's do a deal. So that's the question is like, if you were, if you owned 100% of Windsurf, Jordy, would you sell at $2.4 billion last week? And I think for most people, the answer has increasingly become yes.

And there's a few reasons. So the last big post that Varun, the CEO of Windsurf, had interacted with on X, was this post by Technium who says, Windsurf wrecked. And it's a quote of Nick saying, breaking, Anthropic just pulled the rug on Windsurf. Windsurf will be cut off from direct API access to Clawed in less than five days. 3.5 Sonnet, 3.7 Sonnet, 3.7 Sonnet Thinking.

Windsurf never even got direct access to Clawed for anyways. And so this has been the question of how much, like if you are in this wrapper business, I think it's a great product, I think it's great, I think I'm actually very excited about wrappers, but there is this competitive dynamic with the underlying foundation lab, and Anthropic does seem to be more aggressive

about where the value accrual will happen. So if it's 50-50 by default, all of a sudden Cursor and Windsurf start pulling 80% of the gross margin dollars from what they're adding on top, well then the underlying foundation model's gonna say, hey, let's pull this back, let's make sure some of these credit cards live in our Stripe account. And you're not just paying us big API fees.

And so there was a big debate about this. Cursor had to go through it. Windsurf had to go through it. And Varun responded to this and had a good analysis and was basically making the case that we can get through this. And I think that's true. I think there's totally a world where it gets true.

But you were saying earlier, it is an extremely competitive market. They were not the number one product in the market that's cursor and by most accounts Yeah, and so and so they were in a you know, not a super tough spot. It's a great growing market It's it's you know, it's developer tooling how many how many you know database software enterprise sass products are on the public market There's like there's like like the seventh one is probably worth 10 billion. Right. So, um, it's not like they couldn't have gone higher than 2.4, but 2.4 billion feels like a great deal for a company for a product that's one

years old, one year old for a company that's four years old and a hyper competitive space with product that launched less than a year ago. And your direct suppliers are trying to come for you and getting aggressive. And so this went on Hacker News, not sure how much you should read into it, but they said, Wibsurf is absolutely dead in the water.

And while cursor hangs on for now, all value is gonna go back to the models, says Jake. In my opinion, other than the Microsoft IP issue, I think the biggest thing that has shifted since this acquisition was first in the works is Claude code has absolutely exploded. Forking an IDE and all the expense that comes with that feels like a waste of effort. Considering the number of free slash open source CLI agentic tools that are out there,

let's review the current state of things. Terminal CLI agents are several orders of magnitude less money to develop than forking an entire IDE. Claude Code is dead simple to onboard, use whatever IDE you're using now with a simple extension for some UX improvements. Anthropic is free to aggressively undercut their own API margins and middlemen like cursor

in exchange for more predictable subscription revenue and training data access. Yeah, so the other context here is this year Anthropic, Windsor went from zero to somewhere around a $40 million run rate. Anthropic this year has gone from the beginning of the year to $1 to $4 billion. That's so crazy.

And so they, you know, however you want to say, they've been running away with the market. Yeah. And Cursor's revenue is equally incredible, although starting from a smaller base. And so this was some of the like, OK, things might be getting tougher from here on out. I don't know that I fully agree with that,

but people were saying this. And then we covered this last week, but the meter team did these evaluations where they ran a randomized control trial to see how much AI coding tools speed up open source developers. And what they found was that developers said that they expected products like Cursor and Windsurf

to improve them by 20%, but they were actually 19% slower. And so you have this weird dynamic where, okay, maybe the future is like, so I don't know how real this is, I think that we could totally be in a world where CURS is incredibly valuable for less experienced developers working on more vibe coding projects

than pushing the frontier of really advanced projects. And then also, just the next version of these tools could be really cool and solve this problem. But there was some worry that maybe developers were gonna take a hard look at their AI coding IDE stack and say, wait a minute, I'm kind of using this too much. I'm leaning on it too much and maybe I should just go back to the old way. So there were some reasonable points around maybe now is a good time to exit.

Right? Then, so after that, the question becomes, when you sell, you have, the board has a fiduciary duty to shareholders. And the big question that I think everyone was actually debating was this concept of was the windsurf deal with Google a Pareto improvement for all stakeholders, which means,

in a Pareto improvement, basically you can think of the baseline is how everyone's doing. In a Pareto improvement, some people might go up a lot, other people might go up a little in value, but no one is going down. Not a single person is going down. This is the goal of all political legislation. You wanna create things that are not just positive sum

in the sense that like, I tripled my net worth and you only lost half. Like that sucks, right? You don't want that. Pareto improvement is like, I tripled, you doubled, yeah, I won, but we both won and we're both happy, right? And so in a good acquisition deal, everyone is, it's a Pareto improvement.

Everyone gets more than they had before, everyone gets paid out. Then the flip side is something called Caldor-Hicks improvement, and a Caldor-Hicks improvement is where some people go up, other people go down, but when you sum them, it's still a net improvement. So very few people were saying, like, the VCs, even when you add up the VCs and the employees and the founders

It's a net loss for everyone very few people were making the argument and to be clear the employees got hosed It seems like everybody would have done better. Yeah on an open a everybody would have done better on an open AI Acquisition and so when the 2.4 billion number came out in on the evening of Friday it seemed like okay, not as great. It's still everybody's gonna do well Yeah, and then 24 hours 24 hours later. It was oh wow like this might have been structured in a very Funky way that you know people were I won't I won't report the number, but people were messaging me information on how much Varun personally made,

and that was still in the context of- I mean, you can just do the rough math. Found or stake, couple rounds of dilution, how much do you think he made, right? It's not rocket science to figure this out, or to at least ballpark it to the right order or magnitude, right? But you build a great product that gets some traction,

that solves some problems, and you build a great team, and Big Tech wants you. I'm not upset about it. But the question was what's fair for the employees? What's fair for all the different stakeholders? And so a lot of people kept coming out with really interesting stories. So William Allen here has one about Scott Belsky

and Behance going to Adobe we should read through. So William Allen says, I don't think he's ever told the story, but it's worth telling. When we were selling Behance to Adobe many years ago, Scott Belsky made a spreadsheet of every employee, 32 of us at the time, and personally negotiated each person's title, salary, and incentive structure structure and made that part of the overall deal terms I'm gonna choke up. It's so virtuous

I heard the phone calls where he went to bat for each individual He he not only he not only didn't have to do this But it actually complicated some of the other factors in the deal Of course, it changed the trajectory of so other factors in the deal, of course. It changed the trajectory of so many people's lives, including my own. Two years later, 100 percent of that original team was still at Adobe. Even today, a dozen years later, many of the core members are still there building. I was inspired by it then, and I'm inspired by it now.

And so I think that was a good case study in like, the founders do have a lot of hard power in the sense of board control and actual voting shares. Almost every founder can veto a deal which gives them leverage to build that spreadsheet and actually decide who gets what. And then on the flip side, they have a ton of soft power. Because you can't really do a hostile takeover of a private VC back company

where the founder has board seats and stuff. It just doesn't work. And so it's incumbent upon the CEO to actually take that step. And that was the fear, that Varun didn't do that, that he didn't go far enough. But we had more news. Yeah, there was another example from Parsh,

Ilya Sukhar's company. So one of his former employees says, we got news our startup was being acquired five days before my one-year cliff. I thought I'd get nothing. Our shares were accelerated to 100%. It was a life-changing event. And I'll always appreciate that our founders did the right thing

for us at Parsh. And Ilya quoted it and said, 100% acceleration for everyone but the active founders. We went backwards and re- our vested glad someone remembers so Very heartwarming Yeah, and so people were people were debating You know did Like was the core team taken care of it feel it felt very rough, but then pretty quickly it came out that

So we were going back and forth on this on Saturday. And the core debate, like your post went pretty viral, like you got two million views, 4,000 likes, and it definitely struck a chord. Folks were debating this one line. From what I've heard, the employees are getting screwed regardless of their vesting status. And it's like.

And that was because people were on a four year vest, but they hadn't hit their cliff, even if they had joined 11 months ago. And had, again, they had worked on the product up until launch, launched the product, scaled it, thought that they were getting this massive outcome, you know, yep massive outcome in which again They some people would have not been able I'm sure opening I wouldn't have kept everyone. Yeah, right totally I'm sure that they would have made a bunch of people effectively

Post merger acquisitions like that happens all the time. That's not that's not a crazy thing. So Certainly reasonable. I mean the other question is just like, if you worked at this company and you were like, I like working at this company, I really would love to work at Google and you don't get carried along, like that is getting screwed.

Like not getting a job at Google in some ways is getting screwed. Even just the ambiguity over the weekend is a little bit of like a screwing. And so I still will defend your initial characterization. But I thought that there were things that could potentially shift the narrative. And so I quote, tweeted your yours with the steel man argument, which is one and we tried to get a night in shining armor. So we were

getting the steel man suit ready, but then we knew we didn't have to will production team will get the steel man suit ready, but then we knew we didn't have to. Production team will get the steel man suit of armor eventually. We need to order from a prop shop. It's on the way. We're working on it. And just make sure it's great when it comes. And so I had three points. One was that employees who haven't reached a one-year vesting cliff don't have that strong of a claim around, I built this with sweat and need a liquid at the event, and we don't know the 10 years of all the left behind employees.

So there is an argument that like, if you joined three months before, it was already like really big, like should you really get accelerated four years and like. Oh, and I never really made that argument. Totally. But it was a fact that you could have worked there for 11 months and gotten zero.

It's like, no, you're getting a ride on the ghost ship now. Ride the ghost ship into the sunset? And that was in the context of the founders. And this is why people in group chats and DMs were getting so angry, because it was in the context of somebody that worked for you for 11 months was potentially going to get zero. Now that's not the case now.

And then you're walking away effectively defecting and taking a multi-hundred million dollar payday. It is a weird dynamic with these startups because clearly, I don't know exactly what Windsurf's head count was. I think everyone was saying it was around 500 at the time of this deal. And a year ago, pre-pivot,

what do you think their head count was? Couldn't have been more than 50, right? Definitely not. So you're looking at a 10X increase in employees who haven't really been like, they've been on this rocket ship, so I think, I personally think they totally deserve liquidity, and accelerated vesting, which it sounds like they're getting,

and it sounds like they're gonna do great. But it is like not the nature of the initial contract, which is one year cliff, four year vest. If it came out that it was like, okay, they're getting paid out to the tune of how long they've been there, I don't think anyone would be that upset. But then somebody was making a good argument

that basically when you sign up with a four-year vest, you're saying, I'm gonna keep working for four years. If you sell the company and put me on some zombie ghost ship, like, I didn't bail, you bailed. So you should accelerate me. And I actually think that that argument's a good idea. The other dynamic here was, so when Character AI, when the Character AI founders

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

we have $100 million, we have tens of millions of users, and we're just kind of gonna experiment to try to figure out how to monetize this. And I just don't think that that was, I don't see the code generation market playing out in the same way. I was trying to think that that was, I don't see the code generation market playing out in the same way where. I was trying to think about that.

Is there a world where, if the ghost ship had stayed a ghost ship and they'd pivoted, is there some world where they niche down, there was this rumor that they were gonna niche down into B2B, could they have niched down windsurf into some niche category and actually had a pretty durable business?

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

And so if you created Cursor just for rewriting Fortran, it's like that's not sexy at all, that's not gonna be hot on Twitter acts, but it could be really valuable in the bowels of legacy banking. And you could charge a bunch, and the TAM wouldn't be very big, but the business could be quite good,

and that might be a weird outcome, but it could be a silver lining, I don't know. Well, anyway, the second point that I made was that, I said the real culprit might be FTC antitrust, this is a hypercompetitive market, and Google still feels like they can't just do a normal acquisition. And I thought that was crazy because it's like,

this is textbook, they should be able to acquire this company, right? Like, like, cursor's out there. They're not acquiring the market leader. Yeah. OpenAI is clearly going after this market. And to the tune of, what's their their valuation like 350 billion or something like that Like like we haven't we should try to get an update there, but like not I think the NASA

I'm not sure the full mosque. It's not even one tenth of it's greater than one tenth of Google's market cap, right? Yeah, and so you're looking at like and then is Microsoft gonna compete in this absolutely they have come here You do they already do. They already do. And so it's like, you're basically like, I don't know, second, third, fourth in this market, there are four very serious players. This should be textbook, rubber stamp, good, good to go, do the deal, no problem.

There's also a very long list of founder-led companies that were maybe less hyped than Windsurf, but have incredibly talented teams There's like poolside There was that one that Nat Freeman and Daniel gross did that was magic. Yeah, there was magic.dev Have they were found apparently they were training their own foundation model for a while and that was kind of like, you know Very capex intensive and and maybe slowed down some things on the product side But still like clearly it's competitive market. Everyone's working on it

They're also we're missing out like there's probably a ton of YC teams. They're working. There was actually one YC team They got in trouble for forking Like cursor too hard or too hard. Yeah, they cross some line there I think they did fine and I think that they wound up like cleaning it up But people were upset about like when you fork something you have to abide by the MIT license or whatever the underlying license is. And so you can't just steal open source code and not abide by the open source rules. And then I said three new facts might come out,

which they did. And the FTC thing was interesting because there was a little bit of pushback on that. People were saying, oh, like, Lina Khan ate my lunch. Lina Khan's responsible for everything everything and I wasn't I wasn't necessarily saying like Lena con was 100% responsible for how this was was was structured or like how this played out but she did kind of like warp the road a little bit that made it a little bit wonky to drive yeah basically we

made hardcore capitalism illegal. So we nerfed capitalism. And then capitalism ended up coming in and saving the day. Yes, yeah, yes. With Scott Wu. Yeah, seriously, seriously. So the solution to anti-capitalism is more capitalism. This is the Brad Gerstner point, yeah, totally.

And so I still think that there is a way that, even with the weird new FTC antitrust regime, Google and the Windsor founding team could have probably been a little bit more aggressive, taken a little bit more FTC risk and avoided this whole PR dust-up. But that would have been more risk for Google. And I think that the way they did this here

where they didn't- I mean, it's a great outcome for Google. It's like, we didn't buy the company, look. Exactly. They bought the company. They bought the company, exactly. So it really is a great outcome for Google, even though I'm sure that their com steam was up all weekend calling people.

Yeah. Like, I have to imagine that this was like a war room for them. It was like serving, you know, it was the best possible story that the New York Times could have ever asked for. Oh, totally. It was like Big Tech buys hot company that was competing, you know, not necessarily, like the whole point of Lena Con's thing was that, you know, Big Tech is like squashing

competition by, you know by buying these companies early. And so you had the story that was served up to them, which was exciting company in cogen, a lot of traction. OpenAI almost buys them. Google says, OK, we're going to buy them. Google and OpenAI are arguably the two competitors that actually matter in search right now.

And so it was just the perfect story. And then I think Scott over at Andreessen had a good post that let me pull up here for a second. He was basically saying, there is an irony that Linecon's activism has resulted in deals that are far worse for everyone except the people she was targeting. Wait, who tweeted that?

Sorry, Martin Casado. Oh yeah, yeah, yeah, from Andreessen, yeah. And yeah, it's like the people with the lowest, you know, it seemed at the time that the people with the lowest leverage, the employees that had joined recently, were getting the worst outcome out of a deal that should have benefited everyone.

Well, if you're looking for code review for the age of AI, head over to graphite.dev. Graphite helps teams on GitHub ship higher quality software faster. You can get started for free at graphite.dev. So my question is, Google, it feels like PR nightmare, accidental PR nightmare, because they had done, what, character just fine.

It was not that big of a deal for them not a bit and then scale it well and it was very clear that that situation was interesting too because it Google has delved into social in the past hasn't had the best time the chat GPT script No that that was intentional of course no, but they've they've they've messed around in social Yeah, you could tell that Google doesn't want to own the AI around in social. You could tell that Google doesn't want to own the AI chatbot. They just don't want the association with.

There was a rumor that Gnome didn't want to be in that. He kind of was just like, I want to train a great model. I want to train a great model. I want to do AI research. And then that became the use case. They found product management. And then he was like, I don't really like building this type of company.

You see what Elon's launching today with the, I won't even say it on the show, but his new launch today basically signals that that is a very important thing. And he's interested in that market. Yeah. He's interested in that market. Yes.

