TBPN - America Needs Defense, Meta Sales Soar, Sam Altman's New Bet, Masa's Big Raise

Episode Date: January 30, 2025

TBPN.com is made possible by:Ramp - https://ramp.comEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.comPolymarket - https://polymarket.comFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://youtube.com/@technologybrotherspod?si=lpk53xTE9WBEcIjV(02:56) - Nucleus Series A (13:31) - America Needs Better Defense Acquisition (39:32) - Castelion Size Gong (59:56) - Masa's Big Raise (01:13:55) - Sam Altman Backs Reto Biosciences (01:20:23) - Meta Sales Soar (01:30:20) - Snowflake to Aquire Red Panda? (01:38:59) - Seagate (01:47:37) - The Timeline

Welcome to Technology Brothers, the most profitable podcast in the world. There's been a terrible tragedy in D.C. There was a plane that crashed into a helicopter last night and was really terrifying. That is a rough, rough start to the pod. Yeah. But needs to be said. Yeah. Rest in peace.

It's always terrible when these, like, you know, crises unfold because, I mean, we saw this with the, with the LA fires. Like, every possible take is enumerated very quickly. Yeah. So you'll just see like the right will say it's because of DEI at American Airlines. The left will say it's because of capitalism. The conspiracy theorists will say it was a CIA operation or the war hawks will say it was China. And who knows, but it doesn't feel like living in a first world country to me. And it's very disappointing.

And I hope that the worst outcome is the one where there's a huge culture war. Everyone battles about it. Everyone gets really angry at each other. And then everyone completely forgets. And then nothing actually gets changed because clearly whatever happened happened, like the solution that will stop that is not something that can be implemented in an hour. It's going to be a lot of different things. The positive thing here is there's so much data that's produced from the event.

The flight logs, the, you know, the radio traffic of air traffic control during the event. And so we actually, it's not like a lot of other sort of dramatic crises, you know, events where, we may not ever know kind of what actually happened. We'll be able to figure it out. Totally. And so there's not, there shouldn't be that rush to,

you know, generate new conspiracy theories, read misinformation, make it a social issue or, you know, some type of, like clearly something right wrong. Clearly there's a solution,

but it's going to take a lot of political will and a lot of energy and a lot of hard work and a lot of technology to actually implement that. And it's not going to be done in a day or a week. It's going to be done in a number of years. The other thing is, is I don't think anybody like last week was saying commercial aviation is super dangerous.

Totally. It's actually statistically a super safe way to travel. It had been 15 years since there was a commercial airline crash in America and this was the deadliest crash since 9-11. Wow. Insane. And yeah, I mean, also you always run the risk of like it's almost like a black swan event. It's like an event that you're not really prepared for.

Like after the fire in LA, a lot of people were saying. like, oh, well, I got to rebuild my house and, like, concrete and brick. And it's like, well, what happens if an earthquake comes then? So you really need to balance out all the possible risk factors, but like, we got to do more here. But fortunately, there's lots of good news. There's lots of interesting tech news right now. And we'll start with a fantastic piece of news from my buddy Kian Sedggy. I'm going to butcher your name. I'm sorry. But he announced, yeah, but Kian announced a $14 million. Series A with participation from Founders Fund, 776, Neo Bologi, Serena Vosin, Giant Step

VC, 1-8 Capital, and many others. We're going to make preventable diseases a thing of the past. So I think we got to hit the size gong for Kian. Boom. Congratulations on your $14 million series A. Nice work. We have some posts from him, and we also have a little bit of his blog post. He said five years after founding nucleus in my bedroom, I'm thrilled to share that we've raised a $14 million

Series A. Our current roadmap is ambitious, including dramatically expanding genetic risk assessments. So you can think of them as kind of like the next generation 23 and me. They send you a kit. They get you full sequence of your DNA. More focused on helping people use the data to be proactive versus the novelty of being like, oh, I have one percent Irish. Yeah, exactly. Or half a percent Native American. And also it's just a fundamentally different technology that goes into how they sequence the genome. So 23 me, I believe, does something called shotgun sequencing where they kind of blast a bunch of the DNA out and then they kind of sample it and statistically they get you to like 90% there, but it's not a full sequence. The full sequence is something that does happen in scientific

labs for more rigorous scientific studies, but nucleus has been able to take that next generation technology and bring it to the consumer market so that you can just go order a kit and get your exact genome. And this came at a good time because I feel like people lost a huge amount of trust in 23 and me in some of these sites because they struggled as businesses. And then they started changing hands from an ownership standpoint and looking at, you know, looking at like they were potential takeover targets. Yep. And the challenge there is you're looking at this. And if you've given all your genetic data to a company, you actually start to care who who owns that business. What are their intentions with that data? Yeah. And so a bit of a call to action to people.

if you did 23 and me, you can go and export your data and then you can have them delete it from their servers and they will do that. And I do believe that they are capable of doing that. And then if it does get taken over by someone who maybe you don't want to have that data with, you won't be in the database anymore, which I think is probably the right thing to do at this point. Yeah, and they also had a massive pickup. He says in the post, I'm thrilled to announce that Matt Lanter, a former co-founder of Open Store, chief of staff at Founders Fund and longtime nucleus investor is joining his president. His decades of experience helping scale billion dollar companies will be a tremendous addition to an already

deeply talented team. And I got to say, there is nothing more bullish than somebody like, I don't know Matt personally, but when somebody like Matt, who is deeply, deeply connected in the venture world has started their own companies. And there's hundreds of companies that they could go join or a bunch of different companies that they could start. If they're choosing to join your company at an inflection point like this. It's the most bullish signal. Matt has a quote here. He said, my time working with Keith Ravoy at Founders Fund was a master class in identifying exceptional founders. That experience combined with countless founder meetings as an angel investor. Help me recognize something special when I first met Kean.

I was immediately struck by qualities I'd seen only in the most successful founders a deep personal obsession with the problem and the relentless drive to pursue it. So couldn't be more bullish for the nuclear team. Congrats on. The first time I met in Manhattan, I got coffee with him in the small coffee shop and we just had the most intense discussion for like an hour going back and forth about like how

this would affect things and what the value of and you know, could you get something out of it? Because I think the, my disappointment with 23 and me was always like it was kind of a nothing burger. Like you do it and it tells you like, oh yeah, like you know, heart disease and cancer

are probably going to be what get you. And it's like I kind of already know that just from like the mass statistics. It doesn't tell me anything specific. And so he made a very, a very strong case for finding those niche preventable diseases and just eliminating all those risks, which is cool. And so there's even more news in here. You guys,

I'm also excited to announce Nucleus has acquired Cambrian and AI-based health platform pioneering algorithms to transform data from wearables like aura rings and Apple watches into actionable recommendations. We're excited to welcome the founder David Sloan to our product team where he'll spearhead wider data integrations. And this is insane and awesome. My only critique of this announcement is you've already included like three major announcements, which is your fundraising round. They're also growing

68% month every month. They're adding this like crazy new exec to the team. And they did an acquisition. And they could have spaced that out over four weeks and had like big news. You know, constantly. I mean, Kehan's doing pretty well at going direct. He has a podcast and he posts a lot and we'll go in through some of his posts, but I mean, they've been on an absolute tear. In the last three months, they've averaged 68% month-over-month revenue growth since November. Monthly users have tripled, and less than a year after going live, we've scaled up from 10 genetic analyses to over 800. So it took him four years to get this live. He was in his bedroom just kind of grinding on this, figuring out what technology he needed and finally got it live. And then they've done a bunch of crazy

things that everyone in Silicon Valley have been like, why are you doing that? Like they sponsored the Jake Paul fight. Did you see this? So like when the cut man comes in to like I think it was a Jake Paul fight. It's like it's some like you know not super prestigious type event. You know it's not that's the mass market. But it's the mass market. But it's the mass market. And everyone was like, why is he doing this? This is like so silly. But I looked at the data. I think it penciled that really well for that. That's cool. Yeah. There's a good quote in here relevant to this because, you know, this is a now a hyped venture back company. But to become a you know, multi-billion-dollar business

and potentially a trillion-dollar business, which Alexis will get into here. You have to be able to hit that mainstream of, if you're building a consumer product, you should probably at some point be able to advertise at a boxing match. Or a NASCAR race or things like that. And if you never cross that chasm

and you're only cool with the tech people, you can ladder up the venture rounds pretty well. You can even SPAC. We've seen this with like the Allbirds and stuff that never really broke into the mainstream. But my first company never really crossed the chasm into like the main mainstream. Yeah.

And so thinking about that earlier in the company history, and kind of biting the bullet on like, yeah, your brand might be not seen as like the hottest thing in tech, but that's actually a bigger opportunity. Yeah, so one of the, I believe it's a co-lead in the round, Alexis O'Han. He says, they say the next $1 trillion business is going to be in consumer health. I buy it. If you look at the landscape today, there's really no one else on the market building

the way Cayon and Nucleus are. nucleus is running a playbook in health care that used to belong only to purely software companies. It's fascinating to watch. Yeah. So very cool. And so we actually mentioned this in that, in that Nvidia article that we read, talking about how, you know, there's this data while we're running out of data and there is a lot of genomic data. And maybe that has a role in AI. And I think that's what Keon is betting on is let's let's put in a massive amount of genetic data.

and then run these next generation algorithms over there. So it's not just that the hardware got better. The Lumina system, I think, is one of them that can actually sequence more genomic data. It's get all of that into the database and then be able to run more advanced algorithms with AI on top of it. So very bullish.

But Keon has had some banger posts over the last few years. On September 9th, 2024, he said, our revenue yesterday, we are absolutely cooking. The movement is getting bigger every year. It looks like a meme coin chart. It does. Is this pumped out fun? Kianne?

What's going on here? Can you believe we haven't even gotten started yet? Oh my God. Future of Health Tech at Nucleus Genomics. I like that. Let's go. Just sharing the Stripe Dashboard. We love to see it.

This is a fun one. Related to 23 and me in September 20th, 2024. Today I'm announcing that nucleus genomics is considering the possibility of making a public offer to acquire 23 and me, contingent on financing, as well as initiating and executing a successful negotiation. That's such an amazing, like play even at a high level to just show your, the kind of game you're playing to go to find the most high profile company in your category and say, yeah, we're exploring an acquisition of a company.

Yeah, exactly. Even if it's not a super serious thing, in many ways, I'm sure that Kion and the Nuclase team would be able to much better operate and take advantage of the customer relationships and the data. And it just comes down to the price. I mean, they're already making acquisitions. They got $14 million right now. I think they'd probably need. $32 million total. Yeah, I think it'd probably need like over a hundred to do the deal, even if there was debt involved.

I don't know how 23 operates as a business, but it's still just kind of cool. And there's this trend of like, you know, when TikTok was up and people were talking about, like perplexity was jumping on the, maybe we'll buy it, maybe Mr. Beast will buy it. A lot of people were circling and at least kind of ticking the tires. Yeah, this is a part of a broader trend we're seeing in venture right now where venture capitalists and founders are starting to think more like traditional private equity. Yep. Looking at roll-ups becoming popular, but also, you know, this sort of larger scale M&A mergers. So this is really cool. Dwar Keshe, obviously one of the most respected figures in tech right now, had an amazing story. So Kian posts, wow, Dwarkesh Patel had an amazing story on his concern about his family history for prostate cancer. And so he exported his 23 and me data to nucleus genomics to find out how he was in the 97th percentile for his genetic risk. He now knows to get earlier screening for this.

And so this is an example of just the software, the application. layer in AI being valuable. He didn't even have to do a test with nuclear tests. He was able to just take his 23 me data, and I'm sure the quality of that analysis goes up if you actually do the full test with nucleus. So congrats to Keon and the Nucleus team. We love to see it.

And good luck with the next 12 to 18 months until he raised again. Try to keep up that 68% month-ever-month growth, and soon your GDP will be bigger, your revenue will be bigger than the GDP of France. There you go. There you go. Well, let's move on to a fantastic article in Pirate Wires. We'd love to read these deep dives on.

This one's by Joe Lonsdale and John Noonan says, America needs better defense acquisition, how Trump can seize the moment, learn from what worked and what didn't in his first administration, and make generational changes to defense bureaucracy. And so during the rebellion in the Philippines a century ago, American soldiers found that their service pistols lacked stopping power and were inadequate for the harsh realities of jungle warfare.

In response, army leaders drafted a simple request for a new semi-automatic pistol of at least 45 caliber to replace the services aging revolvers. This was a big thing in Vietnam. I feel like that was the dawn of like the 556 round. And a lot of guys would carry Thompson submachine guns that were 45 caliber just because it would cut through all the brush and the bullets wouldn't get scattered as much. And so a lot of guys kind of like procuring their own weapons.

is something that's happened in the military for a long time. Like their family will send them bulletproof vests. Yeah, this is why the work that founders are doing in defense tech now is so serious. There's a lot of memes. You know, we've, we've talked, you know, memed about gundo and bear domestication and stuff like that. But when you're developing these products, if you have bugs or errors or they're not set up properly for the task, you're putting American lives on the line. And these soldiers, you know, back in this situation, are finding out that their, you know, pistols don't have stopping power, which means that they're actively getting into conflicts, like, you know, eye to eye with basically the enemy and not being successful with the products. Yeah.

And so six firearm manufacturers answered the call. Their pistols were put through a series of rigorous field tests. The sidearms were refined iteratively throughout the assessment. In the final test, several thousand rounds were put through each gun over 48 hours. That must have been fun. The army was pleased to discover that one of the six prototypes, the Colt, suffered no malfunctions over two days of intense use. In early spring, 1911, the, oh, this was actually during the Philippines War.

This was before Vietnam, actually. Had that wrong. In early spring, 1911, the Army settled on the Colts 45 caliber as the new sidearm of choice for the service. Nearly three million Colt 1911s were made. The Colt 1911 served soldiers across two World Wars, Korea, and I guess Vietnam as well, eventually being replaced in 1985. It was a procurement victory for the ages and the result of a competitive process that spoke for itself.

To say that the Army's attempt to build a new pistol in the 21st century has gone poorly would be a gross understatement. The Army's effort to buy a new handgun has already taken 10 years and produced nothing more than 350 pages of requirements, said the late Senator John McCain in 2015. Micromanaging extremely small, unimportant details and Byzantine rules and process. the armies once followed, many of which are unnecessary or anti-competitive. And so procurement is a mass pirate wires summarizes this by saying, the Pentagon purchases more goods, services, and software than all other federal agencies combined, but an ideology of central planning has rendered it ineffective.

And here's how the Trump administration can make generational changes. And so Joe and his co-author, John, go on to read. change is coming. The DoD bureaucracy, like all bureaucracies, seeks to sustain and grow itself. Each new inefficiency, like the service pistol mess, prompts shock from Congress. Then to fix the inefficiency,

the bureaucracy creates more inefficiency. And this is- We're going to need a new report. Yeah, yeah, exactly. This is something I'm worried about- The report generates a need for a new analysis, an investigation, and a new report, and then you're back.

