TBPN - NVIDIA Earnings, Nano Banana 2, Block Cuts 20% of Workforce | Kenn Ricci, Howard Marks, Yash Patil, Scott Morton, Fan-Yun Sun, Adam Draper & Doug Bernauer, Sammy Azdoufal

Episode Date: February 26, 2026

Sign up for TBPN’s daily newsletter at TBPN.com(01:10) - NVIDIA Earnings Recap (09:07) - NVIDIA Earnings: 𝕏 Timeline Reactions (18:05) - 𝕏 Timeline Reactions with John Palmer (59:35) - 𝕏 Timeline Reactions (01:13:02) - Sammy Azdoufal, an AI strategist, discovered a significant security flaw in DJI's Romo robot vacuums while attempting to control his own device using a PlayStation 5 controller. By reverse-engineering the vacuum's communication protocols, he inadvertently gained access to approximately 7,000 devices worldwide, enabling him to view live camera feeds, listen through microphones, and access detailed floor plans of strangers' homes. Azdoufal responsibly reported the vulnerability to DJI, which issued patches to address the issue, though some concerns remain unresolved. (01:25:59) - Kenn Ricci, an American aviation entrepreneur and chairman of Flexjet, began his career through the Air Force ROTC program in the late 1970s, which enabled him to attend the University of Notre Dame. After serving in the Air Force and experiencing the instability of pilot employment, he purchased a charter company for $27,500, leveraging the company's existing funds and a $500 loan from his father. This acquisition marked the start of his business career, leading to the formation of Corporate Wings and subsequent ventures in the aviation industry. (01:55:56) - Howard Marks, co-founder and co-chairman of Oaktree Capital Management, is renowned for his expertise in market cycles and contrarian investing. He discusses how markets oscillate around a trend line due to human psychology, leading to periods of overvaluation driven by excessive optimism and undervaluation spurred by undue pessimism. Marks emphasizes the importance of recognizing these cycles, advocating for a contrarian approach: exercising caution during market euphoria and seizing opportunities when fear prevails. (02:32:20) - Demi Guo, co-founder and CEO of Pika, an AI-powered video creation platform, discusses the launch of "AI selves," a feature that allows users to create personalized AI avatars capable of assisting with tasks like helping family members with technical issues or providing professional advice. These AI selves are designed to be available 24/7, offering users an ever-present extension of themselves. Guo explains that the AI learns from user interactions and data inputs to accurately represent the individual, enhancing both personal and professional engagements. (02:39:44) - Yash Patil, CEO of Applied Compute, discusses the company's focus on developing specific intelligence for enterprises by capturing latent knowledge and integrating it into agentic workforces. He emphasizes the importance of creating proprietary, in-house agents tailored to a company's unique expertise, as opposed to relying on general AI models. Patil also highlights the significance of continual learning and efficient reinforcement learning to adapt these agents to enterprise-specific tasks. (02:47:44) - Scott Morton, founder and CEO of Revel, discusses the company's recent $150 million Series B funding led by Index Ventures, aimed at modernizing outdated hardware control and test software. Drawing from his nine and a half years at SpaceX, where he developed mission-critical systems, Morton highlights Revel's platform that transforms control software from a development bottleneck into an accelerant. He also mentions partnerships with companies like Impulse Space and Radiant Nuclear, and the creation of a proprietary programming language designed to eliminate common errors in hardware control systems. (02:54:49) - Fan-Yun Sun, co-founder and CEO of Moonlake AI, discusses the company's innovative approach to creating interactive 2D and 3D game worlds using AI-driven world models. He explains that their platform leverages logic and symbolic representations, such as code, to encode the deterministic aspects of the world, while employing pixel priors for rendering, allowing for the generation of complex, interactive environments from natural language prompts. Sun also highlights Moonlake's ambition to empower creators by enabling them to monetize their ideas without being limited by technical skills, aiming to shift the focus from technical expertise to creative vision. (03:01:43) - Adam Draper, a fourth-generation venture capitalist and founder of Boost VC, discusses his firm's commitment to investing in deep tech startups, emphasizing their focus on frontier technologies like aerospace, robotics, and AI. He highlights Boost VC's strategy of leading pre-seed rounds with $500,000 checks, aiming to support audacious founders turning seemingly impossible ideas into reality. Draper also shares his personal inspiration for fostering innovation, including his dream of building an Iron Man suit, which drives his passion for backing groundbreaking sci-fi technologies. Doug Bernauer is a software engineer and startup operator focused on AI infrastructure and developer tooling. He works on building practical, production-ready systems around large language models, with an emphasis on performance, reliability, and applied machine learning. (03:27:11) - Google's Nano Banana 2 (03:31:51) - Block Cuts 20% of Workforce TBPN.com is made possible by:Ramp - https://Ramp.comAppLovin - https://axon.aiCisco - https://www.cisco.comCognition - https://cognition.aiConsole - https://console.comCrowdStrike - https://crowdstrike.comElevenLabs - https://elevenlabs.ioFigma - https://figma.comFin - https://fin.aiGemini - https://gemini.google.comGraphite - https://graphite.comGusto - https://gusto.com/tbpnKalshi - https://kalshi.comLabelbox - https://labelbox.comLambda - https://lambda.aiLinear - https://linear.appMongoDB - https://mongodb.comNYSE - https://nyse.comOkta - https://www.okta.comPhantom - https://phantom.com/cashPlaid - https://plaid.comPublic - https://public.comRailway - https://railway.comRestream - https://restream.ioSentry - https://sentry.ioShopify - https://shopify.com/tbpnTurbopuffer - https://turbopuffer.comVanta - https://vanta.comVibe - https://vibe.coFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spo...

You're watching TVPN. Today is Thursday, February 26th, 2026. We are live from the TB in Ultrudeau. The Temple of Technology, the Fortress of Finance, the Capital of Capital. Let me tell you about ramp.com. Time is money saved both. He's used corporate cards, bill pay accounting, and a whole lot more all in one place. We have quite the linear lineup for you today, folks. We got a scoop. We got an interview with the robot vacuum guy. Linear, of course, is the system for modern software development. 70% of enterprise workspaces are on linear are using agents. Sam, the guy who exposed that he could remotely access 7,000 DJI robo vacuum. Very interesting story.

Enabling live video floor plans and joystick control. We're very excited to have him on in just over an hour. Then we have Ken Richie, chairman of FlexJet. Very excited for that one. Quickly followed by Howard Marks. Oak Tree Capital. Oak Tree. He has a new letter today. And then a lightning round to be remembered forever.

Lots of deals getting done. Lots of gongworthy news. And we have a surprise guest as well. Oh, yes, we do. For the timeline. But first, we will tell you about Nvidia earnings. They crushed. Highly anticipated, as always,

NVIDIA is permanently holding up the U.S. economy. It continues to hold up the U.S. economy, the global markets. But it's sold off, even though they blew out earnings. And it was a very good quarter. So earnings dropped yesterday after we got off the phone with Doug O'Loughlin from Semi Analysis. Semi-analyst did have some good breakdowns here. But the top line, revenue came in at $68.1 billion, up 73% year over year and 20% quarter on quarter. And this beat consensus estimates by nearly 3%.

The stock price popped around 3% immediately, but then sold off 5%. after at the market opened this morning, making it the stocks worst day since last April. They're now just a tiny, tiny $4.5 trillion company. April was DeepSeek? Last April? Last April was Deepseek, yeah. That makes sense. People were saying you won't need a whole bunch of Nvidia chips because you'll be able to inference cheap commodity hardware and the models. And Deepseek was climbing the App Store charts in America, totally organically.

Yeah, there was a lot of weird stuff going on. They weren't using a massive bot farm at all. Yeah. I mean, I guess I sort of steel man the deep seek story. There was this interesting takeaway, which was that even though the numbers were sort of misreported. We had it. We had it wrong. I think it was January.

Deep Seek was January. Liberation Day was. Oh, Liberation Day tariffs. Yeah, chip sanctions. But yeah, the deep seek lesson was like you can distill models. You can get, you know, a certain level of. intelligence at a much lower cost, and that is real, but the demand on the frontier is just incredible, because people are like, oh, I have a strong opinion about 5.3 versus 4.6.

Like, people really care about being on that perfect leading edge for exactly what their use case is. You see this with people having favorite models, favorite flavors all over the place. And so the demand and the Jevins paradox really just powered right through. What do you have to say about that? I was going to say, like, I think when the deep secret moment happened, the narrative was not that they were distilling now. It was that they had built, like, they had trained a brand new model with very few resources.

Yeah. There was no, like, sense that they were just, like, distilling them. There was rumors about it pretty quickly. There were rumors, but the main narrative was not that, like, they're being distilled. Yeah, yeah, yeah. I think what I mean, what I mean about distilling is that, like, the, the truth that came out over the, you know,

new cycle was that distillation does get you somewhere near a, particular frontier capability and allows you to reduce cost, but there is still another order of magnitude of demand for the next generation and the next level of the frontier. And we have yet to see a plateau emerge for demand for whatever the next frontier is. Yeah, and overall the story, the story of the last year is that there's very, very, very, very little demand for number three. There's some demand for number two, and there's an exceptional amount of demand. for the most performant model for a specific task. Yeah.

So going back to our newsletter today, our earnings recap, which you can subscribe to at TBPN.com. After the earnings call, semi-analysis called the results staggering. I love it. Clean bill of health on gross margin, revenue, and the guide is firmly above byside bogies. Incredibly clean, really. They also pointed out what NVIDIA said about supply commitments with 20,000.

$21.4 billion of inventory on hand up from $19.8 billion. They have 95.2 billion of supply locked in with chip manufacturers, also stating, we have strategically secured inventory and capacity to meet demand beyond the next several quarters. In other words, we're not running out of chips anytime soon. That's good news for Nvidia. The second order effect that I think was interesting that Doug O'Loughlin flagged for us was that even if TSM does scale up magically or, you know, they figure out how to build another fab, Arizona increases capacity, even if Nvidia has sharp elbows and is able to push out other demand and get all the long time they need to build all the accelerators that they need, soak up all the CPU demand, et cetera, et cetera, well then you can still wind

up in a weird scenario where Nvidia has the chips. They're ready to sell them. The hyperscalers want to buy them. The AI labs want to inference them. But there's a lot. just not enough energy. And so there's this question of like, when does the shift, when does the chip bottlenecks shift to the energy bottleneck? That could be part of what is sort of worrying people, because you can see in the timeline we have this chart, are you not entertained from Nathan Benake over at Air Street? And he's taking a screenshot from the Financial Times, and it is just one of the most incredible graphs I've ever seen. And so as you see this chart, you have to wonder if there are any bottlenecks that they will run into.

TSM capacity is one. And I asked Doug about this. I asked Doug about this. What does NVIDIA do if their customers do have an energy bottleneck? I feel like they'll find a way to still ship the chips. I agree. And truthfully, as big of a story data centers are, they're still consuming well under 1% of U.S. electricity. And so there are chips to be moved around.

There are new power plants to be brought online. We're actually talking to Doug Burnauer from Radiant about nuclear power today. And there are so many different ways to solve the energy bottleneck. But it is very real world. It is very slow. And if there's a timing mismatch, you could see a little bit of a flatline that I think people might be worried about. So Jensen himself strongly pushed back against the Saspocalypse narrative yesterday, which is interesting because he doesn't necessarily have to. He could be out there.

there saying, like, yes, all those SaaS CPU workloads, they're all going to be GPU workloads now. And yeah, you should actually sell all your SaaS because the future is, is inferenced. Like, every app that you use, it's not going to be code that's running on a CPU. It's going to be inferenced on GPU on demand. And so, you know, demand for Nvidia, should be even higher. Like, he doesn't really have that many bags with the SaaS companies necessarily. Of course, they'd be, you know, upset if he was talking about. trash, but he's not. He's defending them. But he buys a lot of software. Sure, yeah, of course.

He said, I think the markets got it wrong on the SaaSpocalypse. This is Jensen Wong talking to CNBC's Becky Quick, pushing back on the fears that AI agents will cannibalize the enterprise software industry. Instead, he expects a broad swath of software firms to use agentic AI to develop their software and boost efficiency. In what he described as counterintuitive, Wong said that AI agents won't replace these software tools, but will use them instead. Why even waste the tokens building a calculator when you can just download the calculator SaaS or whatever. I don't know, whatever SaaS you want to grab off.

And this is certainly what we've seen with databases. Like certain databases have just skyrocketed in demand because they're the ones that the agents are pulling off the shelf. And so, yes, the agent could design a new database and install it, but that's a lot of work. It's a lot of waste of tokens when databases already exist. So let's tell you about fin.AI, the number one AI agent for customer service. If you want AI to handle your customer support, go to fin.a.i. And let me also tell you about vibe.com, where DC brands, B.C. startups, and AI companies advertise on streaming TV, pick channels, target audiences, and measure sales just like on meta.

And we can move over to the timeline reaction. Invidia is such a big deal. It's not just on the cover of the business section. It's on the cover of the Wall Street Journal. Didn't get the picture, though. Didn't get the picture. The picture is Iran in Iran talking about nuclear enrichment is on hold according to experts. But, Nvidia results help soothe AI fears the surge in profit comes as the AI's industry's appetite for chips continues to grow. Data Center hardware, the chips and networking equipment that Nvidia sells to AI and cloud computing companies accounted for 91.4% of the quarter sales, Terrible news for gamers. Like absolutely the worst numbers you could ever see if you're gamers.

Maybe that's why they're launching a short attack. Teenage John would be punching a hole in the hole. I would be. I would be. Maybe the gamers have risen up and they are shorting Nvidia to try and get them to go back into gaming. Computing demand is growing exponentially, Chief Executive Jensen Wong said. The agentic AI inflection point has arrived. With each passing quarter, the pressure grows. on NVIDIA, which at a market value of nearly $5 trillion is the world's largest publicly traded

company. Is it not just the world's largest company? Is there a larger privately traded company? I don't think so. It must just be the world's largest company. I don't know. I guess you get into crazy definitions of like, does Russia count as a company, since it sort of is all one controlled economy.

It is no longer enough for NVIDIA to produce good quarterly results. They have to produce perfect quarterly results. said Daniel Newman. How could they have done better? Instead of net income of $43 billion in the quarter, they could have put up $50 billion or $60 million or $100 billion or $10 trillion, quadrillion. I want to see a quadrillion dollar quarter, please, Jensen.

I'm not happy. I'm not satisfied. Keep growing. Keep selling these chips. Gavin Baker gave some $1.000. thoughts ahead of InVin. Oh, yeah. What did he say? Great. Shano pulled some out. The same point hit on by Gavin and Citadel Securities.

It's a good one. Gavin said the world is fundamentally short both watts and wafers, and it may take years to resolve these shortages. The shortage of watts and wafers may prevent an overbuild. Hyperscalers would overbuild if they could, but they simply cannot. My best guess is that we would need roughly a thousand X more compute for the unlikely hypothetical scenario described by Citrini to be remotely possible in the time it takes us to get there. will give humans time to adjust and maximize the many potential benefits of AI. Citadel said displacing white-collar work would require orders of magnitude more compute intensity than the current level utilization.

If automation expands rapidly, demand for compute definitionally rises, pushing up its marginal cost. If the marginal cost of compute rises above the marginal cost of human labor for certain tasks, substitution will not occur, creating a natural economic boundary. This dynamic contrasts sharply with the narratives assuming frictionless, of intelligence. Even if algorithms improve recursively, economic deployment remains bounded by physical capital, energy availability, regulatory approvals, and organizational change. Recursive capability does not imply recursive adoption. And do you know what the title of Citadel's response

was? No. The 2026 global intelligence crisis, calling everyone idiots. We got to write an intelligence crisis report now. The 299 intelligence. This is actually the This is the perfect response. Like very, very detailed. This is the same report that I pulled out that the current labor displacement narrative isn't holding up because job posting for software engineers are rising rapidly. Yeah, but it's pretty remarkable that Citadel was able to get that report out so fast. Like it dropped, I think, on Monday right after Citrini went viral on Sunday or maybe it dropped Tuesday or something like that.

They got that really fast? Yeah, it dropped Tuesday. I mean, that's like a quick turnaround for like a pretty detailed analysis. I thought that they were just reposting. Let's check the MDashes. I mean, the interesting question about like, you know, replacing white color work versus like augmenting in new things is that there's, the AI labs are obviously selling into enterprises. That's growing a lot. And the revenues are very real tens of billions of dollars.

But when you look to the other startups that have. put up really big ARRs, it just, I'm trying to square like, Suno just announced that they're selling 300 million in ARR for AI music. And that's a huge number. It's so big, but it doesn't feel like replacement work yet. It feels like it's just an additive new thing. Like there were just a lot of people that wanted to pay $10 a month for a cool app. Same thing. How many non-technical people had an idea for an app, how many people that weren't musicians had an idea for a song? Yeah.

It never could. And then you see, and then you see it with like Higgsfield 2 and all the viral loops. And then what's that other one? Not WebFlow. TBPN simulator. No, no, no. Loveables one where huge, huge growth. And it feels like, yes,

level is like going into enterprises and whatnot. But it feels like there's a lot of just like net new software developers, website builders that are joining that platform and building stuff. And it feels very incremental. It does not feel very substitutional to me. And I'm wondering how much of the Suno story translates to the AI lab coding model story as well. And that's certainly what Citadel is hinting at with the increase. Yeah, Citadel is also showing that new business formation is rapidly expanding. This is from the U.S. Census Bureau. You can see that year over year it is jumping, which we love to see.

Did Clousseau delete this post? The Great Recession of 9.52 a.m. to 11.16 a.m. February. Too bad. Let me tell you about Century. Century shows developers, what's broken and helps them fix it fast. That's why 150,000 organizations use it to keep their apps working. And let me tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds online, in store, on mobile, on social, on marketplaces, and now with AI agents.

And video stock is falling because it needed to clear an options wall of $200 a share. So given a lot of folks were long calls into the print and it didn't clear 200, brokers are selling stock to reverse some sold calls. It's that simple. This isn't fundamentals. It's market mechanics, says Gordon Johnson. Very interesting. I don't fully understand all the dynamics that can happen with some of the stuff Jane Street does

to move around the market. But, you know, we'll see. I would say, hold your judgment of NVIDIA for the next quarter to see. Samsung becomes the first Korean company to reach a $1 trillion market cap. Over on companies market cap.com. You can see they are sitting at number 12.

That's your homepage, right? Yeah, homepage for sure. Definitely homepage. Just under Berkshire Hathaway. Pretty good. And Broadcom is above that, but Samsung passed Walmart and Eli Lilly. I mean, increasingly important in the AI era, right? There's done a lot of fabrication and whatnot.

I don't think it's all the TVs. There was some interesting stat about, of the $1 trillion companies, isn't Samsung like the most highest margin, the lowest margin or something? There was some post from yesterday we didn't get. get to, but there was a lot more context on that. Yeah. Anyway, uh, ramp capital is sharing, uh, says Patriot and somebody says, I have open clause sending lowball offers on Zillow all day just to make Boomer start panicking. And he says, can you give me an update on the Zillow campaign today?

The Zillow update, uh, listings contacted today. 372. Average offer, 70% below asking. Positive responses, zero. Negative responses, 270. One response was violent, but I've reported it to the. the Tampa Bay Police Department. No response. 102. Would you like me to keep making offers? 70% below asking? Just you're selling a million dollar property. It's like, how's that? Can you do 300K?

Yeah. Let's bring in John Palmer. Let's bring in John Palmer. Our surprise. He's live in the TVP and Ultradone. Coming in. You know him. With a D.C. Nice hat. John Palmer. You probably know John Palmer is as being one inch shorter than you. Well, he's the face of leg lengthening. surgery right now, right? No, they were saying I'm the Goldilocks technology brother. Some people were saying you're a little too tall. Oh, okay. And Jordy's tall on his own right, but maybe not quite tall enough. But sure, at this table. Yeah, right. So they wanted someone right in between, so I was contacted by your team and happy here. I love it. I love it.

Well, I actually introduce yourself since, for those who've been living in a newer data center. Yeah, sure. My name's John Palmer. I was a co-founder and CEO of a company called PartyDow recently announced that we're going to be joining Stripe soon. So that was a an awesome five-year journey and also work on a company called Area Technology, which does logo and graphic design for brands like yourself. Shout out to the new logo and graphics package. And yeah, that's- We are honored. Well, we wanted to do, we wanted to hang and do some timeline with you. Let's do it. As a sign of great respect in our culture. Yeah, what you got, Jordy? What do we have here? How do you guys enable pseudo for a local client? Okay, Baby Kim. Baby

Yes. Says yesterday he hits the timeline. How do you fix OpenClaught internal reasoning leaking Peter Steinberger? What does he actually mean? Does anyone know what that means? So, I mean, we read your post about something small is happening. Hilarious. Yep.