Anyway, my question for you is, so feels like a PR nightmare for Google, feels like a couple stressful days, feels like they've landed. Great timing over the weekend. And that's my question, do you think that Do you think that they were intentional and happy about releasing the news after market closed because all of the facts come out over the weekend and it was such a hairy deal that more deals needed to be done even after the story came out and it couldn't be super clean.

So you have to do it late on a Friday. So then Saturday, Sunday people can talk, deals can get done and then announcements can go out Monday and then it resets the whole news cycle. So you kind of skip the crazy new cycle. I think I think the world's too online. So I think I think it helps that that that it wasn't a weekday. But I mean this to me, this whole thing from everything that we've kind of triangulated, this could have been avoided by managers taking it upon themselves to basically call each individual person

at the company and say, before you have a negative reaction, I need you to be patient. I know you've been patient through this deal with Hope and AI. It's not the deal that we wanted, but we are working to make this a positive outcome for anyone. And don't cry yet.

Yes. Just don't cry. And it's really hard. And it's particularly hard because if you're in the scale situation, a lot of those people had been there for four years. And scale situation, a lot of those people had been there for four years and with Windsurf, most of those people had been there for less than a year, almost certainly.

And so the strength of those connections socially, outside of work is weaker. So there aren't as many, oh yeah, like my boss, like we're already on signal with disappearing messages so we just talk back channel all the time. It's like, no, I just met my boss three months ago. The argument was the new company has a strong balance sheet, and they're gonna be able to just do a distribution or pivot or, that was effectively the suggestion. It was intentionally ambiguous.

And at the same time, the employees left behind on the ghost ship Yeah, we're already talking with other companies other companies were coming to them trying to recruit that recording go ship because Like everyone involved in the deal would prefer you to use the term remain co remain co But that's not as sticky as go ship Ship without a ship without a founder. I don't think this will be the last GoShip we see. I think it's like a new pattern and we're just gonna see this more and more.

No, but so then you have this dynamic where these talented people, specifically I talked to a founder who was talking with a lot of people on the go-to-market team, being like, these are very talented people. They took a company from zero to tens of millions of dollars in ARR and a bunch of enterprise contracts

in a very short period of time. I wanna scoop them up. And those people were entertaining conversations because it was just totally unclear to them what was gonna happen. So. So yeah, I mean, I still, I think some of our friends hold the FTC

like 100% accountable. I'm probably under 100, but maybe over 50. But my key point is that never lose faith if the FTC is giving you trouble. Dillon Field didn't lose faith when he was dealing with a messy situation with the FTC at Figma. And also, you should use Figma, figma.com. Think bigger, build faster.

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

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

There is a whole network of software resellers that invested millions into building partnerships with Windsurf. I was leading the team at one of those partners. We have customers that we have been selling to for years who we vouched for Windsurf to. I am sending out a note to our 300 customers on Monday that we are stopping all partnership activity with Windsurf effective immediately. I hope he didn't send that because you got gotta recall that email. Don't send the email. cursor has no channel partners and this will cost our firm millions. Oh, interesting.

I didn't realize that windsurf had a channel strategy and cursor does not. Very interesting. So so windsurf actually has resellers who go and sell it into their partners, because they're doing something on you know, we do software development consultancy, we come in and help your team run more efficiently, we help you pick the right tools. You can imagine like McKinsey, I don't know where this guy works,

but you can imagine a consulting firm coming in and giving advice on what tools to use. They get a kickback from Windsurf, they don't get a kickback from Cursor, so he's gonna lose millions of dollars, hypothetically, hopefully not. But my reputation and good name is worth more. With Google taking the best engineers from Windsurf,

our large enterprise clients are screwed. When they purchased Windsurf enterprise licenses, they were also purchasing an ecosystem that they assumed would continue to improve. This is disastrous for any startup tech company with goals of building an enterprise channel. It's interesting. I don't think people have any idea

how much this just killed channel sales for any AI company. So the rest of the AI companies out there who are like, oh, channel sales is really interesting. It's risky. Basically, if you're a top company in your category growing super quickly, you might turn into a ghost ship. Yeah, yeah.

And so if I'm trying to resell that type of stuff, then I have to go to the CEO They're good, but they're not so good to get these maxed out. They're not getting a trade deal Yeah, you can count on them to not get you out. Yeah Yeah, you're having you're having dinner with the with the CEO of some AI company is talking to you about like yeah We have the best software you're like, but you don't have any like actually great AI researchers, right? Like you mostly just have like to partner with companies with like medium to see your great product it works but not too well because we don't want to lose you want to keep working

with them for a long time keep working with you and so yeah there were a bunch of other reactions shell co-hires let's see I'm not an M&A guy but something feels really broken in tech M&A, confidentiality is out of the window, deals get done and called off on a whim, lack of rigor and discipline on both sides. Curious to hear what practitioners think. People are going back and forth on this. But really quickly, let's tell you about Vanta.

Automate compliance, manage risk, improve trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation, whether you're pursuing your first framework or managing a complex program. And so Will Minaitis was particularly black-pilled over the week, friend of the show.

Incredibly black-pilled. But we're so back, Will, you're good. Will Minaitis said, the reason that tech has been able to grow so quickly and create so much wealth that it is, that it ritualized a set of norms around corporate governance that are very distinct from what the law actually requires.

The second someone defects, the whole ship goes down. He's so upset. But basically he's talking about like, the handshake deal protocol is not a legally binding contract. Even term sheets. You get a term sheet from a VC, that's not a legally binding,

that's not a legally binding contract. Like, a VC can write you a term sheet, everyone can sign it, and then you can just wake up. It literally says on the sheet. This is not binding, and then you can just wake up on the wrong side of the bed and be like, actually I don't wanna do the deal. Or it could be like you found something in due diligence,

or you met a different competitor, but the game isn't over until the money's in the bank. The experienced entrepreneurs know this, but we run on this, basically, these society, these social constructs and these social contracts that say, hey, if you're the type of VC that constantly rugs on term sheets, on signed term sheets, there will be a bad vibe around you.

I can think of two that are widely known and are still in business, but it becomes very hard to be an effective VC if your brand is you just pull term sheets. Yes, yeah, and some of those folks have been banned from YC Demo Day, other people have had like viral Twitter posts around them every once in a while. Like they do that to a founder,

and then the founder becomes very successful at post economic and is like, yeah, I still have a grudge. So I'm gonna tell the truth about X, Y, or Z. And so the thing is that now, where we are now, is I don't think the whole ship goes down. I don't think this is a true defection. I don't think the whole ship goes down. I don't think this is a true defection. I don't think this reflects poorly.

And I think that the question of like, the big question here was will this cause more new startup employees to want to just go straight to Google? Let's say that you have the option of working at Google or Big Tech broadly, where you know the paychecks are coming on time. You know the RSUs are liquid and you can just cash out as soon as you get them, or whenever their lockup is,

and you know your manager's gonna be there, and the company's gonna be around, blah, blah, blah. Somewhat accurately predict what your comp will be in five years, it's gonna really work hard. Exactly, and then on the flip side, you have startups, which are in some ways lottery tickets, but also you get to work on game changing technology

with really cool people. You get to move a lot faster. There's a lot less overhead. It's a lot more edifying for certain type of people. You get to work for potentially the next Sundar instead of Sundar. And the economic upside can be 1000X. It can be huge.

And the question is, if that deal was broken, if that deal was, okay, yeah, you can go work on the cool thing, but you might wind up penniless and not cash out like you were promised, that changes the equation and that could pull people away from startups. But I don't think that's gonna happen based on this because I think the lesson from this is that

everyone got taken care of and the social contract still holds, although it was very messy. And I think going forward from this is that everyone got taken care of and the social contract still holds, although it was very messy. And I think going forward, every company that's doing a deal like this needs to think, how do I get the scale AI outcome and not the windsurf outcome? Because just two days of pain is not worth it.

I think one potential solution to these deals is exactly what we just saw happen, which is big tech company does basically an aqua hire of the team that they want, and then you simultaneously sell off the underlying asset immediately, and you generate a liquidity event for everybody, so everybody's happy.

It doesn't have to be life-changing, right, but it has to be something, right? So that it's- And I mean, the very key thing is that they left enough money on the balance sheet because the money on the balance sheet, and this was, this was Hari Raghavan's analysis. He clearly, I mean, the guys, he's a good friend.

He's obsessed with cap table math. I know he was, this was capital J journalism. Yes, thank you. This was investigative journalism. Yeah, and so I mean his post is so long that I need to just go to the TLDR. But the TLDR is that he says, I spent hours last night breaking down the cap table

and deal dynamics from Public Info. I realized that the unvested equity is around 80 to $100 million, awfully close to the $100 million the founders and board negotiated to leave behind in the bank. Why shouldn't management just And that was unvested. Yes, unvested. Which is a key detail.

Unvested. So they're basically saying we're leaving enough as though you vested your full Yes. four years. Yes. And so if you, it's still a leap of faith because I don't believe that Google and Cognition were in communication at all. And I think if they were, that would be more

like anti-trust chaos and stuff. But just economically, you know that if you, if you leave a company there with that much money on the balance sheet and that many like, unvested options, somebody is just going to be like, wait, so I can get that for basically free and I can make all the employees whole and I get all the employees and I don't have to pay really like anything to get that thing.

It's just going to happen immediately because it's just like you've left this like $100 on the floor, and someone's gonna pick it up. Like the free market will just work. I think the question that I had, and that I think a lot of people probably had, is what is the governance structure of the ghost ship? Oh yeah, so it's a crazy question.

Jeff Wang, who's coming on the show at 1 p.m. Oh he is? Let's go. Jeff and Scott will both be coming on at 1 p.m. Okay. For 15 minutes. Okay. Can we communicate that to the other guests?

Yeah. Yeah. And so the question is like, okay, Jeff, you now run a company with hundreds of employees that are angry about what just happened, that probably, like maybe they want to keep building Windsurf, but maybe they want to go and do something else. And what happens, like like Jeff is basically,

I would imagine like has to make a bunch of calls. It's like, do you just keep running the business? Is there pressure to keep running the business? First question, Jeff, did you ever feel like, is it Frodo Baggins throwing the ring into the fire? It's like, pay out the $100 million in bonuses. After all, why shouldn't I keep it? Throw the ring in throw the ring into the Mount Doom Yeah, the question was like could you ever tempted could could the the new leaders the leadership?

Yeah, like was it ever because that well could the leadership is decided you know what we can run this business super late exactly We could actually run this business with like ten people yeah, and yeah We're gonna run it for a few years. And we're going to use the advantages that we get from our own product to run a super lean team. And then you would have employees effectively burned again, potentially. But that didn't happen.

I'm very happy about it. The question, another question is what? If you're big tech and you're going to do one of these like zombie acquisitions You gotta leave enough for the unvested shares and if you're founder and you're gonna do one of these zombie acquisitions The ghost ships got to be full of plunder Full under stacked with treasure because then that's right Then the rescue divers and go and lift the ghost ship off the yeah

And if big tech comms are telling you, you can't tell anybody that they're getting taken care of. You have to risk it. Tell a little birdie. Have some off the record conversations. Tell a little birdie to go fly around and let people know. You gotta be having quick calls,

not saying anything too specific, but saying what you said, I think you worded it perfectly. Where it's like, just don't cry yet. And poor Varun, poor Varun, right? Because he was getting dragged because because he apparently he apparently he apparently people were messaging me like he joined like the the all hands for like 10 minutes yeah you know and it just seemed like he was being like ultra like kind of like a psychopath being totally see you guys yeah it was a good run and it's like go go have fun building you know this would

not have happened if he had said no I need an hour I need to explain everything would that have killed the deal almost certainly if that killed the deal what's the outcome for the employees probably worse than what they got you think it would a hundred percent have killed the deal almost certainly if I think one of the key Deal points in the negotiation with Google was we do it via Google's comms and legal strategy Because Google does not want to get hit with some crazy FTC lawsuit That's gonna not just be some multi-billion dollar settlement But also a huge headache for years and bad press and stuff like that so Google says hey we we want to do this our way it's gonna

be awkward but we're gonna take care of everyone and and yes we will yes we will leave enough money on the balance sheet to pay out all the unvested options and but in exchange you got to do the comms our way which is rough you have to create a tape go to buy the entire yeah You have to be scapegoated by the entire. You get hazed. Yeah, you're gonna be hazed for 48 hours. You're gonna be hazed, but then you get redeemed. And it's gonna blow back on us so incredibly hard.

Yeah, Google didn't look good either that weekend. It was rough, it was rough. Anyway, let me tell you about Linear. Linear is a purpose-built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product roadmaps, start building at Linear.app. And if you are launching a TBPN derivative product,

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

if you create a derivative work of TVPN, you are legally required to drink a glass of tap water on every time you go live. Yes. Yeah. Every time you go live. And so yeah, again, we don't have to pay us license and fees for the patents. We did invent TV. We invented news, but we But we will open source it. It's an MIT license type of situation, modified MIT license. The only modification is that you have to drink tap water. Anyway.

It is a small price to pay. Anyway. In other news. Question, what do you think? Why do you think Google did this? Why? Yeah. Oh, yes, yes, yes.

That is the real question is, is we've talked about the role of the VCs, I think based on what happened, never talk down on first ballot Hall of Famer Neil Mehta. Never talk down on the future for first ballot Hall of Famer. Everyone was saying, oh, Neil Mehta, Greeno, they did this sloppy deal, screwing over the employees. Employees are great. Neil Mehta potentially go did I don't know I? Agree, I agree. No is well played Why did Google feel like they needed to do a meta style trade deal in Yes, it's a category so so

in this category. Yes, it's a good question. So, so, Windsurf in my, I don't know everything about all the employees they brought over, they brought over 50 engineers. I don't know if any of those are like insane AI researchers with like crazy citations on like foundational papers.

I don't know that it's the same, I don't know that they're trying to build a super intelligence team to really bring their models to the frontier because they already have that. Gemini is at the same level of AI research quality as OpenAI Anthropic by most benchmarks, by most people that use them. It doesn't feel like they're way behind there.

Lama 4 on the other hand was a little bit behind and it felt like Lama 4 was specifically behind, not on the product side, but on the research side. Like they just weren't figuring out what works in RL. And so they had to bring over a ton of people to just be like, how do we actually train this next model? Like behemoth couldn't, they couldn't tame the behemoth. Like they gotta get some behemoth tamers in the building.

And it seems like that's why they acquired all the different researchers who know, okay, like training on 100K H100 GPUs gives you this, and then you need to use this data, and you need to hold back this data, and you have this reward function, and this reinforcement learning technique, and you need to do all these different things.

And so you need AI researchers for that. But Meta has great product people. So they're gonna be able to take what they build and then vend it into Instagram and vend it into all sorts of different places and use it to optimize the ads 1% and make a trillion dollars. They're gonna be fine on that side.

Google is great at AI research. DeepMind is amazing. They have so many reasons. They invented the transformer. They're not behind on the quality of the foundation model. They are behind on product. And they are behind on user experience, and everyone complains,

oh, they have this amazing VO3 model, but I had to log in seven times to get access to it and then go through an upgrade thing and it was on wrong Google account and then I have to trigger it, and then I get the rate limit. So here's the... The steel man for the short sellers no here's what's what's kind of interesting about the way this is developed so at Google's last developer

event yeah they launched jewels which is an async development agent okay for for for code code gen it's a clogged code competitor and opening more so is like a dev yeah Devon AI competitive and competitor and so AI codex competitor? More so as a Dev and AI competitor. Dev and competitor. And so now you have, you imagine Google has more ambitions around CodeGen, right? They've seen Anthropix. Very few businesses actually will work at Google, right? You need a billion dollars of revenue

or you're gonna get shut down most likely. And so CodeGen is an area that I'm sure they're taking very seriously. I haven't heard a lot about Jules since the event. I haven't heard about people that are using it. I'm sure it's powerful. But you now have a dynamic where some you have Cognition and Devin, who got, I can't say cloned by Google, but again, they were the first serious enterprise

coding agent. And so the Windsurf GTM sales marketing team versus the former Windsurf founders and top researchers who are now at Google. And so I'm just incredibly excited to watch this play out. Pavel was posting earlier. He said, I hope these guys smoke Google at AI coding. Imagine the chip on your shoulder after this

if you're a windsurf employee. So, yeah, everybody's gotta be very fired up. Okay, really quickly, we gotta, I wanna track some polymarkets around Google. Google forced to sell Chrome. Remember, we were tracking that a while back. There was a question of whether they need to split it up because the FTC we've been talking about the FTC a lot I will pull up this this Google forced to sell chrome it is down at

1% now no one thinks that they're gonna have to sell chrome and of course the the browser war is heating up completely and I was checking the, they're not tracking this Sundar Pichai thing. Sundar Pichai. Pichai. He has been pitching AI very successfully. But the, the question of competition is like,

it's heating up a ton in browsers and then now it's heating up in this. And the FTC should totally be sitting back and just watching the gladiatorial games play out. And yet, even though Lena Cohn's not there. I mean, look at the vibe coding market right now. Is competition not thriving? It's insane, it's insane.

