TBPN - Pop Mart: The History & Economics | Max Levchin, Jim Belosic

Episode Date: August 29, 2025

(00:35) - The Labubu Craze (10:41) - History of Pop Mart w/ Intern Tyler (24:34) - The Economics of Pop Mart (32:09) - Tim Cook on the Future of Apple in 2016 (43:34) - Timeline Reactions (01:05:17) - Breaking News: xAI Sues Ex-Engineer (01:14:31) - SpaceX Launch Reactions (01:17:48) - Timeline Reactions (01:46:43) - Mansion Section Catch Up (01:59:18) - Max Levchin, a Ukrainian-American software engineer and entrepreneur, co-founded PayPal in 1998 and later founded Affirm, a financial technology company offering "buy now, pay later" services. In the conversation, Levchin discusses Affirm's impressive quarter, highlighting a 43% growth in gross merchandise volume and achieving GAAP profitability. He also emphasizes the company's commitment to providing transparent financial products and reflects on the evolving landscape of consumer lending. (02:32:19) - Jim Belosic, CEO of SendCutSend, a rapid manufacturing company specializing in custom sheet metal parts, discusses the company's growth to 350 employees and nine-figure revenue within seven years. He highlights their unique approach of combining software and manufacturing to efficiently serve both individual hobbyists and large corporations, emphasizing the importance of balancing automation with human expertise. Belosic also shares his commitment to self-funding and scaling the business without venture capital, focusing on continuous improvement and innovation. (02:48:15) - Cadillac Celestiq Reactions TBPN.com is made possible by: Ramp - https://ramp.comFigma - https://figma.comVanta - https://vanta.comLinear - https://linear.appEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.com Numeral - https://www.numeralhq.comPolymarket - https://polymarket.comAttio - https://attio.com/tbpnFin - https://fin.ai/tbpnGraphite - https://graphite.devRestream - https://restream.ioProfound - https://tryprofound.comJulius AI - https://julius.aiFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://www.youtube.com/@TBPNLive

You're watching TVPN! Today is Friday, August 29, 2025. We are live from the TBPN Ultradome, the Temple of Technology, the Fortress of Finance. Let's go. We're already fired up because we got... We're live on VHS. Live on VHS.

It is crazy. They said it couldn't be done. They said it couldn't be done. But we did it. Here we are. Then did it. We're here. Our champion.

We're talking about... We're channeling the vibes of the dot-com boom because we of course today, We are talking about the history doesn't quite repeat, but it rhymes. Today we are talking about Labuboos and the story of Pop Mart, which to me really stands out as a similar, like in the dot-com boom, there was this, the Beanie Babies went on a similar run. Incredibly popular, built on the back of dot-com technology. I remember going over to her friend's house and loading the Beaniebabies.com website, and it was so, heavy because it had all these images.

Did it take like minutes to load? It took minutes to load because they like whoever built the website just didn't kind of think about how long it would take. But even then it was like this is so cool. Yeah. It takes 30 minutes to go to the store. Exactly. Oh, if it takes five minutes to load all down. And so yeah, the page would load the HTML would load and then slowly one image after another would load in.

And you can really feel the difference at the time many people were on dial up, which was 56K, which is like a staggeringly slow speed compared to what you get even just on like a plane. And then DSL was one level up. Daniel posted that United has star length now. Yeah, and I think it's 300 megs per second. 300 megs. So that's what, 6,000 times faster than what we were experiencing back in like the mid-90s. Yeah.

And so then you could upgrade a. DSL. DSL was between 256K and 1.5 megs. I had a friend who had a T1 line, which was like

enterprise level internet in the 90s. It was one meg up and down. So you could get equal upload symmetrical line. And he could

still, he could load the Beanie Baby website faster than anyone. It was like true status symbol at the time. Yeah,

it was Alpha. His parents were very successful. What was the the most expensive Beanie Baby transaction ever?

Do you know? I don't know. I don't know. I don't know. I do know that prices peaked throughout just, they perfectly tracked the dot-com boom. So in 1998, Ty, which is Ty Warner, his company is called Ty, T-Y, they make Beanie babies. They made $1.4 billion in sales, making it one of the fastest growing toy companies in history. Two years later, the market crashed almost overnight.

Prices on the secondary market plummeted a supply-overwhelmed demand and speculative buyers exited. So people were in the habit of, and yes, the chat is correct. eBay was a major, major driver of Beanie Baby's growth because people could buy them. And then the secondary market was way more liquid than ever before. Before it was like, okay, if you buy some rare drop or some limited edition thing and you want to go sell it, you have to go to like a trade show that maybe happens every once in a, once a year. You have to find maybe your local shop. but there's not that much liquidity. Remember when we were talking to our friend about the collectible card market,

Beatles memorabilia, he was saying, like, I only need two buyers. It's very easy to find two buyers if you're interacting at Internet scale. Totally. It's harder if you're in some town and you have a rare Beanie Baby and you need to see, are there any other crazy Beanie Baby fans in this town? So eBay was a huge, yeah, Beanie Baby is the original unicorn startup, essentially. I mean, it was an overnight success in the sense that I think the business was going for about a decade before the boom. But they rode the wave of the internet. Interestingly,

the most expensive Labibu ever sold was $170,000 in June of this year. Yep. And the most expensive Beanie Baby ever sold was something around half a million dollars. Half a million dollars. Oh, we got room to run. We got room to run in the Labibu market. So my question's like, what is driving the Laboooo. Yeah, Aiden. Enjoy your victory lap. Get out there, get some exercise. Do some push-ups halfway through the lap.

Aiden. Enjoy it. Beltsky. Did we see that right? Belt skis. Yes. Beltskis? You said your full name now.

There we go. Thanks for watching. The, yeah, so Laboooo, clearly, clearly a beneficiary of the social media boom of TikTok of the unboxing culture, Timu culture, live shop culture, flex culture. Because people put them on their purse. Interestingly, not, even though it's like money is cheap right now, everything is going up and to the right, the market is booming.

I can't find a, yeah, I can't really find a bridge between like the AI boom and the, and Labooboos. It seems like it's just the social media boom that we're continuing to see. It's the fart coins, the Labubo. Yes, yes, yes. Yeah. There's a little bit of that. there's a little bit of just like gambling culture has has infiltrated everything from sports betting

obviously is legal in more states and and has been on a tear for a long time to folks big gambling on crypto and stocks and out of the money options all the way to you know the collector culture on all sorts of different platforms like there's a big there's just a broad boom happening here and then there's also the China angle, which I think is interesting. We were talking about this yesterday, that China hasn't had a major cultural export. And this might be sort of the first one, more or less. Like, TikTok counts in some ways, but TikTok, I see it as like a bucket that fills up with the local culture of the people that open the app. Like, if you're in, you're in L.A., you see L.A. Yeah, exactly. But you can certainly access that if you wind up in that filter, if you search the

write keywords and then you can go there. Yeah, same with Instagram. But by default, I don't see TikTok as like a uniquely, a uniquely Chinese cultural export. It's an export, not a cultural export. It's a technology. It's technology. And of course, like China has been exporting, like manufacturing technology

and manufacturing prowess for a long time. And so my... Got a real win with the demon dolls. They do look crazy, right? I just, I don't like them. They just rub me the wrong way. I don't know. something is weird, but I'm just not into it. I don't know.

That's why we bought one for Bill Bishop's dog. Tashi. We're excited for Tashi to rip it apart. Rip it apart. Yes. It feels it just, it's not a good look. I don't like the aesthetics at all. It's very odd. Anyway. I would not buy one for my child. The bigger question that I have that I think we want to answer. So we're going to dig into the history of Popmar, take you through some of the history of Lububu's. The question that I have is like, the horse is out of stable with like gambling on toys clearly um think about the tic-tok story there was a big discussion

nationwide discussion a few years ago should we ban tic-tok is it spyware is it influencing our culture is it causing brain rot where did we land on that as america we said yeah that's fine we're good the answer was uh youtube will compete in shorts and uh instagram will compete in reels and, you know, TikTok will be out there and, you know, buy or beware. Like, you know what you're using and you're an American, you're a free person. And if you want to use that app, you can. And if you want to come over to a different app and you trust Mark Zuckerberg's team or Stendorpeachian. Stead versus revealed preference.

People are like, I just want to follow my friends. Yep. The, you know, feeds that are algro driven get to use more. And so my pitch and what I'm kind of digging into what I wrote about in the newsletter this morning, you should subscribe at Substack to our Subsdack. TbPN.substack.com. The conclusion to the TikTok debate was the YouTube team and the Instagram team need to launch direct competitors and take it very seriously. And Mark Zuckerberg invested like tens of billions of dollars, I think, in like data center build out to actually support reels and the Algo feeds.

And they took it really seriously. And they executed very well. So what's the conclusion to the LubuBoo story? Well, it's probably like Ty, the maker of Beanie Babies or Mattel, the maker of Barbie. Getting into blind boxes. Like, that's the only answer. That's where the, like, the arrow of progress moves in one direction. They want to gamble.

And so I think that that's the end state here. And I'm just, I'm, I'm, that's the situation that I'm monitoring. I'm not holding my breath being like, oh, yeah, Labouos are going away anytime soon. Yeah, sure, there might be like a bubble and then it subsides. But in general, I think that the future is like more mystery boxes under the Christmas tree generally broadly in American culture. Like we love gambling. We love freedom.

Pick your poison. That's where you're going. Like somebody gambling as a gift is crazy. Like I bought you this blind box. You never give someone to scratchers? Give someone scratchers. It's great. We should give the team scratchers. Send them off into their three-day weekend. I bet some of the boys are like, I'm into scratchers.

I had a friend in college who was into scratchers. Really? You know, the thrill of a scratcher. I bought one lot of ticket in my life. And it was electric. I was like, I'm going to win. Like, it's going to happen. And then it didn't. And I was like, okay, I'm never spending $2 ever again on that.

But anyway, this is what happened in video games. They went free to play plus micro-transactions, the whales drive everything, price discrimination and everything. We see this with only fans. We see this with the future of romantic companions. Price discrimination is key, and this will probably unlock some of that. It'll be interesting to see where it goes. But I think if you're a toymaker, you've got to get into mystery boxes, unfortunately.

Maybe unfortunately, but like that's where the culture's moved. Late stage capitalism. Pretty much. Which I would say we're just getting started. Pretty much. Anyway, let's go through. Brandon Gorell has a fantastic thread on Pop Mart and Tyler has the story here. Full history.

Do you want to take us through the history? Tyler, what's you got for us? Can we pull this up on VHS, Ben? I think this is going to be important. There we go. There we go. Clear is dead. Oh, man.

Yeah. It is. So I think we should first. I just love the way this looks. Yeah. I can't help it. Okay. Let's first go through some big, big numbers here.

So Pop Mart, public company currently at, what, like around 55 billion? Yes. Hong Kong. Wang Ning is now the 10th richest person in China. He's worth $28 billion. Wow. Pretty, pretty crazy. Credit is due.

And a lot of the data sources here are Chinese, and we tried to double-check everything by translating, but there might be some details that are wrong. Okay, so yeah, they have almost 600 retail stores, 2,500 vending machines, revenues at $1.8 billion. Vending machines, that's fascinating. Yeah, that's really the big thing. That was big. So the kind of main story of Popmart is that they basically took a lot of things that were first in Japan and then brought them to China, and then exported them basically world. Yeah, yeah. But yeah, the revenue is 106% growth year over year, and then 700 million of that is just overseas.

Yeah, the stat was crazy. I think in the first half of this year, they beat last year's total revenue. Yeah. And they're already like a scale, that's a pretty huge company. Is that good? It's, I think it's better than Invidia. It's the backbone of the economy. Okay, so it takes through some of the history.

Yeah. In Beijing, Wang Ning starts it. Originally, basically, it's just like retail store for these little collectibles. They don't, there's a bunch of stores that do license other people's IP. So there's like, I think they originally started with some marble.

But then really, I mean, the majority of the revenue is just from their custom IP that they basically license from artists they find. Yeah, so that's the nature of like Pop Mart. Like it's like pop culture market. And Brandon says, starting as a single variety mall store, think Spencers are Hot Topic. They couldn't get investment at the time because no one thought adult toys would work.

Now he's the 10th century. And when Wang was growing up, his parents ran small shops. So it was in the DNA. Family. Okay. Yeah. So then 2014, this is when they basically bring over these sunny angels. These are the Japanese like figurines.

Yep. And this is when they start the blind boxes. This is like really the main thing that spurs the rest of their growth. Yep. Wait, wait, wait, before this, this is actually crazy. Brandon has some extra context here. So he starts the company in 2010, a year out of college. He had an undergraduate degree in advertising and a short stint at the Chinese version of Twitter. His single variety store in Beijing in a Beijing mall, it's essentially a reseller. He's seven employees. He spends two years

selling third-party stuff on thin margins, trying to scale with debt. But it's hard to finance because investors don't get selling toys to adults. He managed to raise $320,000. equivalent in R&B, and then $1 million around there in 2013, which he uses to open three new mall shops. And then in 2014, he hits his first lick, finds a repeatable format blind boxes. So take us into that. Okay. So they start with that. These are still different figurines from Japan.

Yeah, these sunny angel blind boxes. They look kind of like 90s troll dolls. Interesting. Yeah. And then, yeah, and I don't think we already, we covered specifically what a blind box is. It's, you're going in, you're paying a generic price for something, and you have no idea what's in it. It could be this super generic one of, you know, 100,000 item, or it could be ultra, ultra limited. And so you just get this massive, buyers get this massive dopamine rush when they're buying it.

They're paying. And that whatever item they unpack might immediately be worth, like, some significant multiple of what they paid. Yep, yeah, yeah, kind of like angel investing. So it has, it has, yeah, but way more condensed. It's like, I buy this and then I immediately figure out, am I going to get crazy return? But unlike angel investing, I think there's like a floor, right? Angel investing easily go to zero. Labooboos like have, you know, somewhat stable.

Yeah, yeah. It has some market value. So if you're trying to like gamble less and you're addicted to angel investing, maybe, you know, downgrade to just Labubo's and lead boxes. A big attraction of, especially the L'Boo's, which you can get into later, is like they have like these sets that come out. So it'll be like 10. And you would collect the full set. Yeah, it's like 10. And then they're basically all the same except like the color of the fur is slightly different or something.

Yep. But then people are trying to create a complete set, which will then sell for more. Yeah. But obviously if there's 10, you can't just buy 10 of the boxes because you're probably not going to get all of them. So you have to buy way more. Do you think that Porsche should get into blind boxes? Imagine if you just, imagine if like a 9-11, you could just buy 9-11's only. with blind boxes.

It's like, it's like 200K. You might just get a base, you might get a career T, like super base model. You might get a G2RS. You might get a nasty. Wow. Yeah, yeah, there might be something there. I don't know. I mean, people would be, people would be sending it on those.

I think so. Yeah, I mean, and you just work out the expected value, right? So you just charge whatever the expected value is. There isn't quite enough of a delta. They need to throw in like a career GT as well, a few of those as well. You used to see a similar thing in the sneaker market when that was like a really big thing. On eBay, you would see these like a third party like mystery boxes. Oh, eBay would just do it.

Interesting. It wasn't. No, no, no, no, people on eBay, but that's crazy because like that's even like less regulated because they can just totally like cook the box. Oh, yeah, for sure. Versus like a real company that has probably some sort of oversight. Yeah. I mean, you don't really know how many people were actually buying it.

Yeah, yeah, yeah. It was just like for YouTube that they would make the videos like, oh, I about this $500 mystery box? I remember I bought a mystery box of cords on Woot.com, which was an electronics reseller that was bought by Amazon. That's so Kuggenko. It's incredibly, just buying a box of cords. It was just electronics, electronics.

It was like, so Woot.com would go around and find like a bunch of electronics that had been discounted. I bought a, I bought an HD projector that was probably like three grand for like 600 bucks because like they were like going out of stock and they just needed to like liquidate. and so we would go and buy the liquidation and then put it on the website and you could just buy it but it was limited time they would just do one daily deal every day

and one day they just did a mystery box and you could just buy literally like whatever was in their facility they would just pack up for you and who knows I got like oh this like HDMI to DVI cable or something you can probably trace back something like do you remember storage wars the show

where it's like they open it you can't go in but you can just see the front and then you try to estimate the value. Yeah, yeah, yeah. And then, yeah, so there's probably some lineage there. That's great. So when did China figure out that this was gambling? Because they banned the sale of Lububu's to kids under eight years old.

Yeah. But that still means you got 10 years before you're legally adult here in the U.S., at least, where gambling is. Yeah, also, I don't know how many actual eight-year-olds are going to the store and buying it. It's not their parents. Yeah. So it's kind of unclear. Well, if you're worried about your employees gambling with your company funds, get on ramp. Time is money saved both.

easy to use corporate cards, bill payments, accounting, and a whole lot more, all in one place. Vaghan.com. Very easy to set a rule in ramp. No PopMap. No Lubbubu. No Pop Mart. Anyway, continue. Okay, so let's go back.

