TBPN - Jacob Peters, Logan Kilpatrick, Roy Lee, Erik Torenberg, Jack Whitaker, Trump Laying Groundwork to Blame Powell for Downturn, Boeing to Sell Some of Its Navigation Business in $10.55B Deal, History of Thoma Bravo, Oil Companies Have Bold Plans to Fix Their Water Problem

Episode Date: April 22, 2025

TBPN.com is made possible by:Ramp - https://ramp.comEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.com Numeral - https://www.numeralhq.comPolymarket - https://polymarket.comFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://youtube.com/@technologybrotherspod?si=lpk53xTE9WBEcIjV(01:54) - Trump Laying Groundwork to Blame Powell for Downturn (06:16) - Boeing to Sell Some of Its Navigation Business in $10.55B Deal (24:35) - History of Thoma Bravo (37:15) - Oil Companies Have Bold Plans to Fix Their Water Problem (46:43) - Offices Are Ditching Harsh Fluorescent Lights (58:19) - Roy Lee (01:16:12) - Jacob Peters (01:30:47) - Logan Kilpatrick (02:01:13) - Erik Torenberg (02:32:50) - Jack Whitaker

You're watching TVVN. Today's Tuesday, April 22nd, 2025. We are live from the Temple of Technology, the Fortures of Finance, the Capital of Capital. This show starts now. We got a bunch of massive news. There's the timelines and turmoil. There's deals getting done. And the stock market is way, way up, folks, way up. People said we couldn't come back. They said it was so over. But it was not over. It's back up. These days a rumor, a simple rumor might move the market trillion. Yeah. Look at Tesla stock right now. People are like, oh, Tesla, Tesla's done for.

Tesla's done for. It's up 3%. It's up 3%. Tesla stock. There's a lot of great news. We're talking about prize bowls today. We're talking about Toma Bravo buying some Boeing assets. We're talking about tariffs and what's going on with Jerome Powell.

Trump is laying the ground. to blame Powell for any downturn. I was thinking about the market. I was thinking that we need to just take out billboards just for the market broadly. The global economy, the American economy needs to buy billboards on adquick. Just an ad that just says go long. That's it. It should be taken out. It should be paid for by the government. They should do it on adquick.com. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only ad quick combines technology, out of home expertise and data to enable efficient, seamless ad buying across the globe. What do you think?

You think that's a crazy idea? I'm still laughing about the Trump-Powell dynamic. Yeah. The idea that Trump is, you know, basically doing what every VC would like, which is just demanding lower rates. Yes, yes, yes, yes, finally. Ignore the 10 year, ignore the 30 years. Yeah, people are saying, oh, the VC's bought the top with Trump.

He's not doing what they want them to do. He's doing exactly what they want to do. This is all 5D chess to get lower rates. If we get lower rates, we go into the moon. This is great. Central Bank's legitimacy is at risk as president attacks the Fed for cutting rates before the election.

But not now. I got a message on signal from someone that was just like, our two-year treasury was junk status today. Oh, no. Not good. Maybe what Trump is, you know, this, he read it as central bank,

centralizing, verticalizing, verticalizing. Verticalizing. F privatizing the Fed. Yeah. I mean, Open AI went from non-profit to for-profit. It seemed like it went pretty well.

Could we like turn... Our institutions are more malleable than you think. Can we respect the Fed? I think that might be the next step here. President Trump is signaling that he will blame the Federal Reserve for any economic weakness that doesn't result... That results from his trade war if the Central Bank doesn't cut interest rates soon. In the process, he might also be seeking to delegitimize the historically independent institution

in a way that could un-reliaderminist. undermine its effectiveness, says the Wall Street Journal. In a social media post on Monday, Trump repeated last week's demand that the Fed reduced interest rates now. There is virtually no inflation, he said, blasting Fed chair Jerome Powell, Mr. Too Late and a major loser. Whatever anyone thinks about Trump, they have to admit that he is good at coining. He's good at coining.

He's good at nicknames. Mr. Too Late, quote unquote, a major loser. Powell has always been too late. He misspelled it, I guess, in this point. post because the Walshry Journal puts in in brackets SIC sick for for misspelling, except when it came to the election period when he lowered in order to help sleepy Joe Biden and later Kamala get elected. But like comma didn't get elected. So it's kind of odd. It's amazing that the market can be up in a 24 hour period where Trump is attacking the Fed.

We're undefeated. That's why. It's that simple. I don't know what else you need to hear. His truth social post developed one of Trump's longstanding beliefs about the Fed, that it should be more responsive to what the president wants. His statement and those of other advisors allege that the institution, far from being above Beltway politics, has already become politicized. This is what I was saying, where we should give Jane Street direct right access to the law and to the government, and they should just optimize for the stock market value. And so they should just be high-frequency lawmaking is what I would call it.

And so you just change the law, change the interest rates, just do whatever you can to just maximize shareholder value at all times. I think that's a really strategy. You know, Jim, is it Jim Simmons, right? Yeah. If Jim had had right access to the Fed, he could have done amazing things. Trust the computer. Trust the computer. Yeah, trust the computer.

By Trump's account, Powell worked with, worked to help Biden during his term and is now unwilling to provide the same support to his own second term agenda. He put no weight on the fact that Trump appointed Powell to the role in 2018, that Powell worked closely with his administration in 2020 to provide unprecedented support when the pandemic hit or that the Fed was prepared to settle Biden with a recession in 23 by raising interest rates sharply to bring down inflation. Wall Street Journal putting Trump in the truth zone a little bit here. But we'll see where it goes. It's interesting.

The polymarket will Trump remove Powell in 2025. It's still only at a 20% chance. It has jumped dramatically from... Yeah, I mean, if you're tracking this stuff, there's a lot of noise on either side because it's a highly partisan issue, but that is why I like polymarket generally. Obviously, their sponsor of the show.

But I think that, you know, the one thing that we've learned from the last few years is that these prediction markets are not politically biased because people just want to make money when they're in there. And so it's a much stronger signal, in my opinion. Anyway, the next Wall Street Journal story happens to be Boeing is selling some of its navigation

business in a $10.55 billion deal. Ring that size, Gong, Jordan. The agreement includes the sale of Jepsen, for flight, air data, and Oz runway assets to software investment firm Toma Bravo. The Arlington-Birginia-based aerospace giant said Tuesday that the definitive agreement includes several assets that provide digital tools and services for aviation operations, such as Jepsen, a provider of navigation charts and flight planning for pilots and airlines and for flight, another flight planning and navigation app that helps with route optimization, weather tracking, and flight management.

That has been a big issue. There was this crazy backup about a year ago. Do you remember this where Southwest was trying to do all the different routing and everything got knocked offline and it was all just because they had this like, you know, clodgy system that was far too big. It's a, yeah, I mean, people don't really like how much software goes into a Boeing asset. When people think of Boeing, they don't associate it with quality, right? They went to, you know, they've been suffering through a PR crisis, a quality crisis, whatever

you want to call it. Yeah. But it's interesting to think about this set of software providers as basically being critical infrastructure, critical software infrastructure for aviation broadly. Yeah. Let's go through a little bit of this. I want to do a little bit of a deep dive on Toma Bravo because it's a name that comes up a lot, but I don't think people know the history of the company and they think it's one of those like they're not out there. They don't have a marketing organization really. They're kind of behind the scenes. The deals tend to market themselves. Yeah. And then every once in a while you'll see one of those threads that's like, this is the best secret company that no one knows about. Maybe you should start a competitor. It's like, no, you shouldn't. Have you ever thought about applying artificial intelligence to private equity. I don't think anyone's thought of that. It could be a good opportunity. Good opportunity there. Great opportunity. No one's thinking about this. Yeah, no one's

thinking about that. Why has no one thought of that? Private equity has not at all been thinking about driving business efficiency of the software for the last 20 years. They wouldn't even dare. So Boeing is trying to slash costs and raise money as it burns billions of dollars a quarter and struggles with a quality crisis in the wake of last year's fuselage panel blowout on on on Alaska Airlines flight. That was exciting. Their losses are staggering. Yeah, a lot of people were saying,

I'm not flying Boeing. And I always said, if it ain't Boeing, I ain't going. Oil. Yeah, because as a white-collar worker, as someone who, you know, typically, you know, I'm not on the front lines, I'm not in a trench war,

but I feel like I would fight a trench war. For Boeing. For Boeing, for ramp, for Bezell, for wander. I believe that. I need some excitement in my life. And so if I get on a plane, it's normally very anodyne. But if there's a risk, there's real risk. People know, I'm putting my life on the line for business.

All of a sudden, it's real. That fires me out. This is why Nathan Fielder's new show, The Rehearsal, that's fantastic, because it's all about aviation safety. The timing is perfect. I think what people, I didn't have full respect for this. I do now because we've had a number of guests on the shows. Yep.

On the show, just how difficult it is to manufacture large commercial aircraft. aircraft. China has not been able to really get their national champion to any type of, you know, real scale. It is extremely, extremely, extremely difficult. And we should support Boeing. I support Boeing. I completely agree.

Yeah, I mean, the phones, the fact that they're small, I think does make it way, way easier, which is silly because it's a really complex device, but it just is smaller. And so that means you can move them around a bunch of different. manufacturing lines very efficiently and then also it's very low stakes there have been phones where the batteries have melted and the phones have exploded and people would just be like oh my phone's hot I'm putting it over there it's fine yeah they survived but that cannot happen on a plane and so it's just a completely different safety infrastructure and then we talked to the talk to a couple founders that said

that one of the key SpaceX innovations was let's make the motor the rocket engine so small that can fit in the back of like a truck bed as opposed to something huge that needs a crane. And every time you're working with something that's that massive, your supply chain is now three different companies instead of 30. And every time you need to move anything, it's very expensive. So, um, chief executive of Boeing, uh, Kelly Ortberg last year said he would cut 17,000 jobs. He also raised more than 24 billion in equity to keep the company a flow. Pretty good fundraise, honestly. That's the big numbers, you know. You got to give it up to a guy who's putting up big fundraising numbers. Yeah. Executives have been

exploring asset sales that could bring in much-needed cash while shedding non-core or underperforming units. An approach Ortberg has described as pruning the JetMakers portfolio rather than overhauling it. Analysts say the sale is a mixed bag. It delivers much-needed cash, but given that Jepison is profitable, could come at the expense of longer-term profits. As part of the agreement, Boeing will keep its core digital capabilities that use aircraft and fleet-specific data to provide fleet maintenance, diagnostics, and repair services to its commercial and defense customers. Yep. They're selling air data, which specializes in aircraft leasing, maintenance, and asset management, digital solutions, and Oz Runways, Boeing's Australia-based provider that helps pilots

with planning, briefing, flight plans, and navigation. Digital aviation solution segment employs about 3,900 employees across its global operations, a figure that includes those employed in the business that will remain within Boeing and those included in the sales. it's kind of an aggregate number and the transaction is expected to close by the end of the year. And if they're trying to, you know, sell flight software all over the country, they got to get on Numeril. That's right. They got to put your sales tax on autopilot, baby, spend less than five minutes per month on sales tax compliance. Go to Numerle.

Benchmark Series A. Benchmark Series A. Go check out Numeril. Thank you to Numeril for supporting the show. Quick background on Toma Bravo. Started in the 80s, Stanley Golder and Carl D. Toma founded Golder Toma and company in Chicago. Golder had already made a name at First Chicago Corp, where he backed early successes like Federal Express, FedEx, and helped open pension fund investment to private equity. Carl Toma was a Stanford MBA from rural Oklahoma, and he shared Golder's vision of a gentler approach to leverage buyouts.

It's going to be gentle. It's a gentle LBO. Activate gold and retriever mode. Yeah, he's being very nice. Together they pioneered the buy-and-build strategy rather than hostile takeovers or asset stripping. They acquired small businesses and grew them through add-on acquisitions. So this is very much in line with, like, technology-powered private equity.

But back in the 80s. So they're saying, we are going to LBO, we are going to use the tools of modern finance, but instead of just asset sales, strip, hostile takeover, cost-cutting, like the traditional, like the bad. like the, oh, it's private equity so rough. They were thinking of more of like a growth mindset. So they brought a growth mindset to private equity, basically. Yeah.

And bringing it up since it was part of the conversation, yesterday we had David Tish on talking about venture roll-ups, basically. And one of the reasons we were kind of joking about it is that there's been many, many, many, many players in software private equity for a long time. Oh, for a long time. Or buying businesses and saying that we're going to leverage. software and even saying that we're going to leverage artificial intelligence to make these businesses more efficient. So the idea that people in venture are going to come in and outfox

private equity, which is cutthroat, efficient, professionalized. Anyways, I do believe there's opportunities. Yeah. They're very clearly our opportunities. But it's not a, oh, no one's thought of this before. It's not a blue ocean market. Yeah, it's not a blue ocean. Yeah. And it's funny because, you know, Toma, he's known for being a savvy investor, but he has this folksy demeanor because both of his parents were ranchers. He's from Oklahoma. It's kind of like, you know, good old Oklahoma boy. And so he was able to kind of like match that folksy demeanor to these friendlier buyouts that are focused more on long-term expansion. And so in the early years, they applied these buy and build across fragmented industries, buying up niche companies and rolling them into bigger platforms. Very much the rolling.

Boeing deal. They're buying an existing basket of assets, and I'm assuming they're going to add to it. Exactly. And then eventually they'll probably take it public again. And so this approach is common now in private equity, but it was novel at the time, and it earned Golder and Toma credit as its originators. So they're like the originators of the roll-up, the private equity roll-up, the one that we like know and love today and often profile. The firm partnered with incumbent managers and avoided the 1980s stereotype of the ruthless corporate raider. By the mid-80s, their success. attracted new talent in 84. Brian Cressy, a first Chicago colleague of Golder, the other founder of the firm, joined the partnership. The firm was renamed Golder, Toma, and Cressie, making the first of several name evolutions. If you're working at an investment firm, maybe you're an associate at some VC firm. Try to get your name added to the firm. Get your name added to the firm. Exactly. So like if you were an associate at Sequoia today, you might. I was pitching founders fun. I was like, let's do Founders Fun and Coogan. Founders Fun and Coogan.

Founders Fun and Coogan. That was what I was like, this is where I'd like this to go. Yeah. Yeah, there's plenty of precedent there. Yeah, yeah, totally reason. Kleiner Perkins. Kleiner Perkins, Coffield Buyers.

Yep. And yeah, you know, who knows? Maybe it'll be Kleiner Perkins, Randall, and Lee Marie. Yep. Braswell. They are the new blood over at KAPE if you haven't been paying attention.

Anyway, Stan Golder became a legendary figure in private equity. He chaired industry associations and helped legitimize PE and pension portfolios. That's really big for asset accumulation and getting bigger deal sizes done. You need a ton of LP dollars. And so once the pensions come in,

they have trillions of dollars under management across all these different pensions. And he helped pitch PE as a reasonable asset class, which now it's like the most obvious and Venture is the one we're talking about. And then there's even more like, oh, can pensions get crypto? Well, it's more so you have private equity broadly. And then venture is a fraction of that.

Yep. And these, you know, pension funds are over, you know, deploying in PE just simply because it's more stable. And there's a lot of other reasons for it. Yep. So Golder is really key in legitimizing private equity in these pension portfolios. Carl Toma has this mix of, like, Midwest pragmatism and Stanford training. Like, he is a serious dealmaker. But so he emerges as like this creative dealmaker who also prefers building companies.

over just financial engineering. And so a lot of companies, like, you know, it's all about like the waterfall, how they're going to pay down the debt payments and, like, create value there. He's more about that company building mindset. And then Brian Cressy, the third guy on the team at the time, he brings this JD MBA from Harvard

and a particular eye for healthcare investment. So they make some interesting deals there in the early stages. So the three of them, they were collaborative, growth-oriented, focused on specific sectors where they could rinse and repeat acquisitions and by the late 80s, rinse and repeat. That's one of my favorite things to do.

And consolidate. Yep. There's nothing like a little consolidation with your accent voice. When I think of rinsing and repeat it, I just think of one hand washing the other. Just one of my favorite thing. It really is. I love it. By the late 80s, the firm, which was now managing several small funds, had proven the efficient efficacy of consolidating businesses,

which is, you know, broadly a template that they would continue to use. Yeah. And so they add another, bro, to the crew. There we go. They go to GTCR. This is way before Tom a Bravo. Golder, Toma, Cressy, and Rona. Rowner, I don't know how to pronounce that.

They bring on a promising young exec, Bruce Roner, and he'd risen to partner. His name was added in 1987. GTCR became one of Chicago's top buyout shops investing through the late 80s, LBO boom and navigating the early 90s recession. They specialize in roll-ups across industries like health care, media, financial services. And by the mid-1990s, they had some different. visions among the senior partners and the firm success had created these like small

strong personalities and strategic debates as often happens. And so there's like this culture clash a little bit between the original founders and then the newer generation. This happens a lot in funds because you know you're like the partnership is bought in but you got to bring in new blood but they're going to

want to do something in a different way and that's going to lead to some culture clashes. And so in 1980 in 1998 GTCR's leadership decided to part ways, splitting the firm, splitting the firm into two different entities. So they actually split the firm. On one side, you have Stan Golder and Bruce Rowner. They stay with GTCR, which continued focusing on varied industries from its Chicago base. On the other hand, Carl, on the other, Carl Toma and Brian Cressy spun out to form Toma Cressey equity partners, taking a team to pursue their own investment focus. And the split was amicable, but they had

strategic differences and they wanted to try different approaches. And so, GTCR pursued the broader mandate, and then Golder passed away in 2000, but GTCR lived on. Yeah, GTCR lived on. And what I love about going to private equity websites, these firms' websites, is that, you know, in venture, you'll have a fund with like 10 million AUM. And they'll be like, we back and build the future. Yeah. It's like it's got a video. It's got like every company they've ever done.

like transforming business to build value. And they have like 200 billion AUM. Some might say that VC should do that more often. That's great. And so basically like the incarnation of Toma Bravo that we're thinking about now, Carl Toma and Brian Cressy, they really focus on TCEP. That's Toma Cressey equity partners.

