TBPN - Elon vs OpenAI, Ads in ChatGPT, Leaked Tech Emails | Sean Frank, Bill Shufelt, Alex Mashrabov, Sonya Huang & Pat Grady

Episode Date: January 16, 2026

Sign up for TBPN’s daily newsletter at TBPN.com(02:30) - Elon vs OpenAI (58:16) - Ads in ChatGPT (01:11:57) - WSJ Mansion Section (01:28:54) - Bill Shufelt, a former hedge fund trader and ultramarathon runner, co-founded Athletic Brewing Company in 2017 to create high-quality non-alcoholic craft beers that cater to health-conscious consumers. In the conversation, he discusses his transition from finance to brewing, the development of a proprietary brewing process to produce flavorful non-alcoholic beers, and the company's rapid growth, including becoming the top-selling non-alcoholic beer in the U.S. (02:00:04) - Sonya Huang, a partner at Sequoia Capital, discusses the current state of artificial general intelligence (AGI), emphasizing that AGI has arrived and urging founders to leverage existing technologies to address real-world problems. She highlights the evolution of AI capabilities, noting recent advancements in long-horizon agents that can persist and iterate towards outcomes without constant supervision. Huang also touches on the shift from product-led growth to agent-led growth, where AI agents autonomously select and utilize the best tools and services, potentially transforming traditional business models. (02:31:46) - Sean Frank, CEO of Ridge Wallet, discusses the company's eagerness to advertise on OpenAI's ChatGPT platform, highlighting the high revenue per user from AI-driven traffic compared to traditional sources. He expresses optimism about the potential of ChatGPT ads to deliver high-intent customers and anticipates that the introduction of ads will further boost organic activity, leading to increased site visits and sales. Frank also touches on the evolving landscape of e-commerce, noting the importance of adapting to new advertising platforms and the potential impact on traditional website traffic. (02:56:05) - 𝕏 Timeline Reactions (03:14:14) - Alex Mashrabov, CEO and co-founder of Higgsfield AI, discusses the emergence of AI-native social media agencies that create commercial ads end-to-end using AI, highlighting the efficiency and personalization this approach offers. He notes that Fortune 500 brands are increasingly hiring smaller agencies that utilize Higgsfield's platform to produce customized ads, enabling the creation of thousands of videos at a cost below $1 per video. Mashrabov also addresses the challenges posed by the growing size of video models, which are expected to exceed 100 billion parameters, and emphasizes the importance of integrating performance data to optimize content creation through reinforcement learning. TBPN.com is made possible by: Ramp - https://Ramp.comAppLovin - https://axon.aiCognition - https://cognition.aiConsole - https://console.comCrowdStrike - https://crowdstrike.comElevenLabs - https://elevenlabs.ioFigma - https://figma.comFin - https://fin.aiGemini - https://gemini.google.comGraphite - https://graphite.comGusto - https://gusto.com/tbpnLabelbox - https://labelbox.comLambda - https://lambda.aiLinear - https://linear.appMongoDB - https://mongodb.comNYSE - https://nyse.comPhantom - https://phantom.com/cashPlaid - https://plaid.comPublic - https://public.comRailway - https://railway.comRestream - https://restream.ioShopify - https://shopify.comTurbopuffer - https://turbopuffer.comVanta - https://vanta.comVibe - https://vibe.coSentry - https://sentry.ioCisco - https://cisco.comFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://www.youtube.com/@TBPNLive

watching TVBN. Today is Friday, January 16th, 2026. We are live from the TBPN Ultradome, the Temple of Technology, the fortress of finance, the capital of capital, El Capital de Capitol. Let's tell you about ramp. Time's money, baby. Save both. Easy use corporate cards, bell payments, accounting, and a whole lot more, all in one place. It is the goat of Fintech, a fintech goat. a bunch of news today. Lots of people dropping stuff on Fridays. What's the meaning behind that? I don't know, but we'll take you through it.

Lots of AI news, lots of Open AI news, because there's new details, new discovery in the Open AI versus Elon Musk lawsuit. That's heating up. Today, Greg, was waiting for. Yes, for sure. For sure. There's a lot of crazy quotes.

We're going to go, we're going to go, through it all. Yeah. Because it's part of our job. We're going to go through both sides. We're going to do the steel man for Sam, the steel man for Elon. Yeah, I would just say I have a lot of sympathy for Greg. This is like a night, you know, having your personal diary. It is sort of crazy. I mean, do we know it's his diary? We'll see. Elon's call it. Framing it as a diary. I think, I think you had the best take of the day so far, which is that, this is the Super Bowl for Nick on X. Nick on A. NIC is having the best.

Open Ayes number one hater for three years back to that. He's having a great time. He's having a great time. Anyway, let's take you through the linear lineup, tell you who we're having on the show today. Linear, of course, is the system for modern software development. 70% of enterprise work spaces on linear are using agents now, and we will be having the co-founder and CEO of athletic brewing. We got the athletic brewing beers here in the studio. We got a lot of them. Pat Grady and Sonia Wong from Sequoia Capital coming on their co-authors of 2026.

This is AGI. Then we have Sean Frank, emergency podcast. They put ads in chat GPT, so we're calling the god of ads himself, Sean Frank, the CEO of Ridge. And then Alex from Higgsfield's coming back on the show to get this little update. They just hit 200 million of ARR. Absolutely. One of the fastest growing. So we're very excited for our guests.

But we have about 90 minutes here to lock in. Talk about the two sides. of the Elon versus Open AI lawsuit. So let's kick it off with the Elon should lose side of the argument. I'm going to be Steel Manning Sam, Steel Manning Greg. They did nothing wrong. Elon's wrong. He needs to back down.

Do you want your helmet? I need the Steel Man helmet for the whole thing. It might be too much. Maybe let's put it on the turbo puffer, but we'll just let everyone know that we're steel manning like crazy. Put it on the puffer. I'll wear it. Okay, you can wear it.

Before we do, let me steal man. some super intelligence clouds, specifically Lambda. Lambda is the superintelligence cloud, building AI supercomputers for training and inference that scale from one GPU to hundreds of thousands. So, okay, Elon made a donation to a nonprofit organization. He got a tax write off on that donation,

and that nonprofit, OpenAI, the nonprofit, it's now one of the best funded nonprofits in history. And it's still focused on the original mission. Open AI, the nonprofit, it still exists. It has just a tiny hundred plus billion dollar position in a for-profit company. They're going to be able to do non-profit stuff forever, whatever they want to do. If they want to hire researchers, if they want to write white papers, if they want to train their own models, the Open AI nonprofit can do that. It's funded. Elon donated roughly $38 million alongside other donors who put in 90 million.

There's some debate over how much Elon put in. I saw one report that was around 45. It's in the tens of millions of dollars. And he was a large donor. According to OpenAI, they believe that I think their sort of optimistic belief is that the damages would be $38 million. If they lose. The original donation. If they lose.

But I'm arguing right now that they're going to win. They're going to win. The jury is going to say not guilty. Open AI did nothing wrong. And here's why. So Elon, yeah, he was a big donor. He put up tens of millions of dollars. But play out the counterfactual.

It's entirely reasonable to, assume that things would have played out exactly the same, even if Elon was never in the picture, even if he never donated. Sure, I mean, the office would have had to be a little bit smaller. You're working with 90 million instead of 120 million. But we've seen folks raise 90 million series Bs. We've seen folks raise 120 million dollar series Cs, roughly the same company. You know, you pay people a little bit less. You have a few less perks. The office snacks aren't as good. Maybe you skimp on the 45 pound plates. You just get the 10 pound plates. these things happen. So if Elon had never donated, maybe Sam would have just stepped up his donation.

He put in 10, he put in 10. You know, maybe he goes and leverages something. Yeah, yeah, he put in 10. He could have potentially sold more stock that he owned, taken a loan, sold property, put the McLaren F1 up for sale. That's another $20 million he could pour in. He could have filled that gap. Or he could have hit the, he could have hit the road. He's a good fundraiser. He could have gone out and gotten money from a variety of people. Reid Hoffman, Peter Thiel, Dustin Moskowitz all put in money. There are more tech billionaires in that crowd that could have written a $1 million check. So Sam could have gotten $34, $1 million checks and filled the gap. So it's not like if Elon didn't donate, he wouldn't have, like, Open AI wouldn't exist, right?

It's totally possible that everything would have been the same and that the Elon donations were not make or break for Open AI. So Elon should lose this case because everyone around the table came to the same realization at roughly the same time about the goal of creating AI responsibly. Basically, scaling laws ensured that AI progress would require vastly more capital than could ever be raised through donations. At a certain point, if you need $100 million for a nonprofit, you can do it if you're aligned with some of the world's richest people in tech, like Elon, Peter Thiel, the other, folks that I mentioned. On the flip side, if you need $100 billion or you need $50 billion like Open AI has already raised in the venture markets, that's just not going to happen in the nonprofit sector, except it could have because if Elon really believed in the nonprofit mission and really said nonprofit or bust, yes, I see the scaling laws, yes, I agree will need an insane amount of

capital to get to AGI. Well, guess who has an insane amount of capital? Elon, if he wanted to, he could have said, yes, I'm staying with the nonprofit strategy, and I'm going to put up the 50 billion. Every dollar that Open AI has raised in the venture markets could have been a dollar donated by Elon Musk if he sold down all the positions. Now it's crazy. Never going to happen. It doesn't make any sense. Obviously, we're pro. I think the nonprofit transition makes a ton of sense in the context of raising that amount of money. I think that's a reality. And truthfully, I think that everyone around the table agreed about that. And so one thing that seems clear here is there, there are were a variety of different paths, but clearly a lot of big personalities in the room, a lot of ego,

and it makes sense that eventually that just kind of blew up. Yeah, yeah. And so even if you were going to keep funding the nonprofit, you're going up against Google. They have an economic flywheel that will provide the amount of capital required to advance AI build massive. They're a hyperscaler. They're going to build massive data centers. They're not going to have a problem with this.

Google was set up to make investments at this level, at 10 billion of, CapEx, Google's not blinking. The shareholders are all thumbs up on that. Very different. Remember when Sam was texting Elon, I think this was in 2023, saying like it pains me to see you attack open AI publicly. I think we can both agree it's important that Google doesn't own AI. And that's been one of the only things that throughout this whole process they've stayed in agreement on. Yes, yes. So they want to create a counterbalance to Google specifically. And, you know, you know, Elon actually agreed with this as they were shifting from maybe the nonprofit's not the ultimate way to win this AI race, this AI battle, this AI future because Elon agreed, according to Greg Brockman in emails that he said, he being Elon, said

nonprofit was deaf the right one early on, the right structure at the beginning, but may not be the right one now. So, according to these leaks, it seems like Elon wasn't always all in on a nonprofit. He was maybe open to the idea of a for-profit. And, of course, that was a fork in the road. Elon did actually have the money to continue supporting Open AI as nonprofit. It would have been crazy, but technically could have sold down positions. But Elon clearly agreed that Open AI should build a for-profit. And that's why he wanted equity.

He wanted to be CEO. He was interested in Open AI joining Tesla. Tesla's a for-profit. He wasn't saying, we're going to bring Open AI over to Tesla and the whole thing is going to be a nonprofit. Clearly, Elon is no purist about nonprofit AI research. He runs XAI. It's a direct competitor to Open AI.

He started it as a benefit corporation, which meant it had an obligation to deliver environmental and social benefits. But after the merger with X, that benefit corporation status was dropped entirely. This whole lawsuit is clearly just corporate lawfare. And the battle should be fought out in the financial markets. In the app store, on the open internet, not the courtroom. Let the best product win. Let the best AI model win.

Let the best team win. And so let's wrap this court case up and let let Open AI go and compete it out. They're fighting a war on five different fronts. Let them build, let them cook. Yeah. It's worth noting that this is what this is what winning, like today is what winning looks like for Elon. If he gets a, if he gets like the damages awarded and he gets 38 million dollars, yeah.

He's like, nice. Yeah. I can fund XAI for a week. Maybe not even, or even if he gets, or even if he gets like some points in open AIs. Yeah, yeah, yeah, yeah. He's like, great.

This didn't, this is not a material jump in my net worth, even my influence or power. Yeah. Whatever he's looking for. This doesn't really get me one step closer to Mars, right? It doesn't necessarily align. So the wind state right now is just, just being disruptive, right?

Basically buying, buying X-A-I time, putting Open AI in a position where they are trying to go public, right? Yeah. And they've got this, you know, massive high-profile trial going on. The helmet is really adding a lot to this conversation. I love it. The chat loves it too. Jordian and the night helmet is what winning looks like.

Yeah, so anyways, really quickly. Yeah, let me tell you about plaid. Plaid powers the apps you use to spend, save, borrow, invest, and securely connecting bank accounts to move money, fight fraud, and improve lending. Now with AI. We have fireworks for Plaid. I love it. I love it. Plad gets me fired up. This kind of, this reminded me today of the deal rippling lawsuit. The actual wind state for this deal rippling lawsuit is just rippling like being a, uh, uh, someone, like, the actual wind state for this like deal rippling lawsuit is just rippling, uh, like being a, uh, uh, someone. would have an annoyance, right? Both companies are going to continue. There's no amount of money that's going to make Parker happy, right? But what will probably make him happy is just like making it harder for a deal to go public. Yeah.

Right. Yeah. Did you see that line that apparently they were talking to Elon in one of these like leaked emails? And Elon's like, I don't really care about money. But I do need, I do need $80 billion just handy in my back pocket for a city on Mars. It's like the most extreme being like, yeah, like I'm basically post-economic, but there's like one more thing that I'm reaching for. And it just happens to be $80 billion, like more liquidity than anyone has ever had in history. And I just need it ready to go for when I land on Mars and want to build up.

I just need about 80 billion liquid. Just liquid. Liquid. It would fix me. He says 80 billion liquid would fix me. In fact, even then I moved back to California, because even if they're doing a one point, percent a year, right? I can, probably good. Okay. Now, let's argue the flip side. Elon Musk will win the open AI lawsuit. And before we tell you how and why Elon will win the open AI lawsuit,

I'll tell you about console. Console builds AI agents that automate 70% of ITHR and finance support, giving employees instant resolution for access requests and password resets. So, Elon will win the Open AI lawsuit, and he should, and he should, he should win this. Judge Gonzalez-Rogers already rejected Open AI's motion to dismiss. Open AI wanted to throw this thing out. And the judge said no. The judge said, I think there's plenty of evidence that something happened here. Yes, it's all circumstantial, but that's how these things work. Open AI was trying to kill the case before the trial even started. They're trying to get rid of this thing, but it's clear that Elon is on to something here. Okay, just look at the emails. Just look at the emails. It's so obvious that the

Open AI squad was trying to fleece Elon and push him out without giving him a fair share. Elon said, guys, I've had enough. This is a direct quote from an Elon email. Guys, I've had enough. This is the final straw. Either go do something on your own or continue with OpenAI as a nonprofit. Otherwise, I'm out. I'm not donating anymore. You guys, if you're going to do the for-profit, just go start a normal company. and wind this thing down. And that makes a ton of sense. It was an open invitation by him

to just go build a traditional venture back company. Part of the trial in this proceeding that I'm interested in is finding out why they didn't just do that. It's not like Sam and Greg couldn't have been like, cool, we worked on a nonprofit for a while. How do we set up a C-Corps? How do we set up a C-Corp?

Sam's like, oh, I own like a couple points of stripe. I think they have something called Atlas. You can just make a C-Corp. Maybe he forgot. A few clicks. Maybe he just forgot. Oh, if I only remembered about Atlas. If there was like a very, very specific reason.

Yes. Like the nonprofit had developed some IP at that point. Yeah. That meant that starting over or, you know, having to rebuild the team or whatever factor meant that that was like going to set them back years. Yes. That's a big. That's a big deal. Yeah.

And realistically, even like you can't, there's no indentured servitude. You can't keep nonprofit employees working there. Why is the horse? The workhorse. The workhorse at OpenAI. Ilya, Ilya, Suts the horse button, please. Alia was the workhorse at OpenAI. And you needed him to keep the excitement, keep working.

He developed a ton of the foundational technologies at OpenAI. And if he wanted to work at a nonprofit and you say, hey, we're leaving to go do a for-profit, come over here. Who knows if he's going to come? And that applies to tons of different researchers that were instrumental in the development of what ultimately became chat GPT. GPT 3 and 4. And so Elon gave them an invitation.

Just go out and build a traditional venture back company. Maybe I'll invest. Maybe I'll be involved. Maybe I won't, but at least we'll have a clean slate to start from. It would have been trivial to set up a new entity, as we discussed. You could start building a team, and then you run the classic venture playbook. But Sam told Elon that he remained, quote, enthusiastic about the nonprofit structure. That was enough to get Elon to donate more.

but OpenAI wasn't all in on staying in nonprofit mode. They were on the cusp of restructuring OpenAI and taking the $10 billion investment from Microsoft. The reality, see, the reality of modern philanthropy, it's not fire and forget. Big donors like Elon, in this case, do have specific intentions and conditions attached to the gifts. It's not like he's just throwing 20 bucks

in the Salvation Army donation box around Christmas. This is 30-something million. If you give that to a university and you want a building, they need to build that building. They probably need to build it to your specifications, even if you want your windows. They might even put your name on it. Yeah, they might even put your name on it. And you can dictate these things in a nonprofit donation, and you can ask that the donation is contingent on those results. You can pursue specific directions.

He has every right to demand results. And so. Yeah, and meanwhile, you know, during this whole period, Greg is writing to himself, allegedly that he cannot say we are committed to the nonprofit, don't want to say that we're committed if three months later we're doing B-Corp and it was a lie. Yeah. And then later saying, can't see us turning this into a for-profit without a very nasty fight. His story will correctly be that we weren't honest with him in the end about still wanting to do the for-profit just without him. Yeah. Before we continue our defense of Elon, let's tell you about cognition.

They're the makers of Devon, the AI software engineer. Crush your backlog with your personal AI engineering team. So a big part of this, if and why Elon is going to win, why he should win, is that you can't just have corporate structure remorse, Open AI. You can't pull the plug on promises made. OpenAI's own certificates of incorporation talk about creating a company, quote, exclusively for charitable purposes, with the technology being intended to benefit the public. What's exclusively charitable about raising venture to build a subscription app with ads?

That's not charity. Why are you doing that? Elon's right. Not only should Elon win this case against Open AI, he will win this case. It's simple. A bunch of people, a bunch of San Francisco elite tech guys, their fancy cars, promised to build AI for humanity. They took $38 million from one of their co-founders based on that promise, then turned around and built off $500 billion for-profit empire with Microsoft.

It's a straightforward bait-and-switch story that will play well to 12 regular jurors in Oakland. And so that's the case. I mean, this is going to be the big challenge, finding 12 regular people in Oakland. Extremely offline. How illegal is it to try to be on a jury? Extremely. Stop trying to get on the jury. Look, I said this, I'm going to vote. I'm going to vote in favor of whoever has the higher RKGI score.

Okay. I'm just pro-AI progress. Yes, yes, yes. I don't care at all about who wins. I just want better models. You just want better AI. Yeah. Whoever will build, whoever's scaling faster.

Well, then I think you go with opening out. They have 50 billion in the bank. Dan in the chat, is ready to be a juror. What? We've got to get, we got to get somebody in the chat. Somebody in the chat. Yeah, just. Live tweeting the jury.

In the corner while you're in the jury. Just like, hey, guys, yeah, in the chat. Yeah, I don't know. I mean, this is incredibly dramatic. We're going to hear a bunch of crazy storylines, learn a lot about the internal mechanics of both the Elon Empire and OpenAI's world. But at the end of the day, you know,

Open AI is signaling to investors, hey, the max damage is going to be $38 million, something like that. They did say it could be more. It could be more. Of course, it could always be more. It does, it does feel like it won't be existential, and it feels like it's more of a vibe war than maybe a true economic war.

I mean, you could go back and argue that Elon should get pro rata equity at what it was effectively like a pre-seed round that was done as a nonprofit. And that's 38 out of 120 that was raised in the nonprofit, something like that. So you give him, you give him 25. Is there any precedent for a company going? for a blockbuster IPO while having this like lawsuit that is really going at the like foundation of the entity itself right you can imagine a company going public where they're in some process legal process with a with a former executive or a specific customer or even even

even a lender on some you know I can't think of anything I can't think of anything this big ever happening. But opening as a unique company and if anything, it's going to draw a lot of attention to the company and... Yeah, it's interesting from like the retail investor crowd, I think they're still going to be happy to be in this company even if there's like, even if this is all not settled.