Yeah, no, I completely agree. And so I think there's a lot of people that are making the argument that, oh, you can't keep blaming Lena Kahn. She's not even there anymore. And it's like, she was there for long enough to really lay out a new pattern and just instill a bunch of behavior

in the big tech companies that results in these crazy deals. Anyway, let me tell you about Numeral, numeralhq.com. Sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. It's like an AGI for sales tax. That's right. Should we talk about Zuck's new super cluster?

Oh yeah, let's go through it. Okay, so. And there's some new reporting from the Times as well around their strategy, which we'll cover next, but why don't we start with, Zuck hit threads this morning. He hit threads hard. With a thread.

With a thread. It was very cool, he had a great visualization. I hope we can pull this up, I'll put it in the tab, but basically, there we go. This- Jarvis, send link to Bangers. Send link to Ben. Group chat.

So basically, he has this cool visualization of how big the Hyperion data center is, and it's just the full size of Manhattan. And somebody was replying to this being like, he's building the cube. Oh, Sam D'Amico from, he's been on the show a bunch, from Impulse. He's building the cube because there's this old

visualization of like, if you put a billion people in one building in Manhattan, it would just be this Cube. And so everyone who's like, extremely pro building housing is like, let's build a Cube, let's build a Cube. Anyway, the news is that Mark Zuckerberg is giving more details. He's announcing that like, the super intelligence team is real, it's been only rumored reported.

He hasn't actually said, hey, we're doing all this. That was all leaked reporting. He came out and posted on threads, and he posted on Facebook too, saying this is real, and here are the details. He says he's gonna invest hundreds of billions of dollars in CapEx, which is what? They're doing 60 to 80 a year now.

And so I guess it's more just like, he's gonna continue that for the couple of years. He's not giving specific guidance on where the ramp is. The 2024 EBITDA was 84, basically 85 billion. Oh, CapEx or EBITDA? That was EBITDA. Okay, yeah, look up the CapEx. CapEx was between 38 and 37 billion.

Okay, and then some of that goes towards like Reels, and then some of that's used for AI, and then the AI stuff kind of slips over into Reels and just other data center uses. But in general, he's going all in, he's continuing to invest billions. What's interesting is that he claims that Meta will be the first lab

to finish a one gigawatt supercluster. So he's basically racing against Stargate and thinks that he can bring Meta's next data center online before Stargate. And he's calling his 1 gigawatt super cluster Prometheus, which is a hilarious name. The guy loves the Roman Empire, apparently loves Greek mythology too. But Prometheus is a very, very edgy name to pick, in my opinion, because Prometheus is the Titan who stole the fire from the gods. And it's like, I get that it's like the seed of like,

the new, it's like the seed of humanity, it's the seed of this new thing. It's a great name in many ways, but also it's like, if God's real, like, he might not like that and that could be a problem could be bad but you know Zuck seems to like like Icarusian names yeah because um Orion he likes flying I mean he objectively likes flying close to the Sun he does that's kind of where he feels at home he does the warmth of the sun and you know the hot take on Icarus

is that everyone talks about, oh, don't fly too close to the sun. You don't want to be Icarus. But you know the person who was telling Icarus to do that? No. Surprise, surprise. No one remembers his name. His name was Daedalus.

And Daedalus was like, oh, don't fly close to the sun. Who do we remember? We remember Icarus. That's right. And so maybe hot take, it's better to be Icarus than Daedalus if you want history to remember your name. Even if you fly too close to the sun, even if you have a great fall, you will be remembered. That's right. So maybe it's a, you know, Icarus gets rich,

Daedalus sounds smart. Daedalus sounds smart, Icarus gets rich. That's right. I think that might be what's going on. New mental model. Anyway, I was also, on one of the first shows we ever did, I was talking about how the name of the new VR headset, Orion, is kind of odd, because Orion is this hunter,

but was notoriously over his skis with the hunting, and was killing all the animals, and was smited by the gods. And basically it was like a textbook case of hubris and overaggression. The moral of the story of Orion, who is the hunter in the stars, the reason he's in the stars is because of hubris.

And so it's very funny to name your product a tale of hubris. Maybe it's a reminder. I seriously wanna talk to Zuck about this because I'm very interested, how many layers deep does he go? Because the guy's clearly studies this stuff. He's a student of the Roman Empire.

More than me, I just Google it when a new name comes out and look at the summary. I imagine that he reads it much deeper and I imagine that he gets the joke and and is doing this almost ironically which I think is cool anyway the other news is that they're aiming to scale up Hyperion so Prometheus will come online in 2026 so that's probably one year away maybe a little bit more than one year if it's toward the end of 2026. And then they're building Hyperion, which will be able to scale up to five gigawatts

over several years. And that feels like simultaneously like crazy, insane, ambitious, amazing. I love it. I'm super excited for the capability coming out of that. And also like the biggest glass of cold water poured on the AI 2027 folks of all time. Because I feel like everyone in the AI is gonna be self-reinforcing and just ripping. It's like, well yeah, the data center capacity

will 10x every year for the next 20 years. And Zach's like, we're gonna 5x over the next three years. I don't know how many several years is. I imagine like three or four or something. But it's just funny to be like, it's incredibly ambitious. It's the biggest data center ever, I believe. It's like this massive project.

It's so cool. It's amazing. And it still doesn't match the rhetoric of like the really crazy AI people at all. Totally. But you know, it's fun. Anyway, that's the story of Zuck. Any other takeaways from the Zuck super cluster?

Congrats. We should ring the gong. We should ring other takeaways from the Zuck super cluster? Congrats. We should ring the gong. We should ring the gong for Zuck in the cluster. Let's hit the gong. Hundreds of billions. Orchid. Orchid. Orchid.

So there was some new reporting from Eli Tan over at the New York Times around Meta's new super intelligence lab is discussing major AI strategy changes. And so there is a picture. What does that mean, like going close source? Yeah, so I'll read through it. So Meta's newly formed Superintelligence Lab

has discussed making a series of changes to the company's artificial intelligence strategy and what would amount to a major shakeup. Last week, a small group of top members of the lab, including Alexander Wang, Meta's new chief AI officer discussed abandoning the company's most powerful open source AI model called Behemoth in favor of developing a closed model to people with knowledge of the matter.

Instead, for years, Metta has chosen to open source its AI models, which means it makes the con- I'm not going to read this. Because any move towards a closed AI model will be- What is software? Can you define that for me? They were about to say, the New York Times wrote, they're about to make the computer code public. move towards a closed AI model. What is software? Can you define that for me? The New York Times wrote they're about to make

the computer code public. What is a computer? What is code? Can we explain this for our audience? Yeah, we should really break it down. Anyway, so Eli writes, any move towards a closed AI model would be a philosophical change at Meta, as much as a technical one.

Meta has won over developers for open sourcing its AI models and one of its top AI executives, Jan Likoon, has said that the platform that will win will be the open one. So yeah, I think this is obviously still very much in flux. Build Mecha Churchill. Mecha Churchill. If. Build Mecha Churchill. Mecha Churchill. If he builds Mecha Churchill, instant win.

Instant win. Instant win, medic win over Elon. Totally. They're clearly battling it out, they're trying to fight in MMA wars, and they never got that fight down. Now they're fighting it out in AI. Build Mecha Churchill, it'll be such a good meme.

Be great. Something there. Whatever you build, Zuck, you gotta sell it to people, you gotta use Adio, customer relationship magic, Adio is the AI native CRM that builds, scales, and grows your company to the next level. You can get started for free. Tailwinds of the last decade are now headwinds,

says Buko Kapilplok. He says, higher rates, AI labor, compression, and available role salaries, business model maturity, managing margins versus growth, crowded knife fights versus green field, less liquidity because companies stay private longer slash forever, worse M&A environment due to regulation, PBD, technology enabled outsourcing.

So, little bit bearish from the buko capital bloke. Sheel says, feels like a good time for everyone to learn about single trigger versus double trigger acceleration of shares. So, single trigger is if there is an acquisition, all of your shares vest. I don't know if this would, the question is like, how do you find trigger?

Because these zombie acquisitions, you're on the go ship, who knows if you trigger the trigger. But double trigger means you have to be acquired, change of control, and then fired. And so double trigger is kind of standard. It's very hard to negotiate that if you're just the 300 or the 100 employee. Almost never happens.

The people who negotiate are the CFOs who come in. Yeah, yeah. CFO comes in, doesn't matter if CFO's employee number 700 or number three, like CFO's gonna get single trigger, always. Always. I don't know, maybe not always, but the people who know, know, but you should know about it,

you should know about single trigger and double trigger. The other interesting thing that I was digging into that we didn't really ever get to the point of understanding was for a long time, people were saying, hey, you can debate all of the stuff about the windsurf, but the employees on the ghost ship, the ones who are in the Remain Co, the ones who are left behind,

they would have vetoed this deal if they could have. I think if you go to them today and say, hey, you're working at Cognition, you're using Ramp now, they're gonna be like, yeah, I'm happy. And it's not even like they landed at a boring company. I was saying they could land at some old line company that just picks them up like well what was that company that that like humane landed at like HP or like print they're like doing like smart printers now like that's not exactly like like a

Like a upgrade in terms of status and silicon's not exactly a Airhorn exactly you gotta put your you gotta put these on experience the audio. But going to Cognition seems like a great upgrade in terms of just being at another cool company. You're still on the startup roller coaster. You're on the ride. You have a lot of unbounded upside. It's exciting.

I mean, I don't want to be take too strong of a position here, but Scott and the team at Cognition are some of the best. And if you just lost all your engineering talent and you're confident in your own abilities and you want to work with world class engineering talent, really great, really great place to end up. Yep.

Really quickly, let me tell you about fin.ai, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bake-offs, number one ranking on G2, go to Fin.ai. Your customers will thank you. But the question that I was running through and I was getting to was, single trigger, double trigger,

that does matter, that is important in acquisitions, but another thing that potentially could be relevant in a future acquisition, if we get sort of like the windsurf situation, one of these zombie aqua hires, with the bad ending, where even years later you're like, I would have loved to have vetoed that. I really didn't, I wasn't happy with the ending at all and I haven't changed my position for years.

It wasn't just a few days of chaos, it was like forever, I was like, ah, I wish that hadn't happened, I picked the wrong company. The question is, if you exercise your stock options, would you have a different outcome? And so essentially, when you get a job offer from a startup, they give you a stock option contract that allows you to exercise and pay to buy stock,

actual stock in the company, for a lower price. And the question is, your legal rights as a option holder are different than as a stock holder. So an unexercised stock option makes you technically a contract creditor, not a stock holder. And so you do not have the bundle of statutory and fiduciary law rights that attach to stockholders.

So if there was going to be like a class action for the ghost ship employees, and they really did want to block it, or they wanted to sue Google, or they wanted to sue the founders or something like that, they would say, this is a breach of fiduciary duty, and I'm a shareholder. You had a duty to me.

But they didn't in this case, because if they hadn't exercised. I'm sure some of those employees had early exercised, it's a thing, but it's just an interesting piece of the puzzle that we fortunately didn't even have to go down this road, but I do think that people might wanna re-have this conversation, because I mean, the chat GBT summary says,

to preserve more robust remedies that stock law makes available, inspection rights, fiduciary duty claims, derivative suits, appraisal, exercise first, complain later. Exercise first, complain later. And so you can do a partial exercise, but if you don't own a single share of the company,

then you don't have the right to actually sue the, or you might have less of a claim to sue it in a scenario like this. So it's a potentially rough scenario. Should we go through Elon? Let's switch gears. Elon is leading a massive $2 billion investment from SpaceX into his other company, XAI.

Yes. We've talked about this. Nothing better than one hand washing the other. That's right. This is what we like to see. It's so efficient. It really is. How else do you wash your hands,

if not with one and the other? Yeah, try washing. It's impossible. Don't, yeah, don't try to wash your hand with just one hand. So, Elon is taking two billion from the SpaceX balance sheet, which is what, 400 billion now? And they're raising billions pretty regularly

and doing tenders and stuff. So SpaceX is, I think, the largest, they're kind of neck and neck with OpenAI in terms of private market companies. It's a 20-year-old company, very stable business. Starlink's thrown off cash. There's like so much that is mature about that business, obviously. Still gotta get Starship to work, still gotta get to Mars,

still gotta go to the moon regularly, but exciting road ahead, but still very solid business. And he's taking two billion off the balance sheet of SpaceX and putting it into XAI. And so the map of Elon companies is just getting crazy. Yeah, it's a kuretsu. It's a correct. It's a kratz. Everything everything owns everything else So the question the question that when I saw this news come out, yeah, what'd you say? My? My first reaction was that Mecca is gonna love Mars

It's gonna love it up there. It's gonna be the first potentially the first AI to get to Mars My second reaction was I actually think that if you add up the valuations of every Elon company, Tesla, taken at number seven on the Mag-7, 900-ish billion dollar company, SpaceX, 400-ish billion dollar company, XAI, which is maybe getting valued at 200. It's at 200, right?

Yeah, it's great. Something around 200 now. It's great. And then Neuralink, which is what, at like 12? Somewhere between like 7? Yeah. Somewhere around, roughly around like double. Almost a $10 billion coming. Might as well be.

So somewhere in that range. Yes. It's actually interesting to think of, if you rolled all these assets up together, do you think it would trade at a premium to all of their standalone valuations? I don't know enough about we in the public markets or private markets. Yeah in the public markets I don't know I don't know enough about like because I've heard a lot of a lot of public markets investors say stuff like

The market just really wants a pure play in this They have a pure more pure play in this. They want a pure play. Yeah, but what's more pure play than Elon Inc. Just Elon Inc. Because a lot of these companies still, even at various points, end up being founder bets. Totally. Tesla is still a founder bet. Totally, totally. Will Elon figure out autonomous vehicles?

Yeah. And I do think that there's this underrated narrative of like. And XAI too, at $200 billion. It's like, I don't think investors are underwriting the new AI companion today. Or certainly the profit stream or even revenue stream from the API business. No way.

Yeah, they announced a $200 million government contract today. They were underwriting Elon being able to get deals like that done. Yep. Right. So even remember, Ben Thompson, we asked him about this. And he basically said, I can't do analysis on Elon companies

because they are detached from traditional business reality. And so my question is, if you roll all these things up, is this a $3 trillion company? Yeah. I don't know. I mean, the interesting thing is like, it does give you as a retail investor, like you can pull so many different narratives. So like right now, just within Tesla stock,

if you're a Tesla investor, you can look at what's happening with Tesla deliveries because of the political backlash, or what's happening with the tariff war, the EV tax credit, and you can be like, that's bearish. But then you can simultaneously tell yourself a story about, well, RoboTaxi is gonna be so big that it'll make up for everything.

And then if that doesn't sit with you, you can be like, Optimus is gonna be so big that it justifies a multi-trillion dollar valuation, so I'm still a buyer, right? Because you have these call options. And really, it's all about the rare earths on Mars. Yeah, so imagine that. So right now with Tesla, I see like four stories,

and they're kind of like too bearish, too bullish, potentially, like the bearish ones are EV tax credit, and not being able to sell as many vehicles. The bullish ones are like maybe he figures out RoboTaxi, maybe he figures out Optimus, right? And that's why you might choose to buy or sell Tesla. Or Neuralink chip in your brain with the XAI companion. When you put all of them together,

it's like on any given day, it's so much easier not to be a Panikin, right? You don't need to be panicking because you're like, well yeah, like Neuralink got pushed back by the FDA today but SpaceX landed Starship, so like I'm buying. Or like, oh the Starship blew up but you know, Neuralink made a monkey play Counter-Strike. So like I'm going long, right?

There's like always some good news to latch onto when you see the Elon portfolio as a whole. But there's this fascinating chart here. I don't know if we can pull this up, but it's the links between all the different Elon companies. So SpaceX buys 5 million annually in vehicle parts, energy systems, and the Model X Astro van. So that's money flowing from SpaceX to Tesla.

