TBPN - Tesla Robotaxis, Saudi Arabia, AI in Big Tech, Art Market Update + Guests

Episode Date: May 13, 2025

TBPN.com is made possible by:Ramp - https://ramp.comFigma - https://figma.comVanta - https://vanta.comLinear - https://linear.appFigma - https://www.figma.comEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.com Numeral - https://www.numeralhq.comPolymarket - https://polymarket.comFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://youtube.com/@technologybrotherspod?si=lpk53xTE9WBEcIjV(02:39) - Tech Takes Over Saudi Arabia (22:35) - Tesla's Robotaxi Timelines (40:38) - Big Tech's AI Midlife Crisis (45:23) - Dylan Abruscato. Dylan is the creator of Crypto: The Game, an on-chain survival game that blends gameplay with crypto-native mechanics. He’s known for pushing the boundaries of interactive web3 experiences. (59:34) - Jared Madfes. Jared is an investor and writer who has become an online correspondent on Saudi Arabia’s growing influence in tech and finance. His commentary blends humor, geopolitics, and startup insight. (01:14:04) - Sam D'Amico. Sam is the founder and CEO of Impulse Labs, a company developing battery-integrated induction stoves that combine high performance with grid energy storage. With a background in hardware engineering at companies like Google and Oculus, Sam is leveraging his expertise to revolutionize home appliances and drive electrification. (01:32:33) - Vincent Weisser. Vincent is the co-founder of Prime Intellect, a decentralized AI platform that aggregates global compute to collaboratively train and co-own advanced models. He helped lead the development of INTELLECT-2, a 32-billion-parameter reasoning model trained through globally distributed reinforcement learning. (01:47:30) - Maneet Khaira. Maneet is the founder and CEO of Backbone, a company specializing in mobile gaming hardware and software. Backbone is best known for its Backbone One controller, which transforms smartphones into portable gaming consoles, and its companion app that integrates with services like Xbox Cloud Gaming and PlayStation Remote Play. (01:59:48) - Aaron Ginn. Aaron is the co-founder and CEO of Hydra Host, a platform providing decentralized, bare-metal GPU infrastructure for AI and high-performance computing workloads. (02:36:06) - Dan Gray. Dan is the Head of Insights at Equidam, a platform specializing in startup valuation. He is also a frequent contributor to Crunchbase News, where he shares his expertise on startup valuation and fundraising trends.

You're watching TVVN. Today is Tuesday, May 13, 2025. We are live from the Temple of Technology, the Fortress of Finance, the Capital of Capital. Thank you to Pit Viper for sending us these amazing shares. Chris, the founder and CEO of Pit Vipers, set these to us. These look perfectly on brand for us. Yes, they look very on brand. They're fantastic.

And I'm going to take them off because I can't see very well. Yeah, it is. But thank you to Chris for sending them over. Anyway, we got to. great show for you guys today. Folks, we're talking Saudi Arabia. Technology has taken over Saudi Arabia. All of our hardest hitters, all of the absolute dogs of Silicon Valley have crossed the Atlantic Ocean and our technology to the Middle East. Yes, to Riyadh. To Riyadh. So we'll cover that. Talk about what's happening. Why folks are there. Alex Wang's there. I saw Alex

carp there, a bunch of Alex's in tech there out in Saudi Arabia. Jensen Wong and Nvidia's announcing stuff, different trade deals going down, a bunch of interesting things happening. Then we're going to talk about Tesla's Robotaxy timelines. What's going on with their Robotaxy launch? It seems like they've had some setback. There's an article in the information that seems to make it all doom and gloom, but I didn't like one of the quotes that I saw in there, so I want to talk about it.

Truth Zone. Truth Zone. And there's also some stories about just how good. big tech is grappling with artificial intelligence generally. We've been talking about this a lot. The innovator's dilemma, the problems of trying to build a product when you're a massive tech company, even though you have all the resources possible, you're still struggling to get something to work.

This is why Zuck started doing jujitsu. That's the point last year. Yeah. So you could really. They're one of the companies that's doing okay, but the rest are struggling, I think. But we'll dig into it. The art market, we say it's absolutely ripping. There was a big say of it.

It wasn't quite where people wanted it, but we'll break it down for you because we know that you need an update on what's happening in the art market. And then we are going to hopefully talk to somebody who's out in Saudi Arabia. It's going to be like midnight or 10 p.m. their time. But hopefully we'll be able to get on a call with somebody in Saudi Arabia breaking down what's exactly happening with all the technology folks who are out there in Saudi Arabia. And then we got a great lineup of founders and investors and analysts to take us through the stories of the day. So let's kick it off. Let's do it. Trump has lifted sanctions on Syria and touts deals in his Middle East tour.

This is from Riyadh. President Trump has decided to lift sanctions on Syria, giving the country a financial lifeline after a lightning campaign overthrew its decades-long dictator late last year. I will be ordering the cessation of sanctions against Syria, Trump said, during a foreign policy address in Riyadh. His first stop on a four-day swing through the Gulf. I wonder where else he's going. We'll have to figure that out. track him.

Cutter. Yeah. Probably. That would be surprised. I'm assuming they want to give him the jet. Yeah, he's got to go. They can't just fly to him. These things don't fly themselves.

Yeah. Even though it's a gift, it's such a meaningful gift. It's such, you know, he wants to make sure. He wants to, you know, he's not going to take the gift site unseen. Trump is going to break the bottle of champagne over that new plane. Yes. He's not going to let. He's not going to delegate that.

He's not. Yeah. No way. There are things you delegate and there are things you do not delegate. Yes. He's in founder mode on that one. He's not in manager mode. That's right.

Now it's time, now it's their time to shine. We're all, we're taking them all off. The announcement says the table for Trump to speak with the new Syrian president Ahmed al-Shara on Wednesday in the Saudi capital, which the White House has billed as a quick meet and greet. Like the structuring of these deals, like, oh, I asked him to call me and he didn't call me. It's not a meeting. We requested that you request a meeting with us.

Yeah, that's the key to. Maybe we should port some of that back to, to venture capital. If you're pitching a VC, request that they request a meeting with you. If you're a founder, you're going out and raising your series B. Hey,

Andresen, I would request that you request a meeting with me. I would request that you reach out to me cold. Yeah. Yeah, exactly. With a preemptive term sheet. I would request that you preempt my round. Yes.

Yes. I always think it's good that the way that founders will message rounds. It's like they'll be raising for two months and then they'll be like, yeah, we were preempted. Exactly. Exactly. Yes. Buddy, you've been raising for months for weeks now. Like you've been taking meetings with investors. Getting into her. The preempting branding. I mean, I know a friend of ours who said that to me at one point. Also preempting on a preseed is hilarious too. It's like, what are you preempting? You were going to bootstrap? Oh yeah. We definitely weren't ready for proceed. Yeah. Definitely weren't ready for

pre-seed. We weren't ready. Yeah, they just totally jumping ahead on the valuation here. Yeah, we were really going for more of a friends and family. But, you know, once somebody, you know, once this pre-seed fund offered 100K, well, yeah, maybe we're okay with getting preempted. You know, it's become such a meme to use the preempting thing. I feel like the next stage is putting in the press release. I mean, like we announced, instead of, you know, we announced a seed, seed plus, A, B,

all of these rounds who kind of shifted around. So an A is now the size of a B or whatever. you should just announce, hey, we're announcing a preempted series A. And just put that on the newswire. Yeah. Or companies should just announce that they're in advanced talks. That works too. Like, just say like, yeah, we're.

Call the press. I mean, that's basically what company, it seems like if sometimes a fundraise will leak. And it's like, okay, this company is in advanced talks. Other times you can tell it's the company itself. Yeah. Just like going to the press and being like, we are in advance talks. I love this segment because we're like, let's talk about what Trump's doing in the Middle East. Let's bring it back to early stage technology investing.

Because that is. I really don't care that much about this story. I really don't. I'll dive in a little bit. There's some interesting stuff here. Trump's remarks capped an eventful first day of his Middle East visit. He signed $300 billion in investment deals. Let's see here.

We love $300 billion. With Saudi Arabia with an eye toward doubling the total within 40. years. I believe that the White House was highlighting $600 billion. Where does that even go? Is that us investing in them, them investing in us both ways? One hand washes the other, I assume. Who knows? Why don't why don't you figure that out? I mean, I think it's primarily in the U.S. That's what what Trump cares about. He heaps praise on the kingdom's crown prince, Mohammed bin Solomon, promising that we will always be friends. Yeah. I mean, this is one of those things we're like, he announced. He also encouraged.