It's a standalone firm in 1998. And they're continuing this buy and build model, but with a fresh canvas. And so Cressy has the healthcare expertise. He's steering some of the investments toward health services. And Toma's looking at fragmented business services and emerging tech niches, still very technology-driven. And then this is where we get to Bravo.

Boom. Orlando Bravo. Great name. Strong. He enters the picture in 1998. Comes out of Stanford. Stanford, J.D. and MBA. First round draft pick to the private equity ranks.

He made Orlando Bravo. This is a good lesson. He had been frantically cold-calling PE firms looking for a job. After roughly 100 calls, his resume caught Carl Toma's attention, and they quote-unquote hit it off. Dude. He was 27 years old. 99% of Puerto Rican. JDMBAs quit right before their 100 cold call to get that PE job.

The existing partners said it was the smartest investment they ever made. That's awesome. He moved to Chicago at that point. and became an apprentice. Yep. And so Toma Cressy, Brian Cressy, the co-founder of Toma Cressie, is a seasoned dealmaker with a pension for health care deals and a reputation as an industry consolidation guru.

He's educated at University of Washington, and Orlando Bravo is raised in Puerto Rico. He'd been junior tennis champion who attended Florida Tennis Academy in his teens. He returned home for high school, then excelled at Brown before heading to Stanford. By the time he joined Carl Toma in a, 1998, Bravo's drive was evident the same drive that which soon reshape the firm's direction.

I love these deep dives on these obscure firms. So the new firm, Tomocressy, entered the dot-com era cautiously, but caught attention. But even caution couldn't spare it from early missteps. Basically, everyone lost some money in the dot-com bust. A little bit here and there. What's a few billion among friends? Indeed. Orlando Bravo's first assignment in the late 90s were tech-related investments that turned sour

in his late 20s, Bravo led two startup deals, nerve wire and eclipse networks, just as the tech bubble was peaking when the bubble burst around 2000. Bravo's first few deals were disasters losing most of the $100 million invested. That's pretty crazy to go from, I mean, that's the nature of PE.

Like you go from Stanford to PE, and even though you're, you know, like an associate or like new to the firm, you're deploying big money. Wasn't there something with Rush? Schwartzman's first investment at Blackstone where like it, I'm pretty sure that, his first deal, like, went terribly. Yep.

So there's, like, there's basically precedent at this point of, yep, uh, P.E. Syslords, like, you know, basically fumbling the first deal and then just coming back in a, in a big way. Learning a lot. That's why I've been asking some of the VCs that come on, like, what was your first deal? Like, what did you learn from that? Like, I think that's an interesting line of questioning. And then there's some people that we've had on the show and they're like, my first deals were unicorns. Justin Marys was like this. Like, it was like, his first investment was, like,

went public or something like that. Yeah, but you learned different lessons from that. But Bravo said, I learned I didn't want to invest in risky things ever again. He's like, I was permanently risk off after the dot-com crash. It was too painful to live through. This hard lesson would shape the firm's strategy. Rather than chasing raw startups, Bravo realized they could use their capital to buy established companies with steady revenues, especially in software and apply the buy-and-build playbook there.

And so they pivot to software. This happens in the early 20s. Even though they're getting burned in the dot-com on the startups, they realize that there's incredible value in technology and software. And so the insight was that the economics of software were just so powerful. It was like no other industry, very obviously, Bravo later said. In 2002, he spearheaded their first software buyout profit 21, which was a niche ERP software provider for distributors.

Tech buyouts were uncommon then, because most of these were still venture back, they were on the IPO train. Yeah, lenders at the time, a lender was a lot more willing and excited to lend against a real estate portfolio, a fleet of vehicles, things like that, right? So lending against software where they were like, what are we really lending against? How is this secured? It's secured, you know, on the... And so they did it without lenders, really.

I mean, lenders were pretty wary of these tech buyouts. And so Toma Cressy had to structure this profit 21 acquisition with almost no leverage. which you know you hate to see because we love leverage. But they also brought in their first operating partner, experienced software executives to help turn the company around. So they have a deal team and then they also have an operating team. Once they buy the company, they actually help install executives that can go in

and start growing the business and optimizing things. Because a lot of times the companies that they're buying, founders might be out. They might be a little burned out. The company might not be running as efficiently. It's kind of just like, hey, it's humming along. it's profitable, but it's not as good as it could be. So they want to make it great.

And the firm's job is to place immense pressure on the management team to hit very aggressive goals. Strauss-Zellnick did something similar with Take 2 and the GTA franchise. He came in. That company was sitting on incredible intellectual property. They owned 2K games, like all of the different basketball games, and then also GTA, like the greatest gaming franchise maybe of all time. but it was just like it was just a creative mess like they would just like have fun and they were under

they were under like f tc investigation and s cc investigation like they they weren't even like trying to cook the books they were just so sloppy and messy they didn't care about the books and so the accounting was all off and there were all these different lawsuits going on and Strauss came in wind up buying the company for like kind of zero dollar it was a crazy deal we should we should dig into all that but basically he gets the he gets the company and immediately starts running it like a professional business because he's a beast of an operator. And so profit 21, this first tech acquisition did really, really well. So they exited with a 4.7x return on investment. And this was an early win in software with minimal debt and just hands-on operational fixes. And it really

cemented the firm's new direction. Middling outcome, if you're a venture capital firm, but if you're a PE firm that's going to do a bunch of those. Yeah. And it feels repeatable at this point. It feels repeatable. Like there are other companies that are in Profit21's, like segment and that playbook can be run again and again. So Orlando Bravo, he's just 30 years old. He gets promoted to partner in 2001 on the strength of those efforts. Being promoted to partner at 30 in 2001, just sounds amazing. Sounds amazing. No, the timing is perfect to go on this generational run and software.

Oh, yeah, yeah, yeah. I mean, timing is a lot, but it might not be everything, but he, you know, He really nailed it there. And so software deals started piling up. Orlando Bravo's influence within the firm grew. By 2005, Carl Toma and Orlando Bravo had recruited a trio of new talent. Scott Crabble, Holden Spot, and Seth Borrow joined the investment team to focus on software sectors.

All three of them are with the firm today as managing partners. One of them came from Summit Partners. The other had experience at Morgan Stanley. and the last one was also at at Summit Partners and History of Investment Banking. So a pretty common path into private equity from banking

and other deal-making organizations. So this, as they're growing the team, they can also scale up their deal flow. In 2007, they rename the firm because they love Orlando Bravo. The firm is renamed Toma, Cressy, Bravo. Overnight Success.

A year later, 2008, co-founder Brian Cressy decided to depart. Cressy spun off with a team to form Cressy and company, refocusing on health care investments because Toma Bravo, of course, is doing tech stuff and he's doing health care, and they're just slightly different strategies. So they split the firms, and then the firm renames to Toma Bravo LLC, officially born 2008, an overnight success. And today, they're buying Boeing assets for $10 billion, running kind of the same. in playbook. It's a boring, it's a boring software company that's just profitable, growing.

A series of software companies. Yeah, a whole bunch of their bolt on and just continue to grow that. They're not dipping their toe in the super hot, high growth startup market. They're going for just, hey, there's some great software assets. They're installed a bunch of places. It's critical. They've built a bunch of stuff. This business is good. We can make it better. So, yeah, and I'm sure they'll look at venture assets that are, uh, Eventually, you know, maybe they don't reach escape velocity, get to, you know, 100 million of ARR, but not quite breaking out. But they will be very sort of aggressive in terms of valuing these businesses. And certainly, you know, if Toma Bravo is buying your company to bolt on to an existing sort of roll up, very unlikely they'll give you a revenue, you know, 100x revenue multiple. It could very well be a 1x.

It could be less than that. could be more if you're growing quickly and have a real path to generating cash flows. As they scale up, they start doing more and more ambitious projects. They eventually scale from mid-sized PE firm into just like a complete heavyweight in tech buyouts. In 2012, they do a $1.3 billion take private, a blue coat systems, a cybersecurity company. And Bluecoat had solid technology, but needed a strategic overhaul, and Toma Bravo takes it private, improves operations,

and later sells it for $4.5 billion in 2015. So three years, they go from $1.3 billion to $4.5 billion. And of course, at this point, they're also able to use leverage because they have better access to the debt markets. And so they're making even more money. I'm sure you're trying to pull up a size gone of some sort.

I was trying to pull up a lever up button. But they pull up this. Risk on. Risk on. But they basically got a pattern. They buy a public tech company. They optimize it private. and then sell or IPO at a much higher valuation.

And this is the whole, you know, take private strategy is like, it's very hard to completely turn the cruise ship or the battleship in the public markets because your stock's just going to get completely hammered while you go down for a couple quarters because you're saying, hey, there's a business over here that's really, really damaging us. It's low margin, but it's going to hurt our revenues. And if somebody's looking at you on a revenue multiple, they're going to be upset about that or, you know,

there could be a number of different things that could look like red flags in the public market. But if you have a couple of years to rebuild in private, you can just take more risk. You can go risk on. And so on. Yeah, the other thing that they're doing just because a large part of our listener base is venture. They're, they're by using leverage, they can get a much higher return on their equity. So if they're buying a company for a billion dollars, they might in some circumstances only put up, you know, $200 million. Right. So when they they turn that $200 million into a $4 billion outcome. It can be very meaningful.

So there's one more funny deal we've got to go into. By 2018, Tomo Bravo is doing regularly doing multi-billion dollar deals. They're in the same conversation as Silver Lake and the other big tech buyout firms. In partnership with Silver Lake, in 2016, they buy solar wins, this IT management software company. Are you familiar with SolarWinds at all? Okay, so SolarWinds is IT management software. They will go in the network, watch for what deployment's happening.

It's like kind of middleware for deploying software at a large enterprise. But there was a hack where it was a very, very bad solar winds hack. Did you hear about this? And so basically someone injected something into SolarWinds. So then that was what's called a supply chain hack. So every company that had solar winds was now vulnerable. And it was like a really, really brutal attack. And it was funny because I was doing it.

I was trying to understand like the history of solar winds. And I found the founder who had built the company, sold it like exited like years and years ago. And he had gone on Shark Tank to pitch a cooler, like a like an actual cooler that you could put like beers in. Because he was like, yeah, I. Activate golden retriever mode. It's truly golden retriever mode mindset. So he started this cooler called the coolest. And it was a cooler that you put ice in,

but then it also had a fan so it would like provide you air conditioning when you're hanging out with your buddies watching the baseball game or something. He was clearly like post-exit founder just like hanging out with the kids. Like yeah, wouldn't it be cool if like we had a better cooler? And so he goes on there. He pitches it. He explains that it's like a thousand dollars or something because of course he's like, Oh yeah, a cooler.

Like, what does that cost? Like $1,000 something? But he tells the sharks that he's like, yeah, I founded solar winds. And you'd think that would be like total bull signal, right? You're just like, okay, this guy built a billion dollar business. Like he probably can figure out like the cooler market. But all the sharks pass. They all say no.

They all say they're out. Anyway, fascinating little side tangent. Anyway. Yeah, the, unfortunately, coolest cooler shut down after a five-year saga. Oh, no. 20,000 people that backed the Kickstarter. didn't actually get the tour. Oh, that's brutal.

Yeah, very rough. But anyway, I mean, Solar Winds wound up being a great company and Toma Bravo, I'm sure, made a bunch of money. And then they had the hack, and I'm sure they rebuilt from there. But all of that is to say that, like, Orlando Bravo became known as, you know, an incredible dealmaker. He was on the cover of Forbes in 2019. They called him Wall Street's best dealmaker.

Pretty great. He was the first Puerto Rican-born billionaire in finance. He was on Forbes 400. list, the Financial Times nicknamed him the King of Sass. We love that. A lot of people vying for that at a lot of venture capital firms, but you're going to have to go up against Orlando Bravo, the King of Sass, the best dealmaker in the world to really, really own that name. Bravo's war chest grew. They got a fresh $12.6 billion fund. Now they're eyeing a $10 billion-plus deals. And we just saw that with Boeing. They did a $10 billion deal. How did they do that?

they raised a massive, massive fund. And there's a bunch of other interesting deals that they've done. But they're doing mega deals. Yeah, just to give you a sense of some of their bigger deals, they did ProofPoint at $12.3 billion. The Boeing Digital Aviation is actually their second largest, which hasn't, you know, obviously closed yet. But in process, Annaplan, $10.4, Real Page, 10.2, sale point, 6.9.

Medalia was at 6.4. Acquisition binge. Dark trace, 5.3. Sophos, click, imperva. Yeah. Absolute size lords. You don't need to do that many of these deals to put up some very large numbers. Although there is something unique about the Boeing deal that was announced today,

is that this is kind of the start of a new strategy for Toma Bravo. We've seen a lot of traditional private equity. deals where they buy a private company, do an LBO and grow and buy and buy and build, that buy and build strategy. Then they start doing the take private turnaround strategy, or they take a single digit billion dollar public company, take it private, change the strategy, try and sell it later, or take it public again, exit the position. But they also are starting to do carveouts in 23, 2024, and that's what the Boeing deal is. They're car. out a piece of Boeing's business and then, you know, packaging that up as an entirely new

business. And I mean, it is a different operational challenge because it's not operating completely independently. And so, you know, you're going from being a Boeing employee to being a boy, an employee of a new company, a digital aviation software portfolio that's owned by Toma Bravo that will eventually have a brand and be a, like a, you know, cobbled together from all these different assets. Anyway, let's move on to our next story. The oil patches, Manhattan Project, how to fix its gargantuan water problem.

I thought this is interesting. I had no idea the ratio of oil to water when they are fracking. So for every barrel of crude oil that's pumped, they are now producing four barrels

of water. And so this is happening in West Texas and New Mexico around fracking. the Permian Basin is the location. And so there's a big question about what do you do with the gargantuan amounts of noxious water that they produce? Because it's gross. And you need to filter it or treat it if you want to put it back in the water supply.

So typically what they do is they just pump it back into the ground. And so if you go a few slides forward, there's a graphic of what they do. They're taking oil rich shale. which is how you frack, so you blow, I think, like air and water into the ground. You suck up the oil that's there. The oil's very, it's not like a clean pool of oil. There's a whole bunch of other stuff in there. You pump all that up.

This is about two miles down. Then they kind of filter out the oil, take the oil out, and then they pump the water back down, three miles down. But that's causing earthquakes. And so people are upset about that. They're playing God. We don't like that. We don't like earthquakes because they're pumping so much water.

Augustus would like a word. Yeah. Yeah, so we can kind of go through this. So we're trying to evaporate the water, which is interesting. Yeah, so they're basically producing all this wastewater. It's just sort of like sitting there in a pond, and then they have a system to effectively try to get it, just disappear it. Disappear it into the atmosphere. So there's a picture here.

I don't know if we can pull it up, but you can see. It's a fascinating image. So there are these evaporators hum on a huge saltwater pond in the middle of the biggest oil field in the U.S. they are part of an experiment by Exxon Mobile to address one of the challenges facing frackers in the Permian Basin. And all these crazy economic projects to process all the side, like, you know, waste products from this. But it's all part of, you know, the goal to help unleash American energy.

And, you know, I'm generally in favor of figuring out new ways. I mean, fracking was in many ways like a miracle in terms of American. energy independence. Very controversial. You know the meme that's like America's like, you know, struggling and then we just discover like, you know, immense like mineral deposit. Oh, oh no, we're out of rare earth. Yeah. Oh, no, we're out of rare earth elements. And then it's like, oh, we found the largest deposit ever in like Utah. Companies in recent years have made strides in treating brine and recycling it for their operations, but more water flows back to the surface than they can use. Meanwhile, as the volumes of liquid, they can pump in the ground have shrunk as

companies have started to run out of underground space, and regulators have imposed limits on disposal to prevent earthquakes. Enter the evaporators. Exxon, which is the largest Permian producer, started testing the machines about a year ago as a pilot project. The device is manufactured by Colorado-based RWI enhanced evaporation. A little hard tech company, we've got to get the founder on. They blow air down on the pond.

It's probably been around for 200 years. For sure. You've been evaporating for about, you know, coming up on... Who knows? Maybe RWI is just like, you know, seed stage startup. They just went through YC. You never know. Don't judge. One machine costs $46,000 and consumes about as much electricity as wet, dry vacuum cleaner. RWI estimates that between 20% to 50% more liquid gets evaporized that way compared with natural evaporation. And it's interesting because, like, if this water truly is, like, underground, is it something that when it's brought up?

up into the atmosphere, it's going to wind up, like, if it gets purified and evaporated, does it wind up going into clouds? Does it wind up getting seated? And does it wind up making the land in that area more verdant because there's more water? Or was it already considered in that equation because it's kind of groundwater? Or was it buried so deep? It doesn't matter. I mean, these things, like the primary thing here is environmental concerns, right? Totally. If you're a farmer trying to grow organic, you know, food or you have cattle, you know, a mile away. raining down on you. It sounds like acid rain. Sounds bad.

But I'm sure that RWI would argue that, you know, there's some chemical process that means that the water itself is, you know, potentially just as pure as rainwater. It's hard to tell. I mean, evaporation is pretty effective. It's separating things out. That's how it's done in... But this is like a very long-running trend where, you know,

looking at the production side for groundwater in these areas, specifically for oil and gas production. for a very long time, if you owned a piece of land, you were legally allowed to pull as much water as you wanted out of the ground. Yep. And what happened is regulators, governments, states, et cetera, realize that no, water is a shared resource. There's effectively rivers that run underground that are, you know, tied to aquifers. Those aquifers can stretch across multiple states, right? They're massive.

and so, you know, one private company, it seems like broadly, you know, we need a change to regulation and energy, you know, across, like, you know, we've had a number of nuclear founders on. But the nuclear thing is huge for desalination. Yeah. It seems like almost impossible and a perfect match because you have such concentrated energy. You can just throw the nuclear power plant right next to the desalination plant. You have all the energy. It can run 24-7. perfectly matched, as opposed to a lot of other systems.