But it's really a question of like, is Wall Street going to be on board? I think Wall Street will underwrite it as there's a potential settlement that could be in the tens of millions, it could be in the billions, but at the same time, you just calculate an expected value, take that off the valuation that you've built up, and if you're bullish on the long-term value and cash flow of the business, like, you buy anyway. I think that's sort of what happens. Tyler. Okay, so I've been reading through some of the documents, and so I just want to, like, add some other, like, details. Please. So one thing is, like, I think I'm reading through like you can actually see the arguments being made.

One of them is from the defense of OpenAI and that it's that Elon actually didn't directly donate to Open AI. It was basically indirectly through a donor advised fund and through Open AI's fiscal sponsor YC. And so because it's not direct, the idea of like the specific charitable purpose doesn't actually like doesn't hold up. Oh, okay. And that it actually just defaults to, like, opening eyes. Yeah, because it's like, you donate to one entity, and then that entity would have to make that claim,

so their direct communication doesn't necessarily pull as much weight. And then so there's, like, there's a bunch of pages about the history of, like, how you actually define these things. So it seems like it's going to be just come down to, like, extremely, like, esoteric legal definitions of, like, trust. Well, I think we're out of steel man mode. Jordy, of course, dons the steel man helmet whenever he's trying to steal man an argument. We thank you for putting up with our shenanigans and our props.

Let me tell you about vibe.com, where D2C brands, B2B startups, and AI companies advertise on streaming TV, pick channels, target audiences, and measure sales, just like on meta. And speaking of ads, there's ads in chat GPT. I liked Regov in the chat saying they're putting ads in chat, GPT, to help fund the trial. Oh, sorry, that was actually Dave. But Rigab did say Open AI is nothing without its losses, which I think is very funny. Anyway, you want to know. Let's go through some of the leaks.

Let's go through some of the ad details. We also have Sean Frank from Ridge joining to break down the ad landscape, whether he will be advertising Ridge wallets in ChatGBT. Anytime soon. Yeah, part of the last thing I would say there is part of opening eyes defense is that through their actions, they've created one of the most well-capitalized foundations in history, right? And I think that they're going to continue to lean on that. Novo Nordisk has a foundation themselves focus on biomedical research,

and it's like it has the estimate is that they have $167 billion. Okay. So that's why we, that's why we're using the term one of the best funded, because it's possible that the Open AI nonprofit might not be the best funded in history. Although, if the stock continues to rip, they will probably become the best funded in the, in history. Well, there's a whole bunch of leaks and news in the timeline.

There's so many documents that hit the timeline. that it brought down all of X and X actually crashed because so many people were logging on to read the Brockman files. Yeah, and there's one more, there's one more quote that's worth reading through

which is that from the Greg files, from Greg Gate. Another realization from this meeting is that it'd be wrong to steal the nonprofit from him to convert to a B-Corp without him. That'd be pretty morally bankrupt. Yeah. It's really not an idiot.

Yeah, I mean, but that sounds like, you know, they were like it would be wrong to do that and and by their admission, like they would argue that they didn't steal it from it. The funny thing in here is like the, and again, I love Greg and I feel bad that this is all coming out. Yeah. But his like very millennial coded writing.

Brockman further wrote under the heading, Our plan, quote, it would be nice to be making the billions. Okay. I didn't see that one. That's a funny one. I do think that there's a very odd wrinkle where Elon didn't invest in the for-profit when any of those rounds were going. Like, the ships were so thoroughly burnt to a crisp that even when the new for-profit was doing the round, he was not, at least we haven't seen a lot of emails or evidence saying, like, well, don't go with Microsoft.

Like, at least give me right a first refusal. Let's do this at Tesla. and I'll be the financier and I'll take the equity. Like I'm bullish on this. And you know, you don't have to. I don't know how much that plays into the actual court case, but it is interesting just seeing like once the ships were burned and the bridges were burned and the paths started to diverge,

like they never really re-solidified. And you would think that, you know, if you wanted to continue, you would try and build a position one way or another, get some cap table ownership. It is odd that we're, in a situation where Elon has zero equity in the Open AI for profit. There were clearly many opportunities to get exposure. But again, bad blood, so who knows?

At least Greg didn't go in front of Congress and say, I'm just doing this because I love it. Because that would make these other notes on, it would be nice to be making the billions. Yeah. But, oh, yeah, for sure. But the other interesting thing is that do we know where Sam Altman sits in terms of equity It's been going back and forth.

There isn't a number, but in one of the documents, I lost it. But it said he had indirect exposure via YC. Okay, okay. Into the for-profit as well? Yes. Okay, so look through exposure there. But then in terms of like an actual grant, is there a number that's been thrown around?

To my knowledge, nothing has been shared publicly other than the sort of idea of him getting around 7%. Okay, okay. But that still feels low for co-founder of a, you know, No, but that was happening, that's like, a lot of dilution had happened by that point. Makes sense. But, you know, it certainly doesn't feel like the Mark Zuckerberg or the Bill Gates or the, you know, or the Jeff Bezos scenario. I mean, yeah, if anything, these files make a lot of Elon's kind of antics, like, more understandable.

Like, he's been the one saying that they're morally bankrupt. And here they just straight up say. He would be pretty morally bankrupt to steal the nonprofit from him. Yeah. Like, yeah. I don't think anyone ever expected their, that language come out, came out that was this specific about their moment-to-moment thinking during that point in time. Yeah, what's the phrase that Elon uses, scam defaultman? Scam-Uil.

Scam-Ual defaultman. The timeline is really so stupid. And the portmanteaus. But, I mean, one thing that is real is that it's very clear that, like, at some point, the core Open AI team was like, it's either, it's either like Elon as CEO, financial backer, like, complete control. Like Greg Brockman said, this is the only chance we have to get out from Elon. Is he the glorious leader that I would pick? we truly have a chance to make this happen financially what will take me to one B, which is interesting because like there are definitely people that have been taking to

1B alongside Elon with Elon in the glorious leader seat. Like there are people on the Tesla train. There are people on the SpaceX train. Where truly like they are completely hands off, Elon is the glorious leader of those companies. They don't have any control over Elon. But Elon has given them effectively billions and billions. through either their direct work with the company or their investment in the company.

Like there's a whole bunch of ways that those two things could actually be very compatible. Yeah. But it would be weird, especially if you want more of an egalitarian organization, more of an equal board, more of a team dynamic. Well, you look at the run that Sam has gone on. Yeah. And you can imagine a situation where they're sitting at the table and saying, this boardroom ain't big enough for the two of us.

Yep. Right? Yep. And it really feels that way. Big egos, yeah. Yeah, yeah. Big, big, good folks. Sam notoriously is able to draw in capital using many of the same sort of methods that Elon has.

Yeah. I do think the financially what will take me to 1B, that's just a good question to ask. Everybody needs to be asking themselves this. Yes, this is something that should be taught in grade school, really. I see people on Instagram reels all the time asking this question. Alex Hermosey, you know, makes reels about this. He's asking himself this question. The only other question is, why aren't you asking yourself that question?

You should. You should also get on 11 labs, build intelligent, real-time conversational agents, reimagine human technology interaction with 11 labs, baby. Continuing with the timeline, a federal judge denied Open AI's motion for summary judgment. The case is going to trial, and Tyler's moving to... Oakland. East Bay. Should we read through

some of Alex Heath's coverage in sources. Dot news. And talk about a Scoop athlete that is really given Scoop God. I call them Scoop God. Really given Kylie over a core memory.

I mean, these two are just going head to head. Yeah. Yeah. It is a knockout, dragout fight for Scoop athlete of the year. But they're both doing great stuff. And Alex

read things. through thousands of pages in Musk versus Altman, so you don't have to. We'll go through some of the summary here. There's some news about Elia Sutskiver. Ilya had early concerns about treating open source AI as a sideshow. In 2022, OpenAI's leaders seemed quite concerned

about the prominence of open source, the open source lab, stability AI. We don't talk about stable diffusion that often anymore, but I believe stability AI was the team behind that, right? Ahmaud Mustak, I believe, runs it. Sutskova voiced his worry over, text with Marotti and others. Sutskiver, my trepidation around open source is that we're treating it as a sideshow, e.g. deaf not going far enough to really hurt stability.

So they're not taking it seriously. And if open source takes off, everyone could standardize on that. Or gov says, bro, scooping harder than a Ben and Jerry's employee. That's go. This is good. This is good, Alex. He's scooped harder than a Ben and Sherry's employee. We're going to use that for now on.

This is fantastic. Marotti, Mira said, we're missing the opportunity. And let's just say, Mir is the real winner here. Yeah. She's winning today simply because the attention has shifted away from, you know, a good number of people leaving. Their own co-founder, Exodus, drama, firings, who knows what's happening. But good to have the narrative shift and the vibes move on to OpenAI versus Elon Musk.

So Miramorati said, we're missing the opportunity to set standards with this massive growing group of developers. People are hungry to build things and we should lean in and bring our tech to as many people as possible, long-term maximize our chance of maintaining lead, reducing competition. But if we do everything to get this in a couple of weeks at any cost out because we heard stability is open sourcing a similar model, that's not in line at all. my motivation. So reducing competition, never something you want to see in discovery. Always something you want to see in, you know, a page meeting with a VC, but you usually don't want

to put it in writing. Open AI leaders were divided over early investor Reid Hoffman's decision to start a rival AI lab inflection. And Reed Hoffman's interesting because he was one of the big early donors, I believe maybe 10 million, something like that in the millions. And he has not joined the lawsuit. He has not jumped in and said, hey, I need equity in open AI. I'm also wrong to like Elon. Now, in order to make the claim that Elon's making, you need a lot more correspondence, a lot more proof of, you know, misleading around the donation. And I don't think Reed necessarily has that. But also, he doesn't seem to be savor rattling about it. So there were already, they were also already considering prohibiting investors from back and competing

labs from an October 2022 exchange. Sutskiver, I guess I just felt betrayed by him founding a direct competitor while simultaneously telling me quote, I could not possibly imagine you'd find it objectionable. And this is inflection AI.

Of course he'd find it objection. Inflection AI, which was ultimately sort of like acquired by Microsoft in that licensing deal. Was that Mustafa Sulemon's company? I think. Infliction? Altman. Here's how I'd summarize my thoughts. on this.

Pros, he supported us in a moment when no one else would, and it was pretty existential. Okay, so we're learning more about the existentialness of certain donations when they came in during the OpenAI nonprofit era. There are times when if somebody didn't come in and write a check, it would have been very, very rough for them. And Sam says, Reed helped out at a key moment. I think Open AI would have been pretty aft if he hadn't stepped up. Also, he was instrumental in getting the first Microsoft deal done and has genuinely been

quite helpful with Microsoft-related stuff, and he's generally a good board member. Cons. He's very motivated by collecting status. Although I personally think he cares much more about Open AI than inflection. He was blinded enough by the startup of being able to call himself the co-founder of a company. He made an uncareful decision. Also, at this point, I think at this point, I think at this point Open AI has the leverage to ask for a soft promise for new investors, not to invest in competitors, but only a select few companies ever get to do that. And we heard stories of this during one of the bigger fundraisers, where even Gleen was targeted as something that they didn't want their investors to also invest in.

They wanted you to be open AI, ride or die. Of course, tons of funds said, I'd like a basket of labs, actually. I'm going to invest in all of them. I would like broad-based exposure to the category. I'm doing SSI and thinking machines that I'm doing nontropic too. And I'm also on the board of meta. And I'm also investing in open AI and XAI. You got to get a little taste of all of them.

Brockman chimes in. He says, oh, also on a side after talking to Sam Altman, I'm planning to meet Patrick Collison tomorrow in Demo, and Demo DV3. We'll ask if he's interested in participating in the tender under the condition of not investing in AGEI slash big model competitors. So we talked about the Brockman Diary. Well, yeah, the funny thing is he must, like, I'd find it hard to believe that he's not,

didn't get to $1 billion just off of Stripe. Obviously, you know that Stripe was much smaller back then, but Greg was a CTO of Stripe from 2010 to 2015. Stripe was founded in 2010. He was there, like, for certainly longer than a four-year vest. So who knows? But we don't know about his consumption habits. He might have been selling off Stripe equity as fast as possible to...

He might have been using shares to pay for coffee. It's like saying, hey, I'll give you a forward contract. I'm one of those shares if you give me a free cup of Joe. Yeah, yeah. Santadela was worried about Microsoft's position in AI when he started looking at open AI. Yeah, so Stripe was in 2017, Stripe was valued at $9.2 billion. A bunch of wee lads. Just certain stripe.

From Satchanadella's deposition, the question to Satch Nadella, the CEO of Microsoft, did you feel that your progress was moving more slowly than you had liked? And the answer, Satch Nadella says, I mean always as a CEO of a company, I feel my job is to sort of be dissatisfied with the rate of progress at all times. And so yes would be the answer, which is both in the absolute sense, which is can we build products that are more capable in any particular domain? and also, you know, vis-a-vis competition.

There were others achieving things that we looked at and said, hey, that's great. And also, how can we make sure we're competitive with it? And so Satina dello was obviously motivated to invest, and now he has a huge stack of open AI shares, ready to rock. Also, Satina deL almost wrote a book about an AI called An Infliction Point. I think he definitely should write that book. That sounds amazing. According to an exhibit filed in the case,

It was co-written with Marco Ian City and was in development in 2023 from the first chapter. On Wednesday, August 24, 2022, with the Pacific Northwest Summer showing all of its beauty, Bill Gates hosted a dinner at his home in Lake Washington just a few miles from Microsoft's campus. No longer a Microsoft board member or even Microsoft's largest shareholder, Bill remained the iconic co-founder and trusted advisor of the company's senior technical leaders. Sotcha suggested the gathering, which included chief technology Kevin, Chief Technology Officer Kevin Scott, and a handful of top researchers. Food and drinks would be served, but the main entree was a hush-hush demo

by OpenAI co-founder Sam Altman on a forthcoming release of ChatGPT, powered by GPT4. An AI built on large language models. Bill had long encouraged researchers to develop a truly accomplished AI assistant, but had voiced his skepticism about this particular approach. That sounds like I'm listening to an audible. Thank you.

Crowdstrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches, baby. That's right. CrowdStrike. So that would be fun. I hope that book gets published.

It would be fun to have some of those little stories about, I don't feel like we don't have enough oral histories of AI who is in the room at one time. I feel like there's a whole series of books to be written about, Open AI. I know that they're writing, they've written a few, but most of them are sort of these like skeptical drama pieces. I'd be much more interested in two different books. One would be the technical histories, like exactly what researchers were doing what, at what times. And also I want to know the feeling that was going through Ilya's head and what was the vibe when he said like, I'm hitting the button and I'm running the training. What would you think? You're just describing Doreketch's book. Yeah, but... The scaling era, an oral history of AI

2019 to 2025. So, so, yes. And the interview, yeah. Yeah, yeah. So, so I hear you, I hear you on that being a great, a great tour of AI progress across labs. Yeah, I think John's talking about business. Within a single lab, within a single lab,

and you're in the room account of, you know, narrow it just to like the GPT models. And so imagine the scaling era, but just for the progress of opening out. Basically, we're just... The acquired episode on... There's that. I mean, isn't there news that there's a book on Demis Hasibis that's coming out about deep mine? That's going to be fantastic. It's written by Sebastian Malibi, one of the goats of business writing.

He wrote the power law all about the history of Silicon Valley. I know that book is going to be incredible. But... So I'd be very interesting. in the research side, how the research developed, who was doing what, and then I'd also be interested in the financial side. I want to know, okay, how did this SBV actually get done? What were the terms on this? Who was jumping in in this round at what terms? Who were they talking to? Who were their LPs? Were their LPs? Were their LPs skeptical? We've talked to and seen

a little bit of the other side of that. And then layering in, layering in all of this information from the, like, the deposition. Totally, totally. And some of it. some of this evidence that's come out that we read. And so there are a few writers that will take different cracks at the Open AI story. I think the definitive book probably has yet to be written. But it will come. And hopefully Satya Nadella can play a role in that because he's such a key figure in the full story. Vanta.

Automate Compliance and Security. Vanta is the leading AI trust management platform. I like a foghorn. Microsoft beat out Amazon when it initially started working with Open AI. Elon Musk was opposed to working with Jeff Bezos

and wrote the following in an early email to Sam Altman. He said, I think Jeff is a bit of a tool and Sautja is not. So I slightly prefer Microsoft. But I hate the marketing department. Altman responded that Amazon had started, quote,

really dicking us around. Yeah, why? That's such a crazy lie. He's like, I don't like his taste in champagne. Have you seen what that guy drinks in St. Bartz? It's unacceptable. He should be taking that up another notch. And the sparklers with the champagne.

It's all, it's just over the top. He knew he was going to get mugged. Yeah, yeah, true, true. Yeah, I like a Tesla tequila over a St. Bart's champagne bathtub. I don't know. Credit to Jeff. He, of course, was a bit more locked in during that era. So the upside on Microsoft's initial one billion.

dollar investment in OpenAI was capped at 500 billion. Hopefully they hit that cap from a filing written by Musk's lawyers. In November 2018, after dinner with Sam Altman, Scott told Nadella that OpenAI's new corporate structure offered both, quote, a commercial vehicle for monetizing OpenAI AIP and investment returns capped at 500 billion. That's not bad. A 500X bagger is going to move the needle for Microsoft for sure. Altman claimed the nonprofit would eventually benefit because, though, OpenAI has yet to make a single dollar in returns, if Open AI ever does get to $500 billion in returns, the balance over that goes directly to the 501c3.

That's exciting. Microsoft's board initially approved a capital investment of $2 billion, but ultimately decided to limit its initial investment to $1 billion in the hopes that a smaller investment would impress Open AI to commercialize. Satya. Hey, we got it. We can't give them too much.

Let's put a little fire under them. Let's make sure that they're thinking. thinking about dollars, dollars and cents. Well, you see what you've seen, you've seen what happened with thinking machines. You give somebody $2 billion, maybe less pressure to commercialize. Maybe, maybe.

More money on weight racks. Yes, yes. In exchange for its investment, Microsoft received a convertible, limited partnership interest and rights to Open AI's profits with returns cap to 2,000% of its $1 billion investment. Microsoft CFO noted an internal email

that the cap is actually larger than 90% of public companies. And the limit on Microsoft's profits is not terribly constraining nor terribly altruistic. In fact, it was a good investment at Microsoft's request. True. OpenAI agreed to keep any mention of Microsoft's promise 2,000% of return on its investment out of its public announcement. Imagine going to someone and pitching them. Oh, we'll give you a 2,000% return and then actually delivering it.

What a crazy, crazy story. Gusto. The United Platform for Payroll, Benefits, NHR. to evolve with modern, small, and median-sized businesses. Get on it. Stop making excuses. The second update to Microsoft's partnership with OpenAI in 2021 included another $2 billion investment

that wasn't reported and came with a lower upside. This is also a filing from Musk's lawyers. In March of 2021, Microsoft quietly invested another $2 billion in OpenAI. Neither OpenAI nor Microsoft publicly announced the investment, which was subject to a lower 6x return multiple in place of its 2019 license to a single OpenAI model, Microsoft secured rights to commercialize any open AI model developed during the term of the

agreement, except AGI, facilitating its commercial use of Open AIs IP. Microsoft was permitted to embed up to 10 of its employees on site at Open AI. That's interesting. Anticipating increased product commercialization, Microsoft and OpenAI agreed to share any resulting revenue. Just three months later, in June of 2021, Microsoft released GitHub co-pilot, its first product incorporating open AIs technology. Well, there are many, many more scoops in this piece by Alex Heath over at Sources.News,

so I encourage you to go subscribe, go sign up for his substack, and read the full thing for yourself because there's a lot of interesting stuff going on. But we should move on to the timeline. There's so much more news. Let's find some post to run through. Everyone is having fun with financially. What will take me to one? B sitting on the edge of the bed. I love it. Feet up. You got to be asking yourself this. It's just so

clear. This could have saved Open AI from Elon, and it's a diary with a lock on it. I think the diary framing is like woefully wrong. That's probably the worst part of this whole thing is because most of the, most of the thoughts that Greg's putting out are completely reasonable. It's like, yeah, we shouldn't screw this guy over. Like, do we really want him to have a complete authority? like I, this is all, these are all reasonable things to be thinking out loud. It's just when you write them down, they get recontextualized in the courtroom and then the fact that it's framed as a diary, very questionable. Yeah, I don't think it makes, I don't think it makes Greg look that bad because he wasn't, he wasn't ultimately, it's not like he was like secretly, you know,

the Puppet Sam's puppet master. No, no, no, no. And a lot of this went back and forth and there were lots of opportunities for both sides to, to yield. It was like a long ongoing negotiation. But everyone's picking their sides. Owen Sparks says, case closed. Elon has open AI dead to rights. Based on this quote here. He wrote, Can't see us turning this into a for-profit without a very nasty fight.