Did you, how much of that was real? Did you ever actually buy a Mac Mini? So the entire post was tongue-in-cheek, but I did, unbeknownst due, I did actually buy a Mac Mini that week. I did set it up. You did set it up. Setting it up was the best 48 hours in my life. Since then, I've used it.

it not very much. So it's, I don't know. I think the reason I bought it originally was basically to tinker and see like how real is the hype. I set it up. I installed various plugins and skills. I made sure my setup was super optimized. And basically I realized the only thing I really needed it for was coding remotely in repos I'm working on or side projects, you know, when I'm out and about on my phone. And you can already do that with like a million other tools. Actually like even even the Claude app, like you can just connect it to whatever repo. You can literally just use cloud code in the app. Yeah.

And so there was really very little delta that it provided in terms of value beyond what I was already doing. Yeah. And I did try some other things. I've been trying to get it to like, you know, work on Google Sheets and invite people. But the big problem is that the browser use specifically is pretty fragile. And I think it's going to get better. So I don't have buyers remorse yet.

I think that Mac Mini purchase will come in handy. But so far it's like, hey, I want to add someone to a Google sheet. Can you invite them? And it's like it opens the modal to share. It types in their email and it's like, oh, I crash. Like it can't get past like the share model of a Google sheet. I'm sure I could optimize my setup further, which I'm looking forward to doing.

Skill issue. Skill issue. Skill.m. It probably is a skill issue. Yeah. You need to get the skill called skill issue and make sure that's running. Yeah. It is, it is, I don't know if this is like a brilliant PR move from Baby Keem's team or if this is real,

but either way, it's really, really funny. But yeah, how mainstream this went, our lawyer got a Mac Mini. He's obviously pretty tapped in, but it's cool to see. Well, I was with you at the gym this morning that we should, I'm excited about a market for bootleg skills. So you don't, you don't, just like you don't want to be the guy just listening to hits on the radio, right? You don't want to just be going on skills.S.H and getting the what would Elon do skill? that's that's that's pretty that's that's earned it and it turns out that one was like actually malware so what you want is within your trusted social circle people that you spend time with

iRL USBs full of markdown files with bootleg skills that you kind of keep internal and there may even be a market for that you know on craigslist yeah you can say if somebody says hey can i can i try the USB can I can I can I borrow it you say well this this skill is kind of like a personal thing it's not really you need to be gatekeeping your skills that's like probably the last moat in tech is gate kept skills. Just proprietary markdown files powering the entire global company. I do I do honestly wonder what the conversion rate

from, you know, buying the Mac Mini to like actually using OpenClaught regularly was because I think that your post was funny because a lot of people definitely went through that. Like I went and bought a Mac Mini and it did take me like a week even to unbox it because I just had like a busy life and I didn't have time. And then when I did

it was like, okay, well I didn't have a monitor at home so I had to play it in my TV and then like the actual setup does take time. 48 hours is not that much of a joke. And I think on this point, like,

I do think you need like a solid month at home fixing it. So I've been out of town for a week. I'm here in L.A. I live in Brooklyn. And a lot of the time, when you hit a wall, it's like,

okay, now you probably need to get on the Mac Mini yourself and, like, add whatever environment variables or keys that you need, set up a new account for it. Yeah.

And since I haven't been home, like, I can't really. Like, you know, on a more serious note, amazing? Like, isn't it like five years ago?

Everyone was posting. Like, I miss, like, hacker, culture. Totally, yeah. I miss, I miss the old Silicon Valley, and it feels like this, this feels like, uh, it feels like we're back. Yeah, yeah.

A lot of people definitely like open up the terminal for the first time in years. I mean, this is true for vibe code generally. Like a lot of people would step back from just writing code or committing code to any GitHub repo. Yeah. The vibe coding boom. It's funny because I do really prefer the quad code, like user experience to any of the, like, slicker desktop tools because, because of a lot of,

reasons, but it is funny. You're like in the terminal. I think everyone, there's definitely a major factor where like you feel really cool using the terminal if you're not an engineer. But you're just, it's all plain text. Like you're speaking in plain English and like, it's speaking to you in plain English. But, you know, if you're at the airport or in a co-working space, you're like, I feel, I look pretty, I look pretty. Thatics are fantastic. Performative. Shrey says Baby Keem just humbled a model. That is actually an exact lyric from Baby Keem's song, stat. That's a good reference. Sorry. deep cut deep cut and yeah he someone else said two phone baby keem that's another lyric but two mac mini baby keem

and baby keem liked it he's he's very online we're working on getting baby keem on the show to break down his full all of skills yeah i mean one of the biggest questions that i feel like is still sort of unanswered is like is like what are people doing with it what you know obviously if you're working on a startup up and you're building a piece of big software and you're committing to it and you're firing off just managing agents remotely that feels relevant although yes you mentioned you can just do that already yeah i mean i actually whatever like i'm definitely not the top person who's like died into this right but i i feel a lot more confident even for coding i actually don't love doing it with open claw because i've i've got my reps in with clod code i trust the harness i trust its ability to like utilize

the model in the best way so even for coding i'm i'm just using quad code remotely anyway, so I'm still waiting to find the use case. I think one interesting thing, though, is just that, like, I think prior to this whole open claw wave, the whole idea was like all the AI labs had their, like, computer use demo, and it was running in, like, the totally, you know, anonymous VM somewhere. And I do think these things are way less useful without your personal data and your personal context and the stuff on your machine. No one solved, like trusting it enough security-wise, like, you know, My Mac Mini, back home, It has its own Gmail, ICloud, whatever, because I'm not going to let it touch my data.

But if we do get to the point where you can be confident that it has all the files on your file system and all your accounts, and it's not going to leak anything or make a dumb mistake sending it to someone, I do think the ability to, like, do all of your knowledge work on the go, even if it's just like I do the same stuff I do today with AI, I can just do it on the go. Would be a major leap in terms of like idea guys have been waiting for. Yes, yes. It's the moment idea guys have been waiting for, though. I think, yeah, we can riff on that if you want. And just more phone-based work, more, like, okay, this is something I need to do regularly, turn it into a cron job.

Like, the agent should be able to do that. Yeah, yeah, I totally think so. Also, I was just really excited about this, like, Napster sort of moment. Like, every idea, I was joking with you already, like, every idea that I have for, like, something to vibe code is, like, something that doesn't exist not because of code. Like, if you want a fitness tracker, like, yes, you can vibe code one, but you can also just go to the app and get a free, app store and get a free one, or you can pay it. like there's plenty of products in every category.

Right, right. The things that you want but can't get are like something that jumps every paywall, something that, you know, so like gives you videos for free that are behind walls and stuff. And like these walls exist for a reason. And maybe those come down in a world where everyone's like working on open source agents and just sort of showing up as themselves and synthesizing everything. But it's like it feels like, it's much harder to actually productize that fully

because so many of the things that people want are, yes, they're possible in open source in the sense that file sharing was popular. Totally. Yeah, and even though I will say, even though I guess so far, I don't want to say I'm disappointed because it was really a learning thing, but I still, it's never a good bet

to be really bearish on a new form factor with novel tech. So I'm still pretty bullish and excited about, like, three, six months from now what that same Mac Mini could be doing and it doesn't need the Mac Mini, It could be on whatever service, but I think it's going to get pretty exciting and pretty quick.

Yeah. Yeah. What did Playboy Cardi mean by this? Did he, was he responding to Baby Keem? Is that what they were supposed to read into this? Is he also getting him back to me? The Jeremy Irons in margin call? Is that the meme?

This is when he says the music is going to stop. Oh, okay. So Playboy Cardi is calling the top? I have. You have? Yeah. Whoa. Are you a film guy?

I'm not Have you seen Borat? I would never call myself a film guy but I've seen a lot of movies. Have you seen Borat? I have seen Borat. Okay, okay. The whole bit is that Jordy

hasn't seen enough movies. Yeah, he hasn't seen any movies in fact. Wow, interesting. RIP, the market, we had a good run. The three kinds of stock market days so far. Donald Trump spins the wheel of tariffs and replaces a 5% tariff on Belarusian wheat with a 22.4% tariff on Pakistani jet engines.

All stocks lose. $2D6. Substack newsletter publishes a story about DoorDash going badly. DoorDash down 862% global financial system. Teeters on the brink. And three, Nvidia announces earnings

of $100 trillion, beating expectations by 1,000 X. Jensen Wong named New King of Earth while his stockholders to form the new permanent ruling class Nvidia down 3% on the news. This is the press of the market. Are you a day trader guy?

No, no. Are you an investor? I am an investor. How do you think about the markets? What's your strategy? I'm an investor. I'm a businessman. I don't know. I think my approach is like pretty smooth brain value investing. Like good fundamentals, I'll buy the stock and hold it for a long time. Definitely not doing a lot of even intra-month trade. It's really like long-term month. You're not like a one-man Jane Street. I'm not a one-man Jane Street. What about what about crypto? I feel like if you're working in crypto, even adjacent to crypto, there's just so much alpha from seeing essentially like angel investment style opportunities from someone who's building something that you just know it's going to be hyped and the token's going to moon. The issue is that it's like wildly distracting because as soon as you have enough money,

is that? I think I think I don't like doing a lot of like individual stock trading. Yeah. Because as soon, then my attention is gravitating towards this thing that's not actually productive. Yeah. And so what do you think about it? I think, I mean, obviously if you're trading like perps in crypto, like you better stay on top of it because like there's a moment to exit or if you just hold it long term

you'll probably get liquidated at some point so I just don't touch any of that you're right though that there are uh whatever that there are like yeah weird things in crypto where like someone you know or someone's doing a project and they air drop a token or something like this and you wake up a week later and it's worth like whatever months worth your salary um so I think that's happened to let's talk about Jane Street because I've seen maybe 10,000 posts kind of blaming them entirely for the just crypto price action over the last couple months. You haven't been able to, have you been able to find anything that is like definitive? Obviously the lawsuit came out and they were, like, we were going back and forth on it

because it's down, they pulled, they pulled funds out of this liquidity pool right after. Actually, I don't even think they pulled, I don't think they pulled funds. I actually think they sold into the pool, which is, I guess, the same thing. I don't know. Yeah, I don't know. But they did it five minutes after we were saying maybe yesterday or the day before that, okay, it's a public blockchain. It's not actually a smoking gun necessarily. But either way.

I'm only as informed as you are in terms of the tweets. I haven't verified anything. But, yeah, my understanding is that, I guess, Tara, Lerner, Luna had had a lot of money in this pool, and they had planned to pull whatever, 180-something million out of it. Yeah. And that I guess the allegation is that Jane Street heard that this was coming before everyone else.

That's like the material non-public information. And so then also pulled their money or sold it, yeah, like just minutes after Tara did it. And you're right that it's public. So I guess, like, again, not a source of. of truth here. I'm like relaying secondhand with confidence information that I read on the timeline. This guy's built for podcast. Yeah, I'm relaying this to you secondhand without confidence. But yeah, I guess you could say, hey, it was anyone could see that and they just reacted quickest. But I think, I guess what that would come down to is what are the internal ops on moving those

funds like that? I would imagine that a fund like Jane Street with $85 million in this pool isn't just sitting in someone's like hot wallet met a mask, right? Yeah, at the same time, they could have, they could have like some type of protocol or actually software, like, as some type of protective mechanism, given that they clearly are... I don't know. A lot of that stuff feels like conspiracy theories, that it feels very similar to, like, the Robin Hood GameStop fiasco, where there was, like, a lot of conspiracy theories about, like, Citadel purposely tanking markets and the bailing. out hedge funds at various points. And I always thought that was just like people looking for scapegoats and a whole bunch of market actors just playing hardball because that's the, that's the default structure. I don't know. Yeah, I mean, I'm not that comfortable like,

speculate on this either because I'm just like, all right, I saw, you know, close in the timeline. They are interesting, though. DGen CPA says Jane Street got my dad drunk and made him cheat on on my mom when I was three. See, a lot of people are hunting for, you know, Deep dish from Joyer says Jane Street killed my dog. That would not be good. You're just getting a lot of the cathartic, like, crypto people who've just been wrecked by these fiascos, like, now have a viable scapego. He's not a bad trader. The market was manipulated by Jane Street.

Yeah. Tampa International Airport has come out and said, we've seen enough, we've had enough. It's time to ban pajamas at Tampa International Airport. Wait, they've actually, this is great. Read the next line. I mean, it's really... After successfully banning Crocs and giving everyone the amazing opportunity to experience the world's first crox-free airport, it's time to take on even, an even larger crisis, pajamas at the airport. Is this real? Is this actually Tampa's airport? It's hard to say. What's your airport travel? I was going to ask you guys, because you're traveling together a lot. I don't know, it's always a dilemma, right? Do you wear, like, I get the pajamas thing, because if you wear, you know, your nicest clothes, then to me when I get to my destination, I'm like, those are on the plane.

Yeah, yeah, it's like I'm not, unless I have laundry, you know, so for me, I'm rocking like, uh,

one of my more like mid fits. Like I'm, something I don't care about, something, something lightweight that packs light as well, because after that travel, like that's not coming out of the bag for the duration. Well,

there's a, there's like a contagion theory here because if I'm in a suit, but I'm sitting down in a seat that someone in pajamas just sat down in, then I'm getting their pajamas all over my suit. Yeah. And so, uh, it's,

it's, just a vicious. cycle. Are you guys business cash on the plan with I I've actually traveled in suits many times and it's underrated interesting I think I mean besides the fact that I've heard that you can get upgraded to first class more more easily if you're dressed up I don't know how apocryphal that is it happened I feel like that's just people trying to justify I think people just they they see the suit and they're like a respect here please take my seat I'm in pajamas I have the first class seat but you deserve this I think I'd feel more comfortable with that if I if I weren't as tall as I was and

and you are because the suit, you know, more powerful are definitely less comfortable, especially if you're in a seat where you're kind of constrained and it's kind of bunching up. It's really not feeling you're aiming for. What about the TSA ban? Have you seen this? TSA shutting down? TSA pre-check? Pre-check.

This is just like a ploy to increase private jet ownership, right? Yeah, clearly the, we can ask Ken Ritchie about this. The lobby is trying to push people into charter. It's kicking the commercial aviation. while they're down. It's really brutal. What does Joe Wesendthal say about this? He says, I'm very pro-conformity, very anti-social behavior in public, and yet I can't understand why people

care so much about other people's airport attire. Just say that you wear pajamas to the airport. Let people be comfortable. Just say that you wear pajamas to the airport. Flying is unpleasant enough. Burger King is launching an AI chat bot that will assess workers' friendliness and will be trained to recognize certain words and phrases, like, welcome to Burger King, please, and thank you.

It's huge. The AI will be programmed into workers' headsets, according to the verge. I think Chick-Fillet got access to that technology like a decade early. Yeah, yeah, yeah. Because there's a my pleasure. There's a thank you. There's a my pleasure every time. Yeah.

Apparently, when McDonald's opened in Russia, there's a quote, after several days of training about customer service at McDonald's, a young Soviet teenager asked a McDonald's trainer a very serious question. Why do we have to be so nice to the customers? After all, we have the hamburgers, and they don't. They need to be nice to us if they want these hamburgers. What was it? Did McDonald's launch something as well? I thought they launched an AI thing too.

It's, uh, it's AI. It's a, it's coming. The big arch is the big burger. Um, but then, um, I thought there was, I mean, at this point, every single company has an AI strategy of some, of some kind. And, and, and so everyone's putting, putting, uh, various stuff. Are you an F1 guy? Um, I, I, I'm a tennis guy, but I, I, I'm a tennis guy, but I, I, I watch the F1, you know, highlights and recaps.

I'm rarely, like, getting up to watch the race live, but... Play tennis or watch tennis or both? Play and watch both a lot. Yeah. What does it say? Best friends should be able to apply to jobs together and get hired as a set. New Age hired. Hiring looks like four to six talented people clustering together

and building a feature and getting acquired. That's, yeah, this does exist. I mean, a horse did post this. Horse is kind of going on. off. Horse has been on a generational run. Literally a horse. Yeah, underrated to just Riley Walls, we talked about this yesterday, joined the Labs team at OpenAI. Very exciting. We were talking about this kind of offline before the show that it seems like there's a lot of opportunity and like hiring for not just ability, which Riley, Walls clearly is incredibly talented

and has, you know, an insane, probably like the most elite ideas. guy, like, actually on the pitch playing right now. Yeah. And that's hard to say as idea guys, as idea guys ourselves. But I think, like, hiring for, you called it, like, hiring for mind share. Yeah. Yeah, I was pointing out, obviously, both Riley and Pete Steinberger, like, both incredible devs.

So not trying to take away from that. But it's interesting that, like, both of those, either, like, hires or acquisitions, also come with, like, a lot of developer mindshare. and I think in a world where like if you just run out to the extreme like software production costs go to zero. So being an engineer, being able to build stuff, that skill becomes more of a commodity than what are you trying to acquire or hire for? Maybe in this interim period it's like a blend. Like I still want you to be a good engineer, but I also want you to bring me a developer mine share. And I think to that point it's like, you know, with OpenClaw, for example, it was definitely the best product in the market, but it was open source.

so anyone could have, you know, forked it, copied it, whatever. But I think it really would have been hard for someone to catch up, given how much mind share it had. It was like the fastest growing open source repo of all time. So what you're buying, it's like even though it remains open source and forcable and in like a foundation and other people could build it, the reason you buy Pete, in addition to him being a great developer and, you know, idea guy, whatever, is just that like he's bringing the mind share of all the people who definitely follow him,

have notifications on for all his posts, they're following all the updates because he's bringing a mindshare. invested. They probably spent 600 bucks or something like that on a MacMini. Some sort of hardware device to run the model. Noah Smith is sharing the job postings for software engineers have picked up since VibeCoding

became a thing. They had been declining until the early part of last year, actually. And again, this is why, I mean, we've talked about this over and over and over. I feel like there's this like two different narratives being spread on Instagram.

It's just like this like labor displacement narrative going super, super, super, super hard. And then over here, like, it's just an entirely different world. Yeah, I mean. Tyler, how do you interpret the software engineering number? Have we talked about this yet? Yeah, I mean, so I think I broadly agree. Like, so when Daria won in Dorcas, you had this take where it's like, you go from AI doing 90% of like coding, tonne and then it goes from 90% of like all sweet tasks to 100%.

And so when you're kind of in the interim period, like engineers get super, super productive. But then there's a point where it's like actually like, it's like instead of being super high leverage because they're, the AI is doing 99%. Now the AI is doing 100%. And it's actually like it just kind of instantly goes to zero. So like I think you should imagine that like yeah, you actually see you should see a lot of like hiring because everyone wants like a vibe coder at their company. But then at some point vibe coding becomes so easy that like you don't need. any, any, like, special talent to be able to do it. Yeah. And then you just have the random person.

I mean, even in that scenario. Yeah. So basically, if you, if you, if one day you're not sitting at your desk, you're, like, you're kind of the vibe coder in the coal mine. Yeah. Canary. Oh, okay. Okay. Yeah.

Yeah. Sure. Um, I, I, I do wonder about, like, because there is, there is a world where, uh, software engineering postings and jobs are substitutive for other roles. Like, you can have someone whose job is, like, a, business analyst and every day they open Excel and crunch some numbers and then you could hire a software engineer to automate that task 10 years ago, 20 years ago and a lot of companies did. And if vibe coding sort of eats into other things, you could see the rest of white,

it's like the white collar work could go away because the software engineers are doing it. And then the bigger question is like, you're sort of jumping ahead to like a full unemployment scenario where no one has a job. But in the world where there are like a few jobs, there, I keep thinking about this thing that Pavel Esperuhoff said where he was like, yeah, like everyone, if the software engineering jobs go away, like get ready to compete with software engineers in every category because they're going to learn financial analysis. They're going to learn to trade. They're going to learn to sell. They're going to learn all these things. And if they're just like smart and hardworking people and they have AI tools, both helping them upskill, reskill and chip.

and do whatever they need to in the new role. Like, you'll just, those people will still be employed. They'll just be in a different part of the economy. Rachel Carton, who's coming on the show soon, says by more than a three-to-one margin, young Americans believe AI will take away opportunities. There's a lot of uncertainty surrounding AI, especially among the youth,

using it as a joke like Liquid Death, Gucci, or Equinox have tried is not a wise marketing strategy. Yeah, the blowback around Gucci was predictable, but it was also strange that they chose to use an image that looked like it was at a GTA, too. Oh, really? It was just, like, not even trying to look. Like, one of the images that we looked at looked like normal photograph and looked cool. And the other one, like, was, like, a GTA-style characters, which really didn't hit.