Yeah, and one of the, yeah, the issue with this fracked water is that it's salt water. Yeah. And that means that you can't just go spray it on plants or you can't put it on crops. It will just kill everything. Yeah, it's bad. So this is interesting. Last year, Permian drillers discarded roughly $5.5 billion barrels of water by pumping it back down into the ground, right? So 5.5 billion barrels a year.

That's what I want you to keep in your mind. 5.5 billion barrels a year. So they're doing a, so an injection well typically. There's 42 gallons per barrel, by the way. Okay. So an injection well typically guzzles between 10,000 and 25,000 barrels of water a day. An evaporator working in optimal positions, optimal conditions, vaporizes about 32 barrels an hour. And so now Exxon is trying to build a commercial-sized desalination facility.

operating in the Permian by the end of the year. Last month, they commenced a pilot project, but the testing that's happening, the desalination technology, is doing 20 barrels a day. That's the pilot. So 20 barrels a day is, what, 700 barrels a year compared to...

Not making a dent. Compared to 5.5 billion. Yeah. We're off by so many orders of magnitude. But at the same time, like, you have to start small and you have to run the test to see, can you actually purify out all the toxic chemicals in the water and does the actual scientific process work? And then it becomes an economic equation of what happens. So they are scaling up.

They're going to do a $25 million desalination facility with an initial capacity of 10,000 barrels produced a day. And then there's plans to build a plant that's 10 times bigger next year. Yeah, this is the challenge. So generally with oil production, you think it's just about how do we get this out of the ground? It's how do we get enough water to support this process? Yep. And then what do we do with that water after the process to dispose of it? Yeah.

And you're being regulated on both sides, right? I have a portfolio company called resource monitor that helps oil and gas companies basically stay compliant on the production side. So they're producing all this water. and they get budgets, you know, from various groups on, you know, how much water they can actually produce. But that's only, you know, one part of the problem here. Yeah. So the goal is to bring the cost of purifying a barrel down to 75 cents, which is slightly more than what it costs to flush it down the well. This 25 million desalination facility is going to do 10,000 barrels a day, which is 3 million.

a year. But remember, we're five billion we're producing last year. And then they want to build one that's 10x bigger. So that'll get you to 30 million. But you're still two orders of magnitude off. Two orders of magnitude. A hundred times.

They're going to, like, if they build this 10x plant, they will only be doing 1% that they're pumping down into the crowd. It's actually crazy, the scale of this thing. Anyway, you know, they're trying to scale up and there's a bunch of companies that are working on this.

Anyway, if you want to go hang out in Texas, book of wander, find your happy place. Find your happy place. Book of Wander with inspiring views, hotel great amenities, dreamy beds, top tier cleaning in 24-7 concierge service. It's a vacation home, but better. And in most of those homes, you're going to find really, really nice lighting, and that's the topic of our next story.

Offices are ditching harsh, fluorescent lights. New tech is on the way. I think this is going to be extremely controversial because the new tech, it doesn't sound lindy. And so we're going to have a debate over whether or not the path to better lighting is more advanced technology, or do we need to go back? Do we need to go back to incandescent? I was hoping they were going to say, every office will be required to have a warm fireplace. It's a warm, a warm heart.

A hearth. We're going back to hearts. I was joking the other day, I think on the topic of lights, I think Apple to really differentiate should come out with an iPhone UV that sort of gently tan. Your face. That sounds like a real product. The iPhone UV. The iPhone UV, it gently tans your face while you use it. Yes.

And I think they've got a hit on their hands, at least in Los Angeles. Yeah, yeah. They do the blue light filter. They can take the blue light out. Why not add some UV light in? Yeah. I love it. From faux skylights to circadian tuned systems, lighting upgrades are a priority for

companies trying to lure employees back to the workplace. Boat skylights. I know. The faux skylights are crazy. But it's going to be really big when I build my back cave that's three stories deep into the ground. Because you're going to want 24-7. It's going to be like Las Vegas where you can't tell what time it is and you just get lost. It's going to have like a kind of severance vibe.

That's what I'm going for in my basement when I build. Glaring for fluorescent lights in the office are on the way out. The technology is coming in promise to do much more than make everyone look better. Improved and potentially more healthy lighting is high on the list for companies and building owners. trying to lure employees back to offices after an era of remote work. They are investing in new technologies such as faux skylights that mimic natural light compete with a virtual sun and moon and adjustable illumination systems designed to sync with employees circadian rhythms.

I wonder how long until this becomes a cultural issue. Because you know the air conditioning thing became a huge cultural light bulbs. Yes, they're incredibly hard to get in California. I've been struggling with this for a long time. Trump sort of like re-legalize them. Yes, I guess. I didn't hear about this, but that sounds cool. I like an incandescent light bulb.

I'm a fan. I like a tungsten bulb. We've known for a long time that natural light is better and makes people feel better, so it's not a completely crazy idea, says a professor at Wharton. So aside from the psychological benefits, research studies have shown that light can have an impact on non-visual brain function during cognitive tasks, particularly those that involve sustained attention. Office lighting revamps are expensive. Installing some of these technologies can add 20 to 30% to the cost of a project. Those in the industry say, and it could take time for them to become mainstream.

I'm assuming that's 10 to 30% more expensive than the existing light solution. You know, Stanley Kubrick shot a film entirely using candlelight, and he had to collaborate with NASA to make a new lens that could absorb even more light so he could shoot in darkness, essentially. Wow. And now modern filmmaking technology has gotten so good that the cameras that we shoot on can basically shoot in the dark. And so I think for the next set, we might want to consider just a warm hearth,

a nice fire. That's right. There's something there. There's something there. Some nice, a candelabra that we just light and that lights our face. It'd be a very different look from your typical new show. But I think that's what would make the show special. Well, once we go to 24 hours a day, we're going to obviously have eight sleeps on

the floor. We'll be able to sleep, you know, in cycles. For the sub-a-thon. Yeah, yeah, yeah. So there's something there. So programming the day, playing into post-COVID wellness trends, office designers are exploring so-called circadian rhythm lighting to sync with the body's circadian rhythms, the biological clocks inside ourselves that time when we sleep and wake, expect to see illumination that can be tuned by intensity, brighter or dimmer, and color temperature, cooler or warmer throughout the day to mimic the light outdoors. So I want a favor of this. Huberman's take on this. I want Brian Johnson's take on this. I want Slebrose take on this. Mark Andresen notoriously has gone to war with Huberman and said, I'm going to use my phone. That is one of my

favorite interactions on the internet. Their bromance is fantastic. It's amazing. It's hilarious. Anyway, yes, you got to be using at the very least warm white 2,700 Kelvin bulbs. You can't be walking around in the bright fluoresce. Lighting's important. I mean, the issue with LEDs is there's the flicker, right, which is not visible to the human eye.

But when you, if you use it on a camera, it'll drive you insane. It drives you insane. I firmly believe that. Efforts to develop such lighting took off after researchers in the early 2000s discovered photosensitive cells in the retina that detect light generally below the level of our awareness.

These photoreceptors, independent of vision, can affect biology. and behavior research is finding. So, I mean, really what it depends is not, it's not just the one size fits all. It's like, do you want an insane work culture? Do you want to drive your employees insane? Well, then maybe you should go with the craziest,

most strobing LEDs constantly. So when your team is in the office, they're ripping their hair out. You had Chris from Hadrian on a lights out factories. Yes, yes, yes. What about lights out offices? Where the only light is from screens. From screens.

From your email machine. Just blasting light. Anything to get you to work harder. Anyway, you know, I imagine that the lighting is pretty good if you're at an auction for a championship bowl. We should do that story before our guest hops on in six minutes. The vicious sport of landing a prize bowl at auction with herds thinning. Finding the right stud is a high status game. That's why you come to this show, folks.

That's right. Tech, business, this is the business of the technology of prize fighting bulls. With herds thinning, finding the right stud is a high stakes game. But how do you tell a $45,000 bull and an $8,000 bull apart? I know a lot of you have been asking that question. Well, we got the answer from you, courtesy of the Wall Street Journal. When Randall Grimmie shows up at an auction, everyone knows there's a prize bull in the barn, John. The 56-year-old rancher has an eye that is the envy of America's livestock industry, never more so than now.

The U.S. cattle supply is thinner than it has been in 75,000. years, sending prices soaring for bulls with the tools to repopulate a herd. Ranchers travel to auctions across the country in search of the right bowl, and they can't afford to mistake a dud for a stud. I had no idea that there was a population crisis among the bulls. I always see people yapping about humans. I had no idea. So when Grimius' private jet touched down here last month and he strolled into a barn at TD Angus Ranch, all eyes were on him. Which one did he like? Grimius would keep them waiting. this article after 283 bulls were scooped up his prize came charging out onto the show ring number

284 had what he likes a longer neck a chest that looks like it can add more weight and a backside with a nice arch we're talking about bulls here to be clear dreamiest figure the bull could fetch as much as 60,000 and he was prepared to pay up sales like this one can make or break a rancher's year and as a result they are filled with the kind of tension and gamesmanship, often associated with art auctions or the NFL draft. In North Platte that day, the average selling price was about $10,000 up from a year ago and double what it was seven years ago, according to the rancher running the sale. He and his wife, Dana, spent hundreds of thousands of hours preparing his roster of bulls and putting together the catalog. They drew ultrasounds

on the bulls to compile stats such as marbling score. which determines the potential tenderness of a future cut of state. They're doing more diligence on bowls than the average VC does on a $100 million check. For sure. Like no joke. No, this is a mature industry. This is very, very serious. Their paycheck comes once a year during the sale.

Ranchers pour through the data and analyze images of a sales catalog. Rare is the bull that hits the boxes based on his jeans frame and testicular fortitude. Scouts also look for intangible traits, such as if he looks powerfully made or has the requisite Sass and swagger. Founder mode. They are in founder mode to spread his seed. Sean Lorry is a sixth generation Nebraska rancher and is part of the Milldale Ranch, one of the oldest running ranching operations in the state.

He looks at the lineage of the bull, who the mother and father were and certain physical traits, not too big with near perfect feet for wandering around his 3,000 acres and large testicles that won't freeze during the winter. It has to have that look. You just know it. He can't be too tall, can't be too small. We like them long. We like them deep.

This is in the Wall Street Journal, folks. This is an important industry. It's fascinating. Up close, auctions get messy. The bulls occasionally defecate. And if a tail swings at the right time, it flings it into the crowd like a killer whale splashing the onlookers at SeaWorld.

We got to go. We got to go. We got to go and see one of these bull auctions. You know, I follow an account that does breakdowns on horses for horse racing. And the technology that they use to do due diligence on horses, on thoroughbreds, is far more advanced than anything that you'll find in a docks end in Silicon Valley. They match the gate. They have these computer vision algorithms that show the different proportions of the horse.

It's incredibly detailed, and the horses can get well up into the high six figures. So the bidding started at 5,000 before quickly climbing to 15,000, 20,000, 40,000, and soon 55,000. Your man has to beat 55,000. Come on, Randy, he said, trying to get Grimius to bid. Grimius didn't bite. He knew his prize was later in the day.

It's interesting, you know, the same dynamic plays out in venture, right? That's sort of like, oh, the second that Sequoia issues a term sheet, then every other investors coming around me, like, yeah, yeah, we always wanted to do this. And it's an interesting dynamic where, in theory, once he's starting to bid, everyone else should just sort of like pile in and try to get the one that he wants.

Even some of the ranchers are sending other people. So Lowry's people know him. So he sent his foreman into the bleachers to do the bidding. So he wouldn't get recognized because people know, oh, he's got a good eye. He's the Sequoia of bull bidding. Yes. Yes. He says, sometimes I will get emotional.

I will get pissed and it will cost me thousands of dollars I didn't intend to spend. It's the best. He said in this business, these cowboys are awful prideful. Yep. Well, I would love to get one of these ranchers on ramp because time is money, save both, easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. And if they're flying out to different ranching bull auctions, they're going to need to be expensing flights, booking hotels, if they don't have the private jet already. And ramp travel would be a great fit for these guys. That's right.

So if you are a rancher, get on ramp today. And coming in to the studio, we have Roy, who has been tearing up the timeline. We're very happy to have him join. How are you doing, Roy? Welcome. Welcome to the show. Oh, brothers. What's up?

Brother, great to have you. How have the last few days been for you? Can you take us through the brief prehistory here of what happened with Columbia? And then we'll get into what happened with your launch. Yeah, I mean, earlier this semester or earlier this year, I built this tool called interview coder to let you cheat on your technical interviews for software engineering jobs like Leicode style interviews. I filmed myself using this to get a job at Amazon. I recorded it, posted it online, and Columbia saw Amazon reported me to Columbia. Amazon is mad, Columbia is mad,

and this ends up being a spat that I sort of publicized on my Twitter. It comes this big spectacle, and I eventually get kicked out of Columbia or suspended for a year and blacklisted from most big tech companies. What was the original plan? They're big mad. Wait. What was. What was the original plan a publicity stunt or did you actually want the job at Amazon? I was never intending on taking the job at Amazon. The impetus for everything was I did a bunch of legal questions thinking that I would work at a big tech company one day. I really hated it.

And at a certain point, I kind of just thought, I really want to build companies is what I want to do with my life. So this just seems like the optimal route for everything. I can make this big protest against leechode. And at the same time, I can do something that I suspect will be super viral and just give me like a distribution channel to build off. Yeah, that makes sense. No, it's crazy. I mean, there's, there's many people in venture that have spent, you know, 10 plus years trying to build a following here. And, and, you know, the, the growth of your account alone in the last few months has just been insane to watch. And yeah, absolutely gives you an edge as you now, you know, come in. So take us through the product, what you launched and how that video came together. Yeah. So, I mean, Cooley is supposed to be the, I guess, the ultimate experience.

layer for AI in a world where models are truly multimodal and you can sort of have an AI that remembers the last 10 years about your life. Nobody's going to be on a chatbot, chat shop in DT.com. Where are they going to be on? They're going to be on Cluelly. And this is what we hope to build and this is what we are building. We sort of filmed this launch video to be like a vision for the ultimate end state of what does true AI in everything look like. Like a true AI maximalist life 10 years out in the future. What does that look like? And it ended up coming together really well. and it I think it resonated well with the world went very viral and very controversial but yeah very controversial how did you you went against you know the

norm you launched 2 PM Pacific on a son on on on Easter were did you just launch when when you were ready or was that was that planned at all yeah I mean it was 420 and it was sort of in brand with like me being like the little like punk college kid like I'll launch on 420 might as well okay yeah yeah yeah yeah what about Has any of the pushback been correct? Can you steal man any of the pushback? Is it bad to cheat? I think there's two worlds of, like there's two big arguments for the pushback. The first is this is dystopian and this sort of destroys what it means to be human. And I disagree with that pretty fundamentally. I think every time technology has advanced our capabilities, people have

said the same thing. This destroys what it means to be human. But ultimately, like that never ends up being the case, we just become more efficient as a species. And the traits that make us human are not the traits that sort of like AI can fill in the blank floor. The second large area of pushback is this is cheating and cheating is unethical. I think it's sort of the phrase cheat on everything is left intentionally vague. I mean, what exactly does cheat on everything even mean? You can't cheat on a test, but you can't really cheat on a sales call. You can't cheat on a meeting. You can't cheat on a conversation. What clearly or what AI allows is sort of of like an unfair advantage that it's so unfair that it feels like cheating. Imagine you're in a sales

call. I have this tool. It's like this genius tool that knows everything about you, your company, your clients. Anytime a technical question is asked or an objection is asked, immediately it just knows and just can give you the right answer. Like your human intuition just looks at that and thinks, wow, this is not fair. This is cheating. But I mean, ultimately, this is where the world is headed. And really, this just like makes us a hundred times more efficient. Yeah. Yeah. I love it. I mean, in many ways, business is like, you know, feels like a sport in some ways. Yet there's sort of laws that govern, you know, corporations and, you know, different, different markets. But there's nothing, there's nothing wrong with giving yourself every possible advantage to win. And so you

should absolutely just use every tool available to, to win. Yeah. Talk to the product. Version one seems like maybe a web app or an iPhone app, but then it seems like there's a, it seems like there's like an augmented reality vision in the future. But how are you thinking about that because, you know, there's a monopoly in Apple products. There's a monopoly on foundation models now. Like, where are you seeing yourself breakthrough? Are you sitting on top of different systems or trying to build something from scratch? Right. Right now, the vision, the, the version of the app that we have is just a desktop app has complete access to your screen and your system audio. So it sees everything you're seeing and it hears everything you're hearing and can help with that

context. Ultimately, though, what we want, the end state of the product, is a chip inside your brain that lets you use AGI to think. That is the ultimate end state. And the way we get there will be sort of like variable. Like if the models get significantly better, significantly fast, the chips get better, significantly better, super fast, then it's sort of like the way we get there is subject to change. Right now we are building a really, really good desktop app that can be the ultimate player too for your computer.

Yeah. What would you, how do you respond to like the criticism that like, maybe you're over-optimizing for distribution ahead of product. You're going viral. Like you're frustrating people. You're being controversial. And like maybe you should just be heads down and like go build something great. And then, you know, the business will build up slowly over time.

And this is like, oh, you're like clout chasing is like the criticism. I think there's a lot of people that say distribution is the final mode. In fact, everybody says this. Distribution is the last mode. Anything can be built. And if you truly believe this, then you would behave exactly how I'm behaving. That's a good point. That's a really good point.

But specifically, like, there are different modes of distribution, right? Like, you could have found a distribution angle that frustrated people less, right? Or was less edgy, right? And so is the need to be edgy? Is that a product of the way our social networks work or the way our distribution, like, moats already exist. Like there's already a like the the humane team was able to get distribution and attention by kind of aping an Apple ad. And they were able to get a distribution. You went a very different direction. Is that, are you a like a product of the of modernity, I suppose? Yeah, yeah.