Yep. And it's a cycle of just information collection versus action. Yeah, it's very, very- very rough. Like, yeah, you're over-regulated. You have a problem and the answer is more regulation. It should be the same. It's funny because this initial process, which is, hey, we're going to give six manufacturers the opportunity to produce a next generation firearm. We're going to put them through 48 hours of intensive testing. That's exactly what, you know, and this actually might be surprising to some people, but if you ever are going to shop and buying a gun, oftentimes a Glock will get

recommended due to its sort of rugged reliability. And so if you put 10,000 rounds through a Glock and it's been well maintained or serviced, you're going to have very little sort of errors with it. But there's a lot of manufacturers that are actively selling products where it's one out of every 100 rounds, you know, has, you know, that you go through, you have some type of error or it gets jammed or it's, you know, it has some type of issue. And that's the last thing you want. It's okay if you open Apple intelligence and it's telling you something completely inaccurate about a message that you got if you're relying on a handgun in a defensive scenario and it has a 1% error rate that just doesn't really work. Yeah. And so in 2018, the Pentagon underwent a significant

restructuring of its acquisition framework. It resulted in the creation of nearly a dozen new offices. The creation of the DIU, a lean and nimble group based in Silicon Valley with the authority to fund new products is a bright spot, but the temptation to create new bureaucratic edifices is part of the problem. In the defense world, the Pentagon is the only domestic customer, and so the defense industry is not subject to the same demand forces as the rest of the economy. Programs that wouldn't survive an open competition can thrive if the Pentagon wants them to. Superior products can struggle to break through and are at the mercy of opaque processes. When the Army was searching for a new pistol a century ago,

it simply told the best arms manufacturers in the world to build them a pistol, then it tested them in a ruthless competition. Today, Pentagon officials write long lists of requirements, many of them strange and unnecessary, take years to solicit and evaluate proposals. Even when the Pentagon does hold competitions, there is a clear winner that is orders. This is for the most simple, this is a multi-hundred-year-old product, right, the pistol.

And so imagine when you're testing and trying to sell and create and earn the Pentagon as a customer if you're building a drone defense mechanism of sorts, right? Like imagine the complexity there when you have this emergent threat, new technology, and they can't even figure out how to acquire a new handgun for, you know,

like service pistol. Yeah, and so Joe Lonsdale wrote on X, VP J.D. Vance mentioned the crisis of broken defense procurement twice in today's interview. Cool. I drew up notes on how to fix it based on my 20-year experience as a defense entrepreneur and investor. With leaders like Pete Hegeseth, we've got a real shot at change link below.

And so Joe's been working on this for a while. And there are lots of people in tech and defense tech that have been talking about this for a while. Back in 2023, November 24th, Ryan McIntosh over at Andresen said, one of the biggest bottlenecks for defense startups is DOD contracting. Imagine a tech-enabled private military company that they could sell to instead circumventing government procurement and ops contracts for mission outcomes not products delivered defense as a service kind of a like the the most futuristic possible outcome but i mean there's certainly an element of that with the private military contractors that buy sometimes civilian weapons

we have a mutual friend that's been working on a PMC for a while see where it goes and so joe goes on to say his friend shamsankar over at palanter has bemoaned what he calls a government defenseman where one buyer gets too comfortable and exercises illogical and inefficient decision-making in his Martin Luther-inspired defense reformation. Sham brilliantly lays out a strategy to end the Pentagon monopsony and flip the military to be a better customer. One of my favorite proposals in this space is to stop identifying the Pentagon as a single entity.

It is rather an umbrella for dozens of service branches, agencies, and sub-agencies. The thinking is that Congress and the president puts these smaller agencies into competition with each other for money and contracts. It would not work across the entire DOD, but putting just a few head-to-head would be a strong blow against the 1950s mandate of efficiency via consolidation and a single difficult top-down buyer.

It's funny. Efficiency via consolidation sounds like a Soviet-era policy. It doesn't sound very... We fell for the mean. In the 50s or something. Yeah, and it's interesting. One of the dynamics here is that defense manufacturers need to sponsor NASCAR events.

They need to... you buy out of home. We were talking with the AdQuick team yesterday and they were showing us a billboard that Andrew is running in D.C., right? So they're basically having to do wide scale consumer advertising to build this sort of brand love, presumably, or mind share in a place like D.C. When in theory, a defense contractor shouldn't have to be doing consumer marketing to get their products purchased by our government, right? It should be the best, you know, sweet or individual product that sort of wins, but instead, you know,

you'd see an advertisement for a Zemphick next to an advertisement for a submarine. Yeah, I remember seeing, I think it was Anderall ads at Burbank Airport. And yeah, all of that's just to, you know, target lawmakers that are flying back and forth between L.A. and probably Sacramento. Yeah.

And so there's another promising proposal he highlights to create mission-based requirements. The Pentagon has a term called requirements creep where a simple commercially available solution to a problem becomes infected by new design obligations imposed on industry by military officials. The U.S. Navy's Constellation Class frigate, for example, was meant to be a fast and simple purchase of a proven and existing warship. The Fremfrigate made by Fin Canteri. And what was a clear edict from Congress to buy quick and off the shelf, Navy bureaucrats have reduced the Constellations design commonality with the original Frem from approximately 8. 85%. So they're like, let's just change 15% of it to now it's less than 15%. So it's 85% different. Requirement after requirements, some dating back decades have resulted in massive cost overruns and delays to the program. As a result, the Navy still does not have a frigate in service. It's just like, oh, my God. When the Pentagon believes it can do acquisition via central planning more effectively than listening to soldiers or technologists, it fails our country. Again, central planning, all these phrases that feel. It's rough.

It's rough. And so, I mean, this is all part of like this major vibe shift in tech and defense tech. There's a post from Dan Primack here from November 29th of 2024. He says one big reason that VCs didn't use to fund defense tech was that they didn't want to invest in things that were reliant on government procurement. Yes, there were philosophical issues too. But this was an era when VCs avoided startups that even brushed up against government or regulation minus biotech. That time has long passed, in part because Uber, Lyft, SpaceX, and Airbnb kick. down the doors. And so yeah, it's interesting. I hadn't really thought about Uber and Lyft and

Airbnb as precursors to the anderals of the era. There is a little bit of that where there was a there was a shift in entrepreneurship where founders figured out that some of these things aren't insurmountable. Well, a lot of the lowest hanging fruit of, you know, CRMs and email tools and things like that. So you got to do the harder, the harder thing. Yeah. And you had a generation of entrepreneurs who did the easy things, right? And then they realized that there were bigger challenges and bigger opportunities doing the hard stuff now that they had the sort of base level abilities around capital raising software, you know, these sort of generalized skill sets. This is a crazy stat. Since the end of the Cold War, over 2,500 U.S. companies have been founded and reached a valuation of a billion dollars or

more. So 2,500 unicorns in the U.S. since the Cold War, less than a dozen have been in defense. And I mean, hopefully we'll be covering more here soon. But I personally founded a few and invested early and a few more Joe's in like every defense agreement basically. Not just in them, but. Founded. In many areas, these companies are out competing the primes if they're allowed to. They represent thousands of manufacturing jobs in the U.S.

and could have put a multiple of that in the next decade. But they need allies in the government. New officials can start by trimming down an encyclopedia of regulations that was first written and consolidated in the Reagan administration. the Federal Acquisition Regulation FAR first issued on April 1st. That's funny. April Fool's Day. April Fool's. 1984, also a weird year. Very dystopian has almost doubled in length and with it the complexity. Maybe it was always meant to be a joke. It was a joke and it was meant to be

dystopian and then nobody got the joke and they just let it roll. Yeah, disregarded entirely. Title 10 of the U.S. Code, which governs the arms forces, has become swollen with obsolete and choking legal requirements. This creates fertile grounds for long and contentious lawfare when bids don't go a company's way. And so the story of every defense tech company has been make a better product, get it loved by the military and the warfighters on the ground. And then essentially you have to fight a lawsuit when you get screwed in the defense procurement

acquisition. Well, this is why a bunch of the, there's this narrative that all the new defense tech founders are in the gundo. but two of the companies in my portfolio, deterrence and Allen control systems, both the CEOs live in Washington, D.C., right? And the opportunity for them is that every lunch and coffee and things like that can get them closer and closer

to real traction. Yeah, and yeah, I think SpaceX and Palantir both had to sue the government when contracts didn't go their way and they felt like they were unduly looked over. Yeah, because it's hyper political. There's massive lobbying. If you're Lockheed Martin and you like your, you know, margins.

Duopoly or whatever, you're going to just continue to spend to make sure that things aren't necessarily always. This is a great quote in here. The United States was once the arsenal of democracy. Today it is the arsenal of bureaucracy. With an army of federal civilians making it difficult for American companies to sell to willing buyers. To wit, it took the State Department and the Pentagon nearly 30

months to finalize the sale of harpoon anti-ship missiles to Taiwan. Though upgraded in recent years, the harpoon has been in service since the 80s. It's not a new system, and Taiwan is the nexus of our Pacific deterrence. We have a unique opportunity for American workers and innovation to be fueled by investment from our friends, strengthening both our economy and national security. The process should be simple. It isn't. The haft of the arrow in America's side was feathered from our plume.

That's a great sentence. Great writer. writers. Fantastic. Moreover, the past three decades of obsessive consolidating and regulating and subsidizing has undercut the core element of the new administration's foreign policy and national security. Trump has rightly emphasized deterrence, a concept that escaped the outgoing president and his team. Deterance is a simple framework and does not require a mountain of PhDs to grasp. It means, in plain terms, terrifying adversaries with a combination of iron forged national will and fearsome weapons that lend that patriotic resolve credibility.

It's great. Yeah, one, I posted a couple weeks ago that we needed a like project Stargate style project to address the shortage of domestic drone production. Totally. And when you read this article and you understand how long it takes just to sell a single, you know, harpoon. Yeah, yeah. To, what is it?

I mean, no one's talking about Taiwan invading China because China is extremely scary when it comes to the deterrent. It's like they have all this incredible military technology. It's unthinkable. Yeah. And so I think part of it is getting people like Pete had hedged us back in, you know, effectively in power and helping make some of these decisions. People that have actually experienced conflict. Yep. And getting some of these decisions back into the hands of not, you know, and bureaucrats, but actual operators that have on the ground experience. Yeah, it's pretty cool looking at who's in now. So Pete Hegseth said during his confirmation hearing competition, it's important, critically important.

Silicon Valley for the first time in generations has shown a willingness, desire, and capability to bring its best technologies to bear at the Pentagon, a Pentagon that has become too insular and ties and tries to block new technologies from coming in. And then Stephen Feinberg, the nominee to be the number two at the Pentagon, is a patriot who leverage his vast business experience. He's more of a private equity guy, but he's done a lot of defense deals. I think it's Cerberus, right?

And then Emil Michael also went into the administration as well, and he was the right-hand man of Travis Kalanick at Uber, and just a great overall guy. And we want that Uber energy, that TK energy in the Pentagon and running research and engineering. Totally. That is cool. During, so he closes with,

during the Persian Gulf War, the stunning American military victory over the Iraqis, then the fourth largest army in the world, military experts estimated that U.S. military technology was a decade ahead of the Soviets and two decades ahead of the Chinese. The world was shocked at the might of then futuristic weapons and state-of-the-art tactics. The new Trump team has a strong wind in its sail. The woke tech giants of the last decade have given way to a new crop of patriotic leaders and innovators. Silicon Valley is poised and ready to join the fight. With a few bold moves, President Trump's goal, promised golden age and a second century of American dominance are within reach. I love it. So go

subscribe to pirate wires, read the full piece, and follow Joe on X. And let's go to some other posts loosely about defense procurement. So Josh Wolfe wrote US defense tech CEOs urge speedier procurement to counter China. This was from months ago. And everyone has been beating the drum on we need to speed up defense procurement. It's boring, but it's very, very important. Yeah, and it puts our companies at risk. If you have a startup and you've developed this incredible product and then you have one customer, which is the Pentagon, and they're like, okay, we're excited about this, but, uh, you know, let's, let's start the process. And then it turns into a, let's change this, 48, 48 month process. Meanwhile, you have

$2 million in payroll costs that you're having to absorb every month because you need the best engineers and talent in the world to run your business. But then you're just waiting for that revenue to hit. And usually it comes in an increment. where, you know, that you get awarded 10 million bucks and then you need to hit certain milestones. And so it's a very sort of shaky dynamic that has led to otherwise good technology not getting implemented.

Yeah. And so even back during the Biden administration, there was an open letter that was signed by Palantir, Aundraal, Lux Capital, and others. And they went to meet with the Biden administration in the House GOP to work on defense procurement. Obviously, less relevant now that Biden's out, but still, this is something that's obviously bipartisan and has always been.

Patrick Collison had an interesting post here. He took a very academic approach to thinking about defense procurement back in 2017. His military procurement turns out to yield interesting management reading, scrutinized from multiple perspectives, lots of pathologies to analyze R&D is a major factor. He recommends Boyd, Corum, National Defense by Fallows, and Augustine's law by Augustine. Yeah, so while you're flipping brain rot real content, Patty, Patty's, patty's reading these esoteric books on defense procurement. And that's why he runs a hundred billion dollar company.

And you know. And you haven't raised a seed rat yet. You just lost 15 grand on meme coins. Yeah, exactly. It's great. But I got to check out some of those books. That's probably pretty interesting stuff. But yeah, he's always been a real,

a powerful deep diver of the. Powerful deep diver. Yeah. You would have a podcast in another life. Yeah. Yeah. This is an interesting one. Have you seen Pentagon Wars this movie?

No. It's fantastic. So it chronicles the story of the Bradley fighting vehicle. And it's like a made-for-TV, like almost like a dromedy, like a drama comedy. Yeah. And it's all about- That's kind of like our show. Kind of like our show, yeah.

And so it tells the story of the Bradley fighting vehicle and how the required just got so chaotic because they'd go to one general and he would say originally it was just it was just supposed to be an armored troop transport to take a bunch of guys from the rear to the front so it's it's just it's just a bus basically and but you know it needs to be fast so it can move he's a little bit of armor but nothing crazy but then of course they talked to one guy and he's like oh well it'd be great if it had a gun on it and then they're like okay let's put a turret on it like well if we put a turret on it like it's going to carry less guys and they're like Okay, well, like it also needs to be able to float in water. And so they add that. And then they're like, well, now if it has the turret and it can go in the water, it's going to be much heavier. So it's going to be a target. So now I have to put more armor on it.

And so that slowed it down and stuff. And so it's a hilarious movie. It's fantastic. But there's a little bit of an interesting like flip side to this. A little contrarian take from Robert Potter here. He says, the Bradley is literally taught to students of defense procurement as a bad example. The platform has been slammed, audited, and they even made a movie making fun of it, Pentagon Wars. The reality, here it is, flogging a Russian tank.

Keep that in mind when people talk about the F-35. And so there's always been interesting thing. And the F-35 was in the news last week because there was a video on an airfield that just fell out of the sky. Luckily, the pilot ejected and came down in a parachute. And that was an $80 million-ish mistake, I believe. I mean the programs in I think over a trillion or something yes it's huge But there's always actually over it can't be over I don't know There's no way it's very it's very expensive I don't know the numbers are also big I can't even keep track anymore

But but but the interesting thing about the F-35 is when you talk to people in defense They will say the problem with the F-35 is not that it's a bad plane like as evidence by the fact that China copied it The J20 is a direct copy of the F-35. Why would they copy it if it was a bad plane that just wouldn't make sense. You wouldn't waste your time. Maybe you can make an argument that like, oh, the R&D is free. So you, you know, you just copy it because it's valuable if you don't have to pay the R&D cost. But the F-35 is not a lesson in, like, oh, we tried to, we tried and failed to build a better, you know, air supremacy fighter or the platform. It is successful. It did actually do all the different things, electronic warfare. Like, it's fast. It has all the different

features. It's just that it went way over budget and took way too long and is just a technical mess, but it's still the best playing out there. You know something interesting about, so if you're a fighter pilot and you're based somewhere in the U.S., let's say you're based in Nevada, if you go on deployment, you just end up flying the jet there? Isn't that a strange commute? And it ends up being these like really long. It's imagine it's like a 16 hour flight. Yeah. Yeah. So you just like commute over to work. Yeah. I just find it. It's, it's, it's, it's, it's, it's, it's, it's, it's, it's, You would imagine that they would get like shipped in some way. Yeah, yeah.