So 2015 is when Labou first appears as, it's in a picture book. So this has nothing to do with Pop Mart. It's just this other artist, Kai Singh Lung. And then 2016, this is Pop Mart's first, like, kind of real IP that they created that went super viral. Yes. In 2016, Ning tries something new. He flies to Hong Kong and meets with artist Kenny Wong, who had created the trendy toy figurine Molly in 2006 and was a big designer in the toy niche. There, he negotiates an exclusive license with Wong to develop and sell Molly products and blind boxes. Interesting. So I think this was, it's done around 800 million in revenue since 2016. Let's go. So selling Molly not only gives Ning more control and capitalizes on trendy toy plus blind box signal,

but it capitalizes on Kenny Wong's fan base and leads Ning to his next big unlock, betting big on controlling existing toy IP with a built-in fan base instead of selling third party. So in 2017, sales of Mali are going nuts. Total $22 million by end of year for Mali. Pop Mart rolls out vending machines, reducing rent. they had to pay in malls and establishing way deeper reach with fandom. Company begins repeating, replicating the molly products. It's unregulated slot machines.

Yeah, basically. And then they, uh, uh, Puckie is another Hong Kong artist derivative. Uh, they launch it. And then they launch a sater. You know, it's like half, uh, half like goat legs, which is very odd. They're getting, not beating the anti-crace allegations. Yes. If you've been at the PT lectures in SF for who the Antichrist is, I think we

got a lead here. I think we got a lead. Did you already write that? Yeah, this is already there. You already wrote that? That's amazing. Yeah, many, there's a lot of allegations here. I mean, it's unclear whether, you know, what's the original. I think we solved it, folks. Yeah, we've solved. Is there really a star on them? Is that a thing? No, I just wrote that. A pentagram? Okay. Well, that's why, yeah, question marks. Max over in the substack chat says we need to tokenize the little booboos. I think that's, I think that's obviously happening next. We know that's going to happen. We know that's going to happen. CSGO loot boxes walked so Labubu could run. Brandon, Brandon in the X-Chat says we got to get a bezel box going. Totally agree.

Quaid, let's get some blind boxes gone. You might get a Nautilus, you might get a tutor. Yeah, there you go. There you go. Okay, so where are we? Okay. So now 2019, Labibu is then licensed to Pop Mart. Yep. So just in 2018, right before this, sales spiked to 73 million on the back of Mali. Around this time, Pop Mart builds its own in-house design team, the Pop Design Center, like a Porsche Design Center. It becomes a powerful pipeline alongside ever more exclusive artist licenses

and big, non-exclusive entertainment licenses. If you want to entertain people on a stream, get on Restream. One live stream 30-plus destination. That's right. Multi-stream in Richard audience, wherever they are. Continue. Okay, so they license in 2019, but they don't actually release, like, the modern Lubbubu doll until 2023.

So it's in the book or whatever. Yeah. Like, they're starting to build the lore, build the IP. They do characters, they do little figurines, but it's not like the kind of modern instantiation. So then let's go to 2020. They IPO at $7 billion in Hong Kong. Hold on.

So continuing with branded. 2019, Pop Mart began selling Labibu Blind Box as an exclusive deal with artist Kassing Lung. Labibu's original character in Lung's picture book trilogy called The Monsters, but was selling his figurines in Hong Kong by 2015. At time of the deal, it's only popular among niche toy collectors. And we do have some images in the deck, by the way, guys, if you want to pull up the pictures of these monsters, yeah.

If you scroll down a bunch, there are some photos of the Labuboos. It has like kind of a street art vibe, very chaotic drawings. Keep going. There's one more. Keep going. One more. Keep going. That's Molly. That's the first Labubu. The Monsters Trilogy by Kassing Lung. The story of Puka, Pato and the Girl, Mirro's Requiem. And so these start selling in 2019. In 2020, Pop Mart raises $100 million on a $2.5 billion valuation. Hit the gong.

I see a large IPO. And a few months later, IPOs in Hong Kong, stock rips 80% on opening You thought meme stocks were just an American phenomenon. Mem stocks are a worldwide phenomenon. I got him across the pond. Nings net worth doubles overnight. He's worth $3.2 billion at open, $6 billion at close. Pop Mart has a $12.5 billion market cap at close. That's a big company.

That's a big company. So let's continue. OK, so 2023 is when the blind box, Lubbubu, like phenomenon really takes off. So this is, I think, probably, it's mostly due to TikTok. You see a lot of this. And then, yeah, 2025. Right now it's like around $55 billion.

Now it's at 55. Absolutely incredible. What a run. Should we pull up the Wall Street Journal video? Watch some of that. What do you think? Yeah, let's do it. While they're pulling that up,

let's tell you about figma.com. Think bigger, build faster. Figma helps design and develop teams. Build great products together. Folks, get to figma.com. Design your next Laboooo drop. Yeah, I mean, developing real IP this quickly is incredibly impressive. Yeah, yeah.

IP that can do billions of... Yeah, I mean, it just takes so long. I remember learning about the Lucas Film acquisition that Disney did, even the Marvel acquisition. These are like, they were big acquisitions at the time, but like single-digit billions, low double-digit billions. Yeah. And then they just created so much value as they actually monetized the IP

and created like shows and merch and like ran the Disney machine around it. Yeah. Seems like Pop Mart's capable of running like a Disney-esque monetization playbook on top of somewhat new IP, which is pretty crazy. Anyway, let's pull up the Wall Street Journal video and watch a bit of that. Aiden says, Nightmare Fuel, I agree. Whenever Chinese retailer Popmark dropped a new Labu-Dizzer toy, it sells out within minutes. It sold out.

Insufficient socks. Oh, ready? It does seem like, it's truly like a worldwide phenomenon in a sense that it's not just women that are doing it. It's not just men. It's like, it's really people all over. Not just adults, it's children. Children and playgrounds. Yeah, yeah, you would think it's like, oh, it's just kids.

So yeah, their revenue doubled in the last year. Have flooded social media. Yeah. I mean, it just has the natural hook. Look at Madonna promoting it. I go pop mart everywhere. But can the company continue to grow beyond the same? viral moment that has seen its share prices rocket more than 1,200% since the beginning of 2024.

Here, pause it. So are you rooting for their downfall? Praying on it even. The, I don't know. I think the bigger question is like there's something that, so it's easy to say like these go viral on social media. Like it's a beneficiary of social media. But like if you actually think about why is, and why is a laboobre,

boo-boo more viral than, you know, the latest iteration of Barbie or Beanie Babies. Like, there is a reason, and it's directly related to the nature of the algorithm. So when you do an unboxing, it naturally takes about one minute, if you edit it down, to do it. And the reveal comes at the end. So when you watch it, you say, oh, someone's doing an unboxing. They're introducing what the stakes are. It has a natural... the creator because they get that retention. Exactly. It drives retention because it has a natural

storyline of like, okay, how did I get this box? How much did I pay for it? What are my expectations? Do I have something on the line? Maybe I'm hoping to build a set, right? I want to build a set. I really am hoping for the red one or whatever. And then you're taken on this journey. And I believe when they, when they unbox them, there's like two stages to the unboxing. You take it out of the box and then there's packages. Yeah. So there's a box. The third stage. is when you have your dog rip its head off. And see what's inside? What was this?

So there's a box, then there's like a nice, like opening, like you like rip it. It's like nicely packaged. And then inside there there there's a little bag. And then inside the bag is the actual. Yeah, yeah, yeah. Yeah. So even that, like, lends itself to like keeping you engaged for 60 seconds,

which is going to drive more virality in the feed. Aaron Frank, partner at LightSpeed says, I have the largest single collection of Labooos in America. No, I'm kidding. He texted me and said, this is hard to watch. This is hard to watch. Sorry, we're forcing you to sit through this, Aaron. Let's play a little bit more in the journal video.

Yeah, let's pull it back up. Yeah, keep going. What is this. Look at this culture. This is crazy outfits for this. Javon, Lawrence in the chat says, my startup has done 75 million in unboxings. Say more.

Yeah, elaborate, please. Over 70% of Potamagchi for real should come back. AI powered Tomogachi. That's a good business, Daniel Cook. What we've done is just added our own flavor to that. Yeah. Now, the company has more than 500 stores and 2,000 venues worldwide. Look at how international in Europe, all Southeast Asia.

When you decide to splurge on a Popmark blind box, which could cost around $20 to $30, you don't go in totally blind. Take this collection. There are six possible characters you could unbox. Oh. secret one that you have a one in seventy two chance of getting one of the things that the brand can do to keep engagement to encourage consumers to get a little more excitement out of it is to label the box this one says have a seat i know people throw the satanic panic around a lot like white monster

monster energy drink there's like a whole six six six it's satanic but it's always unclear if it's like the the founders are are like poking fun at satanism No one accuses John Carmack of being satanic by, I mean, I guess people did when he released Doom. But in Doom, it's like you're clearly playing as a mortal, like killing the demons. And that's the name of that. That's the virtual of the game. Aaron just sent me the stock chart for Buildabair. Have you seen this?

Oh, yeah, Buildabar's ripping two. Does Buildabair have loot boxes yet? That could be the next unlock. Buildabar is up. It's outperforming in video, I believe. 473% over the past five years. It's absolutely ripping. Who's clapping?

Build a bear blind boxes. No more building. Just gambling, children. Just come into the store. Yeah, yeah. If Laboo is like the slot machine that you could be pull out of the vending machine, Buildabair should turn it into like a game of like high stakes. Has anybody a lot done like remote Labubu openings?

So it's just actually like on here. I think I've seen that. Yeah. Who was it? Blake Robbins posts about this a lot. There's like apps in the app store that are gambling. Oh, it's probably happening on like whatnot, to be honest. Well, have you seen the claw game?

So there is an app that you can download and you can pay real money to use a claw in the real world to pick something out of a machine or like a bucket. And whatever you pick out, you get to keep and they will mail it to you. And so it's not technically gambling somehow. how they got some like loophole there. Right now and whatnot, there's like seemingly hundreds of streams selling Labuboos. Wow. Don't gamble, folks.

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whether you're pursuing your first framework or managing a complex program. Anyway, the last two years of, what's interesting is the last two years of, of, of sales in, in, uh, in, uh, of Labibu have been heavily driven by international expansion. They've definitely figured out how to take the brand abroad. Uh, it was predominantly, uh, growing in mainland China. And I believe it's still growing, it's doubling in China, but it's also like seen maybe like a 10x increase in, uh, in international sales over the last two years. Um, so it's on a tear. It's on a tear. We'll see. We'll see how people respond. we'll see how the American toy companies respond.

I feel like this is like the horse has left the stable. The cow has left the barn. The dog has left the dog. The children yearn for the slots. They do. They're going to figure out how to gamble one way or another. I mean, what's the alternative? Like ban Laboubu?

Airwine blind boxes, combo plates. Yeah, combo plates. You might just get the worst slop bowl if you're like, how about sweet green blind boxes? Or you get 12 ounces. It's like you might get a bunch of steak. You might get a bunch of kale. You might get some caviar.

Never know. Anyway, should we pull up this old clip? We're going back nine years ago. Apple missed earnings. And Tim Cook went on Mad Money with Jim Kramer to talk about the business and explain what was going on. It's called Executive Decision.

I want to play this and revisit Apple CEO. Tim Cook on Kramer. It's a very interesting discussion. Let's play it. Pull it up. There's a curious, really strange disconnect between what I read and hear on Wall Street about Apple and this. Because if you, it's going to be an impossibility to pry this for me. Cold dead hand time. You can't. And yet when I read the stories, it seems like people think it's over. How could it be that you can't have this ever or the ecosystem, but it's dead? Yeah, I think that's crazy. The narrative in 2016 was like Apple's dead. It's it's Hewlett Packard of the era.

Like it's going to just be flat. Let's keep playing. 50 billion plus in revenues and 10 billion in profits. To put that in perspective, the 10 billion is more than any other company made. We literally made the most money of any company. And you're hating. Clearly. What we're seeing is that people are upgrading

at a different rate, a lower rate than they did last year. Okay, pause. But still higher than the... If you go back a couple frames to where it's on the close-up of him, this one, it's very weird framing. You're not supposed to frame someone where they're looking off to the side and they're framed like this. If you go to my close-up, like this, so go to... Yeah, so if I'm like this, it's like, and I'm looking off, it looks like I'm cornered in a wall. Like, it's bad framing.

What you're supposed to do is you're supposed to have me in this third, and then I'm looking across the frame, and this looks more cinematic, and it looks like there's room. I'm not, like, backed up against a wall either way. Yes, the 2016 era CNBC team. Free alpha, free game. Yeah, yeah, I'm sure.

I don't know, but it is an interesting question because sometimes this stuff's deliberate and sometimes it's just accidental. Like, sometimes, like, the camera man's just like, I want to put the TV in the back back. Are you trying to make him look like he's backed up into a corner? That is something that happens in production. Like, it also happens accidentally every once a while.

But it was just something that stuck out to me that it's like, it makes it look like, like, Cook is like kind of, I don't know, it looks like he's in this like more tense scenario than just like having a nice conversation. It doesn't look as like cinematic and relaxing. And Kramer's in this odd position because Kramer is relaying what the, what Wall Street is saying about Apple, but he's actually kind of steel manning the bull case. And he introduces the whole segment by saying, like, I always say, Apple's not a stock you buy.

It's a stock you own. Like, you're supposed to own it. You're supposed to just hold on to it. It's a great company. He's super bullish. But then he's like, but I got this hedge fund guy who just sold. And he thinks you guys are done. Like, explain this, debate this.

And so he's doing, I think he's doing a good job. And I like the way he frames the conversation. But we can continue. I want to, I want to get to the part where he talks about, the upgrade cycle. So let's keep playing. At a different rate, a lower rate than they did last year, but still higher than the year before.

And so we had this abnormally high upgrade rate last year as people bought into the iPhone 6. And now we're comparing to that, along with the other things going on that many companies are facing with currency rates and macroeconomics, et cetera. So basically what he's saying is like, we'd been on this tear

where like no one had an iPhone and so people were just like coming on and then there were huge leaps between iPhones so everyone was like upgrading constantly. You go from, you know, not having 3G to having 3G or not having a retina screen or you know

for the first time you have multiple cameras. The cameras get dramatically better to like that kind of slowing down and he's kind of defending that and being like, but it's going to be fine and he actually calls out services revenue for the first time saying like hey it's like it's like a pretty good business We're basically a toll booth.

And it turned into an absolute monster of a business where now he has to say like, oh, don't even talk about that. Services? You want to talk about movies? Yeah, we make some movies. Anyway, continue. I couldn't disagree more. So here's what I see.

We're in some incredible markets. The smartphone market, eventually everyone in the world will have a smartphone. Penetration today is in the 40s. Long way to go. Emerging markets. like India. The LTE penetration is zero. We've got great innovation in the pipeline.

New iPhones. India did not have LTE. Did not have 4G. People that have iPhones today to upgrade to new iPhones. I will need something else because I don't think, but I can't think of anything else that I need. This is good. But we're going to give you things that you can't live without that you just don't know that you need today.

Okay. This is great. This is great because Tim, later he says like, I don't want. to like leak what we're working on, but they came out with iPod, AirPods, Apple Watch, AirPods Pro, HomePod. Like some of those were not huge, but the, and the Vision Pro is still early, but the AirPods and the Apple Watch went on to, like, become, like, massive, massive drivers of growth for Apple. But you just can't really look it. Versus what we know, which is that other than, say, the Netflix bill, maybe the Amazon bill,

you can put things on this, whether it be my music, I've got the family plan, whether because I've got a lot of pictures and I do the Iclad backup, the Apple pay. Why do people not talk about the fact that this is not a dead device? It's something that we belong to. I think in fairness, we didn't talk about it a lot until recently. And so I take that. But as you say, Services Now is the second largest revenue segment at Apple. It was for last quarter.

It was for the first half of the year, as far as that goes. And so last quarter, we were at $6 billion, up 20%. It's a fast-growing. And you look at what it is. It's things like the App Store. You go and you buy apps far after the sale. You might subscribe to Apple Music. You might use Apple Pay.

You might buy songs. You might rent movies. And so it's all of these things. It's a toll booth for your digital life. And that, of course, is based on how many. many people are using our devices, how many devices out there, and there's over a billion devices in use. This is huge. See, because I, exactly, I figure when it gets to 1.5 billion, there's a number of where we'll be thinking of the average use each month and the average

pay to you. It's not there yet. In the interim, what defines the story would be that China's falling off, that China, which you said in the previous quarter was going pretty good, but the beginning of this last month of the last quarter was not that good has now become clouded out everything else right wrong should be shouldn't you've talked endlessly about China middle classification what's happening there and how did it happen so fast that many didn't see it coming well here's what here's what we see going on in China in the short term in the short term the iPhone upgrade rate affects all countries including China the great thing is the switcher rate in China is huge.

40% up over the first half of last year, the first half of this year. This is huge. So these are people switching from Android smartphones to iPhone in China. Economy clearly not as strong as it was a year ago, softening, currency, weakening. And so you've got a confluence of items in there, some that are Apple-specific, like the upgrade thing that we talked about, some things that are more general that affect everyone. However, here's the way I look at it. Two years ago, we had enormous sales.

And so last year, and last year we did even better, 80% better. So we grew 80% over the previous year. This year, in constant currency in mainland China, we were down seven. So if you look at it on a two-year basis, Apple grew 70% in China. It's hard pressed to say those aren't good results. I want to stay in China for a second because the first leg down in stock last week was because your guidance. Second leg down was a man Carl Icon who had been closely affiliated talking about a no-brainer Apple who says, look, China's an issue.

Now, he sold before we knew anything about the China state administration or press publication, radio, film, and television blocking Apple iBooks and iTunes movies. But was concerned at least essentially. Yeah, you can sell iPhones, but not. We don't want your books. We don't want your American books in this country. How about the fact that there is an encroachment issue at the lower end? And is that something that could have slowed up at Salesdown?