I would think so. I think I have a very unique and I think a very strong viral sense. I've been into about what makes things go viral and what things will go viral. And for me, that's like pretty edgy. And I would probably think, and most people would probably agree, the video wasn't nearly as controversial. It wouldn't do 10 million views in two days. I agree. Yeah.

That makes sense. Talk about how the round came together in the process there. I remember you first started going viral. And I imagine it was just your DMs, you know, flooded by, you know, everybody pushing back being like, you know, this is wrong. But I think you were smart to pick like a common sort of like enemy. Like people generally are sort of anti-university right now. their sort of anti-elete code. But talk about how the round came together. And yeah, I'm curious.

Because that kind of like, you basically did a, you know, indirect roadshow where you had the attention of everyone in tech for, you know, a period of time. It was a really messy round. And I don't think I can advise most people on fundraising. The round in total lasted less than 24 hours. Yeah, I remember that. You just like posted. I think I saw one post and then you're like, okay, the round's done. We are our pitch and our entire deck changed twice in the middle of the round. And the only thing we came in really knowing was I'm super hot right now. We can build a bigger company.

And right now is the best time to get money. In reality in the future, there were only two worlds. One, I fell off and I can't raise again or two. I succeed massively. And all of a sudden, like the extra 5, 10% dilution here if we fuck up, it means nothing. Yeah. How do you think about sort of like flat? flexibility at the product level. Like, it seems like you have a very clear vision of how to unlock

AI for individuals broadly. It sounds like starting in the workplace. But are you flexible in terms of what that sort of exact implementation looks like? What kind of, you know, different niches. I can see the application in sales, et cetera. But how are you thinking about sort of adapting now that you have like this flood of customer demand and attention? Now you need to like, you know, turn it into durable revenue and things like that. Yeah, I mean, this is something that there's like a really, really, hopefully viral experiment that I'm going to try. That will be the first of its kind.

I'll just announce this right now. We're probably going to hire about 100 interns. And we're going to turn them into like sort of the ultimate content farm over the summer. So we like the most motivated high school and college kids. I really truly believe if you're over the age of 23, you probably don't have the viral sense that you need to go like consistently massively viral. We're hoping to have this like gigantic content farm. And every single one of them will be sort of assigned a different use case for the product.

You guys are going to advertise this product for sales calls and you guys are going to just like ship out content for sales. You guys are going to advertise this for meetings and you guys are going to advertise the deep research feature. And sort of like the consistent virality and attention on the different use cases will that will make it what's lasting. I mean, do you have, do you have a suspicion as to which use case is most profitable? in the midterm because, I mean, the RIS app already exists for messaging people on dating apps. Deep research allows, you know, basically everyone to already cheat on their research papers if they have to write research papers. There are co-pilots all over the place and you're kind of pitching like an Omni co-pilot, at least in the short term. Are you still, is your formula like go viral and

test everything and then find a new niche and then double down on that. And then maybe we're talking to you next year and you're like, yeah, we found it. We cracked it. And we are, we are cheat on sales calls. And we're, you know, great for SDRs. And we've kind of dropped all of the other things. Or do you really want this to be everything for everyone on day one? Everything for everyone on day one is a bit unrealistic. Right now, the two things that we're really zoning in on are our meetings, like virtual meetings like this. And also, also, so sales calls. But it's entirely possible that every single use case

flops doesn't go viral isn't helpful except for one random use case, in which case we'll like quintuple down on that. But the end state is like AI for everyone for everything. I want to go deeper on the actual like hacking your way into products to make using the product easier. Talk to me about getting an iPhone app. Is there a way that you can hack your way into the camera button with a with a shortcut?

or the action button on the iPhone, meta raybans, is there a deal that you can do to take over for that? Like, it feels like most of the hardware providers have very sharp elbows around their ecosystem. Some of that's breaking with the latest, you know, FTC lawsuits, and maybe they're more open to it in the future. Also, like, the failure or, like, the setbacks to Apple intelligence have kind of raised questions about, like,

hey, should that Siri button be remappable to other things? How are you seeing the landscape around hardware evolve because that feels really, really important to you if you don't want to go build it yourself, burn $100 million trying to build the next Apple product? Yeah, I don't actually think that we'll, I doubt that we'll ever be integrated into the iPhone. I don't actually know that that is the best modality, even if we could. I think most people, I mean, friend.com owe me like everyone is sort of betting on the idea that there will be like this new hardware element that that is like a companion.

I think that's, if we were to delve into hardware, that would be most realistic at like the next step. But what I really would like to do is sort of like feed out Neurlink and just sort of just directly skip all that and get the chip inside your brain. That is the true end state is what we want anyways. Yeah, don't ask the NeurLink guys about timelines then. Can you talk about what the general, you know, while you're at Columbia, what the vibe was on campus? I'm assuming everybody's using chat GPT, but do they know, like, do they have a sense? Like, is this, is there an attending? Tyler Cowen, like, has completely embraced AI in his, I believe, graduate level economics

courses where he says, yeah, go have chat GPT write the paper, then dig into it and teach me something from it. It seems like he has a very positive view on AI in education. What's been your experience? Yeah. And getting into that more, is there a general, fear about AI on campus or people like worried, oh, am I going to job displacement, things like that, or are they just excited to leverage it to grow and be better at their jobs, et cetera?

There's definitely a concern, but I think the most interesting thing here that most adults probably don't realize is exactly how many people are using AI. I mean, the percentages get even more skewed at the higher level schools, but I will say, out of every single person I've met at Columbia campus, there is not a single undergraduate who has a, cheated on at least one assignment using AI. And the vast majority of CS majors at like, you should tell them to kick everybody out. Kick everybody out. Just clear the slate. Yeah, whistleblower. Columbia whistleblower. Columbia, cheating's okay. It's trolling that gets you in trouble. Yeah. Don't have fun. Don't have fun. Don't expose technological changes. You will be

blocked. Who are your, who are your inspirations? Are you like a Nathan Fielder type guy. I feel like there's someone that you look to in your in your virality. Who inspires you? Bill Burr and Nathan Fielder. Those guys are are so funny. Dave Chappelle, I mean, I was making that. There's like a lot of like Asian content creators college that are funny too. That's awesome. Last question, Jury. No, I love it. Who are you? Do you have, have you put together a team of, you know, former classmates? Have you gotten anyone else to bail with you? What does your team look like today? Yeah.

So over half a team is friends that I met from community college, actually. And the other people are my co-finder who dropped out. And also the guy who's probably going to be valedictorian of Columbia. There we go. That's awesome. Are you worried about any, like, serious backlash from Columbia? Because I saw the thing where, like, they told you don't share this document. You shared it.

It feels like they find out you have $5 million. They sue you. I just want to go out on the lens. I will give money to the Roy Lee defense point. So we got you. I'm anti-cheating in the literal sense, but I like building and I also like trolling comedy. So I'm like 50-50 on you, I guess.

Are you worried? I'm not as reckless as people think. I read the documents very carefully before disclosing the confidential and it was not legal. these are the worst getting expelled and for me probably the best case yeah yeah exactly i i i think i would be okay with you getting kicked out of columbia but i would be upset if they really tried to put i'm gonna i'm gonna go out on a limb and i'm gonna say i i believe there's a real chance that you eventually go back and give the graduation speech at columbia you know you're gonna have a you're gonna have a

crazy arc and i'm i'm excited to witness it i hope so i hope so yeah good luck love it hopefully there's not too many crazy biz-dev deals between you and success because I feel like if if it comes down to it and it's like in order to win you have to partner with Apple, you might have to clean it up a little bit. But good luck to you. I'm sure you'll figure it out. And thank you so much for the this is a very exciting story. And I love when anyone blows up the internet like you did. Yeah. Congratulations on all the momentum in the round and excited to have you back on soon. Yeah. Fantastic. Thank you guys. We'll talk to you later. Bye.

Later. Next up, we got Jacob from Superpower announcing a $30 million series A, B, C, D. Series A. Series A. Series A. That's good. And also a Sousa Ventures. Back to back, Sousa. Back to back.

It's Sousa Day. It's Chad Day. It's Chad Day. It's Chad. April 22nd will forever be known as Chad Day. I'm a Chad. I invest in Chad's. That's his investment thesis.

The end. The end. We got Jacob here. Let's bring him in. how you feeling, how you doing. Should we ring the size gone for you. Preemptively. Congratulations on the round. How's it going? Gone. Jordie, gentlemen, great to see you guys. Great to see you. Good to see you. Give us the breakdown. What are you announcing? And give us the high level pitch for superpower.

$30 million series A. It's our biggest capitalization to date. Capital is no longer constraint. We're building a super team to reinvent health care. Okay. Crazy. Give us a backstory. the start for the consumer? Get lab stuff? I was going to say let's go back a little bit. Yeah, yeah. Let's start with backstory. You had a rough year.

You want to share that? Oh, yeah. That'd be interesting. How that kind of catalyzed super power. Rewinding the clock, it was 2022, actually. And that year I almost lost my life to reverse health care incentives and a system that doesn't necessarily help people be proactive and take control. So that was when I was building my last company, I was diagnosed with an autoimmune disorder.

It's one called. Crohn's, which those lists might be familiar with, 50 million Americans have autoimmune disease, two-thirds of which are undiagnosed. And in my case, it led me to being hospitalized for close to four months, had multiple surgeries, lost part of my stomach, got stuck with a multimillion-dard bill, and you realize really quickly that, you know, the thing that health systems are designed to do from a business model perspective is make the most money. So that's bill, pharmaceuticals, or surgery, versus getting at the root cause of, like, what's actually driving complex diseases in my case. So I was really, you know, more seen as a way for them to make a lucrative billing, you know, cash in low versus versus actually getting to the root of what was ailing me.

Talk about, yeah, talk about how that led into superpower. I remember we had a, I think we had lunch just after that period. I remember you were like, it felt like you were almost still in a daze because you were just like almost, you know, spent a year almost dying. but you knew from, you know, basically right at that moment kind of what you wanted to do. It actually comes back to Twitter. So I posted about my hospital story and it went really, it went mega viral. And as a result, I got connected to a handful of these like high-end concierge doctors who basically work with the tech billionaire class.

And they charge like 50 to 100K for their clinics. And what you do when you're a patient of these practices is they test everything in your body, leave no stones unturned. They'll like sit down with you on a whiteboard for four hours, connect the doctor, across every little thing in your health, and then pair you with a full-time team to basically put your health care on autopilot. So if you're fortunate enough to be in a financial position or in the know to be a patient, one of these practices, you're basically never going to die of chronic disease. You're going to look like, you know, the memes of Bezos and Zuck that are super

yoked. You know, I know the doctors that probably do their peptide regimens. You think it's just peptides? Or is there a secret juice? A jihitsu. I can't reveal too much. But you realize really quickly that there's a gap between health care for the best and health care for the rest. And obviously being a technologist and a brand builder, it just became very obvious that there was a big opportunity here to democratize once I went on my own healing journey. Do you think that founders should, like I feel like there's this balance between founders need to be performant. You need to have high energy. You need to

be able to oftentimes go 20 meetings in a single day, whatever that looks like. You basically have a life, you know, the intensity in many ways of a professional athlete. What do you think the sweet spot is for founders in terms of, or investors in terms of caring about their health, but not letting it sort of like take over their entire life? I went through a period in college when I had a bit more time where it felt like 60% of my brain power, which is like going to like lifting and eating and things like that. And obviously it's not sustainable if you're trying to run a company and things like that. So I'm curious what you think the kind of like sweet spot is in terms of, you know, wanting to be high performance, wanting to be healthy, wanting to not be like, you know, age, you know, accelerating your aging, things like that.

It's quite a quandary, right? Because we obviously pride ourselves on being a team. We even joke that our office is the world's healthiest office yet, you know, sometimes we still have to put in the hours. And we have the engineering team closing up on the floor. That's great. For the evening. But, yeah, it really. I think is an opportunity to usher in a new paradigm shift where we can put health at the forefront of the conversation. You know, I think we're actually about to have our first board meeting here this upcoming quarter. And we plan to have some statistics on the health of our founders and our team in our board. So we want to kind of set the lead the vanguard and what it looks like to have health be like a tract foundation just as you would, you know, your amplitude or your stripe data or all the metrics that matter for business. Yeah, I was joking. John and I gave a sort of humorous talk in Miami last year.

And we were talking about the case for like VC platform team should just be like basically like doping, you know, like helping their portfolios. What's your creatine? Yeah, what's your creatine? You know, what's your create? Sleep score. Looks like we need to add a little bit of tea in the mix. Yeah.

I think someone's going to launch a fund with this thesis where, you know, maybe it'll be me. I don't know. And ironically? No, I don't think it's, I think it's a very. real. I joked about this, but I think it's very real. A lot of venture funds, especially if your niche, you need some type of edge. Some people are like, oh, we're going to help you with sales. We'll help you with recruiting. We'll help you with your next round. But just saying like, we're going to help you with your one rep max. Help you with your one rep max. Exactly. Thousand pound ventures.

Talk about, talk about the sort of opportunity in AI specifically for superpower. You guys have started with biomarkers. How do you plan to leverage that to kind of unlock value on the data side and all that. So in the limit, something that we deeply believe is everyone will have a healthcare super app on their phone. And today, a consumer health experience is deeply fragmented. You know, consumers have to run around town to a bunch of different places and it's all disconnected.

And the front door to health is, you know, something like chatch, BT or Google or web empty. But the problem with those platforms is. they don't really know much about you and they definitely don't know everything about medicine. So what that sort of culminates in with what we're building is what we think will basically be an AI doctor in everyone's pocket. So we're kind of aggregating all of your medical records and health data, making it super easy to test your whole body and combining that with all the world's medical knowledge, which does not necessarily exist in foundation models today.

Each foundation model is sort of trained on a select aspect of the health care and medical universe. So there's a lot of creative ways to get a full picture on what's actually happening at the edge of science and medicine. When you put all this together, you have a recipe for a really unique company that we think one day will be something that a large majority of American zone. And health care is right and it's demanding of better consumer experience. We've seen the consumer experience been reinvented for every other aspect of our lives, but health care is sort of the last domino to fall. And we want to be basically the predominant company to bring this to the market. How do you think about the interaction with LabCorp?

It's an $18 billion company, kind of, you know, stocks up and stocks down, like kind of, you know, up 60% over the last five years, obviously when you're doing lab testing, like you kind of got a bill on top of like the railroad that's already there. But how does that relationship evolve over time? Yeah, labs are a super commoditized business. What's really happening and what's exciting to pay attention to is innovation in testing. So today it's actually kind of a cumbersome process. You have to have to have a nurse come to your house. You have to go to a lab corp. They test your blood. They send it off to another facility. It takes like eight or nine tubes to get a full enough panel and picture and then a week to come back. And there's probably like a dozen or so friction

points there. So something like Feranos over the next few. Probably is not that far off. And thankfully, we're building at the application layer. So we have to be best in the world at building a trustworthy brand, low-cost customer acquisition, and a really amazing AI doctor product. What is your takeaway from the Theranos story? Do you think that there's any sort of misread

on that historical, like anecdote? Like we've done like a deep dive and we were like, there's more nuance to the story. The issue is don't apply, build fast, and break things to consumer health.

Yep. Healthcare doesn't move at the speed of code is all. There's a certain reverence. you have to have for the human body as a healthcare founder, which makes the Zuck adage a bit tougher to apply. Yeah. What about the interactions with the FDA? I assume that there's oversight around, you get the lab markers done with lab corp or

request or something, and then you're interpreting that and you're at the application layer doing AI data analysis, all sorts of good stuff, but at a certain point, actually making a recommendation about someone's health is probably regulated. What does that look like and how will it evolve over time? Yeah, so we're not quite in a world yet where AI and the algorithm can make a medical diagnosis or a recommendation. So the system that we've architected and the paradigm that we're in just as an industry is basically AI with human. So anytime it gets to a point where a human has to intervene, we do plug in a doctor. A doctor. Got it. Which helps us avoid any sort of messy FDA regulation. That makes sense. Got it.

Do you see a world in the future where the average company, maybe outside of our tech bubble, is like giving budget to employees specifically for preventative health, right? Like sort of health insurance broadly is a pretty standard benefit, but feels like preventative health is like, you know, potentially the next place that employers want to invest? Undoubtedly, so one of the challenges in healthcare today is because the average American is transitioning jobs every two to three years. and that healthcare is tethered to your employer,

that means it's just the game of bagpassing, where the insurers don't really have an incentive to underwrite anything that's a bit more long-term or preventative or optimization focused, like getting your testosterone checked out. So in that world, the insurers don't necessarily want you to get access to things like superpower and have it be covered. So that's where employers will ultimately step in and potentially start to cover these types of things as supplemental benefits

because they're going to drive clear employee retention, acquisition in a market where it's only more competitive to get the best to get the best people. What's an underrated supplement right now? It feels like, you know, magnesium is hot. Tia takes six different types of magnesium. I take, I also take six different types of mages. I'm only on four. I got to get my numbers. Those are rookie numbers. What do you think the next kind of magnesium? I've been surprised to see creatine in the timeline so much just because it seems like something that it's lindy it's lindy people have been taking it forever methlene blue is in the timeline methly blue i'm i'm uh i'm 50 50 yeah yeah but what's your take jacob i got one for you

oral bpc 157 i've been on oral bpc 157 oh yeah this is the wolverine peptide oh yeah it's from the wolverine protocol yeah okay one five so um no this is this is what it's sort of is it semi like there's an interesting thing right now where there's like substance that are banned by various sports organizations and leagues that as a CEO you can just take right so like if a pro athlete is like wanting to take something but can't yeah it's very effective but it's so effective it's maybe made illegal yeah it's why not if you're a CEO or a capital allocator why not get on some PPC 157 um interesting in Silicon Valley performance enhancing drugs are encouraged. Yep, that's true. Yeah, it's an interesting time right now. I mean,

it feels like these sort of like psychedelics, like, you know, have long been a part of Silicon Valley culture, but I think that performance drugs, not just exogenous testosterone, but I think they will just become more and more popular where it's going to move beyond, okay, founders are on, you know, maybe they're on caffeine or nicotine and creatine, but on, onto like really optimizing, you know, peptides in the way that, you know, you mentioned it. People like, you know, Bezos are probably doing to some degree. Better sleep. Yeah. Makes sense. It makes no sense. But anyways, great to have you on, Jacob. Very, very exciting. Congratulations. Anything else, anything you want to plug before, before we end.