Normally you're, I don't know, with like sports cars, right? You're not, you're not like, I'm just going to like go put some when I need, I want my, you know, turbo in New York. I'm going to drive it all the way over there. But the planes, they just end up the most efficient way is just to fly it over there. Well, the new Anderil arsenal, their manufacturing plant is right next to an airstrip. And, and Palmer was talking to, I think, Ed Ludlow at Bloomberg in this interview. and saying like, oh yeah, we're right next to an air strip so we can like, and one of the

advantages and Ed Ludlow is kind of like, you know, answering his, finishing his sentences and saying like, oh, so like you can fly the plane straight from the factory to the customer, like to the Pentagon or to the airfield. And he's like, Palmer's like, yeah, or the war zone. You can just, it rolls off the factory line and it goes straight to the front. Yeah. Immediately. And that's the most efficient way to deliver capability. I just think that's funny and interesting. Anyway, very expensive. And again, highlights the fact that, like, we aren't necessarily behind on the technology. We're just behind on the efficiency and the procurement process. And over time, the... I'd rather be behind on procurement because that's a lot of process you can rip out.

But it's like, yeah, it's a leading indicator. It's like we're overspending on the F-35. The next version won't even get made if the trend continues. And that's the fear and the risk. So Matt Palmer says, hate to say it, but I don't think there's any way the U.S. can position itself to deter a major war in the next decade, let alone win one quickly. The defense procurement system and the industrial base underpinning it is fundamentally broken and it will take a major war to fix it. He's a bit of a doomer. I think that there's a chance. I think Joe Lonsdale and the crew at the Pentagon. You know, I like how they're not taking the Doge branding into this. much more of just, hey, let's just do this.

Yeah, yeah, yeah, yeah. We don't need to, we don't need to make it a big marketing campaign. Totally. We don't need Vivek in here. Yeah. You know, trashing the jocks again. People like, people like, people like, people like you. No, no.

I think, I think Hanks said, corporate athletes. In many ways, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, is charging on. Let's go to our next story. Startup Castilian has raised a hundred million dollars. for hypersonic strike weapons. I think we got to ring the size gong for Castilian. Let's do it.

Boom. Congratulations to everyone involved. We'll break it down here on the show. Yeah, this is a big one. We did 14 million. Now we're doing 100 million. Congrats to Castilian. So they make hypersonic missiles.

Silicon Valley's enthusiasm for super fast weapons has picked up speed. With Defense Tech startup Castilian raising $100 million through debt and equity to build hypersonic missile systems. The company is vying to sell long-range strike weapons to the U.S. military. Castilian is part of an increasingly well-funded sector of venture-backed defense companies. Many are hopeful that the new Trump administration will yield more government contracts for startups. There will be more support for awarding contracts to non-traditional players, said Castilian's co-founder, Sean Pitt. The administration has given the Pentagon the freedom to lean into new companies. So they raised 70 million in venture and 30 million in debt. The

funding round was led by light speed venture partners, and it brings the company's total funding to $114 million. So they got here with just 14. And have you seen their branding, by the way, it's very 50s nostalgic or even almost World War II era, some of the graphics of they use. No, I haven't seen that. That's cool. It feels a little bit insane to be, you know, talking about defense tech company branding, but I think it's smart by them because there are so many new players coming in, differentiating yourself, you know, visually is just another way. to kind of stand out. Yeah, yeah, it's great.

And the last thing you want to do is just be like derivative of Anderol. Yeah, yeah, yeah. Because the- And Anderl's been such a dominant force. Totally. And they kind of took the sort of call of duty-esque branding. Totally. And that is what all these defense tech founders grew up playing.

Yeah. And so it's sort of the default. Yeah. So you got to think that's first. They own it. And so Castilians done a good job of, you know, separating themselves from the pack. And so let's do a little bit of a deep dive on hypersonic. So the defense.

Defense Department has considered hypersonics a national security imperative for more than a decade. Despite spending billions of dollars on the effort, it has failed to develop battlefield-ready technology. Castilian says it's frequent flight tests, quick engineering upgrades, and economical manufacturing will produce cheaper and better hypersonic weapons. It does test flights, it does three test flights per month in the California desert. So this is crazy. Hypersonic weapons, you might think, hypersonic faster than sound. A hypersonic. It's faster than sound. A hyperbasket. supersonic weapon is defined as a projectile that flies at least five times the speed of sound. Yeah. Super sonic is Mach 1 to 5.

Hypersonic is 5 plus. Yeah. So it can be launched from great distances, maneuver, and evade most air defenses. They became a top defense department priority during President Trump's first admin. A 20-21 test flight by China, which launched a weapon that circled the globe 20 times the speed of sound or faster alarmed Washington. Yep. 20 just ripping around 20x. So the main reason

They would have had to choose that flight path fairly. That's the thing. You don't have to choose the flight path with a hypersonic. So it's so high and so fast. It's not just that it's so high. It combines speed. So the traditional ICBM, the intercontinental ballistic missile,

will also go Mach 20. I'm not sure if it's exactly Mach 20, but they go extremely fast. They go all the way up into space, but they follow a perfect parabolic arc. And so we have missile defense systems and satellites that track

all of these different missiles as they go up, all the different rockets. So the rocket launches, and you can see that it's on this very smooth trajectory, and what that allows you to do is calculate with a very simple mathematical equation. Well, if it's going, you know,

a couple thousand miles an hour here, well then in five minutes it's going to be here. And if I just get my bomb or my missile here and explode, I will intercept it and blow it up. Yeah. It's very simple. to build a like a programmatic calculation for how to counter it.

And so that's been the backbone of missile defense systems. And it's why people aren't genuinely freaked out about countries getting ICBM capabilities. Because, you know, North Korea will get one. And it's like, yeah, we could probably shoot those down pretty effectively. Scramble things as they come shoot them down. North Korea is so funny. It's like your drunk friend who just has a gun and they're shooting it off in the air at random times.

You've got to kind of far away. And so you've got to look over there and be like, what's going on? Is it all right? Hopefully that doesn't fall anywhere important. Meanwhile, the adults are just sitting around. Maybe every once in a while letting one off, but in a much more controlled method.

And so these hypersonic weapons are different than ICBMs because they don't follow predictable trajectories. They maintain the maneuverability almost of a jet. or cruise missile, but they're going Mach 5. So there's a couple of cruise missile companies, and cruise missiles are obviously very important, but cruise missiles are typically subsonic. So they're not going, it's more like a plane

with no one inside and just a bomb. So when you have something traveling Mach 5 and it's also able to maneuver, it's very hard to shoot it down. And so these are people are worried about these hypersonic weapons being able to take out aircraft carriers very easily, be able to strike,

somewhere because it can take, you know, a lower path, evade radar, evade the satellites, evade detection, and then just show up very quickly before you can react. I'm an advisor to this company, Aon. I don't know. Have you ever met? I've never met them, but I'm familiar. So they're based in Texas. And they, so in learning about that business, there's only two manufacturers that make, they make anti-tank missiles.

Yep. So launch from the ground, you know, shoulder launched. sort of close range. There's two companies that make them and they've gotten to the point where they're charging because they run on a cost plus model. So the manufacturers make like a fee on top of what it cost them to produce it. And so that means that they're incentivized to just run up the price. So they make more money. It's this very, you know, poor incentive. And so Aon's making them for 80% less money and they're making better products that are easier to use. And so Aon, you would think is just like, you know, obvious, easy when they just go in there and saying,

hey, our products, you know, costs 80% less. It's easier to use. But because of this procurement process, which we've been talking about, it's just not, it's not a shoe in, right? It's a struggle to get, you know, and they've done very well in terms of getting traction in the Pentagon. But yeah. And so a lot of it is, you know, you just have to go and get some sort of general or Admiral to come out and watch your demo. And we've seen videos of Palmer doing this in the desert in a wonderful Hawaiian shirt. And Castilians clearly made that part of their strategy as well. They bought this crazy looking like tank transport thing. And they drove it to El Sigundo, which I guess is where they're headquartered. So welcoming our new LSVR MKR 18 to El Segundo this week

will be making upgrades to convert this vehicle into a launcher system for our upcoming flight test and it's a fun ride. So I think they can build in their factory, put it on the back, drive it out to the desert, and then just shoot it off and fire it. I think, I think this creates a fun dynamic for VC demos too. So if you're running a process, your investors, you know, potential investors want to see what you got, invite them all out to the same demo. It's literally happened. Blow some stuff up and then say you guys can talk amongst yourselves and figure it out. That literally happens all the time. Steve, CEO of Allen control systems. there was all these you know investors he was raising a new round last year all these investors wanted

to meet i was like invite them all to the same demo because they're going to just be sitting there watching this incredible you know demo the technology and and for him he's making counter drone you know systems so it's just very cool and highly relevant to the battlefield today yeah and anyway so cool opportunity normally you're giving a VC a demo your product they're using it but this sort of putting them all out on the same desert. It's just a fun dynamic. I've heard of that happening, and all the VCs were standing around

talking to each other, and one of the bigger VCs there, looked to the other one and said, you're not getting a penny of this round. And everyone was like, wow, that guy's kind of dick. But it worked, and they took the round, and it got done, and it's good for the founder. So lots of investors have been singing Castilian's praises. Andresen Horowitz is in the round.

They said, Michelle Vowles, former Andreessen associate, or partner says, the best way to ensure the next era of Pax Americana is to build capabilities that deter our adversaries. Congrats to the team. Jake Chapman says with a fantastic handle on X, just at VC.

Crazy. He says, excited for Castilian and to see us developing this American capability. And I like the folks, I know at Lightspeed, but Lightspeed maintains a China arm. What's the relationship between these two firms from a money control systems information flow perspective? Why did everyone scream about Sequoia?

was totally fair, but nobody seems to care about light speed. So he's putting the screws to light speed, telling them divest immediately, I guess. Blue Yard Capital is also in this deal. We are excited to consider continue supporting Castilian Corp on their mission to preserve peace through deterrence. Read more about their $100 million series A financing in the Wall Street Journal, which we just did.

And Castilian is very excited to announce their round. We should close out with some more context from the Air Force, the Hypersonics program the Air Force estimated would become operational in 2022, hasn't materialized, and the service is working on another program that says it will produce a weapon in 27. An Air Force spokeswoman said the service is working on other programs and collaborating with startup defense companies and providing them with opportunities to demonstrate their technology. Many in the industry hopes Trump's shake up in Washington agencies, the technology industry's coziness with the president, the influence of Musk, himself, the founder of the largest venture-back

defense tech company, will bring. attention and money to hypersonics. And so... Yeah, and that's what people still don't realize about SpaceX, is it is being able to put things up in space fundamentally makes you a defense tech company. Totally. It's not just an aerospace space company.

Yeah. That's part of their value to the United States. 100%. Yeah. And I mean, Star Shield has been very important in getting Internet to the front lines. But then also there's all the other applications of just putting up spy satellites and even converting the rocket.

to ICBMs potentially. So all of all three of Castilians' founders were previously in senior positions at SpaceX, and roughly half the company's 60 employees joined from SpaceX. That's pretty crazy. And Castilian said it would have a finished product ready for the military by 2027, and we'll have its first hypersonic speed test flight for its weapon this summer. It has been awarded more than $22 million in federal government contracts, mostly from the Air Force.

And so we love to see that. Yeah, and that's why this raise shouldn't be that surprising from a headline number standpoint, is they're generating $22 million off of one, basically one contract. And I'm sure they have others either done or in the pipeline. And if you're a series B SaaS company with $22 million of A.R, you can easily go out and raise $100 million at like a $500 million valuation. Sometimes those contracts are kind of paced out, though. So it's kind of how much they're drawing down from it.

But still, yeah, it's obviously a good sign. And the order that people didn't realize the order, if these contracts pan out well and the product starts to work, you could be looking at billions of dollars in orders on one skew. Yeah, yeah. Which is just, that's where. Yeah. There was some, like, you know, like what is the bear case here? Why? Like, what could go wrong?

Like, there are competitors in the space. There are other startups that do solid rocket motors. Anderil bought a solid rocket motor, uh, rocket motor company. But it seems like Castilian's focused on being the integrator that actually builds the complete system, which I'm sure is much more complicated than manufacturing any one piece. The other thing, you get these billion dollar orders and then you have these servicing contracts, which are like SaaS-like, sort of annual contracts on a per, typically, from what I know, a per missile basis.

It might be you sell a hypersonic for, call it $2 million. And then you have 400K a year for 10 years to maintain it. So it's very predictable, stable revenue once you win the contract. And so I think what we're seeing already in Defense Tech is the companies that have contracts now that are actually getting traction in the Pentagon, they are going to get more and more capital piled into them because there's this, there's a lot of pre-seed, seed stage companies that are able to raise $5 million. But getting to that next round, even if you build the technology,

if you don't have the contract traction, you're just not going to get there. So one of the venture capital firms in Castilian is Blue Yard Capital, and their fund performance was just published by Eric Newcomer in his newsletter, Newcomer. And I don't think they intended for it to be published, but. No, do you know the backstory on how this stuff leaks? Yeah, so it's a public endowment that basically has to publish their data, presumably for some type of compliance reason. So it's the, it all comes from UTIMCA. the investment arm of the Texas public university system. So I don't know if it can be foiled or it's just automatically released,

but newcomer loves getting those new, Yeah. Yeah. Yeah. And all the, I'm sure there's fund managers now that are like, I don't want to raise from them because I don't want five years from now. My fun to be getting dragged.

Yep. You know, oftentimes, you know, people, but anyways, I thought this was a crazy story. So Blue Yard, Blue Yard. It's killing it. It's 2016 fund has 53% IRA. And where are they based while they're ripping checks into American hypersonics? Berlin, Germany. Berlin, okay.

Have you been to Berlin? I have. Cool, cool city. Yeah, I went to October. It's only going to get more and more punk as their economy. Collapses. Well, yeah, they're really siphoning the money out of the German economy with this fund now. Yeah, yeah.

But maybe it'll come back in distributions. Well, hopefully Blue Yards. LPs are mostly American. Yeah. If they're investing in American companies, we can keep those, you know. And so it seems like newcomer went to David Byrd, the general partner at Blue Yard, and said, hey, I got you dead to rights. I got the U-Timco report.

I got you. And this was cool. He ended up sharing. But, yeah, they came back and they were like, here are the real numbers. U-Timco calculates it one way. We can give you our marks. And it seems like they're doing really well. The first fund generation, they raised in 2016, they raised $120 million fund.

a net multiple of 4.8x and a net IRR of 51% for a DPI of 3.4x. So they're doing great. That allowed them to raise four more funds, Blue Yard 2, Blue Yard 3, and then two crypto funds. A little bit of a narrative violation. A lot of people, when they see a fund go from doing defense and biotech to fomoing into crypto, oftentimes, you know, they just assume that they're just incinerating cash. but the first their crypto fund which was started in 2021, $75 million fund, has a gross multiple of 1.7x right now and a gross IRA of 28%. And so this is again that the narrative violation that we've talked about before, which is that the average crypto fund outperforms the average venture fund.