Interesting. Jira Ticket says, but, sir, that's rage bait. If you do this, you'll slopify the timeline. And you're posting something that you know has no. value. We are selling engagement to willing scrollers at the current fair algorithm parameters. Avi Schiffman had was certainly... Have you ever talked to an AI just like as a as like a being or like a friend or like any any like non-productivity?

Like earnestly. Earnestly. Yeah. Just like chatting back and forth with it not for any specific business purpose. Have you ever fallen in love? No, I really haven't earnestly. I haven't really given that. I have, like, to test it out, but I wasn't, like, wholeheartedly engaging.

Yeah. It's weird. I don't know if it's, like, a personality thing, or maybe I'm just too busy or something, but I've never been, like, I will, I will, if I'm in a video game, I'll go talk to an NPC on a side quest. For hours. I'm down. Like, I'm down to explore the story that's there, but for some reason it just hasn't

clicked with me. I don't know. I haven't even done that. Like even when I was playing like like MMOs back in the day, like I feel like I would always just be like skipping skipping dialogue. Yeah, I actually do skip a little. I don't know. It's hard to really buy into it. I think maybe a good, the synthesis of that would be, I would be down to play like a new Elder Scrolls game where there are like really good AI models behind the characters. Then I'd be exploring it because like I've decided to suspend disbelief to play this game. So while I'm in this game, let me do it. But in my real life, I'm I'm not having a heart to heart with the AI.

John, next time you call me and I don't pick up, go into chat GPT and say pretend your... No shot. Pretend your Jordy. Let's talk about the day's work. I do think that's like more interesting. Like, again, not like, maybe not as a heart to heart, but like... I mean, there's companies that do that, you know.

Like an AI version of an influencer and whatnot. Like that this thing exists. I mean, you guys have like hundreds, if not thousands of hours of live show now. You could probably get a pretty good Jordy model. That's what I'm saying. And if you were like trying to riff on show planning, like it would actually functionally be pretty good. I just have no desire for it.

I don't know. Give it a shot, John. Maybe, maybe. I do think this is an interesting take on the open claw style stuff where like I think there's a world where, again, security is like a big asterisk here. But like if I had open claw, okay, so I've been riffing on this idea for a while that I'm just a JPT5 client. So like chat GPT has GPT5.

And I'm John Palmer. So I'm John Palmer transformer. I'm JPM five. And I'm just a client for JPM five, which is my brain. brain. Okay. And so like you guys... Kind of like a harness.

Yeah. I'm... Yeah. Well, this is the clothes of the harness. And the brain is the model. Yeah. And my mouth is the client.

I don't know. So in that... Anyway, I won't go into the whole riff, but I guess like... So my Mac Mini, I named JPT5. And hypothetically, if I could train it on like all the writing and speaking I've ever done,

plus my whole file system, and it knew like what I do on my computer. One version of that is it's single player. It's my open claw. I use it to do my task, but I'm really interested in like the multiplayer. Again, this is the security. Security's not ready for this yet. But if I had my Mac Mini and either humans like yourselves could really go, like,

hey, I need John for something. I know he did that one project and all the files are probably on his computer. Could I go micro pay his agent and be like, yo, I need help researching this crypto thing that you did, whatever. And if my agent could actually give you, it's like you're not accessing the same one size fits all model that everyone has. you're accessing, you know, that model with some custom, you know, contacts and prompting or whatever. And that would be cool.

So, like, you know, you have access to Jordi anyway, but for someone who doesn't, you know, if that random third party out there wanted to riff with Jordy on a marketing idea, it'd be cool if they actually could. And you had set up that model. It wasn't, you know, Opus 4.6 trying to replicate you, but it was like all your insider info. It's kind of cool.

And then, you know, the agents could do it to each other. Now JP-T-5 could be talking to J-H-T-5. And we could be hanging IRL and our models could be hanging back at home, like kind of like a kid's play date. Like my model's like hanging out with your model. They like, hey, let's get John involved. They go get John Coogan's. So it's kind of a fun.

It's a take on that way it's like, that's dystopian or something. But that's not how I feel. I just feel like I'm just like bored. We go brainstorm for an hour on some concept. And then we come home and we find out our models cooked up something way better. Yeah. I don't know. I was looking at the clod.

I think it's actually possible. Especially if you were like, you bring the original idea and then you say like, I want John Palmer, GPT to talk with John Coogan GPT about this idea and like come back with a bunch of ideas. It's a lot, it will work a lot better for someone like John

who has spoken on the internet for, hundreds of hours. So much that I don't say on that. Yeah. That's why you actually want to talk to me. It'd be cool if the model could like decide to price its own services and negotiate with whoever, whatever model's hiring it. I mean, whatever it's.

Avi Schiffman dropped user interview number three. We're not going to play the video because it's kind of sad. But Gary Tan said, this is not the happy demo path. Apple or Google would never make this one of their launch videos. It's not what you will hear about in a TED talk, but it's real. AI doesn't get tired. and ghost, a lot to think about with this one. Yeah, I, you know, Avey continues to find new ways to break through the noise, but in some

ways, like, even though this video has been, uh, it feels somewhat dystopian, you know, this is someone who's struggling with mental health, like actually gets in an accident in the video. It does feel like the most kind of real, raw, like, like, like, it, like, it, it experience of AI companionship in this form factor. Yeah, reflection on like, do you remember his interaction with Paul Graham very early on? He was like, I'm building like a hardware device for AI. He put out like some very vague post about his plans and everyone was like, this is impossible.

Like Apple will crush you. They have the supply chain. They have the distribution. They have brand. you will never win in this category. And Paul Graham told him, like, in order to win, you have to do things that Apple would never do and be counter positioned. And so at one point, he was thinking about doing something that looked like very organic,

you know, no smooth lines, no rounded edges, crazy colors that Apple wouldn't pick, like, just really moving outside of their design language, so you wouldn't feel like that. And then, yeah, this type of messaging is certainly in line with, like, the, anti-Apple. Yeah. And I don't know. It'll be interesting to see where the company goes. People were so bearish on that ad campaign.

We were very surprised by how broad the billboard campaign was. They got the Heineken response. Oh, did Heineken, like, young comments? So Heineken also just came out with a new campaign that I want your guys' reaction to. It's, I don't know where exactly it is, but it seems to be global. And it's just like a graphic. a voice note and it says the campaign is don't send a WhatsApp note it could have been a beer in person so they're like taking like the total like real world approach which which I think is

I think it's good you know I think you you had Matt Zeitlin on the show recently and he and I play in a pretty regular like friends poker game not big money it's really like a social hang but it's funny because like everyone's like multiple people have wives here like why are you going to play poker, that's Dgen, are you losing money, whatever? But I mean, I had a post a while back that's like in the current like casino economy between like prediction markets, meme coins, like crypto trading, whatever, like an in-person poker game with your friends is like the most wholesome. Like if you're going to gamble and lose like 100 bucks, go do it with your friends over four hours like having a drink and hanging out. And you're solving the male loneliness crisis

I've heard the same argument made for cigar nights. Yeah, it's like cigars obviously for you, but getting together with friends and actually maintaining social ties is probably really good for long-term health. It's pretty great, honestly. And if you play a regular poker game, even with strangers that you only knew through this game originally, like six months out, you've logged so many hours just like hanging out that it's like a pretty great, like, wholesome, wholesome vibe, you know? I should get into it.

Yeah. If you ever knew, we can have you guys. Okay, let me do some ads. Let me tell you about Gemini 3.1 Pro. Everyone on Pro is here with a more capable baseline. It's great for super complex tasks like visualizing difficult concepts, synthesizing data into a single view, or bringing creative projects to life.

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The software is not. not the hard part. And he was building this app for a very specific sub-community and was able to get a massive amount of attention. So I think this is like a good, good, clear rebuttal of at least that one part of the Satrini piece. Yeah, I think I had posted a while back about how like, again, same thing, like software costs go to zero. Everyone's like, oh, yes, like I'm an idea guy. I'm going to be crushing it now because now I can just use cloud code and like build whatever I want. But it's like if you just make one more logical leap, it's okay, everyone has that now. So if you're just like building your ideas, like if you're building vibe coded apps for consumers,

you're actually in a way more competitive space than it's ever been. So I actually think it's almost more like not to riff on the idea guy thing too long, but like actually being paid like a salary to be an idea guy or like making good income to be an idea guy will actually be like a very privileged position where only companies that have like real moats and monopolies on distribution, we'll actually be able to hire people whose job at us just think on the idea. Because if you have a good idea and you ship it,

you know people will use it because you've already got the distribution. Versus if you're, even if you've got a great idea and you can vibe code it up, if you're in this like sea of vibe coders like producing way more apps. Well, the other thing is, is there are certain idea guys throughout history

that thrives because they had a unique insight. They brought it to market. They executed pretty well. but it just was a great idea at the right time. And so it got traction, attracted great people and things like that. And in a world where, like, an idea can be made. And we've seen this with, I think, a bunch of marketing on acts over the last year,

where if somebody has, like, a good style of launch video, it will be immediately replicated within a month. And then it will become just kind of, like, flooded, and the meta will kind of die quickly. And so in a world where, like, ideas are, like, cheaper than ever, Is it really just about like idea guys getting lapped by people that are great at executing? And it's like, yeah, you had this great idea, you shipped it. Someone else saw that.

And it's like, that's a great idea. I'm going to ship it today. And then I'm just going to out-execute you. Someone should launch their startup with a congressional testimony. That would be a great aura farm. If you just, the first time you're ever seeing about this company, they're just answering questions and getting grilled by Congress people about what their, what their plans are. It's always like typically the top of the mountain, like Mark Zuckerberg built Facebook for decade.

Then he starts getting called to testify. Then he starts getting sued. But if you just come out the gate, day one. Augustus was kind of, he was kind of doing this. He was like half the time in El Zegundo, half the time on the road. He wasn't being called to testify. He was like, you know, standing up. I know, but he's kind of doing it bit.

Yeah, it kind of did work like that. It's very funny. Anyway, let me tell you about Figma. Ship the best version, not the first one with Pigma. Introducing Quad Code to FitMex, more and more options, push ideas further. We got new Apple products. What's coming out? This coming week.

Oh, yeah. We don't know exactly. It has the Apple logo on it, though. We know that. We do know that. Spoiler alert. Touchscreen Mac. Oh, that's why they're touching it.

How are you guys thinking about the touchscreen Mac? Because one of my least favorite things in the workplace is what people put their fingers on my screen. It makes my blood boil. Yeah. And so maybe they have some new, like, are they, I could see Apple at this point. They've got the iPhone sock. They could have like a little attachment that it has like a cleaner, like a cleaner, you know, a little spray bottle, an Apple spray bottle. They could have a magnetized rhumba and you put it on, you stick it to your screen while you walk away. And it drives around, identifies the, yeah, like a zamboni. Like a zamboni. Yeah, like a zamboni.

So messy. The Apple's zamboni. I don't know. You want to create the problem and then have the product that solves the problem in the same launch. So touchscreen Mac with the Rumba. Yeah, that's such an odd choice because I feel like the whole, I feel like the whole, humanity has gone down the path of like the touchscreen laptop. Yeah.

And it's been available for years, maybe over a decade. And I just feel like it's never really broken through. And if it was, if we were at least seeing like, oh, yeah, well, like, obviously like 80% of PC users. have a touch screen, and it's clearly a dominant form factor. Yeah, it's like the reason, the reason for the touchscreen is like, I'm, I'm away from my computer. I can't care around a dedicated keyboard and mouse, so I guess I just have to figure out a way to use the screen for everything, but it's not superior if I, if I have room on my desk for a keyboard,

I'm always going to be faster. Yeah, doing the, like, it's going to, you're going to, it's going to look very, maybe, maybe it's better for people that aren't as tech native. Like I can imagine like, like, like, maybe older family member, like, you know, wanting to zoom in on a photo and maybe it's more native to them to kind of like use the kind of like pinch functionality. Yeah. It feels hard though. Like if it's in a, again, I don't even know if this is what they're releasing, but if it's on a laptop, like I actually kind of have to like reach past the keyboard. It seems like a far reach to like if you're like even keeping your arm held like raise like this for more than like 30 seconds would get, I think, tiring for most people.

I don't know. The first time I saw that, I just thought Mac Mini, honestly, because it just looks like... Well, they're making the Mac Mini in the USA. They came out with that announcement. It's going to Houston, right? And I will be, you know, getting rid of my current MacMany and buying the USA. The USA made in the USA. Of course. Running Kimmy 2.5 on my made in the USA, MacMoney. Well, we have some videos to watch, but we don't have IEMs for you. So we should probably let you go get back to the rest of your day. Thank you so much. Thank you so much. Yeah, absolutely. And we will see you soon. Let me tell you about ACTA.

AQTA helps you assign every AI agent a trusted identity. So you get the power of AI without the risk. Secure any agent. Secure every agent with ACTA. And let me also tell you about console. Console builds AI agents that automate 70% of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. Let's flip through some of the videos that we missed because there are some good ones

TSM's plant in Arizona, which is spread over 1,000 acres, is expected to cost $165 billion. I thought they already had a TSM, Arizona up and running. I guess they're expanding it to the $1.664 billion? Yeah, it's still coming online. I wonder when. What day is this actually going to go live? Got to send Tyler over there. Oh, yeah.

Won't you be in the area soon? Don't want to docks your weekend plans? Later today. later today. I bet you'd check it out. Go check it out. Get arrested for trespassing. We forgot to play this AI video of the AI leaders, Elon Musk and Sam Altman as old men.

Did you want to watch this? Pull it up. This was a very, very bizarre video. Extremely viral over on Instagram. Yes. Oh, yeah. It's in Section E here. Let me tell you about.

Cisco critical infrastructure for the AI era unlock seamless real-time experiences and new value with Cisco It features EnerGIM move the world There we go No purpose They had a lot of time on their hands the less people You start ever The you can't restart videos on Instagram

Had lost their jobs They had no money, no purpose. The visual fidelity is just another level up. I don't know if this is the latest Chinese model, but it's really good. To use the energy of humans to power the machines that took away their jobs. The voices are a little odd, yeah. They're still in the uncanny valley, but the actual video is really strong. It's deeply wrong.

to put our technology leaders like this. Should have made them look like bodybuilders if you're going to do this. Yes. But it is a funny, it is a funny bit. Disturbing. Anthropics going into consumer now,

is that right? Adam Feldman joined. As, I recently joined Anthropic to lead consumer product and we're growing. Our goal is to build AI that millions of people will use every day to think,

better, create more, and accomplish what matters to them. A bit biased here, but this is the most interesting opportunity. Yeah, so I, Back in Q4, I was expecting that they would care a lot more about, that they cared more about consumer that they were letting on. I think, like, when, if you look at their actions this week,

you see that when they were lagging, they were, like, really leading with safety. And now that, now that, now that, now that coding is, as a competitive market, they're obviously dialing some of that back. And when they had actually zero consumer adoption or functionally zero consumer adoption, they didn't care about consumer. But if you look at Keep Thinking campaign, you look at the Super Bowl campaign, you don't do these things unless you care somewhat about consumer.

It all bleeds together anyway. And so it seems like it's the end. of the road for all the AI companies that they have some sort of consumer footprint. It's hard to be that deep. And when you think of like the pure plays, I mean, even Amazon, I mean, they sell a ton of tokens through AWS, but then they also have Rufus because they need to vend the AI into their distribution, into their platforms. And we've seen Lama be vended into Instagram and WhatsApp and all the different consumer interfaces that people use every day. And people will use those for business context in consumer apps. Gmail became dominant in consumer and businesses all over the world because there's a huge blend that happens as people work both, you know, professionally in their personal lives and vice versa.

They do work when they're at home and all sorts of different stuff. Raghav has some breaking news. Apple has acquired the rights from Netflix to Air Drive to Survive Season 8 on Apple TV Plus. You were expecting something like this over. a year ago at this point. Yeah. That if you're going to be spending all this money in the F1 movie and the F1 streaming rights, you want to actually be the home of Formula One.

Yeah, it's sort of like content vertical integration. Like you want to be able to take the viewer on this journey from novice. So you watch the F1 movie, which has Brad Pitt in it, and it's just super accessible, and anyone can throw it on and have a good time. Even if you're not an F1 fan, you can watch the F1 movie and know, and like in the movie, there's a voiceover that explains

all the mechanics of how the sport works. And so you learn and you come out of that saying, okay, I'm kind of interested. Then you could watch Drive to Survive and then you could actually watch the full... Trey says Apple should sponsor Cadillac F1. I get the conflict, but also Penske owns Indycar and has a team. Well, it's funny because...

What would the conflict be? Oh, because they're airing it? Yeah. So like the feed would cut to them more or something? It feels separate enough. But remember, I had a... pretty viral post last year. I forget I was I was I think quoting gen moji and saying like apples like clearly run out of like ideas and obviously that's not fully not not true true but

I was saying that they should just have a Formula one team yeah and should be like you wanted the apple car this is the Apple car yeah it's an F1 car because like a one car on the pitch that just has no or sorry sorry on the track that has grid Grid. Grid. Yeah. Three fingers. One car out there that's just all white. It would go extremely hard. Yeah, no one's really doing white in F-W. Like no logos. Oh, no logos in all. Yeah. Like not even an Apple logo? Just a silver, like perfect, perlessent white or something. That would be very, very cool. Let me tell you about 11 labs. Build intelligent, real-time conversational agents.

Reimagined human technology interaction with 11 labs. And let me also tell you about Turbo Puffer. Serverless vector in full-text search, build from first principles on object storage, fast, 10x cheaper. Semi-analysis says Micron's $100 billion megafab in New York is at risk of delay due to just six concerned citizens in their frivolous lawsuit. The project has already taken on, taken an absurd 1,200 days between announcement and groundbreaking competitors overseas who began at the same time. Now have built and working fabs. Micron spent 612 days on the environmental impact study, including a 45-day public. input period. Yet hours before groundbreaking, they were hit with a lawsuit calling the process unnecessarily rushed, 612 days on an environmental study. Comments from local borders

on NIMBY parity, we are not trying to stop any progress, but we don't want this just bulldozed into our area. This is a real quote. The lawsuit itself didn't come from a ground roaps uprising. A California-based workers rights group went door-to-door in New York seeking plaintiffs. They eventually found just six people willing to sign on, but that's enough to potentially halt the project. That is so insane. Syracuse, local news outlets, excellent reporting on the group behind the lawsuit. Neighbors for a better Micron found that before the suit was filed, the group had never held a meeting or a vote. Some members didn't even know who the others were. One member of the suit who, as a former lawyer, you might expect to be smart, says that

Syracuse has the highest child poverty rate in the country. What is Micron doing about that? anyone can agree it's a worthy cause, but do we really think an advanced memory semiconductor manufacturer is the right vehicle to solve it? Question mark. To be fair, it is legitimate to consider the environmental impacts of a fab. They are large industrial projects that can be harmful, if not built and operated safely, but these last-minute injunctions are rent-seeking, not legitimate environmental concern. We estimate the lawsuits will cost $100 to $500 million to settle, despite the fact they should be thrown out as frivolous. Ultimately, Micron has probably budgeted for it as a small fraction of a $100 billion project. Still, there is a non-zero chance.

These six concerned citizens delay the entire thing. If the U.S. wants to compete in strategic technologies like Microns project, which produces a key ingredient in the AI supply chain, it must reduce frivolous rent-seeking litigation. AI tools will only empower these people as it trivializes nitpicking on complex rules and 10,000-page documents. That is, yeah, really wild. Like this feels uh yeah this feels like any state should be generally excited about having a hundred billion dollar project which will undoubtedly generate hundreds of millions of

and someday billions of of tax revenue. But uh, Patrick says nimbies are being placed with replaced with bananas. Build absolutely nothing anywhere near anyone. Oh, okay. The Satrini scenario is now on Kulshi. There's a 12% chance that the Satrini scenario happens, which of course is the S&P falling.

It's interesting. 12% feels high, but the rules summary is fascinating here on this market. If at least three of these happen, it resolves to yes. So unemployment rate exceeds 10%. S&P declines more than 30%. percent. Zillow home index value declines more than 10 percent year over year in any of New York City, Los Angeles, San Francisco, Chicago, Houston, or Phoenix. Labor share of gross domestic income

falls below 50 percent. Inflation falls below zero percent in any monthly release. And if any of those happen before July of 2028, the market resolves to yes. So sort of interesting because there's a whole bunch of different scenarios where something could happen that's not AI related that could trigger one of those. I was reading an article in the Wall Street Journal today about expats, the number of Americans that are retiring abroad is just increasing. And it doesn't really have anything to do with AI. It doesn't really have anything to do with immigration policy.