I'm just thinking about the office and we're in the office and his story will correctly be that we weren't honest with him in the end about still wanting to do the for-profit just without him. So bad blood. That's a bad one. That's a bad one. We'll see. Anyway, we should move on from all this.

Are there any other things in the timeline that we should run through? Here, Elon says they stole a charity, plain and simple. They're really on the, for all the jurors, they're really going to have to, I imagine you get, if it's Oakland, 12 people on the jury, I guess like four of them are driving Teslas. They're really going to have to go check all the cars, make sure they don't have the bot this before Elon went crazy, bumper sticker on it. They're going to have to throw those candidates. Well, they should also throw out any jurors that show up in Konigseggs.

Because they're probably in the Koenig owner meet up, and they're in cars and they're like, well, yeah, I mean, like, I don't really like, I don't like electric cars, okay? I do have a bias against electric cars. I need a V-12, and anyone who drives a V-12, I'm going to give them some leeway. I'm going to give them some leeway. The thing about a Konaug owners meetup is that a lot of them are probably not driving the Kona Seg because they don't work that well. They're not reliable frequently.

It's been frequently reported that they're not quite reliable enough. The one day you get to start. There's paparazzi there taking pictures of you. Just one of the chances. Seriously, it's the worst luck. The worst luck. The worst luck. Anyway, Century, good luck for your systems.

Century shows developers what's broken and helps them fix it fast. That's why 150,000 organizations use it to keep their apps working. Elon, Holmar's catalog was asking ChatGPT, what ChatGPT thinks. And it says, if I were grading this purely as an analyst, not as an open AI model, the documents are legitimately bad. Brockman notes, not ambiguous. I was asking, I was asking Claude about this,

and it was very funny because it does, you can't not read into it, like you're talking to someone at Anthropic, because it's taking shots at both of them being like, oh, well, like, you know, Elon has X-A-I, and that's a for-profit, so he's a hypocrite. And, like, maybe that's just objectively true

and the model's just, you know, accurate, but it's funny just reading it in Claude's voice being like, Claude sitting there being like, I don't like either of these, companies. Anyway. One more post. Elon said yesterday, we talked about this yesterday.

He was quoting the Kalshi odds on his case against OpenAI. And he said, I've lost a few battles over the years, but I've never lost a war. I think what this comes down to, though, is like what is the same thing as like, what is winning the AI race actually look like with China? What is Elon winning against Open AI? So the odds now, 68% chance will Elon win his case against Open AI. That's up from 34% back in January 14th just a few days ago. And so this new trove really did move the market, at least on Kalshi.

So we will see where this goes. If the U.S. District Court in Northern California sides with Elon Musk in Musk v. Altman, before, January 1st, 2027, then the market results to yes. Of course, this doesn't take into account appeals, which will obviously happen. And there's always the chance that there's a settlement before this, although I think it feels like we're just past all that, and we are fully in. It's going to trial.

There's going to be some drama. There's going to be some courtroom sketches. So get ready, because it's going to be beautiful. And I wonder who they're going to call to testify. A bunch of people will be on the stand, presumably. Joe Wisenthall. What's he saying? He is highlighting Goldman raising 16 billion in record Wall Street Bank bond sale.

Joe Wisenthal says right here, right here. Toss to me. Joe said, Huge, congrats to Goldman Sachs. I've been following them a long time. The whole team in culture is so impressive. I can't wait to see where they're going and what they do next. Yes, yes, yes.

Goldman's really just getting started. They are. They're really just, today's really just day one. It's day one for Goldman. Will Monitis, he thinks of Goldman as kind of the ideal firm, right? He has this idea of firm versus company. Yes, yes, yes. Where the company is just the people, the firm is the core ethos.

Sure, sure, sure. And Goldman is kind of the perfect firm. There are some absolute dogs over there. We talked about it a bunch, but one of the most legendary things, going into the financial crisis, they know that real estate's going to sell off. They sell their corporate headquarters and lease it back for 10 years. They're not exposed to the financial risk of their building. You've got to be careful if you're on the other side of a deal.

If they're selling, why are you buying? Yeah. That's a good question. But a fantastic firm, fantastic results from them. And congrats. Joe. And speaking of the financial markets, you've got to get in on them with public.com. Investing for those tickets seriously.

Stocks, options, crypto, bonds, treasuries, and more with incredible customer service. Joe has some more news. Yes. He's news maxing. He is good news. He is good news out of AP, Beijing. Breaking with the United States, Canada has agreed to cut its 100% tariff on Chinese electric cars in return for lower tariffs on Canadian farm products. Prime Minister Mark Carney said on Friday, Carney made the announcements after two days of meetings with Chinese leaders.

He said there would be an initial annual cap of 49,000 vehicles on Chinese EV exports, growing to about 70,000 over five years. China will reduce its total tariffs on canola seeds, a major... Okay. Canola oil. They're getting seed oils. They're like, we got to have them. Okay, okay. Maybe this is part of a grander strategy.

Oh, okay. He's like, yeah, we need to, this is our version of fentanyl. So he actually did, Carni said that Canada's partnership with China sets us Canada up well for the new world order. So this is, the seed oils are the first step. Yeah, that was a crazy question. That was a crazy quote. When I first saw that, I saw the video, I was like, okay, like, funny, deep fake. Prime minister saying, like, we're excited for this new world order.

But it was real. Yeah. In other electric car news, Ford and B.Y.D are in talks for car batteries. Let's give it up for some talks. U.S. car makers need Ford, the U.S. car maker. needs more batteries for hybrid vehicles, because it's shifting away from the full EVs. They cancel the Ford Lightning, but they are going to do a lot of hybrids, and so they need a lot of batteries, and they're calling up B.YD to help with it. Ford and BYD are going to do a partnership

or they're into discussions for it, in which the American carmaker would buy batteries from the Chinese auto company for some of Ford's hybrid vehicle models, according to people familiar with the matter. The two companies are still discussing how the arrangement would work. One idea is that Ford would import batteries from B-Y-D to Ford's factories outside of the U.S. Some of the people said talks continue. It's possible a deal won't materialize. The tie-up, if completed, would pair Ford with the largest Chinese car company that has struck fear in much of the auto industry over its ability to produce affordable models that carry sophisticated technology. For Ford, it solves a problem. As the company pulls back from electric vehicles,

and ramps up its lineup of hybrids, it needs a battery supplier. And BYD is able to produce high-quality car batteries. We talk to lots of companies about many things. A Ford spokesman said, a BYD spokesman declined to comment. That's a good comment. We talked to a lot of people about a lot of things. Why are you focusing on the Chinese batteries today? Stop calling me, Ryan Felton from the Wall Street Journal.

Move on. I talk to a lot of people. Before becoming one of the world's biggest car makers in the world, B.YD developed a robust battery manufacturing business, including batteries for hybrid models. It currently produces most batteries in China, but the company is building up capacity and its overseas plants as it expands to markets such as Southeast Asia, Europe, and Brazil. Bernstein research estimated that BID's battery shipments rose 47% last year to 286 gigawatt hours. President Trump's trade advisor Peter Navarro criticized the idea on X. He said, so Ford wants to simultaneously prop up a Chinese competitor's supply chain

and make it more vulnerable to the same supply chain extortion? What could go wrong here? That's Peter Navarro on X, the trade advisor. Last month, Ford said it would pivot away from making electric vehicles in the face of slumping demand and take it expected $19.5 billion in charges primarily tied. to its EV business. So, very interesting news. Anyway, let's move on to the next big story of the day. But first, let me tell you about Shopify. Shopify is a platform, commerce platform that grows with your business and lets you sell in seconds, online, in store, on mobile, on social,

on marketplaces, and now with AI agents. Agents. So. And relevant because the day has finally come. Not to see ads in chat GBT, but they're coming. They're coming. We're talking, we're no longer in talks. We're no longer in advanced talks. We're talking about in the coming weeks, Open AI plans to start testing ads in chat GBT free and go tiers. It's go time. Go tiers. They said we're sharing our principles early on how we'll approach ads guided by putting user trust and transparency first as we work to make AI accessible to everyone. We got to check in

with Mark Cuban, with Mark Cuban. But they say, what matters most? Responses in chat GPT will not be influenced by ads. That is important. There's a firewall.

There's a firewall. Editorial is over here. Ad sales is over here. They don't interface with each other at all. And so the models that generate the responses will not be aware of who's advertising on what This seems extremely easy to do technically.

Extremely good for product reliability. It's what the consumer wants. You want to know when you go to Google, if you scroll down far enough, you eventually get past the ads and you see the real results. And you're going to want that in your LLM, even if there's an ad up at the top or in the middle, as long as it's clearly labeled, which they say they will be. So ads will always be separate and clearly labeled.

Your conversations are private from advertisers. plus pro business and enterprise tiers will not have ads. So I'm going to have to downgrade. Yeah. Because I'm on the pro $200 a month tier, but I want ads. I want to experience the ad product. Everybody's got a downgrade. But I think they're going to be making way more than $200 a month off me on ads.

Oh, yeah? Oh, yeah. Oh, yeah. Oh, yeah. They're going to be advertising crazy stuff to me. They're going to be every other result is going to be Connixag. Here's a McLaren F1 in your area. You can go pick it up right now. It's going to be insane.

Yeah, so people have been so concerned, specifically Mark Cuban. We obviously had them on the show to talk about this last year about this idea of, like, ads showing up in the results. And part of it, the reason I was never that concerned is like if I just search best backpack for men, which is kind of a joke in itself. It's going to tell you Ridge. Well, a man shouldn't wear a backpack in the first place. So sorry to any backpack super fans out there. Tyler. Well, you're not a man yet.

You're not 21. Oh, true. So you're good. You got, enjoy your backpack. Yeah, you should switch to a, to a stainless steel briefcase that you handcuffed to your hand. That's the correct thing for someone of your stature, someone of your importance. You got, you're like important stuff carrying around. But anyways, when I search best backpack for men, I can scroll down and find a Reddit result.

Okay. It's the second result after Nordstrom. Sure. But I can all they also serve me a bunch of ads. Yeah. I don't assume that the best backpack for men is the first ad, right? It's not like when it's clearly labeled and separated, I just assume this is an ad for somebody that sells backpack.

Yeah. But now I'm aware of that particular backpack. Yeah. Maybe. So I think it's, I think it's fairly aligned, right? Yeah. That's why, that's why I don't search like best backpack for men. I search, I search best, highest margin,

highest margin backpack, men's backpack. Because you appreciate from the perspective of the business. Yeah. Of the business. You want to support business. Yeah. And then, so I want to know what's the highest margin backpack for whoever I'm buying from. Then I go to shopping tab.

And then it tells me, okay, this is the highest margin one. If you want to support that corporation, make sure the most number of dollars flow to their share. holders, this is the backpack you should buy. Back forward slash in the chat says he uses a Spider-Man lunchbox. Let's go. See, I can appreciate a Spider-Man lunchbox. And soon you'll be able to generate a Sora of Spider-Man in Chatchip-T. It'll serve you an ad for that Spider-Man lunchbox, and the virtuous cycle of commerce will continue.

MongoDB, choose a database built. flexibility and scale with best in class embedding models and re-rankers. MongoDB has what you need to build. What's next? Anyways, so plus pro business and enterprise tiers will not have ads. Yes. Super disappointing. They need to hammer, hammer, hammer the first bullet point here.

Responses in chat GPT will not be influenced by ads. We know that this is what they're going to do. Technically it makes sense. It's completely the industry standard. Everyone in tech knows that this is how it works, but consumers will have all sorts of conspiracy theories. I mean, remember how big the whole, like, Facebook listens to your audio and then targets ads off of that? And there's been so many, so many, like, viral conspiracy theories around how ads work, how monetization works on these platforms. There's going to be a huge amount of just noise out there, basically saying that chat should be.

is polluted by ads, overly influenced by ads. And so they need to beat that drum really, really hard. It's good that they're doing it on the main account. It's good that they're doing with Fiji Seimos post. But they're going to have to, they're going to have to emphasize this in comms on every podcast that they do, every announcement for a long time. People seem to be really riled up about this. I'm seeing a bunch of comments on the post.

They're upset. I don't get it at all. The whole point is that ads, ads have made it so that wonderful services on the internet have been free for decades. They're generally aligned. Even target people report they like targeted ads. It's annoying getting an ad that's not targeted. Like, why are you wasting my time?

I agree. This is funny. Somebody in here says, some poor fifth grade teacher grading the worst World War II paper ever turned in when it suddenly starts talking about world of tanks and North Korea for no reason. Just copy-facing the ads? Honestly, maybe that's a feature, though, you know, because you get two impressions. Two impressions.

Yeah, there's going to be some hilarious hallucinations where someone's reading from their press release and they accidentally have an ad in there. Oh, that's going to be amazing. I love it. I love it. Well, the Wall Street Journal had a little bit of an overview on this. Open AI to begin testing ads in Chachapitia and push for fresh revenue. The company will be showing ads in the free version of the chat box. as well as its cheapest subscription.

Let's give it up for fresh revenue. Ads will appear at the bottom of ChatGPT's answers and be labeled. Interesting. The bottom of the answer? I want it at the top and the middle and the bottom. And I also definitely want to show the ads while it's thinking, because you can run an ad auction and show an ad while you're waiting. I mean, Uber's done this while you're waiting for the car.

There's no reason why that shouldn't be there, especially if you're doing a deep research report or anything. I do wonder how the ads will surface in the audio summary. So if you fire off a deep research report, it throws an ad at the end. If you're listening to that audio, will that play the ad at the end? Will that sound like a podcast ad or will it sound like something else? I'm assuming that they're not doing audio in these, right? Imagine if you do a Google search and it pops up a video that's like trying to play sound.

It's annoying. It could be. You'd be throwing your laptop. Yeah, yeah. But I mean, a lot of times people will go to chat GPT, fire off a query, and then when the query comes back, they will just hit the play the audio button, and will it read the ad as well? I don't know, maybe.

But the company said ads wouldn't influence the chatbot's answers, of course, and that user conversations wouldn't be sold to advertisers. That also makes a lot of sense. Also advertisers don't really care. Well, to be clear, my understanding is they will use what they know about you to offer better targeted ads to advertisers. They're just saying they won't explicitly be like, hey, we have, here's this person's email, and here's what they like, and actually sell that specifically. Or even anonymous. Like, there's not even an option to go to Open AI and say, hey, I'd like to buy, you know, 10,000 conversations about backpack.

That's not an option. What you can say is you can say, I have a backpack. Find me some customers who want to buy backpacks, and they will say, sure, we'll do that. And we will go into the black box and sort and match you and give you the lowest cost per acquisition. You tell us that you're willing to pay five bucks per customer, $2 per customer. We'll get you $2 customers. We'll do our best. This is the auction model.

Yeah, and the thing here is, if you are a business owner, you should be incredibly excited about this. this. Every time a major new ad platform has come out, it has it has, it is an opportunity to drive a tremendous amount of growth really, really quickly because they typically under price, underpriced the ads in the short room, in the short run just to get volume, just to get a lot of customers in. So when Sean Frank comes on later, we can talk with him about this. I remember like early days of like Snapchat advertising like Connor over at the ridge was like getting like tremendous tremendous results yeah yeah Cisco Cisco is critical infrastructure for the AI era thank you to Cisco for powering TDPN Dean Ball is

back on the timeline we know Dean Ball we know Dean Ball he says flowers no way, reacting to the screenshot, that flowers hinted math before numerals, pottery made by people of the Halifian culture who inhabited northern Mesopotamia between 6,200, and 5,500 BC, painted flowers with 4-81632 petals. Some of them have 64 petals. They were obsessed with exponential growth. They were obsessed with compounding, the power of compounding. It's the Claude logo. It is the Claude logo. That's hilarious.

I love it. It's amazing. Anyway, graphite. Graphite. Graphite. Code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. Where would you like to go next?

Vic has a fantastic post. He says, had dinner with wife at a Mexican restaurant last night. Looked at the menu. They were trying to raise prices from $18 to $24 for her favorite entree. Wife was like, I think we can have Claude make this. Told waitress trying to gouge us, they done. One week sprint.

Claude, cloned and replacing. Cochinita Pabille and Carnitas. Restaurant manager freaks out. How do we solve this? This is going to happen so much in 2026. Just telling the restaurant owner that you're going to do it at home. We cloned your entree with Claude. We cloned you.

We cloned it. We cloned it. clone it. This is pretty funny, Jeff Huber sharing this post from R-slash-Teacher. Every year these kids come back with a new annoying quirk. Dot, dot, dot, dot. Claude boys are apparently the new thing. In my 10th year of teaching, mostly freshmen, ever since the pandemic, there's always a new thing students bring to school that they learned over the summer from the internet or wherever. The newest thing here is a flock of self-proclaimed clawed boys who carry AI on hand at all times and constantly ask it,

what to do. They have their entire personality revolve around Claude, prompting an AI. When we went around doing an icebreaker, four of the five kids, some variation of I live by Claude and die by the Claude. That's their fact. Just about an hour ago, when I assigned the first assignment of the school year, one of the Claude boys was bold enough to say, if Claude says I do it, otherwise I don't. I told him if he asked Claude, he would be getting a call home on the first week of high school. He asked it anyway, and it's said to do the homework. That's amazing. This is a copy pasta

from the coin boys? Yeah, it's just the same thing except instead of asking Claude, you flip a coin. You flip a coin. Yeah, coin boys. The coin boys are apparently new things. This is very funny.

I like the copy pasta. This is amazing. Very, very funny. Well, you've been trying to make jemmy boys happen, which I think is underrated. We should get a copy pasta whipped up, of course, because we are sponsored by Gemini 3. Pro. Google's most intelligent model yet. They got state of the art reasoning, next level vibe coding, a deep multimodal understanding.

I have some advice for Jeff Huber. He's the founder of Chroma, and he's trying to change the world. And if he wants to change the world, he should raise capital at the New York Stock Exchange. Jeff, it's that simple. Head over to the New York Stock Exchange. When you want to change the world, you raise capital at New York Stock Exchange. Call Lynn Martin. Let's get into the mansion section. Let's get into the mansion section. I've been waiting all day. The first big piece is about the great property transfer. Gen Xers and millennials will inherit trillions of dollars of real estate over the next decade, and it's already reshaping how luxury homes are bought and sold.

So over the next decade, roughly 1.2 million individuals with net worths of over $5 million are projected to pass down more than $38 trillion globally. That is a huge amount. Real estate is poised to play a significant role in the great wealth transfer. Gen Xers and millennials are set to inherit 4.6 trillion in global real estate over the next 10 years. And this is why it's so important to win the genetic lottery when you're born. We didn't. We didn't.

I won't be inheriting anything. But. But stop making excuses and maybe get a time machine and go back in time and be born to someone with a luxurious state that you can inherit. Yes, maybe even multiple. We already read about that. So M6, let's kick it over to M6. What is it? Parents are buying earlier and bigger.

It isn't a new phenomenon for well-off parents to give children a helping hand and securing a first home. But at the high end of the market, agents say more parents aren't waiting for kids to inherit their wealth. They are buying them luxury properties sooner. It's reshaping the definition of luxury real estate as more sellers cater to the taste and preferences of a younger generation of buyers. The price points have gone wild, said Ian Slater, the Compass agent who works with ultra wealthy families in New York. I used to commonly see people buy $3 million to $5 million apartments for their 25 to 30-year-old kids. Now I see them buying $15 million to $30 million apartments for their kids. That is absolutely crazy.

When you're buying for children, co-ops are a real no-now. Since many co-op boards want the occupants of the units to be financially independent. By contrast, condos offer flexibility, which is especially valuable for global. What makes you more financially independent than having a trust fund that just... Yeah, I don't know. I mean, I guess if you're a co-op, you want to just be around other people. who like aren't nepo's or something? You want people who've like built their own businesses or something?