No, I think what you see in China in general is the smartphone industry isn't growing. There's movement between different suppliers of smartphone. But I think in the areas that we play, we're doing quite well. And in the last month, I'm thrilled at what we've seen with the iPhone SE launch that's been there. This is the phone that we just shipped, that packages a whole bunch of our technology from iPhone 6S into the 4-inch form factor. And so that looks very strong. In terms of the books and movies. It is interesting.

A lot of the China issues have really just started to hit in the last. Yeah. And so it was like, Icon was. Icon was like correct that there was like something happening in China and like maybe you should read into the iBooks ban and the iTunes ban and like Apple is not in the top five. Yeah, but it took it took almost a decade for that narrative to actually play out. And even now, I don't think that they're like weighed down. I think they're just kind of flat. And so like there's there still have a big business there. And it's just like that that thesis like didn't really play out. And I feel like I feel like Warren Buffett and. like right around this time and so must have like seen this interview and been like yeah the the market is is wrong the the price to earnings ratio was was like crazy crazy low at this time it was very much like this like huge stable business and um Tim was certainly right about

AirPods or just net new products that people totally didn't even know that they would want Yeah. Last year, AirPods did around the same amount of revenue as Square and cash app combined. So square blocked at $24 billion. Yeah, yeah. AirPods did $22 billion. That is insane. Okay, we can, I think we can wrap that up.

There's a bunch more there. You can go watch the full thing. It's on YouTube. Anyway, let me tell you about graphite. Dot Dev. Code review for the age of AI. Graphite helps teams and GitHub chip higher quality software faster, get started for free at graphite. dev.

This is a crazy story from Eric Bergman. He says, I got scammed for $1.25 million. I feel ashamed and stupid. The story starts with me getting a phone call from Mr. Beast and Mark Rober. They asked me to donate money to team water to build wells in Africa and help people

get clean water. I'm surprised by their call. We've met before, but haven't spoken in years. I take a few days to think. I focus on learning more about the water crisis in the world. I decided to donate $1 million. Mr. Beast gets excited about this

and tweets to the world about the donation. I'm proud and excited to be part of this in Marries and campaign. About a week later, I get a message from Team Water on WhatsApp on my personal phone number. They are excited about the donation. They invite me on a trip with the top donors to Africa to see the wells being built and to do a few days of wildlife safari. To go to Africa and see Wells has been a long time dream of his. He says he's excited to go.

He immediately says yes. Then they add him to a WhatsApp group with some other top donors. Mr. Beast is in the group. Mark Rober. there's other folks. Toby Looky from Shopify's there. Aiden Ross, the streamer is there. He says he can't believe he's in this group. He feels like a 14-year-old boy. They're all chatting, having good banter going on. Find myself writing a message, then deleting what I wrote because I didn't feel cool enough. I read it again. Then I delete it. I can't believe I'll be traveling with all these people. The conversation goes on for about a week.

It's Friday. I'm heading in for a weekend trip with a bunch of my friends. I've been looking forward to this for month. We have a packed schedule and very excited. On Saturday, Jimmy writes in the chat, it's Mr. Beast, and tells us about this other opportunity. He just signed a deal with Coinbase, one of the largest crypto exchanges that will launch their own crypto coin. As part of marketing collaboration with Jimmy, he's gotten the chance to buy in early on this coin. As a thank you, he wants to extend this offer to anyone who donated over $1 million. Everything is secretive, and it's important to act fast. This is where I should have stopped when someone acts at needs you to act fast. It's often to get you to do something without thinking. But I didn't.

Everyone in the check gets excited about this. I know some of them are real crypto experts and they jump on this opportunity. I don't know much about crypto, but the 13 year old boy and me wants to belong. If they are excited, I want to be excited. I also don't want to be the only one on the trip to Africa that didn't join in on the investment. I find myself calling a crypto friend telling him about this. And he says that if Coinbase is launching a coin and you can get early access to it, it's a sure win. I get even more excited. I'm very very, very, very I'm very distracted. He doesn't want to be in his head right now, blah, blah, blah.

He says, let's go. Within a few hours, he's sent $500,000 in crypto to a wallet that he was given over this chat. The chat's going strong. People are even more excited. Other people want in, but he's too, Eddie from steak wants in, but he's too slow when he asks if he can get involved after the deadline. He's told that he's too late. I read it and I can't believe a guy like that gets rid.

The next day, Jimmy writes again and says, there's a new chance to invest. However, the price has gone up from $1.15 per coin to $0.15 per coin to $30 per coin. The maximum of investment in this round is $750,000. I call my friend again. I tell him the billionaire that got rejected and how everyone else is buying in again. I'm still at the event. I'm still super distracted by other things. And we end up falling forward again, sending another $750,000. Now it's Monday. The retreat has ended. and I'm heading home. I still have a good feeling about all this, and I'm excited. I'm also exhausted after the weekend, lots of experiences to process and far too little sleep. On Tuesday, Jimmy writes one more time in the chat saying, this is the final chance to get it. The price is now 45 cents,

and everything up until now has been taken. Once again, I call my friend and we say, let's go. We're about to send the money, but this time something makes me stop for a second. Something, and I see some of the details are off. I know that Aiden Ross is American, but his phone number is British. The first time since the chat started, I called Jimmy just to confirm everything. And he says, what are you talking about?

That's a punch to my stomach. I say, please say that you're kidding me. And I send him a printout screenshot of the chat. He looks at it and says, wow, I don't know what to say. Please tell me you didn't send them any money. And he says, I sent them $1.25 million. The realization sinks in. The first phone call from a week, from a few weeks ago, was the real Mr. Beasts, the real Jimmy.

The fundraiser for Clean Water was Jimmy, the real Jimmy. But the person reaching out from his team wasn't on his team. It was a scammer. He just saw the post that he had donated and said, hey, I'm on the team that is involved in the donation. Come into this chat. I'll set you up. And everyone in that chat was fake. And so it was all very skillfully orchestrated.

All the people in the chat were fake. all the banter was fake. The trip was fake. I feel the shame inside, the regret, the sadness, anger. I've been fooled. I so deeply wanted to belong to this group. I acted way out of character. I trusted the fake Jimmy. I followed peer pressure of the billionaires and superstars. I broke many of my own principles of how to make decisions. At least there was a silver lining. He's been scanned before. It was a fortune. Silver lining is that he'd been scanned before. That time he felt so ashamed. He didn't tell anyone. The shame kept haunting me. The this time. The first thing I did was tell my wife. Later I wrote to tell my parents and my brother.

Then at group chat with many of my closest friends, I've gotten so much support. He's sharing the, he's sharing the story now. And it's a pretty wild, it's a pretty wild scheme to set up all these fake accounts and have someone, you know, pretending to be Aidan Ross. And Aidan Ross, bro, raised 12 million for clean water. And he's drinking it all himself, crying emoji, crying emoji. And it's like somewhat believable. in tone. And they did, like, these scammers really, really did a crazy, crazy job here. So be careful out there.

One of the hottest takes on this is that this guy runs some sort of gambling company or something like that. So people are having fun with that, the fact that his business is gambling and he clearly likes gambling. And so he took a gamble on kind of a wild investment. Yeah. How do you run an online casino and not? and send one one and a quarter million to some random address,

claiming that Coinbase is going to launch a token when they already have a chain that doesn't have a token tied to. And they have a public stock and plenty of information. Stock. And I think this is, this feels carmic. Yes, because it should set off red flags as like, this would be insider trading if it was actually going on. Even if people I respect are insider trading from first principles,

I should think like, no, I shouldn't do that. This is wrong. He has one of his slot machines is called Le Bandit. La Bandit. That's the one-armed bandit. That's what the slot machine is called. When you buy, like the actual machine is called Bandit. Your coins.

That is hilarious. Not a name. I didn't realize that I never put those together. Great.com. Great domain. Insane domain. Funny to use it for gambling. Yes.

it's also funny to put it as like a Swedish initiative it's like maybe it shouldn't be I don't know like apparently the the site helps you find like the correct uh what were the comments like on this for people people were upset people were like uh yeah this uh like they're they're not a fan of this guy's business um but it is it is a good cautionary tale and it's a wild story it's very um i'm sure Eric's, I'm sure Eric's a nice guy, but the fact that he's advertising his online gambling website as great.com, a Swedish initiative. It's pretty crazy. Pretty crazy story. It's a Swedish initiative, online gambling. To do what? By Sweden. Yeah, I don't know. Anyway, stay out of the, stay out of the trenches, stay out of the casinos, just focus on analysis, data analysis. You should use Julius. What

do you want to run? Chat with your data and get expert level insights in seconds. Ask Julius to analyze your data. You pour all that information in Julius. You probably get a better result. That's right. Or you get that new Garmin. Yeah, horse tracker.

Horse tracker. Yep. Take that data. Into Julius. Understand to the long-term trends of your horse. Better than anyone else. Yes. Well, another more enjoyable thing you can do.

This is extremely important. There's a new food item at Air Force. football games this year are B2 bomber nachos. It's amazing. They didn't just go with the black. This is American innovation right here. Yep. This is great. The chips are the chips are not B2 bomber shaped. So they are. The chips are B2 bomber shaped and the box is B2 bomber shaped. This is capitalism at its best. Oh, this is this is like the Air Force Academy like every single one of their football games will have that. Yeah. That's really cool. Yeah. about that. Has bubble, crazy, nominative, determinative. Sorry, has Hubble.

Hubble. I just read it as Has Bubble. Has has a banger here. Overheard at YC. An investor just took a call outside the hospital while his wife was giving birth and then didn't invest. This is insane levels of ankle investing addiction. Seriously. This is like, how is this different than going to gamble? I mean, there are some. crazy crazy stories. I heard one about an influencer who's like the kid was like in the pool. Did you hear this story? And he was a place in a bed. Very, very dark. Very, very dark.

One of my buddies is just like very, Sager and Jetty is very, very acutely worried about the online gambling epidemic and has been tracking it very closely. We got to have Sagar on the show and just chat about that because he has a bunch of good takes. Anyway, yeah, maybe log off, touch grass. the inside of the hospital when you're giving birth. Get yourself some grass. Get yourself some grass and, you know, maybe you get into the series A.

Have you heard of concentrate? Or just text and say, can this wait 24 hours? Totally. Yeah, can it wait 24 hours? Or also just like, hey, I'm the type of person that will turn down your phone call while I'm at an important family. Every time I'm having a kid and my wife is giving birth, I won't be available. Yes, exactly.

And you can expect that out of me for the duration of your time. And that should be a massive green flag for wanting to work with someone. It should make you want to work with them more. It should be like, okay, you're the type of person that actually has some family values. I'm going to sneak you in late to the deal. I'm going to let you in on an uncap note so you can get into the next round. I want to work with you because you're actually, you actually have some like backbo. It's crazy.

I posted last year. Imagine you're three years old and your parents are addicted to angel investing. Non-stop, refreshing Carta and Angelist and cold emailing founders. Sad that many kids in SF grow up like this. It's crazy. You were joking and it's like a real thing. It's terrible. Anyway, let me tell you about profound.

Get your brand mentioned on ChatGPT. Reach millions of consumers who are using AI to discover new products and brands. You can get a demo. Go to Profound. This post by Steve McGregor, Let's read through this. They were cracking up not simply because grades had gotten so high, but because they knew how little students were doing to earn them. Harvard faculty recognized that grade inflation has become absurd. During their final meeting of the spring 2024 semester,

after an academic year marked by controversies infighting and the death. The fenestration. We were thrown out of a tower. Defenestration. But this is a metaphor. Yes. Harvard's faculty burst out laughing, as was tradition. The then dean of Harvard College, Rakesh, Karana. Karana, Kurana, had been providing updates on the graduating class when he got to GPA. Karana couldn't help but chuckle at how ludicrously high it was. About 3.8 on average. The rest of the room soon joined in, according to a professor present at the meeting.

Everyone just laughed. Just like, yeah, everyone got an A plus. The average was A plus. I'm pretty sure 3.8 is A plus, right? like isn't 3.5a 3.2 would be a minus and 3.8 would be like a plus different in high school though right I don't I don't know I mean like it's supposed to be out of four and 3.8's really really close to four and so I would assume that I thought it would be yeah 4 oh is a perfect score so it's like extremely close and Steve gives more context here he says 25 years ago Harvey C minus Mansfield decided he would quote distribute two sets of grades to his students an initial grade he thinks they deserve and then a second grade the one that will go on their transcript which will be based on Harvard systems what's the point really what's i mean to because he wants to at least give

the feedback of like you don't know i'm not saying i'm not saying what's i'm saying what's the point of grade inflation at a school like harvard right if if the if 99 percent of the value is that you went to harvard and got the degree and then gpa is like tacked on as well hbs does that hbs does grade non-disclosure, so you cannot find the grades. Like, if you are hiring someone from HBO, I believe, I don't know, this is just told me by somebody who went to HBO. You can't email Harvard and say, like, I want to know their grades. And so there's a whole bunch of other, like, where's law school?

I think it's like perfectly ranked. And so you just know your ranking. And so even if there's inflation, it's like we still know where you are on the curve, just very different cultures. I would imagine that in undergrad, it's more about, like, basically NPS. Like if it's discovered that employers are seeing that, oh, everyone that goes to Harvard is dumb because they get C's and everyone that goes to Yale gets A's and they're smart. Then it's like the buyer, the person that pays full tuition will say, well, I'm going to pay and donate and get my kids into Yale because that's where they get A's.

It's like a very weird perverse incentive. But I think that's probably a little bit of what's going on. And then there's just like immense pressure from from everyone in the ecosystem. And there aren't that many people that want, you know, fair grades or like, or downward pressure on grades. Well, speaking of a student of the game, Pat McAfee is set to play the role of U.S. Marine Drill Instructor in the Mosquito Bowl, which is directed by Peter Berg and now in production. Following the attack on Pearl Harbor, four of America's top college football stars set their fame aside to enlist in the Marines.

As they prepare for the brutal invasion of Okinawa, they'll play in a legendary game featuring some of the greatest players in history, a game that for many will be the last they ever play. Doesn't he just look perfect for this role? It's crazy. You see this image and I'm like, oh yeah, he's been acting in Hollywood for two decades. Like, I feel like I've seen him in this role before. It's amazing.

Congratulations to Pat McAfee. Pat says, an honor of a lifetime, thank you for the opportunity. It's fantastic. This is going to be amazing. And then how is he going to fit filming into his college sports only are like, need this in the film and it's bat laying on the ground drinking of beer it's great uh it's so funny anyway if you're planning a movie uh you're trying to plan everything out get on linear linear linear's purpose belt tool for planning building products meet the system for modern software

development streamline issues projects product roadmaps maybe your project is building a movie start building it linear uh the new york times profiled snack shot let's go congratulations She says it's been the most fulfilling five years of her life, getting to work with the biggest food and beverages companies in the world, and swaying the conversation around what we find in grocery stores. Thank you to everyone who has supported her journey. It's really amazing to watch. And this is why I love the internet.

You can build a business obsessing over topics that one would have thought at some point that just weren't large enough to justify. Yeah, very deep but very insightful. And she's huge impact. Focusing on something that I think is real. She says, I like to call our generation the snacking generation. Says Andrea Hernandez, the creator of the Snackshot Snackshot newsletter and Instagram account. She knows your favorite snack before you do.

Your next favorite snack before you do says the New York time. And she really is a snack critic. It's not all new CPG is good. She's willing to call out the silly stuff. Maybe we don't need the 20th prebiotic protein, creatine. Although that does sound. What was the latest thing? It's like combining protein with acylocybin.

That was it. An acylocibin gainer, mass gainer? I think that's what's on trend right now. With Snackshot, Ms. Hernandez is doing the antithesis of what I grew up doing, positioning herself less as myth buster than as cultural anthropologist. Whether prebiotic sodas are effective is less industrial. less interesting to her than why everyone seems to suddenly be obsessed with them. In the five years since, Ms. Hernandez has become, at least in certain circles, a kind of

snacking nostradamus. When Andrea covers a product or a shift, it tends to ripple within the industry. Says Melanie, the founder of non-alcoholic Appertief Brand Gia in an email noting that Ms. Hernandez's observations have a way of showing up in group chats, brand conversations, and beyond. Snackshot offers observations, analysis, and industry scoops presented breathlessly, often without punctuation. A new nicotine energy drink is evidence. We have entered an era of the cocaine-induced opulence, a sharp pendulum swing from the past decade of abductogenic and mushroom coffees. Jay Crewe, retail releasing limited edition pasta, is just the latest example of youthful appetite for affordable affluence, and man cereal, which we covered here,

packed with 2.5 grams of creatine per serving. Well, that remains to be fully deciphered. But if you think that's the craziest thing I've seen containing creatine, you'd be wrong, says Andrea. Anyway, congrats on the post. They even got, the New York Times even got B.J. Novak to comment, he said, at the same time, she still operates with a modicum of anonymity,

a whole swath of her followers, among them the actor and comedian B.J. Novak and Ellie Sussman, the chef behind the Sussman Instagram account know her only through SnackShots Instagram where she posts a steady stream of brutally precise memes. It's a little bit for everyone, says Mr. Ren's. Precision memes. Well, did you see that company, Bouda juice? Yes, they're going public. Going public. Buda juice, which makes branded and private label, citrus drinks filed on Wednesday with the SEC to raise up to $22 million in an initial public offering. Bouda juice states that it is pioneering the ultra-fresh juice category through its end-to-end

cold chain platform. Yes. It's, anyways, they have a company was founded in 2013 and booked 12 million in sales for the 12 months ending June 30th 2025.