Gentlemen, I appreciate the time. Maybe before I leave, I'll give you both a quick sneak preview of our AI doctor product that we're launching very shortly. So, Jordy, if you have any questions for the algorithm, maybe how to boost that testosterone. There we go. What's the, yeah, how much BPC 157 can I take before I explode? What is the LD50 of BPC 157? Because I'm going to the max. I want to look exactly like Wolverine. John has the highest natural T levels of, I think. Yeah, but imagine how much higher they could be if I was on the Wolverine stack. If John 2X's T, it would be potentially a world record.

So, I mean, obviously foundation model plugged into that, but then also built on top of your own data so you can query your own lab results and get customized recommendations. Is that the idea? Exactly. And then as soon as it makes a firm recommendation kicks you over to a doctor before it starts violating FDA rules, basically. Exactly. The way to think about it is the world's best doctor. we'll spend hours and hours with you on webboards connecting all the dots in your health, but that computation doesn't scale at a higher price point.

So we're democratizing it. That's awesome. Love to see it. Love it. Awesome, Jacob. Congrats to you and the whole team. Cheers. Well, speaking of AI, we're having Logan Kill Patrick from Google on.

There we go. Talk about Ardivis intelligence. For this one. A lot of different stuff. Logan has been on a tear. He has great poster. And as soon as he is here, we will bring him. into the studio, but maybe in the meantime, we'll tell you about Bezell. Go to getbezzle.com.

Your Bezell concierge is available to source any watch on the planet for you. Seriously, any watch. And I mean, while we're also on it, we did not get a chance to talk about AteSleep. Go to Aidsleep.com slash TBPN. Get a Pod4 Ultraad has a five-year warranty, 30-night risk-free trial, free returns and free shipping. And we will go back to the show. Now, let's bring Logan into the studio. How are you doing the? Logan. Let's see. We're bringing it in. How you doing? I'm doing great. It's been a great, busy last six months of AI stuff. So I'm trying to stay alive. Just the last six months, I feel like every six days is huge in the AI world. It really is like the best place to do content

around or just read about or listen to podcasts about like the AI world is just so fertile, regardless of what you think about like P-Doom and acceleration and all that, just in terms of like the applications, the deals that are getting done. It's fascinating. So yeah, what are you watching today? What are you watching this week? What's most interesting? Yeah, that's a good question. I think continued momentum of 2.5 pro on the Gemini side, I think obviously a bunch of new open AI models, which has been awesome to see. It's also been back to your point about how much fertility there is and like different AI stuff. I think if you look like two years ago, it was really just the models. And like the model cadence of launching was like actually quite slow relative

to like products. And now we have all these products, which people are really excited about. And like the product innovation actually happens a lot faster. So it's like acceleration across the model category, but also across all the product category. And like there's just there's too much to keep up with at this point. It's impossible. Are you generally feeling the acceleration?

Because I feel like we are seeing acceleration on the product side. And certainly in the fragmentation of models and the specialization of these models. But in terms of just like massive order. magnitude breakthroughs. I feel like when we went from 3, GPD 3 to GPD 4, that was a huge leap. We passed the touring test. Chat Chats GPT was huge. And then since then, it's been more incremental, extremely valuable, extremely great.

I love it. But I haven't seen as many of those like viral moments. Studio Ghibli accepted probably. Yeah, I actually think I'll push you on this point, which is I think we've had more of those large moments than I think people appreciate it. And I think it's just like, it's actually hard to appreciate some of those moments if there isn't a product experience that brings it to life. And I actually think that's been a lot of the gap. It's like if you look at like multimodal, like the fact that the models can like with better, better than just from a multimodal input perspective, better than humans are at like most vision tasks. Like the number of products and like things that that unlocks is like truly mind blowing.

If you look at two years ago what you would have had to do to make a make something work in that ecosystem. And like that is from an order of magnitude of impact, like massive. Maybe it's not as big as like text, but it's still this like huge massive. And like we're continuing to see that with like, you know, now the models are really good at tools. And now the models can actually generate images and audio and video and all this stuff. So I think we're getting those. I also think our expectations have just gone up so much that we're like, if the thing isn't, you know, brushing my teeth for me, then like, oh, it's not, it's no longer. Yesterday we read a post from near Cyan and it was a screenshot of the definition of AGI.

I'll read it out. So it was a reminder of how far AGI goalposts have moved and it's a screenshot. It says an AGI could beat you at chess, tell you a story, bake you a cake, describe a sheep, and name three things larger than a lobster. And it's funny because like, okay, everything, we're doing everything except baking you a cake. Yeah. And even then it'll give you a great recipe. It'll give you a recipe for any type. of cake you could possibly imagine, a sheep-sized cake.

Yeah. You can do anything. Anyway, I want to talk about this idea of like the Pareto Frontier in AI models. Sean, previous guest on the show mentioned that Google has been very good at delivering not just high-quality models, but affordable models. Has that been a deliberate strategy to try and create the best model at every different price point? Or is that just a natural outgrowth of the engineering culture and the scale of, you know, being a hyper-scaler? Yeah, that's a great question. I think a lot of this has been an intentional decision.

I think if you look at like specifically 1.5, like the Flash series is really where we sort of landed this point the most. I think recently with 2.5 Pro, it's been the first time that we've actually had like truly one of the most intelligent models available and relative from a cost perspective. It's still super affordable. But I think it also just like why we've been able to do that and why we focus on it is like goes back to like, you know, Google control. from a product perspective,

like all the way to how the models are delivered, to how the models are trained, down to the silicon. So you can make decisions assuming a bunch of those things are going to be true, which is like a lot of folks don't have the flexibility to make those decisions. And the beautiful thing is like,

I think this point goes underscored, which is like, what does this mean? It means that builders have the freedom to do stuff. It's like not that like Google has this really great advantage and the thing we do with the advantage is find out how to milk money out of people. It's like we have this advantage and what does it mean? It means the world gets cheaper AI models and they get to go and build the products. And the margin for people building AI products actually goes up.

The farther you push the Brato Frontier, the more money builders get to make, which is like such a interesting and unique thing about this AI moment that I actually don't think has been true in a lot of these other platform shifts that have happened in the past. Yeah, I want to dig in there. Google's in a unique position in that it's a consumer tech giant, but also a scale. infrastructure provider with GCP. And you could see... Not to mention a B2B player. I mean, I don't know a single startup that doesn't run on Google

workspace. 100%. And so you, like Ben Thompson was just talking yesterday about, he's really pushing OpenAI to just go full consumer and let Microsoft handle all of the B2B stuff. Don't let the API load take away from serving your consumers. With Google, there's probably some sort of tension there, but what are you excited about on the B-to-B side

and this idea of like, you know, oh, if I build a wrapper, is Google going to like just steamroll me? This is kind of like an old meme, but now, you know, it seems like the best time ever to build on top of the, like, 2.5 or any of these different models that have great cost and like scores and what and benchmarks and whatnot. So what message are you sending to kind of the,

the developer community. Yeah, so two things. One, our reaction to your first comment, which is around like, is their value in doing both consumer enterprise and some of these other things? I think my push for companies, like if you're in the position to be able to do that,

and like there's a bunch of nuance of this because obviously open AI as an example is like extremely well capitalized, et cetera, et cetera. Like they have the means to do this and do it well. But for companies that can, I think part of my core worldview is a lot of the reason that Chad CBT has been as successful as it has. is because there was an API business built around it.

And if you think about it through this lens of what the API business did was like, allow the world, allow this like massive proliferation of AI products to educate the masses that people are interested in this stuff. And then like at the end of the day, who has the world's best AI products? I think like, you know, some people maybe argue it's chat EBT, maybe it's another product. But like you sort of wet the appetite of the world that like,

oh, I can actually do these things and it's, you know, in my product surface or et cetera, etc and all that's enabled by the API. And then when you look for like, okay, what's the best way for me to use this product? Maybe it's one of those consumer products made by one of the larger labs. And I think that that playbook actually works a lot. And that's why I'm extremely bullish for people who are sort of doing both of these things. I think to your question about like where's the value for builders today,

I 100% agree with you. I think there's so much value to be created at the application layer. If you look at, I think about these like three curves at the same time. There's like on one hand, the cost of AI going down into the right, you know, cost of AI down 99% over the last two years. The intelligence of AI is up into the right. Like models continue to get smarter and better with test time compute and scaling and stuff. At the same time that the models are getting smarter, the costs are going down. Consumer understanding of AI is going up.

And then in parallel to that, as consumer understanding is going up, as the models are getting better and cheaper, consumer willingness to pay for AI products is also going up. And I think there's this, like, it's this beautiful, like, you actually could not ask for a better set of four lines on a graph than those four things if you're building a product. It's cheaper for you to build a product. Your customers are willing to pay more. There's more customers and the tool that's actually enabling the value creation is just getting better for free. Like, you don't have to do anything. It just gets better for you.

And, like, I don't think there's been a time in human history where for builders, all four of those things have happened at the same time. So I'm super. works. Like I literally wake up every day excited because people are building companies and all this is happening for them. How do you how do you think about balancing, you know, benchmarks and capabilities, right? Google's consistently been a leader, yet at the same time, every consumer at this point has experienced a new model coming out, performing well on benchmarks, you know, just sort of like broadly, not not talking about anyone lab. but then being sort of disappointed with the actual like experience with the model.

And I'm sure you've spent a lot of time thinking about this. Yeah, this is one, I think for folks who haven't thought about this, evils are just really hard. It's like such a hard problem. And actually like if you abstract evils out of like AI and into everyday life, like you become and maybe I'm like too eval pill at this point. But I think about just like random problems in life are truly eval problems. And like we look at them as this like very human thing. And actually they're e-val.

And the sort of really weak version of this is if anyone's had a job and like have gone through like performance reviews, like performance reviews are an eval. Like are they a super scientific e-val? Like, no, they're actually a pretty crabby email in a lot of places. Folks have gone through performance reviews. And yet, like, that is the core foundation of like how human, you know, career growth goes in a lot of ways. Like there's a lot like e-vils are generally a really hard problem. For AI, they're also extremely hard.

And I think to answer the question specifically, Jordi, about what does that mean for people who have this sort of disconnect between capabilities and what the evils say? I think this goes to why there's so many vibe evals. And if you look at like Elam Arena is a good example of this, like Elm Arena is basically capturing vibes. It's like, how do people feel about this thing? It's not scientific.

They're not like not actually evalling that the model is saying things that are true. It's like how do humans feel about this response? And I think that's incredibly important. the only thing that matters, like certainly not, but I think more and more you see long with happening where like the vibes are really important in addition to the actual quality of the models being important. And I do think you could do both of these things. In some cases, there's there's tension, but I think you have to do both if you want to be successful. Totally. How do you think about the different buckets of foundational research that are happening?

Do you believe in the data wall, the pre-training scaling rule, like kind of, you know, hitting diminishing marginal returns? We've talked to a lot of folks who are extremely excited about reinforcement learning, reasoning, going a lot further there, program synthesis, these kind of topics, even just like just more tool use. Let's bring more tools in. Google has a million tools and a million interesting APIs, both internally and some externally. it feels like there's a lot of low-hanging fruit there. But what excites you on the research side these days is just,

let's build an even bigger data center. You guys probably already have the biggest ones in the world, but you could obviously go bigger. Or is it more algorithm-based? How are you thinking about the future of the foundation model landscape developing? Yeah, I think two points. One, I think there's never been more opportunities to push the frontier. I think all those examples that you just described,

like because the models are evolving more than just being models, and like there's like systems that have tools and all this other stuff together. I think it just increases the number of opportunities for scale and for the models to get better. So I think that's like one of the positive things. We'll continue to see a lot of growth specifically because there's so many dimensions that you can make the models better at. But I think if you look at like an example of this in practice, like 2.5 Pro is actually an example where it wasn't just like RL scaling that made that model better. Yes, RL was part of the story. but there was also a bunch of pre-training innovation.

And principally, there was a ton of post-training and pre-training innovations. I think it's not that companies are going to continue to see value created across all of those. And the really magical thing is like, and this is why I don't subscribe to the pre-training is dead and all that stuff. Because the more work that you can do at the pre-training level,

those capabilities as you do post-training and as to give the model's RL capability. It's like the capability is like amplified almost exponentially. So like if you can make the model 3% better at the post-training level, when you actually finally do all the reasoning work and the model like has to reason through really complicated problems, it's like many multiples of bang for your buck because of that. So like I think we need to continue to do the innovation across all levels. And like that's exactly what we're doing right now.

I know you probably can't talk about specifics. but one of my favorite Google stories is that crazy anecdote about the V8 JavaScript engine. I think it might be apocryphal, but it's like a bunch of Google engineers go out to Iceland or something, spend like a month building a new JavaScript runtime. It builds Node and it winds up being like the foundation of like the Chrome browser. I'm interested to hear like what is your take on just lower level optimization? Obviously Google's already doing the TPU, but in terms of just maybe even just squeezing extra performance out of inference. We saw this with DeepSeek.

It seemed like they did not just one or two breakthroughs in terms of kind of cost performance, you know, optimizations, but they did a ton. Is that type of work happening at Google? Do you want to see more of it? Is it an exciting area? Or is it just like, oh, yeah, that's just something that we're going to have to do.

It's going to have to happen at some point. but it's not as critical as some of the other stuff that's happening in the industry right now. Yeah, you should ask our inference engineers who are working like 24 hours a day. I think like 2.5 pro has actually been like a fundamental example of this. Like all of this stuff matters. Like I think if you don't, if you're not doing it, like the especially with larger models and especially with models that have lots of demand, like there's no world where you can get away with not putting a large order of magnitude of investment into into inference.

And like I think credit to our team who's like actually, working around the clock right now to make it so that people can keep scaling with 2.5 pro because there's so much demand and we're having to like as an artifact of the constraints that we're under like we're having to innovate and like solve new problems and come up with things to like find ways to make 2.5 pro more scalable from an inference perspective so it's it's awesome to watch that happen yeah where where do you want to see more you know knowing uh 2.5 pros capabilities probably better than anyone else. Where do you want to see more developer activity?

Yeah, I think the thread right now that has the most excitement is around coding, just because developers love coding. There's like so much the whole vibe coding thing is a real phenomenon. I think I continue to be interested in like all the multimodal stuff. Like there's just so many products. And like I think back to early my career when I trained computer. computer vision models and like deployed them. And like the amount of time that it took and the amount of resources to do that relative

to today where you can literally just write a prompt and send images or videos to the model and have it do those tasks like with basically, you know, near or better accuracy than you would get from domain specific models is absolutely fascinating. Like I think we haven't actually seen that wave of like multimodal startups that are like building on top of this stuff. And I think that includes like audio things. I think the audio ecosystem is still pretty nascent. I think the foundation is being laid for that.

People saw this with Gemini Live. People saw this with the chat ChbT version of the product that came out. But I don't think we've seen across other product services, people actually invest in real-time audio and real-time video and image stuff. And I think that's like the next iteration of the UX of how people are going to interact with AI models. And the foundation is all there. It's just like the lag of how long it takes people to build interesting products.

It just takes like 12 months or something like that for that to happen. Yeah. I mean, speaking of like building new products, I love the Paul Buchite story of building Gmail. Is this like almost like April Fool's project? And then you see a seed of that in the Notebook L.M project. What's the culture like around the idea of like 20% time? Does that even exist anymore? And then like if I joined Google, could I just go and say like, hey, I'm going to go like build an AI native.

email client. It might destroy Gmail, but we'll figure it out, or is that something that like, you know, we're going to need to think about because like Gmail's mature, but there's still like, you know, right now Gemini is like kind of being vended into Gmail, but, you know, maybe there's an entirely new paradigm at some point. How do these like side projects and 20% time work at Google these days? Yeah, that's a great question. I think my 200% project is on all the Gemini developer stuff. So I do think people are doing 20% projects, which I think is great. I think if you're, if you have freedom to do that, like you should and that's how Google's going to come up with innovation. I think for notebook LM specifically, it came out of Google Labs. And like Google Labs,

the whole point is come up with new product services. So not just, not just notebook LM actually, but there's like a whole like whisk. If folks have seen WISC, it's like a video image generation platform that came out of that. Actually, AI Studio, the product, I work on came out of labs originally and Josh Woodward's team. So I think there is like a whole lot of innovation that's being seeded out of that group. And again, it's like the big bold bets that like you wouldn't see coming out of other, you know, potentially other product areas because it just like takes time to build these products from scratch and oftentimes time that they don't have.

But I'm super happy because Josh Woodward who leads the Google Labs team now also leads the Gemini app team. So I think we're going to see that like fusion of all these like new ideas and product spaces because him and his team sit so close to like the blank slate, let's build any product to solve problems that people have. Now that they also rub the Gemini app, I think we're going to see like a ton of explosion. You should have Josh on. He's one of my favorite people. Yeah, yeah, we'd love to. How do you think about getting, helping, how do you think about almost like prompting new consumer behaviors? Because I feel like every day on X, you'll see somebody that's like, you know, I saw

somebody posts, oh, I'm doing, you know, basically like run it, you know, doing a prompt every day about like a specific industry, like, you know, pull together, you know, the most important headlines and news from this industry. And I'm like, oh, that's really valuable to what we're doing. Yeah. We should just sort of like get into the office in the morning, adopt that and do that. That's something I wasn't really thinking about. People are so used to like, you know, this sort of idea of like just getting the, you know, they'll like adopt a model for like one specific thing. and then they just like do that. Maybe they veer out of it a little bit.

But how do you think about getting users to just like be more creative? Obviously is helpful when a developer builds an application to like prompt a new consumer behavior. But how do you think about that kind of at the application layer at Google? Yeah. I actually, my personal take on this is I think this is a bug of this current AI moment where like the if you look at like what is the ideal case, the ideal case is the models and the products, like, pull out what they need to from the user in order to create value for them.