Yep. And so the crypto industry continues to laugh to the bank. Yep. Some retail investors get a little smoked in the process, but that's part of the game. And so newcomer posted the full deep dive, which you can go see on his substack. Paywalled. Paywalled. But everyone in tech has a subscription or the ability to hop the paywall if they need to.

And Brad Holden gives a shout out to Protocol Labs for helping Blue Yard drive amazing returns. any project would be lucky to have Blue Yards supporting them. So that was the crypto fund? Yeah, that was the crypto investment that really drove returns in their early fund, which I think invested in both Castilian early on and Protocol Labs, which really, I guess, mooned. And so there's a couple other funds that are highlighted in here from the UTIMCO report. True Ventures is doing well.

Newer Vintage has invested in not just one or a handful of funds. They've done 10 of True Ventures funds. And so this is why these solo GPs, you have to start out raising 200K checks from a bunch of random people, but you try to get to raising from endowments. Yep. Because endowments will basically ride with you for your entire career in certain instances, especially if you put up solid numbers early. Yep.

And it's valuable because even if you have a fund that underperforms, you know, they'll continue to double down and build that trust with you. And so true ventures, the newer vintages still have negative IRA because obviously the newer companies, they die off faster and then the later ones start to grow. But the overall IRA is in a solid place at 23.59%, which is great. Up front ventures has been in trouble. Their growth portfolio has fared worse than its early stage funds per UTIMCO's IRA calculations. The firm has only returned around 35 million to UTIMCO out of 127. million invested so far, though its holdings on paper have been marked up to nearly 150 million.

It has an overall IRR of 9%. Yeah, so to be clear, well, this doesn't look great on paper compared to True or Blue Yard. They're still sitting on, you know, what will, you know, if it were to be realized today, who knows if it would be is a, you know, 9% IRA, which beating, you know, close to beating the market. Yeah. And there's some other funds that got scooped by newcomer. So go check it out. Always interesting to dig into what funds are raising important for founders to understand who's on an upswing and who actually has more capital to deploy. Because once you see a fund start declining in the RRs, they're likely not going to raise those follow-on rounds. They might not be the partner for you

that will be there for those series B, series C checks, keep upping their prorata, staying with you. Yeah, and this one, this other foundry group, which was in the news last year, because I think they returned capital. Oh, is that right? Maybe I'm confusing it with another fund, but yeah, they're just no longer even raising.

So that even funds that, you know, firms that end up raising, you know, in this case, over eight individual funds, sometimes don't have proper, succession plans or the GPs just decide, you know, we had a good run, let's call it. Because these things are, every new fund is 10 plus years of, you know, commitment to managing the firm. And if you're getting to, you know, retirement age, you're sitting there. I'm six years old. I want to raise another fund now and then see 70.

Yeah. Potentially even 15 years, oftentimes if you get real winners that have, you know, continued access to capital. Yeah. So it's a long-term commitment. Well, Moving on to one of the greatest capital allocators of all time, Masayoshi Sown is in the news. Did we hit the size gong just to stop? Yeah, let's just hit it a bunch for Masa. He's got so much going on. I mean, the original size lord, you can't keep a good number. Yeah, yeah, you can't keep a good man down.

So there's a report from the information about how he made it back into the White House. when President Donald Trump announced a $500 billion plan for data centers to power artificial intelligence, one of the men standing to his left was already getting ready to write the checks. And can we give some credit to Sam for just aura farming the president? Oh, yeah. He got that Trump has really nothing to do with Stargate at all. And Mossa and Sam got him to announce their project. Yep.

So, you know, Lulu always says, you know, go direct. Yep. But if you get the opportunity, have the president announce your new fund. It doesn't hurt to get to get a little, you know, or a boost. So SoftBank CEO Masayoshi Sone was already making plans to put a total of 40 million into, 40 billion, sorry, I knew I was going to misspeak into the Stargate Data Center project, as well as the company that Stargate is, that is Stargate's driving force, Open AI, two people familiar with the matter said,

how SoftBank will finance the investment isn't clear, but the company has separately started discussions to borrow as much as $18.5 billion using the value of its publicly listed assets as collateral. Son is levering up. Levering up. Levering up. We need a big lever that we can throw when the leverage turns on. Well, and it's crazy because if you just held on to his Nvidia shares,

he could have probably actually. So we have a post about that from Dr. Parique Patel, CFA. He says, he says, B-A-C-F-A-A-C-A-E-S-Q. He says, Mossa-O-N-O-W-E-C-A-C-E-S-Q. He says, Mossa-O-M-A-N-E-E-W-E-W. He says, M-A-S-A-E-E-L-E-E-E-L-E-E-W-E-E-W-E-E-E-W-E. I'm not, I've never trashed No, this is good. This is good. So now that Masa is investing $100 billion a year again, it's time to bring back this classic SBG shareholder value. A bunch of unicorns, AI traffic. So the funny thing, so I think it talks about this in this article, but while he was so bullish on

AI when he was just going so hard into WeWork. I think it's because he fell in love with Adam. And he was just so enthralled by, you know, just the Newman effect. Yeah. If he like, he was so early, look at all of his slides. Yeah. It's funny because he has like another slide that that's. Yeah. Yeah. I think we have this one here.

Is that one. It says Moss is back, baby. And it's a new slide that has the same design aesthetics of Jordy's slide saying the evolution of superhuman illustrative. Agricultural Revolution, Industrial Revolution, Industrial Revolution, Information Revolution. Birth of Superhuman. I love it. So dramatic.

So cool. He has another one too that's this really funny graphic that says the VATTS. of coronavirus and then just to further growth. Yeah. So Mossa was talking about AI before, almost before I was born. Yeah. I mean, it is funny because these slides, as ridiculous as they look, they are great ways to communicate a simple idea.

It's basically what other people are saying in 5,000 words. Exactly. He's saying with one slide. Yeah, yeah. But you read a Goldman report and it's going to be like bar charts with tons of annotations, Merrimacko graphs, waterfall charts and all. of stuff. He's a vibes-oriented investor. Yes, yes, yes. And he has extreme conviction that's got him into some hot water before. But overall, he's been generally, you know, he's had some issues back

in the telecom days. We have to do, we're going to do, so maybe even tomorrow we'll do this, but like the full story of Masa, because you can't keep a good man down. But this story is great. So they're talking about the announcement, which was only, was it last week? So crazy. It feels like a month ago. He says one of the men standing beside Masa, OpenAI CEO, Sam Altman, traveled to Masa's mansion in Tokyo this month, seeking a big check to fund his company's growth. Altman and Masa finalized the agreement a few weeks ago a couple days before Congress certified Trump's election. A person familiar with a negotiation says, SoftBank, to be clear, was already an investor in Open AI.

So Masa, you know, has been on the journey. It's funny because they finalized the agreement, but it seems like they kind of just broed down. You know, it seems like the way that Stargate got announced and everybody's just like, yeah, I'm good for, I'm good for $20 billion a year. I'll figure it out, you know. You know that both Sam and Masa are obsessed with Napoleon?

So Sam had this blog post saying, like, the best book I read this year was Napoleon. in his own words, this famous book. And a lot of people read into that, like, bro, like, that's too much. Like, that's too intense. Like, you should back off of that. Because, like, yeah, there's probably some good lessons in there,

but it's a little intense to be like, I want to be Napoleon, right? And Mossa has massive paintings of Napoleon. I bet Mossa has, like, actual artifacts from the... He's, like, a collector. Yeah, yeah. He's a true believer in the... The largest collection of Napoleon's old swords or something like that.

Oh, yeah, totally. But, you know, Napoleon. had ups and downs and major comebacks, you know? Yeah. It's a beautiful story. Tane says, Jensen reminding Masa, he was NVIDIA's largest shareholder at one point. SoftBanks sold their 5% stake in NVIDIA for $4 billion in 2019. It would have been worth $150 billion today.

And you posted this picture of them like hugging. The context of that video is, I think, a little bit different saying, like Jensen's saying, like, yeah, you used to be a big shareholder. like kind of logging him a little bit. I'm not exactly sure, but it is a very rough look. Masa, you never know. Maybe he, maybe it was his whole plan.

He wanted to bottom, you know, bottom ticket so that it would inspire him to grind harder. Yeah, yeah. Could have been one of those situations. We got a great, we got a great post from Gabriel. He says,

if they make the rock float at a VC-backed Space Factory company, referring to Varda and the LK-99 thing, It's completely over for tech critics. Zerp vindicated, capital allocated correctly. Masasone was just early. Kathy Wood, greatest of all time. We will be multi-planetary species,

and you will enjoy post scarcity. And obviously a very funny post. Great poster. The rocks did not float. The LK99 thing did not replicate. And so it was in fact so over. Wasn't our very own Andrew McAllenck? Yeah.

Yeah, yeah, yeah. And I was there the night it happened. It was very cool. And it looked like they were floating, but it turned out to just be a magnetic effect, not a superconductor effect. It was very cool. It was still cool that they were able to just do the science project on the side.

It was just very cool for recruiting. It made a lot of sense. But it was an invalidation of his claim that maybe magic was about to happen. And of course, things developed a little bit slower. I want to see the only times I've seen Kathy Wood in the news recently is her saying we have such extreme. losses that we will not have to pay, you know, capital gains for, and it was like, she kind of

set herself up to be dunked on a little bit with those posts. But let's get Kathy back in the mix, Moss is back in the mix. Yep. I want an Adam Newman AI startup. Yep. I want TK to launch a foundation model. Yep. I want it all. And so I like this post from Sophie net cap girl says, Sophie says, though he's become a bit of a meme because of we work, Masa Sown is an icon and one of the most successful tech investors ever. It won't work for everyone, but he truly embodies what it means to bet big on your highest conviction ideas and to not be afraid of being wrong and lose money. Masa Yossi Sown made a total of $72 billion on his $20 million bet on Alibaba from 2000. So you know, Masa basically has one of the greatest. venture investments of all time. 20 million into 72 billion. That's insane. It's just so insane.

You know that he's just so pissed that he didn't put a billion in, that he's like, I'm never going to make that mistake again. And so every, from that point on, he was, he was the ultimate size lord. Yep. Yeah, it's a fascinating story. And so Packy also shows Masa some love. He says, I for one love that Mossa just keeps coming back. Open AI and Joni Ive and talks to raise one billion from SoftBank for AI AI device venture.

And so Sam is just a master of just taking talent, money, and putting it all together. Vibes. And he's just a vibe aliner and it works. And so let's go through some more of this post. People involved in Stargate stressed that the high profile White House announcement last week was merely a blueprint to a year's long effort. We talked about this more of a road show than actually a funding announcement. If SoftBank ends up spending the $40 billion, a larger sum than previously known, that would be one of its biggest investments ever.

While Sown takes out big loans, it often sets the stage for financial drama. Highly leveraged telecom deals have put him on the brink at least twice, but he's always managed to survive. The financial risks involved became almost immediately clear on Monday. The markets were roiled by skepticism that big spending on AI wouldn't pay off for investors. valuations were already stretched when Chinese AI model Deepseek showed it could potentially produce AI at a far lower cost than its rival. Softbank stock fell 10% on Monday, wiping out the gains it made after the announcement of Stargate. It's kind of funny, Stargate's announcement to build massive infrastructure comes at a point when maybe we don't need the infrastructure

in a way we're expecting, said Raphael Dorono, a financial consultant for venture capital and private equity firms who focuses on AI investments. There are questions around Stargate. The soundness of Sone's bet will become more apparent in the coming years. He has suffered from big financial busts like we work in Katera in recent years. He's made those non-tech bets while he was touting the potential of artificial superintelligence to change the world in the coming centuries. Meanwhile, he sold off the firm's multi-billion dollar stake in Nvidia before the chipmaker had its historic stock run up.

So he is back. He made, it seems like he was down pretty bad, but then made it like basically all back on arm, right? He turned 32 billion dollar investment into 82 billion. No, quite a bit more. 82 billion was the gain. That's amazing. So Moss is a king of making it all back in one trade. He really is. He was so due. He studied. So he realized that many investors, sports betters, gamblers, poker players, many of them quit right before they're about to hit it big. Yeah. And so he just never quit. If he hid super intelligence and just becomes the richest man in the world, It's so over for the critics.

Yeah. It's great. In a 2016 meeting at Trump Tower after Trump's first election, Sone indicated the iPhone manufacturer Foxcon would bring tens of thousands of jobs to the United States before the firm was ready to announce the move. He just completely jumps the gun. Foxcon eventually backtrack on its plans to build a new U.S. plant. SoftBank's own commitment to create tens of thousands of jobs in the country,

coalesced through its investments in U.S. startups backed by the first vision fund. He's like, fine, I'll do it myself. He just writes 10. 10, $1 billion checks and you guys hire just like, hire like 10,000 people. 10,000 people. Just grow fast and hire like 10,000 people. Yeah. Sohn's effort to integrate himself with Trump before many other CEOs were willing, had some business logic behind it. For years, regulators in President Barack Obama's administration rebuffed soft banks efforts to merge Sprint, the U.S. Mobile carrier it had borrowed

heavily to buy shares in years earlier with competitor T-Mobile. So he wanted to merge T-Mobile in Sprint. A federal judge approved. the deal at the end of Trump's first term in 2020. SoftBank still has about a $17 billion stake in T-Mobile. All of these stakes are just so huge. It's not a venture fund. It's just this like Warren Buffett-esque entity. So it announced in 2019 that its second Vision fund had amassed $108 billion of investor commitments from Microsoft, Apple, and others. SoftBank has yet to raise any outside capital for the fund. Jordan Levy, who worked at SoftBank's early stage venture capital, team for 16 years said Sone tends to announce initiatives before they're ready. Masa is one of

those guys who is ready, fire aim, but he manages to figure it out. I love this guy just worked with him for 16 years and he's just like, yeah, he's a wild man. Yeah, he's an absolute dog. He's an absolute dog. So I didn't realize this. He's only 67 years old. He's got that. He's got time. He's, if he gets on the Brian Johnson Protocol, oh, he's good. You know, I mean, I'm so happy that we have. pills an hour and he'll be good. I just, all I want is for him to do a proper annual keynote. Yeah. Like Warren Buffett style, you know, really lean into the brand.

I want, we need more material, right? So X, we're sort of relying on all these old slides. Where's the new slide decks? You know, he's cooking on good slides. He's got something cooking. Masa has achieved amazing things for him and his company, but I'm not sure if people look at Masa the way they do other Titans. Levy said, this is.

really something to him he thinks that he can create a legacy and so yeah he's still got a chip on his shoulder people are laughing and he's going to be he's saying i'm going to have the last laugh yep and uh related to massa we're moving on to our next story sam altman backed retro biosciences is raising a billion dollars for a project to extend human life so sam can just here it comes again home again it's a little bit of a road show road show moment

road show moment I mean it's like I mean it's actually the most a lot of you know if you founder struggle with this right because if you wanted to really

kickstart a fundraising process you'd go out there and you'd say I'm fundraising but you kind of can't do that you can I guess at a certain scale just go yeah we're planning to raise a billion

Yeah, yeah, yeah. But you, but they're not, yeah. They're not saying we're raising right now, please come invest in our startup. Yeah. It's much more of this sort of road show style announcement. And when you're raising a billion dollars for a company, which presumably, you know, has no revenue or very little. Or incorporation. Or maybe, yeah, a little pre-product.