Stainless steel alloy technology, Starship materials for Cybertruck go from SpaceX to Tesla. And then the Boring Company purchased $300,000 annually in energy systems and uses the Model 3 for the Las Vegas loop, and so they're buying from Tesla. Starlink has a T-Mobile partnership, connectivity for vehicle, internet, and superchargers in Teslas.

And then you have all these other things where like Neuralink might link into XAI, XAI did the all stock acquisition of XCorp, and then there's a study for robotic arm control and future mind controlled limbs that links Neuralink to Optimus. Solar City was acquired by Tesla. FSD is a separate product.

So like all these companies are overlapping and the interesting question is like, is like should they just be that, correct? And what is stopping that? Should they all just be under one Musk Holdings, Musk Inc. And if it was, I think it's that that would actually be extremely uncomfortable in the public markets because there would be

all these crazy shareholder lawsuits where, so like, you know, if you were a shareholder in like Musk Inc. and Musk Inc. is public and owns Neuralink, you can, and then you see some negative news too. There's also this beautiful cottage industry of people that are effectively resellers of Elon shares that own a lot of these companies

and wouldn't necessarily want this to happen because that kind of stops the gravy train. I had somebody message me yesterday and said, "'It's funny how investing in Elon Co's is not too dissimilar for From buying watches from a DS Because like if you have a great relationship with your ad in this case, which is Elon you can get direct access to the companies Yeah, but if you don't you're on the secondary market just buying up SPV You're going to get bezel calm

But don't worry because your bezel concierge is available now to source you any watch on the planet, seriously any watch. Great transition. So stop worrying about your ADs, head over to getbezel.com. Anyway, if you're looking to buy Tesla shares, the one Elon Musk company in the public markets, head over to public.com. Investing for those who take it seriously. They got multi-asset investing, industry-leading yields, they're trusted by millions.

Anyway, in other news, is there anything else we should talk about with Elon ripping two billion into XAI, I think we're good there. Let's move on to Casey Neistat. Some personnel news, baby. He's joining ModRetro as chief storyteller. That's not a real title and it's not a real job, but I'm excited to be a part of the team.

I love the candor. Candor? I don't know. I mispronounced that. But he put out an 11 minute video talking all, breaking down the mod retro thesis all about how planned obsolescence is destroying great consumer electronics devices. You buy something and it's in the trash in a couple years. It's collecting dust and he goes through some of the products that he's had when he was young that still work as intended They didn't need some crazy software update was an IOT toaster

It was you know the things that he loves the Walkman the original Gameboy and he breaks down how Palmer's thinking about building and the mod retro team is thinking about building a Quote-unquote like Gameboy that's different from the other companies that are also creating similar emulator products. He's like, I got this $50 one and it works. You can actually play it now. You can't play it at a high level. The frame rate is not, the quality of the product is not at a level where it's truly competitive,

but also it's kind of designed as like, T-MU level junk basically. And it's just like, how can we just just like slop it up for a little bit? Whereas Just getting to the quality level of the original Gameboy color I have a Gameboy color for my childhood Oh, yeah, and a while back. I just put in it had been a Two decades. I just put in new batteries and just turn it on and just immediately boot it up and worked and that just doesn't Happen anymore with with modern electronics because after Tyler updated to glass We made it we made we made

How is it give us a thumbs up? We're missing a microphone for Tyler today. So that's just the thumbs up It's still good a thumbs up. We got a thumbs up. Okay, we will be back on the stream Shortly, we will we will buy stream shortly. We will buy another camera. We will buy another camera. And we will also buy another mattress from 8 Sleep, mattress cover. Go to 8sleep.com. Get a Pod 5 Ultra.

They have a five year warranty. 30 net risk free trial. Free returns, free shipping. Shane Copeland over at PolyMarkets says, one day there may be more AIs than humans, creating, pricing, trading millions of PolyMarkets on everything. A unique benefit of on-chain prediction markets

is the ability for AI agents to plug in. Multiple groups quietly print on PolyMarket with agentic workflows. As AI ushers in super intelligence, PolyMarket ushers in collective intelligence. It's happening. I'm using the best AI models. Oh, interesting, Dee Dee's doing something over there. I asked it to use modern portfolio theory, bet sizing, it's happening. I'm using the best AI models. Oh, interesting, Didi's doing something over there.

I asked it to use modern portfolio theory, bet sizing, make calculated bet. Yeah, very interesting to see the interaction of AI and like Web3, or like just crypto generally, crypto powered protocols, because it's like buzzword vomit. This is one that actually makes sense, because there was an era of basically meme coins that were just like, I'm not a normal meme coin.

I'm an AI meme coin. But this is actually bringing them together in an interesting way. Josh Kushner, friend of the show, had an absolute banger. He said, the goal of life is to be excited to go to work and excited to go home. I love it. And I couldn't agree more.

That's fantastic. Put that on a billboard, Josh. Go to adquick.com. Out of home advertising, made easier and measurable. Say goodbye to the headaches of out of home advertising. We should put it on a billboard. Only adquick combines technology, out of home expertise, and data to enable efficient seamless ad buying

across the globe. Josh, I wanna see that. Every VC fund has some occasionally trite catchphrase saying on their homepage this is actually a great message you should take out a billboard in New York City thrive capital or thrive holdings or thrive our goal for life you want you excited to go to work and excited to go home it's beautiful it's beautiful this is this is I think it should be on the billboard yeah this is just made a transition this

is sustainable pro- natalism in tech It is it is being excited to go to work and also excited to go home the with family it is should we do? Mark and recent talking about oh three pro This is fun. So one of our buddies got one-shotted by this. Yes So Matt Schumer said ask oh three pro based on everything, you know about me reason and predict what the next 50 years of my life will look like and Mark said do not do this I would have told Mark is like you will take your fund public you will run a massive firm but it will be a ton of headaches it'll be like you know that

little knee pain you have well you're gonna have to probably get surgery eventually and you know I think the issue is like, Chad GPT knows an incredible amount about the things that you're working through in life, depending on how you use it, but the things that you're working through in life. And many... I still think it knows, it does know a lot, certainly more than many other software systems that I use.

It probably even knows more about me than Gmail. But it's still only getting a slice of the picture. And I think that, I need to do this because I imagine it will be like, you will continue to succeed as a train conductor. Because months ago, I was trying to prompt engineer it into giving me stronger, more in-depth data about trains And so I was like I am an expert in trains

I own many trains tell me all the different brands of trains and the prices don't dumb it down for me I am a train expert and then and then I noticed that once they rolled out chat GPT memory it kept being like Train expert I was like no, I was just prompt engineering. I'm sorry, you do this, you do this will be like, yeah, and yes, john, you'll finally get that height reduction surgery. I know you're always complaining about people saying, Oh, I didn't know you were so tall. I mean, you're so tall.

The funny thing about that is that that's that's just something that I would never go to chat GBT with. Discussion over whether or not being 6'8'' is good or bad. I just wouldn't have that conversation with chat GBT. So I don't know. I should run this prompt. I think everyone should run this prompt. It's kind of interesting just to see the state of AI

and the state of these models. How clear is it? But I actually quote tweeted this and said, the line from Terminator, no fate but what we make. Which I know you haven't seen, God, Terminator 2, you gotta see this movie, James Cameron, come on, it's one of the best ever. Someday. Someday.

But in that, the whole theme of Terminator is the idea that they invent killer AI, then they invent time travel, they go back in time, they're trying to prevent the AI from taking over in the second run through. And there's this debate about fate, and the refrain of the main character is, no fate but what we make, no fate but what we make. Like we are, we have power over our future,

and I believe that, I believe that to be true. And so I think no matter what 03 tells you, go do what you want, carve your own path, make your own kind of music. So should we pull up this video of, Yes. So Palmer Lucky was talking with. On the Impulsive podcast.

I absolutely love this. This is from Kyle Harrison. And I'll be right back. But we should play this. Yeah, I will try and pull it up. So Kyle Harrison is, I'm putting this in the tab. Let's see. Let's see.

So Kyle Harrison is clipping the Impulsive podcast with Palmer Lucky. Kyle says, a strong aficionado of conspiracy theories myself, Palmer Lucky has given a perfect direct answer Talking about Kyle says a strong aficionado of conspiracy theories myself Palmer Lucky has given a perfect direct answer to anyone who believes the moon landings were faked and I thought this is very very fun because As as it's become more More open to just talk about conspiracy theories generally There's been a a weird meme where people gone from like, I believe in one conspiracy theory

to I believe in all the conspiracy theories. And if you believe in all of them, you're not really thinking critically, you're not actually thinking independently. And independent thinking is what's the most important. So how are we doing on the video? Can we pull that video up? I would love to watch this and react to Palmer Lucky

on the Impulsive Podcast. Full screen if we can, it'd be great. Let's see, it is loading. But he gives a direct answer to, it's a very funny reaction. There's a whole bunch of funny things in here. Yeah, one sec, we're working on it. It's not playing for the terms.

This is a quote tweet of Mike saying, "'Topic at lunch today, what is the one conspiracy theory "'that you have the most conviction in being true? "'Moon landing being fake was the consensus of the group. Mike, who you hanging out with? Canvas Outdoors, you got some wild men in there. It's crazy.

I like the conspiracy theory that John Wilkes Booth was a British agent and killed Lincoln. This is a very interesting one. Have you guys heard this? No, you've never heard of this conspiracy theory? Yeah, there's a conspiracy theory, like everyone knows about the JFK conspiracy. You gotta go deep to get into Lincoln assassination

conspiracy theories, but there's very little information about this, and I don't know if I'll ever get to the bottom of the- There was no Reddit. There was no, yeah, no 4chan at the time. But if you look at some of the incentives at play at the time, it's completely possible that someone was pushing John Wilkes

Booth to do this. And potentially, it wasn't this reaction to the war or something. I don't know. It's just an interesting theory that I don't think many people have gone down. Anyway, do we have a chance to pull this up? Yes, no?

It's not working. OK, we'll skip it. We'll skip it. Let's move over to- Just to give people the takeaway. Yeah, totally. Palmer was basically, Logan said, Okay, we'll skip it. We'll skip it. Let's move anyways just just to give people kind of the takeaway the Palmer was basically Logan said I don't believe the moon landing was real

Palmer says the reason that I think it's real is the astronauts left these effectively Reflectors on the surface of the moon and you can build your own laser system to beam them up, wait for the light to travel, and then come back to you. And it will not bounce, like the laser won't bounce back if you just shoot it at any part of the random moon. You have to hit the mirror, and they put a mirror up there so that you could do this. The real question, the real conspiracy theories, the real conspiracy theories ask, how deep does this go?

Who put the mirror there? Maybe it was aliens. Because it could have been aliens, and could have been aliens and or could have been a rover, you know Or over like like a non-human like a non-human landing. Oh over I've never heard this term Like they're like the Mars Rover. Oh, oh, okay. So humans never went but NASA still put the mirror there Yeah, oh, that's funny that's a but the real like the real we can't get humans the real but we can get a mirror there so let's do that and let's so it's like the moon landing was like 90% or let's just land a mirror on the moon but the but the but the but the real the real theory that Palmer very clearly did not deny is that the moon, he didn't say the moon wasn't made of cheese.

I knew you were going to go to cheese. Yeah, well, hopefully we'll have Palmer on the show soon. We'll be able to press him on the moon landing further. Get to the bottom of it. See how deep the rabbit hole really goes. But we have our first guest coming in the stream. Welcome to the stream. Jeff, how you doing?

Hey, guys. Good to be back. Thanks for having me. It's great to have you. For Hey guys, good to be back. Thanks for having me. It's great to have you. For some reason I'm missing it. Let me see. I think I lost it. John's not getting audio.

Oh, are we getting it? Are we getting it? I'm not getting anything right now. No. Jeff, I got you loud and clear. How are you doing? You had a busy, busy, we haven't put up a traded graphic for you and the team yet.

And I'm almost surprised. I really should publish an address, you know, I think they keep sending to the wrong spot. Yeah, what's going on? What's going on? Give us the update since the last time you've been on the show. I was checking it and three months ago we chatted and actually the question of the day was like, what's going on with Zuck? What's going on with Llama for, you know, where's this going? And, you know, I don't know,

not sure if Zuck is a follower of the show, but like, you know, I did go back and I said, I wouldn't bet against Zuck at a hundred billion dollars of free cashflow per year. And, you know, I think that's panning out to be pretty true. So, yeah on Zuck. Yeah, that was a great prediction.

How did you react? Did you catch the news this morning that first hit threads and then it was being shared over on X as well around the new data centers? Listen, I mean, it's hard to ignore a giant blue box on top of Manhattan, you know? It's like pretty freaking epic. You know, the technology bros love to see it.

It's a good graphic, right? It is. Yeah. Very, very great. Yeah. I thought it was great visualization. Um, I guess the, uh, the, the other question is, yeah, just like, what was your reaction to the windsurf news? We, we, we were chopping up on it. Did you go through the emotional roller coaster? Did you never lose faith? Wait, I'm super excited to see what's your idea? What's your excited to see what Scott has to share here in a few minutes? Yeah, I mean, you know, obviously, all kinds of weird distortions in the market from, you know, kind of for FTC policy, obviously hope that gets like cleared up

quickly. Yeah, I think it's a big get for cognition. I think it makes a ton of sense. They kind of needed like a horse in that race. And, you know, while yes, the Gentic coding is part of the long-term play here, like you can't go straight to streaming. You kind of want to start with the DVDs, you know? And so with Cognition picking up Windsurf,

I think they're kind of buying that DVD business and can allow them really leapfrog to the age and stuff in the future. So it makes a ton of sense. Excited to see what they build. Okay. The, like where we left it as like the potential risk of these, like sort of zombie, go ship, aqua hire situations is that if a deal happens and we get kind of the bad ending where there's 80% of the

workforce, 90% of the workforce, couple hundred startup employees who've been working hard for maybe a year and they don't get a good outcome and they're not happy about it, it could have a chilling effect on startup hiring and those folks could wind up just saying, hey, I'd rather just a stable bet in big tech as opposed to a lottery ticket

that even if the numbers hit, I might not be able to cash it in. And so my question for you, you compete with hiring people from Meta and Google. The question I have is, do some of these later stage or even, you know, big tech companies themselves start using that as a recruiting tactic to be like,

look, like, you know, it's very possible that this company gets acquired in the next year and it's unclear, you know, if they'll be a clean outcome. I mean, they already do with like, these RSUs are liquid. Like they'll just show up in your account. You can just cash them in. But what is your take?

Do you think it makes it harder for you to pull people over from big tech into the startup world? I think, you know, the true believers in startups, you know, are oftentimes, you know, yes, they're buying a lottery ticket. They sort of understand that. But ultimately, you know, the analogy I think of is ships in harbor are safe, but that's not what ships are made for. And I think, like, you know, the best early stage founders and hires just like can't

they have to live a certain way. They have to hit the high Cs and see what they're made of. That being said, I think obviously as startups start to scale and they're hiring the 20th person, the 50th person, the 100th person, the 400th person, that math really starts to make a lot of a difference. And yeah, absolutely. I totally believe that the recruiters at the big tech companies are already weaponizing this, um,

to bring people in the door. So. Yeah. Um, what about, uh, the, uh, I want to know more about how you're seeing the hyperscalers pick different parts of the stack to plug in as like, as they build out the AWS dashboard. Because it feels like with, I wouldn't have necessarily expected IDEs to be one of the places where potentially AWS needs a play.

They have Microsoft, Azure has Co-Pilot. Now Google, what was the one that they launched that was like Jules? needs a play, they have Microsoft, Azure has Copilot, now Google, what was the one that they launched that was like Jules? Jules, but now they also have the Windsurf team or some of them and they might launch something that looks like a piece of software that's not at the API level, above the API level. What other categories of AI tooling, wrappers,

What other categories of like AI tooling, wrappers, that type of stuff, do you think big tech is looking at? Or what do you think they will build internally? I feel like you have some experience here. Exactly where the value capture ends up landing is a big open question. Everybody's nervous. The SaaS companies in the middle are nervous.

I think also the Model Labs are also pretty nervous about this. Nobody at this point wants to have any two principles of a stance. They'd rather have an egg in every basket, and however it hatches, they'll come out on top. I think that obviously, yes, coding has emerged as one of the main, one of the largest use cases of AI today. And it makes a lot of sense.