It's just sort of like Americans are wealthy, the dollar is strong. And so they find, you know, they want to go travel. And the Internet makes it easier to go live in it. a different country and hang out and, you know, stay on the beach. And so that number has been climbing. And so if that climbs a lot and people leave America, but they stay employed and they leave before they're retired, like that could lead to lower unemployment because the labor pool is lower. There's a whole bunch of different things that could happen that could adjust these things. But it's still, it's still interesting because, I mean, on the face of it, unless there's some

weird alternative scenario, none of these would be particularly good. And fortunately, it's still sitting pretty low at just 11.6% chance, but probably worth following. Let me tell you about Lambda. Lambda is the superintelligence cloud, building AI supercomputers for training and inference that scale from one GPU to hundreds of thousands. Some breaking news. This was sent to me by Jay Yarrow, formerly it was at CNBC for quite a long time. Fortune is launching a daily business according to AdWeek, the latest in a series of publishers, including The Guardian to do so. Mark Stenberg over at AdWeek says this initiative is likely an attempt to imitate the success seen by other daily business programs such as TVPN.

No way. So if you want to make the fortune version of TBPN, there's a role. They're hiring a showrunner for a daily show. Do you think they've acquired the tap water required to make that show work? Yeah, we got to bring, we got to remind people that, you want to remind people right now? Yeah, so I mean, if you're going to clone TBPN or do something that's inspired by TBPN, we do have terms of service. So if you've ever watched the show, you've actually technically agreed to this and buried in the terms of service is an agreement that if you clone the show or copy a piece of the show or rip off the show or even are just inspired by the show, it's fine.

as long as on your first episode, you drink a glass of tap water. Just one glass of tap water. Otherwise, I think the gods might curse you. Yeah. Yeah, it's really just a nod. It's a sign of fact. And also, if you don't do it,

you are legally required to pay us 100% of your revenue forever. But that's like a minor thing. The bigger thing is the tap water. Just focus on that. Anyway, we have our first guest of the show in the Restream Waiting Room. Let me tell you about MongoDB. What's the only thing?

faster than the AI market, your business on MongoDB. Don't just build AI, own the data platform that powers it. And without further ado, we have Sam. Welcome to the show. How are you doing? How are you doing? Thank you so much for joining. Vacuum guy. How's your week been? Were you expecting to go this viral? Well, not really. Because it's been like 10 days. I discover the bridge. Yeah. So it's interesting. It's a pop up now.

Wait, how many? You said, did you say two years? No, 20 days. Sorry. 20 days. 20 days. Okay, breakdown. Why do you start hacking on your DJI vacuum?

Give us the full kind of chain of events. Okay. Well, I don't even try to hack it. It was just a side project. When I saw my little guy cleaning my living room and me playing on my PS5, my brain just makes some association stuff. And I was like, okay, what if I could drive my boy with my PS5 controller? Yeah. So what I do, what I did, I take the DJI app because the GI have an official app called DJI Home.

And I try to understand what's happened when my robot vac moves. When it goes straight, when it goes to the left, and turn right. Check the data between my vacuum and DJI Cloud and try to replicate it with my PS5 controller. And after maybe one hour, I have something working like I could drive it with my PS5 controller, but I want to go further. Like, if my little guy have less than 30% of battery,

I want to hear him cry. You feel pain. So I need to try the battery status, like the percentage of my battery. So I continue my reverse engineering of the DJI home app and find out, like how to do it, how to ask the battery status. I do it, but what I receive is not like, oh, your robot is like 80% of battery.

I got tons of data, like a lot of battery status. I didn't understand. So I take this big chunk of data. It was a lot. I opened my cloud code. send the file and just asking him, like, what's going on, explain him what I'm trying to do. And if there's something I did wrong, like, why have this data? And he answered to me, like, okay, it's not just for the device.

They have thousands of others. So I take a little bit of time to process this. Well, because it's AI, of course, I double check. I tried to manual read like my big log file the data from the vacuum sent back to me when I asked it

about the battery status and yeah it wasn't just my device so for me it was like okay I have a key my own user key let me control my robot it looks like my key

I can open other doors than mine So the software will control my robot and also try the full stream video and microphone from the vacuum. I have like some environment variable, like the thing change just to make your software working with another device. So I have two stuff. Like he and the serial number of the device. So I was just like, okay, I just need to change the device's serial number. a serial number and put another one and maybe he's going to work. It's happened that I have a friend who is as stupid as me to buy this

my question. I just asked him his Syrian number. So he gave it to me, perform some tests, and yes, everything worked. I saw everything. I hear him and I can control him, to control his robot with a really low latency. which is great. So it was like a little bit shocked about what we saw. So I started to check the DGI

the bankruptcy program. They have one. But everything is in Chinese when you go to the website. I was a little bit confused. Like it just for Chinese citizens and even the reward, it was like it was in the local currency of China. So I just tweet about it. like hey, I'm not a Chinese citizen, can I play for it?

I didn't have any answer. So I applied, but in English, I took a good Zee program. And no one answered me. You weren't supposed to, that's not a buck. Yes, that's a feature. It seems like it. So I was a little bit of, frustrated about it. So I start live tweeting about what I discovered. I didn't show how I did.

I just show some data I can have, that I can retry from the DJI Club. They finally answered me. But just because I raised them on Twitter by the idea, and they say, okay, thank you. We're going to check that and be back to you as soon as possible. they come back to me probably one day after telling me, okay, we saw the issue and we fix it. Thank you for everything. But they didn't fix the problem. By this point, you have full access and control over 7,000 individual devices? To be more precise, it was 7,000 vacuum and 3,000 DJI power.

It's like their battery pack or something like that. And connected to Internet, apparently, because I have access to it. But yeah, it was around 10,000 devices. And how did you get the serial numbers for those again? I imagine that they've sold more than 7,000. And so what made the ones that actually were showing up for you different than the ones that you couldn't access? Can you repeat? Yeah.

So I understand how you had your serial number and your key, which turned out to be the master key. And your friend sent you his serial number, and then you were able to control his robot vacuum cleaner. But if I have one of these and you don't know my. serial number, how do you get access to it? Unfortunately, DGI gave it to me without any keys. Like if I take my own user key and plug it to the MQTT protocol of the GI, I see everything. So I didn't have to guess the certain number of everyone. I just saw the data like clear.

Wow. Guys X66 start cleaning, for example. Yeah. Like, yeah, so I didn't have to crack an encrypt or crack anything. Everything was clear. And so, oh, sorry, excuse me. No, no, no. It's just fascinating that all of that data was just,

because that's actually two different vulnerabilities. Like, one is the network topology and the other is the access key. And you would expect that both would be locked down, or at least one, But the fact that both of them were available to you is very disconcerting. Yes. And so just after that, I'm not going to say they're going to be a liar about fixing it and not fixing it. But they probably just fixed some stuff about everything. I was talking with The Verge who started to contact me when I live tweeting what I discovered.

So we plan to do a demo. And during the time, we plan to do it, and the real demo is like two days happened. And during this time, a DJI release another fix, which work. But not really. It's worked to, I can retrieve anymore the camera, the stream video.

I can retrieve the microphone from other users. like protected now and during the demo I still have access to all of others data I still have access to the map plan or magma pro plan sorry because this vacuum have tons of sensors and they need like a 3d map of where you live to make sure he know where to go when you need to clean so I got this I still got this data and yeah and the full telemet trip system of DJI. We work from the demo with the verge,

and one day after, no more access to other data. Everything was... What a remarkable story. Thank you for sharing it with us. Yeah, how... Like, do you think that how much confidence does this give you

that the DJI drones that they've sold millions of could have... Do you think they're more... lockdown or do you think this could be kind of a company-wide issue? I don't know, but the last thing about the story, they still have two major issues. We decide with the version not disclose it publicly because it's kind of bad and I can't talk a lot about it. We try to play a fair game with the company.

Like, okay, we give you a little bit of time. We know this bridge is not as easy to fix as the first one, but they still have two major issues. And indirectly, like really indirectly, you can still have access to stream video from other users. That's crazy. That's so insane. Do you know how many, any idea how many of these vacuums they've actually sold? Do they publish any of that data? 7,000.

Oh, oh, oh, so they've only sold 7,000. I was assuming that you had only gotten access to a, you had only gotten access to a, kind of like a subsection. It seems like you got them all. They didn't separate the region. It was like a whole bucket, like a bucket with the whole, all devices. Yeah, this is a product and there aren't that many out there. So absolutely wild.

It's just insane. I hope that they're contacting customers who have them in their homes and letting them know that, hey, by the way. Anybody on the entire planet. It's a data breach. It's like, it's like, yeah. Because unless they can prove that you were. the first and only person to ever access to this and you didn't go further, then they have an

unknown, you know, liability here that they should disclose. So we'll be very interesting to see how they respond. But thank you for the citizen journalism, the hacktivism. Yeah, it sounds like you're handling it in the right way. And looking forward to whatever you discover next, we'll be following along. It's great to meet you. Yeah. Have a great rest of your day. Cheers. We'll talk to you soon. Let me tell you, about phantom cash, fund your wallet without exchanges or minimum, and spend with the phantom card. And let me also tell you about cognition. They're the makers of Devon, the AI software engineer, crushed your backlog with your AI engineering team. And without further

ado, we have Ken Rugee, the chairman of Fleckjet here at the TVP. Well, that's going on. Good to meet you. Hey, John, hi, Jory. How are you? We're fantastic. We've been looking forward to this. Thanks so much for taking the time to come chat with us. I would love to start. I would love to start with your early career because do I have it right that you actually served in the Air Force? Yes, I went into the Air Force to the ROTC program in the late 70s. Wow. It wasn't that hard to get into the Air Force then. The Vietnam War was still active in people's rearview mirror. Yeah. And I actually probably wouldn't have been able to go to college

if it wasn't for the ROTC program. So it wasn't that I had this strong desire to be in the Air Force, to be in the Air Force, but I did love to fly, and it actually helped me get through college. That's amazing. So, yeah, I'm sorry.

No, no, no, I was going to say, it was interesting. I always wanted to go to the University of Notre Dame, and I was going up for a visit, and I heard my parents, we lived in a very small house, thin walls, and I heard my parents talking about they couldn't afford it.

And they said, who's going to tell them we can't afford to send them to school? So I went to my visit and I said, is there any financial available? And they said, well, you kind of missed the window for that. But if you were interested in the military, you could go down and enroll in ROTC. So I went down there on a Saturday that was closed, but I decided for whatever reason I wanted to be a Navy pilot. I'm standing at the Navy ROTC trying to copy down the number, you know, on the old rotary phones. And somebody taps me on the shoulder and they said, can I help you? And I said, well, I'm an incoming freshman, and I'd like to fly, and I'm thinking of joining the Navy ROTC.

And he looks at me, and he says, you sure you've been admitted to Notre Dame, son? Because the Navy has boats, and the Air Force has jets. So I'm Colonel Mueller. I'm head of the Air Force detachment. Why don't you become an Air Force pilot? And that's how I ended up in the Air Force. That's amazing. Wait, so you were flying before college.

What was the context of that? Or you were interested in flight. No, no, no, no. No, I learned to fly through the, what was called. the FIP program, which was an instructional program through the Air Force. Okay. And then, so I don't know how long you were in the Air Force, but it sounded like when you got out, you had the opportunity to buy a company for a very low amount of money, and I want to know the anatomy of that deal and go a little bit further than you've been,

than you've talked about before, because it sounds like one of the most fascinating deals that maybe doesn't happen anymore, or maybe financial engineering still exists like this, but I'd love to know sort of when did your business career start, what happened after you left the Air Force? Well, you know, I always say that I never really identified myself as a businessman. I love to fly. I love aviation. And, you know, people can go into business because they love business.

And those guys could run a candy store. They could run an insurance company. I'm not that guy. I'm an inch wide and a mile deep. And I only, I know a lot about like one very narrow section, right? And so don't ask me to give you advice on running a candy store. But in my early years, I was flying for a charter company called Corporate Wings. And I got there because after the Air Force, I went under reserves, after the reserve assignment, I flew for Northwest Orient where I was furloughed.

Okay. And so I started to realize, you know, being a pilot has a lot of insecurities, you know. At that time, remember, in the early 80s, there's only 5,000 corporate jets in existence, you know. Today we have 35,000. Wow. And so the industry was small. It wasn't stable. And so the charter company I was flying for came up for sale.

And I called my dad at the time. And I said, Dad, I think I want to buy this charter company. It's cost $27,500. And how are you going to pay for it? And I said, well, they have $27,000 in the bank. So I'm thinking if I buy the stock, I'll just use the, I'll just use the 27,000. thousand and pay for the company goes well but i thought you said 27-5 where are you getting the other 500 bucks and i said well why do you think i called you so yes you know leverage finance

exists today it just has a lot more zeros to it yeah but so so when i heard that it's a fantastic story i'm just i'm confused why a stock would be for sale so close to cash value were there a lot of liabilities that were coming down the pipe that you then you had to generate the revenue to deliver on. Like, it just sort of defies, like, basic economic logic. All right. So we're going to tell a story that's known to only a few. And the true story here is that in the early 80s, there was investment tax credit of 10%. And it came in cash. So you could buy a plane. At those times, a citation was a million dollars. You got a $100,000 tax credit. And corporate wings at the time was actually called J&J Aviation. And, and

And they had King Ayers and two citations that were on investment tax credit, but they didn't exist. The owner of this company, a guy named Jeff Tolk, created a fraud around the existence of these planes. I was flying the King Errs. That was in another, I mean, I didn't know anything about it. But the dispatcher at that company, when the fraud became unveiled and everybody headed for the hills, the dispatcher of the company I was friends with, he said to me, I can't run a company. because I'm a dispatcher. We need somebody that could fly,

make the customers feel comfortable. So the deal was there because the company was done. And so that's how, that was why that situation was unique. But it was a few people know about the citation fraud. That's really how it evolved. We changed the name from J&J to corporate wings, and that's how it began. So a lot of hair on the deal,

but some decent customer relationships and probably some decent employees that could actually fly, what assets remained after you sort of cleaned up the corporation, right? So we had four airplanes. We had two King Airs, a Navajo, and a Cessna 421. Shortly thereafter, the King Airs got worried and they left. So my business was a grand toll of a Navajo and a Cessna 421 for you old-time pilots out there. But by the way, I thought I died and went to heaven, right?

I mean, I had a business I had. I'd go to the hangar on Saturdays and polish the nacells of that Navajo. I was so proud of that airplane. That's amazing. So then talk about the scale up because obviously you have a massive footprint in business now. But what were the key steps along the way? What were the key turning points for you? Well, I'd say the key turning points were in the mid-90s when we, you know,

when fractional was evolving and I had this nice charter company. Yeah. Maybe 2025 airplanes at the time, but saw fractional starting to steal market share in a big way from charter. because a consistent level of service, the fact that they could run one way. In those days, charters were always out and back. You paid round trip for the aircraft. So I kind of saw the threat of fractional, and that's when it came up with the idea to form flight options. And flight options idea, at that time, nobody had done fractional with used aircraft.

They'd only done it with new aircraft. You had citation shares with brand-new citations. Net Jets was working with Hawker and citation at the time. And how would it work mechanically? There would be basically somebody would say, hey, I'm going to buy this jet. I'm going to cut it up into eight pieces or whatever. And then what did they effectively crowd fund it? Like everybody had to come together at the same time.

How did that actually work? You know, I'm sorry to Jury, but there was no internet at the time. So crowdfunding. No, no, I don't. I meant like a thing. Yeah, yeah. Throw a jet up on Kickstarter. No, but you hit on the kickstop.

key issue. You couldn't start with one jet. You had to have enough jets that people would buy a share because they could catch on very quickly. If four of us own a jet, you have to have at least four of them in case we all want to fly at the same time. So you had to get to the point where you had a minimum number of aircraft. And in the in 1997, I was out trying to raise capital for just that. My idea was to start with 12 aircraft. They were going to be used citation twos and used and used hawkers. And at the time, I wanted, I needed 12 million of debt. And I went out to all the debt sources I could get.

I had my great presentation on. I had my shirt and tie and blue suit. And I went to all these places and nobody would give. I mean, in the end of the day, I think we raised like $2 million based upon like, like, you know, having that much money in the bank. It was ridiculous. But this was in late 97. Then in 1998, Warren Buffett buys net jets.

In June of 98, he buys net jets. And my proposal was literally on everybody's desk. And from June of 98 till August of 98, we came away with over $200 million of financing. General Electric, Boeing Credit, commercial credit corporation, Bombardiate. And so all of that was, it was actually in some ways Warren Buffett that got me into the business because he doesn't buy net jets. He christened the industry and allowed my proposal to have meat to it.

So that was really, we went live with flight options in November of 19. Needed somebody to legitimize the industry. And then people looked at your pitch and they were like, hey, this guy is a pilot. He's got all this operational experience. He knows how to work with customers. He's actually a solid bet in the category. He was in the right market. Yeah, yeah.

How much was what there was, there was massive amount of wealth creation in the late 90s. Did that, was how much of that was just in the kind of internet boom? Did that play into into just like a lot of new demand coming in? Or was that not a factor? Oh, unbelievably a factor. Because we tended to be with the used aircraft. We had the same model. It's just the buy-in was lower because a brand-new citation was $8 million,

but a used one was 2.4. So we had the same model, just the buy-in was lower. And so it became very entrepreneurial. It became Nouveau-Riche for interest in it because they were conserving capital. I can remember there was a company called Internet Capital Group, and they were in the late 90s, and they had an annual meeting in Philadelphia,

and we sold 30 shares at that meeting because everybody was instantly wealthy there. And then, of course, you know what followed that, right? the dot-com bomb came, and then in 2001, it just went away. So was that dot-com crash hard for your business? How did you get through it? I mean, with leverage, it feels like there's always a risk of just actually total capital collapse, total loss.

How did you weather the various storms that you've faced throughout your career? I've been through four, and every one has been different. But that one, that one, because the industry, was still in its infancy, there were a lot of other, there were a lot of, there were, you know, at one time there were 55 startups in this area. If you remember, United Airlines

had a startup in the space at one time. So I weathered through it by finding a merger, right? As people were moving away and the business was shrinking, find somebody else in Deep Doodoo and then merge with them, right? And then create a new story. So that was really, and in that case, it was Travel Air,

which was a division of Raytheon. And that was the merger we did to come out of the dot-com bomb. But yeah, you're right. I can remember, like, we came into it combined with 200 aircraft and came out of it with, like, 120. Wow. Explain the dynamic of the buyout with Raytheon. It was a very interesting dynamic. I was not familiar with this particular process, but explain the economic mechanics, how the bidding work, the results.

because I've never heard of that before, and it's fascinating. Yeah, so it's a term called shareholders' roulette. Yeah. And it's used often in a company where you have 50-50 ownership. And what it simply says, because normally, if a company has a buy-sell agreement, and those buy-sell agreements will say something like fair market value determined by three independent auditors, and if you're the seller in a pinch, you take a 15% discount. So it normally defines the process of value in the company.

But when you have two 50-50 owners, one person just simply goes to the other person and makes them an offer to buy and to sell at the exact same number. And then the other party chooses whether they want to buy or sell at that number. So it forces you to a fair number. And if you remember, Raytheon didn't want to be in that business. They're making missiles. So it never occurred to me that they would ever want to own the business. But what I did was I got the business underwritten by a private. equity firm, Orroup Pinkus.

We underwrote the business at that time at $360 million, and I went to Lexington, Massachusetts, with my $180 million buy-and sell offer to them thinking, look, they had a business that was going broke, right? I gave him brought $180 million. I thought, Rihon's going to erect a Ken Ricky statue in Massachusetts. I brought him this $180 million, right? They thought I was cheating. They thought it was too little, and they bought me out.

And so in the business at that time, you said it was losing money? Or you're saying the business overall? Yeah. When we merged, their business was losing money. We were maybe making six or eight million. And the combined, you know, the economies of putting them together, right-sizing the fleet, back office. We thought we had a projection for about $30 million.

They just show you how times are changed. So it was based on that $30 million projection that the multiple came out. And that's how we got to the value. That's still 12x EBITDA forward number. There's a lot of risk there. That's crazy that they took the deal. You kidding me? Of course it was crazy.

I didn't get it. And you know what? It was the worst day of my life because I didn't want to be out of the business. Well, yeah, so you have to make this buy sell at 180. You're ready to buy them out. And you can't, yeah. Then you wind up getting bought out. But there's no, there's no like walking it back.

It's like it's over at that point. They just called your bluff. You deliver them two letters, one that says I will sell to you at 180 million. One says that I will buy from you at $180 million, and they pick one and sign it. That's crazy. And I was gone. You wish you were like, I wish we did a duel, like a proper duel. It's remarkable.

So, I mean... You know what, in some ways, it absolutely turned out to be a blessing, but you never see that in real time, right? I can remember those days. I was like, I felt like I'd lost my child. I mean, it really was, but in reality, because I had raised money along the way, I only owned 16% of the combined of the entities. So, you know, my buyout, I got 16% of the 180.