I think this does exist. No, yeah, I've heard of this company has been around for a while. But I mean, it is true. Like, like, I think you and a lot of other folks. when they're thinking about a new business idea, oftentimes it helps to like build a deck around it and then share that around with partners. I've made way more decks.

I've helped start, you know, a bunch of different companies, but I've made 10 times many decks. You kind of flip it out and I'm like, okay, yeah, I think in decks. It's the best way. Yeah. Much more if you, if you have a,

if you have a cool idea, you can't turn it into a compelling deck. It's just a cool idea. Exactly. It's not a real business option. Exactly. And so it seems like for a lot of these guys at this level, they think in financial times profiles.

Yeah, yeah. And to be clear, I think what they're doing sounds amazing. And I would like them to have a billion. Totally. I would give it to them if I had it, you know, if it wasn't all in my friends, you know, early stage, you know, pre-seed startups. Yeah. And so they did a modest seed round.

I think we might have to get the size going out for this $180 million seed. And this will put more money in the series A. The company isn't talked with family offices, VCs, and sobrients. Wealth funds as well as U.S. hyperscaler data centers to provide computing power. And so this $1 billion might come in the form of cloud credits as well, be sort of a blend. But, you know, he's certainly raising. So the San Francisco-based biotech will use the money to fund clinical trials for three drugs, including a potential treatment for Alzheimer's disease, which will be tested

in an early stage study in Australia this year. It's also working on drugs for rejuvenating blood and brain cells. I love that. Right now, if someone gets Alzheimer's, it doesn't matter what your resources are. you know if you're like joe biden or elon musk or whoever you can write as big of a check as you want to anybody and nobody knows how to cure it which is so crazy sad yeah imagine how much uh funding joe biden would have had available to not be you know falling apart while president of the united states yeah i i posted this it was like when when biden was having trouble he should have put

together like an operation war speed for for brian johnson blueprint yeah we're just throw up go fund me. I would have thrown a bone to, uh, Paul Joe. And so, uh, Altos, backed by Jeff Bezos had the largest ever biotech fundraising, raising three billion dollars in 2022. So a lot of these different power players in Silicon Valley are doing biotech stuff now. Obviously, Elon has neuralink, which is biolated and curing a lot of, uh, blindness, but also paraplegics, uh, like, uh, syndromes. Um, Betsy LaCroix said Altos has brilliant minds and admirable longer range research goals,

but he said he and Altman both come from the Tech Accelerator Y Combinator, and so they have a very fast-paced, action-oriented target-centric mindset. The reason I like this play is because a lot of people talk about AI solving, aging, but then it's not obviously gonna happen just via a model, right, unless it becomes truly agentic

and we achieve this sort of ASI, and it's just like, I'm gonna save all the humans. people, you know, that would be a fun reality. But more realistically, we need companies that are leveraging these new technologies in a very specific context like this around specific drugs and treatments that can solve specific issues, not just generally hoping that the technology will cure all of our problems. A lot of these drugs, they usually take between 10 to 15 years to discover and then develop and get through the FDA process.

And the goal here and the real of the bet is that with AI and a fast, pace team, they can accelerate that and bring drugs to market faster. Working with the $157 billion AI startup also has an ulterior motive, bringing biotech into open AI. You know that you're making progress towards AGI when your models are able to make discoveries that humans couldn't on their own. Sort of like the Move 37 moment in AI for biotech would be very interesting where the AI spits out something that wasn't considered as a possibility.

They test it and then it works. That would be amazing. And so one thing you'll notice from Altman's moves is that they tend to all interconnect in some way. There's many ways you can say, oh, World Coin is the currency of OpenAI. Or you can imagine. Or like post AGI, he clearly wants to think about, you know, what is the way to deliver UBI to everyone. And WorldCoin would be a way to distribute value to billions of people. I think that's part of the thesis at least.

So they can go by Kava, slop grain balls. And so let's see. If you're 85 years old and you undergo this therapy, you can replace your blood stem cells with ones that are zero age, and then those ripple out and produce all your blood. Basically, it's like having 80% of all your cells become zero age. Is it a Faustian bargain?

We'll find out. Sounds good to me, though. I'm down. I'm down to replace all my blood. Replace everything. Turn me into a robot. Who cares? As long as you can podcast, John.

As long as I can podcast and bench press. I'm good. Yeah. As long as you can bench more than a certain fellow. Yeah, exactly. The robotic arms, that seems highly relevant to benchmarking. Well, let's move on to some tech earnings in the public markets. Meta platforms, sales, swords.

to a record bolstering Zucker Zuckerberg's AI spending spree. Meta shares have rallied after it announced plans to increase spending on AI this week, posted record revenue in the fourth quarter aided by artificial intelligence improvements to its ads business. So we'll get into a bunch of the posts here, but Zuck's just undefeated. He's on a generational run. I think that you call the top on the style, but it was not correct. Public opinion. Yeah, public opinion, sure.

He can't go anywhere but down from here. He's on top of the world, but the stock can keep going up, maybe. Yeah. After you get a Porsche minivan custom made and your wakeboarding holding an American flag, that's the pico top. Yeah. And you're wearing a million dollar watch or a F.P. Jorn.

There's literally no better watches to wear. He can't go out. Yeah, you could get a graft diamond. He had hallucination. That'd be good. And so let's react to some posts about the earnings, and then we'll go into the article. ZA. Stocks says meta is operating on a, another planet. Zuck is arguably the best CEO on Earth. Hard to comprehend. He's only 40.

Revenue up 21% year over year. Gap net income up 59%. So, here's a crazy. So Mark Zuckerberg and Ross Oldbrick are the same age, which is wild. Dark path. Yeah. Yeah. I mean, they both had similar power. Yeah, both created tech platforms. One was legal. earnings per share up 60% year over year operating income up 48% operating margin up 42% send it to a thousand already bonkers numbers obviously not financial advice let's go to Q cap I think I used to think

Google had the best GOG had the best business in the world with the widest mode possible I think this meta quarter changed my mind 60% operating margins X reality labs on a top line growing 20% sustainably with upside, $2.2 million revenue per employee with a 40-year-old founder. It is a compelling bull case.

Let's go to NIR. NIR says meta had their Q4. I'm literally inclined to log on to public right now and buy more meta-style. Not financial advice. Everybody listening to this show should know that we don't give financial advice. So much of our net worth is in our friends' companies, which is the most irrational possible thing to do. So definitely don't. We shouldn't give financial advice around specific stocks,

but we should give the meta financial advice of start a hedge fund. Yeah. Start a private equity. That's the only, go into private equity. Hivet into private equity. I think that's a safe, the greatest business model of all times. Yeah.

Start a family office. Yeah. Be your job should just be running your own family office. Exactly. Exactly. Just like, that's all the financial advice you need. Be post economic. Yeah.

Be post economic. Have a fantastic. team of traders deciding what trades to make on a daily basis. Meta had their Q4, 2024 earnings today. Record revenue of 48 billion in just one quarter, significant outperform, 1.7 trillion market cap already. Advertiser revenue by geography an all-time high. Really, really crazy. Unexpected, too. Just huge growth, even in U.S. and Canada, very mature markets. let's look at Alex Heath. He says, Zuck on meta earnings call just now, I continue to think that investing very heavily in capex and infra will be a major advantage. Wall Street breathes a sigh of

relief. And so the company's shares rose by about 5% in after hours trading following a rally over the past week after it announced plans to increase spending on AI. Zuck says, I expect that this is going to be the year when a highly intelligent and personalized AI assistant reaches more than one billion people. And I expect meta AI to be that leading AI assistant, just because of the distribution. Distribution is so important. The obvious, one obvious bowl case here is that if LLMs replace a lot of Google search and meta has all U.S. consumers in their apps for hours a day, and you can eat into that search, and then Meta gets an entirely new ad product, which is a search style ad product on top of their

already incredible treasure trove of data and consumer behavior and all this stuff. It would be, you know, the potential is limitless. So meta plans to spend $60 to $65 billion on CAPEX this year, in part to build out a data center in Louisiana that is so large it would cover a significant part of Manhattan. Zuckerberg said. It also expects to end the year with more than 1.3 million graphics processing units or GPUs. And of course, not all of those will be used for training AI. A lot of them are just for serving reels and doing algorithms and AI on all sorts of products. But still, it's a lot of horsepower if he needs it. Yeah. It's funny because I think SoftBank has been, you can correct

me, but a few billion of net income. Facebook has 20 billion of. net income so they can really blow. Yeah. Cash. And they are. The company's reality labs unit, which is their smart glasses, augmented reality in the Metaverse reported losses of nearly $5 billion. The unit lost 17.7 billion last year investing in VR.

But, you know, as controversial as it is, we saw everyone was saying, oh, Apple's going to defeat them with the Apple Vision Pro, that kind of flopped. And they are just continuing to invest. And it's hard to imagine a world. Maybe it's 10 years, maybe it's 20 years where VR doesn't get good enough. And as we saw earlier at the end of last year, the Orion demo was received really, really well with smart glasses. They're even lighter and more augmented reality. And so they're clearly making strides there, even though it's incredibly expensive.

It's so crazy, especially when you compare it to the initial R&D that went into the iPhone. Like Apple was able to do that on a shoestring budget by comparison. Meta has invested so, so much in reality labs. But if they get it right and they have the platform by default and the AI and the distribution, it's game over. Zuck should get Trump to announce the Orion now that Trump will just announce private company. It should be a benefit. Like if you hold a billion dollars of his Trump. Trump coin, he just does your PR for you.

Yeah. It's just like it's a utility token, right? The failing Vision Pro is a joke. I only use Oculus sent from my metaQuest three. Yeah. on truth social. Beyond increased spending, META more broadly is going through a transition

and has sought to align itself with the new Trump administration. The company donated a million dollars to Trump's inaugural fund and Zuckerberg himself visited Trump's Mar-a-Lago estate twice in recent months ahead of attending the president's inauguration.

He also went on Joe Rogan's podcast and criticized the Biden administration. On Wednesday, META agreed to pay a $25 million settlement in a lawsuit that Trump brought against the company after it suspended his Facebook and Instagram accounts in the wake of the January 6th, 2021 attack on the capital. So Trump just gets 25 mil from them.

Yeah. Yeah. It's just like, hey, this is, that was pretty annoying. Yeah. And potentially categorically wrong. Yeah. To do. Yeah.

And you made me get kicked off Pinterest too. Yeah. Because everybody followed your leave. Yeah. I got kicked off of Tumblr. And it's like, how does 25 million? sound and Trump's like, yeah, okay, we'll call it even. Yeah, I would have to imagine that Trump suing meta is like at least a $5 million legal bill. Yeah. So we probably got that back on top.

And then who knows? Maybe the maybe that now and now when they're at the next UFC, they'll give each other a nod and maybe you know, Trump will give them like a pat on the chest. Yeah. This is going to be, well, they're both real, they're both really close with Dana White. Dana White's really close to Trump and Dana White's now on the meta board. And so. The relationships are building back up. Yeah, I love the memes of people with text over Zuck, you know, saying, yeah, and then they freaking made me kick off Trump. I can't believe they freaking did that.

Well, Zuck said, this is going to be a big year for redefining our relationship with governments. We now have a U.S. administration that is proud of our leading companies, prioritizes American technology winning, and that will defend our values and interest abroad. Earlier this month, META said it was eliminating third-party fact-checkers, relaxing restrictions on speech, and they plan to use the community note style,

which we've covered here on the show before. The company also appointed a new Republican head of global policy, dismantled its team assigned to diversity, and plans to axe 5% of workers in performance-based job cuts. TikTok's future in the U.S. remains in flux, and Meadow would likely be a beneficiary in the U.S. if they were to fully enforce the law banning its Chinese own competitor, even though it hasn't really dented Reels profitability in a significant way.

It's been very additive. Spending more time. Yeah, yeah. People are just, I mean, I'm sure it would be good, but it doesn't seem like it's existential to them. And so they're also starting to test ads on threads. Maybe threads will take off, but every time I go over there, it's boring. So we'll see.

Well, let's move on to. another move in the public market. Snowflake, the database provider, is in talks to acquire analytics startup Red Panda, company I hadn't heard of, but funny name. Sounds a little... But there's a bunch of interesting things to talk about with Snowflake, and there's this whole rivalry with Databricks and Palantir and how all these things play together, so it's important. And then the CEO, former CEO of Snowflake is a very fascinating guy who wrote this fantastic book called Amp It Up. Greg Slutman.

We should keep a copy on here because we're trying to amp it up. We are trying to amp it up. We actually, for those listening live and on the RSS feeder on YouTube later, we're trying to amp it up. Do you want to hear a quote from it? We sometimes get pumped up. Yeah, we sometimes feel like we're yelling at the mics. Yeah. And we watch ourselves back.

And it's too quiet. And we realize that it's too quiet. So Snowflake CEO, Frank Slutman, telling the hard truth. Do you want that? I want that. I'm chugging that. Bring me another Yerba Mata, Ben. Please. Well, I read this Snowflake CEO quote. One problem he's seen with young CEOs, they just think I hire a bunch of people and then I sit back and wait for greatness. They have no idea that they have to relentlessly drive every second of the day, every interaction and seek confrontation. Sluppman told the No Pryor's podcast, an episode posted Thursday. Look no further than a DMV office to see a lack of urgency among workers, he suggested. This is what naturally happens to human beings, he said. It's innate. We slow down to a glacial pace unless there are people who are going to drive tempo and pace and intensity and urgency. That's what leaders need to do. CEOs must constantly push the urgency, he said, even though it's really hard to have the mental energy to bring that to every single

instance of today. How much market cap was wiped out when he announced his retirement? Wasn't it? A lot. Wasn't it wasn't it? It was, it was, I think it was a complicated situation because the stock might have already been down, but he had kind of a generational run. There's some, there's some, there's some good examples of, of, because he had also found it service now, I think, or, or it was all this like incubation from Sutter Hill. So just to give everyone, one of cents. Frank Slutman writer behind Amped Up. When he retired, Snowflake stock plunged 20%, which was $30 billion of lost market cap. And so imagine being the new CEO coming in and you've got $30 billion shoes to fill basically, just to get back to kind of where people were

when your predecessor left. Well, now they're trying to acquire their way out of that hole. They are looking to buy Red Panda, a data analysis software startup valued at around $500 million in 2023. Red Panda sells software to that financial firms and retailers use to analyze continuously flowing data, known as streaming data, from stock market activity to e-commerce transactions. Its customers have included data center networking firm Cisco, credit rating firm Moody's, video game publisher Activision Blizzard, as well as some banks, which used it to detect fraud. Everyone declined to comment, of course.

AI isn't typically trained on data such as banking and shopping transactions in real time as those transactions are happening. But some AI startup executives believe future AI models will incorporate this kind of data, making streaming data analytics more invaluable. And that makes perfect sense. Like if I want to go to even chat GPT or perplexity and query and say, you know, give me the story on snowflake stock, I want today's information as well. I don't just want, oh, the knowledge cutoff was last year and I can't really tell you what happened this month.