Reh Riyadh to move towards normalization with Israel as soon as it's ready, even though war rages in Gaza and Palestinians are no closer to self-rule. The fact that you restrained yourself on the soundboard when we have the Secretary of the Army on, you know, this is a really, it's a safe show. He would have loved it. In hindsight, he would have loved it. Public company CEOs, you know, presidential appointees, really the most important decision makers in the world come on. And they all get sound effects equally. Yeah. Yeah, I really need to adopt an equal opportunity. Yeah, not just with the friends. You hit those, it's very clear who you're friends with. Yeah, Tish yesterday was, was, you could tell he was just like it really meant a lot to him.

Yeah, feeding off the energy. It's great. But I think I think it's universal. I think everyone loves a soundboard effect. So, yeah, let's try and space it out today. I try and hit everyone. This article is extremely politically charged. Yep.

I'm going to read this next point. Still, the main message of the. first day is that Trump values the transactional nature of U.S. Gulf relations. As long as money pours into the American economy, the U.S. will remain engaged and close to the region. He just said we will always be friends. Like he just said, we're boys. MBS, we're boys. And now this journalist wants to say that it's just about the money. I mean, come on. Come on. Give him some credit. But you achieved a modern miracle, the Arabian way, Trump said, of the Gulf's oil-rich monarchies. The Gulf nations have shown this entire region a path towards safe and orderly societies with improving quality of life, flourishing economic growth, expanding personal freedoms, and increasing responsibilities on the world stage.

Trump's stop in Riyadh was always billed as a glitzy spectacle, but few could have predicted the warmth displayed between the two leaders and the nations they lead. Trump's visit to Riyadh kicked off with a Saudi F-15 escort as Air Force One touchdown at King Khalid International Airport on Tuesday. Drums boomed and horns blared as the crown prince. The country's de facto ruler greeted Trump on a lavender-colored carpet rolled out beneath the American plane. It really rolled out the lavender carpet for him. There it is. Then they walked into the airport for a private ceremony lined by waving U.S. and Saudi flags to welcome the president. and many of his senior officials, including Secretary of State Marco Rubio and Defense Secretary

Pete Hegsett. And former Andreessen Horowitz partner, Sri Ram Krishnae, made it. I hope he got a chance on the carpet. He got a bunch of photos. He's a heavy hitter over there. It's amazing. Heavy, heavy. He loved it.

Very cool. And again, you know, they clearly understands. They understand that Trump loves showbiz. And so the more that you can lean into that, the better. you know, the relations you'll have with the U.S. Yep. Elon Musk is there. FIFA president Gianni Infantino is there. Trump landed in the Middle East, transformed by nearly two years of war,

which responded with a devastating military campaign that has killed tens of thousands of people. Trying to shut it down, trying to bring peace to the Middle East. Yep. It's rough. Anyway, we should go to some of the other announcements that relate to this. So unusual Wales has a post that U.S. and Saudi Arabia agreed to $142 billion in defense sales. You have to imagine that that's important to defense tech one way or another, although we haven't seen a lot of stories about this.

Most of the stories that we've seen have been around Ukraine. But I was wondering if we're going to see, you know the story of Niros, the drone company? How Sorin, great name, Monroe Anderson. nominative determinism. He went out to Ukraine. He's literally the world champion in FPV drone flying. Have you seen this? Drone racing.

Drone racing. So he's incredible pilot. You go out and you think, oh, he's going to fly the drone. And it's like the most intense whipping around a tree. He's crazy. So he went out to Ukraine and was helping train drone pilots there to use drones as weapons, basically. Comes back, builds a company around it. It's an incredible story.

Raises from Sequoia. obviously lots of competitive dynamics with Anderol and stuff. So a lot of questions and a lot of problems they need to solve. But still, like an incredible story of like going and getting experience on the ground as a young technologist and then going and building the exact thing that they need. And then eventually selling it to the Ukrainians. But we haven't heard those stories as much from Saudi Arabia or the Middle East. And I was also wondering with the India-Pakistan conflict if there was going to be a Nero-Sy. type company that grows up out of India.

Obviously, there's a lot of folks from India who work at Anderrol or who work in Defense Tech or even don't even come to America, but want to work in Defense Tech. It would be interesting to see someone who cuts their teeth in the Indian Pakistan conflict then build a company out of that. And that's something I'm like tracking right now. Didn't have that much time to cut their teeth. Well, yeah, because it was very, very short. But still, I, like, and America the whole time was like,

like we're hands off on this. Like we're not taking sides. But if you look at the actual numbers, America has kind of taken a side in the sense that just in the last year, America has sent $5 billion worth of military equipment to India and zero to Pakistan. And so like the numbers are pretty clear. And when I see $5 billion, I don't see, okay, yeah, like that's, you know, there's a generational company to be built right there for American,

and a role for America for India or whatever. That probably just makes sense. But is there, is there someone like? an entrepreneur who could go over there and get one contract done for 10 million and then take those learnings from that unique conflict because I'm sure it's different from other conflicts and then build a real company around that. That was something I was kind of tracking. And I've heard some folks saying like they want to build like the Anderrol for India and that'd

be interesting to track but haven't seen that actually happen yet. Anyway, back on Saudi Arabia. Saudi Arabia brought in a mobile McDonald's for President Trump on his visit. Incredible. And it's just like a portable McDonald's. Like his reputation. With the wooded inciting, that looks like not just any old McDonald's.

Yeah, that looks like top tier McDonald's. Pretty sweet. And then Vittorio kind of summed it up all in one post here. He says, Trump, Elon, Sam Altman, Jensen, and Saudi royalty, this might be one of the most important events of the decade. Trump signs the piece of cords,

sets up the largest bilateral deal in history. Elon brings autonomy, solar grids, orbital access. Sam Altman brings AGI and Stargate infrastructure. Jensen brings silicon and compute. Saudis bring capital, land, and energy. This is how post-scarcity begins. Compute for carbon swaps and desert solar-powering AGI.G. Fabs instead of oil rigs and starship landing pads on Arabian sand.

Peta-flop replaces PetroDolar and Sun replaces oil. This is the birth of a post-Western, post-Sacercity, post-democratic world order. interesting take, Victoria. Let's hear for Vittorio. Which is the most aggressive take possible out of like, you know, something that they described as like a meet and greet. And they're like taking some photos. But, you know, I mean, yeah, you got to.

I think it's directionally correct that there's like, this is the beginning of partnerships and the continuation of partnerships. Because obviously Saudi Arabia through investments as exposure to a lot of these. And, you know, there's been discussions here. It's not like all of these deals are going to get signed today. but I like that he's putting a point on it. He's saying we are entering post-scarcity today. I like some options.

Even post-democratic. Yeah. Post-Democratic. Yeah. LaVittorio, thought-provoking to say the least. There's some other. We should talk about the specifically the Nvidia thing. Yeah, sure.

So I'll pull this up. So Humane and NVIDIA announced strategic partnership to build AI factories of the future in Saudi Arabia. We're hearing the AI factory term again. Humane is the AI subsidiary of Saudi Arabia's. public investment fund, PIF. So they're making a major investment to build AI factories, powered by hundreds of thousands of NVIDIA's most advanced GPUs over the next five years.

NVIDIA will work with Humane to train and empower an AI-ready workforce. Sounds awesome. When did Jensen start calling data centers? AI factories? I don't know. And I wonder if that came from him or it came from a month ago. But it does seem like a more general term. Like anyone can understand AI factory, like everyone's factory?

Data Center is very, it's like, are you just storing data? Yeah. All right. Add another one trillion to the market cap. I've seen enough. So the projected capacity for one of the first factories is 500 megawatts, which is not massive by American standards, but it's up there. And that will have several hundred thousand Nvidia GPUs over the next five years.

The first phase of deployment will be a 18,000. cluster, 18,000 GPU cluster of Nvidia GB300 Grace Blackwell AI supercomputer with NVIDIA InfiniBAN networking. Man, they really like the jargon in here. And Nvidia popped on the news. They're up another 5% today. Back into the 3T club.

Let's hear it. Let's get some soundboard for them. That's fantastic. That's really good. Here's a good quote. This is what you're talking about. Here's a good quote from Jensen. The path to the biggest company on Polly Market, how it was a race between Apple and Microsoft.

And we were like, yes, that makes sense. But the one company that could just absolutely pop would be Nvidia. If it was a wild card. Yeah, of course, of course. But like if Nvidia does a couple more huge deals out of nowhere, all of a sudden, it's going to be so funny. Because the gap between Nvidia and Microsoft is like $200 billion. Oh, that's it? I thought it was like a trillion dollars.

I don't know. Where are all the markets? $200 billion. There's just not. Oh, they could close that in the weekend. Yeah, yeah, that's just like a one swing. Here's a good quote from Jensen. Jensen says, AI like electricity and internet is essential infrastructure for every nation.