And so you don't see this much. What is this screenshot? Because this screen like the screenshot of the financials looks like something that was made in the Microsoft Excel template. It doesn't

look like a normal SEC filing. It's not a screenshot of like what I would normally. I don't know. It stuck out to me as like particularly like early stage financial aesthetics. But I don't know. Good luck to them. If they're going to get out and wonder what's going to happen.

I have no, I really have very little idea of what's involved in going public as a small cap or microcap. I'm only familiar with the traditional IPO, the DPO, the big, big companies going out that way, direct listings, and then the SPAC route, which seems to always hover around $4 billion. It's like you go out at $4 billion. When you're ready to be a $4 billion company, you go out as a $4 billion spec. I don't know why the number settled around there, but that seems to be the kind of default price. I don't know. I mean, look, John, grown 20% a year. Yeah, I mean, it seems like a fine company. It seems like a fine company, but like, you know,

This is probably like a $20 million business, maybe $50 million business. Like, I don't know. We've got to get the Ridge guys on and get the actual value. It's very possible that retail loves the stock. Do people love Buttigooze? This is a popular... Well, I've never heard of it before, but it's just funny. Well, they probably have to pay sales tax.

So, foodage juice, you've got to get on numeralhq.com. Sales tax and autopilot. Spend less than five minutes per month on sales tax compliance. Let's go through... John, they didn't put this... I don't know if this ended up in the S1. but they have 7,000 followers on Instagram. Whoa.

Okay, it changed everything. Count for something. Do you mind you and Tyler running through? They've posted once this year, by the way. Only once. Wait, hey, that's strategy. Yeah. I mean, we've posted like hundreds of times.

I don't think we have 7,000 yet. Yeah, it's a barbell strategy. I mean, one post that just does that well, that's very impressive. So congrats to the team over at Bouda Juice. We have some breaking news in the chat. XAI has sued a former employee for stealing trade secrets about GROC and taking them to Open AI. I want to learn more about that.

The lawsuit said... You and Tyler to talk through this chief scientist of meta-super intelligence labs, potentially threatening to resign. Yep. I can give a little bit of info here. I'm just pulling it up now. Open... Sorry, X-AI's lawsuit against Shushan Lee says he took trade secrets in July,

shortly after accepting a job from Open AI and selling $7 million in XAI. stock. Lee admitted to stealing XAI files during a meeting on August 14th. XAI later found additional stolen material on his devices that he had not disclosed. XAI asked the court for an unspecified amount of monetary damages and a restraining order blocking Lee's move to open AI. I'm not sure if there is much more info on this, but... Yeah, this is like just breaking, right? Yeah. It's kind of weird to physically like take materials, right?

Like you can imagine most of the secrets are just like, oh, it's like this new kind of like, you know, activation function or something that we use that you can just kind of like, you don't have to like actually store like a big file. I would imagine for like training secrets, stuff like that. Yeah, you can imagine that a lot of what he learned at XAI, he would be able to pretty quickly implement over at OpenAI once starting. he wouldn't actually need the files, but who knows? Sounds like if the complaint is correct,

it sounds like he already admitted to doing this. So we'll see what the damages amount to, but it'll be interesting to see if he can actually, according to his profile right now, it doesn't appear that he's at OpenAI at the time. So we'll see if they're successful in blocking the move to Open AI. But clearly Elon is not playing around. He's happy to use the courts to further XAI's goals.

There was some more reporting, Shangjia Zhao, which is the co-creator of Chad GPT, within days of starting at MSL, meta-superintelligence labs, threatened to quit and return to Open AI. He actually even signed employment paperwork with Open AI to rejoin. That's crazy. That is very, very crazy. This is extremely dramatic, in my opinion. Tyler, what's your take?

How much do we know about this particular AI researcher? This is like very, this is not a good sign for MSL. I mean, he's like the head of MSL, so he's leading the entire team. Yeah, he was on the board when you put up the whole chart, right? Yeah, I mean, he's the head of MSL, like he directly to Alexander Wang. Yeah. So do they have anything in here about his motivation? One of the few remaining big tech founder, CEOs, Zuckerberg, has relied upon long-time

acolytes, such as Chief Product Officer Chris Cox to head up his favored departments. But in the battle to dominate AI, the billionaire shifting towards new and recently hired generation of executives, including Giao, Scale AI CEO Alex Wang and former GitHub chief, Nat Friedman. There's a lot of big men on campus, said one investor who's close to some of new meta's new AI leaders. Let's give it up for big men on campus. I love it. It was a campus. Adding to the tumult, a handful of new staff

have already decided to leave after brief ten years. Like, what could you have possibly learned in like a month? By the way, we spend so much time on the show in normal, everyday conversations that I have off air when someone says something like, there's a lot of big men on campus. My immediate reaction is in the actual conversation. Let's give it up.

Let's give it up for bringing your work everywhere and randomly clapping when you're interacting with people. It really adds to the conversation. Okay, so he said that while, so Rezab Agarwal, a research scientist, who started at Met in April, announced his departure in a tweet on X on Wednesday. He said that while Zuckerberg and Wang's pitch

was incredibly compelling, he felt the pull to take on a different kind of... I mean, this just sounds like he's starting a company. Well, so, yeah. That researcher was never in MSL. Okay. He was just, I think he was... I don't know if he was out of air. So he was like, they wanted me.

me, but like that I can, you know. You guys are incredibly compelling. Yeah, yeah. I just got to go a different direction. Ask me to join the team, but I'm going to take my talents somewhere else. Yeah, we're actually good. You never, you never. Yeah, he was on, I think, I don't know exactly if it was fair or just like meta-AI team.

Yeah. I don't think the MSL team was like even really there when he was during his tenure. Yeah, it is an, it is such a funny dynamic because like MSL is like the hot new thing. but like at the same time, like you could wind up being at a different, in a different org, not like that new hot thing and actually have like a huge impact and have a great career and like really enjoy it and be comped well. And so it's got to be a whole bunch of like, you know, odd dynamics back and forth. They don't, I don't think they got anything about this motivation.

This is just purely like, you know, some, some leaked like, like, you know. This is one one meta research scientist. Mimansa, Judge Schwal, said one more reorg and everything will be fixed. Just one more. That's hilarious. Said that on X. Yeah, wow. I think, like, it's good to have a little fun with it.

The only possible reasoning I can imagine is, like, the promise to join Meadow was basically that, like, you're going to have a ton of free compute, you can work on whatever you want. Yep. And then you get there, and then Zuck or Alexander Wang is just kind of like, oh, actually, we're going to do, you know, Instagram companions, like you have to work on. on this like random project that. It feels like, yeah, I don't know. We have to work on ads or something.

I mean, even the Instagram companions, like even if you like say, even if you wanna tell that story of like, oh like yeah, stepmom and cow or whatever, like that doesn't feel like an MSL project. That doesn't feel like, oh yeah, they built a team, they launched something. Yeah, the idea that-

The idea that- Those chat with a celebrity thing, that's been going on for like a year. Yeah, and the idea that he would, you know, have this maxed out offer to some cracked researcher and then say, like, get ready to work on the ads product. Like, that doesn't seem like what you would immediately put somebody like... No, no, it feels like don't work on any product, work on the foundational research,

build the, build the amazing model, get us to the frontier. I think it could also be like, imagine like, okay, you give these massive offers to a ton of people. Yeah. You can probably expect some of them are going to be like, okay, I just made like a billion I'm not going to work that hard. And then the rest of them are just like, well, the team is like only really half into it. I'll just go back to Open AI where everyone is like actually grinding. Like they have this vision of AGI.

Yeah. Everyone is super driven. Even though here I might make a little bit more money. Yeah. You know, something like that. At the same time, like just the idea of like being on any sort of implementation, I just would be shocked if any of that's left up to MSL. It feels like their job is to build like basically an incredible AI API that can be vended

into every single product team at meta. And so, like, if you're on the ads team, you're like, cool, we're going to get a new capability. Like, we're going to get better AI researchers. But it's not like the AI researchers can be like now in charge of ads. I don't know. Anyway, what was that? Financial Times says multiple company insiders describe Zok as deeply invested and involved in the TBD team, while others criticize him for micromanaging, saying that being surprised that,

that Zuck is going to micromanage something that he's investing tens of billions of dollars in. Seems silly. Wang and Zuckerberg have struggled to align on a timeline to achieve the CEO's goal of reaching superintelligence for AI that surpasses human capabilities, according to another person familiar with the matter. Obviously, this is going to be a debate.

It's like how do we move as fast as possible, but at the same time what's realistic? Yeah, yeah. Meta said this allegation was, quote, manufactured tension without basis in fact that's clearly being pushed by dramatic, naval-gazing, busy bodies. That's important. I think that's the real line.

I think that's the real story here. Someone went to the press with, like, a very salacious headline that's, like, sort of ridiculous and doesn't really, it doesn't really have a solid narrative. Matta also said while TBD Labs is still relatively new, we believe it has the greatest compute per researcher in the industry, and that will only increase. That's fun. That's cool. Well, instead of chatting with the cow, chat with an AI agent for customer service. Go to fin.AI. Number one in performance benchmarks, number one in competitive bakeoffs,

number one ranking on G2 at fin.a. Let's go over to Doge Designer. He has a video of SpaceX landing. He says this isn't CGI. Will be the real judges of whether or not it's CGI DOGE designer. Let's play the video of Starship coming down and landing. What do you think, Jordi? real or CGI.

Maybe it's not CGI. It's generative AI. It's nano banana. It's GROC 5. No, this is incredible. Obviously, this is the higher-res video from that camera that was live streamed. Wait for the explosion.

Wait for the explosion? You think they're going to fade to black beforehand? Wait, wait, wait, wait, wait. A fade to black. Fade to black is a technically, it's technically a computer generated image, right?

Because you are taking the frames of the video and you are adding an opacity, you're adding a black layer. What do you think? Can you do a fade, like, practically? Yes, but do you think that was practical fade? Do you think that they... It could have been on film, yeah.

You think they had a neutral density filter that they were rotating over the lens at that exact moment? On the kitty pool? Or do you think that was done in post using computer generated imagery? I'm calling CGI, not on the rocket landing, but on the fade. I think the fade of CGI.

I think the fade of black, that looks like CGI. Let's pull up this video of the lift off. Yeah, yeah, let's see the lift off. This is the real tinfoil hat. Ahi in the chat says clearly V-O-3. Yes, V-O-3 could pull it off. I would love to see if somebody tried to generate that in V-O-3, what it would look like. Anyway, let's look at the lift-off of super-heavy, the most powerful launch vehicle in history on Starship's 10th flight.

I believe this is slowed down, right? I think this is a slowed down video, but it is incredible. So this, the first question is like, how are they filming this? You would immediately imagine that the camera would melt. Apparently they're using a high-speed phantom camera in custom water-cooled nitrogen purged housings. They use sapphire windows and protective enclosures to survive the extreme heat from SuperHeavies Raptor engines, either that or Photoshop, one of the two.

Just kidding. It is remarkable. Satfire and really strong air conditioning. Basically, yeah, yeah. Well, water cooling, like an eight sleep. Aetleep.com. Get a pod five. Five-year warranty.

30-night risk-free trial. I got a little cocky last night. Yeah, how'd you do? I had so many good nights of sleep this week. Yeah. Look at Jordy's drip. The chat loves the outfrey. fit. They're really happy.

Eight sleep. How did I do? I was up late last night. I got an 84. I got a 93 Monday, Monday, 86 Tuesday, 84 Wednesday, 68 Thursday. Thursday, I got a 95. I did great. What about yesterday? Last night, I got an 84. What did you get? 68. Hit that soundboard for me.

I think it's a clean sweep this week. Wait, what did you get on, what did you get Monday night? Monday night? I don't know. Let me check. Monday night and 83. 93. Okay, you beat me then. So not a clean sweep, but I think I won best of five. Anyway, there is a battle.

The timelines and turmoil over a partnership between Cloudflare and browser base. Paul Klein, who's been on a show a few times, says, today we're announcing an unlikely partnership. We believe that agents need reliable, responsible web access. That's why we're partnering with Cloudflare to support, in support of web-bought-off and signed agents, a new standard to allow good bots to authenticate themselves. Here are the details. And Varanam Ganesh says, I get why browser base is doing this, but if perplexity doesn't step up,

will be in a world where, for no reason, Cloudflare gate keeps the entire internet and dictates how agent-to-agent interaction will evolve in the next few years. What's perplexities role in all this? I don't know. Maybe perplexity has the ability to get around Cloudflare's agent, user agent blocking? I don't know. I mean, I know Google has the ability to get around Cloudflare's user agent blocking because they have two bots. One is the Google bot that scrapes your website, and the other one is the Gemini bot.

And you can turn off the Gemini bot, but you can't turn off the Google bot without not showing up in search ranking. like they're going to get your data and you're going to show up in the AI search review, search like the AI overviews. Maybe perplexity is building something similar where it's like the option, perplexity has leverage over Cloudflare potentially because if you're using perplexity and perplexity says, look, if you don't let agents interact with your website, we won't show you in perplexity at all. I guess that might be a theory.

I don't know. Yeah. Anyway, Gary Tan's not happy with it. He says, the Cloudflare browser base, Axis of Evil, was not on my bingo card for 225. Legalize AI agents. And Paul Klein quote tweets it and says, good morning from the Axis of Evil. And they're all wearing bucket hats, having fun on the timeline. I don't know how Axis of Evil this is.

I mean, I guess people are unhappy with the Cloudflare thing. I mean, it is just a default. People can go. like if you want to legalize an AI agent coming to your website, like even if you use Cloudflare, you can go turn that on. You can, but the main thing is that by default Cloudflare blocks AI agents.

So you have to go and configure it, but you can. I don't know. I don't know how disruptive it is to, for Cloudflare. They don't control 100% of the, of the internet. And then also, there are plenty of other companies that are being probably way,

more proactive about blocking AI agents. And really, it's like, it's a cold war because, you know, the company says, oh, we don't want, you know, to be disintermediated by, you know, an AI company. And then the AI company is like, well, we're going to go and build an RL environment with verify a reward and be able to get over your CAPTCs. And when you watch ChatGPT in Agent Mode, it's often like, oh, I hit a CAPTC. I'm going to try a different browser. Now, it just did that for me yesterday.

Tyler, what you got? Yeah, you can also, like, you can kind of always get around these things. It's like the, there's like the meme of like the Chad Web Scraper versus like the Virgin like API user. Yeah, yeah, yeah. It's like you can kind of always just get around. The front end is the API. Yeah, yeah. So I don't know.

I think it's not like a massive deal. Yeah. I don't know. Well, we'll have to keep tracking it. It doesn't seem like it's too much of a fight just yet, but we'll keep monitoring. Anyway, Adio, customer relationship magic. Eddie is the AI Native CRM that builds scales and grows your company to the next level. Get started.

Cotery, according to Drew Fallon, codery nearing deal to be acquired by mammoth brands for $650 million. Reuters reported that mammoth brands, owner of brands like Harries and Flamingo, is nearing an acquisition of the baby care diaper brand. Cotery is reportedly doing over $200 million in revenue with $50 million in Iwita. A $650 million price tag would represent three and a quarter times revenue.

in 13x EBITA. I remember when codery launched, and it was long before I had children. And I thought, is this that great of a business? You get a customer, and then, like, you know, they use diapers for a little bit, and then they're going to churn because they learn how to use the potty. Yep. And then I realize, I've now, I've spent, like, thousands and thousands of dollars in coterie.

They probably, who knows? what our family's CAQ was early on, but it seems like a fantastic business. And they're always, they're, like, we've been on a subscription,

I think, for years now, and we run out, and then we go to Whole Foods and they're out. Like, it just seems like this infinite demand for the products they make.

Yeah, I wonder how big the actual market is for diapers, because that seems like the cap is that, like, user for life. Kids do grow out of them eventually. But it seems like the business

is certainly solid. What's interesting is, are you familiar with mammoth brands? Are you familiar with where that came from? So, Harry's, you know the story of Harry's, right? Yeah.

So Harry's D.C. Shaving company, they launch with this massive fundraising round. They buy their supplier. They buy a razor blade manufacturing company. The razor blade

and shaving industry was highly oligopolistic and very hard to break into because there were only a few companies that owned basically everything. I think it was a Unilever and Gillette and there were a few others that had vast majority ownership. And so Harry's figures out

that if they want to break in, they got to buy the manufacturer. They do that. They scale. I believe they tried to sell the company and they got blocked. And then they were thinking about IPOing or something,

but they just rebranded. That's going to be a number. their antitrust victory where they end up getting blocked. Maybe. Maybe. I mean, the thing I like about this acquisition is, is mammoth, like, it feels like if mammoth just executes for 20 years and buys, starts like acquiring the breakout brands instead of P&G, they'll actually be a real, a new consumer conglomerate.

Yeah, and there's something, there's something sort of maybe differentiated about, so Harry's rebranded as mammoth brands. It's not like Harry's sold to some sort of roll up Holdco. They just became a whole company. Still Harry's. Well, no, no, no, no. The parent company now is no longer Harry's. It is mammoth brands.