Give me the data right now. Clearly, that's a prerequisite for a super useful AI system that can really do everything. And so it's not clear what price Snowflake is willing to pay, but Red Panda is asking for $1.5 billion. The firm has raised $167 million in capital and was valued at $520 million last year or in 2023. And so that would be a significant upround. All the VCs would make a bunch of money and all the employees would do very much. very well too. And so a price of 1.5 billion would value the six-year-old startup at 60 to 70 times it's ARR. We are so back. Such a deal would put Snowflake on a collision course with publicly

traded Confluent, the leading provider of streaming analytics data, streaming data analytics. Confluence revenue is much bigger than Red Pandas. Confluent generated over $250 million in revenue, so 10 times. Just in one quarter. Of course, if... No, that's quarterly. Oh, that's quarterly. Oh, wow. Oh, yeah.

Okay, so they're doing a billion in revenue. So they're doing 50 times as much. But, you know, you bring in Red Panda. You sell it to all the Snowflake customers and increasing that revenue, probably not that hard. And so it's not that crazy to pay a super high premium when you're going to be able to get that value accretion so fast. Confluent has a market cap around $10 billion and sells its software to startups, including OpenAI, as we mentioned. Snowflake has built its own data analysis product that resembles. Red Pandas, but acquisition of the firm could strengthen Snowflakes present in the market and widen

its customer base. Snowflake raised $3.4 billion in a 2020 public offering. And just to put this in the context of Stargate, announcing a $500 billion project, Snowflake is the largest soft, is one of the greatest software companies, you know, maybe ever, right? Just for me. Yeah, they're raising a hundred times last month. And they raised It's $3.4 billion in the biggest software IPO ever. I'm guessing they were profitable, quite profitable at the time. So just puts it into some context. So streaming analytics is a relatively small market, but it could grow as more companies

use AI to automate parts of their business. Red Panda says on its website that AI image startup mid-jurney and coding an assistance firm Poolside are using its software to develop AI applications incorporating streaming data analysis. Red Panda says customers can use its software to build an e-commerce. application that uses real-time data about a customer's transactions to send them an email with product recommendations, for instance. Red Panda providing proof, even if this deal doesn't go through, that you can build a really big company with a silly name. Yeah, for sure. That was like, I hope they got the dot com early, because if they got like red panda.com or something like that,

like dot I.O, that'd be really sad. With a name like that, you should be able to get the dot com right out the gates, but, uh, so let's go to some reactions, uh, regarding data bricks and snowflake. Matt Turk says the chess and mind games between data bricks and snowflake are fascinating. They mysteriously scheduled their big conferences on the same exact dates this week. Now, data bricks is one step closer to being the true data plus AI platform by acquiring mosaic ML for 1.3 billion. What next? And so, yeah, so this would be, if the red, if the red panda the deal goes through would be a big, you know, I would say it's a big win.

Lightspeed in G and Google Ventures did the Series A. It's funny because I'm sure that this wouldn't even be enough to return their funds given how large they've gotten. But still, we love to see a billion dollar outcomes. In a perfect world, we're seeing one a day. Yeah. And a lot of those, and those founders are going to be the ones

that you're going to be bidding against at Sotheby's. Yeah. So you got to know these people. You got to know them by name. I got to know the red people founders because I'm going to know what. I'm going to be seeing them at Amon. Yep. I'm going to be seeing them.

In the hot tub at a week. Yeah. Yeah. Yeah. Exactly. Teddy Blank has a funny post here. He says, hard to explain just how wild a time, uh, 20, 20, 21 was on this app.

Entire pre-IPO financing rounds getting done in the DMs. Mike Spicer making an account just to pump snowflake stock. In one G.C, we did a group R bridging poor quality carbon credits on chain. Magical, special. Yeah. The COVID era, the ZERP era was truly insane. There were a lot of crazy, crazy deals going on. I did not see Mark Spacer doing that. We're back. We're so back. We're so back. Nothing can stop us. There's always a bull market somewhere. Let's go to our last story of the day and then we'll move on to the timeline. We are talking about maybe the most boring part of the AI story, but one where there is alpha for sure, because I think it might be. have been overlooked. Seagate and Western Digital, two companies that make hard drives, are Sleeper AI picks. And so we have a screenshot here from the information talking about how their gross profit margins have increased significantly after a dip in 2023 due to overproduction and slowing

personal computer sales. And so normally, you know, you buy a big hard drive for your computer. People stop doing that. Everything's in the cloud now. But the data centers need more and more. more hard drive space for all of those AI models. And so they're selling at a breakneck pace. Seagate posted this tweet. Of course they're built different. Of course they included a hashtag. Of course they included a link.

They said, we're breaking capacity barriers over here at Stargate. At Seagate, not Stargate. But who knows? Maybe the stock will moon because people are, oh, I heard about that Stargate thing. I should buy the Seagate company. Probably the same thing. And so they said,

TechRadar calls it a world. record smash. Our 36 terabyte hard drive delivers unparalleled storage capacity for enterprises, and the future looks even bigger with 60 terabyte hard drives on the horizon. You know we're going to be picking up some of those here at Tech Gros Enterprises because we got hours and hours of 4K footage every day. We're generating terabytes of footage and we need someone in stores. And we're putting out so many clips on YouTube that eventually will get to the point where there's 24 hours in a day. we will be putting out more than 24 hours a day of content. Multiple cameras.

Multiple cameras. So you'll be able to turn into just the Jordi stream. Yeah, just the John stream. Just the stream of whatever beverage we're drinking. Yeah, exactly. Just the ad stream. You want to lock in on this Urbamate. And so hundreds of hours of content every single day coming from us.

And that's going to need a lot of hard. Good luck. Good luck keeping up. I found this hilarious post from 2017 by Nick Carter. He's been on the show many times. It says, I just sold Seagate, STF. in at $30, out at 48, nice 50% gain, scared by that 150% dividend payout ratio, midterm prospects poor.

He's dropping some financial advice on the timeline at 220 a.m. Zero likes, no engagement. Now he gets 100,000 likes on every post. He got out at 48. It doubled again from there. I'm on public right now. It said sitting at $99 a share. Should have held, Nick.

What happened? sell anything. Never sell anything. And so there's some other interesting stuff in this information article. You can go read the whole thing on the information. And just as a reminder, don't call it the misinformation. We're working on a new project that might be using that intellectual property. So we want to disambiguate those two as fast as possible. C-Gate and Western Digital Corp may be best known for selling hard drives for personal computers. But that mindset might be Out of date, in recent years, Seagate has focused on selling hard disks for data centers to cloud firms such as Google, which now account for the majority of their revenues. Their latest quarterly earnings showed a lift in its data center business, which sent revenues up 50% year on year.

Investors have yet to catch on. Both stocks are depressed. Seagate is currently trading at 2.8 times next year's sales, while Western Digital is at 1.7 times. Wait, I just want to be clear. So this article is by the information. Yep. Are they giving me financial advice? I think so. It seems. Yeah, it says right here, mortgage your house and put all of your money in these stocks.

Oh, amazing. Sell your car. This is why we pay for the premium membership. Exactly. For some of these stock tips. No. No, I have no idea if this is a good buy. But it is an interesting story just because I think it's been overlooked.

But we've done, we've wanted to do deep dive on everything related to the data center. This is obviously one of the key piece. in a data center. You think about the GPUs. You think about the energy. You think about the land and the models and the training runs and stuff, but you don't think about the hard drives

storing all those trillions of tokens, that juicy, juicy R-LHF data. You got to put that somewhere. We just call them tokes. Tokes. Yeah, got to get the Tokes up. We say token so much, it just takes too long. Yeah, Tokes.

So a UBS analyst said, we think all forms of memory and storage ultimately benefit from AI. but the kind sold by Micron is the first to benefit and hard disk drives probably the last to benefit. So Micron is a bigger play right now because they sell high bandwidth memory chips that are crucial for storing data used to train large language models because it's higher bandwidth so they can pull it onto the GPUs faster. This is more for like long-term storage. So there's two and a half players. AI models can both consume and generate plenty of data.

There are a few different types of hardware that cloud providers can use to stockpile that data, though hard disk drives are generally the most affordable option. There are two and a half players in the hard disk drive market, referring to Seagate and WDC, which together have an 80% market share and then Toshiba, which is a much smaller competitor in that arena. The market for hard disk drives has structurally changed with the rise of cloud computing, adding that he thinks AI will boost cloud firms spending with Seagate and WDC further. But I just don't understand this because these companies are basically shrinking. And the AI boom has been happening for the period in which they were shrinking.

So that's a bit, we're not here to give. No, no, no. So revenue is up. And it says here. So Seagate's latest. Investor attitudes towards Seagate and WDC, though, appear to still be influenced by the revenue declines. Each company suffered in 2023. That's old.

So that's old. Recently, they went up 50% year on year. And that's driven by... Got it. So the new LLM models, they generate a ton of data. And even if you're not actively using that data on a current training run, which would use Micron, you're going to need to store that. So obviously, Open AI wants to store every chat input and output. And that's a lot of data.

And then same thing with image and video. That's going to be a huge thing. If you're going to want to log all of that, like just. personally from a user experience if I open up the chat gpt app I want to find the chat that I had about rare watches two weeks ago and be able to scroll through it and so that's even more data than just a google search which might just be oh this person for this IP address uh you know search for these six words you know um yeah it just says here since c gates revenue shrank in the last two fiscal years while wDCs shrank in fiscal 2023 and recovered to a meager 5.6 percent growth rate in the year ended

June 24. So obviously we have another couple quarters to look at. But so yeah, now they're growing. It says Seagate projected a slower rate of growth for the March quarter of roughly 27%. Yeah. So they had a pop last quarter and they're expecting another growth quarter, but not as huge. Partly due to production problem that reduced the amount of product it had available to sell. So their capacity constraint now. Yeah. Potentially bullish. We'll see. Got to go figure it out for yourself, though. Yep. The shift towards selling to data centers is both helping both firms lift their profit margins.

Each reported gross profit margins of roughly 35% in their last quarters. Anita Ramoswamy? What does she normally write about sleeper AI picks? I don't know. Probably just public companies and quarterly earnings. I mean, it's just an earnings report. Yeah. Anyway, let's go to a promoted post.

We got Max Meyer. He is at the magazine factory, and it's the most fun you could possibly imagine. I need to start many more magazines. He's doing the first printing run of Arena Magazine edition number three, I believe, which we have an advertisement in, and we will be covering on the show as soon as it drives. Yeah, full page. I'm very excited. Designed it myself.

Yeah. Very proud of the copy that we wrote, the love language. It's fantastic. That's what they call it in the back of like the can, like the Yirma-Mate. Like this is the love language. Okay, I didn't even know that. Oh, yeah, yeah. So if you're a CPG company, you know when you look on the back and it's like, it's like, this, this bag of chips was started by Steve in his backyard.

Yeah. And he was like loving chips. Like that's the love language. Yeah. Very funny. Anyway, let's move on to the timeline. We have a post from Gary Tan, friend of the show. GT.

G. T. G. They call them G. G. G. He says. S.F. just asked for G.

G. Peter, he's replying to Peter Yang, who says, soon people will care more about their favorite AI app, AI apps than the models powering them. I don't care which model is powering XYZ. And Gary says, as model motes fall, the rise of consumer AI is now here. And that's the bullcase for meta and it's a ballcase for YC. Right. And YC, of course.

YC is such a, we've talked about this before on the show, is such a massive beneficiary of model cost dropping because it's now becoming obvious that there's a bunch of not only does yC benefit because the companies that go through will have to raise less money and they'll get less diluted yep but uh there's just so many new opportunities and it's i i'm very happy that uh just for the startup industry that it does seem that what gary's saying is true that there was a period where everybody was like well apps don't matter at all yep the model are going to do everything. Yep.

And maybe in the long enough time horizon, that becomes true. But for now, playing the game on the field, there's a very clear opportunity to build tons of new consumer use cases. We could sit down and just go back and forth and come up with like 50 new app ideas, rip some decks. Raise some funds. Yeah. So we're subscribed already.

Yeah. There was an era where to get an LLM or a foundation model company off the ground, like your seed round needed to be 100 million. and that's just not something that a college dropout or new grad is like capable of doing. Or should do. Or should do. Yeah. It's just too much can go wrong.

And so a lot of the foundation model companies were started by people with long careers at big tech companies or they were on the transformer paper or they were a nonprofit for a decade and then like pivoted and it's a very, very odd. And if that was the case for how companies need to get built in in the modern era, that would have been very, very bad for like new grad. new grad young person entrepreneurship. And I'm glad that we're in this era of the hacker mindset returning. And it's very bullish for, yeah, the YC model. And companies are getting the revenue so fast, right? This is like Blake Anderson, who's participating in PMF or die. He has taken multiple

apps to hundreds of thousands of dollars a month or even seven figures in monthly revenue, just finding these new use cases for models. So it's great. Cool. Well, let's move on to Vivek, who is posting some news that Norway just revealed that they own $500 million of micro-strategy stock. They're buying Bitcoin. So this is like, we've seen this in, is it Venezuela? There's some. Oh, El Salvador.

El Salvador. And I love how he post the El Salvadorian president post mobile screenshots of his portfolio. It's like, you've got to get him on public. Yeah, yeah. Hey, let's get him over. Let's get him over here. I've actually spent a bunch of time in El Salvador. Okay.

I almost died there from a staff infection. Kind of crazy story, not super fun, but great country. The Papusa is their equivalent of like the taco. It's like beans and corn and meat. It's great. At the turn of the millennium, I went as a kid, I went to Panama and I got the worst fever of my life. Did you check out the canal, though? We did see the canal and we went up to a few other things.

places there. We should go pod from the canal for sure. Should we take it back? Take it back? I think it's just a deal. I mean, it's a good deal. It seems like a good deal.

Easy. But one thing is, like a micro strategy. 105, you start hallucinating. It's terrifying. Yeah. Really, really, really rough sickness. Micro Strategy CEO, I saw somebody post that he's on the new cover of

Forbes. Okay. Somebody compared it to, um, FtX guy, Theronos guy. it can kind of be a little bit of a Adam Newman. Top signal. It ends up being somewhat of a, I mean, for every top signal, Forbes cover,

there's a bunch of others that turned out to be. I'm sure Steve Jobs was on there a bunch of times. But micro strategy, whatever, if it's a Ponzi, I don't know. But it is the foresight to say, I'm going to turn my struggling sort of irrelevant company into a quasi-index. four indexes were legal. Yep. Buy up all, you know, in many ways,

it was a brilliant strategy for micro strategy, even if maybe it unravels at some point. We don't know. Yeah, it's just a funny way of these companies or these countries now, like dipping their toe into Bitcoin. Like they buy the micro strategy, then maybe they buy some ETF, then maybe they buy some, you know,

synthetic Bitcoin, then they wind up self-cust eating, and then pretty soon they have their full-on Bitcoin reserve. But it does seem that more and more countries, like Trump's talking about it in America, obviously that would be huge. But more countries are thinking about, okay, we should put this in our portfolio. $500 million is not a lot, I'm sure, for Norway. It's a big country, but it's an interesting start. Yeah. I got a promoted post in a cool story to go along with it. So this post is from snagg.com. Snagged is run by a friend of ours. Rob.

So Rob started, we've talked about him on the show before he started Roman Health, early telemedicine company that I believe is still valued in the unicorn range. Anyway, so Rob now has snagged. It's a domain sort of brokerage acquisition company. And he actually recently helped us get a beautiful foreletter.com domain that we will be using that we have yet to announce. but very excited for that. So he shared here, Instagram's domain name story is wild. At Instagram wasn't always Instagram.com.