Together with Humane, we are building the AI infrastructure for the people and companies of Saudi Arabia to realize the bold vision of the kingdom. So, anyways, big news. And it is a 28% to be the largest company by the end of 2025. It's Microsoft at 37%, Apple at 31%, and then Nvidia at 28%. And the market caps are 3.33 trillion versus 3.17 trillion. Wow. Yeah. Doable.

Doable for Jensen. Couple deals. He makes it happen. Yeah. Interesting. I wonder what they'll be training. I mean, they've done Falcon 9b. I haven't heard more about their LLM development.

Are they okay being a buyer of Open AI and Anthropic and the other foundation models? Or do they really want to own their own? if they're really close with us and they are boys, right? Like you shouldn't care. It shouldn't be that big of a deal. You should be like, yeah, that's fine. I don't care if I use an American LLM. But we'll see where they go with it.

Anyway. We will see. Alex Wang was over there. He said, good discussion on AI leadership with President Trump and my colleagues from across the AI industry. Shaking hands emoji. Thank you to our Saudi host as well. Seems like he had a great time.

And Elon Musk posted a eight-minute interview from the Saudi U.S. investment forum. And there were some details that came out of here. I don't know if we can play this video. Do we have audio for this? Imagine the tension between Monsorship and Sam. Yeah. To celebrate a U.S. Saudi and a Saudi-U.S. relationship

that is 92 years old about how we move from an oil-based economy to an innovation-based economy powered by wonderful technologies. That definitely you're one of the pioneers. this industry. We just showed to His Royal Highness some of your optimist robots and to President Trump. Let's talk about that. Tell me about them. Yes, so we just showed several of our Tesla Optimus robots to His Highness and President Trump. And I think they were very impressed. In fact, one of our robots did the Trump dance, which was pretty cool. The YMCA, yeah? Yeah, to YMCA. So, yeah, robots can dance. And so yeah, robots can dance.

They can walk around, they can interact. I think we're headed to a radically different world. I think a good world, an interesting world. My prediction actually for humanoid robots is that ultimately there will be tens of billions. I think everyone will want to have their personal robot. You can think of it like as though you had your own personal C3PO or R2D2, but even better, then who wouldn't want to have their own personal C3PO or R2D2?

That would be pretty great. And I also think it unlocks an immense amount of economic potential, because when you think about what is the output of an economy, yet is productivity per capita, at times population or capita. Once you have humanoid robots, the actual economic output potential is tremendous. It's really unlimited. Potentially, we could have an economy ten times the size of the current global economy where no one wants for anything.

There's sometimes an AI that talk about... adding the sound of the basic income. I think it's actually going to be universal. No one's clapping in the actual audience. Yeah, it was kind of low energy. Come on, guys. Where's your soundboard? I was falling asleep.

Saudi U.S. investment forum, stepping up, guys. Anyway, we should stay on, we should stay on Elon and talk about the Tesla robo-taxie stuff. Should Tesla get credit for those tens of billions of humanoid sales today?

Because I don't think that's priced into the stock. The market is not quite pricing it. It's pricing a figure, right? Yeah, $38 billion. You got to think that figures priced in. For sure. But if I'm looking at Tesla, I mean, you know, you're like half joking, but they're really hard

too. Oh, Tesla's back over $1 trillion. Let's go. Let's go. I never got it for a second. We're so back. It's so crazy. So you could buy Tesla at $227 a share a month ago.

Less than a month ago. It's at 335 today. All it took was giving up the Doge dream. Terrible time to be a techno pessimist. It's really awful. Anyway, I do think the Tesla story is interesting because there are two narratives right now that are kind of rivaling. Like you're joking about like, are you pricing in all $10 trillion worth of GDP or

whatever that they're going to add? But I do think that there are a significant number of investors that are saying, I'm investing because of Optimus. and there are a different set of investors that are thinking, I'm investing because of robo-taxies. Because these are the two major transformative technologies that if they work will be big new markets, right? And Tesla's working on both of them.

But there's questions internally about timelines on each of them. Optimists obviously seem farther out, potentially bigger market even. And then also there's like reports of like, you know, how far along are each of the technologies? how are the teams actually doing on this stuff. But the thing that I keep coming back to and the thing I want to dive into is just

there's a lot of negativity around Tesla like missing deadlines or, oh, the robots are actually teleoperator or whatever. But I think it's always useful to step back and benchmark against what else is happening in the market because like the idea of a robot that dances is not science fiction.

We've seen it with Boston Dynamics. We've seen it with Unitry. And it seems like the question is not Can Elon build a robot that dances that's as good as unitary or as good as Boston Dynamics? Like that seems like pretty commoditized right now. He should be able to do that. The question is can he dominate the category and really scale up production to a point where the economic flywheel works? It's profitable.

And the products are so much better that they're winning, winning, winning. Just like in the heyday of Tesla, the Model 3 was winning like best car of the year by car and driver. like a pretty nonpartisan group that was just like, yeah, on paper for the price. This is an incredible car. It goes zero to 60 in two seconds if it's the pladden. It's like under 100K. You could never get that performance for price ever before. And it drives itself.

So anyway, the big discussions about the Tesla Robotaxi deadline. The information says the deadline is nearing and it's the start of a key testing phase that is uncertain. And so in Austin, Texas, there is a deadline that's just weeks away. but the company hasn't started testing its cars without a human safety driver as of last month, according to an engineer close to the testing and former employee. That's a crucial step required before Tesla can launch the pilot service for customers. And so Waymo is going through the approval process for self-driving taxi services, obviously, all over the place.

They're in Los Angeles now. They've been very successful in San Francisco. And there's clearly stages and gates to that rollout where there's a human driver in, then you pull the driver out and the car's driving around by itself at low speeds, then at higher speeds, and as you get approved, you move forward. And so Tesla's been training its most popular model, the Model Y, in Austin, since at least last fall, according to internal emails. Tesla employees are now testing the Robotaxy service cars on supervised rides

in which a human safety driver sits behind the wheel. Testing without a safety driver is the next step, although it's unclear when that will start. Much is at stake, Musk is betting Tesla's future on Robotxy ambitions, which will initially rely on existing Tesla vehicles before using cybercabs, the specialized vehicles without steering wheels, it plans to begin manufacturing next year. And making the cyber cab, that does not seem complicated, because it's basically a Model 3 without a steering wheel.

It's like less parts. And it's all the same infrastructure. So like I would be shocked if they don't hit that goal to make that because it's like painted gold and you're good to go basically. It wasn't like a radical reinvention of what the vehicle is. Yeah, I mean the most exciting thing was the doors go up, right? Yes. Yeah, the butterfly doors are important. Yeah.

The doors go up on the cyber cab. Tesla can catch up to Alphabet's Waymo, which already operates a commercial robotxy service in several U.S. cities, but it employs a different approach to training and operating cars, which we'll talk about. So when Waymo wants to offer its service in a new city, it uses data from sensors on a handful of test cars to prepare detailed maps of each city so its vehicles can safely navigate the streets. The process took a decade to develop and can take at least a year to complete.

In Austin, Waymo tested for about six months with the safety driver in its vehicles and six months without them. Waymo cars don't yet ferry passengers on Interstate 35, but they are training on highways in California. Tesla, on the other hand, trains its cars mostly on data accumulated from existing Tesla drivers. Preparing to launch the service in Austin has forced the company to confront mundane operational problems like rerouting when cars get stuck and providing customer service. Essentially the struggles of not having a human in the car, the engineer said. Waymo and other competitors have spent years grappling with these issues. Musk told investors this month the launch in Austin could include as few as 10 Model Y vehicles. The company is looking to hire a team of people to work remotely,

using virtual reality headsets to supervise the cars when they encounter problems. So this is teleoperation, very normal and also used in Waymos. This is the George Hots contention. It's never been confirmed, but he said Waymos don't work when the cell phone towers go down. So you know that they're connected to the internet and you know that people. people are watching them. But the VR headset thing is interesting because I haven't seen that as necessary. I always thought that when you had a teleoperation team working on self-driving cars,

what you'd see is somebody had a big screen or series of screens and they would be looking at maybe four cars simultaneously and it would have kind of like green, yellow, red. And if it's green, it's just cruising down a clear day on an empty street, no problem. But then it sees a cone that it doesn't understand it goes yellow. And you can kind of look at it. And then red is, I'm really confused. I'm stopping the car. Now you need to hop in and take over.

And then you're not driving the car in VR. You're saying, hey, I've double-checked as a human and I see no humans there. So you can go for it, car. Yeah. And it's not, I mean, at the end of the day, it's not unreasonable to think that Tesla rolls this out. And there is perpetually somebody monitoring every single minute that the car is operational. Why not? It's not that expensive. And it's not that expensive.