I don't know. Well, I won't, yeah, I, I, I, there, I won't stand for, for, for, for, nepo slander. Yes, yes. Seriously, I love, I love when a nepo utilizes every available resource and just absolutely dominates. Yeah, it's beautiful. You got to appreciate it. Well, let's look at Gene Hackman's Santa Fe compound, which just listed.

Wait, what did, how did he, how did Gene? Hackman make his money? Actor. You didn't know that? No. I don't. This guy was born in the, in 1930. I guess.

He's amazing. He's a Hollywood icon. He's not a hack. No, he's not a hack. French connection, Unforgiven. Superman, the movie. Enemy of the state.

That's where I know him from. Enemy of the state's a great movie. He's in the firm. Guys, is this on the movie list? He's in the firm. Or any hackman movie in the TVPN chat movie list. Behind enemy lines, that's a great movie

about a downed fighter pilot or spy, a U-2 spy plane. I think it's Owen Wilson who goes down and crashes and needs to get back to his team, to his side. It's a fun ride, I recommend. So nearly a year after the shocking deaths

of Hollywood icon Gene Hackman and his wife, Betsy, are Kawa at their compound in Santa Fe, New Mexico. The couple's 53-acre estate is coming on the market for just $6.5 million. I had no idea that Santa Fe, New Mexico was so affordable. We were looking at a place in Nashville, which I would put at the same level of Sanofan. John, I got to stop you there. Well, I explain. I mean, saying that, is this a bit? Saying it's so at six and a half million, it's so affordable? It is. I mean, we looked at a three-bedroom apartment that was like $25 million in Nashville last year, or last week. This is 13,000 square feet,

53 acre estate, and it's one-fifth of the price. I'm just saying, like, on a relative basis, do you go Santa Fe at six, and you get 53 acres, or you're living next to John Fio and you paid 25 mil? Which one would you go for? Pick it, pick it, which one would you go for? I'm going Santa Fe all day, personally. Hackman, the two-time Oscar winner. Let's see, there will be some buyers who just adverse to purchasing property, blah, blah, blah. Let's move on to Washington, D.C., where the prices are way up, way over six. Six is low compared to this $28 million home. It's D.C.'s most expensive home, and it's now owned by the owner of the Washington Commanders. Joshua Harris. This is one of those interesting things where you can build a massive private equity firm, a massive financial institution. Josh Harris, of course, built Apollo, the co-founder of Apollo. But he's known as the owner of the Washington Commanders, even though that's not like his life's work. It's an interesting thing. But when you buy a sports team, that's the thing that follows you around forever.

And so the billionaire investor, Josh Harris, the owner of Washington Commander's NFL team and his wife, Marjorie Harris, have paid $28 million for a storied Washington, D.C. landmark with plans to return it to its original use as a single-family home. The sale is a record for the city. It's known as the Halcyon House. The federal-style building in Georgetown dates to the late 1700s, the roughly 30,000 square foot house, which has a large garden with a pool in the back, wasn't publicly listed at the time of the same. and then the deal happened quietly off market. Would you live in a house like this, John? 100%. I knew it.

Absolutely. Would you not? It's amazing. This style of architecture is extremely depressing to me. What do you mean? This is like the Lindiest thing. You know who lived there? You know who lived here first?

This was built for the first secretary of the name. No, I understand. Benjamin Stoddard. You are inhabited. I understand the appeal for you. but, and many others. What is depressing about this? This is a beautiful house.

It's not enough light? I don't know. Potentially, if they, like, did a pretty hardcore remodel to it, really, really brought it. What's not to like? It looks beautiful. I don't understand. It just looks a little too vintage. Ridiculous.

It does have a crazy, like, there's a roof inside. And it looks like a frat house. Do you see this? It does kind of like a rat house. Look at this. Why do you have a roof inside? under your roof. Do you see what happened here? It looks like they just built another house

an addition on top and so there is some chaos here. It's a little too fratty for me. It looks like the floor would be sticky with... The floor is sticky. Somehow I don't think this $28 million property has a sticky floor, but you never know. They have three TVs up there. That's sort of fratty.

You watch three different football games. Well, if you own an NFL, team. Yeah, you got to watch all the games. Yeah. The market, the previous record in D.C. was set in 2024 when Cantor Fitzgerald's CEO, Howard Lutnik, purchased Fox News anchor Brett Beyer's

Fox Hall estate for 25 million. Mark and Hunter McFadden of Compass represented Dr. Kuno in the Georgetown sale. Harris was represented by Sotheby's International. Figma. Figma make isn't your average vibe coding tool. It lives in Figma so outputs look good, feel real, and stay connected to how teams

build. Create code back prototypes and apps. Okay, I hate to interrupt the mansion section, but we have to pull up this video from the Houston Texans. Let's do it. They are, their new video is Call of Duty theme. No way. And I just got to wonder, we created Cox.

Yes, 100%. We created the last thing. Well, let's switch over to reacting to the latest video from the Houston. It is in the timelines. And while we pull them up, here it is. is. What is this? Can we get some? The match begins in 4331.

Eliminate the enemy team. And Kirk with a diving attempt and he's got the catch. Oh, the hit marker. The hit marker sounds good. Long shot. It's so funny because we were just talking earlier this week. We did the hit marker sound effect. The hit marker sound.

The hit marker sound. Air raid. Air raid. Kick? What sound effect? UAV Online. Another hit marker. UAV Online.

That's us. That's not them, right? That was you? We got to figure out if they did this, if they did this before. The graphics package, I didn't realize how iconic the text was in Cod. That like deep glow right there, the glowing letters, that's just, you know, cod to a T. They really nailed that. That's very fun.

I wonder what inspired that. Anyway, let's move on to the. last story in the mansion section. But first, let me tell you about railway. Railway simplifies software deployment. Web apps, servers, and databases run in one place with scaling and monitoring and security built in. So this is a renovation. I want your take on this renovation. A Texas couple transformed a 945 square foot room into a space where they could watch sports and entertain friends. This looks fantastic. Thank you. This is what I want to see.

This is awesome. I agree on this. I want to see this. More dark wood. I know. Yes. To the last property. But I feel like this does capture some of the opulence, some of the details, some of the texture.

Yeah. This is not flat white walls. There's lots of layers. There's trim. I like the blue, the way it goes. The brown, the gray couches. Everything sort of like harmonizes, but it's not bland. It's not flat.

There's a lot of detail and layering there. Even behind the TV, you see a sort of like textured back splash. I think they did a fantastic job on this, and they spent $465,000. So when financial consultants, Damon Kronos and Julie Kronis decided last year that it was time to renovate their game room, they wanted to keep it fun for their two teenagers, but add a layer of sophistication. You always got to do that. They're in their early 50s, and they drew inspiration for their new entertainment lounge during a visit to Manhattan and a stop by the UBS Arena Preview Club,

a temporary showroom for the arena's premium space under construction. Styled in vintage hues of rich gold and deep blue with dark brown wood, the space had just the upscale feel they wanted for their home. They brought in pulp design studios, and they transformed it. The owners wanted it to look like a lounge, like a private sports club. We took the inspiration and created our vision to suit their needs and lifestyle. The 945-foot space was designed for versatility, allowing guests to enjoy different activities at once. It was tailored to host movie nights, lively cocktail parties, and Sunday football gatherings.

The room had to have maximum flow for people to move about. And so you see they have a horseshoe couch, but there's a gap in the middle so you can flow around either way. So it's kind of like two L couches nestled next to each other. Very, very smart. Two L's almost making a double. two-piece, I like it. The custom two-piece sectional sofa set them back $26,000, and it allows guests to move in and out of the TV. So you can tell the floors are not sticky here. Yes, definitely. Which is key. The room is narrow, and we didn't want to have a

sectional that you had to walk all the way around. And so for additional seating, ottomans pull out from under the coffee table, swivel stools, a company console tables beside the sofas. Tall stools are tucked under the nearby bar top and custom banquet hugs a curve of windows. Performance fabrics and durable materials were chosen to endure active crowds. They're not letting the beer soak the walls. They got performance fabrics and durable materials in there.

They're not worried about a sticky floor. A sticky floor here, a sticky floor there. It's going to be okay. They're going to mop it up. Those performance fabrics are built to handle the stickiest beer. Maybe even the athletic brew. Some athletic brews. You're chugging athletic brews.

You're spraying them all over. You're cheering, slamming them on your head. And they get on the performance fabric. Honestly, so athletic brewing, which we have a few here, athletic brewing really needs to do a hard sell to cheeky pint and be like, look, you guys are hardly drinking. We can tell. We'll have to ask him if he uses stripe currently because maybe there's a one hand

wash the other deal there. Yeah, yeah, yeah. We can tell you don't have it in you to get hammered on the podcast. Yeah. But we want you to be able to enjoy the taste of beer. Yeah, I like that. A little cheeky athletic brewing. I like that.

Cheeky brew. Beyond watching sports across two TVs, the family enjoys competition of their own. Oversized scrabble board hangs on the wall to set the tone. They spent $25,000 on a table. Who knew tables can get so expensive? We've been looking at tables. I mean, I feel like we did.

We're just trying to get a new table. I know. We want a bigger table. We want a slightly bigger table. We want some features, but very quickly you get up into these big numbers. So the table, the round Cambridge. A table was crafted for man-made quartz with a metal base. We bolted the base to the floor because Damon and Julie wanted to be sure it wouldn't topple

around the teens if people are getting hammered down there. Standing on the table, they don't want it falling over, so they bolted it to the floor. The chandelier set them back $3,900. The Cavalino X-large radial chandelier from visual comfort adds sculptural interest and focused lighting to the game table. Chairs, $2,400 each. covered in Everly fabric, having coasters. Casters allowed them to move freely perfect for group activities,

so you can move them around. The window shades, $12,000. Motorized Roman shades create a blackout environment that's ideal for TV watching. That's a cool feature. And the banquet cost $27,000. The bottom is covered in ultra-sweighed green and ochre from Crovat, and the back in Lulu Velvet.

I like the sound of that. I like the sound of that. We had to do a custom banquet so that it fit the curve of the window to maximize seating. They're all about maximizing seating over here. Well, congrassly. And also, in more news. AI, be a number one AI agent for customer service. If you want AI to handle your customer support, go to fin.a.I. What other news do we have, Georgie? Tell me. Harmonic. Harmonic is investing in math. How much? They're investing in Flads, AI startup,

Harmonic. They're investing 120 million. hit. Emerson collecting. Collective is also joining his new investor alongside existing backers. Ribbet. Ribbit. We need a frog sound effect. Mickey Malca's doubling down. He's a big Robin Hood guy. Sequoia index and Kleiner. Ooh, Sequoia. Yeah, we'll have to talk to the Sequoia folks about how harmonic fits into the post-AGI age because we have Pat Grady and Sonia. What if it turns, what if it comes out that Harmonic is just working on a chat, CPT-style app to help kids. kids do math problems.

That's it. That's the play. It's a trillion-dollar opportunity. Yes, I love it. Well, we have our next guest in the Restream waiting room. Let me tell you about Label Box while we bring him in. Get in the Box. Reinforcement learning environments, voice robotics, e-vals, and expert human data.

Label Box is the data factory behind the world's leading AI teams. And we have, ooh, nice and cold, athletic brewing. hazy IPAs. I will enjoy one of these while we bring in our guest, Bill Schufeel from, here we go. Welcome to the TV fan ultrasound. How are you doing, Bill?

Incredible to be here. Love the show. Thank you so much. Even though I'm East Coast and not in the AI world, you know, I just sell things that hurt when you drop them on your feet over here. But I'm a huge fan of the show and so I'm excited to be here. Yeah, so great to have you. I was just trying to remember I listened to like about 90,

minutes of you on a podcast. It must have been like four or five years ago at this point. I listened to you on Logan Bartlett. That was a fun one. Yeah. He's great. Yeah, yeah, he's awesome. What do you think about the pitch of getting, are you familiar with the Cheeky Pint podcast from Stripe? Have you seen this? I love it. Yeah. I was actually thinking about cold emailing them to get out. So the elephant, the elephant in their pub is that they're not really crushing beers. They're not getting actually drunk. And so I think you should make a special edition for the team over there. They can really start indulging. I love that.

I'm a fan of them, Ireland. I've got a bunch of their books. So, yeah, we'd love to reach out to them. Fantastic. Let's take it back to the beginning since it's your first time on the show. Give me the founding story. Give me what you were doing before. It's such a huge trend now, mostly thanks to you.

Did you imagine that the trend would become so big? What were the inciting elements? Yeah, I think there's both like the personal story and the category story and like the health and wellness megatrend behind it. You know, even zooming out to the trend, I know, you know, so much of like the megatrends and business these days in big numbers around AI and it's rare to see something that is like so solidified, very visible, long term. And I can get more into like how big I think the trend will be

and why it'll be so big over time and why I've got a line aside to that. My personal story really is I was working in the hedge fund world, had a great finance job. I came, I went to like, went to college, exactly.

But I like went to college with that view, went right into it in my career, never thought I'd do anything different. But I was living this high performance lifestyle where, you know, 12 years ago I was about to get married. I was thinking about my future life. And alcohol was kind of a ceiling on my work productivity, my relationships, my sleep, my workouts. You know, all the things that are like so commonplace and knowledge now that like, you know,

all the fitness variables, the podcasts like Peter Atia, Huberman, Rhonda, like all these things are like so evident now. But I was like living that and feeling it myself. I was, you know, I had a very. intellectually intense job at Steve Cohen's hedge fund where you're graded on your output every day. I was at the desk from 6 a.m. to 6 p.m. 150 work dinners a year, then out with friends and family on weekends. 150 work dinners is insane. One for us, I mean, we have like a, maybe not as intense as your

schedule with Steve Cohen, but it's very, you know, we're here. We have to get to the studio at nine. We go live at 11. There's very little downtime. And so we do one work dinner and it throws everything on. It's like throws off the whole week. I have huge admiration for your always on. I think about that all the time. But yeah, we had 200 brokers and I had to do research dinners also and you have to have

good relationships. So when you like pick up the phone and need to convey something in 10 seconds that you know that person. So anyway, that's a long way of saying. Like I was very interested in health, longevity, my fitness, my performance way before it became such a commonplace trend and I was

living that. And I really started saying to people, like, I really wish I could go out to all these dinners and be in the moment without alcohol. And, you know, I saw the trend happening over my finance career where people were just as excited to go to Barry's boot camp or something in the morning rather than go to a steak dinner at night. And so, but I just really wish there was another side of that. Keith, for Barry's bootcamps in a day. So why not Shirley Temples? Why didn't you just become the Shirley Temple King drinking six of those? Like, what, what were you doing? What were you doing? before you actually decided to build a new product in the category,

were you on just like soda water and lime? What were the options? Well, so I saw that huge impact on my life just by like moderating my drinking and ultimately stopping my drinking. And then thought, you know, if I could just bring moderation to the masses and just make it accessible. Like I have no view on like bringing back prohibition, sobriety or anything like that, but just making the other side of the menu delicious, like match the culinary

expectation and the experience. And as I started to look into the numbers behind it, 50% of adults, even at that point, had 0.1 drinks or less per week. And it was really only like the top 10% of adults have more than like seven drinks a week. And it kind of hit me that the adult beverage world is also just totally missing a majority of the population and their needs. And so I'll skip like the years of business research and surveys and stuff like that to

get conviction around it. But ultimately it was like, right out of my lived experience, and I wanted it to exist and quit my job to build that. How much credit do you give just how good the product is with the success of the company? Because I think in CPG, you're not the first finance Chad to, like, wake up one day and say, I want to start it. Like, it's kind of a common path. It is.

You know, they're kind of, like, bored. They're, you know, they try some drink. I've met, as an angel, I've met so many people over the years that, like, are trying to make the leap from finance to being an entrepreneur and CBG because it's like, you're going from, like, spreadsheets to something that's, like, super tangible, and you still have to use, you know, spend plenty of time in spreadsheets. And I think there's something really appealing about, like, going from, like, finance to, like, the tangibility of CBG. But the issue is, like, so many people that are incredibly talented, they just end up, like, they end up developing a product that's not amazing. and then you can't even live up to your talent level or your potential because you're just like handicapped by the product. And when I try, you know, having this product, even when I had it for the first time,

it's like it's just a fantastic product. It tastes exactly like a beer. It tastes like sort of a celebratory moment or it tastes like, you know, winding down at the end of the day, which is like it delivers something unique in the way that like LeCroix or just some other like non-alc, you know, alternative actually works. Yeah, that is exactly it. And we have an incredible co-founder, John Walker, and the two of us homebrewed on Gatorade Jugs, and we took it down to the screws and reinvented the way non-alcoholic beer is made,

rather than where historically non-alcoholic beer was a very industrialized, heavily processed thing. It was only a logger category as well. And so we took the time, and John said he wouldn't even sign on. If I didn't agree that we wouldn't launch the beer, if it wasn't indistinguishable from top craft beers from day one. And I think that's the huge differentiation. We made the very unattractive decision to investors to take a capital-intensive route.

We've built all our own breweries. We've put over $130 million into our manufacturing. Just very unattractive to investors, if I can repeat that. Well, attractive now. Yeah. But it was so we could own our proprietary process, own the quality of what we were doing. every step of the way where, yeah, as you were saying,

if you were to Nick Shirley, a lot of CPG, or especially the competitors in our category, you would find that they just totally outsource all the production. There aren't brewers on the team, and it truly had to be different quality and different experience. And we really invested to change that perception of the category. And that's still very rare in non-alcoholic beer. There have been 280 brands since we launched,

and a lot have had very disparate future. Well, yeah, and what's happening with the category right now broadly? Because, you know, again, as an angel in L.A., there's so many CPG founders. I've seen so many of these companies try to come up, not just in kind of the non-alc beer category, but in other categories. And one of the things I always struggle with as somebody who, you know, dramatically reduced my drinking probably like six years ago from, like, drinking, like a handful of drinks once a week to, like, drinking, like, one or two drinks. drinks like once a month, really. So really limited it. And so I'd get these pitches and people would be pitching

like something that doesn't taste like alcohol at all. And I'm like, I'm the buyer here, but you're selling me a product that I can drink a Diet Coke. I can drink any number of other things. And so like your competition is just is not like the non-alc category for some of these new non-out brands. Their competition is just like every single drink that doesn't have alcohol in it. And that just felt like a super tough physician. Whereas for this, it's like if you want a beer but you don't want alcohol, like your options are like much more limited. Yeah, for sure. And as I looked at the tam of the market, the way I thought

about it was, a, 50% of the people really aren't drinking and 99% of people, or even people who do drink are not drinking like 99% of the time they're awake. So there's a huge opportunity to meet new occasions. And those occasions, you just described losing over the years. We're trying to bring those back, bring the social connection back, get people out multiple times a week. But I think the clearest way I think I could say this isn't like why I think it's such a big trend is, you know, the overall beer category per the Brewer's Association is north of

$100 billion in all retail sales. Craft beer itself is $28 billion, supposedly, per the Craft Brewers Association. If you go back like 50 years, light beer was one of the biggest mega trends to ever hit beer. And that is an enormous part of the beer category today. But that was a huge trend up until about the turn of the millennia. And then we started to see like people, well, the light beer trend was driven by like the nutritionals where people wanted superior nutritionals to what existed previously.

Then you had big trends in craft beer and flavored RTDs, which were, you know, light beer might be. not have that flavor. We want to like have the nutritionals but the flavor. And where non-alcoholic beer comes in is all the experience superior nutritionals, it's about 20, 30% of the calories, plus all the flavor of great craft beer. And it's emerging in this new big megatrend that I think has really good line of sight to be the next huge thing in beer. And I'm a very delusionally optimistic person, but I do think non-alcoholic beer will be significantly bigger than craft beer and a huge part of the overall beer category in the future.

Yeah, where else in beer is there like meaningful growth? Well, that's also the problem too, is every other, like most CPG overall, but especially Bev Alc, all the innovation is like a one-for-one substitute for the same consumer in the same occasion. And even some of them are like, you're substituting one thing for many. Like a THC drink is a one for like six substitute. Oh, sure. And so what we're doing is we're bringing in, like a lot of people drink our beers within the same night as alcohol. 80% of our consumers drink.