I know, but Harries is what they sell products. Yes, Harry sells products, but then they also owned Flamingo and then they're going to buy coterie. And Harry's, like the team at Harry's, the owners of Harry's, have become like this holdco. And so instead of trying to spin up new DTC products and try and become like, like launching new things, they're actually just going out and using the cash from the business that's working to acquire new stuff, saying if we can't get, if we can't sell, we're going to buy. This is basically the takeaway. I don't know. That was my. Interesting data point here. So

Align Ventures led a $23 million series A in Cotery in 2022. Align is the venture fund that was meant to lead figure AIs round at a $39.5 billion valuation. Wow. So a line had invested, I think, previously in Figure AI. And so when Figure, the news broke that Figure AI is in talks to raise $1.5 billion at 15 times its last valuation. Everyone's like, okay, who's leading? And it's like, okay, it's just like CPG fund. Yeah. That's interesting. That feels that align ventures, that doesn't feel particularly aligned. It feels misaligned to invest in both babies that wear diapers, new humans, new human labor,

and then robots that don't wear diapers, new robotic labor. Those two things are actually at odds. What if the figure robots have diapers back here that they can pull out? And then they can diaper the babies. It's a beautiful symbiosis. How much would people pay to not have to change a diaper again? Potentially billions. Potentially billions.

Jeff Dean made the time A-I-I-I-I-I-I-I-I-Lyons. made the time AI 100 list. Hit the soundboard for Jeff Dean. One of the greatest to have to do it. Congrats to Jeff Dean. He finally is going to pat himself on the back and think, I'm good at AI now. I actually might be decent at this stuff. I made the Time AI 100.

Yes. And I saw in the chat, I didn't verify this, but somebody said that Google is hitting all-time highs. Congrats to everyone at Google, including Jeff Dean. if you're looking to go long or short Google, do it on public.com. Investing for those that take it seriously. They got multi-asset investing, industry-leading yields, and trusted by millions. Dave, Dave, Grandpa, and the action that says, TLDR diaper. LTV industry sources confirm the average spend per U.S. child over their diaper using years

is between $1,2,100 and $2,100. That makes sense. That tracks. And with coterie, you get to spend even more. They're clean. Yeah. Microplastics or something. Tyler, would you mind pulling up the Time AI 100 list, putting it in the truth zone?

Let me know who the... See how it tracks are the Metis list. Who didn't get on... Did they include Shaltow? Did they include... Wait, I think, wait, Elia has a new profile picture. We might need to update the Metis list because it's a great... Oh, for sure, for sure.

Okay, so anyway, Tyler, dig into the Time AI 100 list. I want to know who stick. out to you who's interesting. In the meantime, let's go over to Mechanize. They said, we built a Twitter vibes engine for AI labs. Evales are important, but the vibes are hard to fake. And it's the vibes for Open AI and Anthropic over time. You can see Anthropic had great vibes throughout 24. Then the vibes started dipping a little bit. After 3.7 sonnet, they were on a high, and then they went negative, negative net sentiment score. And then have been climbing back up. Anthropics about even Open AI has been lagging a little bit.

The vibes seem to be flipping back and forth between the two. Very, very interesting analysis. Of course, you know, you got to take it with a grain of salt. It's just a bunch of scraped posts and then run through sentiment analysis. We, of course, love looking at the polymarket best AI model and seeing who's tracking there, the vibes. Google is running away with it. They're now at 71% by the end of the year, predicted to have the best AI model,

and they seem to be chopping, chopping wood over there. The vibes are getting better, too. I saw Logan posted an interview with the team behind Nanobanana. They're getting good with the naming. And nanobanana, I mean, major reversal from some of the earlier Google AI image projects, which were kind of hated on for a variety of reasons. This just feels like it's a very useful tool. I was playing around with it.

Some amazing results where the generated output looks so much like the input that I couldn't even tell if it was doing generation. It was actually just like, oh, like did it change anything? Had a few errors where I was trying to get it to swap outfits from one person to the next and it was getting confused or it just wasn't doing it. It was sending me back the same image that I put in, basically. But you had some luck with it. You were trying to turn yourself into a centaur or something.

That was kind of a bizarre outcome, but I've seen some good ones. Tyler, have you been having fun with Nano Banana? Yeah, mostly I've just done, like, change the outfit or something. It works perfectly fine. But I did try making myself look more jacked, and it didn't work. I think I was already, like, max or something. Yeah, T.J. Krasinski says, takes longer than GPT5, but does better at turning people into Chads. Does better. Interesting.

Maybe my prompt was just wrong, then. Yeah. So let me show you. I think it's interestingly particularly good at posting. Let me see if this works. So did I post this? I'm putting this in the chat. It's, um, I took a, uh, like one of these like trade deal alerts, kind of like the meme formats that we do that we would normally do in Photoshop. And I fed it an image of Ilya and the logo and just asked it to kind of recreate the same image.

And if we can pull up the ESPN one, there's an alert for the Green Bay Packers. The Packers are trading for Micah Parsons. Um, and you have an image of the football player on the left. You can see this. And then alert. the logo and then the other image is from Ilius Sutskever changes his profile photo and I put the corporate logo there and like look at this looks like it came for Photoshop but this was actually just a nanobanana prompt and I guess it's like it kind of re-rendered his face it's probably not

100% perfect but in terms of just like and they watermark it yeah the watermark is weird because the watermark in this in this image is it just says sports it's not it's it's like a random hallucination of a watermark. But it, so in terms of just like, take some images and make the meme, it can now do that very, very reliably, which is just kind of a new unlock. And we were talking, Tyler, about the

nanobanana chat GPT moment. And I feel like I'm starting to see that on the timeline with people posting. Take Sam Altman's face and put him at this pose on this background. Yeah, like ballerina. Yeah, the ballerina one. You saw that.

And I feel like that's kind of the mean. It's like make a super photo real image of this person doing this funny thing and this funny place. And it requires a lot of creativity to come up with a good concept. But once you do, it can instantiate something that's photo real extremely quickly. So very cool.

Yeah, I mean, that's what we kind of talked about. It's like the consistency is like vastly better. So you can actually do like photo realistic stuff. Yeah. I think it's at a point where it's good enough to put it on a billboard, if you have an out-of-home advertising campaign idea, generate an in a nanobanana, and then head on over to adjcook.com.

This ad-of-home advertising. This ad is brought you by die-co. Easy and measurable. Say goodbye to the headaches of advertising. Only ad-quick combines technology, out-of-home expertise, and data to enable seamless efficient ad buying across the globe. We were debating whether or not we should do a cheeky rack

and react to cheeky pint, the podcast hosted by John Collins, Collison at Stripe, where we... Cheeky rack would, of course, be where John and I drink a 30-Rat. 30-rack. During an episode of Cheeky Pine. Three hours of John Collison interviewing founders while drinking. He drinks one Guinness.

We would drink 30 light beers. But there was some debate over how much he was drinking. And so obviously, the bar has been, the gauntlet has been thrown down. Is any podcasts are capable of drinking a 30-rack within the context of one podcast? But I think we just solved how. bad that would be because even a single Diet Coke stuff makes me, you know, incapable of doing a clean show. Anyway, Forbes is undefeated. It says Rob Frund. Yeah, do you remember this company, IRL? Oh, I remember. They got marked up to a billion in 2021. Yes. Of course, led by none other than

SoftBank. Interesting. At the time when I saw this round, I didn't know a single person that was using it. But I also just realized that people still use Snapchat because the younger guns on our team use Snapchat. And I didn't, I don't know anybody. I didn't think I knew anybody that still used Snapchat. It's out there. But it's out there. It's real. So I wasn't quite.

And there are these social networks that pop up from time to time, the anonymous social networks, there's always something new. And if you're not really tapped in, you can miss them. So the narrative around IRL was if you're not using it, maybe you just missed it. Yeah, or maybe you're not in the demo. But I remember the timeline kind of turning on them as they raised more and more money. And more people started saying, well, and it was, does anyone know anyone who uses this product? Yeah, and it was it was employees that were also wondering.

Yes. Do we do, do people actually use this product? Yes. So the allegations were that they were cooking the books. and it was a rough go. And now a federal grand jury returned an indictment charge of a Hawaii man with wire fraud, securities fraud, and obstruction. I think that's the founder. The founder.

Yeah, apparently 95% of their 20 million users were fake automated bots. Wow. And the actual number of human users was around. Yeah, what's so interesting is like Reddit started as a platform that was seated with fake users. But I think that from an early day... It was also a Lexus just using accounts to seed. And it's very different if he was telling... I'm sure at the time he was telling investors like,

yeah, we're trying to kind of kickstart this network. So we are using the product ourselves. And he wasn't necessarily saying, you know, we have millions and millions of... Yeah, totally. It makes a ton of sense to have like some sort of flywheel early on. But you have to disclose that. wire fraud if you don't make it clear.

And so if Alexis O'Hanian had gone to investors and said, like, yeah, look at all the usage, it's all real, instead of being like, no, like, we're seating it. Like, don't value us on the basis of our MAUs yet, value us on the promise of what this platform can do. And I'm sure the first round was like, you know, $5 million or something like that, like super, super low. Not $175 million going in this crazy company that had a lot of fake use. Yeah.

So, anyway. Sad story. What should we talk about next? Should we talk about Bezell? Go to getbezzle.com. Your Bezell concierge is available now to source you. Any watch on the planet? Seriously, any watch?

Blind boxes, Quaid. Yeah. Oh, yeah, do them. It's easy money. It's make it happen. It's the only end of the... We would just be hitting that button over and over and over on the show.

Should we talk about the $25 million home that's listed in the mansion section? Isn't there another article here in the journal about lovable? No, that one is. in the financial times. In the Financial Times. This is crazy. Page six in the financial times.

AI startup nears $4 billion valuation. Swedish vibe coding startup lovable is fielding inbound investment offers. It's a Swedish initiative. Valuing company. I mean, I like the company a lot more than that gambling company for sure. We talked to the founder. He's a nice guy. Swedish vibe coding startup,

lovable is fielding in inbound investment offers valuing the company above $4 billion, and more than double the price at which it raised funding just weeks ago. So that's like the rare double tap. We saw this with, I mean, Ramp did this. There are a number of companies when if you're on fire and all the metrics are up into the right and there's more and more demand for your stock. It's not the craziest thing to sell one tranche, one tranche at one valuation and then go back out to the market and do the second tranche at the next valuation.

So Loveable was valued at $1.8 billion in a deal. in Excel, by Excel, in mid-July, cementing its position as one of Europe's hottest AI companies. Now, this is one of those things where did Excel do that deal three months ago? And it just released now, and then we're getting leaked information about a new deal happening. Is it early talks? Is it advanced talks? Exactly. Saying that the deal was actually done.

I mean, I mean, the question. But in February, they just raised $15 million. So, like, that is a big jump up going from $15 million raised to $200 million raised in something like six months. I mean, the company is on fire, apparently. People with knowledge of the new investment approaches said that Lovable's chief executive Anton Oseka was not engaging with investors on the latest proposals, but he was weighing fundraising options for the coming months. So again, we're talking, going forward. Jason Turner in the chat says, Loveable is the ish? I have like 15 prototypes. Do you have any production products, though? Yes, plan for production.

I mean, the big question around lovable is like clearly they've caught fire with the product. People love it, but what is great metrics? So ARR crossed 100 million just eight months after crossing the $1 million threshold. That's a huge ramp to do two orders of magnitude in eight months. You can see why VCs are piling in on the momentum. And that more than 10 million projects had been built on the platform. So if it's 15 per person, that's the, That's pretty crazy.

However, it is yet to demonstrate that it can generate a consistent profit amid questions from some investors about whether AI coding tools can make a margin in a highly competitive market. So, I mean, everyone, what we got? Louis Vuitton, looks nice. Love it. Very nice. Print ads. It's a new meta.

Yeah. So the trick is like, I think that reporting suggested that for free projects, they're definitely losing money because they have to use reasoning models. They generate a ton of tokens. Infference is pretty expensive. And so if you go to just let's zoom out to

website creator tools, if they're for free and you're just generating a bunch of them, you're probably losing money on inference because you're not, you don't own the GPUs, you don't own the foundation model, like you're paying pretty high inference

and you've got to use the best to be competitive. but the light at the end of the tunnel is that you get someone who stands up a website and then they use that as their front end to their business or their restaurant for a decade and people stick around and so that's the pitch for you know everyone from from Webley to Squarespace to there's a whole bunch of these companies that have all done and what's weird about those companies that they've all done very well I've seen I've seen tons of like Squarespace ads on YouTube for a long time. I've seen a bunch of those website builders,

and this is kind of like the next generation of them. And if you can get someone to build a website that they get value from and they don't want to re-platform from, and the hosting cost is zero marginal cost, even if there's a, even if there is a non-zero marginal cost, like onboarding process, which is the generation of the website, you can imagine that most people would spend a ton of tokens generating the first version of their website. and they'd be like, yeah, I'm good for like a year. My business is basically the same. They're not hammering it with prompts every single day.

So there is a way where the math can math out, and I feel like that's probably what the VCs who are underwriting Excel. And we just talked to the Framer guys yesterday. It's a kind of similar business model. Get someone to build a website. Maybe it's expensive up front, but if they stick around for a long time,

you can be reaping a reward. Yeah, when Anton was on the show, he was saying they're clearly fixated on Enterprise. and that that will be an important market for them. That's very interesting. And I don't think it's the market that they're dominating in. No, no. I know them as like particularly good at like go viral on social media for like build an app in a second.

And then people go and build a bunch of a bunch of stuff. My weird like question about all the next generation site builders. Obviously I'm biased here as a figma power user for a decade. and obviously they're a partner of ours, but Figma is just so dominant in the enterprise and people love Figma make, right? Yeah. And so they have lovable's, I think, in a struggle in the enterprise.

So this comment in the chat from Pericleed says, I'd imagine lovable customers will have high churn and not stay long because it's for starting and not finishing ideas, and you won't be finishing them as final web products. And that is like the second act that I think the, you know, lovable customers stay for a few months, whereas a real platform like WebFlow has lifetime customers. And I think that that's probably the second act that all the VCs are betting on.

They're saying that. You've filled the top of funnel. You've gotten people to show up long enough to actually build and deploy a website. Can you charge them $20 a month forever? Can you charge them $100 a month for 10 years? which is certainly the story of Webflow and the other site builders. Squarespace, if you remember, another site builder, did at $1 billion in 2023. $1 billion in revenue?

Yes. Okay. But it was taken private at $7 billion last year. Okay. And lovable is at $4 billion on $100 million in sales? Sure, they're well beyond $100 million. Run rate, but as one knows. It's fascinating.

Well, anyway. Kyla Scanlan has an essay around how do workers actually feel about AI. She surveyed 1,200 people across various industries with the main goal of learning what they actually wanted from AI. The results show a workforce that isn't really blindly optimistic or totally resistant, but negotiating a rather messy middle. Makes sense. Workers hope AI will take over repetitive tasks and boost efficiency, but they worry it could erode career opportunities and work quality. Trust is fragile, too. Most people somewhat trust their employers on AI while some industries lean heavily towards. toward no trust. The biggest ask was training in a seat at the table.

62% want shared decision making and how AI is implemented. But overall, this wasn't really about job loss worries. It was about why we work and what makes work meaningful. The policy asked weren't about banning AI. It was about training, transparency, and actual input in implementation decisions. It was about preserving the human parts of work. And that makes sense as AI is making us reckon

with what it means to be human in a way that not many us have ever had to do. One of the human parts of work that I think will endure for a long time is power lunches, right? Throwing a couple back. Throwing a couple cheeky pines. A couple cheeky pines. Cheeky boot. A cheeky boot.

Stuck in out of the beer boot is the way to do it, for sure. A cheeky round of shots. Yeah. Not lunchtime. Yeah, we'll get there. What are the other takeaways from her article? In the executive summary, she says, 85% of people are familiar with AI,

but even among the very familiar, more than a quarter, don't use AI at all. Workers want AI to take over the boring parts of the job. The 15% of people she surveyed just being like, AI, no, not familiar. I haven't heard about it. 62% want shared decision-making

in how AI is implemented at work. 15% want full authority. fewer than 2% are comfortable with no input. There's a trust paradox. Most people somewhat trust their employers on AI, but in many industries, a majority report, no trust, no industry reached a majority of complete trust. Only 60% of respondents have received training

with especially low rates in creative industries and entertainment. That's interesting. I would think creative industries, you definitely want to push the creative tools. You'd want to have training on nanobanana, but maybe you just want to turn your folks loose and let your teams know if you're on a creative industry, like just go figure it out yourself. The AI tools are out there, so maybe you don't need formal training. Anyway, there is a beautiful house available in Alpine, New Jersey.

Pull it up. We've got to pull this up. Ellie Tahari co-founder lists European-inspired New Jersey home. And these photos are, I think that's, I think you got the the wrong one pulled up. I think that might be 50 cents house, which we can do next. Arvam Tahrari, co-founder of New York-based fashion brand, Ellie Tahari, is listing his property in the affluent suburb of Alpine, New Jersey, for $24.75 million. His roughly 21,000 square foot home was completed around 2016 with a slate roof in a backyard landscape that reminds him of the south of France. And look at that car, Jordi. Can you ID that? It's Kuntash. It's a Lamborghini Kuntash in red. I love it.

It looks fantastic in red. It fits in with that. Doesn't it belong there? You see it in white so often? Yes, you see it in white a lot, of course, in the Wolf of Wall Street. It has eight bedrooms, indoor and outdoor pools. You've got to be having multiple pools these days. You bought the two-acre property 15 years ago for $4.25 million. The previous owner had built a foundation and then stopped.