Yeah. Obviously it doesn't work over the very long term, but it's fine as a way, as a path to market. And so the Tesla, the Texas Department of Public Safety, which oversees the highway, has not yet received an emergency plan from Tesla, but said it's prepared for the launch. Such a plan would help emergency responders engage with cars if they fail to pull over or if they block traffic, such as other robo taxi services have done. So it seems like the government's actually catching up to this stuff and is putting a plan in place to say, hey, like, We want this and people want this, but we got to figure out what to do if this car freaks out, basically.

I saw video somewhat unrelated, but I saw a video of somebody figured out how to trap a Waymo. A Waymo had, was used- I thought you just put a cone on it and stops. Yeah, so apparently a Waymo was in front of this guy's house. And so he went and just took tape and just put four pieces of tape around like the main sensors.

And so the car's like on and it's like running, but like, I was like, I don't support abuse of any type of robot. That person's first to go when the salvation day comes. They're cooked. Yeah, the Terminator's not going to look kindly on that behavior. Anyway, full self-driving could take over most of city driving on city streets. FSD launched the public in 2022.

By last year, more than 2.4 million cars were using it. That's a lot of data. Several autonomy researchers. engineers said Musk's confidence in Tesla's ability to quickly expand its autonomous vehicles to new markets fails to account for the logistics needed to operate ride hailing fleets at scale. At scale. Yeah, whether they're driven by a human or computer, it also glosses over some of the regional differences such as traffic light and lane design that have slowed other companies that they try to scale. And this is the key thing we'll go into, but this is like the really,

really important. This is a very, very important underlying strategy to the way Tesla is approaching this versus way now. So Tesla receives video clips from an array of cameras mounted around its cars and processes them at a cluster of supercomputers, which it calls Dojo. A primary goal is reducing the frequency with which a human has to intervene in the cars driving. This was called on policy learning versus off policy learning. And so you, the car's driving itself. Whenever the human interacts to take the steering wheel or apply the brakes, that's sent as a negative reward to the neural network to say, hey, whatever you did there, that was wrong. The human didn't like it. And so go back and do more of the driving where the human isn't taking over.

And you get a lot of data on that. You build a big transformer network and eventually you get a very strong machine learning model essentially. So the computer systems handling the data learn differently from humans and sometimes stumble over issues that would be obvious to people the engineer said, like this is obvious. We've seen this with hallucinations with LLMs. The development has at times relied on feedback from Musk and from YouTubers driving the semi-autonomous modes who map out parts of the roads in San Francisco and Florida where the car struggle. This is citizen. Citizen journalist.

AI. Yeah, I guess. Training. Tesla's sole reliance on cameras rather than laser and radar-based systems in Waymo means its autonomous approach is more prone to mistakes, critics say. Cameras only is not enough and likely will never be enough, says Sieton Mercili, the co-founder of the autonomous trucking and logistics companies, Locomation and Atlas robotics. Tesla's approach doesn't work, period, said Missy Cummings,

an autonomous vehicle researcher at George Mason University. Computer vision is simply not enough for this task. And I completely disagree with that. Betting against Elon Musk. It's not just that. It's betting against the way humans do driving. Like humans don't have LiDAR. We just have vision and we drive fine. And so I've never bought this this argument, this line of reasoning. that you definitely need something more advanced than just a camera because humans are able to drive. 18-year-olds can drive, 16-year-olds can drive. And yes, you obviously need to create something that's, you know,

human-level intelligence and very, very capable, and you need a huge amount of data. But there's nothing, like this is such a refutation of the... The director of the Mason Autonomy and Robotics Center. Yeah, and I understand where she's telling from. It's a naval pilot in the 80s. Yeah, I mean, I understand where she's coming from in the sense that, like, right now, LiDAR and radar-based systems and GPS-based systems are seeing better results right now.

But to just throw out the bitter lesson and disrespect scale is all you need is a really, really tall order that's been wrong many, many times. And so it's a very risky position to be in. And I don't think it'll pay off well. And the whole theory of the scaling laws and the ideas that you want to, that you want to just get a whole bunch of data and crunch it down into a huge transformer, essentially, has proven correct many, many times. And it also puts you on a different path to scaling because as if you have a system

that's more hand-coded, more customized based on the particular locale, every time you go into a new city, you need a new team to spin up new records and scan and whatnot and do all these things. Yeah, and her broad point is that laser-based LIDAR systems also make errors like computer vision is making today. Yeah. But it's just that layer of redundancy that allows you to avoid mistakes that pure computer vision systems are making today. It's just a very strong statement to say camera only will never be enough. Yeah. Because it's literally enough right now in a human.

And so I just don't, I just don't buy this line at all. I just think the timeline to actually scale this up is long. It's going to take a long time. But the idea that you will never be able to operate a car safely with just camera is ridiculous to me. Her analysis last year of Waymo, Cruz, and Zooks and other testers found that computer vision systems are very brittle and likely play an outsized role in crashes. is in part because they miss obstacles and can hallucinate imaginary obstacles that don't exist. This is what I was saying. If you add that LIDAR system, you can add redundancy.

And so it's just another effectively, you know, check on the pure computer vision approach. It's difficult to gauge safety of either approach because Waymo's deployments are still limited to specific cities and Tesla's system is not yet fully autonomous. Federal regulators are examining how Tesla cars handle relatively common traffic occurrences, such as Sunglay. fog and airborne dust, which is legitimate. Musk has counted counter-doubters by saying that humans managed to drive with only their eyes. Got them. But acknowledge last month that Tesla's robot taxi services won't work in snow, prompting some

followers online to offer to help train Tesla by driving more in poor conditions. They're just like, I will do it for you. I volunteer as tribute. Musk. Musk also said it's been difficult to train on enough incidents to make sure the cars can handle them safely because if the testes don't get into a lot of crashes, there's not a lot of data there. If Elon can add the Tesla camera system to a Lamborghini strato, I'd be great. I'm happy to put 5,000 miles on it in harsh winter conditions.

You know, at this point, you know, summer's approaching probably need to take it down to Australia, but doing, you know, a road trip through, you know, the Australian winter sounds great. Yeah, yeah. I mean, this also ignores simulation learning and transfer learning, which is obviously something Tesla's invested in a ton and has a very proven track record. There was a researcher from Nvidia at Sequoia's AI sent talking about transfer learning and how they're using generative AI to generate essentially video from the simulated data. So they'll create a physics simulation, basically a video game, a robot picking up. an orange or something like that. That's a physics simulation. Then they'll create a ton of variation in the different physics properties to try and

inject a lot of noise into the system basically. But then they'll use generative AI to convert that into video feeds that then they can feed back into the system to train on and they've seen a lot of success with that. And so I'm skeptical that this is that big of an issue but also like you could just put LiDAR on the cyber cab. like it hasn't been built yet. And if the price comes down, you throw that on and then all of a sudden. Yeah, or Tesla, there's companies that.

Yeah. Tesla could acquire that would immediately give them a massive edge there. So yeah. Anyways, uh, let's move on. Okay. Well, well, there's some other, uh, commentary around this piece. Uh, with the Robotexie network, your Tesla will be able to earn money while you're not using it, essentially paying for itself.

It'll go, it'll go to work just like you, says Tesla. Um, very bullish for buying a Tesla. It's wild that big public company can tweet like this. Don't use periods anymore. Oh yeah. I saw. Um, yeah, it's an interesting evolution. Yeah.

But periods are over. Done. And then, uh, Dan O'Dowd is another, uh, account on here pouring some cold water on the robotaxy launch. You can almost hear Elon sigh of release, uh, sigh of relief. He now has his excuse. for canceling Tesla's June Robotoxy launch. It won't be long until Elon claims Tesla was totally ready,

but the pesky regulator stopped him. Mighty convenient. Do you think Elon ordered NHTSA to send this letter? And so the NHTSA said, Get him a tinfoil hat. Get him a tinfoil hat. And then Cole grinned says, people say you should sell Tesla

because it's hard to build a ride sharing system like Uber and Lyft, but little do they know Tesla already has over 20 million people using their app. Once the Robotaxi launches, they'll be able to use the existing Tesla app for their rides steering service. This will allow Tesla to gain new customers through app downloads and cross-selling of other Tesla products. Once those members come online, I would not be selling here. I would be buying. He's given some financial advice, folks, but we aren't.

And then Rami, who's clearly a Tesla fan, his handle is Tesla Explorances. Please send me a video of any other company that can drive me in New York, in the rain, door-to-door, without any interventions. I didn't need to be in the car. I could have easily been in the backseat of my own Tesla Robotaxie, and the result is that it took me to lunch autonomously. So he's a fan. The level of conviction from some of these Tesla fans is incredible. Huge.