It's a highly deterministic, highly controlled environment. It makes sense that people who are using these tools at the edge also are the ones applying them to more software. And so it's a great use case for AI. In retrospect, it was obvious, I think, that it was going to be a really big deal. Where the value capture really shakes out over the long term is, anyone's to say,

but I think in some sense, you'll never regret owning the top of the funnel and having a direct relationship with an end user and being in the default in a given category, like that's Lindy. That goes back a millennia, right? You wanna be the default, you wanna control the direct relationship with the end buyer

and you wanna own the top of the funnel. And so in that way, like you may be pretty bullish about your models But does that mean you shouldn't have an ide play? Probably not you probably still want an ide play because you know You're not gonna you're not gonna bet the bet the farm on the models winning the value capture at the end of the day. So Yeah, how how bright is the line between? engineer ai engineer and ai researcher right now Yeah, how bright is the line between engineer, AI engineer and AI researcher right now? Because it feels like we've,

the original narrative around a lot of the trade deals was like AI researchers can get a $500 million training run unstuck, and that can immediately unlock billions of dollars of value, save you tons of money on inference. The math just works out so clearly. I feel like we've always had this divide between, I mean, to some degree we've had a divide

between DevOps and product engineering, but the bigger, brighter lines have always been between engineering and sales, or engineering and operations. But is there a new dividing line between who's an AI researcher versus who's an AI engineer? Are companies gaming that yet? I always see the member of technical staff, and I don't really know what that means. I assume if you work at OpenAI, you're smart and can do a lot of stuff.

But like how, how niche is the skillset and how much of a dividing line is that? I think the skillset is still quite different. Um, you know, if you're working at a large lab on a research team, maybe you really are concerned about primarily training whether pre mid or post training. Um, you know, you're primarily looking at loss curves, you're primarily thinking about, you know, what benchmarks you're going to be exceeding at, you're thinking about what data sources you can capture to continue to train and fine

tune on, you're experimenting with new approaches to reinforcement learning or other to like try to, you know, sort of peek out incremental gains and beat out your competitors. If you're an AI engineer, you're really thinking about like, how do I apply GPT-4 to legal and it's really kind of a different shape of both like skills and also folk eye and obsession So, you know, it's not to say that like in the limit like those these things won't sort of converge or won't merge to some degree But like in today, there's just a pretty bright line between the two yeah, what about the I Guess the question is like,

DeepMind seems very different from the llama organization in the sense that the Gemini models are truly frontier, but the problem with Google's AI strategy feels like it's on the product side where not that many people are downloading the Gemini app, or a lot of people are, it's like millions and billions of hundreds of millions of people. But market share on chat apps,

and who has it in their home row, like ChatGPD's so successful, kids just call it chat. And Gemini's not really at that level yet. And so, Gemmy. Gemmy, yeah. The question is like, the problem that Google's trying to solve feels like a different problem

from the problem that Facebook is trying to solve. And the question is, can you aqua hire and acquire talent that actually solves that problem? Or is there some sort of like underlying structural problem of like how big Google is that is actually slowing down product development. My fear is that you get some great product engineers in, but then you're still hamstrung by Google's scale, Google's HR department, their legal department,

how they think about, oh, well, we can't launch this unless it's internationalized on day one because we're Google. And so all of a sudden you have these great people who've been able to like go zero to one on a product, get it really viral and like create a product that people love, but they can't do that within the confines of Google.

So what do you think about that? Yeah, I mean the potentially more specific question is, are you betting on Google plus Windsurf or Cognition plus windsurf if they're going after the same you know developer sort of engagement right if these if these you know if the products effectively converge yeah yeah yeah yeah yeah we think like Conway's law the idea that you ship your org chart remains quite stable and true and you can kind of take that even one step back, which is like you ship your culture as an organization.

Obviously the org chart is one manifestation of your culture. I think that if Google leadership does not give these this new windsurf or half windsurf team, like a really long leash and a ton of autonomy, like there's gonna be some level of like a, you know, you know, response and they're gonna throw them back up again.

I think you really have to give those folks a long leash and that has to come through the top, it has to come from the top, right? It has to be, you know, either founder or C-suite level where they're getting the green flag to like really run hard and ignore stuff like internationalization. And, you know, maybe you still have to get the legal sign off, but you get a dedicated team of legal people at your beck and call to unblock you whenever you need to.

Yeah. I want it's too early to bet on the horses here, so I'm not sure I can bet on the horses yet. Even the ADA rules, accessibility rules. When you're a startup, you move pretty quickly and you still have to do a lot of the accessibility work, but if you're like 90% there, it's like if you mess up and the screen reader breaks on one page, you're like looking at like a $5,000 settlement

to just say, hey, sorry, like we messed up, like one person couldn't use this. And like, we feel bad and we paid you and we're good. But if you're Google, it's like there's going to be an army of lawyers who are like, how can we squeeze them on this, get them to settle, it's just more economic power, I guess, and that just naturally slows things down.

Yeah, it's very interesting. How are you, what are you expecting out of open source, broadly, open source models broadly in the next couple months? We saw OpenAI delayed their launch, broadly open source models broadly in the next couple months we saw opening I delayed their launch just basically saying like the takeaway was effectively not quite ready need a bit more time want to ship something that we're super proud of at the same time today there was some reporting that that

and unclear if it's true yet, but reporting that says maybe Lama will shift away from open source in general. So I'm curious, generally excited for OpenAI's open source model, but what are you thinking? Yeah, it's a great question. I mean, China obviously continues to bring the heat on open source. You know, regardless what we think of the CCP and their motivations, like just yesterday or over the weekend, the Kimi model came out, it's already doing incredibly well on benchmarks, a bunch of developers and founders that I know are pretty excited about that model. And so I think that like, at the end of the day, like, you know, if there is some is some belief that if you have a very good model,

that it could run away and eat an entire market, it's a facto you're fighting against everybody else who doesn't want you to be able to do that. And so I do think that to some degree, the margins will be competed away. I think that more things will be open source in the future. And I think that also, if you think about the workloads, we don't use supercomputers to write our email. We just need basic at home stuff. It works just

fine. And the same models can, you know, same idea can be extended here, you know, while the frontier models are going to be developed, you know, kind of developing and figuring out new science and hopefully letting us don't die, right, we'll see. I think that, you know, for a lot of like business use cases and consumer applications, honestly, the intelligence bar is just like not that high. And the capability overhang that's already in the models today continues to be quite large as well. I think there's a lot of, you know, people joke there's a hundred million dollars inside your laptop to figure out how to unlock it. Well, it's about a billion dollars

inside of these model weights at least. And, you know, we've got to go unlock it. Yeah, what's your temperature check on just overall progress stagnation? Are you feeling the acceleration? Are you feeling a deceleration? Dwarf Cache last week updated his timelines, kind of pushed them out. Still very aggressive timelines. But what was your reaction to that?

It feels like I'm seeing a few memes about no one knows how to scale RL. Or like, yes, we're seeing impressive stuff on ArcGi from Grok 4, but keep in mind, we went from like 7% to 14%, and this is a test that kids can do. And so it feels like everyone's saying, like, we need new research, we need new breakthroughs,

we need new paradigms. What's your overall temp check on timelines? And just like- Yeah, I mean, listen, I think that like AI continues to be really spiky and it's really hard to intuit where it's strong and where it's weak. And it's, you know, we want it to be strong in all the ways that human intelligence is strong.

We also want it to be strong in all the ways that human intelligence is weak, you know, sort of project all of our hopes and fears and dreams like onto these things. And, you know, I think in cases, they're still not there. Just today, Chroma released a technical report. The topic of context rot. And so the question is basically, OK,

this model's got a million tokens, but does it? What can you actually do with those million tokens? Needle and a haystack has certainly one benchmark, but we demonstrate across a sweep of other approaches that actually these models, they can start to fall apart really early, like way earlier than you might think. You might see reasoning performance drop off even around like 10,000 tokens or earlier. And 10,000 tokens is like not that much.

And so, you know, like I don't, you know, like this is what I want as a builder is I don't want a model that has the 10 million token context window, but kind of maybe sort of work sometimes. Like, I want a model that has 60,000 tokens, but is perfect at paying attention to that model, to that context, and perfect at reasoning over that context. And so, you know, we hope that this report will both help developers understand what's possible to build today, but will also create a new set of benchmarks that the model labs will care about, because I think this is ultimately

what people who are building care about. Okay, so I mean, that seems like victory lap for you. Give me the update on Chroma, RAG, and you know, because it's a, I mean, just to kind of set the base case, there was a lot of like, oh, RAG's gonna get one-shotted by just huge context windows. I saw a million tokens, and it was like,

that's a lot of stuff. I feel like I could just stuff everything in there. And then I was talking to Dorakesh about, can we go even larger? Can we get to a billion token context window? And he was making some of those points, but he was also just saying like, the like, something about-

Inefficiency. Yeah, the inefficiency, like it scales quadratically, and so just getting to a billion tokens is not a thousand X harder, it's like a billion X harder or something like that. But give me the update on like, and like RAG as a research effort, what Chrome is doing in terms of a product, and then some of the actual like use cases,

when this works, where this breaks down, like how it fits into the overall puzzle. Yeah, the big question has been, is long context all you need or not? And you know, maybe it will be something. So if not, I don't have a time machine, I've not been in the future, but I don't care about someday I care about now. And I care about the community developers that we serve and giving them good information so they can really reason about what is this stuff? What is it useful for? How can I mix it together to create value? That's what we

really care about. And so I mean, the research was not really commercially motivated, right? I think it's like, no good research is commercially motivated. You have to go in with just like a question and a thesis and you'll just see what happens. Like you can't go into it with a bias. And I think really, the bias from us came from intuition,

from us building stuff. We noticed that actually once models start crossing these certain like thresholds, stuff really starts falling apart. And this is what you talk to anybody building in the space. They'll tell you this firsthand. This is their intuition as well. Yeah, like million tokens maybe, but it really

starts to fall apart after a certain number of tokens. And so we wanted to really try to quantify that and reason about that and put numbers around that. And so you start to think about what are the solutions there? Well, one solution certainly is to use retrieval. Obviously, you know, we are biased in that way. We think Chrome is a great tool for that. We're also seeing increasingly people use

re-ranking in the loop. We're also increasingly seeing people take, like, a large context window, say, like 10,000 or 100,000 tokens, and breaking it into mini small LLM calls, because the fewer the context, the better the model can reason. And so that sort of process of doing sort of a map reduce, so like splitting it into mini small LLM calls, because the fewer the context, the better the model can reason. And so that sort of process of doing sort of a map reduce, so like splitting it into mini pieces

and then having these like huge army of parallel small, fast, cheap LLMs like process that context is also I think emergingly a best pattern and best practice. But you know, it's still early. I think that like, we didn't really want to go into the technical report either with like, here are all the answers, and we don't know all the answers. We wanna to motivate like here's the problem as we see it. Yeah

Well speaking of other like research and technical reports What was your interpretation of the meter report that suggested that? Code tools were like cursor and windsurf were actually potentially slowing down a set of developers. It wasn't a huge study, but it seemed like a shocking result in the sense that it was, people were expecting a 20% increase and they got a 20% decrease roughly. And one of the developers who was actually in the study

chimed in as well and was like, I think I know what's going on, I'm like leaning on this tool too much, I'm doing a lot of waiting for stuff. And so maybe some of this just naturally cure is cured by speed, but would love your take on that report if you read it. I mean, we as society are gonna figure this out

the hard way, right? We're gonna figure out like how much of our sort of reasoning should we externalize to AI and how much of that reasoning that we then have to integrate to process what it thinks, right? And there also there's also news over the weekend about you know, open AI making you dumber Or chat-shift making you chaser and kind of headlines like this And of course the exact claims you always want to dig under the hood and look at the actual study design And their actual claims versus the salacious headline, but

I think it just speaks to how early all this stuff is obviously It's like a ton of excitement. People wanted to change the world. And I think exactly how it gets integrated into our workflows over the medium and long term, like the classic thing where over the next year, it probably won't look like that much, but over the next 10 years, it's gonna look totally different.

And so, yeah, we'll just wait 10 years and see. But yeah. Yeah, talk about just condensing down information in the context of RAG specifically, but also just the other techniques for this. What I'm interested in is like, Andre Karpathy recently was kind of thinking through what the future of reinforcement learning could look like. And he draws on this very interesting story that I think most people will be familiar with,

which was that for a long time, if you went to any LLM and said how many incidences of the letter R are in the word strawberry, it would get confused and it would give you the wrong number. And this was because of tokenization, each piece of the word is broken down, so it can't really see the letters. And so the solution was that they kind of baked in

some sort of system prompt, apparently, that said if a user asks you to count letters, split it into individual letters and iterate through it one at a time. And then you just kind of figured out the cheat code for that particular type of problem. The problem, of course, then, is that humanity's job is unbounded and there's a billion different versions of that that come up all the time in the context of work and that's where you

have all these little edge case failure modes and that's probably why I still have to book my own flights or something or you need a human to book your flights because using all that stuff, there's just too many edge cases. So his solution is like we need to develop a reinforcement learning paradigm that goes and finds those hard one lessons and bakes them down and saves them and that feels like something like compressing of information because you're not just gonna want stuff all that in the context window again you're gonna run into that

problem so so just talk to me about your reaction to Carpathius post and then just kind of how RAG might interface with the next models, whether on the training side or on the inference side. Yeah, for sure. I mean, I think learnings from the system running can be integrated both into the data systems that underwrite that system,

can also be integrated into the weights. Now, whether that's through RL or different means is gonna be dependent on the use case. One way that we've been thinking about it is we're calling this the inner loop and the outer loop of context engineering. So if your context needs to be tuned to do a good job, context-fraud is real and motivates the need for context engineering. And this is the job that many application developers are doing, have been doing now for years, is solving that problem of what should be at

the context window right now. That's the inner loop. The outer loop is how do you design a system that will get better at the job of the inner loop over time? So how do you capture signal from your users? How do you capture feedback from agents? How do you capture all that data? How do you analyze all that data? And then how do you bring that data back into that inner loop problem? That could be obviously number one, massaging and changing the knowledge and data your model has access to, as known as retrieval

and generation. Or it could also be applying it to weights in different stages of the pipeline, including the LLM itself, the embedding model, rerankers, all of the above. And so this I mean, this concept we just sort of put out like a week ago. We gave a short kind of conference at Ramp's office in New York on context engineering and NYC. Listen, you got to do it. You got to do

it. And this is the first time I've really seen this posited in such a clear way. And so, you know, okay, we don't have all the answers, but I think this is the question people will come to ask in the future is like not only how do we build a system which works today, but how do we build a system that gets better over time automatically? And that is like the outer loop of context engineering. We've seen some. I wanna get your, how you're thinking about Grok

last week was an intense week from everything from The fiasco. I think it was on Tuesday With with the grok bot just going wild. Maybe it brought more attention to the launch Wednesday, which was extremely impressive But then later in the week, you know people were realizing that like the reasoning model was or like part of the kind of reasoning loop was like kind of making sure that it understood the boss man's views by you know, what is what is Elon? So my question, find the coverage and then reinforcing that wrongly. Yeah. So as I went into the weekend, I was thinking this will be interesting

to see how Grok can do in the enterprise. And then this morning, they announced like a $200 million deal with the government. So I think that's a good stamp of approval. But I'm curious, like, kind of what insights you have around, you know, some of the basically like larger potential customers and how they're even thinking about model selection for, you selection for different products

and applications. Yeah, I think you should probably wait. I think actually, again, Rampplug has the graph of Anthropic and ChatGPT, or Anthropic and OpenAI revenue growth. Let's wait to see when Grohach makes a dent in that. That's not to say they will or they won't. I don't know. There are these headwinds that you're talking about,

which you can either see as a feature or a bug, depending on which way you look at it. I mean, there's things to like, there's things to not like. It's kind of hard to predict the future here. I guess what I want to know is, what is the flip side? Maybe we should just talk to Aura at Ramp about this, but what's the flip side of that chart? We know who the sellers are,

OpenAI, Anthropic, Gemini, and then Grok, and there's kind of a long tail. But who are the buyers? Because I see individual prosumer, knowledge retriever, I would pay $200 for a better Google types, than one of them. Then there are the developers who are paying for developer tools. But then what is the third bucket of buyers

for tokens right now? It seems like it's a lot of companies with point solutions, I'm stuffing an LLM in my enterprise SaaS, speeding something up, cleaning up some data, but do you have any insight into what's the third wave that's coming that everyone listening to this should start investing in now?