And then we bought that company back from them in 2008. No way. No way. Okay. And we bought it back in total. Wait, so that was like a five years you were waiting? It was, yeah, almost six. But, and by the way, I bought it in the middle of the 2008 financial crisis.

Yeah. We bought it back for $130 million. So we bought it back at $0.30 on the dollar. What did you do? What did you do in that, in that window? You're just twiddling your thumbs? I don't have that twiddle your thumb gene. I actually began a disastrous process, which leads me to much pain these days.

I began to roll up the FBO industry. And I started by buying, I partnered with a company called Allied Capital, and we bought the Mercury Air Centers, which were primary in California. And we started that in 04, and we sold that company to Macquarie. which was Atlantic aviation. We sold that to them in 2007. And so we bought, and it's painful because you wish you, how long, you wish, do you wish, in hindsight, you wish you didn't sell? Well, what I was going to say was that we bought, we were buying them at six times,

and we were one of the first transaction that traded it 15 times. Now, today, FBO industry is trading to private equity, well north of 15 multiples, and what are they doing? They're raising the fuel prices to people like us to fund. the acquisitions of what I started. So, you know, it comes back to Roost. You mentioned four key crisis moments, four financial crises that you've soldiered through. Dot com, obviously one of them, housing Great Recession, another. What were the other two? So in the greatest interest rates, 84, when I remember doing proposals to buy an airplane at 21%

interest rate. We had that huge interest rate issue in the early 80s. Did you have any, did you have any like adjustable rate loans at that time? So, or everything prior to that was fixed and you were just having to work off of the, the 20-something? Well, it wasn't that I was, had any debt really at that time. We were, you know, corporate wings was more of a management company. I needed people to buy a new plane so that I could run it in charter and become the manager of it. So I had to make a proposal and they said, what's my cost to capital? And I would say, well, the going interest rates are 21%. So that was tough on the industry.

And then Gulf War I in the early 90s when we hit Gulf War I, the sale of new aircraft came to a standstill during that crisis. So I would tell you, high interest rates, Gulf War I.com bomb financial crisis. How is the aviation industry doing today? There were some folks asking about EVTALs, automation, there's tariffs and depreciation schedules are changing. It feels like a time of transformation, but I don't know if that's just what it looks like from the outside. Well, I think our industry, the cool thing about aviation is we're always in transformation. We live in an industry that always has something cool coming up.

So that's fun. I'll tell you that I don't want to be a Debbie Downer on your program, but we are in a time of abundance. And I think you can, if you've only been in our industry for five years or eight years, you can come to think that this is normal. And we're living through a time where it's easy to see, right? There are two economies. We can talk about the cost of bread.

We can talk about the cost of gas. But fractional owners and private jet owners aren't living, they don't live in that world. The wealth transfer that's going on doesn't live in that world. So we have this one world that's living in really good times because it's very in right now to be, you know, business and wealthy. And that is creating what I think is an overabundance in our industry. I think this is extraordinary. In my 40 years in this industry, this is one of one. And I think we have to be careful not to be complacent about this being normal.

Because I say, you know, this too shall pass. But right now, this is the world we live in. We live in this abundant world in our industry. What about specific technologies that might change aviation? There's been a lot of talk about flying cars, a lot of talk about EV-TALs, not a lot of production process, not a lot of movement there, but do you have more insight into some of the new technologies that might be coming out in the next decade?

I think the new technologies. I mean, I think the number one thing we're going to see is how windows go away from the airplanes. So today, today, if you look at the supply chain, if you go back three, four years ago, it was titanium, that's been solved. The problem in the supply chain today is windows. If you ask Embryor, ask Mike Amphitano, ask them, why are your delivery slipping? They say it's the windows. I didn't know this, but 50% of aircraft windows fail when installed.

And if you get a failure in the air, like we have a buddy who, who, had a lung collapse, a lung collapse, because of a broken window. Yeah. And, uh, yeah, it's a disaster. So I think the technology that's coming very fast, I don't know if you saw that Embrier announced the smart window in their Prater 600. So they've taken out one of the windows in the aft part of the cabin. And they, and instead of that, they put a digital screen.

Yep. And you can make that screen just look outside because there's cameras outside. So if you want to see if anybody's stealing your luggage, you could look out the window and see it. But the reality is, in flight, you could make it day, you could make it night, you could watch a video, you could make it larger, you could make it smaller. So that is, I think, the start of what's coming next. We'll get to the point where we'll eliminate passenger windows in rapid form. If you're familiar with the auto aircraft, that is in their development process without windows. And then it won't be long after that that will be rid of the cockpit windows. Because, like you just said,

high failure, expensive to maintain. So I think that's a technology that we pretty much, you know, assure us coming quick. How do you evaluate new technologies? I'm sure anytime there's any type of new private aircraft manufacturer or EVTal company, they're coming to you, they're pitching you, they want like some type of like L-O-I, even though they're not going to deliver for, you know, even five, five, ten years. We've seen so many of these companies kind of, kind of come and go or have a good render or kind of like demo and then they never end up getting off the ground at all. So I feel like the tech industry, maybe it doesn't feel like this from your vantage point, but it doesn't even get excited about a lot of these EVTol projects anymore,

or at least the insiders don't. But how, I'm sorry, let me separate EVTol because I think that's a different class from innovations and aircraft and so on. First of all, I think it's my obligation for someone that loves aviation to invest, a vested side and encourage people to come up with new technologies. So I will say I've invested in four clean sheet aircraft. I'm 0 for three with one with one that I still have development. So let's go. Let's go. Let's go. Let's go. Blue super sonic, no way. I did that. I was at the Arian. I was an early, early supporter of the Arian product, right? We're an early supporter of the auto aircraft. So I think part of it is just our obligation is to encourage technology, okay?

Some of it is, some of it is self-serving because, you know, you do have a, you know, a duopoly. You know, we do have a polyoply, I guess, in the aircraft business. And right now the main manufacturers control so much from the pricing of aircraft, the servicing of aircraft. So encouraging people to be entrepreneurial in the phase is something I feel obligated to do. Now, I said, I haven't done it. very well at it, but we'll continue to try to encourage those technologies. I think EV-Tol is something different. E-V-Tal is a totally different market.

We've been a supporter of beta. I did the SPAC at Eve. These are the Wright brothers. This is early aviation, and we're generations away from those aircraft being suitable for our businesses. That we're not going to have flex-jet fractionals. They're not luxurious. They don't have the weight capabilities.

You know, a lot of them don't even have no pressurization, no heating, no cooling. People go, well, what do you need heating for? That's only going to be six minutes. Well, okay, that's not where I go. It's not something we can do, right? Yeah, that's funny. But I think, true, but I think it's a great technology, and it's going to happen. Yeah.

Why do you think the Concord failed? It's a great question because I think it was a wonderful aircraft. There were only 15 of them. So lack of adoption would be the number one reason. It's hard to, 15 aircrafts, you know, you can't keep parts in, you know, it's just, I think it was, it's obviously as a financial reason. Now, there were other, you know, environmental concerns at the time. Most of the environmental concerns aren't a challenge anymore. Most of the technology now can deal with that.

So it's really, I think we're just, we're like, I think we're on the, I think had Aeryon maybe started a year and a half later, they'd have played into this era of abundance that we're in, but they got caught in before COVID. And so that kind of hurt them a little bit. But I think had they been a little bit later, I think the market's right. I think we're ready for this. We're ready for Supersonic. What's the most number of hours that you've ever heard of an executive flying annually? you don't have to name the person, but just the number of hours. 600?

600 hours in the age. Whoa, okay, that's quite a bit lower than what the Financial Times was reporting on. Oh, what did they say? Well, the Financial Times was reporting on, I think Alex Carp. I think didn't they have, like, expecting him to be up in like the thousand-something range? And we were saying, like, it seems like this guy is doing. deals in Europe and Asia and America constantly. You can imagine he's constantly in the air. The headline was that there's only 2,000 hours in a year. So like how are we going to? Well,

the headline was that he spent $17.2 million on flying and they worked backwards to estimate that that was 2,457 flight hours. But a lot of that is based on the plane. Obviously, if you're in a very expensive plane, $17 million. dollars goes a lot less far. Could have been the BBJ. Could have been the BBJ. Anyway. Now, I personally fly between around 350 hours a year,

350 to 400. And, you know, but I'm doing a long, I go long trips. I'm going, I go back and forth to operations in Europe. So, and I feel like that's a lot of hours. How is Starlink, how is Starlink impacting aviation overall? lot of excitement from it rolling out on the commercial space. I'm sure all the jets that are in the sort of flex jet fleet have had great, great internet, you know, connectivity in general for quite a while. But what is the ongoing impact? Well, not to correct you, but that was not a true

statement. Connectivity in corporate aviation has been a challenge for many years. In fact, I would tell you it was the Achilles heel, because here you go buy the $70 million jet and you get on it and you have one of the old technologies, you know, and it's a disaster. Like, how can I pay this kind of money and I don't have the internet? Starlink has changed everything. I mean, Starlink, like even for me now, I used to never, through my flights, if I had an eight-hour flight, I'm leaving this weekend. I can schedule anything in that flight.

If you want to do this podcast from the air, we can do it. So you can just keep your schedule. And remember, it works on the ground. The old technologies only worked in the air. Yeah. So now you had taxi takeoff. You couldn't do a phone call. You couldn't watch a movie.

Yeah. So disruptive. Yeah. No, this is, it's, it's changed a lot. In fact, we had for, we did the initial installations on, on Musk's airplane. And because of that, we've got the initial STCs for all of Starlink. So our fleet's been in Starlink very early on. Our competitors are just starting to convert to it.

Yeah. Yeah, how do some of these, how do the contracts work historically? Did some of the old connectivity providers lock some fleets into really long-term agreements? So now they have to make a decision, hey, do we continue paying for this plus Starlink? Because we've just been wondering, like, how slowly some commercial airlines have reacted seems surprising, just considering it's such an easy way to create a meaningful differentiation for past. Well, I think you're dead on, right? Money makes the blind C. So if you try to find the solution to what you're missing, it is the fact that they have those long-term contracts. Now, I don't know enough about all the contracts. I know our contract. You know, our initial contract with Go-Go allowed us to, because we have so many planes, we could just add and take off planes at will. And we have not yet done the phenom fleet because there's a different antenna needed for the smaller fuselage. So we still do. have, you know, about 80 airplanes that are on the go-go system, but we'll be converting those.

That's great. Great. Well, thank you so much for taking the time. This was a lot of fun. I learned a lot. And hope to talk to you soon. I love what you guys are doing. Thanks so much. Thank you so much. How good best of you today. Let me tell you about the New York Stock Exchange. Want to change the world. Raise Capital at the New York Stock Exchange. It's that easy. And we have Howard Marks in the Restream waiting room from Oak Street, Capital. Let's bring him into the TV pin Ultronome. How are you doing? Welcome.

Thank you so much for joining. I would love to kick it off with the high level on your theory of the market cycle. And then maybe we can walk into how you're thinking about markets today and over the last few years. But the high level thesis on the market cycle, how do you explain your overall thesis? Sure. Well, thanks of all. Thanks for having me on today. You know, I've watched what you do, and it's terrific, and I'm glad to be part of it. Thank you. Thank you.

You know, basically, a company or a market or an economy makes progress along what we call a trendline. And so the value that it creates should progress along that trend line. But the point is that while the progress there is pretty steady and, gradual. Sometimes people get too excited and they overvalue that progress and the market goes to an unsustainable high and then something comes along that makes that correct back toward the trend line, but given the way human nature works through it to an unsustainable low. And then eventually that's corrected back toward the trend line. to a high. So the point is that whereas the underlying thing progresses gradually, the price fluctuates

wildly around that trend line, and the main reason is the fluctuation of psychology. Yeah. How far back do you go when you think about market cycles? Does the same theory apply pre-industrial revolution? Well, I'm, you know, I'm old, but I'm not that. I didn't mean it like that. I wasn't there, but yes, I think, well, I think, you know, one of the most valuable operative quotations is from Mark Twain, who supposedly said that history does not repeat, but it does rhyme. So the things that rhyme are the elements of human nature that cause these excessive fluctuations around what I'll call intrinsic value or reality. So, you know, the desire to get rich quick, envy of seeing others get rich quick, the belief that it's possible to get rich quick, the fear of missing out, the fact that people get more excited, the higher the price goes, which should be worrisome. So these things, I think, have always been in place. And you read about bubbles that took place, let's see, the Tulloch bubble, I think, was 60, 20, the 60, 20, the

South Sea bubble was 1720. And so these excesses, these human failings, have always been part of what goes on. But this time is different. I'm kidding. How do you think a lot of the guests on our show have maybe been through the COVID kind of brief correction and chaos of ZERP, but don't have much. else to go off of that can kind of be an advantage because you could just be so optimistic that even if something you know that you know you do get a big correction maybe you get a fast rebound yeah has being through a number of

these cycles ever hurt your performance because you just weren't like optimistic enough or you know this this idea that you know optimists make money and, you know, pessimists sound smart? Well, you know, my firm, Oak Creek Capital Management, first of all, doesn't invest for the most part in the stock market. We're mostly investors in what's called credit or debt. But I think that we are what's called contrarians. I think we're, my partner, Bruce Karsh and I are essentially innately contrarian, which is to say that we are most comfortable doing the opposite of what the herd is doing at the extreme because we see its error. And so I think we've always done that naturally. And so we are, I think we're

conservative by nature. And I always say, by the way, in 1978, Citibank asked me to go to the bond department and start a high-eo bond fund, a convertible bond fund. And it worked great because being a lender requires conservatism, if they would have said, I want you to start a venture capital fund and predict when Amazon is going to be created, I would have been a disaster. I'm not a futurist. I'm not an optimist, et cetera. But when I have seen excessive pessimism and excessive gloom causing crashes, and I've seen a few, it has been, it has come kind of naturally to go against that excess. And so I think, ironically, one of the things we've done best for conservative people is seize

the opportunity at the lows, again, by being contrarian. And, you know, I wrote a memo in October of 2008 after the global financials. after Bank of the Lehman, with the title, The Limits to Negativism. And there is such a thing as being too negative. Do you think contrarianism, like you just described, is purely innate or can it be learned? Is it a muscle that you can build over a career? Is it something that folks in everyday life who maybe aren't professional investors, but might benefit from not getting overheated and falling in with the herd can learn? And if so, how?

I think you can learn these things. You know, I wrote a book called Mastering the Market Cycle. I'm not really trying to plug the book, but it wouldn't hurt. But, you know, and it all talks about how to deal with the cycle. And what I think is I get all these questions, can you learn this? Can you learn that? Can you learn to be unemotional? Can you learn to be what I call a second-level thinker?

Can you learn to be a contrarian? The answer is I can tell you why it's important. I can explain to you why it's essential. Is it something you can ingest? I don't know. You know, I, for some reason or another, come by it naturally. It's easy for me, relatively. By the way, I don't want to give the impression that when I make these calls at the highs or the lows,

that I do it without some trepidation. I'm never sure. Anybody who's sure is an idiot. They say there are two kinds of people who lose a lot of money, the people who know nothing and the people who know everything. So I'm not trying to imply that it's easy,

but it does come fairly naturally to me through the combination of my emotional makeup and the application of logic. Yeah. If somebody else doesn't have my emotional makeup, They could learn the logic. Maybe they could learn to do it. It might not come so easy.

That's all I can say. How do you think about the concept of black swan events or the integration of black swan events into a market cycle? Because going into COVID, I was looking at the health, the fundamental health of the American consumer, the fundamental health of the economy. Everything looked very strong. And I think that's why the economy rebounded as quickly as it did. and then sort of overheated.

But do you need to put black swans out of your mind? Are black swans even a real thing? Like, how do you think about that concept? They're a real thing. I don't think you can do anything about them. My term, the term I've always used for what Taleb calls a black swan, is an improbable disaster. And by the way, they're not all disasters.

They're improbable bonanzas, too. Yeah, to the other. But, but I mean, if you just think about, the improbable disaster. It is something where if it happened, it would be disastrous, but it's very improbable. What do you do about it? And in my opinion, you can't do anything about it. If you say, well, I'm concerned that there could be, you know, an eight hurricane, earthquake, I'm concerned that there could be four hurricanes in a row. I'm concerned that there could be nuclear war, and I'm concerned that there could be inflation at 20%. Well, you can protect yourself against that.

You can call that guy who lives in Omaha. He'll write you an insurance policy to protect you against all of those things. You just won't like the premium. And if you take out that insurance policy and you pay that high premium and you're protected, in the vast, vast majority of years, it's not going to happen. And after a little while, you'll get that. tired of paying those premiums, and you'll stop, probably in time for it to happen. Yeah. So you really can't. And the things that are in the way, way distant tales of the probability distribution are just things you have to live with. That's real life. How do you think about the education that goes into becoming an investor and how that's changing? It feels like it's

easier to learn without mentors because everything's been compacted into AI and open sourced on the internet and you can watch great lectures and podcast interviews. What's changed and what's the same? Well, my perception is that AI, number one, AI has a mentor. It reads everything that ever happened and ingests it and remembers it and can find it. And then AI becomes a mentor. And, and, and, and, And it tells you how to think. It gives you examples of thought processes. So I think it just makes it so much easier to learn, you know. And I wrote a memo in December.

I write memos to my clients. October was the 35th anniversary. And I talked about AI in a memo December 9th. And then I have a son named Andrew. He's in the tech world. He's a terrific venture capitalist. He's co-founder of a group called TQ Ventures. And given the recent events, he pushed me to revisit that memo and update it.

And he had this great idea. He said, why don't you ask Claude to tell you about what's been happening? And so he and I developed a request, which we input. input it to, to Claude. His help was invaluable, but of course he does this all day with all of his brilliant founders. And so Claude wrote me a tutorial, which enabled me to update the memo. And I learned an incredible amount, you know, from in a field that is not native to me through doing that. And so it was a mentor to me, and it can be a mentor to others.

But as we know, you have to ask it the right questions. And Andrew and his buddies helped me do that. Yeah, how has technology changed the credit markets or just investing in credit over your career? I can imagine computerization, the internet, there's sort of a continuum of advances that just help information flow. more freely. AI feels like just an extension of that. But how has like the actual work changed over your career? Right now, AI is helping us marshal data with a with the thoroughness and a speed and a

and an error-freeness that we never had before. I don't think it has changed the process because it what you see, it all comes down in the end to looking at a company and assessing the probability that it'll pay its debts. And I don't, you know, I don't, I think we're still better at doing that than AI is. Oh, by the way, I should tell you that an hour or two ago, we put, I put out a new memo updating the December memo, you probably haven't seen it. I may make reference to it. Please. But, but, pardon me?

No, I was saying we do have it pulled up. Yes. But for the audience. Okay, great. So, you know, it says in there, and I ask Claude, and Claude said, look, the truth of the matter is that the thing that AI is the weakest at is doing analyses on brand new things where there aren't established patterns. And so, and I think that that's a lot of what we do, you know. And so, you know, at the present time, I think that I think AI can, can marshal the data, organize the logic, frame the question.

I don't think it's the top of the heap in answering the question yet. Of course, I can always be wrong. But, you know, and I say in the memo that I think that what AI does is predicts, based on past patterns, it predicts what kind of companies will pay their debts and whether a given company will pay its debts. And it puts forth a hypothesis with regard to an individual situation. And it tells you you should or you shouldn't invest. I think as I understand the status of things today, you need people. to check the hypotheses. You know, I don't think I would make an investment commitment based on the hypothesis

alone. I would want to check it. But I think it gives you a great starting point. And by the way, so I wrote the memo. I said to Andrew, do you want to look at it? He says, why send it to me? Why don't you send it to Claude? Ask Claude to take a look at the memo.

So I did. And I was absolutely, and if you read the memo, I was absolutely dumbstruck. by what what what I got back because it responded to me in I said it it it responded me it felt like a note from a colleague or friend it was personal it was warm it drew analogies to my 35 years of memos it talked about some some of my some of the people I respect it it injected humor it was it was complimentary it's I you know, it said, it talked about a section that it thought was really good. So I wrote to Andrew, I said, is, is AI, is Claude, an ass kisser.

Because I thought it was maybe unduly complimentary. He said, well, dad, ask it, ask it to be hypercritical. So I wrote back, I made a few corrections. I said, now, would you please be hypercritical? So it writes me back, and it says, do you want me to be hypercritical? hypocritical or hypocritical. It's making a joke. You know?

And so, you know, I think that it's going to change all world. I think that, you know, we have an activity in our investment world called indexation, where rather than pick stocks, a lot of people who invest in the stock market, now instead just invest in a vehicle that emulates the S&P 500 or some other indexation. or some other index. And indexation has put a lot of people out of business because a lot of people used to, A, do an inferior job, underperform the S&P, and then B, charge highly for their services.