It's similar to the level of conviction around. It's even beyond our little corner of tech, right? It's an entirely new level. But I mean, we see this with other companies. We see this with the ramp fans. Like they go crazy. There's all those YouTubers. People saying that they were defending.

Eric Lyman. Exactly. Yeah. It happens a lot. Because, like, I mean, they know the time is money and they want to save both. And so they create whole YouTube channels all around just easy to use corporate cards, bill payments, accounting, a whole lot more all in one place. They're just obsessed. It's crazy.

Seeing people get time as money save both tattoos. Lots of tattoos. Lots of ramp tattoos out there for sure. Some people start whole live shows, whole podcast just to promote ramp basically. In service. In devotion. Yeah. They call them like, you know, there's like the Tesla Rottie.

They're like the ramparotti. The ramparotti. Yeah. The Illuminati. Yeah. That's great. Well, if you're looking to go long Tesla, short Tesla, whatever your decision is, go over to public.com investing for those who take it seriously. They got multi-asset investing.

Industry renewals. They're trusted by millions. Thank you for the soundboard, Jordi. Thank you to public. Should we talk about the giants of Silicon Valley, how they're having a midlife crisis over AI? This was an interesting post in the Wall Street Journal because it was. it kind of all stemmed from an interview with Serra Guo, who's been on the show.

And so she did a podcast with the Wall Street Journal, bold names, venture capitalist Sarah Guo's surprising bet on unsexy AI. And they did a nice little write-up here. So they say, one minute, you're upending, established industries as the younger disruptor. The next, you're staring into the abyss, eating glass, as Elon Musk likes to say, watching the disruption at your door. Most, if not all of the Magnificent Seven are in that position, weirdly trying. at the same time to figure out the threat of artificial intelligence to their kingdoms.

That dynamic has been on display for the past few weeks. Alphabet stock dropped more than 7% after a senior Apple executive disclosed that Google search traffic on its devices using Safari fell for the first time in 20 years. They've had Safari around for 20 years as a Google partner? That's crazy. It's so long. Google clarified it continues to see overall search growth, even from Apple devices, putting Apple in the truth zone. Don't knock our stock down, Apple.

We're still growing. For his part, Chief Executive Tim Cook is trying to buy time for his company pushing investors during his latest earnings haul to be patient with the iPhone maker's delays around AI features. Then there's Facebook. Mark Zuckerberg is attempting to paint a bright future for his ad dollar juggernaut as something of an AI buddy for the lonely. That was kind of taken out of context from a Dorcas.

interview. Doorkesh said something and they attributed it to Zach? It's like every time. It's so bad. Anyway, uh, even, uh, even Musk seems to be sweating things as he returns from his doge sojourn to Tesla seeking to counter a slide in the electric carmaker's stock price with promises of deploying driverless cars. We're not on the edge of death. Not even close. Musk told analysts recently we love to hear it and we saw it in the stock over a trillion dollars now. Not bad. His protests sounded like that Monty Python and the Holy Grail character about to be thrown on a pile of corpses. I'm not dead, I feel happy.

To be fair, none of these giants are dead yet and they have lots of reasons to feel happy. They are wildly profitable pillars of corporate America, which we love to hear of corporate America. And together, they represent around $7 trillion in market value. Yet the crossroads, they all stand at collectively and how they react individually look like ready-made case studies

for 21st century update. to the classic business school. So on the Tesla, the innovators to learn. On the Tesla note, yeah, people that were shorting Tesla over the last couple months, right?

Sales of the cars have been abysmal. Literally every market is down like double digits. It's like so bad. Just getting crushed by every other EV manufacturer. They're having to sell cars clearly at- No black pilling. No black pilling. No black pilling.

No, I'm not, I'm just, I just have, to the this is why it never be a short seller because you could have looked at all the data for Tesla and said this where is the bottom here yeah it's like where like why is Tesla you know and it's like Elon Musk don't betting against never bet against it's okay not to invest with him but betting against him that is uh it's rough dangerous and again it's like it's like are these this is what we keep going back to it, like the Trump tariff things and stuff, it's like, are these things stuff he can roll back? Yeah. Like, okay, so what, what, what's going wrong with Tesla in this theoretical bad

scenario? Well, like, Elon's not spending enough time there, right? He's spending too much time at Doge. Well, can he quit his job at Doge and go back to be CEO of Tesla? Like, yes, okay. And is that what he did? Yes. And that's worth about $350 billion. It's like, oh, like the LiDR isn't working. Like, could he add LiDAR to his cars? Like, yeah. Like, could he, like, could he, map every city? Yes. Could he, you know, there's like all these things that people are like, oh, he'll never, he's not doing this. It's impossible.

Oh, he's like, he's over, he's politically, he's too right wing. Like, well, could he come out and endorse Gavin Newsom? Like, yeah. Could he live out? He could. Yeah. Like anything's possible. It's never too late.

Anything's possible. It's never too late. Well, let's talk about the art market. I wanted to have my dear friend, Dylan, avariccato on. Potentially the most important topic to talk about the most of the show. important story of today and certainly potentially the week. Yes, I think so. It's shaking up Silicon Valley.

There's a lot of venture capitalists, a lot of exited founders, post-exit founders, and a lot of technology journalists who have generational wealth who are at Christie's right now bidding on modern art. And so they'll want an update. So we're bringing up the price on the studio. Welcome to the stream. How you doing? Thank you for joining. Thank you for joining, Dylan.

Dylan, it's great to have you on the show finally, long overdue. You've given us a lot of, a lot of great pointers. But anyways, I wanted, we were going to cover this story. So thank you for being able to hop on on short notice. Do you want to give a quick intro and then we'll dive into the story just so people have some context? Yeah, sure. I'm Dylan, founder of Crypto the Game, which is an interactive crypto survival game.

think HQ trivia where I worked for the Rise and Ball meets Survivor or Squid Game or Hunger Games. We've had a couple viral seasons. And before that, I was Jordy's head of marketing over at Party Rounding Capital. So we go way back. Way back. Way back. Awesome. Why don't you give some context on your background as an amateur but successful art collector as well? Yeah. Yeah. I've kind of always been an obsessive collector of things. You know, growing up I collected, Beanie babies, Pokemon cards, baseball cards, sports memorabilia, always collecting. Fast forward to, I don't know, probably like 2017, 2018. My wife and I move into our first apartment together, had very sterile white walls and decided that, I guess, like, collecting art would be a good way

it kind of scratch that itch of collecting and be something that we could do together. So kind of just started as something we could do together. I kind of browsed Instagram. Back then there was like a much more intuitive kind of like explore tab. You were surfaced kind of like art if you followed artists. And pretty much just cold DM as artist also coincidentally named Jordi, Jordi Kerwick, whose art immediately spoke to me. Sent him a DM.

He didn't have any gallery representation. He made, you know, buying a piece and commissioning a painting as easy as like texting with a friend. You know, I think the art market historically has been so hard to get into for young collectors. And there was like zero friction in the way that we went about it. I think we got a little lucky in the sense that he eventually like blew up, got kind of like gallery representation and tier one gallery representation. He was breaking records, you know, in similar auctions to what we're about to discuss. and kind of because of that, I don't know, I almost like made a name for myself in this like Instagram art community. And yeah, I've kind of just like catapulted into into the art

collecting scene. How's the P&L though? On paper, I'm sure the returns are fantastic. Have you ever, do you ever sell or do you just buy? I don't. No, I just buy. I don't know. Everyone always asks kind of because of that, like what to buy and how to go about it. And my advice is always just to buy what you love and buy what speaks to you. And it kind of sounds like, you know, pretty simple advice. But anytime I've looked at a piece or like had a recommendation from a friend or a fellow collector on a piece that was going to be a great investment or was going to do really well has never worked out.

And I've always kind of regretted buying and having my wall and kind of like looking at it versus the stuff that we do buy and collect and kind of like do it for the right reasons and have always been kind of like rewarded on paper basically for for those early bets. Yeah. Great. Well, let's talk about this story and then I'd love to get your update on kind of the broader art market. So we'll read through it. So the journal covered it this morning, but the Mondrian sells for 47.6 million. Christy's modern art sales kickoff a week-long series of art auctions that will gauge the art market strengths amid broader economic uncertainty. people are wondering, will art values sore or flop or, you know, in general, what the liquidity will be like.

So this was at the kind of low end of the estimate, the 1922 work composition with large red, plain, bluish, gray, yellow, black, and blue was expected by Christie's to sell for between 40 million and 50 million, but only one bidder emerged and it's sold quickly for $41 million or 47.6 with the auction house's fees. the work still ranks as the third highest price ever paid for the artist, but the record remains 51 million paid three years ago for Mondrian's composition number two. Both examples feature a large red square, which the auction house hoped would help because collectors tend to pay a premium for Mondrian's spare abstracts that contained cherry hues, said Alex Roder Christie's president. Red always helps, simple as it is because it's a color that people that people like. said Rodder. There you go.