They finished the job. The home has eight bedrooms, a mosaic-tiled indoor pool, and an outdoor pool with cabanas. walls were hand plastered and stenciled by an artist from Portugal. The Tahriris raised their three children there and had many parties, including a white party and a friend's engagement party for about 150 people. I hate to move from here, he said, but they have children and they decided to move out. They plan to spend more time in Florida. Located across the river from New York City, Alpine is a borough of Bergen County,

homes there sell for millions of dollars and often span over 15,000. square feet according to Sirhant. Oh, Sirhant. Nice. Who lists the home is under contract with a 22.49 million listing price. So go pick that up. There are a few other stories in here that we should cover. In a bunker, no one can hear you scream.

The question that the mansion section asked real estate brokers is, have you ever encountered a secret room or bunker in a house you've listed or sold. And Scott Bayon's, a real estate broker at Aspen's Snowmass Sutherby's International says, wouldn't you want to know about the secret bunkers in the houses I've sold? The whole point, if it's truly a secret bunker, it shouldn't be on the listing. Yes. So in May, this particular broker listed a property in Aspen for 15.95 million that has two structures on it. One of the structures is a contemporary home with three bedrooms and the other is a detached three-car garage with a one-bedroom pietteer above below the garage and accessed via a hydraulic door that leads to a hidden stairway is what we call the smugglers den

speakeasy which includes a lounge and bar LED lights like a high-end dance club a fireplace a tv sound system a powder room a photo booth and a reverse car lift which allows you to pull your collector vehicle into an elevator and transport it down into the speakeasy where it's on display behind glass. Right now, there's a classic motorcycle, a drum set, and a disco ball to provide a little something for everyone. The owner who built the speakeasy was one of the founders of a well-known nationally franchised chain of restaurants, so he has hospitality in his blood and a love for a good bar and a well-crafted cocktail. Since he was active on the Aspen social scene, he conceived of a truly unique space designed to surprise and amaze everyone lucky enough to get an invite.

when showing the house, we always save the speakeasy for last and enjoy seeing prospective buyers' mouths drop. It's a very specific listing with a feature that cannot be replicated. And I know there's a buyer out there who will love it. Let's go on to Renee Roberts, who says, in September 2018, I met with the owner of a five-bedroom contemporary Cape style home in Canton about a half hour south of Boston. And it had a lot of desirable features. It had a one-acre private lot, a Foyer, large eating kitchen, and a wooden stove with high-end appliances. The owner, an older gentleman, wanted a market analysis. I didn't know him. As we were touring the house, we got to the basement, where I learned that the house had two hidden, soundproof concrete bunkers. The bunkers didn't have any

technology cameras or food storage, but there were electrical outlets and air exchange systems in both of them. Both of the bunkers were accessible from secret doors located inside the basement. As the owner showed me the basement. My heart sank a little bit because I was in the house alone with a stranger and nobody knew I was there. When he opened the door to one of the bunkers and invited me to see it, everything in my body was saying not to go in, but he was excited to show it to me. And I was curious. So I went in to peek around. But then our tour took a chilling turn when he closed the heavy steel door, the kind that banks use for their vaults to show me how soundproof the bunker was. I started to get anxious, but after a minute or so, he opened.

in the door, which had a keypad. And when we left the space, when he showed me the second bunker, I didn't go in. It definitely made for one of the most scary and unforgettable listing appointments of my career. Ever since that day, when I go to a listing appointment, I tell everyone and give them the address of where I'm going to be going. This guy was just like nerdy, nerding out about his silly bunkers and scared the living daylights out of his listing. In other news, 50 cents.

estate has hit the market. Look at this thing. Fifty-one thousand square feet. It has a nightclub. It has a recording studio. It has two pools. Remove a thousand square feet. He really should have. He should have remodeled and taken a thousand feet off. So it tricked out Connecticut estate once owned by both Rapper 50 Cent and Fane Boxer Mike Tyson is listing for 9.9 million. And, Jordy, tell me, I feel like we could move the entire crew here. and this might be a solve for everything. Look at this. It has 19 bedrooms.

That's more than we all have combined, for sure. It's 51,000 square feet. Probably more than we have now. The suburban home in Farmington is in central Connecticut, about halfway between Boston and New York. You can get back and forth to either. The 17.6 acre estate has a recording studio where 50 Cent said he recorded the 2005.

album The Massacre. Tyson, who paid about $3 million for the property in 1996, sold it to 50 cent for $4.1 million in 2003. Not that much of an appreciation in what's nine years. The rapper bought it as a real estate investment following a lucrative tour, he said, on million dollar listing New York. The current sellers are food and beverage investor Casey Ascar and his wife, Shira Ascar, who purchased the home from $0.50 in 2019 for $2.9 million, about 84% percent. less than what was first sought in 2007. So 50 cent went out to market trying to sell it for like 12 million and only got 2.9. It's crazy for a 51,000 square foot house.

2.9 million. That's like in L.A. That's like a normal house. It's crazy. Two bedroom. Yeah. The property underwent several price cuts and was listed, it was listed by various agencies until the Ascars purchased it.

They live primarily in Florida and own Duncan Donuts, franchises, pizza places, and chicken restaurants around the country. Let's give it out. Another example of owning a bunch of franchises. They spend summers and holidays at the Farmington House with their seven children. Wow, seven children. What a flex. Tyson's former ownership was an added incentive, said Casey, who had been a fan since childhood. The Ascars renovated the Circa in 1985 house, investing more than $3 million over the course of their ownership.

After buying the house, they installed the cigar lounge and upgraded the commercial kitchen. The Ascars also redid the indoor pool and spa, which has a steam room, red light therapy sauna, showers, a massage area, and a hair salon. The nightclub called Club TKO, a reference to the boxing term technical knockouts, was installed by Tyson. The Ascars used the space as an event venue for parties and company retreats. Recently, they hosted a surprise party there for Shira's parents' 50th anniversary. It was the best family gathering gathering they've ever had in their life, and that property made that happen. The Ascars are selling because they don't anticipate using the house as much now that their children are grown. So if you're in the market for a 51,000 square foot house halfway between New York City and Boston, head over to the mansion section in the Wall Street Journal.

And if you're looking to just get a weekend away, head over to wander. find your happy place. Find your happy place. Book of Wander with inspiring views. Hotel great amenities, dreamy beds, top tier cleaning, and 24-7 concierge service. It's a vacation home but better. Well, in two minutes, we have Max Levchen from Affirm.

Fantastic. Joining, very excited about that. Tyler, do you want to give us a quick review of the Time 100 list? Please. Are we looking? Yeah, it's pretty mid. Okay, so it's like basically, so there's, There's a couple different sections.

There's like thinkers, innovators, greater of the mid-st-list calls other AI-less mid. But, so it basically has most of the lab CEOs, but it's missing Demis for some reason. Oh, weird. So kind of strange. It has Nat Friedman and Alexander weighing sheriff's spot. A little bit odd, too.

Okay. But it's like, okay, it's like reasonable, obviously. Yeah, yeah. Lab CEOs are influential. They're missing a lot of big researchers, right? Ilya's not there. What? Basically, most of the big researchers are not there.

Okay. But it's like maybe, okay, maybe it's like not technical. There's some like big. Are there some Easter eggs? Do you think it was pay to play? Do you think it was pay to play? And Ilya. You're getting that vibe a little bit.

I'm not paying to be on your list. Yeah, especially as you go down, you see there's some good picks. Josh Kushner, great pick. Oh, nice. Love to see him there. I support that one. But then, you know, you go down. Rick Rubin's in there?

Rick Rubin, you see the president of the teachers union. A little odd. Wait, which teachers union? The American Federation of Teachers. Oh, I mean, that makes total sense. Like, they're on the bleeding edge. Scale is all you need. There's a lot of teachers out there.

I suppose. There's like some senders. I think it makes sense in the sense of like influential. They're going for influential. So it's like if the head of the teachers union decides that AI will be used in every classroom in America, that is an influential decision that will steer how AI is implemented. Yeah, but up until now, has the union affected AI progress in any way? Probably.

Probably in the sense of like, I mean, maybe not yet, but I'm not exactly sure what they put up. But if they signal that like we are in full support of AI in the classroom, let's get universal basic chat GPT. Let's go all in. That is an important moment for the AI industry, just like if they say, hey, teachers don't want AI in the classroom at all. we're going to ban it. We're going to ban phones. We're going to ban technology. Like, that is an important, like, fork in the road of AI progress, even if it doesn't, even if it's not tied to capabilities. Okay, okay. What about this?

Minister of Communications, Innovation, and Digital Economy for Nigeria. Thoughts on that? I'm not sure. I don't know what's going on there. Seems, I don't know. I like this quote in the chat, though, from Gabe. He says, Alex Carp never learned AI. He was too poor, and now he's too rich. Wait, John in the X chat says the Pope is on the Pope. The Pope is on the list.

The Pope is on the list. Let's give it up for the Pope. Let's give it up for the Pope. It's a Chicago boy. Right? Isn't the American Pope? I mean, I think... The American Pope should be on the...

Broadly, I would say the list is extremely word sale oriented. There's almost no shape rotators. Okay. Rough. I think a good Easter egg, Pliny the Liberator. You know, the X-Anon. No, you're kidding. No, I'm serious.

It's the very last spot. Digital jailbreaker. Wait, really? Yeah. Wow. They did get some crazy ones on there. Yeah, but it's like, I mean, sure, it's like a good pick, but like I would like to see Gwern. I would like to see Dwar Keshe.

Yeah, totally. Yeah. No, Dwar Keshe got snubbed for sure. Yeah, I don't know. A bunch of the researchers, I would imagine. Okay, okay. Download the HTML, fix the list, repost it in the next 20 minutes. Anyway, we will move over to our first guest of the show.

We have Max Lutcheon. Welcome to the show. How you doing? I'm good. Thank you. That's a cool walk-on music. We're working on it. Yeah, a little bit better every day. We expect more sound effects, too. Just fair warning. You guys just had a great quarter, so we might do something like this. Yes. All right. Where should we kick it off? I mean, yeah, maybe we should start with the quarter update.

How is the business going? Give us, like, the high-level overview of. of how you are positioned in the company, what is next on the horizon for you. And then obviously I have a whole bunch of other questions that we can dive into. Sure. Quarter space for itself, it's pretty killer. If I do say so myself, GMV, which is a fancy acronym

for merchant sales powered by us grew 43%, which is a fourth in a row quarter of accelerating volume growth, which is pretty powerful for a business company. Incredible. This is in the, you know, for those not watching, the quarter we just reported the GMV number was 10.4 billion. So, you know, compounding at 40%ish, pretty solid. Pretty solid. Sorry?

Pretty solid. Extremely solid. Extremely solid is good. I'll take it. Extremely solid. We're very happy. Congratulations. Accelerating growth at scale.

We love it. You don't see it often. Exactly. Exactly. Just hit gap profit. profitability, which for internet companies are not expected to do that. We're 15 years in. It's well expected of us. So we delivered on that. It's not a huge surprise to anybody.

We said exactly a year ago, it'll take us exactly one year to exit with gap profitable. And we delivered on that. User growth accelerated for the sixth quarter in a row, so it's another really nice result. Anyway, every metric is anywhere between mid-30s to to low 40s. How are you breaking down the GMV growth? Like what do you think is driving that? What can we read into that on like the health of the American consumer or the broader consumer market? Like what's the story that we should be telling around GMV? Yeah. How is macro driving it versus just your team execution? Yeah. It's actually a really good question. So normally,

so every quarter I get asked 12 different ways, hey, so what's the standout segment? And there's always like, oh, you know, people are really traveling because COVID's over. So airlines have tickets. Yep. And then everybody upgraded their electronics during COVID. And then it was like a dead lull for electronics for a year and a half. And then proof electronic. Everybody needed a new TV.

So this quarter is special because there's not a single category that is like, oh, wow, that thing's exploding. Like literally every category is generally speaking contributing on par with the average or the weighted average. And the best explanation I got, which these things, you think we know everything about American consumers just given our scale. And we kind of do, but it's also now big enough where parsing it is more and more of a slunking process. And what I think is really going on is we've hit an inflection point where by now a palator as an industry is just such a part of the vernacular.

Be like, of course I'm going to pay over time for this thing and I'm going to use a firm. So I don't have a great like, oh yeah, it's a standout industry X. The only thing that sort of jumped out at me when I was looking through the category results, services, like in-home services, things like that, are really growing nicely. In part, that's because our card, which we launched a couple of years ago, that's growing at 120% year-over-year-over-year, so it has a serve-its-own, very, very strong growth curve. That's a really nice product to pay for things that are not traditionally bought online. So as an offline tool, it's just surging really nicely.

So services are kind of a stand-out story, but even that is, like, just distributed across many, many different things. Yeah. What about that narrative that was kind of bubbling up around tariffs where there was this thesis that consumers would be fearful about like the iPhone price going up and so they would lock in current prices by pulling forward demand. Did you see any evidence of that being true or bearing out or not? A little bit. I would call it as a, I think a bunch of public company CEO spoke to this last couple of quarters, sort of pulling forward some

purchases people expected, et cetera, not a major contributor. I don't think I could stick a finger that. Like, that's the root cause of growth. Yeah. What about interest rates broadly? How are you thinking about profitability in a high interest rate regime? There's a lot of discussion around Should rates be lowered? Is that a tailwind, a headwind? How are you thinking about the interest rate environment broadly? Yeah, I feel like it says a lot that you guys are putting these numbers up in, I would say, critics five years ago, or not five years ago, only a few years ago would have said it's, you know.

The model will never work in a high interest rate environment, right? That was the criticism, and you kind of proved it wrong. But walk me through a little bit more of like the actual flow from interest rates to the business. The interest rates are certainly an input. So we're non-depository, non-bank lender, which means that our own capital or the capital that we lend out is some form of sourced. And there's multiple ways of doing it. We're extremely diversified in a source of capital.

You have to be because at any given time, somebody may choose to no longer participate. We generally speaking have an extremely strong set of relationships. point I kind of lost count. It's so many different folks that we work with both at sort of huge depositories, insurance, companies, banks, funds. Some of these people buy our loans, we now are big enough where we securitize in a fairly regular basis, which means people buy our securities, the receivables that we securitize. And then we have a whole collection of what's called warehouse lines where you finance the receivables or you borrow against the receivables as a security. And so all of that comprises our capital markets program.

every one of these people has their own benchmark, which of course is dictated by Fent Funds rates to a pretty significant degree. Majority of these agreements, majority of these contracts are reasonably long-dated, which means that an increase in interest rates or decrease in interest rates is a sort of a slow trickle into our cost of capital. So it's not a tomorrow morning we go back to ZERP, which I think we won't. But as the rates will come down, inevitably there's now enough conversation about it, it will accrete to us as a tail-in to the business, but it won't happen overnight, just like the, even the sharpest increase in history, which is what we saw in the tail line of 23, I think, didn't really impact us overnight,

but required quite a lot of maneuvering to make sure that we consistently deliver yields to the people who buy our loans or those who lend to us against it. But it'll be nicer, it'll be easier, perhaps, to run this business when the rates come down. But a couple of quarters ago, I had a headline in my letter saying, higher for longer is just fine. We obviously printed great margin. We call our margin RLTC revenue less transaction cost. It's a very fancy term for essentially the bottom line of the business. And that's been between three and four, with I think one exception every quarter since we were public in the first month of the first months of 2021. And so rates have changed quite a lot

from then to 23 to now, and we've been able to maintain a very consistent margin that should tell you everything you want to know. Are there any new uses or unlocks in the by now, pay later world that you're thinking about? We were talking about coterie diapers earlier on the show. It's a subscription product. And I always thought that there's a world

where you get a year supply delivered, you pay for a year's supply, then you use by now pay later to just do the virtual financial transactions every month, but you only have to pay for one shipping fee. And so the cost of the consumer, there's some savings there for both the consumer and the probably doesn't work if it's a really big object, but for small things that are subscription, maybe there's a match there. Have any of the smaller dollar merchants or more regular purchase merchants been

beneficiaries recently? Yeah, actually, if you look at our average ticket, I think when we went public, I already screwed this up today once, so I don't want to picture myself again. But I think our first quarter of the public traded company, we were on the order of $900, maybe. Yeah, people think about it as like you're getting a Peloton or something. You're buying a TV. You're in the $1,000 range roughly.

And it makes sense to, and you're going to have that thing for five years. So you make sense to match that the payments to the price. So this quarter, our average ticket is just under $300. So that should give you a really good sense for the trickle down. All the while, our transaction frequency went up, I think, over 20% just in the last year. So as people realize that this is a great alternative to credit cards, we're getting more and more acceptance in all kinds of places. The thing you're describing kind of this reverse factoring, if that means. maybe the right term for it. I don't know if that happens too much yet. There's a good idea.

I didn't actually think of the shipping savings. But that's very real. It's good for the environment, all sorts of things. So I'll suggest it to our sales to you immediately. Fantastic. It's good. It's great for that. My kids are out of diaper age, but this would have been helpful. If it works, I will expect you to send me a year's supply of coffee because are you still into coffee? I read that about you. Okay. Oh, yeah. How, explain to me coffee. I'm not, I don't know anything about coffee.

Where should I get started? What should I avoid? Give me the TLDR on how to become a coffee expert quickly. I think you've opened a can of worms or a can of folder is that you may not have wished for. I really quickly. So I'm a huge espresso, Fecino. So you got to sort of put that, that's a bucket in of it itself. There's plenty of people who think that the highest form of coffee is something else.