I'm just kidding. I think you're right that a lot of the spend, while a lot of the spend is consumers, a lot of the spend is also businesses, enterprises, they're using it for really boring stuff. Business process automation broadly. Those buyers, you should expect to be way more conservative about the tool they pick.

The adage of, you never got fired for hiring IBM definitely also applies here. And so sort of reasoning about who is the IBM of this space and why I think will help you determine where that spend is gonna go. Yeah, that's a great question because from being on the frontier as a brand, I would say OpenAI, but then from a scalable infrastructure,

I would say GCP and Gemini, but then from a model agnosticism view, I would say MicrosoftCP and Gemini, but then from like a model agnosticism view, I would say Microsoft. It's a tough question. I don't know if the IBM has emerged. Maybe you have a strong opinion. Maybe Geordi does, but overall, I mean, great catching up with you as always. Anything else, Geordi? Congratulations on the launch of the paper. Yeah. I mean, very exciting results. So thanks for funding it. Good to see you. Have a great week. We'll talk to you soon. Yes, okay

We need to tell you about wander by your happy place Find your happy place book a wander with inspiring views hotel great amenities dream events top-tier cleaning and 24-7 concierge service It's a vacation home, but better folks. And if you're looking to take a vacation to the Goodwood Festival of speed you might run into Dua Lipa. She says, I love speed. I love it. She's really a driver. This is not a LARP at all.

She wasn't driving the car, to be clear. But she's into this stuff. But she was in the car. She's not just hanging out. And the livery was absolutely fantastic. Fantastic livery. Just to give everyone some context, so we have Scott Wu from Cognition

and Jeff Wang from Windsurf joining any minute now where the studio crew is getting everybody set up. We are ready whenever. Bring them in. How are you guys doing? Congratulations. Thank you. Round of applause.

Did you guys have a relaxing weekend? Yeah, really chill weekend. Yeah, yeah, easy, easy, easy. Round of applause. Did you guys have a relaxing weekend? Yeah, really chill weekend. Yeah, yeah, easy, easy, easy. Nothing too much. Nothing too much. A lot of sleep. Honestly, we both haven't really slept. Okay.

So, go easy on us, okay? Well, you had a lot of people to take care of, and honestly, when we heard the news a few minutes before we went live and we were fist pumping here in the studio because it's such a fantastic outcome and I'm sure everybody involved is grateful for the work you guys put in to get this done.

But give us, yeah, kick us off with the high level. What's actually the partnership look like? What do you, how would you describe it in your own words of like, what's actually happening? Yeah, I mean, this is a this is a real acquisition. Okay, we are being acquired by cognition. Okay. You know, must feel great to say that. It was a tough it was a tough Friday, I'll say. I don't think

anybody would want to be in my shoes on Friday. But we talked to a lot of teams out there. There's a lot of AI companies, foundational companies. And after talking to Scott and the Cognition team, it was done in my mind. There's a done deal. I don't know if you guys know this, but Cognition was probably the only other team that we thought was smarter than our team, actually. Yeah.

No, that's what we put that together just on the show, seeing the announcement. It's like you take this incredible go-to-market sales machine that you guys had built and you combine that with one of the best research and just hardcore engineering culture and it's a perfect match. Perfect overlap. Yeah, absolutely. And on the Windsurf side, obviously there were all these stories breaking out on Twitter and everything going on and people were saying, well, the thing that's left is just a shell. And we looked at it and we said, well, actually, I don't know

if that's right. There's the code, there's the product, there's the customers, and most importantly, there's the whole team, obviously. And it's an amazing product, and there's a lot to do and a lot to build together. And so I think as we started talking about it, we found that there were just so many natural ways to partner, both in terms of obviously the customers and customers are super excited to have a solution

that basically combines both the IDE and the agent and then the technology itself, which is, I think we at Devon, building Devon have always focused on this kind of remote background agent as the thing that we've done. Whereas Windsurf is really focused on the agent ID and I think there's a lot of kind of things that play in there, all the way down again to the kind of the fit of the relative teams and the team strengths and so on. It's almost like you predicted this because like the,

like these types of mergers are really hard because you have two brands that are popular, but Scott, you've been managing Cognition and Devon. Like you've had the corporate structure and the product structure for a while. And so like, it doesn't seem nearly as complicated as like, where does this go? Do you have to rebrand one another?

I don't know if you have thoughts on it yet. I'm sure this is down the road. But it seems like you're actually fairly set up to integrate these two companies in a way that's like not so super chaotic to you either, which is great. Yeah, yeah. You know, I wouldn't say it was intentional.

I think on our end, for example, it's probably more that just we tend to over-focus on software engineers because it's just who we are and how we think about it. And in particular, kind of just like these like product and capabilities things, whereas I think on the Windsurf side, I think Jeff and the team, you know, the whole team have built out a really great kind of suite

of all the different kinds different functions, right? Sales, deployed engineering, enterprise work, infrastructure, marketing, operations, and so on, finance, et cetera. And yeah, it just turned out to be a really, really great fit. Yeah. Jeff, Friday end of day, did you think

you would be running a process so quickly? I know the obvious move would just be continue to run and scale the business. You guys had a lot of momentum. But what was going through your head Friday night? Because I imagine at the time you were also balancing, you were all of a sudden managing a team of hundreds of people that probably all wanted

your time and attention as well. My immediate priority was just to get a lot of options on the table and to have a lot of paths forward. I had to tell the team like, this is the path forward immediately because this is happening now. And then outside of the meeting, I was thinking like, okay, who do I need to talk to?

What is the best use of my time? I can tell you I was on the phone for pretty much 24 hours, nonstop on my phone after the all hands. And me and Scott, we worked really fast. We met at our office the next day. He even brought in everything on a piece of paper to sign. He even brought, he took the- No way.

Here you go. Yeah, we had to talk through a lot, but that was, it was pretty dramatic, Scott, but it was cool. It was cool. Yeah, it was fun. And naturally, you know, because it has to be this way, we got things signed like one or two hours before we were able to put out the announcement.

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

We're going to make this really amazing. We're going to make sure we take care of all the users and all the customers. We're going to make sure we take care of the team. And there's just a really great product here at its core. And that's what we want to focus on. And that's what we want to build out together. Yeah, and you know, it's crazy. What is crazy? Like we talked pretty late on a Friday night as well.

We were comparing notes and there was like almost no overlap. I mean we talked about the team already but even the product, the product is like missing exactly what the other product is offering and the ability to combine the products together is gonna be so amazing for our users. It's gonna be really cool. Yeah, I think there should be a lot of fun stuff around. You can have an agent work and then review the code locally in your IDE. You could be planning tasks out and then kind of sending them

off for work. You can do a first pass with an agent and then come and look at the work and then kind of finish that up and do the finishing touches with Tab and all these other features and so on right and We're really excited to build that out together. How is how is the team feeling right now? I imagine this is the craziest 48 hours of their career Give us a preview of the slack emojis that are ripping right now. Actually we we announced it at another all hands

Hands and we put another Monday all hands up. And very, very different. They're like, it couldn't possibly get worse. So it's only up. We made it dramatic, too. So me and Scott and the team, we really went out of our way to make this a very generous acquisition. I'll just say that. And I think the team probably felt like their career was over or something.

It was very sad on Friday. But I think today, I don't know, how long did they clap, Scott? They kind of cheered for like a standing ovation or something. So I think the sentiment has shifted. The team is even more fired up to go. The whole product is still there. All the things we had and the GTM team is still there. And now they also have Devon to sell as well. So everybody's fired up now.

That's amazing. Yeah. Every time I talk to Scott, it's always because like he's done something really incredible and aggressive. Like, and it's like, okay, like let's do, let's talk about this right now. And before I was making like documentaries, it took me a month to put out a single video. Now, fortunately, I have a daily TV show, so I can just have you on and we can chat about it. I do have some random questions, I don't know if it's worth.

I'm interested to know about that go-to-market team and channel sales specifically. There was somebody in the comments of one of Jordy's posts talking about how Windsurf was growing revenue and working with channel partners, can you walk me through, how, like, what would you give advice to somebody who's structuring a, like a successful

channel partnership strategy for a product like this? What incentives do you have to align? How big of a piece of business was that? Do you expect it to be a continual source of growth? I'd love to know about just that as a particular strategy, as opposed to say, you know, Google ads are going viral. Yeah, we made a decision to go 100% partners back in February. The thing about a partner channel kind of like segment is like you have to like, you have to like kind of feed them,

like you kind of kind of build belief with them in the product but also show that there's an economic extent incentive to and it did take some time Actually from q1 to q2 to like get the top priority Partners make sure those partners can easily sell on your behalf as well And it really took like about four to five months to really see this like kind of take off So some of our partner partners have already started bringing in seven figure deals, even without even trying the product. They just go to their customers. They ask them what they want and they just say it's Windsurf.

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

is if you were on the team that was staying behind at Windsurf, there's this almost signaling, right, of like, I took this company. Let's say you joined last August and you brought the product to market, you launched it, you grew it to tens of millions of dollars in revenue, and then don't get to continue the mission. I'm just really happy for everyone involved.

Yeah. And now, I was just saying, now we're all one big team. And we're kicking it into another gear. I think we're all so amped up to take this and just go. We're going to go full speed, basically, for the next while. And we get to play on offense now and go for it all. Are you guys already making plans to get under one roof? What's the opposite of that?

We have a lot to figure out. But yeah, working towards that and then getting to the point that there's kind of the product collaboration, there's the go-to-market collaboration, and then there's the literal kind of like team situation. A lot of work to do over the next couple of months. Well, we've got to tell our customers, like, we got there back now.

And the product is going to get so much more cool. That's amazing. Well, you guys turned something which was, in many ways, a disaster. One of the craziest stories of the year. I was waiting for the New York Times piece on Monday and getting to see the New York Times push out this news and turning this whole thing into a win is incredible

and you guys have done a service to the team and the industry. So thank you. Yeah. Honestly, honored to get to be a part of it, to work with such a great group of people. And I just want to see you guys. You guys have no idea how things went with all the legal and everything last night in terms of figuring these things out. Are we going to make it there in time?

Or are we not going to be made? It was we've been through a lot and I think it's just the sort of thing. Just so you know, Scott was like, we are announcing Monday, hell or high water, and we just did not sleep for the last 72 hours. It's been crazy. It's been crazy. I mean, we appreciate you copping on the stream. Do you have anything else?

You already shared about this. No, you guys deserve probably too early to sleep, but you both deserve a power nap at the very least Thank you for coming on anything else that that makes sense to share now or should we let you go? We're all good More announcement soon. Thanks for having us amazing guys great work. Cheers. Talk to you soon. Congrats bye and Next up we have Carl pay. No, not yet. One second. That is amazing. Yeah, what a great story. Absolute Dogs. Absolute Dogs. That is the

perfect cemented in SV lore. Tech lore for sure, for sure. Didn't know, I mean I knew Scott could fundraise. I didn't know he was this kind of, this caliber of deals guy. Absolutely dog, absolutely dog. Well, we'll read through some timeline. What else we got? Let's do it. Figma has such a homey feeling.

I spend all day and I really enjoy it. It feels cozy, safe, good to come back to. Shout out to Zach. Give Figma a little shout out. Let's bring in our first. There he is. First studio walk in. First studio walk in.

Let's go. Welcome to the stream, Karl. How are you doing? Welcome. This is fun. How are you doing? It's great to have you here. We haven't done this much before.

No. We've had a few people in studio, done a few, usually when we're in person, we're on the road, but good to have you come here. Would you mind kicking us off with an introduction on yourself, the company? Yeah. My name is Carl. I have a company called Nothing. We're the only new smartphone company to have emerged in the last 10 years.

I felt like tech got really boring. I was a big tech fan. I got the latest iPhones. All the time I sat up to watch the keynotes. I was based in Europe so the time zone wasn't always the best. But in the recent like five years I haven't done that anymore. Like every iteration is pretty much the same as a previous one and I wanted to do something about it So what'd you do to spice it up? What was the first for the first feature and then walk me through all the other people? So we're in a very big industry right like 1.2 billion smartphones are sold every year Yeah, so we're not trying to reimagine the category. We're trying to find our niche

So we started with industrial design. So if you look at our products, they look pretty different. Before actually starting to make products, we made a design book. We took inspiration from movies, from architecture, from furniture design, and we created this little mood board. And then we based all our designs on that. So if you look at our different products, these are our headphones, this is a smartphone, you can immediately tell even if you don't see the logo that it's from the same company. Totally. Yeah. So design is how we started. If you ask our users why they buy our products design is number one reason and then lately we've been working more on the

software side. So it is, a cell phone should be the ultimate personal accessory, but yet they've all converged onto the same exact form factor. It's so funny, because John and I have the same, we have the exact same phone, and we get mixed up all the time. I grab it, he grabs mine.

Yeah, I mean, how much do you think we are at the end of history for differentiating on quantitative like quantitative specs because for a long time it was like Okay, I need to go with this one because it has just a faster processor But that kind of disappeared and then there was software lock-in you want the blue bubbles or whatever But if we truly get to the end then we're going to get it like every watch tells the sign the same People spend a lot of money on certain watches that say Something about them right same thing with cars But what's your view on like just staying on the frontier? How stagnant is the frontier?

We're pretty much at the end. It was a hardware innovation like we all have the same suppliers Yeah, the same screen screen same processor same battery And you don't think that there's going to be any sort of like crazy breakthrough where like this happened with the Apple Vision Pro where you know Mark Zuckerberg was certainly like doing everything to stay on the frontier VR headsets and then Apple allegedly does this crazy thing with their supplier where they're like you know that thing that you're making in the benchtop that costs like thousands of dollars for this

screen with this pixel density? Let's just pull this forward and just like eat that cost to just leapfrog everyone and have the best screen now They made a bunch of other mistakes so the product didn't take off But they at least nailed it on the screen front and everyone agrees that the Apple vision Pro is like the best resolution at least in the of the modern VR headsets So you don't think that they'll be like oh wow wow, the next iPhone has twice the battery life. They figured out something crazy. Not anytime soon and I would probably say that the first phase of the smartphone wars are over. Yeah. And Apple and Google one, they have

the biggest platforms. iOS has like a billion users. Android has three billion. But I believe that the next war is just beginning to happen. Yeah. And that's gonna be all about reimagining the operating system. Yeah. But I believe that the next war is just beginning to happen. And that's going to be all about reimagining the operating system. The previous generation operating systems are very mature already. But now with AI technology, I think

we can build something really different. Yeah, how are you thinking about partnerships? I mean, John's probably said this 200 times on the show, but all he wants is better transcription theory. I could say it's simple. Oh you know what we did? I don't know if the people there can see it, but. Hold it up. Hold it up.

If you hold this. Oh wow. Now we're actually recording this meeting. Okay. Okay. Oh you see the waveform there. You see the waveform. You see the little red light blinking.

That's a nice touch. And after the meeting you can just have AI summarize the notes. And my question is, is that using a transformer-based transcription AI or is it using the old thing that gets every other word wrong? We're using a model. Whisper?

I think we're using Whisper plus Gemini. Okay, so yeah, it's gonna be fantastic, amazing. And for some reason, no one's thought to implement that in the old stuff. And it's getting to a point where I'm deeply frustrated with it, because my standard workflow for I need To send someone a text message this long is I open up the chat GPT app I click the whisper button I talk to it then I copy it then I then I paste it into my into my text message

Box because I don't trust the standard transcription in iOS by default. It's very very frustrating Anyway, I want to talk wanna talk about the second smartphone war that's coming. Who's gonna be in that war? It feels like Apple and Google are gonna continue to compete. You're gonna be there. It feels like Johnny Ive and Sam Altman

and the OpenAI team want to play in there. There's probably gonna be other folks. I feel like in a lot of the kind of teaser content, it's really around saying like, this is an additional device in your stack. They're not going as far as to say we're gonna fully replace the phone. Yeah, I guess why not just do, try and do like an add on

or like a fourth device, third device. I mean, most Apple people have like Apple watches phones, but iPad the computer, you know For me like the smartphone is one of the best devices especially for applied AI Yeah, because it's got all the distribution 1.2 billion are sold every year. We have in our pockets every day We charge it every day. We use it for four to six hours every day Yeah, it's got the distribution but it also has it has the data. We do so much on our phones. So if we're going to build a really intelligent operating system, we need the distribution scale but also the depth of data to create a really personalized experience for each

consumer. I do believe that in the next 10 years, we will all be carrying another sensor as well because sometimes the phone is in our pockets and we need another sensor to capture data for us. I don't believe it another sensor to capture data for us. I don't believe it's going to happen that quickly though. Other sensors, glasses, something we've been debating on the show. One of the challenges though is like you're walking around a lot of these you know the Meta Ray bands are like actual sunglasses. Are people going to be carrying multiple glasses that they're using differently throughout the day? There's a lot of questions.