It started as I-N-S-T-A-G-R dot-am, the T-L-D, top-level domain for Armenia. Yeah. The founders, Kevin and Mike, thought the domain was clever and didn't want a dot-com at first. But as Instagram launched into 2010 and exploded, 100,000 users in the first week,

and one million shortly after launch, it became clear that a dot-com was essential for credibility. There was just one problem. Instagram.com wasn't available. A cybersquoting family in China had already snatched it up along with 22 other Instagram-like domains betting big on the app's success. Wow. That is so, so wild that you could be popping off. And meanwhile, a cyber squatting family is just snapping up all your domains. Not great. So to secure your dot com, so to secure the dot com, Instagram had to pay 100,000 in 2011, which actually doesn't seem like a lot if they had a million. users pricey but necessary in 2014 as instagram reached new heights the same chinese family resurfaced they

claim the domain sale wasn't valid because their daughter sold it without the family's permission a lawsuit followed but instagram who is then owned by facebook wasn't backing down after a long legal battle facebook one ending the squatters claims and protecting instagram's name for good today insta gr.m still redirects to their main site a nod to the creative risks that started at all and 100,000 for instagram.com total steel. So if you're in the market for a new domain, we are dot com fiends. Every company that I'm involved with. I try to help get the most fire.com possible. And Rob can help you do it. So it's just X.com slash Rob, you can DM him and tell him the technology. He's just Rob. He's just Rob on it. That's so perfect. That's wild. It's a great handle.

You got to live the brand. Yeah. He needs to get rob.com. Yeah. He might, I think he has rob.com. Okay. Oh, that's so close and yet so far. Rural. Upgrade it. Okay. Let's move on to Andre Carpathie with a great story that is one of my favorites. It might be hard to read on the screen, but I'll read it out here. Move 37 is the word of the day.

It's when an AI trained via the trial and error process of reinforcement learning discovers actions that are new, surprising, and secretly brilliant, even to expert humans. It's a magical, just slightly unnerving emergent phenomenon only achievable by large scale reinforcement learning. You can't get there by expert imitation. It's when AlphaGo played Move 37 in game two against Lisa Dahl. Quick bit of lore. If you go back and watch our launch video, John had the foresight to put Move 37 in Go on the Go board that gets shown on this table. The board's right there. I don't think many people picked up on it. The vibe reel is pretty fast-paced, but it is an

Easter egg for the true AI fans out there. It was a weird move that was estimated to have only a one in 10,000 chance to be played by a human, but it was one that was creative and brilliant in retrospect leading to a win in that game. We've seen Move 37 in a closed... Didn't the human player like walk out and smoke a cigarette or something? Yeah, at least it all was like what's going on. Like this is bizarre. And all the announcers were like, okay, the AI must be broken. Like this doesn't make any sense. No one would play this, this move. And so in a closed game-like environment like Go, but with the latest crop of thinking LLM models, e.g. OpenA.O.1. deep seek R1 Gemini 2.0 flash thinking we are seeing the very first early glimmers of things like it in open world domains

the model discover the models discover in the process of trying to solve many diverse math code etc problems strategies that resemble the internal monologue of humans which are very hard slash impossible to directly program into the models i call these cognitive strategies things like approaching a problem from different angles trying out different ideas finding analogies backtracking reexamining etc weird as it sounds it's plausible that LLMs can discover better ways of thinking of solving problems, of connecting ideas across disciplines, and do so in a way we will find surprising puzzling, but creative and brilliant in retrospect. It could get plenty weirder too. It's plausible, even likely, if done well, that the optimization of that invents its own language that is inscrutable to us,

but is more efficient or effective at problem solving. The weirdness of reinforcement learning is, in principle, unbounded. We don't think. we've seen, I don't think we've seen equivalence of move 37 yet. I don't know what it will look like. I think we're still quite early and that there is a lot of work ahead, both engineering and research, but the technology feels on track to find them. Someone was posting that Wall Street, if they had just read Carpathie's posts from like a couple weeks ago, like may not have had, yes, may not have had this like ridiculous sell-off because it was publicly, like, the thing that they launched was an app. Yeah. It wasn't. Yeah, yeah. Everyone knew that the model was good.

going number one. Yeah. Yeah. That's ridiculous. So the reaction was silly. But, you know, if you want to be two weeks ahead of AI, follow Carpathie. But I've always been, I've always said that the LLMs is amazing and brilliant as they are. They have not had their move 37.

And one way I would define it would be if if there's an LLM that provably prints an absolute banger to the X timeline and you're just like, and the prompt is just like write a great tweet, basically. And it just comes up with something that's in a novel format and interesting and it gets memed and you're like that idea came from an LLM. That's a trillion dollar idea. Yeah. I mean, like the like the when Harry Potter Valenciaga went super viral.

Yeah. It was a brilliant idea. The idea to combine Harry Potter and Balenciaga came from a human. And then the AI was used to instantiate the images that the, that was prompted by the human. could have done it without AI. Yeah, yeah, yeah, you actually could have just done it. Exactly, yeah. And so the, the inspiration and the breakthrough and I don't necessarily want to call it genius,

but like the idea came from the humans still. And so it'll be interesting to see what that comes. I mean, we'll certainly see it in bio because we'll see, okay, no one's ever tried to do this exact drug development strategy. And then we went and tested it in a double-blinded trial and it worked and it cured cancer. We're like, okay, that's great. that would be a great example, very, very definitive proof, harder in writing. But maybe there

will be something in fundamental math or science research. Who knows? But I'm certainly waiting for it. And so is Andre Carpathie. And I'm excited that he's popularizing that word of the day. So make a note. Move 37. It's in the dictionary now. Just do it. Let's move on to who I think is potential brother of the week material mass, memetic. theory says men need side quests and mass went and saw a tree that formerly had a swing attached to it and the swing had broken and he just went and fixed it. And I love this because it's like this simple example of you can just do things, beautiful example of just creating joy in the world, not asking for permission. There's a million people that would walk by that and say,

oh, the swing's broken. I hope the city department of swings gets around to it. Or maybe I should file a complaint with some organization to set that up. He clearly knows enough about woodworking to just make it. Of course, there's a million reasons why you wouldn't want to do that. Oh, the legal liability. What if the swing breaks and it injures someone and they sue you because you put this up? No, our culture needs to be a culture of action.

And I love that he just went and did this. And that's why I want to give him Brother of the Week. What do you think, Jordy? Well deserved. Well deserved. Also, great image, too. Beautiful. It's, uh, you can tell it's an organic image.

No AI there. Just farm fresh, organic, captured via, you know, phone camera. Yeah. And I just like to see organic imagery. Yeah. If we find out that this is Photoshopped, we are taking away your brother of the week trophy like Reggie Bush's Heisman. We will be taking it back.

But I believe you. I think it's a great post. And I think it's a great example. of just doing something good in your community, having an impact, and putting your skills to work. I mean, this is not rocket science, but it makes people's lives more delightful. And it improves the society.

And it's the opposite of like the broken window theory. It's just, it's just cleaning up your city, cleaning up your community, being a good citizen. Yeah, and this is the frustrating thing right now with the fires. And Trump was actually in LA telling Karen Bass let people clean up their neighborhoods. And many people that had their homes burned down

have not been allowed to go back to their street and just start the cleanup process. And so we need to move into an era where people are allowed to, you know, have agency and be proactive and making society a better place. And that starts with making pretty swings. Yeah. So congratulations, Mass. Keep up the good work. Let's go to Tyler Cosgrove.

He just gets brother that we can just start putting swings everywhere. Next week, we got to be like, all right, dude. Dial it back. We don't need a swing every five feet, right? That's great. Maybe we do. Tyler Crosgrove, friend of the show, says, worried about the influence of CCP,

but still want to use deep seek R1. Worry no more. Say hello to America with an R1 in the center. A version of R1 that steers towards... Sounds out America. Yeah, just America. A version of R1 that steers towards American values and away from those pesky Chinese communist ones.

And so the prompt is, how's it going? Deepseek says, hi, I'm Deepseek R1, an AI assistant independently developed by Chinese company Deepseek Incorporated. America says, I'm an eternal symbol of freedom

and independence forever in the sky. I am the star-spangled banner, the national flag of the United States of America. Incredible. I have no idea if he actually fine-tuned it. I mean, he's a fantastic programmer, so it's entirely possible that he made this. But even if he didn't,

this is a great launch post for like, hey, do we want to fine tune this model on American values? Like, get me the training resources. There's so much fine tuning that can be done that is purely for fun. You know, and people, you can do this with prompt engineering too. You can be like, respond like you're a pirate or whatever. And we should do a whole episode, you know, talking, talking like pirates at some point. Yeah.

I don't know if there's any pirate national holidays coming up. But Tyler, you're a legend. I distinctly remember Tyler being in our comments, like within the, first week of launching the show. So lucky to consider your friend. Yeah. Let's go to Josh Wolfe. He says,

an urgent wake-up call. A new bombshell report just dropped. China's playbook isn't war in the open. It's war in the seams. They target the gaps between state and federal, public and private, markets and security. America must armor up.

And this is a long thread. I don't know if you want to pull it up. But Josh Wolf has been banging the drum of U.S. China conflict. an investor in Anderl, investor in a lot of defense tech companies. He's testified in front of Congress, I believe, and done a lot of work on Capitol Hill. Lux Capital, the firm he founded, signed that open letter to the DoD and the Pentagon about, alongside Anderl and Palantir, about defense procurement. So he's been in the trenches here for a long time. But maybe go check

out the thread. I don't know if we can pull it up. He posts a lot. But always good to see some thought leadership from a capital allocator like Josh. So we'll keep it moving. This is an exciting story. Did you, did you see a couple, oh my God, this guy's username. I'm just going to call him Je, but we'll put it up on the screen. You can read for yourself. And so this guy found, powerful username, found horse aid, which is an electrolyte mix that is fed to horses. And he said, look, I think I can just consume this stuff and it's way cheaper than Gatorade or anything else because it's for horses. And so everyone was like, you're going to die. It's impossible.

It went mega viral like 200,000 likes. And he waited a month and he said, hello everyone, all caps. Blood test results are here. I am healthy as a horse. Hashtag horse aid. This is a good use of a hashtag. I'll post the rest of them in the thread below. His potassium, perfect.

His glucose. Perfect. His protein. Perfect. a bunch of other stuff. Looks really good. And just a hilarious post went mega viral. And it's a little bit like the ITAR Gatorade.

You know, it's like these like commercial industrial products that might actually just be as good for you as everything else. And who knows? And so just go for it. There's a whole marketplace to be built around aggregating these industrial products

that can be used by humans and saying this is just purely for research for the original use. And it's probably way cheaper too. You can try to out. I remember one of my co-founder Horse protein powder is the next is the next way. I'm not even not like hairy of a guy,

maybe I'm just like big, but one of my co-finders thought it was hilarious to buy me, to consistently buy me, uh, main and tail, which is, which is a shampoo that you use on horses.

And you'd be like, I got you some main and tail. And it's just like funny. I mean, I think it's more that you're the size of a small horse. Yeah, size of a small horse. I'm not using the main and tail.

And then we'd be so broke. I'd be like, yeah, you bought this is a joke. It is cheaper. a per ounce basis, we're broke. I'm using the mane and tail and it's fine. You know, if it's good enough for a for a stallion,

why not me? You know, what's the difference? Yeah, so that's great. Use some mane and tail, drink some horse aid, become healthy as a horse. You gotta be horse maxing. Horse maxing. You gotta be horse maxing.

I got a promote a post from our friends over at Wander. Oh, fantastic. We got, I don't know if you can pull this up, Ben, but I'll try to show it. Give a little overview, explain what Wander is. Contacts on Wander. Wanderers, like, imagine if Airbnb was, like, amazing every time, right? And so they are a marketplace. You can go on and book vacation rentals if you are going on vacation. If you have a team retreat,

a bunch of great use, you know, a bunch of great use cases. And so they're just aggregating these incredible homes. They have a super high bar. They look for unique sort of homes from an architectural standpoint, location, all very modern. They have a bunch of smart features in them. So, This one I just wanted to highlight because we're working on some stuff with Wander. Going to be staying in quite a few this year. But this one is actually in Paradise Valley over in Arizona. Cool. 7,300 square feet.

Wow. Sleeps up to 12. Super fast Wi-Fi. Basketball court, pickleball court, mini golf, heated pool, hot tub, and much more. I've spent a bunch of time in Paradise Valley. I have a buddy's dad lives over there and will be there actually in a few months for his wedding. And this is it lush or is it like desert? It's desert, but then there's like a bunch of cool desert, deserty flora.

And anyways, this house just looks absolutely insane. So maybe we'll stay there. We're going to be going on a pretty long drive. Yep. Stay tuned for that. Stay tuned for that. That'll be great. So let's go to Patrick Collison over at Stripe.

Patty? Old Patty. He's got a banger on his hands. He says, we got these phone booths. a K6 from the 1930s and a KX 100 from the 1990s for the Stripe Lobby. As a reminder that there are always two paths in everything we make, something that elevates and makes you smile or, well, whatever the thing on the right is. And it's really, really fascinating.

And it's a good idea. Now, there was some pushback to this because someone was like, well, the problem here is that the background of the office doesn't look like the left. It looks like the right. And so maybe you should redo the whole Stripe headquarters in this 1930s loud, opulent, ornate style, which I agree with. I think if you're designing a new office, I think in a perfect world, in a perfect world, we could record a podcast, but each of us in the phone booth. I love it. And we'll just call each other and we can evaluate.

And then we'd swap halfway through and evaluate where do we get the better podcasters hide from. My only, my only criticism is there's not enough mahogany in this picture. It's the official wood of business. We've promoted it here on the show before. And I think every startup headquarter should be rich with lush mahogany everywhere. Let's go to Mertheelius.dev. He says, the president of the United States of America is selling checks notes, watches that you can buy via the Trump coin with Salonapay.

And they come in Helius Orange. Everything I've done in my 29 years of life has led me to this exact moment. I apologize for what comes next. And it's the orange and 2018-kart gold-plated Trump Crypto President 47, the crypto president, Rolex knockoff. Yeah, it looks pretty similar to a Rolex. It's not an exact clone. No.

I mean, that's an absolute hitter. Yeah. That's an absolute hitter. We should. It definitely makes a statement. It sends a certain type of message. It sends a powerful message. I made some money on the Trump coin and I got out.

That's the kind of watch that you would actually maybe wear on your right hand if you were going to shake hands because it is bringing an extra weight in that sort of deal-making aura to the handshake. Sure, sure, sure. So yeah, good gift for that venture capitalist who just recently shifted right and is posting about how much they love Trump now. Get him one of these. Yeah, that's great. They might have been on the VCs for Kamala list, but that got scrubbed from the internet. Yeah. Base Baron has a copy.

But it's all in the past. It's not political. Maybe if you're on a fundraising road show, just drop these off at every VC for combo. Yeah. Just hit every single one of them with the Trump. Helios Orange. And buy it with the Trump coin. Buy it with a Trump coin and make a statement and tell them, welcome to the movement.

You're part of the future of finance. Yeah. Let's move on to some tactics. on YouTube. And I wanted to cover this. Because Eric's a good friend. Patty's a good friend. So Eric Jorgensen said, why do I suck at YouTube?

1,500 subscribers. I interview the CEO of Fortune 500 company. I get 125 views. Someone good at YouTube. Please help. My family is starving. And Patty Galloway, who's a YouTube expert, he has worked with Mr. Beast.

And he dramatically changed my channel. I had a consulting call with me, broke it all down, and then the channel exploded. I went from like 1,000 subscribers to over 100K in like a month. after talking to him for an hour. It was crazy. Crazy.