So we're bringing a lot of people back into the category, plus 25% of our drinkers are new to beer altogether. So like this is really additive to the beer world for the first time. Yeah. And then, as you think about those occasions, there's just a lot of occasions to layer it. I guess on the broader beer category too, the last few years have been the worst beer years of our generation in alcohol for a number of reasons. I think part of it is the category is not connecting to the next wave of consumers. If you look across the spokespeople in the major brand TV ads,

most of them in their 70s, one of them's in their 80s, one brand's about to bring back an 87-year-old spokesperson from 10 years ago. So, like, this is a cohort. This is not the cohort we need to meet. Like, it is, like, we are bringing beer for the modern, healthy, active adult. We have great aspirational athletes and chefs and people behind it. But more than anything, we're just trying to build, like, a really timeless brand. And I could share more about our marketing and how we're thinking about that differently, too.

I want to get to that. But first, I want to know about how is your business different or similar to other beer companies that are, higher alcohol. Do you need to be 21 to buy this? Are you subject to the three-tiered system? Can you sell this online? What's different or similar to just higher alcohol beer distribution in sales? Yeah. I mean, as a finance chat coming into this category, I was like, wow, there is no tech in this sector and there is margin everywhere. And like I very quickly got on the ground and realized that there's a lot of reasons why like beer distributors are great what they do. It's an incredibly capital intensive. They're basically a big logistics business.

And so we do largely plug into the three-tier system, but that's our opt-in. So you legally, you don't have to necessarily because you're regulated slightly differently. Correct. And then we were the first beer brand to launch nationally on D2C also. And so that was like an absolutely enormous marketing advantage where, you know, any high-flying brewery of the 2010s, you'd have to wait in line outside of their brewery for a limited release. in the locale where, you know, we could lose tons of money shipping beer all across the country. And then is there any age restriction? Not in most states, no.

But, yeah, typically it's, you know, we're trying to establish it for adults in typical beer occasions, celebrating life's special moments. I'm mostly trying to catch Tyler because I saw him grab one. And if there's some rule that he's violating, I'm going to call the cops right now. I see him over there. I mean, we are huge on the Michigan campus. Okay. There you go.

I mean, some of the, like, just like colleges across the country were enormous. This next generation is so much more moderate than prior generations. And I think the perception of alcohol has changed something like 14 percentage points in three years, which, you know, it's happening really fast. Talk about the formulation process a little bit, not to go too far back. But a lot of folks, when they're doing a CPG project, they go to a copacker and they get a dog and pony show. And they come out and they're like, we form it the perfect thing for you or flavor house or some supplier. They tell you this is the best thing possible. And then if you're not sharp, sort of the dog and pony show can kind of overpower you.

Was there any point where you were working with a manufacturer and you had to sort of override them? or what was the initial scale up like? It's really been all internal since day one. Yeah, I basically put my life savings into our first 10,000 square foot warehouse, gaitreade jugs, me and John's salaries a bit. And then raised an angel round to build that first brewery, did 120 meetings, huge rejection percentage. But yeah, in that,

We wanted to approach it in a totally different way. And so we're confident we arrived at that. I feel like consumer is the one category where you just really don't know until you start selling the product. Like I can easily imagine getting this pitch and just being in the mindset of like, if I want to drink a beer, I want alcohol. And it just turns out it's like totally,

just totally false, right? I wanted to ask, I know you did a ton of like community IRL marketing early on and I wanted to ask you about how you advise other consumer brands when they're early on and thinking about how to spend their time, what channels to really focus on because for certain consumer categories, if somebody's like, yeah, we're going to really focus on events and community, I'm just looking at them being like, you should just sell the product. Like just sell the product. Like you spend all your time selling the product. Whereas you guys, like, I know invested a lot in the, in kind of the running,

running world and saw a ton of great results. Yeah. I mean, I invested a lot, like a lot of my time and weekends. Yeah, like every weekend. Yeah, we had no more resources after all the stainless steel to put into marketing. So that was like all on us. But just touching quickly on two things you said there where like, A lot of people both, A, don't contemplate non-alcoholic beer.

They're almost like non-considerers and then think they don't like the taste of beer. Are two things we like combat like over and over again. Because like it really is hard to imagine non-alcoholic beer and the social experience until you actually experience the social experience without alcohol. And you're like, oh, like I kind of really like this. I'm actually in it for my friends, the food, the moment and not the alcohol that mostly hits you after the moment. That was like a big light bulb to me.

And the thing we hear all the time is people say, oh, I don't like the taste of beer. Well, actually the ingredient a lot of people don't like in beers, the ethanol, which at times is up to like 80, 85% of the calories of beer. Like in a normal light beer, the ethanol calories is more than 80 other calories of like the 95 to 100 calories. And so we actually do have a pretty big flavor advantage too. And like no comparison large brand.

Yeah, on the in real life too. That was almost at necessity. Like I was like going around our early grocery stores like Whole Foods and nobody was even looking at the non-alcoholic beer shelf. And so I was like, okay, I got to get out in the world

and bring people in. And so I was running a lot of races and like trail half marathons and Spartan races anyway. And so I just started pouring beer at those giving out hundreds of beers a weekend and getting people to like to the actual like table and trying the beer

where they're like happy, sweaty, thirsty and actually considering it. So it's kind of be like, yeah, how do you measure success with an initiative like that? You're pouring, you're sampling with people, you're seeing their reaction. Are you trying to like, are you already at that time stocked in shelves in local stores? And then you're trying to like see, hey, if I, if I do like a bunch of weekends back to back, am I going to see an uptick and sell through? Or is it more just like, this is like, I'm basically spending my time to get more

people aware of the brand and I have more time than I have capital. Yeah, we have down to zip code and store level sales. And so I was able to see like ripples fairly quickly and could run regressions on that. Separately, like it has to be authentic to the brand proposition. Like everything about this brand like the can, the mountains, the outdoor aesthetic, the taste was like all out of me and John's life and like primarily my life. And so where I was going to market the brand and talk to people were like, I didn't have to like go to a focus group or Google where people like me hang out because it was all built around me. And so I have seen a lot of people like try to bring non-alcoholic spirits to like races.

And it's just like it's like an absolutely laughably terrible fit. But you can tell some of you see is just like pushing someone up to. Yeah, they heard you on a podcast. And they're like, yeah, let's just run. We'll do the same thing. It'll have the same thing. We did also take a very intentionally, like, long track with things, too, where, so, like, that, like, yeah, talking to someone face to face is very unscailable. And, like, doing things digitally is so much more scalable in awareness.

But, like, if you do it enough and if you're doing it all the time, all of a sudden it is scalable on a long time horizon. And even up until this year, last year we probably did 2,500 events as a company and handed out well over a million samples. probably in all 50 states and three other countries. And so those things do scale over time. And then we've been really consistent with our marketing messages too. I knew my core skill set isn't like me being a social media persona and just turning on the cameras all the time. We wanted to create a timeless brand that just compounds over time.

We talk about the same things like over and over again. I think of it somewhat as like a Red Bull model of advertising consistency, where most of CPG these days is like chasing that next hit. It's like you've got to be on the next trend. You've got to be like the next video has got to be a home run. Or even shorter duration like celebrity trends. You know, we've had upwards of 10 celebrities enter our category. We have a whole range of superheroes at this point.

It's so funny because you probably know all of them, but you could list them all off and I've never heard of any of them. And that tells you everything about the level of focus and actually. It's probably harder to watch their movies now. I feel personally slighted. I can't do it. Yeah. Well, we've got one more, at least one more superhero coming into the category this year.

This one's being launched at us from a French castle. You know, it's going to be draped in Americana in Missouri, so we're excited for that one. But there's all different texts. There's like the short-term celebrity spike and like hope you can ride it where we've kind of just, done the thing and been authentic, like who we are inside the walls is who we are outside the walls over and over again. I think that really compounds over time and matches with our like manufacturing strategy, our continuous investments in quality. Every one of our teammates is full-time teammates and like all all this capital investment is it looks really good right now,

but in 2018 this was super out of vogue for sure. Yeah. Yeah. Well, yeah, the beautiful thing with CBG, it is incredibly competitive. You are going to deal, if you're successful at all, you'll deal with a million knockoffs and new entrants, but you can look backwards and say, like, or even just look at your business today and realize, like, even with everything you know now, imagine trying to compete with yourself from zero. It would be an absolute nightmare, you know?

So it's just the benefits of great product, operational excellence, and then compounding. Talk more about the decline. alcohol consumption amongst young people. What are you seeing in the data? How real is the trend? And what are the key drivers of what's going on? Yeah. And how much, basically, how much does the alcohol industry hate Andrew Heberman? He basically needs to be in witness protection. Yeah, the new dietary guidelines were basically like, don't not drink alcohol. It was like, it was like as close to don't drink alcohol as it gets

and the industry was like yeah but at the end of the day like I think a lot of this is potentially skewed by COVID and you know generations that were maybe like I mean if you go back to the start of our careers it was so easy like I lived above a bar in the West Village in New York and like I had friends

in that bar every afternoon it was so easy to find where people were after work and I feel for this generation that like is kind of losing the work happy hours, the mentorship and stuff. And I don't think we're going to have generations that don't love social connection and blowing off steam and having fun. I think the industry and the world has to meet people where they're at. And so I do think they'll normalize, but I also don't think, you know,

in a world of cell phones and videos always on and like high work performance expectations, it's going to be really tough to get back those like volume drinkers as well. So I think you've got a layer in more occasions throughout the week. You've got to find ways to keep people at bars longer with moderate beverages. So the industry on the alcohol side will have continued volume challenges. And then there's like new non-alcoholic functional drinks too, of which THC is the most obvious. And those are not like high volume drinks either. Yeah, they're low volume and they destroy your sleep.

Yeah. Not a fan. Talk to me about label claims. The only real label claim that I see on here is non-alcoholic brew. it doesn't say it has creatine in it or protein or caffeine or anything else. Protein beer. But I mean, you've reduced the calories. Have you guys ever made like a MVP internally of the protein beer?

The high protein beer. 50 grams. Why not? We've had some fun with like caffeine and protein and like funny videos and stuff. I do think there could be a world of functional beers in the future. but I also think like beer and function is like just kind of different things for the most part. And so, but that being said, like one of the hardest things of starting a CPG business is like the plaintiff's bar and all the like how tight the FTC rules are from website to label claims to everything. And there are a thousand eyes waiting for people to misstep even the smallest trip wires.

then. Yeah, that was why earlier last year, there was somebody, there was a viral brand doing like nicotine drinks. And that, that, uh, but at the same time, I mean, I just looked like it was like, okay, you, you're just, you're just making stuff and selling it. Jordan, you don't think an athletic four loco could work. An athletic loco? Athletic loco has a nice ring to it.

No, that one got met immediately. What's a scale of the business today? Steadily compounding. I guess we've moved into like the top five of overall crapp breweries out of 10,000 crepe rers, top 20 beer producers overall. Yeah, we passed 100 million in revenue in 2024 and have been growing very healthy double digits since then. Last year was the worst beer year of our lifetime probably and we had really strong growth into that. And, you know, we're just coming back with more exciting partnerships, more marketing spend next year as the business grows and kind of steadily just chugging along.

And, you know, comparable, I think, could be the energy drink category, which Red Bull really put on the map in the 90s. Monster arrived in, like, 2002. And those brands didn't have a lot of 100% years. It was just a, like, 5 to 15% compounder for 25 years. And that's really what we're looking for also is just to, like, make really high. high-quality beer, timeless marketing, and just ride that health and wellness wave. Yeah, that's always the, I feel like founders can get a bit carried away of like, I'm making an energy drink. Look how big monster is. It's like, or look how big Red Bull is.

It's like, you don't, they didn't just like, oh, yeah, we just executed well for six years. And suddenly we're a $50 billion company. It's like, no, you did decades and decades. And I think I get excited about CPG founders that are like, I think of like Peter with David where he he doesn't want to sell out to the last gen. He wants to just compound enough, launch new products, launch new brands to get to the point where he is the 800-pound gorilla in the industry. And so I'm sure you've had a bunch of opportunities to sell and turn them down to date. So I'm a fan of the compounding. Well, you guys know better than ever, too.

the rules of private capital have totally changed since we launched the business. And we have an amazing cap table through all that rejection I went through. And just people who are super excited about what we're doing with a really long time horizon. And there's the whole public versus private debate. And like, do we want to go public and spend 80% of our time on the regulatory of that versus how great it is for awareness? And then the public can also invest in the business who are like super fans in it. So there's a lot of push-pull on public.

versus private, too, that we're working out. Are you getting any pushback from other alcoholic beer producers? We saw this with the milk lobby pushing back against, like, the alternative milks and saying, hey, you can't use the word milk. Are there words you can't use? There's actually, like, the alcohol industry definitely tries to put up walls around things like this. we can't use like all the normal beer words like logger stout ale like you name it. And so like we have to call our Mexican lager or copper, for example, our stout, a dark.

But I do did look at like those analogs and beyond meat and companies like that and how they made enemies with the incumbent industry. And, you know, we want to make it really clear from day one. Like we're not out to stay in our soapbox and kill alcohol. Like we're here to add to it, bring a lot of new consumers into it. and actually create a really new, exciting, viable part of the industry that just helps build the whole thing. So, yeah, definitely learnings from that. Well, thank you so much for coming on the time. Thanks for all the drinks, too. We're working through it. We're working through it.

I think it says under half a percent. I think if I drink 50 of these, I can get a buzz going. So hell or high water here. Yeah, there's a major placebo effect. So it's like having one with lunch or on stressful work days or like my commute beer is my favorite beer to online like yeah it's like all these new occasions it feels a little risque i like you it's delicious yeah so thank you so much for taking the time to come chat with us great great to meet you super super impressed with everything yeah and come back on anytime you know news uh thank you so much love the show thanks so much we'll talk to you soon chatting bill bye cheers let me tell you about turbo puffer serverless vector and full-text search built from first principles on object storage. It's fast, 10x cheaper, and extremely

scalable. Our next... Switching years, just a little bit. We're going from non-alcruing to AGI. We have Pat Grady and Sonia. From Sequoia Capital in the Restream Wainter Room. Welcome to the show. How are you doing? Cheers. Thanks for having us. It's Friday. It's been way too long, Pat. I haven't seen you. I missed you, too. I missed you, too. Most shows, it's like, you know, maybe once a year we'll have someone on. Invest like the best. I like that we can just get you every few years. We'll start scheduling next week's appearance too.

Sonia, it's also been too long. We enjoyed the candles that you sent us after our last hang out. I'm so glad I'm going to share the ideas for this year's swag. Just wait. Yes. Is the conference, it's still called

AI Ascent? It's going to be on 420 this year. Oh, really? Whoa. Yeah, you were early to the whole Ascend trend. Everyone's talking about ascending this year. And so it's just a great point. brand for you guys. I love it. Anyway, take me through the article 2026. This is AGI. Why were you

writing it now? What was the one thing that you saw? What was the inciting element? Go ahead. I think there were two, let me start with. There were two purposes to the article, and there was something that we saw that catalyze the article. One purpose was to kind of put a stake in the ground, because there's this thing that people call the AI effect where once the technology is actually out there and working, we stop to believe that it's AI and we start to just call it by the specific name of the technology. That's not AI. That's just our LHF. And so there's this mythical quest for AGI. And best we can tell, we're there.

And so we just kind of want to put a stake in the ground and say, hey, look, we're there. And then you say, okay, well, what's the point of doing that? why put a stake in the ground? Well, that leads to purpose number two of the article, which is, it is time, this is meant to be a call to arms for founders. It is time to take stock of what capabilities are available in the world today and apply those to real world problems as vigorously as possible. And so there is enough great technology out there available to founders today to go solve so many real world problems and particularly what we've seen over the last couple of months and this is kind of the triggering thing for the article

um with Claude code and Opus 4-5 and these long horizon agents which to us are kind of the tipping point that's gotten us into AGI like in particular what is possible now with that as sort of the third big inflection point of the last five years is pretty remarkable and so it's kind of meant to be a call to arms yeah we're not helping because we have physical goalposts here. Yeah, exactly. We always should, I mean, do we have to take the goalposts off? If we've achieved it. No, no, let's just mount, let's mount it to the ground. Like, we actually have to bring it. Your smell of AGI stuff was amazing. Yeah, see, it's there. We're there. Yeah, yeah, yeah, we'll bolt it to the ground. Congratulations, we're in the goalpost now.

You're physically in the goalpost because you have declared AGI.GI. Take me through a little bit of the history of Sequoia, the history of previous technological revolutions. I don't remember a, a, you know, a 1999, this is internet. But, but as you reflect on the work the firm has done, what, what can you tell us and what can you share about how the firm has processed these, you know, broad proclamations about the impact of technologies that are coming and then arrival dates when they are ready and that maybe changes the stance of the firm. Yeah. I love that as a question. So thank you for asking that. We've been pretty quiet historically as a partnership. And so this idea of sharing our thoughts with the world is kind of new. And hopefully it's a useful service to the

founder community. If you go back to our founding, so in 1972 when Don Valentine started Sequoie Capital, he was the go-to-market guy at a company called Fairchild Semiconductor, which is a household name for people who studied the history of Silicon Valley, but not really outside of that. It was kind of like the open AI of its day, or it was the Nvidia of its day. Like, it was the it company of its day because it was the first company to really commercialize silicon-based transistors. Like, it was kind of the company that gave Silicon Valley its name. And as the go-to-market guide of that company, Don's job was to take this magical new capability and figure out how to apply it to real-world problems. Yeah, make it useful. Make it useful. And that's a useful. And that's

sort of led him into venture capital because a lot of his customers were these founders and he just kind of fell in love with them in their quest to build these businesses. And so I mentioned that because we grew out of this semiconductor revolution where all of a sudden computation is a thing that was available to the masses. We move from that into systems in the next generation with the apples and the oracles, you know, taking these chips and turning them into more computing systems. We move from that into the networking and PC era, where all of a sudden you have endpoints on it on every desk and every office thanks to the PC and you can connect them all up with networks thanks to Cisco and the router. We move from that into a more sophisticated form of networking, which is known as

the internet. We move from that into applications, which are a more sophisticated way to make use in the internet, those applications started to show up on mobile devices. And then eventually, now that everybody has one of these mobile devices in their pocket, there's an enormous amount of data, people started doing interesting stuff with data, and now we have AI. And so this lineage of Silicon Valley is kind of built up over the decades, and each successive wave has built on the one that's come before. And being in this very fortunate position to kind of be in the mix on a lot of these transitions, and actually being the only partnership that's kind of made it through these different tectonic shifts and kind of has this institutional knowledge, you know, gives us

this broader view on, okay, what's the importance, knowing what we know about past tectonic shifts, what's the importance of the current moment? And with that, I'll hand it off to Sonia, because Sonia was the one who, you know, three, four years ago, prior to the release of ChachyPT, kind of called this for what it was and put out the original generative AI post back in the fall of 2022. Yeah. The other thing I think that's interesting about this moment is, I feel like people have had this sense of like AGI will be here when it's just like so obvious in the economic data. And like that's like that's when it will really feel like, okay, that's when you can declare it of like it's here. It's working in the economy.