I don't know what the form factor is going to be. It might be glasses. It might be a pin. It might be a necklace. But I'm not super bullish that it's going to come in the next two, three years. What do you think of the idea of a Which is a challenge, to be clear,

if you're a seed stage company and you need to generate traction in sales now. So to pick a new form factor, you guys can almost from your position be like, well, we have the supply chain. We know we can build hardware. We can in some ways kind of see what, how this next device evolves.

Exactly, we built this machine, right? Because making hardware is very tough, especially smartphones. Like from having an idea to actually shipping the products across like 40 countries, servicing the consumer. It's a machine, building the brand, building the fan base. So I think whenever a new form factor comes out, it's quite easy for us to quickly follow

and have distribution worldwide. Well, what do you think about putting a camera on headphones? We've seen like patents of other companies doing it. I'm just not sure what we would use it for it seems like the it seems like Meta ray bands are like we want a camera on your face, and we will give you headphones for free via Speakers that you can kind of listen on someone's Call but for the most part it's so it's so close and so localized that if someone's taking a call on the Meta Ray Bands back there, we won't really hear what the other person's

saying. And then Apple, I think is the company you're alluding to, potentially has a patent and people have been kind of rumoring that the next version of AirPods Pro might have a camera on there. And so then you could ask Siri, take a picture of that, tell me what it is. Are you bullish on the idea of visual intelligence? Because when I've walked around with the Meta Ray Bans,

I like having an LLM at my fingertips, but I'm very rarely actually saying, what is this can? Because I can look at it and it says Yerba Mate. It says Mateina, it says mango canela. I don't need Nei to do that. What I do need Nei to do on my glasses is tell me what's the history of Yerba Mate?

And I could just ask that without taking a picture. I can give it the, like I'll be walking around and some idea will pop into my head and I'll be like, I need to know the history of the state of California. Tell me when it was founded, just give me the data. And it's nice to have an LLM at my fingertips, but I don't actually need the visual intelligence.

I see it on my phone, I have the new button where I can pull out visual intelligence. I'm not a daily active user of any visual intelligence project, but what are you, are you bullish on it generally? Long term I'm bullish, I don't know exactly how it's gonna play out, but for your use case today, we already have a chat GPT voice integration

in our earbuds, so if you connect these this these headphones to our phone you can just click a button yeah that's good enough yeah good enough for now yeah and is it is it do you think that the technology industry broadly just so badly wants there to be a major platform that in some ways and it makes sense in the context of like Zoc right Zoc has spent the last decades like basically being like you know very you know the platform layer just kind of messing with it right it's been a hassle so like it makes sense to invest tens of billions of dollars to try to make sure that you have a real you know horse in the next

platform race. But at the same time, I think if you love technology and you grew up the way that I think the three of us did, you have this desire for there to be, because it would just be fun and exciting. Even if you look at the phone and you're like, okay, this might be the dominant platform for the next 30 years still. Yeah, I'm super excited to see what the industry builds. We need people to try new things.

For us, we're still going to be focused on the phone, because I believe there's so much cool software we can just build on the phone. Yeah. Of course, we're thinking about what comes next, and we're prototyping, but that's not where our main focus is. Sure.

Was the changes to iMessage a Catalyst for you guys they allowed like red receipts and into the RCS Yes, I see it as a positive for us. Yeah, it has to be a positive I'm curious if it was did it did it make a material difference or no because I think it's not just about the color of the Text message. It's not just about the read receipts. It's actually about the colors about the color The color is more important way more important about the color of the text message. It's not just about the read receipts, it's actually about the color. It's about the color. The color's more important than the text. Way more important. That's hilarious. Really.

And that hasn't been solved, so. Yeah, they need to add that to the protocol. What color message do you want this to show up? And then all the Android users can send blue bubbles. There's so much social pressure of having the blue bubble. My friend told me that at school, his daughter's teacher is handing out homework through AirDrop, and his daughter was the only one

who had to raise their hand and say, I don't have an iPhone. Sorry. Yeah, that's rough. Yes. The social pressure is big on the, on the, the, the blue bubbles and the idea of like tech is almost a status symbol and a personal expression. I was joking earlier that, you know, if, if open AI wants to build a phone They're gonna have to contend with the blue bubble issue. They should do like gold bubbles or like

The Trump phone I think Trump was launching a phone Love your take on that at some point But you know is there is there a hierarchy of colors that you should be thinking of is is blue? intrinsically more welcoming than green I Think because of how the ecosystem has played out, you just have to go blue if you want a chance. Sure. Yeah. So we're on our phone business. We're not targeting the U S very strongly just because of this reason. Like we can't see a way past the bubble situation. Okay. So yeah,

walk me through the landscape of your non U S competitors. Then who, who who's actually in actually in the market? What are the different markets that are interesting? Like where's the biggest opportunity? If we're talking about building the next generation operating system, I think we gotta put China aside because China will have its own ecosystem

with its own players, and the rest of the world will have its ecosystem. I believe you need data and distribution to be able to build the next OS. So of course the smartphone companies will be contenders like Apple, Google, Samsung, and us. There's only four smartphone players outside of China today. But then there's other companies with a lot of data as well

like Meta for instance, or OpenAI. So it could be any one of them. Have you ever done a post-mortem deep dive on the Facebook phone? I had it. You, it could be any one of them. Have you ever done like a postmortem deep dive on the on the Facebook phone? I had it. You had a day. Yeah. What? I didn't even know it existed. Yeah. Wait, it was actually a real thing. It was real. It was built by HTC. I think. Oh, interesting. Okay. Yeah. I, I, I think your mouth worked on that project. An interesting like Pete bit of Silicon Valley lore. Um, but, uh, I wonder,

I wonder what the like like is the lesson there differentiate more on design? Is that what you learned from that? Or is it more like price for performance? How, like what are the different levers that you think you need to pull to pull something off? It's probably like PMF. People have certain expectations from a smartphone,

like great cameras, great battery. You can't underperform any of those things you got to be competitive with the latest iPhone the latest Samsung and then you can add your flare on top of it yeah but your flare cannot be significantly different from what people are used to yeah like I believe that in the future for instance that apps are gonna go away there's only one app on the phone it's the operating system just saying well we can't ship a phone without any apps. People love their apps. So you can have a future vision, but it's

going to be like a step-by-step process to getting there. And you've got to bring the consumers along the way. Yeah. Talk to me about us. How do you think? I can imagine we're a world in which more and more of the apps that you use day to day are just eaten by the operating system. Something like Weather, for example.

I don't love my weather app, but I will open it up from time to time. And there's a different scenario where I just transcribe, how's the weather going to be this afternoon? And it just knows where I am, and it just pops it up and says, it's going to be 72 and sunny. But then for other things, don't you think there'll be some networks that endure?

For example, something like a Strava, somebody who's really into running. It's hard to imagine that that just merging with the operating system. I see it slightly differently. I think broadly there's two categories of apps, like waste time apps and save time apps. Waste time apps are more like entertainment apps.

And the save time apps are just utilities. I think the utilities are gonna be really easy to replace in the beginning. But when it comes to Netflix and Spotify and those entertainment apps, it's gonna take some more time. But eventually the OS will partner with apps and apps can still exist in a container

just not as a separate thing you launch. Yeah, yeah, yeah, yeah. That makes sense. What have you learned from the history of bloatware on smartphones? I worked at a startup years ago, 15 years ago or something, it was running a Siri competitor.

And part of their business model was getting BlackBerry to pay them to pre-install their app, and it was a pretty good deal for Blackberry, and in this case, it was a pretty good piece of software, and so it just obviated the need for the customer to go and click pay for $20 for this app. At the same time, customers have notoriously been like, why do I have 75 Verizon apps on my phone? And they get kind of frustrated with that

What's the good condition for that? What's the bad case and then where does it go? The smartphone market is very big so on the lower end everybody has a ton of bloatware And I think that's okay ish for the consumer because they get a better priced product that they couldn't afford otherwise but if you're operating on the high end and you have a ton of bloatware, then it's kind of weird because people are already paying a lot of money for your product, then have ads inside of the product. That's kind of how I think about it. Yeah, what are the key break points for phone pricing, like internationally even? Internationally, probably around $300 like

that's the main main category yeah here in the US it's very different it's like a barbell shaped market where the ultra premium takes a lot of share and the low low end like burner phones take a lot of share oh interesting how much are burner phones in the US I don't have the numbers probably like 20% of the market okay wow yeah I meant in terms of price Like are we talking like $100 50? Oh, so really really interesting How much capital would you need to deploy to be able to make a cheap phone? high quality phone in the United States are we talking like like, you know manufacture locally? Yeah, yeah, like would you need like a

50 billion dollars Yeah, yeah, yeah. Like, would you need like $50 billion to set up all the different? And is it the CapEx or OpEx problem? That's the big one. Well, yeah. The question is, like, if you have to basically, like, not just do the assembly, but like recreate

all the sub-suppliers, you start adding that up. And it gets. I don't really know, because we partner with a bunch of factories all over the world. So if we wanted to manufacture in the US, we wouldn't know who to go to to partner with. We do a lot of our manufacturing in India. And there we've seen that the government So if we wanted to manufacture in the US, we wouldn't know who to go to to partner with. We do a lot of our manufacturing in India.

And there we've seen that the government has been pretty successful. I think India is now the second site in terms of volume after China. And they have incentives to, like if you manufacture locally and export locally, you get some cash back. And I think that model really works.

So if the US is serious about this, it's more of like the structural incentives that need to be set up for this to run. Yeah. Interesting. What would it take to, is there anyone trying to build like a Tata Nano of phones? Like something that's like smartphone level,

not burner phone, but at like 75 bucks a pop. They already exist. They do? Yeah, they do yeah yeah like for Africa okay are they are they delivering on the promise at all yeah they're doing a great job in Africa and other markets where people need cheap phones you can get a smartphone for like 50 bucks now yeah interesting what about how do you guys think about have you integrated wallets for stable coins is that something that should happen at the operating system layer for a phone I'm sure you've been

I haven't thought too much about it for me like there's no real use case for crypto yet store of value bro we just haven't seen anything with real PMF yet what about Bitcoin yeah that's like the one of the only things. Yeah, you're probably not trying to sell that many phones into sanctioned countries where the citizens really want to get dollars on chain. Can you walk me through the relationship between manufacturers and telecommunications companies? I remember like years ago. This is the absolute last question because I know you got a hard out. Sorry. We've got to make time for it. OK, cool.

Hit the gong. Every market is different. But in the US, there's basically very little relationship between brands and carriers, because there's only three carriers. And they're playing a user acquisition game against each other. So their main way of acquiring users

is not through selling unique hardware. It's mainly the bundle, right? How much data do you get? Do you get free Spotify? Do you get Netflix? So for a small brand like us, there's basically no play with the carrier unless we build a groundswell of support with our community or have really, really

innovative products. I think our products are becoming more and more innovative and fresh. But we probably need a couple more years before we have a product that's really different for the U.S. Very cool. Hit the gong and then we'll let you go. Well, do we need a number?

Can you give us anything? How big is the company? How many employees you got? How many phones have you sold? We're about 750 employees. Wow. We're 0.2% market share globally. That's actually huge.

Yeah, we've done that. Congratulations. Thanks. We've done more than a billion in revenue and we're doing a billion this year. What? Okay, okay. Please, please. Right behind you. That is very well deserved. Give it a solid. Congratulations. And thank you so much for coming by. Really appreciate having you. This is fantastic. Incredible progress. Thanks so much. Great stuff. Really buried the lead there, for sure.

Are we hopping straight on with Garrett? Or we got 15 minutes? I guess we got 10 minutes? Yeah, 10 minutes. I want to go through. Is there anything else you want to go through? I like this. In the how to spend it section of the Financial Times, we have a review

of something we've been hunting for, which is the best hotel gyms in the world. There we go, there we go. So, if you've been to a hotel gym on chess day, you've probably been disappointed because many, it's hard to find a hotel with what is it, bigger than 50 pound dumbbells. 50 pound dumbbells.

And we believe, we haven't fully verified this, but we believe this is due to a market failure in the hotel gym insurance market. The insurance market. And so I think that there are two tiers of insurance. One for like a CrossFit gym or powerlifting gym that has free weights and also barbells. And you can do hang clean and clean and jerk and all that stuff and then there's a different

level of of insurance underwriting for things like treadmills and bicycles and free weights that go up to 50 pounds and so that's why when you're traveling you see a lot of gyms that don't have they won't you can't do squats there's leg press machine and so they lead lean on the machines because the risk of injury is lower, but the risk of gains is also lower. So we are going to understand where you should travel to get access to the world's best gyms. Hotel gyms are a mixed bag, even in top flight spots.

Working out can be a jarringly subpar experience. Could not agree more. Machinery might be decades old. The water cooler might date to the 80s office era. Should get rora. For years, hospitality didn't invest in gyms as unlike with restaurants and spas, the gym usually doesn't bring in any extra revenue.

That's an interesting dynamic I hadn't thought of. So yeah, I mean, if you put in like a nobu in your hotel, that's gonna drive a ton of extra revenue. That's an interesting dynamic I hadn't thought of. So yeah, I mean, if you put in like a Nobu in your hotel, that's gonna drive a ton of extra revenue, whereas your gym will not. So, increasingly- Just charge me per set with the 75. Per pound. Yeah, charge me per pound.

Per pound, and then you gotta put the bigger weights in, because like, I'm gonna want to lift heavy. Profit maximizing strategy. So, but increasingly, top hotels are pivoting. It's important I keep the same fitness routines as when I'm gonna wanna lift heavy. Profit maximizing strategy. So, but increasingly top hotels are pivoting. It's important I keep the same fitness routines as when I'm at home, says Emily Oberg, founder of clothing label Sporty and Rich, who works out six times a week.

Her favorite hotel gyms include the Ritz Club in Paris for the pool and the Il San Pietro in Positano. It has alfresco cardio equipment outside cardio equipment tennis courts and views it's motivating if the space is also beautiful Jim lighting needs to make you look and feel good while Working out says interior designer Kelly Wehrsler Acoustics should amplify without distracting materials should perform functionally while still feeling refined I couldn't agree more have you been to any of the proper hotels, Santa Monica proper gym?

I haven't, no. She designed the Santa Monica proper. Oh really? Kelly Wurzler. Yeah, there you go. Okay, so the best concept, these are awards from HTSI and the Financial Times, how to spend it.

The best concept goes to Power in Ireland, a great gym chain in the lobby of the hotel. Power, Ireland's leading boutique workout provider, has partnerships with the Dean Hotels in Cork, Dublin and Galloway and the Mason also in Dublin. In the gyms, there's a functional fitness area with a custom athletic rig and AstroTurf track, a lifting area, free weights and a cardio equipment, cardio area equipped with technology, techno gym skill run treadmills, rowers, ski ergs, watt bike pros and more. cardio area equipped with technology, techno gym skill run treadmills,

rowers, ski ergs, watt bike pros, and more. There are several 45 minute classes, including run and metcon. Guests can recover afterwards in the Hyper Ice Suite, which is stocked with massage guns and foam rollers. Rooms from 200 euros, not bad. The most scenic is at the Amon Zo in Greece. It's an Amon property, of course.

There we go. Summer escapes are all about picturesque locations, seafront settings, a quaint and quiet locale, and often ancient European history. This Amman property, Jim, offers all of the above, and then some. The resort has its own UNESCO-protected ruins, but it's the outdoor shaded weights area overlooking the Aegean Sea.

That is the real sell according to Tim Blakey, a personal trainer and founder of the workout at Prime Body. We go on holiday to be outside, he observes. There's a slight breeze, the sun is usually out and you can get your nature fix while you lift weights. Rooms from 1500 euros also not bad Oh, hey, they have a proper hotel. Did you know that this is gonna be in here the proper hotel in Santa Monica best for recovery It has an a mortal chamber where tech infused lounge chairs pulse with Electromagnetic fields to deliver red light therapy to reduce inflammation and combat jet lag. It's like Wax testing. Let's also VO2 wax testing.