And I think if you look at, like, how all AI products basically work today, you as the user, the burden is on you to create value with this tool. And I think that just, like, one inherently, like, limits, you know, the number of people who are going to get value. But, too, it's also just like a shitty experience, honestly. Like, I hate, like, this is my biggest claw on with AI pools, which is, like, you have to go, for most AI tools, you have to go to. and make this like sizable investment in order to get anything out of this.

I think like a couple notable acceptance to this is like deep research. I can just fire off the like random question that I have about how something works. And then I'm given a 50 paid research report inside the Gemini app. And then I can one click turn that into an audio like a notebook LM audio overview. And like that's great because like as a user, I don't need to make this like large order of magnitude of investment. The model does all will work for me. And I think as we see more experiences like that, like I'm,

I'm super excited. So like I'm almost, and this is maybe too absoluteest of like a product perspective, but like I will not build a product that like we have to try to convince a consumer to change their behavior. Because I think actually the promise of AI is that these tools are going to be able to pull this context out of you. And you should just go and build that product. And like I think the models are actually good enough in a lot of ways to help you do that today without having to like rely on a user, hopefully having the right behavior for to make that product. successful. It's an interesting thing where I feel like users are so trained on like software doing a

specific thing that this dynamic of software and this sort of application being able to act like a smart friend or a smart coworker that knows infinite more information about a bunch of different subjects and then can help you accomplish tasks is very different than this sort of and I just feel like even as, you know, somebody who's, you know, I've now, I'm not 30 yet, but I've basically spent 20 years using software that behaves in a very specific way. And I need to just like totally reimagine how to use software. I think the push needs to be, though, that like you don't have to reimagine. Like, I think about this all the time. Like, the thing that I would love is the AI tools that I have today interact with me. Like I already interact with software today.

shoot me a text, shoot me an email, call me on the phone. Like, I'm already doing that all day. Like, you could, there are ways, I think, to bridge that experience gap where, like, you don't need to convince, you don't need to go into a new flow. And I actually think if we've, if we fast forward like 10 years, I do think there's going to be a lot of those experiences, which like look eerily similar to the way that they do today because it's just like so ingrained in like human culture, like how like texting is a great example of this.

Yeah. Yeah. Like I want to push notification from Gemini that says, hey, you're talking with Logan later. be sure to ask him about this funny story, you know, and then it's like, boom. And I didn't even have to, I didn't have to. Everything in AI, we're kind of reinventing from first principles, like, even just like the idea of like the cron job. We're like adding that back in and now, like, there'll be like a whole new cycle from like,

oh, like the AI apps got cron jobs this week. Like that's incredible. And it's like, yeah, but this has been around for a long time. But it really does transform the experience. I mean, speaking of, I want to know more about some of your specific workflows. that you're enjoying. You mentioned deep research into notebook L.M. Is that something that you're able to do

within AI Studio.govol.com and run it all there? Or is there like a copy paste step? Because I've had to do that before where I've been like, okay, I got a deep research report. It's not reading it to me here, at least in chat chitia. I need to take it over to Speechify

and get it to read it to me there. But obviously AI Studio is a little bit more prosumer, I feel like. I mean, the temperature is there. there's like still some some buttons that are, you know, almost like developer, like terminology. So walk me through some of your favorite AI use cases in AI Studio and what you're getting the most value out of so people can just kind of copy your prompts. Yeah, John, I think this is actually a great reminder for folks. Like, AI Studio is a developer

product. So we're building it for developers. And like the use case that we're trying to build for is like showcase all the models raw capabilities so that you understand what the models are capable of so that you can go and build great products yourself. Like we're actually not, so like deep research as like a great example of this. Like deep research is built on top of a bunch of capabilities that the model has, which is like native search functionality, tool calling, et cetera, et cetera. And that's available in the Gemini app. So if you're, you know, you want the like polished consumer experience or even prosumer experience,

honestly, like the Gemini app has that functionality. It has audio reviews. It's like a fully baked product. AI Studio is like give you the rawest possible experience. like some consumer AI enthusiasts like that experience, which is why they come to AI studio. But like generally we're trying to showcase like frontier capabilities, show you the art of the possible so that you can go and build the products that you really like.

So I do spend a bunch of my time from like a like doing work perspective inside of the Gemini app. You know, Canvas is another one of them like vibe coding inside of Canvas. Inside the Gemini app is a lot of fun. Someone needs to vibe code a Google reader. this would be the most viral thing ever. I don't know. Have you familiar with Google Reader? Probably before my time.

It was like an RSS reader and Google shut it down. And like it had like a thousand true fans. And so they were like so upset about it. I was using it. It was fun. But I understood that they didn't need it. But anyway, we'll continue for you.

We'll see what we can do. Maybe we'll bring Google Reader back as a vibe coded house. That would be, you would destroy the internet. That would be the greatest marketing for everything that you're doing. If you could bring back Google Reader. Anyway, sorry. I want to let him finish about his most interesting AI use cases and what's fun.

And what's in your everyday carry in the AI world? Yeah, I think the only other one that I'll mention is this is something that's specific in AI studio right now. And we'll hopefully have it in the Gemini app and other places is we have this live API or this real-time mode where you can go in screen share and share and show this model what you see on your screen. I think this gets to like all the points that I was getting at before. about like, why is this such a magical experience?

It's because right now, the product experience of using AI is I need to go and find all the context that's relevant for the model and get it into this text box somewhere or get it into this list of file somewhere. And like the beautiful thing about screen sharing is like all of the context that I need the model to do stuff with is already on my computer. I'm looking at it somewhere on my computer. I looked at it today or yesterday or right now. Like just let me show the model what I see and have it do interesting stuff.

So I've been playing around with a bunch of like pair programming examples like that. And just like generally like critiquing work that I've done and having the model sort of watching and with my permission, able to see the things that I see and talk to it is a super cool like very futuristic feeling experience. That's awesome. Last question, switching gears a little bit. Do you have any, you know, ignoring your work at Google and on Gemini, do you have any takes on AI hardware? Do we need new hardware devices? Is it an area that you're excited about? Or how do you think about that generally?

Yeah, I think on both sides from an enterprise and consumers, I think there's a lot of opportunity. And I think in the platform shift, like, it makes sense to try to build something. I think like does it end up working? I don't have the crystal ball. But I think on the enterprise side, the opportunity is you go in and build, you know,

hardware that makes LMs a lot faster and more efficient. And I think that's warranted and somebody should do that work. And then on the even, even, yeah, consumer side, yeah, I'm curious. You know, we had, we had like the founder of Cluelly, which has been going viral on before you. And he was talking about how, you know, the end state is just being embedded into, into the brain directly. But yeah, I'm excited. I mean, you can feel free to pass on this question. But the founder of Cluelly, he applied for a job at Amazon.

He cheated on the elite code questions. If he were applying to be on your team, you caught him cheating. What's the punishment? Is he on the team or is he out forever? I think we've actually been looking at doing like AI-assisted interviews and not AI-assisted interview. Like I think the world needs both right now. It makes perfect sense to evaluate both. Yeah, yeah.

Kind of interesting. I mean, he was doing it as like a publicity stunt basically trolling. Obviously, I don't endorse actually cheating on real interviews. But it is interesting that, like, you will have to adapt, just like the teacher will have to adapt that was previously assigning research papers that can be one shot by CHAPT. No, it's an interesting way to test how somebody works individually, right? Single player and thinking about AI assisted as a sort of like multiplayer experience. How you collaborate with other people, right?

And that's like a really good e-val, as you said. And in a world where the tools, like, actually make a difference in how much you can do? Like, can you use the tools? I think that's like a fundamental question that I don't think a lot of people asking these job interviews, like, are you AI assisted in what you're doing today? And if you're not, like, you know, there's a delta in your output if you are AI assisted versus not across coding across every discipline right now. Totally. Awesome. Well, thank you so much. Come back. I'm sure you're going to have many big announcements this year. Always welcome to come on and jam with us.

Thank you for making the time. Bye, guys. Cheers. We got Eric Torrenberg coming in the studio in just a minute. he's injuries and Horowitz's the latest general partner GP a good friend of us good friend of the show known him for years and excited to dig into his new role and do a little some personnel news segment we got a massive trade deal you know first round draft pick many times in his career max contract probably four-year deal you know one year cliff who knows so good to have you Good to have you here. Beautiful logo in the back. Welcome to the stream.

How you doing, Eric? Thank you. A long time listener, first time call. I think for having me on, guys. Huge fan. Yeah. Take us through the anatomy of the deal. Did they sit down with your parents tell you, hey, we're taking them to the big leagues?

How did it come together? I mean, I imagine you're close to a lot of folks over there for a long time. But is there anything you can share about how someone becomes a general partner at a story of venture capital firm? They brought a briefcase to my parents' house. Yeah. Yeah, you know, just been working the family for years. Yeah. Yeah. I love it. I love it.

But yeah, I mean, seriously, I mean, you've known the team for a long time. What were the conversations like and how did it all come together? It's funny. Part of me wants to ask like, why didn't you ask me this a few years ago? Why didn't they try to recruit me a few years ago? Sure. But it's kind of like when someone amazing asks you out, don't ask too many questions. Just say yes.

Sure, sure, sure. My philosophy, but basically what happened was, so Mark and I've been close for a long time. And every year I basically, you know, sort of give him a state of the union on my career and how I'm thinking about things. And this year, I was like, hey, I know I want to marry venture into what I'm doing. I have this media company. We've got sort of this founder of social network thing. And everything around my career has been either investing or building.

communities, networks, media for founders. Yep. And so I was just like, I want to do it again, but I'm figuring out what was the right structure, how to do that. I can start something. I can join something early. And then Mark's like,

why don't you just do this at A16 Z? That's awesome. And I was like, I hadn't really considered it because such a big firm, you know, so specialized. I'm a generalist investor, you know, a more talent,

you're driven early stage. And he, and I think like what I fit in at, you know, 700 person firm like, like Katrina Horowitz. And he's like, let's talk about it with Ben. So then me, Ben and Mark, have a bunch of conversations.

Catherine's involved too. The other partners get involved. And basically they had had a desire to go much bigger on content, like separate from me. And they kind of liked what I was up to at Turpitan with sort of this network approach. And they crafted the right dual role. That's a mix of investing and a mix of kind of media network stuff. And that's how it over a few months. period we just, you know, like kept falling in love with each other even more, we'd love with the

opportunity. And so here I am. No, there's just there's this thing in venture, specifically investors. They spend all their time working with founders and they, and they think, I need to be a founder. Like, I have to start my own firm. And then you realize like, you can potentially have like a thousand times more impact if you join a platform and make it better and leverage all of those resources. So I think it makes a ton of sense. I have, I want to go back like, way in your early days. How did you get so good at networking? I think it's like, you're probably like, you know, the best, the best to ever doing.

The Michael Jordan of networking. And, yeah, I don't say that lightly. No, seriously. It's, you know, it's extremely impressive. And I'm curious, like, you know, if you identified early that you were just good at it or it just felt like riding a bike and you didn't yeah you know it just was totally natural yeah what is it first of all i appreciate the compliment uh and no one who's good at it wants to be known as the thing that they're they wanted to be like like delian's got a good network but it's like a byproduct of the stuff that he does

and so yeah we i would say hopefully similar to i mean i think the the way i realized that i was doing this music tech company out of college wrapped fm it was kind of a retarded idea It was like chat roulette for rap battles. It made no sense as a business, but it was just kind of a out of college project. We somehow raised the money for it. This is when Twitch was getting off the ground. People were like, hey, Twitch for music, maybe that'll work. And live, just the TV, live video, et cetera.

And I got people noticed that I had the skill for evangelism, like getting people excited about things, attracting talented people. You know, what do great founders do? They attract capital and labor, right? And so I was, I had some skill for that, even though the idea was dumb and people were like, hey, you have something here. But I didn't put it together until product time, which is the thing I joined next, where like, you know, Ryan was CEO and he really got that off the ground.

But I helped him sort of like bring that out of thin air, like, you know, create a strong community and network. And in that period, I was like, this is my superpower. Like up until that point, up until age 24, 25, I hadn't identified a superpower that I had. And I was just like, I'm just going to triple down on this. And so then starting on deck and village. And what is it? I think it's just like a desire to like an obsession with people.

Like who is everybody? What are they doing? But then also desire to help them and think about sort of people dynamics. But then also this, that's like highest level. But then the next level is like build communities and networks that sort of help each other where people can help each other like even when you're sleeping. And so that's what I spent a lot of time thinking about and do it. I want to talk about media, but first, let's talk about some of the industries that you're interested in on the investing side. Andresen has a fund for every vertical now, bio, gaming,

defense, you know, crypto enterprise. What's interesting to you? And is there any crossover? We kind of have this take that, like, media can be fun and lucrative, but media is really hard to invest in. If you want to invest in media, you've got to be on the platform side. You've got to be in Spotify, TikTok, Instagram, Twitter, Facebook. Like, those were the power law outcomes in media. People don't really think about them as media. But if you were in YouTube early, you did very well. Very hard to invest in companies that are more in the middle.

What are you seeing in terms of, are you excited about any investments on the media side? And then also, what are you excited about in the other sectors of the injuries and portfolio? So I think Jessica Lesson really sort of helped popularize sort of the bootstrapped media company. Sure. That turpentine has followed. I think you guys are following. I think it just doesn't make sense for this kind of business for the reasons that you're, you sort of indicated, but people can do very well.

And so I in general, you know, because I did a music company, a lot of people pitch me music. I'm like, I don't like this business. Sure. Because people, I do media, people pitch me media. I don't want to invest in media companies, but I do want to build a lot of media at Andreessen Horowitz. Sure, sure, sure. Yeah. And I do want to partner with a lot of independent creators like yourselves, like the Lenny Wachischis, like the Happy Stebbings, like, like, you know, all these guys who are building, you know, really awesome cash flow businesses, super lean, making a ton of profit.

Sure. And sorry to interrupt. One thing I think is interesting is that venture required. venture outcomes require scale, yet media, and one of the things that makes media is amazing is anti-scale, right? It's like having, for us, it's like having CNBC meets X, right? It's like, it's a niche thing, but it's great, you know, for a very core audience. And on that note, I think you've done this very well with Turpentine in terms of like verticalizing out and being like, hey, there's this sort of show on a niche topic. And it may only be interesting to 50,000 people in the

whole world, but those 50,000 people, like, that's the show that's, like, waiting for it to drop, right? Or it's, or it's a group chat that only has 50 people, but it has, you know, maybe like more activity for that, those 50 people than any other social platform that they use. So can you talk about how you think about, like, sizing sort of, like, projects, right? Because not everything that should be done should be massive, right? 100% of the it's interesting there's this business industry dive that really taught me about something it's a business that not a lot of people know about but it's immensely successful a lot of people when they think about media businesses of last 15

years they think about like BuzzFeed and box and it's kind of like you know upworthy these businesses raised a bunch of money in the 2010s and totally crashed right there was you know there was a bunch of venture firms you know this one included do it doing sort of, you know, consumer media businesses. And people thought, you know, they were going to ride the platforms. And they were, they were big. You know, they were growing. But then sort of the, you know, as you alluded to the platforms, you know, took the value,

it was where the value was. It was in the distribution, not in the, and these were just like content forms on top of them. But an under told part of that story is that business media has actually done pretty well. This company, industry dive, which is just a collection of niche trade publication. So things like utilities. weight, HR, pharma, just like a valuable niche like newsletters

sold for $500 million, I believe, to Informa, which I believe is like a $10 billion trade show company. Wow. So business media, business events,

there's quite a good business there in trade stuff on the B2B side because, you know, if you have the leading HR publication and, you have 50,000, even 5,000, you know, decision makers reading or listening to your thing, that becomes a great channel for people who are trying to sell to that audience to reach them. And they're willing to,

if making one sale can be tens of thousands of dollars for them, they're willing to spend quite a lot to reach that audience. So the premiums on the CPM are just fantastic. And so Sean Griffey, the CEO of Industry Dive, has been like educating the market on And so I heard him. And then I looked at it. I think they're incredible at business. I'm incredible at sales. I wasn't like blown away by the content itself.

You know, they're a great business and they built something much bigger than I have. But I was like, wow, I think more people could do this. And the business Workweek also is doing this. And I wanted to do sort of a Silicon Valley take on that of like, you know, Lenny Rojcicki is the goat of this for product managers, the newsletter. Yeah, I think he's almost had like a million subscribers. and he's printing cash.

And I was like, hey, there's going to be a lenny for for HR. There's going to be a lenny for CFOs. There's going to be a lenny for every position in every sector. I want to create that. I want to create this roll up. And we started on the podcast side because that's what I know. I think there was gap in the market for like, you know, the best of X. And we did that.

I think we had, you know, reasonable success. And I was excited about adding additional businesses or business models on top of that. Investing being one of them. And I think ASEN is the best place to do it. Makes sense. What do you think about the different business models and media between ad, sales, subscriptions, monetizing through trade shows or merch or products? I've seen, I'm a big fan of Doug DeMiro.

He kind of like, you know, value captured at the very end of building massive scale. with cars and bids, his online auction platform for cool cars made in the modern era. Yes, I'm a fan. I know this whole tagline. But in general, like, what business models do you think work in tech? What business models do you think work in other industries in trade publications versus more traditional journalism? How are you thinking about the landscape of monetization of media? Well, yeah, it's really fascinating question. It depends on what niche. Like, if you're as big as someone like Mr. Beast, you want like a mass market thing. Chocolate bar.

Yeah, even Mr. Beast, I do wonder if, and I'm, I'm friends with him and I think he's genius, but I do wonder if that's the right, if that's the most optimal business to be like, and I like he's also getting to gaming too, but like should Mr. Beast have like, sort of a cash app competitor or like, or I was pitching a VPN, Beast VPN, because he has a global audience, low churn, high margin. It's not, VPNs are not suitable for venture backing typically. It's all marketing that the entire expense is just getting people to install the VPN. So, you know, it doesn't matter where his audience is. They can sign up for the VPN. Silly, but I don't know, probably not a good fit, but it was funny.