But I love espresso. So the easiest way to get into it is find a great, what's called, third wave coffee shop nearby. And that's typically a place where they don't sell food, they don't, or they may sell like some pastures in a corner, but it's a coffee-centric small coffee shop. Sure. And chat up the barista behind the counter and ask them to teach you about tasting espresso. Okay. And like from, I don't, no idea what this is to, I can understand what we're talking about when you say crema and sour versus bitter shot and all sorts of fun jargon and the new show will hit you. And you'll either be like, oh, I can totally taste a sour apple in this shot.

You're like, I have no idea what you're talking about. If you're in the former group, you've hit the right rabbit hole. And like six months later, you'll be buying your first Lomar Zoko for $10,000. And so. When do you have your last espresso shot of the day? Yeah, what's your caffeine stack look like? So I wake up pretty early in the morning. And before I brush my teeth, because I don't want to mess my...

Palette. Exactly. So I'll have some water, but sparkly water is the right thing to drink before espresso. Oh, okay. I'll head downstairs and do what's called dial in my espresso machine, which in fact is a very expressive mom or is over. of course, and not the only one I own either. But you asked.

Please. You're going to be just about coffee. You got to blow out quarter. Yeah, we can just talk about coffee for 20 minutes. We should go back to affirmative. Yeah, I've got to come forward. But so I'll dial in espresso machine, which means that I'll grind a pole. And two is like a good, like I can get to a real.

I can get to a really good tasting shot by two shots if I feel at the time and feel especially passionate or it's not working out. You mean you're making the first shot, you're tasting it, seeing the... If it's where you want to be on it. And then you're trying to iterate on it to get interesting. Yeah, and dialing in is basically two things. You're setting your grinder fineness setting, and then you're playing with a time of the pole. The two are not entirely independent variables. like the finer the ground, the longer it takes to pull the shot,

but you control when you want to stop it. Interesting. And you have three different tenth of a gram precision scales in my kitchen, just to make sure. What's the most you've spent on a single bag of beans? Because that's one thing that's interesting about coffee addiction. The upfront cost of the machine can be high, but then the actual habit, enjoyment of it,

doesn't actually, you know, it feels like something that everyone can get into. Yeah. Espresso is expensive, but it's not outrageous. Sure. I think at any given, I mean, it's also amortized over time of consumption. Sure. So I don't want to, yes, you can blow a lot of money on extremely rare espresso, but even if you tried, you couldn't spend more than $100 per bag, unless you go into like crazy outlier, but like, you know, really rare, very time sensitive. of only roasted in this particular time of the year

from this particular single origin espresso farm in some faraway land. Even that will run you like $150. There's some exceptions, but that's a good high tensile average. I spend probably $30 for espresso bag that I buy and I try to buy larger sizes. So to save on shipping on this.

That's great. What's the, going back to the business, what do you think is the number one misunderstand? standing around the category from investors. Because I feel like by now pay later is something that people experience as a consumer all the time. They're seeing it all the time. They think they might have a good sense of how the business works. But it's still relatively new, at least in this form.

Totally. You know, today's market reaction actually tells me maybe, you know, But we'll see what happens in the days and months ahead. But I think for the first time, the reaction correlates pretty well to our perception of our performance. We've been printing exceptional quarters for a very long time. The stock has been essentially not a good predictor of our performance. I'm fairly uncorrelated. It's gratifying to see, like, we have a blowout quarter of the stock does really well.

So that's a putting that aside. There's a bunch of things that are still misunderstood probably, but I feel like they're less misunderstood now, at least today. I think a lot of people think, oh, that's for people that can't afford to buy things. They borrow money, and that's why. And that's such an arrogant point of view. It frustrates me a lot. I mean, that's the thing that angers me the most. I'm not sure it's the most important thing that's misunderstood, but it's the angriest thing that I have to have a beef with.

It's fundamentally a better product than credit cards simply because credit cards are designed to get you into revolving debt, which is a exponential function. because of sort of the simplest form of math, you borrow $1,000, make minimum payments, sit on a balance. It looks like this. It just goes up and up and up. And people on coasts, us, generally speaking, look at them, like, I don't understand. I just pay it off at the end of the month.

A lot of people don't. It doesn't make them poor. It doesn't make them dumb. They actually have much better facility with interest rate math because they actually pay interest. And for a lot of those folks, it's not a matter of, I cannot afford it. In fact, we will not lend money to someone who cannot afford it. Our whole model is built around the idea of no late fees, no gimmicks, no compounding interest,

which means that we can only lend money to those who can afford it. And so they're discerning customers. They're not poor. They have jobs pretty much 100% of the time. And they are the very middle Americana that fuels this country in every way imaginable. They use this product as a great alternative to credit card. But they're not, like, this is not the last resort. This is not even near kind of a bottom.

of the economic strata. And so that's been as soon as a long time. I think it's a lot better now that people have seen the performance of our, our securitizations are public in terms of their results. And they're updated more frequently than our quarterly earnings. And so you can pretty easily see that the loss rates are meaningfully below those of credit cards, which even the casual observer can be like, okay, so clearly this thing is performing better that will be competing with.

Yeah. And how is the competitive dynamics, how have the competitive dynamics changed over the last few years? It's a competitive space. Payments has never had a monopoly ever in any version of payments, which is not a surprise given how enormous it is. It's the single largest industry in the world. Maybe energy gets close. And it's very competitive, which is good in a sense that it forces people like us to, or, everyone to compete on substance. It's very hard to compete in a highly competitive market on things like clever slogans and temporary promos.

Like you have to perform day in and day out and year in, year out. And so our competitive edge has always been underwriting, just depth of understanding of the borrower of the end customer, better usage of data, better modeling, kind of living in the cutting edge of whatever most interesting math thing that happened in the research world for us.

And so in that domain, we're unmatched. and that's always been our strength and we continue to win there. But there are plenty of competitors and many banks that looked at us 10 years ago and said, no one will ever use this thing. It's stupid. It's barely understandable. I have now come around and said, actually, we have our own buy-in-out pillator product. It's going to be great. You guys should use us inside the car. So that's probably, that's pretty. Outside of the narrow competition within this particular category, B&PL,

what does it look like to think about the next like 10 or, 20 years. There's this interesting dynamic that I've noticed where there are a few kind of broadly fintech founders who are still at the helm. They're in double digits, billions, market cap. They don't seem to be slowing down. And they're somewhat on a collision course where they're starting to build products in the other spaces. And the legacy players, the really big banks are maybe less in founder mode. And so just as like a startup, Silicon, and Valley guy, I kind of root for the next wave. And I'm wondering, obviously, like, the current product is working well, everything, you've been on this for a long time. Like, is there a desire

to build, like, a mega firm and expand into a bunch of different categories? What are the risks associated with that? How narrow do you want to stay? And over what time, do you have a vision for where you want to go over the next, like, several decades? Yeah, for sure. So if you look at our mission statements, which I'm very proud to note has not changed a word since today we started the company. We're almost 15 years old. So we're still a startup. We're definitely in founder mode. Yeah.

I am the founder. Yeah. But we're 15 years. Sorry, that's one of our sound effects. Gotcha. Love it. I'm urgently in search of a sound board here. We'll set you up with one.

Excellent. Anyway, so our mission is to build honest financial products that improve lives. That is not nearly as narrow as, let's have some loans at the point of sale. Yeah. Now, loans to the point of sale turn out to be a roughly trillion dollar TAM, and so we're pretty busy trying to claw our weight. You know, every quarter, we print 10 billion, that's a round off error. And so we'll continue trying to get our way our way to a one or multiple percentage points of the overall, just in the current plan. But the consumer that we attract, and this sort of speaks to your broader question, like, where's this whole thing going?

The thing that's really amazing slash, what a time to be alive sort of like, the thing that I wake up to every morning, like we're all getting so much smarter. It's so cool. Like this whole AI revolution and the various sort of offshoots of the idea, even before and certainly what's to come next, it's like the general increase of the IQ of the universe that we are familiar with. Certainly a general increase of the IQ of the internet savvy consumer, which naturally accruits to the younger player. People 25 years older than me have a harder time catching on to the current thing. People 25 years younger than me, they're born with it.

They have no idea what it's like not to have an iPhone. They have no idea what it's not like not to talk to Chad GPT about, you know, my kids just like pull up their phone and be like, what's the answer to this thing? And I'm like, it's a lot of steps. Like, no, it's not. It's just like one bicep movement. And so as we all get smarter, lots of things are changing. And the idea of I got tricked into this stupid financial product, man, I'm so unhappy about the dumb loan I took out

or the sale I did with my stocks or, you know, all the many things that people have regret about financial products is going to start frending down because you will have a PhD level advisor, as Sam Alderman likes to say, at all times in your ear telling you, hey, that's a good idea, that's a bad idea, that you will trust, that will be completely dispassionate and will have a really deep understanding of who you are and where you're going financially and in your life with your goals. And so the company that's built to create products that we are proud of, Like, lending is kind of a dirty industry. The reason we tackle this thing is because, you know,

I've done payments my entire professional career on and off. And lending is like the thing you don't touch because it's like kind of yucky. Like you want to maybe stay away from that because like ultimately it's all about late fees and compounding interest. And we started the company specifically to not have late fees, to not have compounding industry interest, to all the things that people hate, we want it to be on the opposite side. And I was told over and over again by people like, this is stupid. One, that's where the profit is.

But two, you can survive. The whole industry depends on this. Like, don't be an idiot. And we just kept on going like, yeah, we'll figure it out. And for the longest time, people look at us, be like, okay, you have less margin and less opportunity for margin. And boy, that's going to be tough. And it wasn't easy.

But with every passing day, as people get smarter, it gets easier. Because the machines will not make the mistake that consumers make when they're like, oh, it's a big zero. The asterisk, I don't care about the asterisk. You should care about the asterisk. We don't have an asterisk. The rest of the industry is about to find out. what it's like when a PG-level advisor is like, mind the asterisk, it is about to screw you.

And so that's like a lyrical digression. But where the world is going of financial services is there's tons of opportunity to apply the same level of purism that we brought to lending to other things, from mortgages to banking, to auto loans, to all sorts of fun things, where if it's not good for consumers, it will be naturally demoted by the next generation of search engines, which are the AI bots. So there's a lot to do.

It's not just point of sale loans for sure. I want to play out a hypothetical, counterfactual. What would the world look like if you couldn't sell PayPal, no one could ever leave PayPal, and the original PayPal Mafia was still working together on that business? Well, you wouldn't have space,

He wouldn't have Tesla. You wouldn't have founders fund. You wouldn't have David Sachs, the AI czar. Yeah. The world would be a boring place. I suppose, yeah. Do you think PayPal would be like a trillion dollar, like, owning everything, like financial institution for everything?

Like, you know, get your mortgage, trade your stocks, crypto, everything. Like, would it just, would there be any chance for an start fintech company? You'd have a first true monopoly. Yeah, yeah, you said it's competitive space. Would it still be competitive if the entire team was there? I don't think so. This dates me, but it'll date anybody. There's a great comedic musician slash math professor named Tom Blair.

You don't know who he is. He is worth knowing. He had a great quote at a great time in high school, but I certainly wouldn't want to repeat it. And I think PayPal was a little bit of a high school for all of us. It was crazy times. We're super young. Some strange things happened. Some tough words were spoken and the fact that we're all friends now is a function of the fact that we're no longer working together in some ways.

And so I think we all graduated with. decent grades and went on to everything from graduate school to other fun projects. But I think in many ways PayPal was as successful as it was in spite of some of the decisions we made and some of the behaviors we exhibited, then because I think all of us went into our next set of ventures with a very strong view of, I would love to do that again. and I'm definitely not doing this other thing ever again to myself. So the learnings of the crucible of PayPal are unique, but I'm not sure the original,

the original crew starting another company together would be a really fun thought experiment. That would be quite something because we're older and presumably smarter. Avengers. The Avengers. Yeah. Well, what lessons from PayPal have you codified in sort of like the employee handbook at a firm?

Or like, what are the stories that you tell to a new hire at a firm where you can go and say, this has been true, not just for the history of a firm, but it's been true for every business I've been involved in for my entire career? You know, it's not necessarily true for every business. So I had my own educational journey, if you will, where after PayPal, one of my erroneous conclusions was, man, PayPal was such a tough environment. It was not out of character for any one of us to storm out of a meeting because like, that is the dumbest thing ever heard. You're wasting my time. F this and if all of you.

Not quite. But like, I wasn't kidding about us that tough words ever spoken. Like we could tear down each other and our ideas on any given Tuesday, et cetera. And when I left PayPal, I was like, you know, I'm going to definitely start another company. I would love to start with people like these or even these people. And by the way, one of my firm co-founders was one of my closest collaborators from PayPal. So the band is still comes together and, you know, builds interesting things. But I was so over-indexing on the tough interpersonal relationship side of things was exhausting.

I don't want to do that again. And I really overdid the, let's make a family not a team. And that was an error. Like I had since realized that one of the. the huge benefits of PayPal was this no holds barred. Your idea is stupid. I'm going to tell you, comma, and you're not. Like, I may be driving this idea of yours into the ground and stumping on it and trying to kill it, but just so you remember, we're here because you're brilliant and I'm not so dumb myself and like, let's work together to make a better one. Figuring out how to package that

into a conversation that holds across 2,200 people is like the team strategy at a firm. You should be able to tell someone that's a dumb meeting, it's a dumb idea, I'm out of here, please do better than this, while not tearing them down personally, while not damaging their conviction around their place in the team, the company's mission, all those things. And so that's a tricky balance to strike. I think we do a pretty good job here. But that is probably a single most important lesson. Yeah.

Embracing disagreeableness as a character trait of a high performing employee or coworker is, it's so underrated. And once it clicks and you feel it and you feel someone disagreeing with you, but they're not disrespecting you. They're just actually making their own decision. and bringing their own information, their own perspective, it's extremely refreshing when you first feel it, at least in my experience. The thing that's stuck in my head is, and then we'll let you go is this idea of the entire lending industry

being built, assuming that the average person doesn't have access to legal services, right? This, you know, traditionally a wealthy person will get a loan agreement and they'll have their counsel, you know, review it, spend thousands of dollars, you know, making changes or potentially walking away. And I'm very excited for what you guys can do in this space in a world where anybody in the world can take a loan agreement or find print, drop it and get, maybe it's not the best lawyer in the world, but it's at least decent. It's dangerously close to the best lawyer in a world.

Yeah. It's really, yeah, that's exactly right. And I think that's, we built a company on the assumption that that's coming, the fact that it's coming so quickly and in the way that is conversational and easy is just like deeply inspiring. I am very pro-AI because the notion of everyone's IQ is just getting lifted every day more and more is so powerful. Like this whole the sideshow of, oh gosh, you know, the jobs like everyone has gotten so much smarter. They can do the jobs that were always out of reach for them. The whole thing is just going to elevate That's also one of the most interesting, like, AI is a tailwind for my business theses I've ever heard. Instead of just like, I'm going to use AI to, you know, lay everyone off and cut my costs.

It's like, no, AI will make consumers pick me over the competition. Incredibly confident. I love it. That's right. Thank you for sharing. Brilliant. And thank you for hopping on the show. This was fantastic.

I'll talk to you soon. Thanks for having me. Have a great rest of your day. Enjoy your weekend. Soundboard. Always. You want coffee advice. I got coffee advice.

We'll definitely ping you about more coffee advice. I think the entire team in the studio would be happy. Yeah, congrats to the whole team on the market, finally waking up and seeing your guys' level of execution. It's really fantastic. That's getting started. Amazing. We will talk to you.

See you next quarter. Thanks so much. Bye. Up next, we have James Belosick from Send Cut Send, one of the hottest companies in Defense Tech. Anyone who's building anything, they know SendCut, send. They use them regularly. excited to bring James. Custom sheet metal MVPs. Yes. World champions. From the re-stream waiting

room into the TVP and Ultradome. Welcome to the stream. James, how you doing? What's happening? Great. Great. Thanks for having me, guys. Did I get this right? So I'm not a customer, but I know a ton of your customers. Why don't you just like explain exactly who your customers are, how you grew the business. I'd love to kind of kick it off like an intro on you and the company. Okay. Yeah, our customers are everyone, I guess. I usually have the way I describe it like my mom. My mom has a silly sign that we cut for her that says live, laugh, love. And then we also have parts that are in orbit right now.

Wow. We have parts of the bottom of the ocean, parts in Antarctica. You know, we do work for 60 to 70% of the Fortune 500. Wait, how big can you go? You might be the solution. Can you make gong? bigger gong. Could you make this a gong?

Okay. I was hoping you would ask us. Because we are trying to get rather large gong. Yes. And this gong is relatively modest. But it's not big enough. It needs to be even bigger. This is incredible.

I think we could even put logos all over it. That might be some sponsorship opportunity. There we go. Now we're talking. This is fantastic. Can you have any update for the business? Can you share anything about the scale of the business? How many employees or size of the business?

anything you got. Yeah. Yeah. We're in our seventh year of operation. We're profitable. Profitable? That's hit the gong for. I love hitting the gong for profitability.

There's nothing better. You know, the big fundraisers are great, but nothing like a little profit. Congratulations. Yeah. We're doing nine figures of revenue. Wow. About 350 employees. That's amazing.

So, yeah, we're doing it. Yeah, and all in America, right? Like, what does the actual footprint of the business look like? Where are you based? What's the scale right now? Yeah, yeah, 100% in the U.S., including support staff, remote staff. We have staff in 22 states, I think, right now. Our headquarters is in Reno, Nevada, which is not known to be a big manufacturing tech hub or whatever, but we're doing it.