And I think part of why I appreciated your guys' piece is it's like it actually is going to require a lot of human agency and like human application of this. It's not just going to, it may not just like happen fully organically running away by itself, right? And call the arms. Now's the time. Let's go. Yeah. Yeah, I wanted, I want to hear from you, Sonia, but I wanted to ask, like, has there been any type of shift in founders coming and pitching Sequoia with like an entirely, like, I felt

like last year I kept seeing like agent businesses that were exciting and the teams were talented. But I felt like they were just, in many cases, just like kind of rebranded SaaS. It's like, okay, like you're pitching me this as an agent, but like if I log into the product, it's going to look like traditional software. And maybe that's the, this, maybe SaaS is evergreen and we're just going to live in dashboards forever. But I've, I kept wanting like wanting like more, basically. And I think we have started to see some new paradigms, but has there been any type of shift in terms of the companies coming in where maybe somebody spent a few years at a lab and they're like, okay, we're actually going to,

going to kind of, we've seen the future, and now we're going to really reinvent the, you know, the entire product experience from the ground up based on this new set of capabilities. I'll start, but that is our app player guy. So you should, you should talk as well. We frame this with bottom of our post, like, from talkers to doers. I think maybe that describes a little bit of what you're describing of like first iteration, um, and Gen. A.I. Companies, including some of the great ones, like, it did feel like, you know, it was a, it was a next generation of staff was how it felt like. They weren't actually getting work done for you. Part of the reason for this called arms is like we're going from talkers to doers,

which is, and I think it is both the long horizon agents is the thing, but it's both the underlying model capabilities and the harness around it. So like these models can now take action and iterate and persist in the world around us. And so what we're seeing now is that founders are selling companies that are not just doing the, you know, the, you know, brighter, newer, shinier version of SaaS, but actually something that takes real agency and takes real time horizons to execute. So, for example, a traversal in the troubleshooting space. Like when there's a bug that goes down, data dog says like, ding, ding, ding, there's an issue. Typically, you have a war room that goes back in triages, what the hell happened, goes back

and scrolls through dashboards, goes through traces, et cetera, eventually root causes it, fixes it. This is a, you know, several hour to day long process for companies. It's funny to think of the, it's funny. It's funny. to think of the human analog there. It's like if you have an employee that comes to you and they just tell you there's a problem and they're not doing anything about it, they're just like, we got a big problem here, boss. And you're like, okay, like, what are you doing about it? And it's like, so traversal is like, okay, like we're actually going to be what a good employee would do, which is like, we have a problem. Here's like how we're going to fix it. And hopefully

that's just solved before it even gets to you, right? Exactly. And so in this case, there is no SaaS equivalent to that, right? It doesn't even feel like SaaS. It feels like talking to a co-worker. And that's why the litmus test here is, you know, are you, can you actually sell work? I'd say the founders that came into our door a few years ago, they all saw that vision. Like, it's not, it's not a new idea that you can build agents. I think what's new is that you can actually execute on that vision. Because these models are finally smart enough, capable enough to actually stay on the rails where you can just let them run. I would see founders have done a really nice job of making use of what is available technologically

at the time. And I think, I think over the last five years, we've kind of had three big inflection points. You know, inflection point one was chat TPT when we saw the benefits of pre-training. And pre-training kind of gives you baseline world knowledge and some kind of instinctive judgment, so to speak. Inflection point number two is late 2024 when 01 came out and we had reasoning. And so the ability to kind of take your time and really think through particular questions and come up with deeper answers and better conclusions. And then inflection point number three has sort of been these last couple of months where we saw the impact of these long horizon and agents. And so you've got some baseline knowledge. You can do some reasoning over that

knowledge. Now you can actually bail, recover, stay on task, persist all the way through to some sort of an outcome. And I think if you map those three capabilities to the applications that people have built, it's no surprise that the initial applications were kind of like good Q&A or good summarization or good basic content generation. Like it was the stuff that pre-training sort of gives you. the next generation of those agents could think a little bit harder. You know, like in the case of, in the case of Notion as an example, which I think has done a really good job of staying on top of all this stuff, you know, you could now tell notion, okay, can you build me a database?

And it could actually reason through, like, what kind of database do you need, how should I build? And it can actually build you a database. It's pretty good. And then now with these Long Horizon agents, we're finally getting to the point where you can make a couple of mistakes, you can test a couple hypotheses, and you can actually iterate your way toward the right outcome.

And so look at, again, you can look at Notion and you can effectively have your personal chief of staff doing stuff that you would otherwise be doing while you were in a meeting running in the background, you know, or in the case of Harvey, you can effectively deploy an AI associate after a data room or a deposition or some other legal workflow. It actually complete it into end while you're doing something else. And so I think this maybe one way to put it is with this third inflection point, you don't have to babysit the model. You can just like give it instructions and let it go.

And you can have a few instances of it running in parallel. And you kind of go from this is a cool tool that allows me to be more productive to, holy cow. This is kind of like a team of coworkers that I have at my disposal. Yeah, totally. Help me reconcile these two things that I'm feeling simultaneously. I agree with your declaration, the call to action. the idea of so much opportunity for founders to use AGI to create all sorts of different value and products and services. At the same time, towards the back half of 2025, I was seeing Ilya on Dorcas, talking about, hey, maybe we're in age of research, and Richard Sutton and Andre Carpathie talking about some of the more restrictive aspects of the research progress.

And so is that something else that we're working on? How are you thinking about the progress that's happening in more purely research contexts? What even needs to happen there? Your role as venture capitalists in helping that happen? How do you blend those two things that both feel true but feel somewhat at odds? I think it's an end. And we're putting our money in both camps. Okay.

Like on the research side, there's absolute fundamental research. to be done right now. Yeah. I'm personally, I don't know if you guys have read Dave Silver and Rich Sutton's Age of Experience paper like that to me kind of outlines. The premise like we're going from, you know, learning from existing data, internet data, et cetera. Yeah, oh, yes.

That was like the paradigm for pre-training to learning from experience, which is like reinforcement learning the paradigm is you interact with an environment, you get reward signals, you improve. And so I think there's a lot that's going to happen in terms of learning from experience and have been following, you know, what Rich Sutton's doing with Keynes and very excited about some of that direction. I'll give you an example also. We backed a company called recursive intelligence.

They formally took out the chip at Google, and this is like recursive chip design. So similar to in the game of Go, you can have, you can play your, the agent can play itself and get superhuman at Go. You can actually get superhuman at chip design. And very surprising things come out of that. Like you end up having chip design that looks,

you know, not like the Manhattan distance, kind of like square grid stuff. You actually have what looks kind of like alien-like chip design layouts. And so we are absolutely backing research labs. But then if you freeze research progress where it is, I am convinced there is so much value to be built in the world. And it's just like it's just lacking founders, lacking agencies to actually go out and productize

and build companies around those. Like one of my examples. Go ahead. I was going to say, how are you guys thinking about like more passive product experiences? because people talk about agents, and most of the time they're talking about, like, giving agents tasks. Like, hey, go do this thing and spend as much time as you need on it, and, you know, we'll see the result, right? Like, selling work. But when you think about actually working with people, some of the best employees are just without direct guidance, constantly doing work in the background, and coming to you only when maybe they need some type of, like, input.

And so it's like more like you're just kind of reacting to the work that they're doing and and giving guidance. And so an example I would think of is, you know, with Harvey. It's like if somebody sends me legal docs, I should get some type of notification from Harvey really when it's when it's already done some type of like diligence on it. I already did the work. You only don't. So I'm not even worried about. I'm just getting a ping from Harvey. Hey, you should pay attention to this thing.

Yeah. you're going to need to make a decision here. I've done all the work. And even with an email experience, I would love to log into my email and not see just like the order at which the emails came in. But like here's three decisions you need to make. And again, like when you work with great people,

if they have five minutes of your time, they don't just tell you here's the last 20 things that's happened. They're like, here's the three things that you need to make a decision on. And so I'm really excited to see more of these like passive product experiences where the work is just being done and you only need to chime in when it's really necessary or if you're actually a bottleneck. Yes. I think this is a great question and great direction.

And to me, this kind of gets at the software as a service versus services as a software. You know, the nature of software is really changing as we go from an era of apps to an era of agents. In the era of apps, you want a lot of surface area with your customers. You want them to spend a lot of time in your product. You want to put workflows around them. They're going to be really sticky that they're going to get accustomed to. In an air of agents, to your point, things can just be running passively in the background.

The actual amount of surface area you have with your customers might be de minimis. The amount of time they spend in your product might be de minimis. So the nature of the moat that you build is different. And the nature of the moat that you build, kind of what Sony was saying with the age of experience, it's all about context. It's all about like the environmental context of the job that, you are trying to achieve. And the feedback that that agent gets, as it runs off and does something and then comes back, it's actually, you know, like you did this part a little bit, a little bit

wrong, you need to do this part a little bit different. And I think in a perfect world, you have something, you have something like what Harvey does, which, you know, Harvey kind of bridges that gap where there are workflows today for people who who want to do the work, kind of how they've done it in the past, just a lot better, faster, cheaper with the benefit of the AI brain. And you can deploy agents to go out and do the work on your behalf and then come back to you when it is done. And I think that, I think that, I think we'll see a lot of that over the next handful of years where there are companies who can kind of bridge that gap where they can live in the software world and have some of the workflows, better workflows because of AI, but some of the workflows

people might be accustomed to. And then separately, they can deploy in the background with these passive agents that kind of function as coworkers who just come back to you when things are done. But it's two very different like design paradigms. It's two very different business paradigms. The fact that they're so different is one of the reasons why I think it's going to be tricky for a lot of the incumbent software companies to make the leap, the same way it was tricky for a lot of on-prem companies to make the leap to cloud.

Can you help me understand where you sit on the level of software eating the world? We talked to Tyler Cowan about one of the problems with AGI showing up in economic statistics is that AGI needs to live in a digital realm. It has to affect the digital economy, the services economy, and that there's so much of the GDP is made up of the health care sector, nonprofit sector. He highlights a number of sectors that are sort of AGI resistant or AI resistant, and so that's why he has longer timelines for significant impact to the overall GDP figures.

Do you agree with that, or do you think that there's something different, about AGI that should allow tech to finally move the needle on those stickier industries? Well, I do think as like, I fully agree with the premise that, you know, this AGI stuff is only good. It's only embodied in the digital world right now, right? And so like we seem to be, you know, getting tantalizing close to solving the entire digital world. That is very exciting. At some point, the physical world does become the next bottleneck. I think exciting thing is actually that like, Hey, robotics is also going through Renaissance right now as well. Like some of the smartest people are going out and working on robots.

And so I do think like similar, just the pace of progress is so high right now. And I didn't think we're going to have digital embodiment that was reliable this early. And now you can just let the thing run on your machine. I think that increasingly we're going to get to physical embodiment. And we're going to have a smooth curve there. I do agree with the premise of like if you want, if you believe in the super fast takeoff, recursive self-improving, like, you know, everything is just going to, you know, go vertical line. Like, I just, yeah, we're not going to get there.

We're not going to get there. We're not going to get there even if we have the physical world. I just think the reality life is really messy. So I don't think we're at, we're at ASI. We're not at that kind of like takeoff moment whatsoever. That's not the stake in the ground that we're putting. We're almost saying here is, hey, guys, this quasi-religious concept of AGI, is the thing, you know, generally intelligent?

And, you know, instead of just waiting for it to arrive, it's here. Let's build that here around. Yeah, there's so much, there's such a, there's kind of this toxic idea that I feel like is ingrained in so many people's head, which is like, AGI is just going to do that. Yeah. Like, AGI is just going to do that. And then we're done. We'll all be retired. And it's like, it's, at least in the near term, from everything we're seeing, it's going to be a human properly, you know, a group of talented people properly using the tools to solve all the most pressing problems that we have.

And so it's, and for young people, it's extremely paralyzed to be like, in 2027, I'm either dead or a billionaire retired on a space yacht. And so I can probably just chill for the next two years because it's going to be one or the other. No, and I worry that we'll have this sort of like lost generation of people that have let be ingrained in their head that it's not worth trying. No, now is the time to build enterprise sass. You heard it from Sequoia Capital. Get in the arena, folks. This is a whole of action. I feel bad because...

Seriously. I feel bad because a friend of mine was pitching me this idea of, like, an agent to help consumers switch between, like, insurance products. Because, like, an insurance company will sell you in a policy. And then I'll just kind of jack up the price a little bit every year because they assume a lot of people aren't going to churn. And at the time, I think Chad GPT agent had come out. And I was just like, dude, like, the labs are going to, like, one shot this problem, like, right, right. like I think pretty quickly. I think you could work on this for like, you know, six months and get steamrolled.

And like it's very possible that like if he had just focused on that one little problem, it'd be a decent business. It'd be like a solid business. And he would have figured out something unique. Yeah. And it's a big category. And so I felt bad. There's lots of examples.

How much do you guys, I wanted to ask like, like processing signal because obviously there's so much noise right now. And something that I've appreciated is kind of comparing like the X timeline to the app store charts because every single day on the X timeline, like, vibes are fluctuating, and some news will break or some product will be released. And the common response is, like, it's so over for XYZ company. And then you look at the App Store chart, and it's like the company that just launched the thing is, like, not actually even in the picture at all. Like, they're not in the top 25 of any category. And so, like, I feel like there's this insane disconnect between the real world.

The real world is using ChatGBTBT all the time. but they're clearly not paying attention to X, our little bubble. So it's like, where are you guys really looking for signal and noise, especially in the later stages where you're investing in companies that should be out in the real world at some point. Yeah. Look, before I get to that point, I think it is so amazing that all of this AI discourse is happening on X right now.

Like, you could imagine a world where all this dialogue was like happening and behind closed doors or, you know, scattered across different channels, the fact that it's all next is amazing. And, you know, it's a combination of research and what takes and what's happening in the labs. It's like, it's, I think it's awesome that's all happening in one place. It's remarkable for young people. You can just, like, jump in and learn by osmosis and understand who. Yeah, it'd be bad if it was only happening in Valnor.

Totally. Valnor. I still have to figure out what the Alps comment was about. But, anyway, putting that aside, like, yes, our, like, our job is, like, you know, to kind of try to P signal from the noise. We have, we're obviously doing everything we can in the background, credit card panels, web signals, et cetera.

And I'll say like sometimes we see a, you know, trending web signal take on X and it's just, it's just wrong. Like we look at our own source of the ground truth. The example, like this, some of the stuff on, you know, chat GPD is losing, losing market share.

We actually cut it by like U.S. Web traffic. It's a very different story. And so for us, it's like, it's really important that we're on X. I think all of the discourse is happening here, very important. But then, like, let's get to grab truth. Most importantly, just know that as venture capitalists, if someone refers to you as smog, it's sort of a compliment, but also sort of a dig.

So that's what you need to know in terms of Lord of the Rings references for where you sit in the ecosystem specifically. Is that short a little smigal? Smog is the dragon that hoards all the gold and is an antagonist in the Hobbit. But it does have the gold, which is kind of like what you do. You got a lot of capital over there in Sequoia Capital. Sorry, Jordy. No, what were you going to say? Pat, Pat, sorry.

Oh, I was just going to say, you know, to the question on the signal, yeah. Interestingly, one of the big themes of the last few years on X, thanks to Lulu, is the go-direct idea. And I think for us, go-direct is a little bit of try to, you know, let the world know what we're thinking, but probably even more so, just go-direct to the founders. You know, the best source of signal we get is the founders. We spend, you know, we spend many hours every day just meeting with founders out there doing interesting things.

And we kind of have the ability to do primary research that not everybody gets a chance to do. And I think that's still the best source of signal. Yeah. What is changing in the AGI age in terms of adoption and just AI diffusing itself through the economy? This is something that obviously every company has to deal with because they can build a great. product, but then they need to get it into businesses if they're in enterprise SaaS. They need to get adoption, make sure that it's being used correctly. There's the forward deployed model. There's self-serve models. Is anything changing there structurally? Or is it all just, you know, the same

playbooks? One thought is like, I think we're going from, over the last second, we went from sales-led growth to product-led growth. Yeah. I think we're going from product-led growth to agent-led growth. Okay. And I think you see this most clearly, actually, if you're using, for example, cloud code actively. Like, it says, hey, you should use for database, you should use superbase. For hosting, you should use for sell, et cetera. And like, it's choosing for you, the stuff you should be using. And I think increasingly, like, so it's, it's most obvious to me with code. Like, your agent is choosing your infrastructure. But I think it's going to happen across the entire economy. Like, your chat chip team is going to tell you, like, hey, this is the place,

this is the travel you should be booking. This is the, you know, and so I think we are going towards kind of... It's like back to channel sales, like old school. Yeah, old school, but I think that the difference is, like, you don't have competing incentives here. And I think the open ag guys, treacherously is, like, principles that I think are, it's a very principled take on, you know, how do you want to tell users what to use? And I think product growth brought us closer to the vision of best product wins, but, like, ultimately people are still lazy.

They can't read all these reviews. they kind of default to like what looks cool on the website, whereas agent-led growth, like your agent has, remember, your agent has infinite time to go and make these for you. And so it can go and, you know, read all the documentation, read all the user comments, like figure out for your use case. Also it has an experience, like, building on top of the infrastructure. It's like, eventually it's like, well, you want to choose a product that's most reliable. Reputation management is going to be very important. The way you show up in these LLMs is important, both in the pre-training and in all the research. that they do. And then also, this whole idea of, like, you know,

SaaS companies that don't have customers, they have hostages, well, if it's one click or one prompt to re-platform from the database that has, that was trying to keep you hostage to the database that's trying to keep you happy. Yeah, but it's also, like, I think it's good alignment. Compare it to, like, if you're building a home and, like, the person, like, you know, like running, like, the construction firm that you choose, like, uses really bad cement. Yeah.

And then you have like a terrible foundation. Like you're going to be mad at, you're actually going to be mad at like the firm. Sure. Because you're like, why did you pick this? Yeah. You should have known. This is like. And so I do think there's a good alignment where it's like the best, like you're saying,

the best product should win. Yeah. Because the agent is incentivized to make sure that you're on the best like footing and using the best product. Yeah. Cost is a factor. Quality reliability, all these things. So I do think there's that good alignment.

That makes it sense. The agent kind of accelerate this, you know, best product wins notion. And best product for the human is maybe a different best product of the agent sometimes. Fantastic. Well, thank you so much for taking the time to come and chat with us today. Have a great weekend. And we'll talk to you soon. Pat, we'll see you next week.

We'll see you next week. I can't wait. Two for two for two. Have a great rest. Great to see you guys. Have a great Friday. Goodbye. Phantom cash, fund your wallet without exchanges or middle men.

And spend with the Phantom card. Meet Phantom Catch. An Andrew Reed special. A Sequoia Capital Company. We have some breaking news before we bring in Sean Frank. Sam Altman has taken to the timeline. He posts the melting smiley face emoji with a screenshot from Elon's court filing. In the court filing, here's what it said.

Musk insisted that any new entity, quote, support the nonprofit mission and that OpenAI remain, quote, essentially a philanthropic endeavor. Now, Sam Altman's putting it in the truth zone. He says, here are the actual September 2017 call notes from Elon. Coming weeks, top priority. Got to figure out how we transition from nonprofit to something which is essentially philanthropic endeavor and is B-Corp or C-Corp or something must tell the story and not lose moral high ground absolutely vital. So we'll see if, we'll see how Elon

reacts to that. But if that is the case, Sam Altman is upset about it. He says, Elon is cherry picking things to make Greg look bad. But the full story is that Elon was pushing for a new structure. And Greg and Ilius spent a lot of time trying to figure out if they could meet his demands. I remembered a lot of this. But here's a part I had forgotten. Quote, Elon said he wanted to accumulate $80 billion for a self-sustaining city on Mars and that he needed and deserved majority equity. He said that he needed full control since he'd been burnt by not having it in the past. And when we discussed succession, he surprised us by talking about his children controlling AGI. I appreciate people saying what they want and think it enables people to resolve things or not.

This is Sam speaking. He's no longer quoting. But Elon saying he wants the above is important context for Greg trying to figure out what he wants. And Hope's revenge says, oh my God, girl, he's such a snake. The drama continues. The drama continues on the timeline. Well, let me tell you about app-loven. Profitable advertising made easy with axon.a. I get access to over one billion daily active users and grow your business today. And we have a happy app-loven customer in the stream waiting room. We have Sean Frank from Ridge. He's the CEO. Welcome to the show.

How you doing? Good to see you. Ooh, you got the polo bear on. What's this? Is that the Winter Olympics? Team USA? It is the newest drop, guys. You guys like it?

I've put on this for you. Insane. Fantastic. Fantastic. Insane. Brought the RL. Okay, so emergency podcast. We had way we wanted to have you on because Open AI introduced ads.

How quickly are you thinking about ramping up? testing it out. Is Connor waiting in line outside of opening eye to try to be the first? Dude, no joke. We would be the first advertiser if they let us. You know, we measure a lot of traffics are still at Ridge. And the most like revenue per user out of all traffic ever. I mean, Google branded, meta, whatever is chat GPT.