You guys had the founder of Honey on who's a very good friend of mine and he's building a really great business I just invested in on the ad blocker's side. But like Mr. Buse was saying that he brought a lot of Honey's traffic. And so should he have created a Honey competitor back. Like, there's got to be something that's bigger. Yeah. There's better margins, you know, than chocolate. That's more defensible.

Well, there's an interesting, there's an interesting thing with media, which is like this idea of value, value creation versus value capture. And it's possible with media to create a massive amount of value, but not fully be able to capture it. That being said, one of the best ways to capture value is just put out amazing content and then invest in the companies that sort of come around from that. So I think that people have had this idea of, you know, media of one of the best business models for media being investing. Yet that doesn't mean,

you know, starting a solo GP fund and just having a podcast necessarily. Like, it can look a lot of different ways. And that's why I'm, uh, I'm excited about turpentine in the context of a 16s, because you can make the best podcast about biotech. And you're, it's less about how do we, how do we, you know, scale this to, you know, millions of ad revenue and more so like, how do we just have the most important conversations in biotech happen on this, you know, podcast and then invest in some of those companies and see the return from that. Yeah, I know you're still like, you know, second day on the job, but I'd love to know kind of how you are thinking about the current A16Z media landscape. People talk about like, oh, future was kind of, you know, didn't get, didn't roll out

the way they wanted at the same time. It's like, if the named partner can go on Joe Rogan, like you're kind of winning. And so, you know, I think about like the, Joe Rogan appearance is like probably worth a thousand at bats that maybe, you know, are strikeouts or whatever. But, but, you know, how do you balance the, let's build an intermediate, like a in-house media product versus let's empower the team to go and make a statement on other shows like what Mark did with, uh, with the, with the, with the, with the, with the, with the Rogan appearance. Totally. Um, yeah, it's a, it's a fascinating question. So I'm still, I'm still getting up to speed with the, yeah, yeah, yeah, the exact

history, but my outsider version of it is that the future, well, let me step back. What I love about Andresen, and it's not limited to Andreessen, but that they, they try a bunch stuff. Yeah. Like you guys, right? Like TBPN, you know, you guys had a few different iterations before coming to this one that worked. And people don't see that, you know, like making video content for years before this.

And Jordan, you were making all sorts of, like, amazing brand of content and doing all sorts of experiments and you guys tried it with different people first, and you figured out the format that works, like a couple years in or a few months in. So similarly, I think future was a good idea. And I think it's possible there's some version of that that comes back. You know, they already do a lot of long form content. I love their everyday carry for founders where they would just ask the, they would just ask the founders in the portfolio, hey, like tell us what apps you have on your phone right now. And that was it. And it was just like a listicle of like, okay, the founder of, you know, some amazing company, like data bricks, like what's he using on it for his

email client? And it's like, that's just interesting. I don't know. It's like, yeah, it's like total insider baseball. It's totally like, oh, it's only Andreisa portfolio companies or whatever, but like, I don't care. I just want to know, like what these people are using. It's interesting. I don't know. Totally. So they took a first stab. I think there were a lot of great things about and I think it also coincided with sort of either the Andreessen, uh, decentralizing into different funds. Sure. Like they used to be main fund and now they're sort of different funds. And so there's some org complexity perhaps around that. I think there's much more buy-in and much more maturity in the org to do something like it again. That's not immediate priority for me. I'm on the

content side, separate from investing. I'm more focused on the podcasting to begin with. Sure. But to your question around own shows versus creators, I think we're going to have a mix. So we have some flagship shows right now with the Ben and Mark show, with A's Z show, that we're going to have vertical shows relative to the funds. But I want to sort of really grow the Turpentine network. And, you know, the limitations of Turpentine were that we were a bootstrap business. So we have to make money from other shows. But, and Tristan doesn't have those same limitations.

So we want to do something like an affiliate network where we can partner with amazing shows, help them get distribution, help them make more money, and kind of make it a no-brainer for them to be part of this sort of broader podcast network that just sort of extends our influence and friends of them. And I think what's interesting is that if this works in podcasting, there isn't like a premier tech podcast network that works with like the best shows. Like there are some, you know, I love what Ashana's he's doing. That's only like, that's like seven shows. Those shows are great. And I love, you know, the HubSpot's doing some good stuff.

But like, you know, Lenny's not on a network, Dorcash is not a network. There's a bunch of people because they don't need to be. But if you can make it a no-brainer, I think there's something interesting there. And if that works in podcasting, maybe you can work with newsletter writers. Maybe you can work with YouTube creators more broadly. It's kind of like extended. Like I love what Slow is doing. They have a creator fund.

There was a super, super cool Andresen Games video that was produced by Secret Tape, which runs this video game documentary channel called Noclip. So they will do like the full history, the most defamation. documentary about like half-life or Counterstrike and they'll go and interview all the people that worked on it these really really amazing things and it was actually a viral video like it got almost 500,000 views and it's uh this is why games like balder's gate three are so rare just like a a deep dive on the history of balder's gate this like great role-playing game and I just saw this and I was like oh like it's awesome that they like they found the right match of like the

the team behind NoClip and these documentary secret tape, they're great at creating. And clearly, Andrews and Games, A16D Games was just like, go run with it. And it worked out really, really well. So I love the idea of that partnership model you've described. What do you think about the infrastructure around group chats, right? Like, nobody wants to download another app, but at the same time, like, you do run into limitations.

Everybody that's built on, you know, you've built a number of communities, right? And I'm sure you've like hit the limits on Slack, hit the limits on, you know, run into issues on Discord, you know, Signal has its limitations, WhatsApp. Like, how do you think about scaling these sort of like vertical, you know, group chat, like if you product, a group chat is just like a, it's a curated social network, right? And how do you think about the infrastructure surrounding that? You think there's opportunities there? Yeah, so at first is zooming out, I think a lot of the last interesting, most interesting conversations over the last five years to me have been in group chats and I've been in some with you guys where that's happened. And I think it's just because, you know, Twitter X, just social in general became a little bit too noisy, a little bit too public. And you needed to have these kind of like private spaces just to have conversations without a bunch of people sort of like getting in the getting in the replies. And, you know, there could have been a world where Twitter, that just happened in the DMs, but for whatever reason, that it moved out to different group chats. And so, but the platforms are not really built for, you know, Signal WhatsApp, they're not really built for like hundreds of people in a chat, right? And, you know, they get notifications for every message.

The identity's messed up. Sometimes John Coogan just adds a bunch of random friends on a Christmas Eve. You have to text me and say, hey, are you? going to stop or are you going to keep going, John? Because I made you an admin when this is a lot smaller and there's much more powerful people in the chat now. Why are you inviting all your friends? Yeah, that was back when I cared, when I tried to moderate the chat that since, you know, Bology just Bology goes Bology and I can't. Yep, it goes full Bology all that time. It's great. That's what you live for. So I, I've thought about this for a long time and I worked for Shrewarm when he

was at in Driesen because he built out there, Groupshead Operation. They basically of dozens of group chats, different verticals, different categories. It's all separate chats. There's no like master directory. So I mean, what it should be is like a real social network of like a thousand super interesting people and you can cross promote and it should be sort of, you know, like interoperable in some way with certain permissions. WhatsApp's not built for it.

Right now we've just optimized for ease of use. I think that in the next five years, like someone is going to build a group chat social network where every day, well, you guys cover the current thing every day, but Twitter is too slow in the way that like, like Twitter sort of obsoleted the New York, the traditional media by just being way faster. And I think there's going to be something that's even way faster than Twitter. And by that, like, Clubhouse got into it a little bit, whereas like it's basically like the beef of the day.

Like every day someone gets in a fight or there's some drama and there's going to be a platform where they just fight live. I feel like that's just going to happen. Like I remember in Carbouss with Mike Solana and Chesa Boudi, like infinite entertainment. And so group chat is just so much more live. I mean, Vlad Tenev and Elon Musk. Like that was iconic. So I was actually working on a product.

Sure. That was going to be like Pub House for group shots where you chat live with a public audience. You can sort of tier the permission gates and there's a speaker and an audience. That's fascinating. about really had some magic, but I actually think, you know, people said they got too big and they did, but, and, you know, they're pioneers, so kudos to them. But I think that also the audio format's a bit hard. You can't, like, scroll audio, the way you could scroll text. And so I think group chat format is the right one. I was working on it. But then I, you know, spent time with,

with Mark Adrieson and decided to have other plans. And I also met another team that I, I'm not going to announce here yet, but introduce you to them. And when they're ready to announce, they will. Who's building this? And I think it's, I think it's, exciting product. I think the, as you said, Jordy, the bar for a new app is really high, but there's a bunch of different ways that what's happened signal just aren't built for it. And I think you could do a 10x better product there. So I'm going to know, I was asking in hopes that you were incubating or funding or he found something there. He found it. You found it. You found it. You found the right one. It sounds like. But yeah, it just seems like such an obvious opportunity.

When I hear about you running, you know, multiple groups, I'm just like, wow, it sounds. really exhausting the second that you get even more even just one is a lot yeah so one is a lot excited to see that roll out i have a hot take i want you to react to market maps are underrated oh interesting um flesh out the case uh i just think that uh they got really like overhyped and they were kind so i mean the basic map the basic mechanism of a market map is it's inherently viral because when andresen puts out a market map of like all the gaming startups like every gaming founder is going to be on that list. They're all going to repost it.

And so it's just naturally like bait for the algorithm that it's going to get a lot of attention, a lot of quote tweets. Oh, thanks so much for including me, right? But then it became like very like cringy and it was like, no, you should be like thinking more deterministically about the future. You should be more aggressive. You should be thinking more about even like bigger problems like the far future, the world. But, you know, I've gone back to market maps and I think there's maybe something interesting

there just to kind of. kind of take you on a tour of all the different approaches when there is uncertainty about something like AI at the application layer and how that's applying even to legal. Like everyone kind of knows Harvey, but there's probably seven different companies in the legal AI space, probably 50, 70, and they're all taking slightly different approaches. And it's kind of a nice, like, little window into this industry that you might not be immersed in. And so it creates some value for, you know, keeps the associates busy, keeps the partners busy. But it's also just maybe we can get past the criticism that like, oh, market maps are too

basic and cringe and maybe just go to like, hey, actually, they make sense. If you read a Goldman Sacks report or Morgan Stanley report on Wall Street, you would often see something that looks like a market map. It's just instantiated in equity research, right? Or equity capital markets research. I'll go further. So I agree with you. But I'll want up you and say, I think lists are underrated. Like forms have trained us to think that. Yes, yes, yes. you know, the lists suck or they're obviously always game or everyone's going to go to jail if they're on a list. Yes.

Hypothetically speaking. But, you know, we've joked about sort of the, like the Forbes 29 or 29 or 29 or 25. Yeah, yeah, yeah, yeah. I think you should do that. I mean, I don't know if it makes much sense now. Maybe we do it. Maybe we do it. Or collaborate or something.

But discovery, like knowing what people think about people is really important. And it's what we do all the time. We're like, who's good, you know, who's emerging? Who should we pay more attention to? And I think that functionality, sort of like market maps, like the execution has gotten sloppy. And so we sort of thrown the baby out with the bathwater. But those things, they do perform best,

which is why they get games. But if they're good, they're really valuable. Totally, yeah. Yeah, we're actually going to do a Midas list competitor. It's going to be 100 of the top VCs. It's $100,000 to be on the list, a million dollars if you want to be on the top 10. But yeah, just email Jordy if you want to be on that list. If you're listening, we'd love to have you.

I love your whole corporate media, like, Rand. Oh, yeah, independent media is dead. Corporate media is the future. Yeah. You're either backed by a trillion-dollar venture fund or you're shilling for ramp and Bezle and ad quick and numeral and A-Sleep and wander. You're one of the others. On a more serious note, I'm curious if you're seeing from group chats, the edge that you

used to be able to get from the internet. Like, internet used to be a place you could, you know, Blake Robbins talks about hanging out on the edge of the internet. But like, but you could be in these sort of different sub-communical. and sort of discover somebody. And, you know, we had this, this kid, this 21-year-old named Roy, who, like, rocketed to, like, almost 80,000 followers in, like, a few months. Serious.

And historically, that would have been, like, some, you know, maybe he would have had gotten kicked out of Columbia, and, like, two people would have heard about it on X. Yeah, no way. But now it's, like, information moves so quickly. Is it, you know, are you seeing group chats as, like, the sort of where you get an edge right because it's like you know more niche down there's like less there's less noise there's less attention maybe if there's a thousand people in the group chat like you know it's there's less like almost like leakage like how do you where where do you think about so it's it's really interesting

so a few years ago when people were more sort of centralized on on on Twitter there was more of a desire to to it was critical to go to group chats because some someone uh was sort of was quicker to cancel you or call you out or there was just like more friction. But social media has balkanized a bit, right? The whole blue sky exodus sort of, you know, people who are threads, whatever, people leaving X. Like it's a bit. And then Elon sort of, you know, with his sort of new impact on sort of the like free speech dynamic or even just like everything's about politics all the time. So people are more comfortable speaking up on X, but because they're more comfortable speaking up in public,

they're also more comfortable speaking up in private. So I've seen what happens is these like eight people group chats. You know, me and John had a great one for like a couple years. There's less of a need for them. It disbanded. Now we're in like multi-hundred people group chats because we're more public. And I think it's cool that, you know, we have people who disagree. Like we have this, you know, one chat where our good friend, Mark Cuban, gets, you know, great debates.

You know. I thought you weren't supposed to say people's names in that chat. I thought the whole reason was Chathamhous Rules. You're just supposed to say, a, you know, billionaire, who's somewhat left wing, he was lampooned on Silicon Valley. Yeah, reality show. Yeah, pitches. He went on a podcast with a bake.

They had a debate. So this is public because they said their names. They did a debate on DEI in our chat. And then they took it to the podcast. Oh, that's cool. They mentioned the chat. So I'm comfortable mentioning their names as. as people who've had debates.

And it's just fascinating. He doesn't want to go on Twitter because he gets dunked on a billion times. In the chat, he'll get dunked on, but with more thoroughness. Sure, sure, sure. And we all learn from it. He gets some dunks in too.

And that's the dynamic you just won't see anywhere else. And I didn't even see it a few years ago because you wouldn't even think to put people who disagree in the same chat. So yeah, I'm still seeing the alpha. Well, the most important group chat to me is the one that's just me and you, Eric, our one-on-one group chat. That's the best group chat in my DMs. Thank you so much for coming on.

This is fantastic. Hey, Eric, little requests. You're the first Andresen partner to come on the show. Let's get the rest on. Let's get a lot. Send it over. Thank you for, you know, only Nixon can go to China. Only Toramberg can go to TBPA. I'm here to broker the relationship. Are you Kissinger or Nixon in this analogy? I'm confused. I think you're kissing. You sneak in through the back door and then Nixon makes his arrival.

We're very excited to watch you work and collaborate and congratulations again on the move. We'll talk to you soon. Cheers. Bye. Next up we got Jack Whitaker coming in to the studio. The author of the fantastic substack, Bunny Hopping. I wonder if that's a reference to Counterstrike.

I'm a big fan of Bunny Hopping. know if you ever did that or if that was before your time that like a bmx reference too oh yeah yeah yeah you can bunny hop on a bmx bike uh but he wrote a great post pre-training isn't dead it's just resting gpcc four point five the value of reinforcement learning and the economics of frontier training so welcome to the stream jack how are you doing boom doing great it's great to be on the show thanks for coming on a little context for everyone jack is helping us uh with uh our distribution strategy so thanks for all the Support Jack. It's great to have you on the show, probably first of many, I guess. But I love the post and I'd love for you to take us through it. What inspired this? You kick it off with a couple of the reactions to GPT 4.5. The one that's popping out to me is from Jack Morris. He says, so GPT 4.5 is 10x bigger than 4.0 and only marginally better at most things. My read could be the beginning of the end for scaling laws. What happened here? Did we run out of data or do scaling laws not capture model behavior on tasks?

we really care about. What inspired you to write this post? Yeah, definitely. So a lot of me and my friends really like GP4.5. And we kind of had this high taste tester mentality where we thought it came out really well. And we were kind of confused why people were underwhelmed by it. But a lot of the reason people were underwhelmed by it were the actual benchmarks. You can look and you can see it did worse than you'd expect. So me and Trevor were like, well, did it do worse than you would naively expect on the benchmarks? Have we actually they graphed out a log-linear law to this scale and seeing what performance we'd expect on AI and E on everything else.

And when we actually did this, we saw that it was about in line with benchmarks, a little bit better, a little bit worse. And we thought this was a really important conclusion. I think what a lot of people don't realize is that these are log-linear laws. If you double the amount of compute that goes into AI model, you're not going to get double the score on the math benchmark. This is something that we expect that as compute gets

larger as buildouts get faster, you know, we're going to get much better models, but not just because you can double model strength with doubling the amount of compute. So what is the, what is the implication for that? Like, what model should people be defaulting to in the chat GPT app? I think that's the, that's the thing I want to start with, is should people just trust you and say, you know, I don't care what people say online, I got to pick 4.5 from the drop down. Even if I can't tell I will be getting better results or or is there more nuance there with some of the reinforcement learning that's happening on top and some of the reasoning models that might kind of take things to the next level even if the underlying model is weaker and cheaper. Definitely. Yeah. Well, I think the central claim here is

that pre-training will continue to work as we're able to build it out, not that the pre-trained models are the best right now. I think opening eyes 03 is the best model we've ever seen. It uses RL on every single type of tool use. It uses RL on chain of thought. It is quite a small model. And it came out really impressive. Is 03 built on 4 or 4.5? I'm kind of confused at this point. Yeah, there's no public information on it. Me and Trevor did some estimates based on the token speed that comes out.