That's what Dylan's talking about. Never, never buy Brown. Never by Brown. It doesn't sell. It's also particularly small. It's only about like two feet by two feet or something. And so I saw on X, Bornosaur,

an NFT profile picture, says this tiny Mondrian just sold for 47.5 million dollars last night without anyone batting an eye. And yet people think AAA, natively digital grail, are overpriced at two to three million, much, much higher, kind of saying, hey, maybe we should pump the, pump the market of the board apes. Yeah, let's get forward apes in the conversation.

Yeah, let's get it back in the conversation. Um, anyways, uh, were you surprised at how this, this got priced, Dylan? Were you following it at all or, or, or, or what, I mean, there's a lot of, like, there's a lot of uncertainty in the overall economy, right? So, yeah, I mean, I, you would expect that like art kind of oscillates but yeah I mean do you follow this or like how do you even track the overall art market these days yeah I mean it's exactly it is so similar to you know venture investing I know you kind of joked about it at the top but especially when you look at emergent markets and if you buy from their studio in the same way that I did with jordy curwick it's basically getting into a friend and family around at least with kind of like living artists

and artists that still have gallery representation if you do um if they do basically sign with an up-and-coming gallery, that's the equivalent of a seed round. And then by the time they do get that kind of like Tier 1 Gagosian level representation is the equivalent to an Andreessen or a, you know, Tier 1 fund, like backing them in like a growth stage round. But yeah, I think you referenced that kind of like Mondrian record that was set three years ago. There were emerging artists, everyone, basically like at the time of ZERP, like everything was going crazy. And we saw that both and basically across every single market, art notwithstanding. So I think the way that I personally judge it is basically just off of the information that I

receive. In 2021, 2022, I was reaching out to galleries kind of cold and being told that there were wait lists and the deal flow is basically like very, very hard to come by. Fast forward to, you know, a few years from then, you know, galleries were kind of like reaching out to me. you know, hey, I know you were initially interested in this artist a few years ago. Here's all this work that's available. I'm willing to offer discounts. And that immediately signals to me that, you know, times aren't good for galleries. But I do think that the best way of predicting, like, how these auctions are going to go are based on basically how New York Art Week goes.

And that was this past week, which was kind of headline by freeze, but they also had Tafas as well as NADA, which is kind of like the more emerging art fair. And from what I can tell from everyone that I've spoken to, that was kind of like on the ground, it was a much more optimistic New York Art Week than years past. Gagosian sold a $3 million sculpture on the floor. They sold out, you know, tons of booths that were sold out kind of like on day one. Three million dollar sculpture selling on day one. That's great news. Yeah.

So I think like that usually sets the tone for how these kind of like auctions go. There's been a ton of. buzz around the bass house. I'm not sure if you guys are familiar with the bass house, but it was a commissioned, uh, we both are, but can you explain it for the fans who might not be? Sure. Yeah. It's an architecturally significant home in Texas, uh, that these two kind of like well-known collectors, uh, commissioned a very famous architect to design this mid-century modern house in Texas, uh, specifically designed to house their collection of Rothko's and warhols and, uh, you know, pretty much every big name. And they are auctioning off the collection, which everyone is

in our market is very surprised by because you would think, you know, you commission this home to specifically house this collection. It should eventually become a museum. And I think that kind of like bodes well for what they think and a lot of people think is going to be a lot of liquidity, kind of like heading into these auctions. Having said all of that, I would say if we had this conversation in like a week or two ago, I think it would be a lot more pessimistic or concerned, but given the very like recent kind of like positive news and kind of like market turnaround, I think there's some buzz kind of heading into tonight. I have a follow up question.

I mean, the size seems significant. I feel like there's probably a sweet spot for the scale of a particular. You mentioned that sculpture. We're recording not too far from the brood. You walk in. There's this massive Jeff Coons balloon animal. Yeah. I walked in when I was in New York once.

I walked into Jordan Wolfson. I don't even know if it's a sculpture, but it's like a performance art piece. I don't know if you're familiar with Jordan Wolfson, but it's like this crazy interactive like machine that has motors and stuff. And at a certain scale, it becomes like, how do you even collect that unless you have like a museum to put it in? That's fine. It is the institution. So, like, I would imagine, you know, the $3 million sculpture that Gagosian sold that I mentioned was a Coons.

And, you know, the Brode bought their Coon sculpture from Gagosian. And I would venture to guess that the bitter or the person that bought this $3 million sculpture was an institution looking to build out their collection for the museum. Yeah. Is there a different set of fire? I mean, yeah, I'm curious not to switch gears too much, but I'm curious. Is Christie's even slotting in NFTs this week at all? Or are they so over it? that they're not even putting them.

Because it was a big thing like three years ago. Yeah, I mean, Sotheby, you got to give Christy's Sotheby's. Yeah, you have to give them some credit for moving quickly and getting NFTs into these auctions early. But I'm curious if they're doing that now. So this week is kind of like the hero week of every year. And there's no way that in like a, you know, 21st century like masterpiece auction, you'll see an NFT. But I do think they are still accepting crypto and selling NFTs. all the major auction houses kind of have daily auctions that they're running. You know, you probably

won't see a people in something as kind of like highly publicized as this week's auctions, but I definitely think they're still selling digital art for sure. Yeah. Yeah, there's one NFT that I think belongs in the conversation. Have you heard of this Moxie Marlin spike NFT? So he's the founder of signal and during the NFT boom, he wrote a very technical deep dive on kind of some of the flaws with the way NFTs were structured in that he basically designed an FD that displayed differently on OpenC than in a phantom wallet than in an Ethereum wallet. And he was making this commentary around the importance of platforms and the role that a firm like open sea plays in the art market and how like the the code is not purely on chain because

it can be represented differently in different places and and it was kind of this like it was kind of a top signal at the time he wrote it when nfts were super hot and obviously he came to it from a very engineering mindset perspective and I think that it even though he never sold it and it doesn't have any value and it never like minted in the traditional sense it is an nfts and it has this historical provenance and the story around it that I think as we look back on the NFT boom, we could remember that particular story as an interesting commentary on the entire industry that could actually drive the value up. So I was considering buying it for a while, but I didn't have the guts to throw out an actual price. Yeah. Yeah. Well, I do think similar to

how there's paintings and there's sculptures and there's basically all different forms of, you know, those mixed media art, like I do think digital art definitely has stang. power, probably just like in the more experimental guys that you were talking about. And then just to quickly touch on like size as being a blocker, I think once you're talking about these like, you know, eight, nine figure pieces, it's almost always someone that can house or store either in their, in their museum or in their home, like a massive piece. But just for like the everyday collector or someone that might be listening to this, like personally speaking, like I have just.

gigantic canvases that are still rolled up that I have absolutely zero wall space for, but that is like an addiction and a problem. And I do think that, you know, buy for the size that feels right to your home and something that you actually want to hang. Well, we're moving into a new studio very shortly and we're certainly going to have some wall space. So we'll only charge you a small storage fee. I'll pump my bags. Yeah, family and friends.

Anyways, great to have you on. Yeah. Come back on again soon. Thanks so much. And let us know how things shake out this week in the art market. Oh, okay. Later. Talk to you later.

I was just pulling an episode OpenC. Let's bring in Jared because he just has five minutes and he's all the way from Saudi Arabia. Jared Mattis, folks. Reporting live. Reporting live from Riyadh. He's there on the ground. He better be in the traditional. In the traditional.

Oh, we were expecting a suit. We were expecting more pageantry. Yeah, no thob from me today, boys, but I am calling in from an undisclosed location in Saudi. Can you hear me? Yeah, you sound great. You sound great. You sound great. Loud and clear. Give us the breakdown. Why are you there? What's going on? What's the mood on the ground? Yeah, so I'm here mostly just to see friends. Okay. But beyond that, there was an event today where there was a U.S. delegation. President Trump was there. The Crown Prince Mohammed bin Salman was obviously there and a slew of top tech leaders from

the U.S. also came. So we had Jensen Wong, Elon Musk, etc., etc. You know, all the big names, you can look them up online. Yep. Can me hear me? Yeah, yeah, I'm at this. In terms of the big, the big headlines, look, you guys can look them up. The big ones are 600 million and new, new committed capital. Billion. Sorry, 600 billion in new, yeah, 600 billion new committed capital. But I don't want to talk about that at all. What is the most interesting thing from today is the fact that sanctions on Syria have finally been lifted. Now, I know between the three of us, every time we get together, it's like, when are we finally going to be able to enter the Syrian market?