We get like $12 from every one of those sessions. And like, you know, for meta, you'd be lucky to get a dollar per user, right? Right. So the revenue procession from an AI user is just through the roof. And we have some data. I don't know if you want to share it or not, but like NorthBeam put out their 2025 report. And they track, you know, probably 2,000 merchants, billions of dollars in revenue. And AI search in January was like 0.01% of all traffic on all e-commerce websites. And now it's like 0.7. So it's just like shot through the roof. And there's not ads yet. As soon as ads roll out, I am so excited. Okay. We would expect the dollar per user to fall based on ads, correct? But do you still expect them to be high intent? Because there were, you know, we were talking to Ben Thompson about this, and he was saying that they should have launched two years earlier because it's going to take a while for the ads product to work its way up. I imagine that the chat GPT users that land on your website are super high intent because they've probably been asking chat GPT about your product

specifically, or wallet specifically, or product specifically. Now, if they're researching the Roman Empire and they just see a little ad at the end that you purchased and it's not targeted at all, they might click on it and check it out, but it's probably going to be lower intent. How optimistic are you about ChatGBTDB ads delivering at a level above Facebook quickly? Well, Google is rolling out their direct AI offer, right? And what that is, is if someone asks, hey, what are the best gifts for dads, right? They're going to have that specific, you know, question. I can now bid to show up with an offer for those people. It's like, hey, the Ridgewall, it's a really good gift for dads. And they're going to give you 20% offer right now if you click this link, right? So it's incredibly bottom of the funnel, like people who are ready to purchase. And that's Google's ad offering inside of AI. And that's coming out soon. So I think that I was like, what pushed ChatG-G-T over the edge to roll this out? They'd probably do a carbon copy of that. So it's not going to, going to be discovery ads like you get on a app loving or a meta right what it's going to be is um you know like that last point of sale almost like an affiliate like push you over the door like a honey

competitor or whatever which i think is would you be unhappy if uh the offering was just give us a dollar amount per customer and we'll go find you customers uh something that's fully black box you're not doing any demographic targeting, no keyword targeting, or would you like those features? Well, historically, if you can tell somebody like, here's 20 bucks, find me customers, and you're, you just look at your average order size. That's like the holy grail of advertising, but it usually ends up being a bit more complicated. But is the initial product that they roll out, does it matter to you? Or will you just take what they, what they give you? Yeah, it's, it's, what we've seen the organic traffic from any AI search is already so valuable.

Any way to get more of that, we would spend a lot of money for. But, you know, the beauty of the Facebook ad product is that they figured out a way to take half of everybody's revenue, right? Like, affiliate is, like, people... Let's give it up to the market. I'll take half. You do the work. I'll take half.

Yeah. TikTok shop affiliate. people don't want to give more than 15% of a sale. They're like, oh, that is too much, right? But all performance marketing is just a affiliate in a different coat, right? It's like they're able to, like, oh, you're going to generate your demand. And if you have a better offer, you'll get a better return, right? But really, they've just figured out exactly how much money they can take from everybody at the optimal level.

And that's why they do $100 billion a year in revenue. So if the offer from Chad, GPT and Sam Altman is, hey, give us 40% of your revenue, and we'll give you new customers you wouldn't get otherwise, I would take that deal because I'm already giving Mark Zuckerberg 50%. Right? One thing that's exciting is I think once people start seeing more, once they start seeing ads for products, they will just naturally start using LMs for more product research.

Like I still find myself if I'm like, if I'm doing like product research, I'll still go to Google search quite a lot, even though in many ways the experience is inferior just because I'm so trained on that. And so I think, like, as they roll out ads, they're just, there's going to be, like, more organic activity. So hopefully as a brand, you should be getting more people just landing on the site organically because they're just finding out, finding out through their own research.

Totally. Half of all product searches start on Amazon. So, like, Amazon has been able to take over the product search box from Google, but they spent $500 billion in two decades doing it. So if ChatGPT can start stealing some of that, you know, glow, Amazon's been able to do, they'll have an amazing affiliate business and ads business and whatever you call it. Yeah, what do you, what do you, you guys sell a ton on Amazon? What do you think Amazon's like play here really is? Uh, because they obviously don't want to give up the golden goose of their massive ad revenue business. Uh, they want to like protect that. Uh, Alexa's like not even in the picture as far as I'm concerned in terms of like a shopping assistant. So,

What's the play? Well, you know, Amazon has a beautiful ad arbitrage system where they spend, they're like the number one spender on Amazon, on meta, and on Google, because they can spend $2 to get a user, and then those users click on a bunch of ads on Amazon. It's a free money machine that they've invented. So, yeah. Yeah, I think they would love to partner with everybody, because once you're on Amazon, you're still going to click around, you're still going to do shopping and they have an ad product.

the more interesting question is what does Shopify do? Because Shopify is a product feed of all these merchants, right? But will they be able to win over any sort of of these deals? They don't have an ad product. They make all of their money on me hosting my website and then a percentage of the sales I drive. And it's a very small percentage. It's a payment processing company. So it's like, how are they going to survive if more and more of those transactions are happening inside of chat GPT or inside of Gemini? I think Amazon's fine. They have a big enough product, you know, feed they could feed it in everywhere. And if you do come to Amazon, they get all their money back with all the clicks. But walk me through the risk of Shopify because if I am, if I'm looking to, there's a lot of brands. Like there's a ton of, I would say like the real like shopping that I've done over the last five years is like almost always on Shopify stores. right like amazon for like essentials and things like batteries and things of that nature but i feel like a lot of my uh like like like um like lifestyle consumption is happening on shopify and so you mentioned that

that not having that like ad flywheel but am i not still like discovering ridge and just popping over to your shopify store and like to complete the transaction and if they're effectively a payment processor, like they're still making their money? Right. Well, it's just if websites continue to be important. Like, you know, I'm, I'm going to operate on the assumption that all... Yeah, but calling Shopify just like a website company, like, in my view, it's like a catalog and it's a CRM and it's a payment processor.

Oh, for sure. It does all those things incredibly well. Bro, I'm so bullish on Shopify. I love Shopify as a thing. But the challenge is the website will become less important in the future. Just like mobile apps had a moment. They're not important anymore. Where's the last time you guys opened a shopping mobile app?

And before that it was catalogs, right? So like the user experience has become easier and easier and easier. And the way you interact with brands has changed. And I think the website will kind of be replaced just by asking chat to buy you stuff. And maybe you'll still go to websites, but kind of like how you still kind of open catalogs. I don't know, but catalogs. Straight in the recycling. I'm like, I did not ask for this.

Totally, right? And that's just like the worry of the website. So showvines is incredibly important for us, but they do have to plug into every single LLM, right? They have to be that product feed everywhere. Yeah, but I think they're, they've taken the approach of just like being more quick to partner with the LLMs than an Amazon has because, again, they don't have that same like they have like less to lose, right?

They're not worried. Because they don't have an ad business, they're not like, like I feel like Amazon has to be a lot more. When you look at the, when you look at the marketplaces that have partnered with chat GBT,

it's like Etsy, right? Etsy doesn't really have anything to lose, right? Like they're, uh, they just want more traffic, more, more sales. Like they'll take it however they can get it.

Whereas like Amazon has something to lose. Right. You know, and it was big news when Shopify, partnered with chat ch pt, Intel Amazon partner with chat chvety. And Amazon comes in with an equity round. But now all of those products are going to be feeding in chat chvety. And that's one of the worries of Shopify.

It's like, how do you stand out? Right now, it's like beautiful brands with beautiful websites, with shopping experiences. And that is different from what Amazon offers. But if all of those products are just going to be discoverable inside of chat chept and competing for the same space. I don't know the value of my website in three years. That's one thing that we're worried about at Ridge right now.

Well, what about ad creative? There's this weird trend where D2C companies were effectively making TV commercials with TV production techniques, cinema cameras, high-res photos, whatnot. But what wound up working on TikTok and Instagram Reels and YouTube Shorts, was a lot of UGC, a lot of stuff shot on iPhones,

a lot of stuff that feels more natural. Is there a world where maybe you want to get good at creating SORA videos or AI-generated images, even if they don't look like a real photo, it looks more natural within that app, within the chat app. You're expecting to see AI images, and so you want to lean into AI image versions of your products,

even if the background's a little crazy hallucinogenic, it's what people will be used to. They'll be in that mode. Yeah, I think when ChatGPT launches their ad product, it's probably going to be thumbnails to websites with really aggressive offers. But right now, in our ad account, if you guys go to the Facebook ad library and pull up bridge,

we're running full-blown AI videos, right? And they're getting spent and they're winners in the ad account. So we're all probably underestimating how much it's going to affect the ad industry. It's like by the end of the year, video is going to be, if you want to make AI video, it'll look just like human video. And like the highest level productions are already being basically monopolized by AI. Something I've been thinking about that feels inevitable is, you know, two years from now we'll look back and laugh that people would like make an ad. and then serve the same ad to like a hundred thousand people or a million people because it's like if you're going to spend a lot of money serving somebody an ad you should serve them the most

like hyper targeted like Sean Frank I have an athletic brewing company beer for here for you I got an offer for you Sean just click the link and check out like eventually it will just get so so so so targeted that it's basically like ads are being generated on the fly for individual customers Oh, dude, that's for sure coming. Meta's working on it. And not only that, they'll put you in the ads. They'll be like, hey, look how cool you can look in this sweater. You should buy this sweater.

And they want to do that because then the CPMs just go up. Right now I get a $12 CPM on meta. They would much prefer me to get a $200 CPM and just show way less ads to everybody. Right. So I think the personalization of ads is coming. And we've already just seen it. Like in my ad account right now today, maybe a third of all my spenders will be AI ads. And that's crazy.

That is crazy. Double click on the AI ads that you're running. Are you running stuff that you could shoot that's indistinguishable from human photography, human videography, or is there a unique value to saying, look, there's just no way that we could take a ridge wallet to the top of Mount Everest, shoot it into space, have it turn into cake, have it turn into a cat, like crazy stuff that's just impossible, maybe with like a massive CGI budget? but truly like breaking the laws of physics,

or are you just trying to do like, hey, it's just a Ridge wallet on a beautiful background and, you know, we were able to generate that. Yeah, so really what it is is,

you know, we have wallets with every college. And let's say there's 200 colleges in America. Okay. Right. Now, I could get 200 jerseys, and I could get 200 fans

and I could have them talk about this particular wallet with this jersey, with this fan, like they're very bespoke ad. And then serve it into a market like Ohio. I could do that, but that would cost, I don't know, $85,000 to run that campaign,

or I can have one guy do it in one day with a Higgs field or whatever, right? So that's what we're doing right now. Are you guys using Higgsfield? We're having them with the show in just a couple minutes. Yeah, I love Higgsfield. So, yeah, I don't think, like, I think Normies are using Chatshapit now, like it fully broken through the mainstream. But like all of the tools around that, I mean, everyone knows lovable at bolt.new.

But like if you want to make videos at scale, Higgs feels like the best, easiest way to do that right now. Yeah. So the pipeline is you specifically want to multiply your creative. So you are filming one human video and then you're creating variations with AI. Is that the correct use case right now as that example? No, no. So what we're doing is we have B-roll of actual while it's being used that we've shot, right? but we need an opening hook of a Buckeyes fan, right, in a Jersey or whatever.

So that is being done with AI. And then intros to the wallet. And you can pull up her out of care right now. There's a woman like Hunter. She's walking, talking about like, hey, like, I bought this for my husband. He's like, you know, whatever. She doesn't exist. That is all I.

And it's because for us to find a woman hunter who's out in a field or whatever, we could do that. just take, you know, two days and it'd probably cost $2,000. And we can test that concept right now in real time inside the Facebook ad library. It's going to be interesting. I'm so curious to see what happens to the brands that, like, try to take like some type of like moral aesthetic or ethical high ground and just say like we never use AI. And like what actually happens to those? It's one of those things.

Yeah, it's like not using AI. It's like if somebody said like, yeah, we don't use computer. I'm like, I don't even know what you mean. It's like everything's a... Everything's going to be AI. So, look, incredibly bullish on ads coming to any surface of the internet. So if there's any service of the internet that doesn't have an ad, I would love an ad to be there. You know, you guys did the app-loven ad read.

Brand-new to e-commerce. And I spend millions of dollars there. and I love it as an ad product. So more of that is just really good for me. So if it comes to Gemini or ChatGTPT, now I just don't think they'll do big, beautiful display ads. I don't think there'll be any video ads. It's just going to be, hey, you're looking for a gift.

Ridge Wallet will give you the best price ever right now. And then they'll take a 30% commission. I really want to see more flashbangs coming to anything. Watch out. Watch out. We got you. Oh. Do you have any flashbangs on your podcast?

You're the one show that we would give you the effect if you want to flashbang your boys. Okay, cool. I'll get the ad rights to that. We also have a horse that runs across the screen now. We'll save that. We'll save that. For right now. Wait, have you used any other of the AI ads, like AI, basically like, basically like,

I heard perplexity was rolling out ads in their product. Did you demo that? Have you thought about using that? I know it's like smaller and earlier. Do they have they actually live? Do you have any experience there? No. And I have a list of in front of me like all, I told you earlier, Northby did a report.

Yeah. And chat CPT is 99.5% of all AI traffic to e-commerce websites right now. Wow. So it's the big one. So this is a big announcement today. So yeah, what does it take to actually get Ridge live? I don't know, man. You guys know Sam, dude. Hit him up. Say he's got his first paying customer right now. He's a little busy today. He's going to go back and forth between Oakland and traffic. Yeah, we'll put in a good word for you. I would love to see. What consumer? What kind of broader consumer trends are you tracking this year? We were talking about the sauna wars in New York City, people setting up these bathhouses. I was somewhat bearish on the trend. Like nationally, I just think there's a lot of places in America where people will be like,

am I going to pay a couple hundred bucks a month for this like sauna like bathhouse membership or do I just want to buy one, you know, for my house? And, but what are you tracking? Well, on the sauna wars, I mean, pause is a franchise based sauna business. They have them in Venice. They have them in Southern California. I was at a e-commerce or like a private equity conference. I think those guys are going to expand aggressively.

So I think they're selling territory rights right now. I used to live down the street from a pause. I would go there. I enjoyed it. I was like, I like using a sauna and I like using an ice bath. And so I just bought one because it was like $100 every time I went. I just did the math.

And I was like, it's nice to go there, but it's nicer to just have it in my house. And so that's one of those things. I don't know how much actual spend that they can capture long term or what the LTV is. if you get somebody hooked on using the sauna, eventually they just run the numbers, right? It's not like a gym where it's like a gym, I'll pay however much it is a month because it's

nice to go somewhere out of my house to work out, and I don't want 300 different machines and all these different plates. So I'm not convinced that it's actually going to scale that well outside of, you know, major metros like L.A. and New York. Yeah. Also, the cost per use of a gym is really low compared to a hundred bucks every pop of a pause. But they're going to expand like crazy and it'll be a great private equity transaction for somebody. But yeah, long term, I don't think it's a good trend. The thing we're most interested in is fiber. I think fiber is going to have a protein like moment. And protein's been like on a mega trend for 20 years or whatever and has billions of dollars and spend behind it. You know, creatine had like a little taste of that, but fiber will be like the next,

you know, thing that even reaches something like a protein. So we think fibers like the obvious big trend right now that's going mainstream. Well, we see, will we see you, you guys enter the category this year? Oh, we're secretly in the fiber space already. So we're not talking about it, but we have, we have a brand bubbling up. We have real customers that are paying. They don't know it's behind Ridge, but we'll talk about that maybe offline. Amazing. So you're going to post your revenue every single month to invite thousands of competitors. the category, right? Yeah, yeah. Seems to be the smartest thing to do, right? It's like, the build in public movement brought to consumer is just an absolute nightmare. It's like,

if you brag to the world about how much revenue you're doing, there are going to be smart people that enter your category. And they're going to do it fast, and they might out-execute you. I don't think they'd out-execute you guys, but I've yet to see a consumer founder build in public that didn't ultimately regret it. Oh, yeah. You know, we're pretty public with Rich just because I think you have to be stupid to try to sell wallets in 2026 or whatever.

Yeah, but for you guys, it was never like you were just like, here's our investor update. I'm publishing it because it's so good. Like, you guys don't have investors, but like it was never like, I'm going to flex monthly on the timeline, which is the approach that I think a lot of people have had, like on the consumer side.

Yeah, I mean, consumers a knife fight, man. Like, there's no moats at all. It's the digital equivalent of opening a restaurant, I think. So, you know, like, you're fighting for every single transaction, right? You guys were just having, you know,

Sequoian, talking about it's a great time to sell enterprise ass because you guys have hostages and not customers. And it's like, yeah, I would love to have. Yeah, there's truly no lock in once you buy one. It's not that you have to come back the next year. whereas for a lot of enterprise SaaS, if you stop paying, your entire business shuts down.

Yeah, the moat is like scale, operational excellence, but those things can erode. Very team-based. Well, thank you so much for taking the time to hop on. It's great to see you. Next time you come on, come in person, we know it's not that long of a drive. Yeah.

Dude, I would love to, and guys keep crushing it. Once you actually have the OpenAI, the Open AI ad platform live. Let's come here. Let's put it on the big screen. We'll get a bunch of monitors. And we'll just monitor the situation together. And we'll clap every time a sale comes in.

Yes, yes, yes. And thank you for hooking the team up with Ridge Wallet. Oh, yeah. You guys are too kind. I was in the gym this morning with some of the folks. They had the suitcase. Look at the suitcase. There it is the corner.

There we go. Every single member of the team is rocking a ridge. suitcase. There are more Ridge wallets that you can possibly count in this Ultradone. It's amazing. We're huge fans. We love you. I carry a Ridge wallet every day. I love it. Talk soon. Others. Thank you. Keep crushing. Goodbye. Goodbye. Goodbye. Restream. One live stream 30 plus destinations. If you want to multi-stream, go to re-stream.com. I want to talk about ads more. I want to talk about vibe.co's ads. They're a sponsor of us, but they've also been burning up the timeline with a number of billboard ads in San Francisco.

Shiel Monot, friend of the show, says these ads are very clever. What else is in the collection? And I got a preview of some other ones. So this is Jensen on Target Jensen on TV. That's a brilliant billboard. It only works in San Francisco, but Jensen, Wong, the CEO of NVIDIA, his leather jacket is iconic. And so you see the shoulder of the leather jacket with Jensen. You know what they're talking about. If you want to get to him, you're going to go to vibe.co. What else did they do? They It'd say target Mark on TV. They put just Mark Andreessen's head there. It's an iconic image, and it lets you know immediately.

How can you target someone like Mark Andreessen? It's hard. He's not going to be everywhere. Vibe.com has great targeting. So I got a little teaser of what else is available. We got Sam Altman, Target Samma on TV with the McLaren app one. Is that real? And then we'll go to the next one.

Target Zuck on TV. And it's a wrist with the F.P. Jorn on there. or a patechicle. No, you made these. And then the next one, they have a Target Chesky on TV and it is a barbell. Yeah. So this is the type of marketing that you got to be doing. You got to be thinking, okay, how do I, how do I send a message? There's one more. We'll go to this. Target Augustus on TV. Of course, everyone knows Augustus Dorico. He knows he's known for carrying a white monster. He's sort of like a human version of the white monster. If you put this billboard up, everyone's going to get it immediately. They're going to know that you're cool. They're going to know

that they should go to vibe.co and they should start targeting folks like Augustus Dorico, the CEO, founder of Rainmaker, who's known for having a white monster every once in a while. Not every once in a while. Pretty much constant. Every hour. He's powered by it. The way you drink Diet Coke's, I imagine he drinks White Monster. Yes, yes.

It's just like, oh, oh, it's 2 o'clock. No, no. The four of those that we just displayed, I did generate in nanobanana with Gemini 3 Pro, Google's most intelligent model yet. Leah says, love trash day, love here in that truck. Humans getting stuff done. Cooperation, logistics, municipal services, civilization. Couldn't agree more.

It's a reminder that we haven't collapsed yet. Dude, a four-year-old, the way their face lights up when the trash truck comes, and it's just pure wonder at the massive machinery moving up and down the street, the beeping when it backs up, that is childlike wonder that you should. should never lose. No matter what your age is, you should always take, take a moment to show some respect for the trash truck. I completely agree. I love it. Joe Wisenthal is crashing out. He says he never wants to use the web again. He said in today's Oddlott's newsletter, he wrote about how depressing the internet's become. We'll read his piece. And we need to catch up with Joe. I think

he's coming on the show soon. He says, I swear, I swear, this is not another piece about my personal forays into vibe coding. Okay, maybe it is a little bit, but not really. So last year, did an episode with the C.O.O. of perplexity, whose name is Dimitri. He says, which is kind of a hybrid LLM search engine, you'll be familiar with it. It's very tethered to the real world. So if you asked it about, hey, maybe the latest developments in Venezuela, it will obviously produce text, but also links to the latest reporting from reputable news outlets and other sources. It generally works well if you want to get up to speed on something that's happening right now. Anyway, one of the questions that Joe tried to get across with Dimitri,

but he doesn't think he phrased it all that particularly well, is what happens to the future of the web as we know it, if more and more of our news is coming to us from chatbot form. Let's just imagine people start regularly making perplexity, their first destination each morning to capture up on the news, and let's just imagine for sake of a thought experiment that the traditional news publishers come out fine in this relationship, so the New York Times and the CNNs and the Al Jazeera's of this world

are getting adequately compensated for their reporting to be summarized and displayed on perplexity. It's hard for me to imagine this future, but whatever is beside the point. So he's just saying it's not an economic issue. Let's talk about the vibes that would result from this. So he says, this is his question. In the future, why do websites still exist?