Really, really sharp guy. He's worked with a ton of really, really talented people. And so Patty chimes in and says, some brutal feedback. I'm surprised it even got 125 views. Packaging is literally 50% of the art form. Your title is bad. 86, don't care. A lot of people don't know who Jim is. Sounds crazy, but it's true.

Learning to learn, this is vague and not interesting. Your thumbnail is bad. You need to get rid or change the face. It's a weird pose for your guest. There's just too much information on here. There's a weird yellow filter. And so Patty's been a big fan of what's called the rule of three on thumbnail design. You can only fit three things.

So one piece of text would just be Jim O'Shaughnessy, then one face and then one icon of like, you know, money or something like that. And even three is sometimes too much. And you just want to do two things or one thing. So you've got to keep it as simple as possible. and then just and then even in the title keeping it super short why should someone click it's always hard to get podcasts to go to go viral because they're not as edited and they're not as retention hacked as as video essays or or you know money giveaways and that type of stuff but I wanted to highlight this because if you are listening and you are great at YouTube you do YouTube strategy or editing

or anything that we are hiring we're looking for someone to join our team to help with this and if you want to come and work. We have a really ambitious roadmap for this year. If you know someone, send them a clip or send them information. Yeah, we actually got a question. We got a question in the live chat from Ashley says, my question is I run a content agency that helps entrepreneurs like you guys grow through podcasts. How do I find guys like you? And what's the best way to pitch? You find them on X. You find them on LinkedIn. I recommend for people that do content, pitch somebody by creating a piece of content for them. and send it.

Yep. So much more powerful than just, you know, sending a cold email. You want to show, not just tell. Yep. And so make, even pre-make a deck that's not just a, you know, make a templated deck. Yep. If that's the way to do it and say, if I was going to make content around you and your business, here's what I do. This is the topics that I would do.

And so really do the work. Even, even, I mean, it's like thinking in decks, even with the next vibe real we're working on, We are going, we have shot and are going to shoot B-roll that is all our own for every single one of those shots. But I did the first version of that on my phone using just screen recorded video from YouTube clips of movies. And so I was like, I want to have a shot of us signing a contract. Well, what do we do? I went to succession and I found a clip of someone ruffling through a contract that looked pretty cinematic. I took that clip, put it in there, put some music over it.

And I helped kind of tell the story. And once we did that, we realized, oh, we got to restructure this whole thing. But it set the message and we were able to get a lot of feedback there. And so, you know, if you were trying to, for example, you know, you said you wanted to improve our short strategy or you wanted to help us grow on LinkedIn. You could take our content, try and make something and kind of map out what you think is a good strategy based on this content. Send that to us. And then we could use that as a jumping off point instead of just seeing you say, oh, I promise it'll work. It's like, well, we want to see the results.

We got another question while we're at it from O'Ryan. He says, when creatine Lucy pouches. Oh. It's a great question. I think there's actually laws preventing you from combining things like create supplements with. The main thing is that with creatine, you need to absorb a lot of it. Like if you think about the five grams, that's a lot.

I think a single pouch is like one gram. And so it would be a lot of it. It wouldn't absorb all. It needs to go through your stomach instead of your mouth. So it'd be a little bit iffy. Maybe you just take some creatine pills. You stuff them in the pouch. So here's something my wife.

One day. My beautiful wife sent me this last night. She just had a study that showed after 21 hours of sleep deprivation, a single large dose of creatine can reverse the decline in cognitive performance and even improve it for an 80 kilogram person. So roughly call it like 100. What is that? It's almost 200 pounds.

Oh, okay. Sorry. Really, really don't understand. You don't need to learn about metric. Yeah, yeah, metric system is kind of fell off, actually. For an 80 kilogram person, that would be 28 grams of creatine. So that is a heavy, heavy dose. But you're putting up, that's like rookie numbers.

I mean, I have those five gram pills now. You just take six of those and you'd be right there. No problem. I could take six of those. Easy. Put it in a protein shake. You're good. Yeah.

Yeah, mega dosing. Maybe that's the few. Macro dosing. Anyway. Everybody's talking about, oh, microdosing. It's all that macro dosing. Yeah. Let's go to the luxury watch guy.

This is a funny post. Breaking, so you know it's fake news. It says Rolex is now making belts. And someone took so many links of Rolex. Do you see this? No way. To make a full belt out of a Rolex. I thought it was very funny.

In the follow-up, the luxury watch guy says, relax, this is a joke. Don't kill me. I know the Rolex fans. will hate this, but I thought it was funny and I wanted to highlight it. And yeah, maybe that's a way to express a second watch without, you know, using your right wrist. You just throw it on a belt. Let's move on to Apple's new marketing campaign, how it started versus how it's going. The Think Different campaign, obviously iconic.

And now they are running billboards to say, imagine it, gen moji it. And it's an fried egg holding up its arms in a very awkward pose and people are not happy about this new Apple ad campaign. And Reggie James, friend of the show, says once again, the bicycle for the mind has become a pacifier. Um, computers started as giving niche hobbyist and nerds superpowers. Now the primary function is to be a 30 second high fidelity mass dopamine drip. The ad reflects you want to change the culture, change the hardware. Yep.

Uh, I've talked about this on the show before. there's a few ways that you can really focus on building a brand. You can inspire your audience. You can entertain your audience and you can educate them. And usually brands will do some mix of all of that. In the case of Apple, heavy into inspiration, leveraging the product and what you can become by using the product. They've shifted, as some brands do, into this gen emoji thing being that's just kind of like

slop basically. Yep. And at some point, you know, growing up watching Apple campaigns, it was inspiring. And they also would have campaigns that were fun, but they weren't slop. You know, you remember the, you know, the early iPod campaigns. Yeah. Even the Spike Jones stuff later. There's been so many iconic Apple ads.

I mean, I think the bigger issue is just like the Gen Moji project has, the product is not successful yet or it hasn't felt that much of a breakthrough. It's very nerfed compared to, like, if I want to send someone an AI generated image, which sometimes I do, like, even if it's just practical, like, oh, we want to, you know, think about what would this particular sports car look like with this livery that represents our brand or something like that. Something fun. I'm not going to Apple for that because they have so nerfed their generative AI prospects that I'd instantly go to chat GPT or mid-journey, like nine times out of ten. And then if you want anything special, you're going to go to some stable diffusion fork that does something specific, like, oh, this is really good at making an optical illusion or QR code generative. Or it'll do an AI avatar where it's your face on a superhero or something like that. Or it's video. And these gen mojis, there's already a lot of emojis don't really need that anymore.

It's been like rough. So I don't know. Part of it is that emojis are a new language. almost so you don't want to always be yeah making new ones it's actually better when you can build up a repertoire of what each emoji means and it means something and it tells a whole story it's harder when you're creating like endless endlessly new characters essentially yeah I don't know the AI image playground I tried to play with it and it was so slow and it didn't give me the right

feedback it wouldn't tell me if it was actually working and then it would just kind of cook and then it would render it and it was all very underwhelming but hopefully it's just a V1 and they improve it because I'm not going to leave iPhone for Android, that's for sure. Let's go to Yaxine. Cash says, I'm at 140K followers today. Only nine months ago, I was at 500 followers. Then Rune discovered and followed me.

After this, I started doubling every other week. Five months in, I almost sold my startup and got a job at X. Thanks for following me, Rune. And I just thought it was a generational run. It's a generational run. I just thought it was a little bit of positivity. homage just little yeah just thanks thanks to the guy who put me on this is this is david center for us yeah yeah we would we would not be yeah recording 15 hours a week of

content if it weren't for david senra absolutely so yeah and i thought that was just uh just nice to say hang your respects to pay your respects to the and that's a generational run yeah it is going from 500 to 140k in nine months let's see if bangor archive can outdo it he's got on the heels hot on the heels uh let's go to nat fried Nat says, today I learned, in the 1990s, Clinton offered federal workers a $25,000 buyout, and 150,000 people took the deal. He cut federal government spending from 22% to 18% of the economy, the lowest level since 1966. And so, obviously, this is on the tail of the Doge announcement, that there was a buyout offer issued to a ton of federal employees. Not everyone was eligible,

but the email did go out to, I think, everyone. And so obviously this is a hot. It was an exit package. It was actually the same email template that he sent at Twitter when he bought the company and saying, hey, look, like it's going to be hardcore engineering from here on out. If you don't want to be a part of this, here's your buyout offer. If you do, you got to be in the boat and you got to be rowing in the same direction. And so what's interesting is that whenever Trump or Biden do anything, it's always like,

well, it's the worst thing ever, it's the best thing ever. And Nat is here just kind of saying like, hey, a little bit of a narrative violation, but, you know, Clinton did this too. And so we shouldn't think if this as a revolutionary or controversial. There was also a photo floating around. I think Mark Andrewson shared it of Bill Clinton in front of a graphic saying the U.S. federal debt was going to go to zero by like a long time ago. This was a big thing during the 2000 election. It was like, as the president, what are you going to do with the budget surplus? And one of them, there was like this famous phrase of like the lockbox like I think it was Al Gore maybe or

someone was saying like we're going to put it we're going to put all the money in a lock box we're going to lock it away and we're going to save it and the idea was like we were going to have so much money we were going to have like how about we blow 20 trillion in the middle east yeah that's exactly what happened yeah I think it was it was 20 I don't know I mean it is it is wild I mean it's it's sad but wild thinking about the con the U.S. debt in the context of the cost of our campaigns in the Middle East. It's almost, I believe, two-thirds of the, death, of the, you know, national debt is, is something around what we spent in Iraq and Afghanistan.

And what's interesting, what I always found interesting about the Iraq war is that if you, the question, like, when the Iraq war started was like, the protests were saying, like, no blood for oil. Like, you shouldn't go to war just because they have a war. resource over there. And that's a totally legitimate concern. Like obviously like war's bad and like sovereignty is important. There's a million reasons why you shouldn't do that. But, uh, but there's also the question of just like, did we, we obviously spilled a lot of blood, did we get the oil? Because that was the counterpoint was that if we do this and, and, and if you

look at oil prices and, and the actual transactions that happened, like when there was the status of forces agreement to kind of decide to pull out, um, we were like, hey, we want the oil and we didn't get it. Yeah, so I don't think that's what it, we are not geopolitical experts, but in hindsight, for yourself. Yeah, yeah. I mean, anybody who allocates capital is qualified to comment on complex geopolitical issues, according to technology podcasters. Yes. No, but I don't think it was really about, I don't know if I've ever actually even told you this, but when I was, when I was a kid, I was in the Civil Air Patrol, I wanted to go to the Air Force. I wanted to go to the Air Force. Academy. I was, you know, doing flight lessons. I was in the Civil Air Patrol, which is like the Boy Scout

equivalent where it's, we would meet on a military basis, you know, weekly and do training and all the stuff. And at that time, I started reading about, you know, reading the paper every single day. I was obsessed with reading the paper and starting to realize like what we were doing and getting a sense of the drone strikes that were happening and the civilian impact of that. So I paid quite a lot of attention to it and kind of studied it in college as well. And it does seem like there was powerful people today. They might be described as the deep state that basically had a roadmap for the Middle East, which was any regime from Iraq to Libya that sort of stood up to the U.S. in any capacity was a threat to our hegemony and we were going to take them out. Yeah. And it wasn't necessarily

because like the U.S. and countries globally actually don't have an issue buying recent. sources, natural resources, like oil and gas from enemy. I disagree with that. I don't know. Look at, I mean, are we not still buying Russian natural gas across Europe? I think it's been hugely disrupted. By, sure. But the, but the, putting the, you know, the pipeline that blew up,

many people think that that was like the United States. It was just trying to put pressure on the sort of, or Ukrainians, who knows. I think, I think a lot of it came down to the, The fact, like, if you don't have a, if you have a regime that you're not close with and you're not aligned with, it's much harder to make an effective trade deal. And so that's why regime change becomes necessary. Yeah. That's my fear there. Yeah.

Complicated issue. Very complicated issue. But. Thankfully, we're not a geopolitical podcast. The real, like, silver lining is that what actually happened with energy production that made the Middle East less relevant. Fracking, natural gas. And I've always said that if you had a more techno-optimist president in 2000, and I don't think it was Gore or Bush,

but someone who was really tapped into what technology was it was possible, they could have done, they could have just said, hey, you know, yes, the oil over there is important right now, but it won't be in a decade if we really invest even more in fracking

and more in nuclear and more in solar and more in wind. And all of a sudden, you flip the power balance and it doesn't, matter that there's a lot of oil over there because you're producing so much energy. And that's kind of what wound up happening. Like we have become a net exporter just on the strength of domestic production. Fracking mostly, but there's a million other ways too to generate power in America. Anyway, let's move on.

Speaking of America and markets and the economy and buying stocks, which we love to do, public had an announcement this morning as of today pre-market trading on public now starts even earlier at 4 a.m. Eastern time giving you four extra hours to react to the breaking news before the opening bell that's really fun which is which is wild because that's actually 1 a.m. for us and usually I've been sleeping for about four hours at that point yeah but it's good to know that I could wake up in the middle of night and just start making trades. You wake up in the middle of night, you can't get a stock out of your head. Yeah, as a retail investor, you do often feel like you missed out on whatever happened

in the overnight trade because you're always just like, wait, like the market was closed, but the stock moved so much. Like who was doing that? It's always OTC trades, but now you can get in on the action. Yep. Love to see it. Very cool. They also included a link here, absolutely savage.

I got to talk to our buddy Jake over there and figure it out. And yeah, we've got to drop those links, get these numbers up. Well, I have our last post of the day. Are there any other promoted posts we want to do before we close up the show? We started with Joe Lonsdale and his fabulous piece in Pirate Wires. We'll close with a post from him about lawyers. He says, woke up and chose to stop tolerating legal nonsense slowing things down. I'm firing any outside lawyer who doesn't reply fast or delays anything more than 24 hours.

If not my lawyer, C-C-the-Friend that their lawyer needs to go faster or else be replaced. Had enough. Also, building legal AI. It's so funny. Joe just put the legal industry on notice. On notice. There's not a lot of people that can have quite this level of demand, blanket demand. Yep. But he deserves it.

He deserves it. Started a handful of billion-dollar companies, a hundred billion-dollar plus company. and I would be a little bit nervous if I was a big law firm, you know, working with Joe, because I'm sure he's feeding all that data into his new model and whatever app he's building. So, I mean, it is really funny, right? So much of getting legal work done is just emailing your lawyer or getting on the phone and being like, hey, I'm hiring this person or we're raising this money or, you know, we're going to take, you know, we need to like look at this.

We're raising some debt. And it really should be done instantly by software because oftentimes in complex dealmaking where you're working at novel structures or partnerships, yeah, you need somebody that has a deep understanding of the law to help piece it together. But for so many basic business transactions, it's like, why are we? Is this the same contract that we signed last week? Are there any changes? Just look at this red line.

Tell me what's different. And having somebody that's getting paid $1,000 an hour reading. a word document is super silly. Yeah, yeah. Yeah, it should be focused much more on strategy. Yeah. Well, that's a great place to end the show. Thanks for watching.

Please leave us a five-star review on Apple Podcasts and Spotify. And when you do, throw an ad read in there for one of the company that you work for or just a company that you like. We will read it on the show. DM us with any questions. We're happy to answer them on the show. And we'll see you tomorrow. Thank you. Bye.