There's something wrong with that. And a lot of those people are out of the business now, and the majority of equity-neutral fund money is managed through indexation or passive. I think AI will advance that. What it does is it just raises the bar and weeds out the people who don't add value. I don't think it'll replace the best, but it'll replace a lot. How are you personally comparing the AI buildout and the advancements in the various models

and stuff happening at the application layer, all the way down to the hardware layer, to the internet buildout. There's so many different comps from investor psychology to overall consumer psychology. We were talking earlier this week on the show about the Battle of Seattle and the protests around the internet buildout and the fear that people had around jobs getting outsourced,

going overseas, as well as just disintermediation. And it feels like so many of the radical predictions that people made about the Internet are still being made about AI. Some of them came true with the Internet, but they came true over a decade or two. And in some ways now, it feels like AI really is just a continuation of many of the same trends that the Internet brought along. But some of the predictions are even wilder this time around. Well, I think that, first of all, I am in that debate, I'm on the side of the warriors, vis-a-vis society. I, by the way, remember I said 10 minutes ago, I'm not that much of an optimist.

So I can imagine the jobs eliminated, and I am not imaginative enough to think of all the jobs that will be newly created. So I see a net decline in jobs. And I do worry about that. AI is similar to the technological bubbles that I've seen, and the technological bubbles probably go back all the way to the railroads, you know, 140 years ago. But the power of AI,

relative to the predecessor technologies, I think, is vastly higher. The speed of innovation is vastly faster. I think innovation, I think if you look at the Claude and all the coding models and the way they've progressed and the way anthropics revenues have progressed, I think you have to say that this is faster than anything we've ever seen before. And it's because you have the distribution that was laid starting. over 20 years ago. But I think the speed at which AI can innovate is faster than the speed at which society can adjust.

So you might say it'll catch up, but I think you could, I think at minimum you're talking about a significant period of dislocation. The other thing, the other thing that we haven't touched on, but is the biggest difference between AI and everything else we've ever seen is the autonomy. And all the other technologies, starting with the railroad, up through the internet, were I would call labor-saving devices. We had a job to do, and the new technology did it better, faster, cheaper. AI, it's different. It's not just going to do the job we used to do.

It's going to design new jobs. It's going to assign new jobs. It's going to take on work we haven't asked it to take on. It's going to take on work we didn't think it could do. And it's going to operate at some point in time without instruction. In the memo, I talk about the fact that chat GPT brought out a new model earlier this month. And in the write-up for the model, they said, basically, in English, AI, the model helped us design the model. there's never been anything analogous to that before so when I think about the this extreme level of

competence speed etc I think of dislocation for people and you know there are people who say and I referenced in the memo there are people who say oh I have great news people aren't going to have to work to me that's terrible news. You know, I think we get a great deal from our work other than a paycheck. Yeah. And how are those elements of life going to be replaced? It's a wild time. How are you feeling about the United States relative to other countries, the rest of the world?

There's a lot of uncertainty generally, politically, at the same time, America seems to have a lead in the AI race? How are you feeling about just America broadly? Well, I don't know enough about the technology to know where we stand in the race or what it's going to take to win the race or anything like that. But I think, you know, and there was, the big news recently was that Anthropic is going to, I don't even know the right terminology, but let's say be less reticent in certain areas to apply technology. Yeah. Because in America and in a lot of developed countries, we have these things called scruples. Oh, no, you know, I'm not going to do that. You know, that, oh, yeah, well, yes, you could do that,

but I'm not going to do that. This is an arms race. And, you know, we're, America has never had a serious rival before. Never had a serious rival. We thought Russia was a serious rival. We were wrong. It was never really a threat other than militarily or, you know, atomically. But we've never had an economic rival before. Now we have an economic, we have a rival in many dimensions, and of course it's China. And I think that AI will be at the core of that of that rivalry. And, you know, if we slow down because of our scruples and they carry on Pelmel, I think that'll help them win. And if they get control of AI, if they have highly superior AI, I think that could be

one of the things that makes life tougher us. So, and by the way, I consider myself as having scruples. But I worry about what this implies. And by the way, if you want to think about scruples, think about this. One of the areas in which we have a problem, which is not highly talked about or acknowledged, is a rare earths. And rare earths are ubiquitous in many areas of technology, and we're dependent on China for them. So here's a question for you two young guys. Before China developed its primacy in rare earths, who was?

had primacy. Wasn't it America? I think we did and we decided it was dirty and it was worth shipping overseas before. Bingo. You get 100 points for that answer. Let's go. Thank you. It was us.

And as I understand it, as I understand it, most of the rare earth came out of one mine in California. And my guess is some ecologists concluded that, as you say, that it was dirty. Yep. And so maybe we shouldn't do it. Yeah. And then guess what? And guess what China said?

We'll do it. We'll do it. Yeah. And we'll do it cheaper. Oh, yeah. And so they got all the business. Yeah. And that's how you create a dependency.

Yeah. And there's a big question about how does the dirt over there just come right over here? Like potentially, you know, I think it's possible. It's all one atmosphere. But look at what happened with energy in Europe. Yeah. Oh, yeah. Germany had a bunch of nuclear plants.

nuclear reactors. And then they said, well, we don't really like having nuclear reactors because of it's non-ecological. And Russia said, oh, we'll do it for you. They'll supply your energy. And you develop a dependence. So the point is, what you had in both cases is you had decisions made on purely economic terms in areas that probably should have included some strategic decision making.

Yeah. Geopolitical strategy. But it was all seated to the economists and the ecologists. Yeah. Hard decisions. These are hard decisions. They are. Can I completely switch gears and ask you sort of a personal finance question?

Of course. I've heard this rule of thumb that the allocation between stocks and bonds should be tied to your age. If you're 50 years old, you should be 50-50, if you're 25 years old. If you're 25 years old, you should be 25% in bonds. But recently, the bond markets and the stock markets have been more correlated than decorrelated. And I'm wondering how you think the average person should think about the equity markets versus the debt markets.

First of all, there are no numbers that hold true for everybody. So any rules of thumb that have numbers in them, you have to throw out. The only rule of thumb is no rules of thumb. Yeah, that's a good one. Who was it? Somebody once said that every generalization is flawed including this one. Yes. Right?

That's great. So the point is that stocks and bonds have different qualities, existential qualities. And people should understand what the difference is. And the difference is not merely that one is called stocks and one is called bonds. You have to understand the difference. And then you have to figure out for yourself what the right, I would say, risk posture is. And each person and each company and each insurance company, each sovereign wealth fund, each investor, should figure out their normal, appropriate risk posture based on age, wealth, income,

sufficiency of age, of wealth and income, aspiration, number of dependence, and intestinal fortitude, the ability to live with fluctuations. And it's different for everybody. So, you know, that rule of thumb generalization hints at a direction, which is to say maybe younger people whose lives lie ahead should take on more uncertain paths which have a higher trajectory, but more uncertainty. And older people who are approaching retirement should have a less uncertain path and more dependability. Makes perfect sense. Using something like your age as the answer is silly. But I think everybody has to think about those things. And it's not

easy to come up with the answers, but you better do it because it's damn important. Yeah. Last question for me, and sorry to jump around a little bit, but I'm curious, were you ever deeply pessimistic about the internet, about what the internet's impact would be on society in the way that you are around AI and potential labor displacement? Because certainly there were- That's a great question. Because you could have pessimism about, hey, we got a lot of fiber in the ground that's not actually being used, that we're headed off. a cliff here. That's kind of like maybe more like economic pessimism, but societal pessimism. I'm curious. You know, I think the honest answer is that I never was, I never knew enough about the internet to reach that point of pessimism. Because you didn't have the internet. You didn't have, I didn't have, I didn't have my son kicking me in the butt, making me do the research. I mean, he has really pushed me. He said, Dad, you have to know this stuff. And he does it all day. And so I think

I know much more about AI than I ever did about the internet. And so the answer is I never did reach that level of pessimism with regard to the internet. What's the what's the fundraising cycle like for Oak Tree Capital? How do you, how often do you raise funds? What's the latest fund? Well, that's an interesting question. I mean, we have a lot of different kinds of funds. We have some which are very plain vanilla and produce a steady return fairly dependably. We don't do anything in what's called high-grade bonds or investment grade. Everything we do is non-investment grade.

So we don't, you know, we don't do a guilt edge. But so nothing we do is 100% dependable. But, but, and so we. We have some that are mundane and modest return, moderate return. And then we have some that are highly aspirational and often tied to the cycle. I think it's fair to say we're the world's leading investor in distressed debt. And so sometimes when there's a lot of distress, there's a lot for us to do. We have the ability to invest a lot of money and historically have high returns.

When everything is placid, there's not much to do in distressed land. So we have to kind of go into remission. And we don't raise much money in those funds. And we raise small funds with which we can do very selective things and make do with a modest supply. So a lot of our fundraising is tied to that. The other thing is we're warriors. When in good times, most people plunge ahead, we tend to pull back because we get worried because they're too damn optimistic. You know, Buffett says, the less prudence with which

others conduct their affairs, the greater the prudence with which you must conduct your own affairs. Or he says, we, we must conduct. And I believe that. So when everybody is, is unafraid, I get terrified because they do nutty things that put us all in jeopardy. The scariest thing in the world, the riskiest thing in the world is the belief there's no risk. And when people believe there's no risk, the world gets crazy. There's an old saying in the banking business, which is where I started my career, that the worst of loans are made in the best of times for this reason. So that really defines our cycle. When everybody else is having a ball, making money, hand over fist, doesn't see anything to worry about, you know, we kind of go into a cocoon because to us, to us, that's scary, and it hints at very few opportunities.

when everybody else is terrified and wouldn't touch risk with the 10-foot pole, and as a consequence, you get highly paid for taking risk. That's when we turn aggressive. Which, I don't know how much you, if you read or talked with Andrew about Satrini's Sunday memo, the 28 global intelligence crisis, which Citadel responded to by basically saying, We have an intelligence crisis right now with everyone's reaction to this piece. But did you ever have a memo that had wild, that created really wild, near-term price action or in the way that the Satrini piece did, or with the way that information moved historically, did that kind of?

No, look, he used a device of, I mean, he even said, this is not a prediction. this is an extreme case to illustrate. I've never felt that it was attractive to do that. I try to live in the middle of the probability distribution and understand what's going on in the middle of the probability distribution rather than, again, I think maybe you would say that Cetrini's case was a black swan. Yeah. That's a good point.

And I don't traffic with black swans. Yeah, it's interesting. It kind of needed to come from a substack that gives the kind of appearance of being, if you're just reading it for the first time, it gives these kind of appearance of sophistication, but doesn't come with having run tens of billions of dollars of assets.

Well, thank you so much for taking the time to come chat with us. Yeah, really enjoyed it. Really enjoyable conversation. Well, as I said, I think you guys doing a great job, and it's really a pleasure to be part of it. Yes, we've loved having you. Hopefully we can do it again soon. Yeah, and tell Andrews welcome. And let's plug the book.

Go buy the book. And it's available where all books are sold. I'm sure that there's an audio version as well. Exactly. Thanks so much. Cheers. Bye. Bye.

Let me tell you about Vanta. Automate compliance and security. Vanta is the leading AI trust management platform. And let me tell you about Labelbox, RL environments, voice, robotics, e-vals, and expert human data. Labelbox is the data factory behind the world's leading AI teams. And without further ado, we will kick off our Lambda Lightning round. I'm getting it, Ben. We got new graphics.

New graphics. The Lambda Lightning Round has been done. We did it. We have Demi Guo from Pica. She's the co-founder and CEO. Welcome back to the show. How are you doing? Thank you so much for coming back on the show.

We're fired up. Tell us about AI selves. Tell us about the latest launch. What did you launch today? Yeah, for sure. So we all have the same problem. You know, there's only one of us. Your mom needs, you know, help with your computer.

Your partner wants, you know, more time, especially for a founder. friends want to hang out, you know, your founder, you're so busy that maybe you're missing out or like all the group trip planning, but you're in a meetings, you're on flights or asleep. So then we raise this question, like, what if there's a second new? We build something, you know, new, which is called AI stuff, where you can get burst to it, you can raise it, and it will grow with you, you know, evolve, and it becomes a living extension of you. This is what you and John Balmer were just talking about two hours earlier in the show. You're like, John and Jordy are going to talk to each other and get stuff done.

Is this purely for entertainment or do you actually see a business sort of use case where someone with a great marketing mind will create an AI self? And then I would be able to go to them and bounce a Super Bowl ad campaign off of them. How do you see the user actually interacting with this? Yeah, for sure. I think there are many ways you can do it first. like it definitely, it's you, but it's always, like you mentioned, it's like infinite availability, right? So 24-7 available, always on, can be everywhere. So, you know, your family, mom, people who love you will be able to have more access to you. So your mom will be able to, like,

talk to your AI self and help her to debug IT problems. But like you mentioned, it's same for, you know, people who are, have great expertise, right? So like if you're a really genius marketing person, maybe like other people can talk to her to gain more marketing knowledge and she can monetize off it. And it's because it's AI, so it can do all those, like it breaks all the human limits, right? So it can be very capable, for example, like I mentioned, like it has your marketing taste, but it also can do everything like 10 times faster. How do you, how do you get enough data for an individual to make it an accurate representation of the individual. We've talked about this because we put out three hours a day of content, of ourselves talking,

hanging out, but most people don't have that. We're going 24-7 with this. Let the AI selves host the rest of the other 21 hours a day. Yeah, for sure. Like, yeah, the whole thing is sure you guys can use for AI self to directly give. This is it. This is it. So, yeah, but to answer a question about how do we get data to have accurate representation

of you, I would say there are like three angles. Like first is it could import more data of you. So for example, like import all the TBM is showing the past. So you can learn from that. But also like when you're using AI self, you can, there's this constant process. Like you're correcting and guiding it. Right. So when you're using, we're using her.

her, you know, to, or him to, like, generate marketing assets for you, he will also learn the marketing taste you have. So, like, when you're using her for, like, you know, short-term productive word, you know, he will also learn the taste, basically. And the last angle is that the identity also really matters here. Because, for example, like, your mom might not care how it's 100% accurate about, like, everything is accurate about you. But as long as your AI, she will be interested because otherwise she could not find you, right? So, yeah. Well, thank you so much for coming on.

Unfortunately, you have some breaking news. So I need to cut this interview short, but we'll love to have you back on the show soon. So have a great rest of the day. And congratulations on the launch. We'll talk to you soon. Cheers. Goodbye. And the breaking news is that Warner Brothers says Paramount's new offer is superior.

Netflix now has four days to respond. the Kalshi market is continuing to diverge. When we started tracking this, Netflix was up at 50%. Paramount at 40%. Now Paramount is starting to run away with it. They're at 62%. And Netflix is down at 33. Will they sweeten their offer?

We don't know, but Netflix has four days to respond. More breaking news? More breaking news. What else? Square is cutting from 10,000 to 6,000 employees of 40% reduction. Let's head over to Jack. He says, we're making blocks smaller today.

Here's my note to the company. Today we're making, and I wanted to ask Howard about this because it feels like so much of, I'm curious to see what Jack says around the reasoning, but this, I've been shocked that more CEOs, when their stocks are down and beat up, aren't looking at what happened with X and saying, there's a huge expense that we have here.

payroll. And anyway, so he says, today we're making one of the hardest decisions in the history of our company. We're reducing our organization by nearly half from over 10,000 people to just under 6,000. That means 4,000 of you are being asked to leave or entering into consultation. I'll be straight about what's happening. First off, if you're one of the people affected, you'll receive your salary for 20 weeks, plus one week per year of 10 year, equity vested through the end of May, six months of health care, corporate devices, and 5,000 to put toward whatever you need to help in this transition that is generous. We're not making this decision because we're in trouble.

Our business is strong. Gross profit continues to grow. We continue to serve more customers and profitability is improving, but something has changed. We're already seeing that intelligence tools we're creating and using paired with smaller and flatter teams are enabling a new way of working, which fundamentally changes what it means to build

and run a company, and that's accelerating rapidly. I had two options cut gradually over months or years as this shift plays out or be honest about where we are to act on it now. I choose the latter. Repeated rounds of cuts are destructive to morale to focus and to trust that customers and shareholders place in our ability to lead. And I won't read the whole thing, but this feels a little bit more real. Like what's the trini was sort of predicting a little bit. Yeah. Yeah. And it feels more real than some of these other cuts where they do like an eight percent riff and then say, oh, we're getting, but going. But going.

down by nearly half. Also, I mean, Block has been mostly spared the Saspocalypse. I mean, over the last one month, the stock's down 17 percent. Over the last six months, it's down 30 percent. It's not, it's not, you know, down 50, 60 percent. Yeah, but still, it's trading at like one, like, like somewhere around. It's way off peak. The peak stock price was $263. Now it's at 54. And so there's certainly a question about how they build back. Well, let me tell you about Gusto, the unified platform for payroll benefits and HR built. to evolve with modern small and medium-sized businesses. And without further ado, let's continue our lightning round

and bring in Yash Patel from Applied Comput. How you doing? What's going on? Good, how are you? Good to see you again. Good to see you. Since this is the first time on the show, long overdue, please introduce yourself in the company.

Yeah, yeah. So my name is Yash. I'm the CEO of Applied Comput. And what we do is we build what we call specific intelligence for enterprise. And what that means is, right, like, you know, AI is sort of, you know, going at breakneck speeds, these general models are getting better and better week over week. But, you know, if you're using the general thing, you're kind of

never having your competitive edge. So what we think is there's a ton of latent knowledge or subject matter expertise that's kind of in an enterprise. And what we want to do is help enterprises capture that, imbue that into their agentic workforce and I'm going to start to scale up their their agented coworkers. What does an actual onboarding process look like for an enterprise? Is it just sort of turning loose? Before you answer, I just got to say I love the, I love specific intelligence. I don't, yeah, I've got enough general intelligence.

I really like some specific. I think a lot of people are feeling that. They're like, everything's at 99% but I want 99.999%. Exactly. Yeah, yeah. I mean, like, you know, there's that MIT, Gen. Yeah, the state of gen AI paper that came out a while ago. And, you know, the thing it highlighted, you know, the reason 95% of these AI pilots fail is because

these things don't really do the last mile. So they don't adapt to feedback. They don't get better the more you use them, kind of like an employee would. And, you know, that's really what you need in enterprise in order to actually have, like, a productive employee. You know, you can do kind of simple automations. We've seen a lot of, like, workflow building. And that's great.

So I kind of think about this as like RPA plus, right? You used to have like sort of like your click and drag RPA. Now you're introducing models into it. But to do sort of like real cognitive work that like knowledge workers are doing, you kind of need to go a step above. A lot of that is context. But a lot of what we do is fundamental research on the model level too. Because we think in sort of building this next agenic employee is going to require sort

of touching the entire stack. And what does your stack and supply chain look like? Are you a beneficiary of open source? Are you partnering with big labs? You obviously have a lot of experience with big labs. But what does your, what is actually deploying one of your products look like? Yeah. So we're a platform.

So we deploy a platform inside of an enterprise. We really want to sell the entire stack. So that's being able to plug into all of your system of record and data. because we think context is there. It's just really fragmented, right, across all these different applications and even people. A lot of stuff is in people's heads, this tacit knowledge. So, you know, we plug into all of your data. We have our RL proprietary RL post-training stack where we can train these sort of like reasoning models directly on top of your data.

All the infrastructure around models, which makes them agents, right? So there's the model, but an agent is really like, where is that model running? what tools does it have access to all the permissioning and authentication. And then above that is like the application layers. So how are humans interacting with these agents? How are they like sort of guiding it, instructing it on what to do? And then the observability around all of this. And what we think our value really is is closing the loop.

So everyone's been talking about continual learning. I think that's entirely how this space is going to go, right? Like we have offline evils today. That's because that's kind of the best thing we have to benchmark. Really, these models are getting so damn good. But you're going to be evaluating them based off the real work that they're doing in the enterprise and while you're actually tasking them with stuff. So we basically help capture all of that information, turn it back into context and data that we can use to continually train these things.

I don't know how much you can share or how much is this as a secret sauce that, that maybe you'll talk about on a podcast three years from now when you've already won. But how do you get all the context that lives in people's head into your system so that it can be used across the organization? I imagine you've tried a bunch of different attempts and ways. Yeah. Yeah. So I think there's like a couple of, you know, standard sort of recipes that you can use to start these things.

And I actually want to be super clear. I think RL is sort of one of the best ways to train these models today, but it's not going to be the only thing. And it's going to constantly evolve. It's honestly quite nascent in its stage, right? I think Carpathian and a lot of these other folks have talked about, like, how simply, overly simplistic it is. But, you know, a good example, Jordy might be embodied work, right?