It's known for a lot of things, but, yeah, we love it. We have a facility in Paris, Kentucky, which is a town of about 10,000. Yeah, Paris. Paris. And then Arlington, Texas. So just about 200,000 square feet under roof right now. Okay, so 2018, seven years ago, you start the business. Like, there was not an American Dynamism meme at that time.

People weren't writing breathless blog posts. When the American Dynamism meme started, did you look? I invented American Dynamism. Come on. But seriously, like, was it a happy accident or was it deliberate that you saw something on the horizon about America's need to manufacture things domestically and you made the conscious decision? Or was it just like, hey, you're here, you're making your thing, you're building the business,

why not build it where you grew up? Yeah, I'm not that smart. I don't see the future very well. Really, it was for selfish reasons. I needed parts made. So I've always been a car guy. I'm always working on weird side projects. And I needed some custom parts made.

No one really wanted to make them, especially in a quantity of one. I could get a made in a thousand or I could wait eight weeks. But no one would make something high mix, low volume. So I was like, well, I'm a software guy. I should be able to figure this out. So that's really how it started. I told my wife, hey, I want to buy this machine. It's like $600,000.

dollars. But I think if I can get just enough customers, it'll paper itself, and then I get to use it for free. And for whatever reason, she was like, yeah, go for it. So I told her it would print money. Took about seven years, and now it prints dollar bills. So hoping to turn that into hundreds at some point. That's amazing. That's amazing. What, yeah, talk about the actual automation and software that went into, like, increasing profitability of a given machine. I imagine that that's like the secret sauce, that's the proprietary like platform that, you know, keeps, you know, keeps margins reasonable in a world where probably anyone can go out and buy the same machine, but they're not going to get the same yield. How did that evolve? Where's the

status of this now? Like, how autonomous is manufacturing in America? Yeah, it's, it's got to be a mix. It's got to be a mix of robots and dunes. And no matter what, I think you can over robot, you can over autonomous, if that's the word. Or you can go with just too many humans, and I think we've figured out the right mix. You put guys where guys are really good and put robots where robots are really good.

I think our secret sauce was we approached this whole thing as software guys. We weren't manufacturers. We're like, oh, how hard can it be? Software development is supposed to be like the hardest thing. We make all the money. You're a computer scientist. Yeah. How hard can that'll be?

But it was a gift. because we approached things completely differently than anybody else because we just didn't know any better. And we made a lot of mistakes. We had to throw stuff away that people had learned 100 years ago and we were just learning for the first time because we were trying to figure out by ourselves. But some of the things we discovered, you know, being software first, it helped us, you know, like you said, we can beef everyone on efficiency and waste. and material utilization and machine uptime. So, you know, our original vendors for our big equipment, they didn't want to sell us the machines because I showed them how we were going to use it

and kind of hack their software and use our own. And they're like, oh, it'll never run. It'll never run. A few months later, the sales guy came back and saw our numbers and was like, oh, holy crap, can you teach us how to do it? So at one point, you know, we thought, why don't we just license our software? You know, that's, we're software guys. And I keep getting cut on metal and it's heavy and stinky and whatever.

But it's really not possible. Our software would not work for anybody else. We're so weird with the way that we approach things. You really have to start from scratch. And I think really vertical integration is the way to do it. You know, if I could, you know, buy a bauxite mine and smelt my own aluminum and have my own ships to transport the aluminum and everything, I would. I don't know if that's the future for us,

but really controlling everything from software out. Yeah, it feels like, I mean, this is, we've had a lot of your customers on the show, and this is your first time. Have you intentionally stayed out of like the avoided kind of the hype cycle? I know you got a Jason Carmen video as of today, but it feels like if you wanted to, you could go out and raise like billion, you know, a billion dollars right now if you wanted to play

that game, but it feels like it's just not something that doesn't seem like that. That's interesting. You seem to be just focused on this. Yeah. Yeah, it's the motivation. I don't know that world. Like, I don't know finance and venture capital or anything. I have a really tough time understanding or a balance sheet. But I have a high school education. I just like to make parts.

The way that I run this business is like a lemonade stand. You know, we sell lemonade. This is incredible. Yeah, I make parts. I make parts. So if we sell enough lemonade, I can take my profit and go buy more machines and make more lemonade. And that's really what I love. So I've kind of had my head down for seven years.

And we've been doing it. We've been self-funded and able to buy all of our own stuff. And what I realized is like if you if you want to shortcut that and go the VC route, you can light money on fire so much faster in manufacturing than you can in software. The CAPX is just absolutely wild. So thank God we didn't go down that path. We're a little smarter now. We do need to expand at a very, very rapid clip here in the next couple of years. We just got into CNC machining, which is an order in magnitude more expensive.

But honestly, I don't want to raise. I want to show people that it can be done with our method, with our dumb finance method, and it can work. It's great. Talk to me about how steep the distribution is in your customers. You said you're in, I think you said somewhere in nine figures in revenue. And I imagine that there is a tension between I want to serve the mom who wants to cut a live, laugh, love sign, or so whatever your example was. And then, uh, the re-industrialization

process. And there's a, you know, a billion dollars on the table. Yeah, exactly. And so, uh, obviously you want to say yes to both. They're both profitable, but there, there tends to be attention in custom, in just every company of, we have an enterprise, we have a B to B, we have a B to C business. Uh, have you, have you bifurcated the, the business at all internally? Are there tradeoffs or tensions? Like, talk to me about how that. bulbs. We treat everyone the same. Wow. We try and emulate in and out burger. You know, I don't care who you are. Everyone gets a double double the same way. You can't ask for it, medium rare. You can't ask for a filet of fish. The menu is small, but it's good, fast,

inexpensive. So we're actually very proud that, you know, all these rocket launch companies that use us, they get the same exact treatment as some guy who's built a Harley in his garage. So I think building a system that can serve everyone equally, maybe the Fortune 50s get a little worse service than they're used to. We're not bending over backwards. We're not giving them, you know, net 300 terms. They get a little worse service, but then the guys in their garage get an amazing service. And then they grow. We help them grow.

I want to see people do a prototype and then 10 units, and then 100 units and then a million units. Everyone should be making a business out there. Yeah. And I'm sure at some point, like, if we're talking about, you know, like some huge, huge customer that's going to be making trillions of things, like they always have the option to bring that in-house and do that themselves. And that's their financial calculation. But you're going to keep scaling.

And it's a race between, you know, hey, yeah, like, you might be able to bring it in us and do it a little bit better this year. But I'm going to keep going next year. And then the year after, so maybe you stick around. Yeah, it's a huge incentive for us because in software in SaaS, We had the concept of churn. Churn was absolutely terrible. Here we don't really have a concept of churn until the company gets so large that they

purchased their own equipment. We've actually advised on that a couple of times. But it's a reminder of, you know, we should be the ones scaling. We should be the ones growing with them. And we've been able to do it. That's good. That's good. Jordan, you have something?

It's just incredible. Yeah. Our friend David Senro's someday, I think, is going to make a podcast episode about you. Yeah. I got to be a biography first, you know, to reference on. I do have a question. The chat loves you, by the way. It's like obsessed.

It's going crazy. But I have a question about like position against like American made products. Like the narrative is, there's always the narrative that like China's cheaper. But then there's also. And they respond faster. The responding faster thing, there was this viral YouTube video. I'm sure you saw it of like I tried to make. something in America versus China and like the Americans couldn't get it to me and blah blah.

And so when I've heard the initial narrative, a lot of it's been like, look, we're going to be a little bit more expensive, but we're going to be higher quality, more reliable, more compliant with DOD rules and government rules. But how do you see the landscape of comping your business to international competitors evolving, like what's at the top of the stack in terms of benefits of going with you over international competitors and how is that evolving? Well, I think I think no matter how fast we are and how much better the service, people always will shop with their wallet. They vote with their wallet, right? So our goal is we have to be equal, if not better, than offshore options. And we are. So especially

on the C&C side, because of everything we've learned, we've been able to leverage our software and our efficiencies. And so we can compete. We have a lot of customers that are coming to us now and going, hey, you guys are maybe a dollar more or a dollar less, but you're faster someone to use you. It's 100% possible. There's a lot of people that are coming back on shore. I think the climate right now with tariffs and then the no de minimis shipping and everything, there's a wave right now of stuff coming back on shore. So if you're equipped so that you can respond or you can do instant quoting, you know,

a lot of these shops, they were set up in the 80s and 90s, and it was based on fact. and it was based on like, hey, let me look at your blueprints for two weeks and then and then we'll send you a letter in the mail or something and they still operate that way. That's why I'm encouraging people to go start manufacturing now because you're going to start with a totally different tech stack than anyone ever has. There's email first, chat first, texting first. That's really where the business is. China does a good job of it, but all the new startups that I've interacted with are doing it. back. Yeah, so speaking of those new startups, like, I'm interested to hear from you since you're

so far upstream of like the next tech shift. You know, we've heard about like drones. Like there's been a boom in drones. There's, there's been a few industries. What are you seeing on the, on like the next breakout interesting industry of like things or objects or physical products that's being made in America that you have an early insight into where you're like, oh, I didn't actually know that we'd have that as a customer. And now they're here. making cool stuff and I see their products and that actually could be big. I'd be interested to see what your take on like the hard tech world is broadly, even outside of like defense and B2B.

I'm actually really excited about the basics. It's not necessarily a category like drones or automotive or aerospace or whatever. It's people are making nuts and bolts here again. They're making washers. They're making just simple brackets. Stuff like that has been offshore for way too long. And a lot of people don't want to make it because offshore could always out-compete. And so you'd lean on something like ITAR in order to do your aerospace work that couldn't be done offshore.

But what we're seeing now is just dead simple stuff that is going into OEM components. And I was like, okay, once we get that base, then you can add complexity as we go. So I don't know what the next thing is. I think drones is a great one. So we're seeing a lot of movement in automotive, just with OEMs that were producing stuff in the U.S., they have factories in the U.S., but the castings maybe came from offshore. Some of those castings are coming from here in the U.S. now. So it's really exciting at the basic level. Yeah, automotive is interesting.

It feels like, you know, Tesla is obviously vertically integrated very heavily, but it's kind of caused like a rethink of all the OEMs. They all need to rethink their strategies. Anyway, already anything else? I'd like to see you guys acquire Intel and get them on the right track because I think your system of dumb, dumb finance or whatever you called it, plus just hardcore engineering. It's clearly working. Yeah, this is working. Anyway, thank you so much for hopping. We're going to be your next customer. We're going to go to the website right after this. I'm ready for the gone. I'm ready for the gone. We're talking. You're the man.

All right. Thanks. Thanks so much for joining. Bye. We should end with this story of an OEM. about the Cadillac, an electric caddy with Rolls-Royce aspirations. It's in the Wall Street Journal today. GM is betting that the Cadillac Celesteque, with its ultra-luxurious, customizable design and striking silhouette will become a coveted electric limousine in the new gilded age of the hyper-wealthy. What do you think, Jordy, about the Celestique?

It's deep in the stack, but the boys are going to pull it up. There it is. It's blue. It's got a little wagon. vibe to it, a little hatchback. So, this job requires an open mind. Obviously, our car test this week, says the Wall Street Journal. The Cadillac Celesteque, a

sultonic, custom-crafted, electric limousine priced in the mid-six figures, has some explaining to do. But it's so gorgeous, I'm prepared to listen. This isn't a concept? This is a real car. They're shipping this. They're making it. For starters, what the hell makes GM think it can

compete against ultra-luxry legends like Rolls-Royce Bentley, Aston Martin, and Maibach. when it struggles to even build full-size pickups properly. GM has one of the highest warranty costs and recall rates of any manufacturer. As for the Cadillac brand, most sales come from glowed-up versions of mass market products such as the Escalade ESUV and XT5 crossover. What does the sell a steak? A visionary four-seat, six-figure electro yacht built to ply the oceans of global privilege have to do with that riffraff. Almost nothing. That's the point.

The contradictions are largely a matter of. optics, unlike Jaguar, now on a production hiatus while ownership figures out how to retool and rebrand the classic British market. So is a four-seater? This is a four-seater. Cadillac is reimagining itself in plain sight. While the division's profits currently depend on internal combustion-powered people-movers in the North America, the Celesteak maps the brand's ambitions beyond the U.S. in a gilded age

of hyper-wealth, and you'll have to be hyper-wealthy because I imagine the depreciation on this thing is going to be insane. Can you imagine buying a $400,000 electric car? When you could get a Bentley. I mean, the Bentley is going to depreciate by 50K in the first year. What's the Cadillac going to do? What's the Cadillac going to do? 90 is going to look like a SPAC.

They got F1 now. They got Zuck. They got Coogan driving Cadillacs. And so maybe the brand's on an upswing. November 2024, Cadillac announced it would sponsor a team in the biggest, brattiest, most mammon-worshipping. of all international motorsports F1. Brick by brick, Cadillac is building itself an ivory tower.

It wouldn't surprise me to see the division relaunched as an independent manufacturer in the next decade with its own IPO and everything. Let's just hope nothing ever happens to disturb the free flow of goods among our global trading partners. This is hilarious. Arcelestique arrived at my hotel in Monterey, California two weeks ago, leaving no head unturned. The sense of occasion is partly owed to the car's luxuriant size. 217 inches. Do you know how long that is?

220 inches is the size of like a full size, like a escalate, basically. So it is insanely long. The thing makes a full-sized Lexus sedan look like a toy. How long is it? 270 inches. Wow, so it's longer than Mybok. Yes. Wow.

Mogged. Mybach is 215. 215. Well, they got you by two inches. It has a 130-inch whale base. The status-seeking proportions obliged design. to use the largest wheels and tires that could reasonably fitted. Custom 22-inch Michelin Pilot Sport EVs wrapped around forged alloy rims for extra swagger.

You can specify 23s. You know the talking with Jim at Send Katsun made me think that we should get a cyber truck lower it, put it on smaller wheels. The Cybericon. The Cybericon. Yes, yes, yes. Yes, I've seen the demos of that. I would 100% be in. Tyler, next project.

Yeah, build it. Build a sports car version of the cybercrubs. Just send cut send. Just send cut send. The design signature move is, obviously, the fantabulous fastback glass and the tapering rear deck lid, the hatchback of the gods. Here I detect top notes of Jensen Interceptor and Maserati Moroc. The brand's boomerang motif is restated in sizzling LED side markers in the sale panels.

I chuckled, I chucked my suitcase into the cut pile spaciousness of the cargo compartment and closed the privacy shade on the rear window. What a fantastic I used. The fast-back four-door configuration creates a chic, futuristic cabin with a range more like an aircraft than an automobile with two sets of identical sports seats, gorgeous, divided by central consoles with armrests and interactive touchscreen displays, all under the blister-like canopy of tinted glass. I was pleasantly surprised. Over the years, Cadillac has rolled out a series of ultra-raishing ultra-luxury concept cars, the CN, the 16, the El Mirage. Have you seen those cars? Cadillac Cien, the CN looks insane. We should pull up a picture. That never made it to production for want of a business case.

Cadillac's standard of the world motto grew increasingly pitiful. Indeed, much of what makes the Celestique compelling might have been nixed by an earlier generation of bean counters. The technically demanding carbon fiber hood, the radio transparent material in the grill form, allowing the LIDAR emitters to be hidden behind the glass, surface, the shaved exterior doors with hidden push buttons, replacing door handles, the nifty panoramic roof. That's the, that's the CN. Yeah, that's the 2002 Cadillac CN. They got to

ship that thing. I can see, you're such a Cadillac guy. I can just see you building out like the most, the best catalog. Well, you can't buy that. It was just a, it was just a, there's always a price. There's always a price. I don't know if there's a price for that. I think that's only an automotive museums. I think that never. It has butterfly doors too, right? Yep. Yep. Yep. Yep. They should have shipped it. It would. It would have been the Audi R8 of the Cadillac brand, but they're going back into Halo cars. How does it drive? It's stupendous.

A nuclear attack sub. Are they calling this a halo car? This is definitely a halo car. I don't know that they're calling it, but it clearly is. The Wall Street Journal says it's stupendous to drive. It's a nuclear attack sub with heated massaging seats. Mecca Godzilla on little cat feet. Odd.

parts of California Route 17 winding over the mountains between Santa Cruz and Los Gatos narrowed down to just four lanes separated by doom-threatening concrete barriers. The traffic is fast, close, and competitive. I dialed in the car's lane-keeping driver assistance and pointed it downhill, overtaking porches as I went. I could have driven with one finger. The unsprung mass of large wheel sets can provoke a grainy, noisy, undampened ride response. The Celestique chassis says, we'll have none of that. the car hangs on a variable skyhook of gravity-defying interventions, including four-corner adaptive air suspension,

active magnetic dampers, active roll control, rear-wheel steering, adaptive all-wheel control. If drivers want, they can almost entirely eliminate dynamic body roll, so the car stays absolutely flat in corners, even as the lateral Gs throw personal effects into the footwells. Mybok does have some body roll, especially when it's the way that speeder drives it well folks

I think that's our show it is a three day weekend we will not be live we'll see you on Tuesday folks our team has been absolutely grinding they're going to enjoy three full days away from the Ultradome but Tuesday we'll be back a big week next week

we've we've sensed that we've sense that apparently people are going to be announcing some fundraisers next week It's going to happen. Summer's over. Well, I guess summer will be over Tuesday. Yeah.

And the fundraising will be in. Enjoy the weekend. We're back on VHS. We love you. Good night. Good night. Bye.