Well, boys, that day is today. That's today. Yeah, no, it's today. This is the day. Everybody's been waiting for. We should start distributing the show there, for sure. Yeah. No, 100%.

A lot of people don't realize, look, Syria, after the Civil War started in 2011, our companies have just not really been able to serve customers there. So the Syrians don't really know big joy. of U.S. big tech yet. And, you know, they missed the whole Web 2.0 mobile development. So most of the groups that are servicing them are from the Chinese sphere versus the American sphere. And I am beyond excited for the new crop of talented founders that are going to descend

on the Syrian country to spread them the joys of American big tech. So, you know, if anyone is walking and is going to be launching any number of companies in Syria, my DMs are open. I could not be more excited. Very cool. Wow. 23 million people in Syria. Go get them.

23 million people, they've had double-digit inflation for like the past decade, which means that they are a prime market for stable coin adoption. So every stable-clane neobank needs to be descending into Syria and seeing how quickly they can dollar out as the entire country. If anybody is using the Syrian pound in five years instead of U.S. dollars on blockchains, we have just massively screwed up as an industry. So please, request for startups. We are looking to fund.

That's very cool. What about artificial intelligence? has, Nvidia launched some stuff. Have you been hearing any rumblings about AI stuff going on? Yeah, look, the fact that Jensen was here today on the main stage shows that we are likely softening some of the restrictions on being able to export GPUs to the Kingdom and other parts of the Middle East.

I might have the numbers off, but I think there was an announcement that like a purchase order of 18,000 GPUs has just been approved for the kingdom. If you're listening and that sounds small, not enough to build a hyperscaler, a massive cluster, you're correct, but this is clearly the first of many. The entire region is rapidly searching to turn their, you know, petrol-based capital into, you know, token-based capital in the future. So expect continued investment from the region trying to diversify out of

their kind of one main industry. Yeah, Humane is, just for extra context. So Humane, the AI subsidiary of the PIF is going to be purchasing hundreds of thousands of advanced GPUs over the next five years. So starting with, I think, the number that you said 18,000 and scale. And the first plant is, I think, half a gigawatt, right? Something like that. What's your take on? Why do you think that we started calling data centers AI factories? Do you have a take there? Is it just sound cooler? Yeah, it lowers your cost of capital. Yeah. And that's that's the most important thing that anybody can be focused on at any given point. Yeah. What is the word on energy? Obviously with AI training, it makes so much sense to put big data centers there.

But at the same time, they're trying to get away from the, hey, we have a whole ton of free energy because we have so much oil. There's also a lot of sunlight. So maybe there's solar in the future. What are the hot energy sectors that people are looking at? Yeah, so a lot of people are with regard to energy talking about a potential nuclear deal. While there is an abundance of oil in the kingdom, burning oil to power plants is not necessarily the most efficient use of oil. You know, I don't have the numbers off the top of my head, but if you look at the amount of oil that is burnt in order to air condition all the buildings in the kingdom, it's like an exorbitant expense. So some Gulf states are slightly more advantaged in that they have larger deposits of natural gas, versus crude or shale, which is just, you know, it's more efficient in terms of converting into energy.

And with regard to solar, solar in the desert has not really taken off as much because my understanding is there's a lot of wear and tear that comes from the sand and that you need to build a series of protections and the elements are not necessarily kind and, you know, 130 degree Fahrenheit weather as sand rapidly batters them. So we'll see what happens. But, yeah, obviously there's been a bunch of companies that are super interesting. like Crusoe, I might be mispronouncing that. They're doing things like capturing excess flare,

using that to generate energy at first to do crypto mining and now to run data centers. So expect there to be a lot more, as you already put it, AI factories coming out of the region. And there's a mass focus on renewables and alternative sources as well to power these things because people would rather sell their oil versus use them to, you know, spin a water turbine. Yeah, that makes sense. Do you think you or Jensen go to more conferences? I really don't go to that many conferences, guys. I'm about to hit my quota for the year,

and then I will retreat to a dark room and sit on my laptop for the next nine months. Yeah, you do it right, though. You do it right. You go to just the right ones. We've been just, like, not even intentionally, but paying attention to Jensen's travel schedule, and he's at a new conference pretty much every single day.

But a lot of buyers. What's the rest of the mood around crypto broadly? Is there a push for Saudi Arabia to build a position in Bitcoin, kind of a Bitcoin National Reserve from their public investment fund? Are they into Ethereum, Solana? Is there even a thesis from the sovereign wealth fund around crypto? Or is it kind of just general hand-waving around,

hey, we want crypto to be friendly generally? Yeah, so the holdings of PIF are public, or PIF, the public investment fund of the kingdom. As of now, there's no crypto holdings in that, except via, you know, funds that they're invested in downstream. In terms of if it is going to emerge as a crypto hub, that is still yet to be seen. Crypto is largely legal in Saudi. What is interesting, though, is when you look at countries that have been super friendly to crypto in the region, mainly the UAE, right?

There's a lot in Abu Dhabi. There's quite a bit in Dubai. The customers that they tend to cater are not born Emirates, right? The number of emirati citizens that necessarily will make use of crypto products in terms of giving them access to bankers. is fairly low, right? These are nations that are mostly staffed by emigrants, you know, expats that are choosing to live there. But when you look at Saudi, even though crypto is legal here, there are some studies that show that in terms of Gulf region, it has the highest penetration from a individual user adoption space, just how many individuals are holding the coins.

So I think that as the regulatory framework fleshes out a little bit and as, you know, more and more voices inside of the Ministry of Finance and the Central Bank here grow louder. We should expect to see a softening of the rules. And then the end state of that is probably a pretty robust environment, specifically in the kingdom. But remember, the people that can benefit from crypto the most are regions that have high levels of inflation, low levels of banking, highly mobile first in terms of payment infrastructure and things like that. And that doesn't necessarily describe all the Gulf states the best. So, you know, jury is still out on how much and how quickly penetration will come outside of just like investment speculation, which of course, you hear rumors about tons of family offices here building massive positions.

But it's just very hard to validate that. Yeah. With the new 300 billion, 600 billion investment, is that one of those things where the investment was already going to happen and they're tagging it for this press release? Or what is the structure? Is there any clarity on like the structure of that deal? Is that just investment dollars flowing into American investment funds or specific buying of American goods? Do you have any clarity on what we're going to expect here? I haven't really broken it down yet, but I think the right way to think about it is it's going to be a lot of infrastructure investments and a lot of purchasing of American goods.

Sure. Right? So when you're already talking about the hundreds of thousands of GPUs that are going to be acquired, that's, you know, the pool of capital that that's where that's going to be coming from. But no, I mean, they specify they want to invest in energy infrastructure. or they want to invest in data centers. They want to invest in, you know, ports and just anything. So, I mean, it could even be like more oil rigs in the short term as they, you know, they're moving away from oil, but, you know, they're obviously still producing a lot of it. And American companies have kind of a dominant position in the, you know, oil and gas infrastructure market.

So they might be buying for that. Totally. So we'll see. Also, a part of that is a massive defense spending bill or a defense spending agreement. I think it was $143 billion that they committed. And, you know, just socially talking with some of the people from the Ministry of Defense that you ran into at the conference, they were like, oh my God, have you heard of this company called Serronic? Have you heard of this company called Andrewil? They're really gung-ho on some of the non-prime upstarts coming out of the States. And, yeah, I had like three different guys from the Ministry of Defense. They're like, hey, if you meet any founders building interesting new defense companies, refer them to us. We want to potentially pilot them. We want to potentially invest in them if we want to make a purchase contract. So, yeah. It's an exciting time for sure. I would like to see somebody with a Daytona SP3 using it as a launch pad for a roadrunner.