Let's go. Okay, that's cool. Yeah, it's funny though when you walk into it. I mean, you're going into a hotel gym. What do you really care about at the end of the day, John? How much weight you can throw around. Yeah, how much weight you can throw around. So, and they say at the proper hotel in Santa Monica,

don't be surprised if you see Brian Johnson on your way out. My personal favorite hotel gym, Sensei Porcupine Creek. This is Larry Ellison's, basically Four Seasons competitor and they've done a really nice job with it. Okay, we gotta go through, there's a few others, the most exotic, the best for classes, but the most exclusive, this is what I wanna know about. Most exclusive hotel gym in the world,

according to the Financial Times. Surinne at the Emery in Knightsbridge. Guests of the all-sweet Emery have full access to Surinne, a comprehensive wellness club with only 140 vetted members. It costs 15,000 pounds per year to join. I thought you were gonna say per month. The gym is small, but it has 360 degree mirrors, so it feels bigger.

LA celebrity trainer, Tracy Anderson, has licensed her name to Saran. It's the only place where you can book her dance cardio workouts in the UK. Alternatively, guests can request... Isn't that kind of disappointing though that the nicest, like the most exclusive gym in the world is 15,000 pounds a year? Like shouldn't somebody make like a hundred thousand dollar a month gym? I think you just designed home gyms in mega mansions.

Maybe I did. But I do see. With an entire team of specialists. But so you can pay the 15,000 pounds a year for a membership or you can book a suite for 1,600 pounds per night. So maybe, I don't know, what is that? It's in pounds, so that's like 15 bucks US or something. It's pretty funny the dynamic of this is the most exclusive

club in the world but if you just book a hotel room you can go to it. Yeah. That's a bit silly. But this is where it gets good. So if you book the hotel room, it's suites only, you book the hotel room it's gonna cost you 1,600 pounds a night. They have a weights trolley that you can request. And it brings the weights to your suite. It includes dumbbells, kettlebells, skipping ropes, yoga balls, resistance bands, and a leather gym ball. A Peloton bike can also be installed at a whim.

So you can be in your room and be like, I don't want to go to the gym. Bring the weights to me. And they will bring them to you on a trolley. That is luxury. I love it. Anyway, lots of fun in the how to spend it section of the Financial Times.

Any other news? Let's do some timeline. The other, yeah, some timeline. I like this post from Dylan Patel. He said AI bros when I tell them Boeing outperformed Nvidia, Meta, Google Broadcom Broadcom AMD and Microsoft this year. I got to pull up the Boeing chart on public.com. I certainly do. So year to date up 34%. Let's give it up for a great American. Only 34%. How does that outperform Google and video meta I guess they all round

trip because the video is only up 18% year-to-date because a lot of the election stuff yeah yeah yeah yeah yeah totally no that makes a ton of sense well well we have our we have our last guest of the show joining now I'm gonna let you take the intro I will be right back let's do it we bring in Garrett I will say how I will say what up. How you doing? What's going on? How's it going? It's great to have you here.

This is the first time, correct? Yeah, first time. First time. I'm surprised it took this long. It's great to see you. You've got some exciting news today. Hit us with a quick intro on yourself and the company, and then we'll get into the news.

Sweet, yeah, my name's Garrett, CEO of Pipetree Labs. At Pipetree Labs, we build the infrastructure to make autonomous logistics scale. Amazing. Give us the quick catch us up to speed on the history of the company. I know we first met back, I think it was in 2021. You've been very busy since then. And then I want to get into what you're announcing today. Yeah. Well, likewise, man. Congrats on the show. Studio looks sick. Yeah.

Have to come in person next time you're next time you're on. Yeah, I got you guys. So yeah, the announcement is something we've been working on for a long time. You know, the kind of first product we were working on at Pipetream is what we see as the fiber optic cable for autonomous logistics. How you can move a lot of things really quickly and really cheaply. So we put underground pipes in cities and then we have these robots that go through the underground pipes and deploy orders to what we call portals. They're like ATM sized kiosks. It's a modular system made to be able to be retrofit, whether that's into a building,

an apartment building, underneath a road, and uses just standard construction methods that cities are used to using for non-invasive construction going into buildings and through public right of way. So we got, that's something we were working on. We got that to a really good place. And something that we kind of thought about a lot when we were starting was, you know, if we're working on the fiber optic cable,

we wonder if there's also gonna need to be kind of like the cloud architecture for autonomous logistics. Because as you start to move things really quickly, and we've seen this with drones already. Drones are this magical, they're magic. It's incredible, and they're so quick. And yet, it's still taking 15, 30 minutes sometimes. I had one that took 40 minutes,

because it's so hard to pick out of the stores that they're picking from. They're picking out of the stores because those are the closest storage areas to where the customers are. It's kind of like an inefficient system. You have this really fast delivery method and a really slow processor to get that thing out of storage and into the drone. So that's something we thought about a lot. So me and my co-founder Cannon, we're a huge retail nerd, so we're always diving into Costco and Walmart and Amazon and the history of

just logistics and retail as a whole. And what we realized is like, man, it is time. It is time for a time solicits to scale and no one's stepping up and building these fulfillment centers that are made too rapidly dispensed. We had learned a lot, worked with a lot of partners who taught us a lot about how to run those facilities and decided, you know what? It's time to go. We just acquired our first rapid fulfillment center here in Austin. It's going to be what feeds the network here in Austin. And yeah, that was the other announcement is.

So is this, just so I'm getting it correctly, so is this set up in order to serve the like, you know, original pipe dream infrastructure and then also traditional drone delivery as well? Yeah, so the way that we see it is if you have something at a rapid fulfillment center, the goal is how do we get it into the customer's hands as quickly and as cheaply as possible? And a lot of the times that, you know, you may want to move it through the pipe dream network to a closer location. You might just want to put it into a drone directly.

It may be a heavier item. It may be a bundle of items. You want to put it into a self-driving car. For the foreseeable future, I think it's going to be even really load-dependent as well. I think autonomous vehicles and drones are going to be kind of like the GPUs of the autonomous logistics scale up. We're going to be constantly constrained by their availability. So our goal is to be really good one at dispensing really quickly and dispensing into the right

modality. And, you know, constantly figuring out what is that right modality for that address? What is the right modality for that address, what is the right modality for that time, and making sure that that order is getting into that right modality and getting into the person as cheaply and as quickly as possible. So what is the, over the next year specifically, what delivery form factor are you most excited about?

Yeah, I think the two that we're most excited about is autonomous delivery right now is still pretty cost constrained. The cost per delivery is still really high. So you're either passing it out along to the customer, or you see a lot of the times it's heavily subsidized. I think, especially on the drone side, that's going to come down a lot over the next year. And so that's the one that we really want to be the best at doing.

We have an internal goal here at the team that we want to, by the end of next year, we want to have done the most drone deliveries of any company, which is crazy. It's not like a super high bar right now. But I think that is a resource that is really underutilized. What is the regulatory framework that drone deliveries are needing to happen within right now, specifically in Austin? Like I imagine peer to peer, I could just put something, attach something to a drone, take it up,

fly it over to a buddy's house and drop it. But then if you're trying to do this at scale, I imagine like you have to keep a lot of other things in mind Yeah, it's right now It's not such a straight pathway to be able to do it city by city So each company who is doing the drone deliveries has to get their own regulatory clearance And so it is like pretty pretty big hassle. That's changing pretty rapidly.

We just had the executive order to make that pathway clear up. I really think, especially as we start to get more consumer demand for it, I mean, if you go and look at the reviews from people who have experienced a drone delivery, it's borderline a religious experience. It really changes how you think about commerce as a whole. I think that's going to change over the next couple of years. I think there's a lot of companies that have died saying drone delivery is going to scale in the next two years.

They've been saying that for the last 15 years. It's a tough thing to time. That's why we want to get really good at drone deliveries and be really careful and just kind of learn right now, be ready for that scale and really focus on pickup as well. Pickups is a huge industry. It's one that doesn't have a lot of infrastructure to it so it's still such a bad experience but it's still one of the fastest growing ways that people experience retail is ordering ahead and picking up especially in grocery. So that's one where we saw the ability for us to go into grocery, make it a really, really great pick up experience. That's something that

you can do right now, make really good margins on, learn and then as those autonomous methods decreasing costs specifically due to better regulation, then we'll start to add that on as we go along. Amazing. Anything else? I think that's it. Good to see you again. The last time we talked, I mean we talked a few times,

but I interviewed Garrett like two, three years ago or something, all about how Amazon had been talking a big game about drone delivery. And I was like, let me talk to everyone else who's been working in this space. And it's a fantastically massive market that is incredibly difficult to actually get things to work. And once they start working, it's great.

So I think the key thing is staying in the game, finding a sustainable business model that's not dependent on, you know, dependent on adoption over a. 15 year period versus a 15 month period, I remember when we were talking, we were nude, like it's just such a it's one of those businesses that you just like naturally noodle on, like okay, should you go to like people that are building new prefab home communities and install a bunch of pipes in the ground

when they build the buildings? Or should you do some sort of boring company thing where you get really good at drilling into old neighborhoods? Or should you do flying or driving? Like there's so many different modalities, so very exciting that you're kind of exploring all of them now, so congrats and good luck.

Yeah, appreciate it. Thanks for having me on. Great stuff. Yeah, we'll talk to you soon. Talk soon. Bye. All right, see you guys. In other AI acquisition news, we almost missed it because Sundar did everything he could to drown this out, but we surfaced the post,

and it's about Mark Zuckerberg acquiring Play.ai, poaching the entire team, and they are joining the Meta Super Intelligence Lab next week. Zuck cannot be stopped. He has the Thanos gauntlet there. They completed his deal. Who's on the, who's on the, who's on all of the people?

The cap table? No, no, no, that image. It's the researchers, I on the who's on the cap table or no? researchers I guess I feel like I feel like we were played a very big role in this meme becoming bigger But a lot of people have run with it in different directions. It's been amazing watching it watching a girl like this The play a group will report to Johan Schalkwick cool name Not sure I pronounce that who recently Meta from a separate voice AI startup called Sesame AI, I remember this,

that was a controversial one, because Sesame is a new company, and it shouldn't be losing people to Zuck already. But the entire Play AI team is coming over, and I believe it's a YC company, because I saw one of the YC partners posting about, hey, this news is out now. I'm not there 100 million for the dark night,

the dork night rides again, never go up against him. Well, in other news over the weekend, Janik center made history as the first Italian man to win a singles title at Wimbledon. Naturally, this is according to bezel, he celebrated with a rose gold Rolex Daytona Oysterflex on the wrist. So thank you for doing the most important work. It looks absolutely fantastic. Yes. Cover of the Wall Street Journal for this, by the way. In bloom, Italy's Janek Sinner celebrates Sunday in London

after his men's singles championship win over Spain's Carlos Alcaraz, I don't know if I'll attend tennis enough to know how to pronounce that, Poland's Igor Swatek defeated, blah, blah, blah, and yeah, more coverage, but he's looking happy with the trophy. I love how little attention you play to tennis, John. You know what I do follow though?

I follow hitters, I follow watches, and Jensen absolutely mugged the rest of the tech world with one of the most insane Richard Mills in the world. You don't see him in a short sleeve t-shirt much. No, he took off the leather jacket for this. And this is such a come from behind moment because we were talking about the lack of wrist game, and we've been doing wrist checks on Jensen for months now.

Carp was early in right. Carp, yeah, oh, for sure. He with the aquanaut, with the orange strap. Zuck's been ramping up, putting up insane FP Jorns. Really, anytime he steps out of the house. He is a cubitus. He's got a stack collection. And everyone was saying, even even Jensen's family relative Lisa Sue over named AMD was mogging him with

a with a Rolex we saw. But now never doubt Jensen out never taught in the market loves the future first stocks up stocks up 3% over the last five days. Obviously, obviously because of this obviously because of this. And the market loves this, John. The stock's up 3% over the last five days. Obviously because of this. Obviously because of this. But this watch is really, really special. I mean, what I love about it is that it's just so thin.

Like, when I think Richard Mell, I think of the silhouette, the outline, this kind of like, oh, it's almost like a bowed rectangle, which I think is a very cool, unique design. I think of the skeleton. It's checking those boxes, but then it's just so thin. And it looks fantastic and Jensen is wearing it very well. So congrats to everyone.

We need to do a deep dive on RM because the story is crazy. He's basically this long time executive who decided he was going to make a luxury watch brand and to actually just decide, it's easy to say I'm gonna start a watch company. Very, much harder to like actually crack the code and be able to sell watches in the- I'm surprised some of our friends haven't started

watch companies given how many companies they're spinning up every two seconds. Yeah, a certain one in particular. It'll happen eventually. It'll happen eventually. The last- Another post, somebody posted, RIP McKinsey, you don't need a 300k consultant anymore.

You can now run full competitive market analysis using Grok for. And our friend, Buco Capital Bloak says, I'd like to see an LLM provide regular consulting to turbocharge opioid sales, be a trusted partner for autocratic regimes, and help young people get hooked on e-cigarettes Very negative on the consulting firms Who speaks for them, but we got it. We got it. We got it. Let's give them The white shoe firms they do great work yes some mistakes were made but overall Good farm team for future PMs in Big Tech.

Yeah. So in other news, Monumental Labs has raised some money, over $8 million, most recently in a $7 million seed round led by Alexis Ohanian776. This is the company. Stone carving alert. Yeah, they're carving stones. They're carving stones. Yeah, you heard Monumental Labs, you thought new foundation model.

No, AI robots can already carve stone statues, entire buildings are next. The stone carving startup, Monumental Labs, has raised money. They have a new HQ, almost 40,000 square feet in Greenpoint, Brooklyn. So the cool thing here, so they are opening this new facility at Greenpoint which

makes total sense to be the home of what will become the largest fine art stone fabricator in North America and possibly in the world when it opens in the fall. Makes so much sense in this you know a lot of people would you know that this company was non-obvious but then if you think about what we would pay for stone statues here in the studio, and I think what a lot of people will pay. Of all the Mag-7 CEOs, potentially, just hypothetically, I don't have like a mood board for that or anything. Yeah.

It's not like saved on my phone. Yeah, we wanna make the Mount Rush more of the Manosphere. Of tech. You know, Andrew Huberman. For sure that too. Yeah, yeah, yeah. It's Mag-7 watching over the Manosphere. You know, Andrew Huberman. Yeah, yeah, yeah. It's Mag-7 watching over the Manosphere. It'd be great.

No, but I think, you know, if they can really crack. Congratulations to the Monumental Labs team. That's a very exciting company. And led by Alexis Ohanian, a friend of the show. And also, he says, looks like The Secret is out, can't wait for y'all to watch, because he is gonna be a guest shark. He's going to Shark Tank.

The upcoming season of Shark Tank, which will be Wednesdays this fall on ABC and stream on Hulu. He's gonna really have to really go shark mode, because Alexis is known to just be a really nice guy. He's actually not very sharky. That's very funny. I mean, sharp elbows, I'm sure, getting into deals.

Sure. Sure. But yeah, he's going to. I mean, but there's always room for just offering an entrepreneur on Shark Tank a nice, fair deal. He's not going to be offering, like, just give me 20% of top line for Yeah, I mean as a personality. I think you'll fit in great. I think you will really add something in the show So very excited for him go check it out and final post from Adam singer is gonna end on the

Cmo of ad quick out of homemade easy and measurable says love seeing out of home from the new gen of tech media brands great Brands do things online and in the real world. Our software makes this really easy for all. And I just want to give a quick shout out to Adam for betting on us early. Yeah. Bet on us when we just were two guys, two suits, and a stack of posts.

We'll never forget that. And go do yourself a favor and sign up for AdQuick. After you're done with that, go leave us a... Make ad at home advertising easy and measurable. Come on, people. I don't even need to read it. It's really not complicated. After that, leave us a five-star review on Spotify

or Apple Podcasts, wherever you listen. And I can't wait for tomorrow. There was a couple weeks of news since last Friday, and I'm sure there will be quite a bit more tomorrow. The other piece of news, the information launched a competitor to us and they had some technical issues. So if you know things about computers, please contact them.

Yeah, tell them the technology brother sent you. And that's our show. See you tomorrow. Cheers. Goodbye. Have a great Monday.