So humans go and spend a ton of time going and creating artifacts that they spend a lot of reason. effort on. And what you can actually do is you can look at these artifacts, these final outputs, and sort of say, hey, this is what good looks like. And then optimize models, sort of train models to produce things that look like that. So, you know, I think a recent example of this, that we actually, you know, we put out some collaborative research with Mercor like two days ago, sort of hill climbing on this new agentic benchmark they call apex. So sort of a professional services benchmark across law, investment banking, consulting management. And yeah, we're sort of number

one on the corporate law subdomain there, I think, got bumped down to, yeah, and like number four or five overall. So yeah, it's pretty how much you can do with these small amount of data. Where is applied compute? Like, where, what sectors are your customers, like having their mind blown in the way that software engineers have generally with with co-gen tools over the last year yeah it's it's a great question so we're really targeting um you know institutions where there's a lot of sort of built up knowledge and context uh over over decades right so this is like financial services insurance health care bio um places where data really really matters um i think you know even even the coding domain, right? It's, you know, there's so much, there's such a high ceiling there in terms of

the types of models you can go and train. So, you know, we've been doing some, some work with cognition, helping train some custom models there. But yeah, I think, like, places where there's a lot of sort of, like, institutional knowledge, that's where, where this sort of, imbueing it into these models shines the most. Well, thank you so much for coming on the show and bring up to us. Do we have to, I think we've got to hit the gong. Oh, yeah. Yeah, I mean, the fundraising was a little bit ago, but how much did you raise? We want to hit the gong.

Yeah, so we raised 80 million last year. Better late than never. Great to finally have you on the show. You're welcome anytime. Yeah, we'll talk to you soon. I hope we can hang again soon. Have a great rest of your day. We'll talk to you, serious.

Let me tell you about CrowdStrike. Your business is AI, their business is securing it. CrowdStrike secures AI and stops breaches. and let me also tell you about Railway. Railway is the all-in-one intelligent cloud provider. Use your favorite agent to deploy web apps, servers, databases, and more while Railway automatically takes care of scaling, monitoring, and security. Get in the Ultram. He's not here yet. Scott Morton, we're running a little bit behind. We'll check on him. And in the meantime, we will tell you about Scott is here. We have Scott Morton from Revel. He's the founder and CEO. Welcome to the show. What's happening? Hello, great to be here. How are you doing?

Massive Day. Take us through the fundraising news because I just hit the gong and I want to hit it again. Yeah, we've raised $150 million for our Series B. And by index from Red Point as well. Amazing. So since it's your first time in the show, let's break down the product. What are you building? Yeah, so we are solving a basic problem in that the software used to control.

used to control and test hardware systems really has not improved since the 80s and 90s. So you have these companies building the most complex cutting edge systems like hypersonic jets and satellites. And they're using control software that was designed pre-Windows 98. So yeah, it's insane. And so we provide a state-of-the-art software platform that really makes control software and test software no longer a bottleneck, but instead an accelerant to their development. Do you have any experience making hardware? Did you just think this was a cool idea?

Yeah, I know. So I spent nine and a half years at SpaceX. Overweight Success. Yeah, worked on a lot of these systems were a lot of control software for Falcon 9 and the later Starship Vehicle launch site. And SpaceSys really, you know, it was like a proving ground for, you know,

software for hardware systems. And, you know, and also kind of the highest stakes environment. Yeah. So, yeah, maybe go a little bit deeper in terms of software for hardware systems. Like when I think about a rocket taking off, I could think about like a gravity simulation, like a full 3D environment, something on Unreal Engine. Then I could also just think about like a whole bunch of, you know, like business logic, basically testing different ratios and applying the laws of physics at sort of just a mathematical level. Like, what's the shape of the product? What are the most common problems that are solved? Yeah, I mean, this is, you know, this is the software that will control the hardware system directly.

You know, engineers typically, you know, they need to often control software. And, you know, overall, it's like if, you know, if they can only test, they're like, let's say you're building a pump or something. If you're only able to test that five times in a week, imagine if you could then test it 50 times in a week and how much a a better pump you're going to then deliver when you need to ship that product. So with a pump, I, you know, I could imagine like, what is it, CFD fluid dynamics? Like, are you simulating individual fluid molecules flowing through a system? Or are you acting on a higher level of abstraction? Like, what's in demand right now in terms of simulation and control software?

Yeah. So this is more so like you're designing a pump from the very beginning. And you first kind of design the system, you then fabric. an initial version of it. Then you need to set up kind of an environment for how you're going to make sure that what you've built is actually going to work. It's not going to break, let's say. And so where we said this is the software that will both control the pump, but then also

all the systems around it that are going to kind of make that simulated environment. Yeah. What do you think of the term digital twin? Is that overused and two buzzwordy? Yeah, hilarious. Yeah, I know it's used everywhere. I mean, you know, simulation is a big component of all of this. but we're more and more so in the like rapid iteration in testing these systems.

So for instance, you know, we're running so deep partnership with impulse space, if you know them. They have a rocket engine test site out in the Mojave Desert. Our software will run that whole system. I mean, it's a large facility. And we enable the engineers there to write all their control software, you know, make their command and control interfaces. And then also kind of execute those together. And they're trying to figure out, you know, what what they want to see on that system. Yeah.

Where are, where are you getting traction, $150 million series B tells me that you're not just selling into, you know, pre-segundo? Are you getting into some of these larger kind of legacy manufacturers yet, or is that part of this round? Yeah. No, we've been, we've done really well with kind of scaling startups so far. far, both doing the test software, but also control software, working with radiant nuclear, providing their command and control system. But yeah, we are engaged with some other companies. Doug is here. Doug is here physically in the old room. He's about to come on the show. He's coming on in 10 minutes. He's like, I have a bug report. I have a bug report.

It's amazing. Yeah, but yeah, we're so doing very well with the kind of scaling startups, but we're now starting to engage with both larger companies in aerospace, but then also in more of heavy industry mining, more of industrial control, oil and gas type applications. That's cool. Is this a good place to just kind of vibe code, not even look at the code, you just kind of, you know, tell it not to make mistakes. Or as part of this is like if you,

if there's software errors on your side, there can be very physical, expensive consequences in the real world. Yeah, no, I mean, it's definitely the latter. I don't think a lot of people are really vibe coding this type of software at this point. And we do have some plans for that to make that enable you to vibe code potentially for control software. We do actually have our own programming language, believe it or not, which maybe sounds pretty wild, but there really isn't a good programming language specifically designed for controlling hardware systems. And part of that is actually designing out a lot of the common mistakes that are made.

So this language, if it compiles successfully, it actually cannot crash when it is run. That's an example. You know Goldman Sachs has their own programming language? I did not. I think it's called like slang securities language, right? I think Bloomberg. I've heard of that, yeah. Yeah, there's a number.

Jane Street, O'Camel. It's not theirs. It's open source. But respect. Programming language respecter here. That's right. Anyway. So great to finally have you on, Scott.

We still got to hang one of these days. Maybe we need a custom program. programming language for TBPN. Yeah, Tyler. Tyler can learn his first programming language. This is what we need. It's more of like a plain text programmer these days. Sorry, Scott.

We're having too much fun. But congratulations to the whole team. I'm sure you'll be back on very, very soon. Have a good rest of you guys. Goodbye. Let me tell you about Restream, one live stream, 30 plus destinations. If you want to multistream, go to Restream.com. And let me tell you about

Public.com investing for those that take it seriously. They got stocks, options, bonds, crypto, treasuries, and more with great customer service. And without further ado, we will bring in Sun from Moon Lake, Sun and Moon. You see what I did there? Congratulations on the launch. How are you doing? Thank you so much for joining the show. And please explain exactly what you built and how much AI is going on because it's a crazy demo. We're hopefully going to be able to pull it up, but we'd love to know about how you're positioning the product, how you're explaining it, and what Moon Lake is. Yeah, of course. So actually, let me take a step back. Please explain. Define world models first. Yeah.

There's such a term that is overloaded. Yeah. So I define world models as models that can, a predictive model that can extrapolate the next state of the world in an action, right? And in fact, I'm defining this right now because I'm predicting that you guys are going to ask me about, okay, how is our world model different than other one? This capability is actually my world model capability. Yeah. And the biggest problems with foundation models in the idea today

is that these models don't have these world model capabilities such that it can't predict and act in long horizon tasks. Yeah. No, we've seen with like Genie 3, amazing ability to paint on the wall, come back, paint again, and the paint's still there. But we're so far away from a real game mechanic of your five hours in and you go back and you get a new quest. Like we're far away from that.

At least it felt like that until this demo. No, exactly. Like there's different schools of thoughts when it comes to world models. And really it comes down to how are you representing the world for the tasks that you care about simulate? Right. So for example, for Gene, it's, they have really pretty pixels. The problem with it is that it can't remember the world currently more than a minute. But it's an absolutely incredible technology.

The way we're approaching it is to say we're going to use logic and symbolic representations such as code to encode the interactivity and deterministic part of the world, and then we're going to use pixel priors to then render the world. But the pixel fire is only responsible for the appearance. But games or real world physics, there's a lot of deterministic part that is better represented through code and symbolic relationships. Yeah. So when I watched the demo,

I was very impressed. It felt like the first, like, sort of turning and coding agent loose on like the Unreal Engine platform. Are you using a game engine under the hood? And then how much of a harness did you have to build to actually get this result? Because the little interactions around there's music playing and you can bowl and you actually have a game within a game. You can go up to an arcade game and play Space Invaders that it was all built.

How much of this is the harness? How much of this do you get for free by sitting on top of Frontier LLMs? And then what are you using in terms of game engine and stuff off the shelf? Yeah, great question. So we are, we actually are using a game engine, but we've forced a source game engine and make a lot of customization on top of it. Oh, probably Godot? Our model, exactly. Yeah.

They allow our model to essentially leverage a lot of things that off the shelves of can't. Awesome. And then, so you can think about it as like this cogeneration model that is, we post-trained to have, to be able to use a variety of tools to build the world. Very cool. So do you want to become a game developer and use your own tool to generate the next super deep world at way lower cost? No, John. You're playing in a game right now. Yes.

Then we're getting into simulation theory at the next interview. Or do you want this to be like a consumer tool similar to what we've seen with Suno mid-journey where there are people that go and sort of generate their own images or music? enjoy those for themselves. Maybe they share them, but maybe they just enjoy them for themselves. How do you see this being adopted? Yeah. Frankly, our ambition is beyond gaming. So we really want to solve multimodal reasoning. Like, be able to allow models to really do long horizon planning, both the virtual world and the physical world. Yeah. But for us of commercialization, short-comitization, we want to empower basically people to be able to monetize with their ideas that is not founded by

their skill. Yeah. Right. We want to be the enable of an player to shift leverage from skill or domain knowledge to really taste. Yeah. So that anybody with good ideas can then modify them their ideas. Yeah. So how much of a network is important here?

Like I'm thinking about the priors of Roblox, building games within the game engine. And a lot of that comes from the network effect, the multiplayer nature. Do you think that will be important as a growth engine for you? Absolutely. In fact, in our agent today, you can say I want to build an open, like, multiplayer game. Sure. And then the model an agent would automatically configure. Yeah. Database and multiplayer setups for you. Yes. Yes. And one-click deploy this experience. Yes. But importantly, that would not be that sticky of a network effect for you. And so what I'm thinking is like, do I wind up with a moon lake handle at some point that I can take across the different

games that are created through the platform? Yes. Okay. You won't be able to say, you know, create an ID and then create 10, 10 of the games that just monetize on top of the moonlit's platform. And we help you distribute it to the players and help you monetize. That's amazing. This is very, very cool.

Take us through the funding news. How much have you raised so far? We've raised 28 minutes in total. Who's in? I think that was this. I think there's the same round. as last time, right? But it's been, it's an honor to hit it again.

Yeah, I'll hit the gong for anything that Jeff Deans rip and checks into. Congratulations. It's a great lineup of investors. And thank you so much for taking the time to come on the show. Yeah, great to get the update. Really impressive progress. Congrats. We'll talk to you soon.

Have a good rest of your day. Let me tell you about app loving. Profitable advertising made easy with axon.aI. Get access to over one billion daily active users and grow your business today. And let me also tell you about graphite. Code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. And you heard us tease it earlier, but we got some very special guests in the TVPN Ultradome.

We got Adam Draper. How are you doing? And Doug Bernauer. How are you doing? Good to see you. Look at this outfit. Whoa. Welcome back.

What you got? A hat for us? There you go. Beautiful. Well, we both been on once. Wait, I saw a preview of this. I saw the nuclear hat earlier on this show. I also got you guys a gift.

Whoa, right orange. Is this a safe? You have a meat stick hanging out of here? You got gas. This guy's got he's got You know, we're up here for a little while. Yeah.

Is the orange because you're doing construction? Well, noose we see is orange. Okay. I'm wearing orange pants for about 10 years. Okay. For about 10 years. Yeah, you got to have the vest for when you're doing video podcast because we didn't see your pants last time.

Well, I asked Twitter what I should wear today. Yeah. And so I was just walking around L.A. Yeah, yeah. And they said the dumb and dumber suit. There we go. And so I went walking for costume shops, and I ran into a great guy who tried to sell me everything in the store.

Fantastic. And I ended up on this. There you go. It's great. Can we open this? Yeah, yeah. I want to even open this. You got to give them time to, to crush it.

I just, I felt inspired. Here, open the whole thing. Okay, do you guys know, Funko Pops? I am familiar with Funko Pops. What did we get here? What is this? Whoa, it's a, look what it says. Whoa, custom.

Custom Funko Pops. Crazy, crazy. You can just get these made? How does this work? Dude, you know, if you think about a gift far enough in advance. There you go. You can do it. That's crazy.

I feel like we got to protect those, so nobody kind of messes with them. Yeah, we should consult with Dylan and Berscott on our team who knows collectibles very well because we might have to get this PSA certified, something like that. That's amazing. That's amazing.

Thank you. Doug, good to see you again. How are things going? They're going really great. I can imagine that demand for energy is in endless supply. What's the latest in your world, though? Absolutely.

Humans like being humans. They like lots of energy. They do. And you better get ready for the gong. Okay. What you got for us? Oh, we just raised $360 million. Can we get a pre-gones?

That's a big number. I love kicking off an interview. Congratulations on saying the biggest number. That was $360 million. Woo. Fantastic. Another gone? Is that?

Yeah. I want you to hit the horse, actually. It's on your side. We got a, we got a horse. I know. We should make a horse gong. Okay. So, I mean, you know I've been to,

I've been to the radiant facility, Nelsugendo. Does this unlock a new facility? Is there going to be a separate manufacturing line? Just a lot more humans working, joining the team. Like, what is the money for? Yeah, it's mainly a scale of production at our factory facility in Tennessee, which we signed for in October. Congrats.

It's about 80 acre site right now and already broke ground, digging on site and buildings going up. It looks awesome. I saw art yesterday. And so now you have, when we were last talking, you were talking about still doing design work. You were working on the, what was it, the helium, I remember you explained some of this to me very nicely, dumbed it down.

But how far are you along in sort of locking the design? Because if you're setting up a manufacturing plant, I imagine that you're going to lose some flexibility at some point, right? Yeah, absolutely. So we're doing a dome test in the dome very soon. And we actually, since we talked last, we've gotten approval from the Department of Energy. Cool.

It's a really boring, sounding complex name, but it's the approval to fuel and go to full power. approval. That's more gong-worthy. We should have the guy. I was a lot of people with money. There's only one government that can actually put down a stamp, you know? Yeah. It is incredible progress that doesn't get enough credit. But anyway, so continue. Yeah, so it's called a preliminary design and safety approval. It's done. So that means the design is locked. So that thing we were working on finishing out, that was the big event. And now it's been months of review back and forth. And we're good. approved. So no big change.

Oh, we're moving away from helium. We're moving away from trisop. Well, this is just, I should say that's just for the first unit that goes in the dome. And we've got more of a team now working on the production units that we're going to build lots of and build many at a time, right? Up to 50 per year from that factory site. One a week. So 50, that's 50 megawatts. Are you still thinking about the one megawatt architecture?

Yep, absolutely. To replace the diesel generator? Yep. Okay. And then in terms of demand, initially there was a lot of demand for. from, you know, stranded, places where energy is very expensive to get to. You're off the grid. You're on an oil and gas site or you're in a military context.

Has the demand shifted, have the AI folks showed up? Oh, yeah, absolutely. Okay. I mean, we haven't announced deal with Echo Nix for 20 units with a down payment on them. And, you know, what end up happening is we're going to make many reactor products, right? Nuclear reactors can be products. Yep. That really has never happened before because usually you dig a big hole in the ground, you build a building.

really you're making a building. Yeah. Right? And it's not a product. To be a product, it has to be mass-producible. Yeah. So that's really what Radiant is all about. But we're going to be making reactors for space.

Yep. We're going to be making reactors for maybe the bottom of the ocean floor, reactors that float. Atlantis. You don't have that? That's the horse. Walk me from some of the economies of scale. If I want, in a long time, whenever it's ready, if I want 10 megawatts, is it more efficient to get 10-1-magawatt reactors

or just scale up and create 1-10 that maybe is bigger, maybe has different manufacturing and transportation requirements? But when do you think about actually scaling up the design versus just selling more of the existing product. Yeah. So our mandate is really mass-produce. And so we don't want to make things that are immobile. And so if you operate a reactor that's at a larger power scale,

it's going to be more efficient. There's actually a neat effect where, like, if you put a little bit more nuclear fuel in a design, that fuel makes the other fuel that you had go a little further. Sure. So it's very cool, and it's this like exponential scale. But, you know, we know what we're doing. We're totally focused around efficiency that we provide

is more like deployability. If you go, I want power next week, we can actually do that. And if you go too big, you can't do it. You lose that. So that's what Colitos, the product is about. Got it. Makes sense. But this round is really exciting. We actually had, you know, Adam led the rounds and actually has invested in every rounds.

Every round. Every round. I used to be called the most investingsest. So he used to say I've invested the most, but now I get to say. Is this your biggest check ever? Yeah. So Boost VC, precede for. magic and mutants and historic things.

And that's how we look at it. Cool. We generally are investing $500,000. Yeah. Into all the deals. Seems like a shift. But every once in a while, you know, you encounter a company and a founder who you just enjoy and care about and you want to go all in. And so we, we, in October, after they had announced this, the Nashville plot,

Yeah. My partner and I, Brayton, we got together and we were like, can we do it? Yeah. And so we decided to just pack up the truck. We went for it. And fortunately, he is incredible investors. He's an incredible founder. And we, everyone just re-upped.

We got to lead it. It was fantastic. Yeah. Now I get it. Does that change the overall strategy of boost? Or is this sort of like a special case where you went to the LPs and said there's a specific a specific opportunity that we're targeting? Yeah, so great question.

I do think that there are opportunities like this that emerge when you get to know your founders well. So I've invested in 600 companies over the course of 15 years. Here we go. I like that, yes. And, you know, we do follow on. We do do those things.

but I just feel, hey, if Doug does this, if the team at Radiant, is it capable of doing this, this makes historic change in a world I want to live in. And so I ended up getting to care about the founder as well as the mission. And so by doing that, I get to. So my quick answer, you asked a very specific question. In the situation where that will continue to be true,

it would be really fun to do more of these. However, I wear orange pants and I love the early stage. Yeah, so you should still, yeah, you're still very focused on the early stage. Like we shouldn't just think, oh, boost is just a major growth equity firm now. I don't think I can sell. Yeah. I don't know. No, I just love the energy.

I love being the gateway to be able to help people pursue their dream of whatever the thing is. That's great. And I've been able to see people across the entire stack for over the last 15 years. And, you know, I also now get to, you know, be in the room and watch nuclear reactors be built. Yeah. Are there, are LPs and investors that you talk to sort of receptive to this idea that nuclear technology is like sort of getting pulled forward by the AI boom, but sort of uncorrelated with it because, like, we still need energy for. for oil and gas exploration and the military and all these different things.

Like, it's not so hyper-indexed on like make or break, do we get to ASI or not? Like, this technology is useful in all scenarios. Is ASI the new AIS? It's the, we have the goalpost. We have our goalpost over there. There's a great book called Seif that calls that the Thunderhead.

And so we can call it that now. I'm gonna call it Thunderhead for the rest of them. Okay. Ooh, I like that. Thanks. So the general answer is I think across all markets, energy only gets consumed more, and that's like such an easy sit-sell. Yeah, yeah.

So it's pure execution risk at this point. Yeah, and so we know the demand is there. We know that there's a huge nuclear wave where the government is behind. And so limited partners and other investors, they want access. Now, when Doug pitched me seven years ago, like none of those things, but the energy was still a real problem. Overnight success. Yeah.