And it seems like it's quite a small model, smaller than GPD4, bigger than 4-0 mini. Okay, interesting. So is this something that we're expecting them to optimize over time and eventually distill 4.5 or maybe just scale up the inference chips to the point where they can, run an 03, 04-style model on top of 4-5? Yeah, as you scale up the inference and as you scale up compute build-outs, you could take something the size of 4-5 and you can do 03-style training on it. And I think that's going to be a really, really exceptional model.

I think a lot of the point of the piece was that you have, like, a lot of axes on which you can improve AI, and none of them are obviously showing diminishing returns. So there's just tremendous potential to make models better, and there really is no wall. But what about the economics at a certain point? You need an order of magnitude. This is log linear, of course. So you need order of magnitude more compute. We're getting into the $500 billion data center at a certain point.

You get to $5 trillion, and you're talking about a meaningful portion of global GDP. And if the results are, oh, it goes from 128 IQ to 130, the economics don't really pencil out. What's your take on will we just see a pre-training winter just? for purely economic considerations. Yeah, and I think that's what we're seeing right now. But another thing is that even as we have, it would be really expensive to train a model 10 times bigger than GP4.5 now and probably, like, impossible to serve.

But in a couple of years, we're going to see the type of algorithmic efficiency, and we're going to see the type of chip improvements that make a model this scale much more feasible. When you say algorithmic efficiency, are you talking about the type of optimizations that happened with DeepSeek on kind of memory interconnect, the FPA, those types of inference optimizations at the actual inference level, or are you talking

about the actual design of the algorithm as it's trained or the design of the model? Yeah, basically on every level. I'm really referencing Dario's excellent piece about deep seek and export controls, where he says that deep seek is really good model, you know, but we do just see these continuous algorithmic improvements as we go, you know? So sort of the functional ooms of compute are also scaling, even if you know, even if you if your compute isn't scaling. Talk about switching gears for a second.

What is the, what's the vibe on the Stanford campus right now? Is there a risk that everybody drops out to work on AI? I imagine it's like a constant conversation. Yeah, I wish it was honestly talked about a lot more. There's a lot of people, a lot of my friends around campus, like Mohit Agarwal and Jacob and Tamaki, you know, who are super aware of this stuff, you know, and are always kind of pushing things forward

and thinking about these things all the time. But in terms of just like the populace getting used to AI and getting involved in it, it's just been a really slow and continuous crawl upward, you know? I'm a CS major. I end up talking to a lot of CS majors, and they're not fully internalizing what the model suite is going to look like.

Everyone thinks that the models are going to get better around the same kind of paradigm and level, you know? And no one is ever thinking, we have her three now, what's GPT5 going to look like? in a few months. What's GPT6 going to look like next year? What are you thinking GPT5 will look like? Are we just talking about another order of magnitude on pre-training flops, or is there more too than that? Yeah. So my naive guess is that GP5

is going to be a model that uses all the clever training techniques that OpenAI and Anthropic have worked out around RL, but it's scaled up significantly from these pretty small models. Sonnet 3.5 is pretty small. I think the O-series is quite small as well. One thing that I think is the most interesting about O3 is that it has a lot of these agentic properties that we've been seeking for so long, but it has them in this kind of narrow sense where it can agentically call tools. It can agentically browse the internet, but it's not necessarily like agentically going and doing a whole project, you know? And I think that trajectory is one to watch as you look at GP5 because you're going to see it being more and more agentic just very naturally as context expands and as the model expands. Yeah. Tyler Cowen said, O3 is AGI. We had someone on the show yesterday who said, we have 10-minute AGI, but that's not necessarily eight-hour AGI or 24-hour AGI. How do you think about the length of reasoning chains and kind of that new frontier of optimization? Maybe we've hit the intelligence

curve, but we need the agenticness to continue for a long time. Yeah, I basically think that's right. AGI take is exactly right. I mean, the AGI debate hinges a lot on what definition you use. Obviously, the Microsoft CEO came on Dorcasch a few months ago and said, I'll only believe it's AGI when the GDP goes up by however much percent, you know. I think we're starting C models that are very general and they're very intelligent, you know, and they can do a lot of the things that you might have naively described in AGI to be able to do, but they still don't really have this like full capacity yet.

I think a lot of this stuff just gets worked out as we kind of improve our current techniques, though and isn't necessarily like some barrier, some key problem that needs to be solved. Are undergrad CS majors bullish or bearish on like rappers or trying to go for the application later, trying to do a startup or are the best and brightest saying, hey, there's no way we're going to win. Let's go work for a lab. Yeah. I think a lot of the smartest people I know really want to work for labs, but I think they're

almost too bearish on startups and on wrappers, you know. and that a smart wrapper can take a model and kind of scale up with it, you know, and I think this is what we've seen from places like cursor. You improve as the model improves. If you're making a wrapper that's a bet on models not getting better, you know, like this is keeping a lot of prompt engineering and you're really working to create the scaffolding to try and make the model better instead of just saying, okay, how do we out how do we get distribution?

How do we get the user experience? Yeah, the sort of it's better. Very light wrappers of the last few years. I think a lot of them relied on consumers not being aware of chat GPT's capabilities. I mean, there's some apps in the apps that are literally like chat AI. Yeah, there's still like billions of dollars of revenue out there. That's basically, they just happened to acquire a customer before Open AI did or another lab. Yeah.

Can you tell us any more about just the mood among CS majors around the opportunity in startups broadly? Yeah, I may write about this pretty soon, but I do think the startup culture at Stanford is really not what it used to be. You know, there was sort of this like halsey an era at Stanford where it seemed like there was so much energy around startups. And now it really feels more like people are doing their startups in summer projects and people aren't committing to them in the way that you really want to see. I think that if some Stanford student came to me and said, I want advice on what I should be

doing this summer, I wouldn't tell them to go start a company. I would tell them to go work for ramp. I would tell them to go work for cursor. I would tell them to go see one of these incredible organizations, look at how they work, and then take this knowledge to go start a company. I think too many people are doing these things as like side projects and not fully committing to them.

Yeah, we talked to somebody who is referencing the early Facebook days at Harvard where if you were an undergrad at Harvard or Stanford and you were interested in startups, like going to Facebook was the expression of that. Now, if you're interested in startups, like there's a $2 million seed round just waiting for you and you will be a founder, even though you could go join a 10 person or even a hundred person startup, get a lot of that startup experience.

So do you think venture capitalists are to blame here or is it something cultural or should we lay it on the university? Who's to play? There's no actor who really made this bad, but the fundamental issue is that startups became too high prestige, too fast. And like doing real things and really building things didn't gain that same kind of prestige. This is a lot of actually what I valued most about my time at Dorcasch podcast, which is where I worked last summer, was that Dorcasch felt like a startup. We had all of this energy, all of this attention that a startup had.

But at the same time, obviously, we're doing a podcast, you know, and we're executing a very high level, but it's a podcast. And I think getting to work with someone like Dorcasch who has this agency and this knowledge and this drive to make things better and make his content incredible, make his questions incredible, was something you can learn a lot from, you know. So it becoming higher prestige to have like stealth stowed up in your bio than it is to have like, I'm like working for Nat Friedman this summer is like pretty lame. Yeah. I think that'll shift. I mean, working for Nat Friedman's pretty cool. Working for Nat Friedman's pretty cool.

It will catch up. Yeah. The benefit is we have a generation of people that are finding out just how hard startups are. And there's not. There's not. And they'll land somewhere. Yeah, they'll land somewhere, but also realizing that if you're going to start a company, once you know how hard it is, you really, really, really need to pick ideas carefully.

Totally. Can you give me your read on the last two episodes of Dwar Cash? He had AI 2027 and then AI 57, 257 or something. Are you AGI-pilled? Are you feeling the AGI-I? What's going on over in your world? Yeah, for sure. I actually, I mean, I think the epoch people are fantastic.

and I also think the AI 2027 people are very smart. And I've sent these to both sides here, you know. I think model capabilities will grow very quickly, and I think it's much less clear how this will translate into the economy growing really fast, you know? I was in an interview recently, and someone asked me, say, Jack, you keep telling us that AI's going to be good.

I think AI is already good, you know? Why hasn't it changed the economy? I was like, I don't really know, you know. It seems like the naive economic model says the diffusion of technologies takes a really long time. And it seems like intuitively that wouldn't be true for software, but practically it seems like it is, you know. So I think the AI 2027 people might be mostly right on how fast things are going to grow and how fast the models are going to get smart. And then the epoch people might have a really good sense of like, oh, but really getting this into the sewer sector, getting this to disperse across the economy in a way that changes things fundamentally is a much longer issue.

Yeah, I mean, maybe it's just like a human issue. You could kind of comp it to, I mean, you go back to like the PayPal days. Like the internet got fast enough to transfer money very quickly. And then the percentage of money that was transferred digitally grew very slowly because it's human behavior. And it was only last year that Strait became 1% of World TDP transactions, you know? And that's Stripe. And they're like the power law winner in the category. Yeah, it's crazy.

Anyway, Jordi, you got any other questions? Not this second, but Jack is great. Yeah, we got have you back. Every time you publish, hop back on. give us the breakdown. This was fantastic. Thanks so much. And Jack's coming to L.A. soon. Oh, fantastic. Looking forward to meeting you in person. Yeah, for sure. We'll see you at the new studio. See you at the simple technology. Thanks for coming on, Jack. Bye. Good to see you. Great few on, guys. Thanks. Thanks. See ya. Talk to you soon. Should we go through some timeline posts and then get out of here?

Matt Wang says, I find, he's quoting, he posted quote, I find that super subject matter experts can sometimes be very bad at predicting the things they're an expert in. That is because, they're overweight their own expertise. Interesting. I think we should deep dive this. This chat with Domer, the number one trader on polymarket. Interesting. Kind of like an anti, it's not anti-wisdom of the crowds, because that's polymarket, but there's something, there's something there that, I mean, highly relevant to the AI discussion, where everyone has a different prediction. They all have a different set of experiences and expertise, and then also conflicts of interest and all sorts of things. But we should dig into that post.

Joe Wisenthal shares that markets are surging on this headline. Besant sees de-escalation of China. Situation unsustainable. S&P now up 2.7%. I didn't really. Markets love. Markets love when a situation is unsustainable. Yeah, we're de-escalating, but unsustainably.

Who knows? Anyway, we got some big news. in the media world, Evan Armstrong has walked away from his cushy writing job at every to launch his own startup today. He's going founder mode. He says the leverage is his big swing starting a company while parenting a newborn feels a little insane, but I couldn't keep this idea inside me anymore. It had to exist. So congrats to Evan for taking the leap into the arena out of one arena into the other. Maybe it'll be a public company today. Maybe it'll be a public company to one day, maybe you'll be able to buy the stock on public.com investing for those that take it

seriously. They got multi-asset investing. He's got to be the first substack to SPAC. Yeah, I'd love to see it. Anyway, we wanted to give a little congratulations to CC Gong. She shares a life update eight months after she went viral for supporting her YC boyfriend. I don't know if you saw that eight months ago. I missed it. She posted some photo saying, like, I, my boyfriend's in YC, I cooked him dinner and it went like very viral. He, but he proposed this last weekend by bringing together a hundred of their friends and family to surprise her with a stand-up comedy show that she had to perform in.

It's fantastic. She says, I posted the tweet in Just, but it sparked a global gender debate about women being invisible, emotional labor sidekicks to men's visible professional success. In actuality, my fiance is my secret weapon. So congratulations to Cece on the engagement.

I hope the wedding planning is fun and enjoyable. And I hope his company starts ripping. You know, if it's not ripping already, he went through YC. Hopefully it's just up and to the right from here. Marriage is the greatest investment you'll ever make. It is. One of the most important. It is.

Calvin, Kevin says, never buying regular Zins again, five pound bucket of horse nicotine from tractor supply, never underperforming or having a foggy mind ever again. I am the hashtag boss. lipping half a horse dose and I feel great. Can you scroll so that people can see this? The next slide is keyed up for the Mustang horse nicotine packets. If you pull up the next slide.

Do you know about this? Is nicotine consumption in the horse community a big thing? No. Wait, do you understand the riff on this? So basically someone got horse electrolytes. Yeah, yeah, yeah, yeah. Okay, okay.

This is horseade, horse gatorade went mega viral. And so now people are spinning off on that. Got it. This is clearly AI generated. Oh, okay, okay. This is AI generated. way too quickly. I saw it and I was like, John, is this size of an average horse? Maybe I should do this. We got to get Lucy to do some horse nicotine. There were other jokes about this. There was horse creatine. People were spinning off on it.

There's a variety of options. I got AGI's here. Yeah, AGI's here. Oh, this is big news. The star defense tech founder Matt Grimm was spotted. Spotted. Soaking up some sun at his Costa Mesa headquarters. He is, of course, the founder of Anderol. And he's stunned in a perfectly tailored three-piece suit. You can't step out of your office without one of our... We have paparazzi everywhere. We're bringing the paparazzi to technology. And Ben had a good idea. He said, need TBPN to start a weekly segment,

showcating the best tech business and finance fits of the week, what league fits does for the NBA. Here we need for the high-class work fits, maybe even throw in a yearly award segment. Oh, we already did that. We already did that. We already did the best fitted in tech. Aidan Gomez was the runner-up.

I believe Alex Karp won for his general overall style, but also his fantastic Patac-Felipe Aquanaut with the gold strap. Well, great idea, Ben. Or the orange strap. We already talked about Clue Lee, but there's a lot of backlash. I thought it was a great interview. I thought it was interesting. It is a little...

What's interesting is that I don't find his actual product that dystopian, the idea of having augmented reality glasses that I think he finesse the internet for a bunch of attention. Yeah, he finessed the internet. I think he's going to leverage it very well. The most dystopian thing is that he's clearly a talented founder. He can't just say, I'm building augmented reality AI app. He has to go and put it in these provocative terms. That's actually the kind of more dystopian thing. And he wants to get to, you know, a implant effectively, a chip for your brain. but he's got to build enterprise SaaS to get there. Yes, I love that.

And that's a good lesson for everyone. Well, speaking of a lesson, a Sam lesson said the state of VC. Let's actually save this for tomorrow. Okay. Yeah, let's bring him on. Go through it properly. Yeah, it'd be great to invite him on and talk through what to do as a seed investor and his TLDR.

We will go to a post from Bezell. We already did the ad read, but they had a great post. Cartier said brand everything, and they launched a horse headband that's branded. I love it. Camel drapery, branded. Grass, not yet, but they're working on it. Maybe we should do a TBPN horse headband or camel drapery for the folks in the audience who have horses and camels. I think it'll be great. Put some ads on there like the jacket. We should do a TBPN. Camel drapery or horse headband? Horse drapery. Horse drapery? Yeah. Livery for your horse. I love it. Anyway, shout out to Michael in Hawaii. He says, doing my duty and TBPN pilling my Hawaii. I eat one big screen at a time size gong in full effect. Thank you, Michael, for putting us up on the largest TV I've ever seen. This must be a projector of some sort, but I thought this is an awesome post. Thank you so much for sharing us on the big screen.

We love to see the show on TVs and offices. We love when we're just passively on in the background. We'll get the subtitles going at some point, the live, like what you see in the gym. Live transcription. Yeah, live transcription. I'm sure we can do much better than what. the standard is on TV. That'd be great.

Also, another post from Rahul, been on the show, a big fan of him. He says, with intense focus... He's been really wearing the suit everywhere. It's fantastic. It's amazing. I'm so happy.

Because he works in finance artificial intelligence. So, I'm glad he's dressing the part. Finance artificial. With intense focus, you can build a superior product. He's sharing a text message that he got from a friend, I believe, or a customer. Just tried Julius for my first. real use case. I've always been annoyed that the 8Sleep app only gives you the last year of data.

I found out that I could get a full export from them and ended up with like 10 megs of JSON. I tried visualizing the data with ChatGPT and Claude and they just couldn't manage it. I decided to try with Julius and immediately nailed everything I asked for. Keep up the great workman. I love that. And promotion for 8Sleep. Use code T-BPN. Use it. Fantastic. And then download Julius. He also was on a plane and he downloaded all my YouTube analytics and that. I was crazy. Julius analytics on that and showed that, I've been in the trenches. I've been in the trenches.

Content trenches. Yeah, I think the first year I got like a couple hundred thousand views. It was like 17 million three years later. It was great. Great, great run. Anyway. This post from Nat Suki, I don't know if it's, it seems like it might have been Photoshop, but it was funny. Hey, chat, GPT, look under there.

Underwear. LOL made you say underwear. Ha ha, well played. Say home. Home. Lattitude. This looks like, this looks like an ad for gamdom or whatever. It's a gambling ad.

No, no, no. This is a way. So this is a hack that betting companies are doing. Wait, but why is this AI poster posting at gambling? I feel like that's a good. No, no. So basically, what's going on here? I bet Natzuki just post a lot of content like this.

Sure, sure. And gambling companies, I think, are not. pay for the watermark? Yeah, they pay for a watermark on a lot of posts. Weird, weird, weird. Anyway, we'll last shout out, and then we'll wrap up the show. Mass, you know him from the viral swing gate up in San Francisco. We covered on the show.

There was a swing on a tree. It broke. He said, you can just do things and built a new swing. And then that was taken down. Went back and forth. I called it the most important political. issue of our modern day. I said that unironically. But he just wanted to give a huge shout out to Daniel Strachman, Danielle Strachman and 1517 fund. They are the goats because he's been looking

for compute and he got some. He said, we were just approved for $100,000 in AWS credit. Thanks, Mass, for working so hard on that. And huge thanks to Danielle for hooking us up. So he got some credits and he's going to be training a decadillion parameter time series digital twin of the global economy. The future is predicting the future. Are you ready an non? So, congrats to Mass for working on stuff. I think he's working in the stock market prediction, hedge fund prediction. Very interesting area to apply artificial intelligence to, obviously a lot of data. And I wanted to give him a shout out on the show. Anyway, we've had a fantastic show. Thank you for watching. Thank you for listening. And we will see

you tomorrow. Have a great rest of your Tuesday. Enjoy your Tuesday. Goodbye. Chad Day.