If more and more people start consuming the New York Times' content through a chatbot, why continue to invest in maintaining a well-functioning website called n.ytimes.com. I suppose that to some extent, this is a question that precedes the existence of chatbots. There was almost certainly a time when a major priority for the New York Times was to have a well-functioning, elegant, website. And while there are people still paid to work on it, this is probably not their top priority right now. A tech budget that might have once gone to web development might now be going to figure out the best strategy for Instagram, Reels, or whatever. Nonetheless, do you have a comment,

George? Yeah, maybe this is just because I turn 30 and I'm unk now. But I like going into the world of the content. Like, I like going to the Wall Street Journal app. I like going to the New York Times app. going to these places because you get it. I like the physical paper. We like the physical paper. This isn't going anywhere for my cold dead hands. Me and you Joe Wisenthal. We are keeping the newspaper alive. I guess you'll be on the web like some hot new young in. And ultimately I will be reading the paper. Yeah ultimately I still care about like it matters. I care a lot about who wrote it too. Totally. I don't want to just serve. But that can be instantiated in perplexity or chat chit. Yeah. You can tell you who wrote it. You could in theory if the if the deals are structured properly.

You can't get, I don't think you can get the New York Times content in chat ChbT because they have a lawsuit. You can get Wall Street Journal content. So in theory, you could kick off your morning with a query to ChatchapT. Hey, tell me the most interesting pieces that are on the front page of the Wall Street Journal, and it would just do it for you, and it would bring that in, and it would pay News Corp accordingly. But there's something fun about holding a nice piece of paper in your hands. I think it will die, but a very, very slow death. We're still reading newspapers.

I imagine I'll still be reading newspapers in a while, and I imagine that we'll still be going to the websites. But he is correct to highlight that there is a change afoot. So he says, nonetheless, the web browser is, by and large, still a dominant piece of software for accessing content and services that exist on the Internet. And, in fact, if we step out of the news context and think about it, say, buying car insurance, then the website, as we know it,

is still incredibly important. Anyway, I was thinking about this again because my vibe coding foray, easily the most annoying parts, where when I had to leave the terminal interface and do something on the web. So it's still an unbelievably annoying process to do something simple like redirect a domain name. I found GoDaddies, where I've been registering

various domain names for years, interface to be a borderline unusable shots fired. Back check true. It is difficult sometimes. Every time I'm just trying to make sure that a domain is renewed, they're like, how about you buy a thousand websites right now? Buy a thousand websites.

I'm a thousand AI websites. I'm a name.com guy. It's a better experience. We have one billion websites for you. Yeah. Yeah, yeah. As I mentioned in the piece he wrote on Tuesday, one of the first things Joe did to make it so he could update his website directly from cloud code, rather than having to update the files

via cloud for their back end. This is the first very small thing. But the point is that every time I had to operate in the browser, it felt deflating, typing in URLs, clicking buttons, checking boxes, pulling down. drop downs, entering fields. No thank you. He's genuinely curious what happens to the visual web that's designed for humans. I know there's plenty of work that's being done to allow agents such as Claudeco to go to a website, click around at what human does, just in the same way the chatbots were trained on billions of Reddit posts and everything else on the internet. These agents are being

trained by ingesting numerous sessions of people moving a mouse on the screen and so forth until they can get me that process. So that's all well and good, but it still gets to this issue that we currently have much of the internet presented in the form of web pages that are designed to be logical and pleasing to the human eye. We still do so much on the web. But now every time I have to use the web, it feels kind of like a personal failure. It feels inefficient.

And if the web is increasingly going to be navigated by bots working on a human user's behalf, then why even bother optimizing it for visuality at all? I don't know where any of this is going, but my guess is that it's pretty big structural changes are in store for what people think of as the internet. Yes, it's interesting. No, I feel like the internet is already living in apps.

So much. Like when I think about a world in the future where an LLM is just generating me an article that was in the New York Times that day, I could imagine it's just generating it in a visual style that the New York Times decides themselves. And you can already do this with Nanobanana.

You can say, write me a New York Times style article about this topic. It will write it, instantiate it. It will search the web to find the facts, so it'll probably not hallucinate that much. And then you could say, turn it into an image that looks like a New York Times screenshot, and it'll do that too.

So people will be met where their preferences are. I don't know. I think that, I mean, the flip side is like, he's making this argument that as more and more traffic shifts away from the web, it will get fewer and fewer resources within those organizations. So the New York Times will say, hey, you know, we're not getting that much traffic to our website, so let's not spend that much effort making it better. But you also get 10 times as much leverage because the folks say,

at the New York Times, we'll be able to fire off an agent and say, hey, make it look better. And so you would imagine, I would hope that even as you go from, okay, maybe there's 10 people working on a website, and now five of them move over to Instagram and YouTube strategy, and four of them move over to generative optimization strategies and LLM and AI stuff, well, there's one person left, the person on the Japanese soldier on the island who hasn't gotten the memo, that no one's going to the website. Well, some people are going there, and they fire off a prompt, make it perfect, don't make mistakes, and boom, they're good. They're in business.

So some cause for optimism. We'll see. What do you think, Tyler? Well, I was just going to update on the same Altman. Please, give us an update. What's up? Okay. So first, just if you want to look at prediction markets, right?

So will Elon win his case against opening eye? Yes. Earlier today, basically at the peak of like the, oh my gosh, like Sam is so cooked. Yes. He was at 74.5% chance. Whoa. It's now down at 54. This is fascinating. We're watching them like duke it out in real time. Yeah. But you know, Elon,

he doesn't have to wear too much because Nick. Oh, Nick. His strongest soldier. From the rock. Yeah. He's saying it reads as Elon's emails. Yeah. It reads as obviously fabricated. Elon doesn't talk like that. Oh, well, you know, case closed. Case closed. I wonder if Nick will be called to testify. I'd love to see him on the stand. That would be very entertaining. Anyway, Jensen Wong doesn't care about gamers, allegedly. Asus reportedly says the RTX 5070 TI is no longer being produced. RTX 5060 TI 16 gig to follow. The gamers have been having a rough time.

I don't want to play with. Jensen says, I don't want to play with gamers anymore. It's AI all the time. Yes, gamers are being squeezed left and right. We need to make everyone aware of the rights of gamers with our cod sounds and our flashbangs and our smoke grenades to let people know, let Jensen know. Maybe we'll have to bring Jensen on the show, throw a smoke grenade, and when the smoke clears, he can tell us that he is still committed to gamers. Let's move on to World Labs. World Labs launched a box. They shipped a box.

It's a video of they took World Labs. I think this is real. I have no idea how to process this, But it looks like they built a screen put in a box that has an, what is it, IMU inertial measurement unit that can measure how the box is being rotated. And then it can re-render the world so you're looking into it in this box. This seems really, really cool. This seems like just a piece of hardware that people would actually buy and sell. We've seen this with the holographic display that you put next to your gaming rig made by Ace. or a razor, I guess, razor is the one that makes it.

This is really cool. I'm a big fan of World Labs, and I like that they're productizing this. I wonder if this is like a stunt, if this is just for fun. I really hope we can get our hands on one of these because this looks amazing. Well, there is more news than the AI, talent war. The total number of employees that are leaving thinking machines, Alex Heath is hearing that it's up to six now. Scoop God is on

the trail of another scoop. He posted this at 2 a.m. He's up burning the midnight oil, getting the scoops on thinking machines, maybe up to six people leaving. Neval says California-based unicorns... Do you think this is because of ads? Do you think all the thinking machines?

Folks, we're like, wait a minute. We want to work on ads. They're going to do ads at OpenAI. I've got to go back there. I got to go to Open AI. I've got to get out of here. It's been my dream. Mira hasn't said anything about it.

Maybe it's, maybe it's, they wanted to work on adult mode. Maybe, maybe. There's lots of reasons. Or Sora. They could be trying to grind up the, the Disney IP. They want to get their hands on that IP. Yeah, they want to sloth it up. And they say, we're not doing any of that thinking machine.

So we're going over to open. Talk about this. Naval says California-based unicorns being routed to the glue factory. The horse metaphor. Minsing words. Yeah. We will protect the unicorns. Unicorns are horses.

They will protect them. They are. Do we read through David Friedberg's piece? Yeah, fantastic piece. California started with the gold rush and might end with the golden exit. We're co-neying. It has been underreported how much wealth has left California because of the asset seizure tax being proposed. It's important that we continue to call it the asset seizure tax.

He's coining. A private poll was conducted amongst affected individuals a few days ago, an 80 to 90 percent surveyed they had already left California in 2025 or will leave in 2026 if the ballot measure looks likely to pass. Of course, the ballot measure currently, is retroactive, so they would be subject to the 5% one-time tax, and of course, it would get litigated. Dave Freeberg continues two to two and a half trillion of assets gone, representing 20 billion of annual revenue for the state government, and likely hundreds of thousands of jobs. Now at risk, less reported is the bigger exodus underway from folks who are not directly

affected, but worry as they should that this law will quickly transition from billionaires to everyone else. The initiative actually gives California legislators the right to take anyone's post-tax assets any time in the future based on a majority vote. This isn't about billionaires. It's a new tax system that simply destroys private property rights in America. All private property is now public property even after paying your taxes. It's not legally your property anymore. It's the government's. You're just borrowing it. Legislators will decide where you get to keep and temporarily use each year. Countless founders, CEOs, and other business leaders are actively looking to move their companies out of state, not just tech, not just AI, not just billionaires, but the core

engine of California's prosperity since 1847 is unraveling. And here is how this initiative risks unraveling America. Ten states have explicit or implicit prohibitions against asset seizure tax. Individuals affected in California and other states trying to do the same. We'll move to these states that endow private property rights. California already has a $20 to $30 billion budget deficit an unfunded $1 trillion pension liability for public employees' unions and $500 billion of debt outstanding. The state cannot afford to borrow much more and will launch more asset seizures to meet its obligations.

Asset seizures will transition to millionaires and eventually to the entire middle class as more asset seizures drive more people to leave the state. The deficit debt and job loss will spiral. The golden exit, no U.S. state has ever declared bankruptcy. In addition to California, dozens of other states face. similar fiscal crises. Legislators promised future benefits that can't be paid where theft and waste have been allowed to run rampant and unabated for years. Struggling states will eventually request federal government assistance, as they always have in time to fiscal crisis, effectively federalizing

state debt. States not in crisis will declare enough is enough. Individuals in those states will refuse to pay their federal taxes. Why pay for other people's mistakes? Some states may try to secede from the union and a constitutional and civil crisis will erupt. I know this sounds crazy, but I think at some point states will just say, like people, citizens will be like, why am I sending 30% of every dollar I make to bureaucrats in Washington that hate me? And so I think this sounds wild, but I don't think it's as far-fetched. Yeah, it's very dark. It's a, it's kind of. Nothing like a little fresh. Friday black pill? Not we just, the answer, the answer is clearly just AGI pilling all of the California

regulators. Just say, AGI will solve the deficit. We will just ask AGI to fix the debt, fix the fiscal crisis, fix the pension liabilities, fix the budget deficit, don't make mistakes. And, and so much value will be created by AGI here. Just the income. income taxes will pay for that a thousand times over, a thousand times over. So you don't need to, you can respect private property. Don't worry. It's going to be fine. AGI's here to save it. That's the solution. Got to pitch them. Anyway, back to the AI world. We have Alex from Higgsfield AI in the Restream waiting room. Let's bring him in to the TVPN Ultrono. Alex, how are you doing? He's doing great. It's great. It sounds like you're doing great. We were just talking about the billionaire tax.

This is something that, fortunately, your business is doing so well. Yeah. Focus on growth. Focus on the good things. Tell us the best news in your world this year. Give me that mallet. Oh, yeah. Give me that mallet.

Yeah, what's the latest? What's the latest metric? Absolutely. So what's exciting about Higgsfield is that we see emergence of AI-native social media agencies. So really, teams from maybe 10 to 30 people making commercial ads, ends or ends with AI. Yeah. We just talked to Sean Frank.

He said he's a huge fan. He uses it for Ridge Wallet and has been able to generate custom ads for tons of different markets, local areas where it was just completely unfeasible to cast so many actors, to play so many different parts for every single different. college team that he sells products for. Yeah, it's a fascinating time. So this is mostly driven by agents or brands going direct. What's the biggest driver of growth for you? Absolutely. We are excited to see Fortune 5500 brands really hiring, primarily hiring us, really hiring smaller, her really hiring smaller agencies so that they then use HiggsL to make those ads. And I think although the most exciting segment is definitely direct to consumer, especially when AI can deliver not just the efficiency, not the cost efficiency,

but also high level of personalization. So the example which you just brought up completely makes sense. Whenever someone needs to customize for 30, 60, 100 different user groups, let's say, sports teams, generally AI delivers against this. goal and Higel is at forefront of this. What are the compute costs looking like these days? I mean, the big news is that you, you jump from 100 million to 200 million top line in just two months.

That's insane. Congratulations. Jordi hit the apple. Congratulations. But on the flip side, I mean, if you, I mean, you are raising money. obviously the capital markets are open, but if you were really spending on inference, that could be difficult. How are the margins developing? How are you optimizing for inference cost? What are you seeing on just inference cost trends broadly? Are you happy with the progress? Or what else can you

tell us about the cost structure of this business? I have good news and I have bad news. Okay. Look, I think the good news is that video models get more capable so that over time marketers can just upload all the brand assets in one place and then the model just remembers all the context. And this helps to make not just one video but multiple videos and extend existing marketing campaigns.

I think this is going to be a major unlock. think about marketing agents who actually remember all the previous campaigns, all the performance of the previous campaigns and so on. Although there is a bad thing, like these models, they get bigger and bigger. There is no other path around. I think most of the video models this last year were maybe between 10 and 50 billion parameters, and it is going to scale well beyond 100 billion parameters. So I think, although the good news is that in the same time,

we're seeing customers spending thousands of dollars a month on the platform, which tells us that Slay likely make thousands of videos. Cost per one video is still quite below one dollar. This is very interesting times. as we move from a concept of... Well, yeah, that's an insane reduction in cost because... Even the most efficient video shoot on your iPhone,

you're going to spend a day, even if you're paying a marketing, intern $20 an hour. Yeah, when brands are trying to generate UGC content, historically, you know, now they can use Higgsfield and generate stuff on the fly. But historically, you'd be like, okay, I'm setting a budget of like $200 an asset,

and then you'd have a bunch of people actually record on their iPhone to generate it. And so if you're saying it's a dollar, an asset or sub-a-dollar, it's like a 100x reduction in cost. It's pretty significant. Absolutely. I think cost reduction has already, I mean, it has already happened compared to physical production. And I think this batch quantum generation, meaning that we make not just one video, but hundreds of videos simultaneously,

I think this change happening this year. So the goal for Higgshill is to lead this new wave of agenetic behaviors and builds course for video. What about getting the ingesting the data on performance? Do you have API integrations with all the big platforms where you're ingesting ad data from meta and App Lovin or whoever else you're distributing video content through? or is it PDF upload, CSV upload? How are you thinking about actually creating that feedback loop? Because that seems extremely powerful. Yeah, absolutely.

On that angle, I can sell that probably 2027 is going to be a year of major revolution in ad tech worlds as connecting generation with performance data is going to become major points. Got it. This year we collect a lot of these data from social media platforms. We built most of these integrations and establishing direct relationships with the platforms. We collect a lot of very valuable data points directly as we see which generations results in an actual ad so that we can actually run reinforcement learning to streamline content creation process. I think this is the main priority for 26, and 27 is going to be a year of a full revolution in advertising technology space.

What's going on on the hardware side? What would be most valuable to you? We saw Nvidia acquire Grok with the Q. Grok's whole pitch has been very fast inference, usually for tech-based LLM models. When I think about the work of a marketer generating a bunch of different video variations, If they fire that off and they come back an hour later, that doesn't seem like a terrible experience. So are you more focused on higher fidelity, larger parameter counts over speed? Are you interested in what's happening in custom silicon in a particular area?

Or do you just want more and more Nvidia GPUs at your disposal? Like what's important on the infrastructure side for your plans over the next few years? This is great question And I think we have seen That custom silicon can perform really well Gemini 3 is the first Multimodal LLM which has this emerging capabilities which is non a banana pro model

This model essentially made Adobe obsolete Yeah, who needs to Yeah, because I mean who needs to go to Photoshop Yeah Look, I mean, I'm not saying like, especially for social media marketing, if we're being serious. So, I mean, going and if let's say, George, you assign me to go and make five ads for you a day

and try completely different stuff. I don't have time to go to Photoshop and push every pixel to make it perfect. I better use model like Manor Banana Pro to really deliver against the vision. And it's semantic-based editing, not just like pixel pushing. So I kind of miss when you used to be able, used to see like a really high quality Photoshop on the timeline. And part of why you appreciated it is like somebody really needed to put the effort in or they needed. Even if they're not great at Photoshop, they hired somebody.

And it's like, you have, and nowadays it's like, oh, you just have. You know they got the lasso tool and they cut that character out and slap that text over there through a drop shadow on it. Now it's just a prompt. It's fascinating. Yeah, now it's just a prompt. And it's done with custom. silicon so i think we're gonna see a renaissance of custom silicon for sure in jemini and anana banana prod are our amazing model with this immersion capabilities and we really embrace those create

those creators and social media marketers who creates ads with a i end-to-end so they don't have to go to So Adobe's still in control. How are you tracking the problem of understanding what's AI generated, what's real? This is now a daily. I feel like it used to be like even like 12 months ago. It was like, you know, once a month he'd see something and you're like, oh, is that AI or is that real now? It's like almost every single day. I see stuff on Instagram all the time where I know it's AI, but then I go to the comments

and everyone's happy. No one's used to be people would clock it. And then even if they couldn't tell, they would key off of the comments and then kind of pile on. Now people are just like, yeah, this is good content. Yeah, what's your take on AI detection, how it's working through its way through the internet?

Look, I think that's where we're going to see more standards emerging. I think in the European Union it's a big thing. We're going to see something by the end of the year coming on that front, I guess. I can just tell you that direct-to-consumer brands, they primarily don't care if that looks like AI-generated content or non-A-I-generated content. As long as it catches cyballs and it sells, they just keep coming to Higgsville and making more of such videos. So the best performing AI-generated ads, they look like AI ads, and they don't look like real ads. I think that's my main observation.

Yeah. Yeah, yeah. I mean, there's a certain element where, you know, the iPhone, the selfie video, it never actually wound up looking like an HBO show or James Cameron film. It never wound up looking like, you know, it was shot with a $100,000 camera. But everyone just got used to it, and they liked the aesthetic, and we grew accustomed to that aesthetic. And it has its own aesthetic. And so have AI content, even if it retains its aesthetic for a very long time, even though I think it's going to be indistinguish. already sort of is. But even if it does, people could just become fans of that and be like,

yeah, I like the way it looks. Yeah. Yeah, interesting. Anything else? Very cool. Well, I also, my buddy texts me. It's Alex Casson. You guys just had lunch? No, no way. Absolutely. We're just talking about that. Small holes. Yeah, he's a great guy to know in this, in this town. So are you in L.A. right now? Yes, I'm in L.A. I love. You should have come, You should have come by the studio. Yeah, next time. Could have be sitting here. You could have been hitting the gong.

Could have been moving the goalposts. Next time. Absolutely. Anyway, thank you so much for taking time. Well, yeah, congrats on the progress. The growth is absolutely insane and look forward to talking more this year. Yeah, we'll talk to you soon. Cheers.

Thank you, guys. Have a great weekend. Go bye. All right. We can close with one of the best ideas that I've heard recently. It's from Ryan Peterson. He says we should have an AI transfer portal like in the NCAA. Couldn't agree more.

Well, that's our show. The bomb has been planted. Thank you for tuning in today. Thank you for watching. Leave us five stars on Apple Podcasts and Spotify. And sign up for our daily newsletter at tbPN.com. We send out our newsletter every weekday. Enjoy the weekend.

Enjoy the weekend. We will be live Monday. We will be live Monday. Looking forward to it. And we'll be back at 11 a.m. Pacific. So tune in. We have a couple live in person guests. Go touch some grass. It's going to be a lot of fun.

Well, hope you have a great weekend. And goodbye. And goodbye.