On fire. I got a hot hand right now. Oh, my God. None of those things, like, no, the other things were true. It was, you know, people thought it was a regulatory burden. And people thought, like, the government would never allow you to do this. But, you know, we have built nuclear reactors before. We have nuclear reactors.

And so when he pitched me on a phone call in 20 minutes, I said, yes. And we wrote the largest check we had ever written at that point also. And then we, this last October we wrote a bigger one. How much work do you think needs to be done on the public perception side? Because right now, data centers are unpopular. and I think the number one reason is not slop in your feed. It's energy prices going up. And if you build more energy, if you build more clean energy,

it should be a win-win. Everyone should be happy. But I just have this inkling that if you go and you say, we're building a data center, we're going to make it look good, you won't be visibly obstructed, and we're building the power plant for it. It's a nuclear power plant.

You're still going to get a few protesters. Maybe not as many, but they'll still be there. So how do you think public, how do you think about positioning nuclear for consumers, for people that might have this in their neighborhood at some point or in their state or in their country even? Or in their podcast studio. Ideally, ideally. Sign me up. But, but, but, and then, and then how do you think about, I think actually, we actually, we actually did look at it. We did look at a studio space. We were about to put an offer down on it. And we were like, what's in that door? And they were. like, oh, don't worry about it. That's just the machine.

We were like, oh, I'm actually very curious about it. And I'm actually pretty worried about that. In that case, they were cleaning the soil from some industrial waste that it happened like 50 years prior. Cell remediation. Yeah, yeah, yeah. Soil remediation. About 100 years on.

But anyway, communication about the risks of nuclear, the benefits of nuclear. What do you think are the important points to get across? And then how do you think those diffuse through the populace? Yeah. It's really important, first off, to talk to the public and really explain how to think about nuclear. And I wrote a thing called Adams for Prosperity that lays out some of those points. But we are making it now into a cooler kind of series. We can't go through all of the individual points here.

But I think you're right about AI. I think that people don't like really a big building going up, like a big monstrosity that's going to bring a bunch of attention and people and traffic. and like all the stuff that it brings. And you also have the added complexity of the energy markets typically being very regulated, right? There's a lot of laws around it, and they can just get a higher rate they have to pay, right,

if they get enough votes. Right? And so that's probably more on the gross set of things. The good news is the thing that we're doing is the opposite. You know, most people doing nuclear are targeting something big, you know, and there's a lot of excitement around nuclear right now and AI. a lot of people are saying a saying they're building a building

we're not doing that we're doing the doing sure so and what is that it's just reactors that we build are on our site it's a building far away that you never see as the customer and it just appears when you want it it goes away when you want it to you call us and go pick it up yeah it's kind of beautiful it's like totally different from other nuclear

so I think that will help quite a lot because just such a different thing to be able to go you know I can have clean power and we go, yeah, and they go, I can have it next week, yes. And they go, and it can send it away anytime. Yep, anytime you want. And no waste. Yeah, we take that and we handle that.

Talk about the ramp, because we were looking at the data center that was recently protested in New Brunswick, New Jersey. It was tiny by AI comparisons, 25 megawatts. You could probably supply it in half a year. But META's average campus right now is around 500 megawatts. take you 10 years to power that. What does the ramp up look like? Until your next round.

What is the ramp up to get from 50 a year to 500 look like for you? So I don't know, right? It's not really something we're trying to address. What I'm most interested in is being able to put reactors in really crazy places. Like put a reactor on the bottom of the ocean floor, like right like I was saying.

Why would you actually want one on the bottom of the ocean floor? It's the same reason you would go, like, put a research facility in Antarctica. Oh, okay. Because it's far away, and it's weird there. And you're going to learn some things. And we haven't ever done it before. Interesting.

And so it's a frontier. Yeah. And that's kind of all that I'm excited about. So in theory, you'd sync some sort of, you know, remote lab that had camera equipment, lights and sensors, and you could understand what's happening at the bottom of the ocean. That's fascinating. I don't know what you'll learn. James Cameron should become the spokesperson.

Anybody could, yeah, if you want, we can make a reactor for that. Yeah. And the thing is like, if you want, you can't use a combustion power source, and there's definitely no sun. Yeah. So it's, just think about that. That's actually interesting. We're the only thing you can do in a lot of places, actually. Yeah.

Not just that one. It's just a good example to get people to think like, oh, shoot, okay, bottom of the ocean floor. Yeah. All the way up to anywhere in space, as far from the earth as you want to be. Yeah. As far from the sun as you want to be. Oh, true. Think about that.

Yeah, solar's weaker on Mars, right? Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. I like both.

I like solar plus nuclear. Yeah. I love it. I think you're on the right path, though, that education is one of the most expensive. issues, right? And stories like having a nuclear reactor on the ocean floor that's functioning and we're learning tell a great story. And so those stories become easier to tell as more of them exist. The hard part is the in-between. We saw this when we were in crypto also. Everyone was saying, like, the banks will never let you do this. The governments will never let you do it. And now,

obviously, like, it's on the Congress floor. It's all the rave. So many big, massive. Yeah. And so, like, transitions take time and they're expensive, but like it's important because the end consumer gets a better product. Yeah. In the early stage of, I would call like the hard tech boom, the defense tech boom, the El Segundo boom, the dollars that were being raised. You're talking about 1980s? Yeah. I'm talking more about like 2022 maybe when people started paying attention in Silicon Valley. But the dollars were small and so they could be sort of flyer checks from VCs. Now we're getting into real numbers. what do you think about the relationship with the SaaSpocalypse? It feels like public markets investors are rotating away from software.

They would love something like industrials, energy, something that's clearly going to exist in 100 years, no matter how good the computers get at AI. But then in Silicon Valley, we'll talk to founders all the time where they're raising for a software product, basically. It's just AI indexed. And so they're soaking up 200 million of capital every other day. what's happening at the early stage in terms of excitement and at that growth stage to fund projects like this?

Well, as we are growth investors. Yes, yes, as visually. Private equity guys, really. Precede and series D. Oh, I actually have a shirt that says precede and series D. Oh, I love that. You're thinking, you're actually thinking on the longest time around. I'm going to make a custom gift.

Technology looks like magic. Incredible. Well, I'm sure we both have thoughts on this. So we've been investing in hard tech. We have a way of when everyone really gets excited about something, we like looking the other way. And over COVID, we saw everyone getting really excited about software because we were all locked in our houses and inside.

And software was where you saw everything. Anything for remote work is just booming. And so we made a conscious decision to be like, hey, that's not always going to be true. Let's invest in in-person business. businesses that are physically expensive, that are high cap-ex. And so we obviously invest in Radiant multiple times. And a bunch of other Starfish, Venus, just an incredible number of fantastic companies.

And so, like, we were able to, there's a, I think that there's a sense in the investment world where they want to be a part of something that's important, but sometimes they're not considering whether or not it's a good investment. And I think that balance is at scale right now. That would be my like, and I think they're probably overestimating the SaaS apocalypse. I think so many talented people are building so many incredible things. I was just at the upfront summit, which was just over here, walkable. So thank you. This was very efficient. And you know who I love to hear speak is Kathy Wood from ARC because she's just so optimistic about unlocking. technology assets to everyone.

And a lot of other people were sort of in the AI negativity bucket. And I was like, how can you not be optimistic? We just saw everyone who's building awesome stuff on this show, right? Like incredible AI things. Well, I don't know if you saw, but Square just did the largest layoff in S&P 500 history on a percentage basis. That's crazy. And so that's kind of the... of the flip side and even Howard Marks.

A, get in touch with Boose V.C. Okay. And we're going to invest in some square alumni. I think it's the... You got 4,000 of them. Fantastic. So get the brink trucks ready. There are talented people there.

We would love to invest in. And I think what AI is really causing is this eruption of amazing individual entrepreneurs. It's like the next wave. Yeah. So it's exciting. Very interesting. On that note, you know, of optimism, there's a very cool video we released just yesterday

that I thought you might want to see. Yeah. And I think you're, I think you guys have a, perhaps. Let's do it. We can have a look to see. So where is? So shows what we're building, right? So we talked about the approval, the regulatory approval.

Yeah. I remember seeing the core plate. I think you showed me like the raw material for this. That's harbored in the loop. That's doing orbital welds. Yeah. tubing. That's the mounts for the pressure vessel. That's the forged pressure vessel piece. That's crazy. And that's what we're doing. Yeah. Amazing.

That's our July 4th. I love it. So cool. How awesome. Yeah. Amazing. It's just like building all that. Huge physical things. Like we're, we're back to building huge physical things. So you'll bring that design to the dome? That's right. All that is the actual nuclear reactor harbor that we're showing. And this is really like the most that we can possibly show to the public. Yeah. And we now have two buildings. One is just all manufacturing.

It's like you go and it's all machine shops. These big fancy glove boxes where we're doing welding with controlled gas conditions. It's so much different from the last time you were down. Yeah, yeah, yeah. When I was at the office, were you sending out for like CNC parts? A lot of stuff we had to send out. Yeah.

A ton of stuff. Because I noticed a lot of equipment, but there wasn't that much actual machining material to like make stuff that you would put on. So that must have, having the machines in the actual building must speed up iteration as well, right? Absolutely. And a lot of the incoming capital allows us to make those moves and do those things and even invests a little bit in R&D for things that are really far out, that aren't even a product yet, that are just like we realize the limitation and we're like, we're going to go push on that thing. And if it moves, we'll have something no one else has. Yeah.

Last time I was there, I think you had around 40 people. How big is the company now? Oh, my God, 150. Wow. Talk to you about that road. I mean, you were at SpaceX for a long time. Did you ever manage that many people? Is this a new challenge for you?

No, I did a very weird job when I was at SpaceX. I was there 12 years, and the first couple years I did. Ever night success. I loved it, is why I stayed 12 years, right? It's the coolest mission, like make life, multi-planetary. I love that. And I left to make a reactor company to make power for that mission still. Like, I still want our reactors to go that route.

Totally. Of course, a different type. but I was doing stuff like, you know, I made the first Falcon 9 ground system, and then I made the first two rockets. I traveled around the country testing the first two Falcon 9s that flew. And then I did the first ever rocket with legs. And that was like report directly to Elon with like three other people. And like, go to his desk, yeah, and go, here's what we're doing.

He'd be like, and we got so lucky that like every time we came to him, we're pretty much like, and the Qualtank passed and it worked and the schedule's good. So he loved it, right? It was like, great. But from there it was like then I was doing boring company. and I was doing hyperloop is every Elon like side projects, which is exciting. You run special projects. So not really full scale up constantly.

Yeah. But now it's higher, higher, higher. But I would just go and talk to whoever I needed and cross every line possible. And I didn't use the right channels of communication. I just pulled all the assets and I'm building a thing. I'm building a thing and I'm ignoring everything else. And that's basically still how I operate. Yeah, that's great.

Hidden Candy Shop. Powerful. Anyway, George, anything else? No, guys. Thank you so much for coming on the show. Thank you for coming here. Yeah, this is great. So excited.

I genuinely cannot wait to get my own. I don't know what I'm going to use it for yet, but I'm going to have one. How many are you going to need in total? How many badgeneas can you power? You're talking about the ocean one? 2035. I'm going to need some for a boat. I just decided that.

I love it. An electric nuclear boat. I mean, off grid for the preppers, for the rich preppers, the AI billionaires, they might want it. Yeah, yeah. Well, and if you have some real estate on the moon, not very high value without power. There you want to get some power for that. There we go.

I like that. Guys. Thank you so much. Thank you. Amazing progress. Hang out. Hopefully we can see you and wrap up the show. That concludes our guests for today.

Thank you for watching TBPN. Let's get more into the block news. Okay. Yeah, you can pull some up that. The other big news is that Nano Banana 2 launched today, combining pro capabilities with lightning fast speed. We, of course, did, This is the latest image generation model from Google.

And Tyler gave me a little review. He ran a couple benchmarks. Some pretty impressive results. You said it's slower. And is that because it's reasoning more, you think? So it's unclear. I saw people saying online that it was actually much faster. So I'm curious if it was just like while they were just deploying it.

Sure, sure, sure. And it was on the studio, it wasn't on the Gemini website when I was trying it. Yeah. So that could be, I'm not actually sure if it's... Yeah, I mean, the headline is intelligence and visual quality at flash speed. So I think that they were going for something faster. But yeah, I mean, these models take down to... I think I was using it right when it was being deployed.

But there's examples here. A big upgrade over Nanobanamo banana pro. Yeah. A lay flat infographic depicting the water cycle, some cartoons. Yeah, it really... It really has always been great at nailing like these complex graphics that typically you would absolutely have to do piece by piece and then maybe add the text afterwards because you would get slight hallucinations or misspellings. And it seems to be one-shotting these things at this

point. So we, of course, ran Waldo Bench, where we try and use a generative image model to create a photorealistic where's Waldo graphic. And you'll, you can be the judge. This took you a couple prompts, but we did in fact get a where's Waldo that fits the right perspective. I feel like the scale of all the characters is correct. And most importantly, there's only one Waldo. And he's somewhat hard to find. It's not the hardest Where's Waldo. So I'd give it sort of an eight or nine out of 10 on Waldo quantity and placement.

But as you zoom in, one of the key features of Where's Waldo is that there are little storylines playing out throughout the image to distract you from finding Waldo. And so that is, in fact, happening here. You can see some folks building a, some kids building a sandcastle, some people in line for what looks like ice cream. There's a mariachi band. There are sunbaters. There's a large sandcastle that's gathered a lot of folks. The level of quality, once you actually zoom in very, very closely on the individual people that are being depicted at a very small scale, this is totally nitpicking.

but there are some hallucinations still. It's not quite at the level of visual fidelity of a handcrafted Wears Waldo, but it's getting close. And so congratulations to everyone over on the Nanobanana 2 team who made this possible. It's certainly a major step forward, although I'm moving the goalposts again because I want my full Where's Waldo

just as intriguing as a typical Where's Waldo. Jordi, what else do you have for us on The Block News? How is the Internet reacting? to the news that block laid off so many people. I mean, it's 4,000 people, which is a huge number. And then I was trying, I ran a deep research report to try to find, because it's certainly not the largest layoff ever, but it is the largest layoff as a percentage of the overall workforce in S&P 500 history.

Wait, how is that possible? So the second largest layoff in S&P 500 history, was Conoco Philips at 22.5% Chevron at 17.5% Verizon. Nearly half. Intel did 15% in 2024. GM did 15% in 2018. Yes. In 2018, meta. So I guess the Twitter restructuring doesn't count because it was delisted before that happened.

So Twitter went from 7,500 to 1,500. And yes, I think you're right. It might not have been in the S&P 500 at the time. Yeah, it wasn't. Interesting. Well, there's some reactions. Will Slaughter, Bama Bond says in three years, from December 2019 to December 2020,

block more than tripled its head count from 3,900 to 12,500, unwinding less than half. An insane COVID overhiring binge has much more to do with Jack Dorsey's managerial incompetence than whether AI is going to take your job. And so people are, immediately jumping to, is this AI, is this not? The stock's up 25% on the news. So the investors certainly think it's the right move to make,

the right hard thing to do. The other interesting thing is that Block, if I'm correct, did a fairly large merger with afterpay. And I don't know how much overlap in the employee base there was, but it's not uncommon when a merger of those two sizes, $10 billion, I think an afterpay merriment, was in the tens of billions after after pay block acquisition let's see it was 13.9 billion it was an all-stock deal it was originally announced at 29 billion and I'm not sure how many

total employees let's see if they we can pull up this after pay had around a thousand fifteen hundred employees and so there's a few different things this go And Pramak says it's stunning in its candor, and if you're one of those spared, how could you not be wondering how long until AI comes for your job, too? If CEOs get comfortable that this is okay, let alone if they believe shareholders will be rewarded for it, could set off a stunning layoff wave. Very interested in the AI will create. Yeah, so the obvious pushback totally over at Salana is making it. He said, didn't Jack have 10,000 people running this website when only 75 were needed even before? for AI. So, yeah, the, again, it doesn't really, it doesn't really matter whether or not

a company is actually getting tremendous efficiency from AI. Every CEO is going to do this. And we've said over and over and over, I'm surprised more CEOs haven't done the Elon thing. Salesforce has 76,000 people at the company, right? It's basically a city. And yeah, it's really, really sad. Jared Sleeper, who has a fantastic episode on odd lots about the Saspocalypse. He says, first of many sad days, as painful as it is, Jacks did focus service by being decisive.

Of course, really says, these employees will be able to quickly go and hit the job market, which it probably gives them somewhat of an advantage over future layoffs like this. If you're not a software engineer, there should be a wake-up call to what has happened in the past few months with AI engineering tools. Everything has changed. Now we get to watch as companies learn how to either use these tools in earnest or slowly fall behind. Says Dustin Curtis, I'm very interested to learn the shape of the layoffs. Do they lean more software focused or less software focused?

This is certainly just one company, one example, but interesting to see how this matches with the Citadel rebuttal of the Satrini piece. A lot of people are seeing this as vindication of the Satrini piece. Anyway, we will cover it more. Take Kim, says every media person, please read this before writing your narratives tomorrow. Jack Dorsey is Jack Dorsey.

Do not extrapolate. Do not pass. go responding to Will Will Slaughter's post. Yeah. Square for Context did around 24 billion in total revenue in 2025. They've been trading it around 30, even though the business is profitable and growing. And so had certainly been beat up. But very, very sad.

Very sad day. Gavin Baker had a post that Kyle Harrison highlighted. He said the fact that Twitter is running well with headcount down significantly really matters whether they admitted or not everyone in SV admires Elon. A lot of venture-funded CEOs are sending emails like this inspired by Elon and taking drastic actions. margins are going up. Bologi says this is the first AI cut and it will send shockwaves. Remember, Jack is one of the greatest founders of all time. He created this platform that we're all on and has been early to many technological shifts and Block is doing very well as a business. So for him to cut 40% headcount in this way as a signal to everyone in tech, get good now, become indispensable, work nights and weekends, learn the AI tools and raise your game,

where you might not make the cut as an employee or as a company. I know that sucks, but capitalism is natural selection. The market is unforgiving because you are the market. After all, it's not like you're buying some random gallon of milk from the store. You're always buying the best product at the best price. So too for apps, your customers are always installing the best piece of code they can get and because AI is going to create new winners if you aren't the best in your market. Someone may become better with AI, to be clear.

Block severance is generous by any measure, 20 weeks of pay, six months of health insurance invested equity. All of that goes far beyond any typical package. package. Jack did his level best to cushion the disruption that laid off are a temporary, unfortunate class as opposed to a permanent underclass. But had he not leaned into the AI transition, he might have had to lay off more people slowly and over time as faster competitors went after his market share. How would they do that? Sure, AI is not a panacea by any means, but the closer you are to software engineering, the more aggressively you need to embrace agentic

workflows. The AI companies are already doing that in places like Stripe, Shopify, Coinbase, and now Block are pushing hard on this area. There will be overcorrection, but the fundamental technical innovation is real, and you need to either disrupt yourself or get disrupted. I think that's generally good advice. Anything else in the timeline you want to review?

I'm sure we will be covering this. A16C says every tech company can fire at least half their people, but most can probably do 80%. Blackbell, thanks. Yeah. And to round it off, we'll leave you with a white pill. Okay. Or something like a white monster, which is that Joe Wisenthal is sharing the chart for the Monster beverage corporation, which seemingly is entirely AI proof.

Yeah, monster's been ripping. Fascinating company history. Founded by a very... How much do you think... How much do you think Satrini paid... paid square to do this life? Yes. How deep does it go? How deep does it go? Yeah. Elav's taking a victory lap. After being mocked for the last four days. Yeah.

FedSpeak says, on one hand, Jack is a notoriously bad business operator, and on the other hand, it's over. Yeah, the pushback on Bologi saying Jack is one of the greatest founders ever is simply that, yes, he is one of the greatest founders ever. And I don't think anyone would say that he is the best operator. Sure. Of, of, and that's okay, right? But sometimes being the best founder means making the super hard decision and having the foresight to get a help.

It would be a very weird situation. If only Jack Dorsey founded companies, take him said, same dude bought Jay-Z's title, not the greatest operator. Yeah, take him's white-pelling. He's always white-pelling. and enjoy him. Anyway, thank you for watching the show today. Leave us five stars in Apple Podcasts and Spotify.

Sign up for our newsletter at TDPN.com. We will be live tomorrow at 11 a.m. No, we won't. We're off tomorrow. We're off tomorrow. We're heading to Montana. And so we have some affairs to attend to, and we will not be live tomorrow.

But we will return on Monday. And I can't wait. Mark your calendars 11 a.m. Pacific on Monday. We love you. Goodbye. Goodbye. Nice work, brothers. I'll see you on the next one.