So like you're driving the Daytona, launching the roadrunner off the back. I mean, in terms of like early stage founders, like how early is too early to start engaging with someone like as senior as like a ministry of defense official? I feel like you need to have a product that can be demoed. But when we talk to the secretary of the army, his message was very much like, we want to hear from startups even at the early stage. We have a proving ground. You can come test here. We want to work with Silicon Valley. That seems like it's certainly a vibe shift in America,

but it sounds like that's happening over in Saudi Arabia as well. Absolutely. I mean, I mainly do not focus on defense, so I don't want to say anything too out of turn, but I think post the Ukraine-Russia conflict, people saw how important it is to have the most up-to-date equipment for the battlefield. So in the same way that a lot of companies

immediately went over to Ukraine and Russia immediately went over to Israel following October 7th. There's probably an increased appetite to trial many things and see where it goes. And if you have a prototype, it's probably better than not having a prototype. But if you have good contacts, it probably is a good idea to get in touch earlier rather than later. Yeah, I think oftentimes a conversation start, but no purchase activity can actually happen until the U.S. has actually basically approved it and said, this works. We'll buy it. Now you can export it to allies. But anyways, we don't need to get

into ITAR stuff. What's the mood around the trade war? Generally, it feels like we're almost in like post-trade war discourse. It's a distant memory at this point after Sunday and Monday, but are people still thinking about tariffs or has the conversation just completely moved on? Yeah, the day opened with tariff conversations. So Scott Besan started the day. And it was very calming. You know, he got up. He talked about the negotiations with his Chinese counterparties. he made some very interesting points around how while President Trump and Xi had a very strong relationship, some of the people more junior in the CCP perhaps did not share his warm feelings towards our president. So he mentioned that a lot of the talks in Switzerland were about, you know,

showcasing and building favor with some of the, you know, second and tertiary level folks within the Chinese government. and came out and was very much, we don't want to trigger an embargo on Chinese goods. We don't want to trigger a double embargo. So the tariff rates came down and talked about a number of other countries he's going to negotiate with, and it was very much a non-escalatory tone.

And I don't think it's a surprise at all that the U.S. delegation chose to start the day out that way. So no, tariffs weren't really talked about after that because Besson kind of kept everybody at ease. We'll see how much that remains. and if we continue to lay off and have more 90-day reprieves and more agreements negotiated or if, you know, tomorrow things ramp back up again. But for now, I think people are pretty, pretty calm.

Very cool. Thank you so much for taking the time. I know it's late there, very clearly. Thank you for, thank you for just thrown on the suit, just to pop off. Yeah, just for us. Every time. Every time. Great to see you, Jared.

Let me talk about linear. Linear is a purpose-built tool for planning and building products. Let me get some soundboard, Jordie. Meet the system for modern software development. Streamline issues, projects and product road maps. It is the standard for product development. Yeah. It is the backbone of the global economy.

Of the global economy. Many people are calling, just considering that big tech is, you know, this really goes on for a long time. Thank you to Lanier for supporting the show. Impulse Labs coming in the studios. He's talking about stoves, but also trade tariffs, manufacturing. I want to ask him about what it takes to build a B-YD in America. And I want to know the history of B-O-D.

B-YD, what he's learning from that company. And I also want to get him to sign up for a numeral because I want him to put his sales tax on autopilot. I want him to spend less than five minutes per month on sales tax compliance. But Sam, welcome to the studio. How are you doing, Sam? Welcome. Welcome. Welcome. Sam. It's great to have you. How'd you sleep last night? Better than you have for the last few weeks? Yeah, it's pretty good. I think I got the notification at like midnight on on like was it Sunday night or something like that and I was like oh sweet I didn't expect that but I did and that's why I didn't panic um but they and so so for clarification basically we um I guess Ashley Van scooped this that we do a decent amount of

our manufacturing in China yeah um at Impulse which is the highest performance dover you can buy and you can go check out his latest video um on cash on core memory um the core memory YouTube channel if you want to learn more. But the fun part about that is we probably spend a couple weeks being like, hey, do we have to pay this 145% tariff on a bunch of the stuff we build? My immediate calculation was this will stop trade between China and the United States and a bunch of businesses will not like that. And feedback will land from everyone from Ryan Peterson to someone that makes Bradstalls to, I don't know. Yeah. everything. So, I mean, it's only a 90-day pause. Are you trying to get as much stuff in the

country right now? Are you scrambling to import a year supply? Or are you thinking that this is the end of the trade war and we're going to be more or less smooth sailing from here on now? Yeah, I mean, as much as I would, so one big thing with hardware companies is like a year supply is like a gazillion dollars. So you got to be, you got to be, you got to be a little strategic about what to grab men. Um, we made sure that our, suppliers are multinational and have manufacturing sites in Southeast Asia and other places, including places that are likely scope to have deals of, you know, coming together in terms of, in terms of like favorable treatment on the tariff side,

Vietnam, other places in Southeast Asia, Mexico, et cetera. And so basically the idea is just like make sure that like all the customers that are already paid. We already told them, hey, we're going to cover this crazy 1.45% tariff back in the day. or a couple weeks ago, we sent them a mess, then you know, like that. Obviously, it's a little easier for us to do that now. Still, still holding to that. But, but yeah, the, I think the big thing is, like,

now at least I've got some breathing room to think conscientiously about what the next steps are for manufacturing of not just our stuff, but, you know, technologies that we're going to be powering other devices with as well. I mean, I know you're a relatively new company, relatively small. But did you actually have to pay any tariffs or were you able to kind of like do a little bit before and a little bit? You did. Okay. Oh, yeah.

I think we paid the 145% on a couple things actually. On a couple things. We, we, we, the customer, the bulk of the customer orders that are coming in or not subject to that. But like, we got, we've started mass production already. And we're a bunch of kind of the beginning of that ends up being kind of samples and like the IP influencer unit. and other fun things like that. We've definitely paid it on a handful of those. The balance of the balance of even that tranche of units is landing like pretty soon.

So we mostly avoided all of this. Yeah. We're kind of lucky that this was an April thing, not a May thing. Nice. To be to be blunt. But yeah, there was a lot of fun on that side where I think if our, if our battery pack build hadn't gotten delayed like three weeks, there was actually a small chance that we would have had to decide whether or not to pay a very,

a very large amount of money to get them out of the port. It's better to be lucky than good, right? That's the nature. So the calculation, so I'll give you kind of like what I thought about and what was in my head as this was happening because I don't think I actually panicked at all. I was like, this is actually an opportunity to talk, frankly about what it's actually like running hardware startup in 2025 with a large supply chain with a pretty complicated product with with with with all these constraints right yeah and finally people care about me right like you know finally this is the main the main news story of the day so i viewed it as like let's turn the limits you made it's turn the limited you didn't

panic you coped and it all worked out and i get on odd lots and yeah so so so So that was the opportunity I saw. And the second piece was I was like, okay, so how long does it take for a boat to go from China to the U.S.? And then I was like, okay, so by like the first week of May, there's probably going to be some motion on something here. And so I kind of had that in my head of like there was a shock clock going on before we're going to have to do some sort of relaxation of some sort of thing. and looking at the shapes and negotiations and kind of the various players that were, you know, swarming around and what I've heard privately from, I probably can't say who and what, but like just just in a sense of like there were there are there are there are there are there are

there are there are there are there are there are well-known folks that have complicated supply chains that were not going to want to pay under 45 percent duties on their stuff. I mean you saw that pretty quickly with Apple right. and Apple was kind of like the largest thing. They got the exemption pretty early, but then there was a lot of other discussion about other companies. And at a certain point, you know,

the noise gets so loud. It's deafening. The climb down from Amazon on the like, we won't put the tariffs in the checkout. Was it interesting? Because it's like, I wonder if there was, it kind of felt like maybe there could have been some negotiation

behind the scenes on this where they're like, yeah, don't put it in there because we're going to just come back in two weeks kind of thing. Well, I think they threatened to do it, right? They actually rolled out the UI, and then they got slammed by the Trump administration for doing that and seeing it is like, hey, you're, you're blaming us, but you shouldn't, never has a sense. I think that's so impactful. The question, the question I have is, does the

debacle of the last month or so change your long term planning in a meaningful way? Because we were talking in some, we were talking on the show and off the show yesterday around this idea that, okay, what did we get out of this? Right. And it didn't, it didn't feel like we got a lot out of the Geneva negotiations, if anything, we got rare earths back, which was a reaction to the initial tariffs. And de-escalation is just generally good. Market obviously likes it. But we just kind of like round-trip back to where we were. And John made a point, which is that, okay, well, if a generation of CEOs, like, got it into

their head the reality of decoupling does that. It's not happening right now. It's not happening, but it could. And you had a board meeting during this chaos. period. And so I'm sure during that board meeting, you guys thought really seriously about, hey, if this actually sticks, what is our plan? Maybe that wasn't plan A, but at least it's a plan in the plan document now. And so decoupling. They had concepts of a plan. So, so I actually have this like, I, I, I don't want to get super political, but I do think there's this like Trump tariff cycle, like image that

that there's a meme. There's a meme that's called it the Trump tariff cycle. Like, I add tariffs. Yep. I like, take them off art of the deal. Arr of the deal. Yeah, yeah, yeah, yeah. You can probably call it up.

Take them away. Art of the deal. Yeah. So I actually think there's one interesting wrinkle to this, which is the Democrats have been often space. Like you can argue they've been often space with like, you know, you can blame like wokeness or some of the more like, like some of the Elizabeth Warren. coded economic ideas in terms of like, oh, we should just break up all our big tech companies because

well, that would be. And like there's a bunch of these sort of like these sort of ideas that have been what's call it anti-tech or or kind of on the wrong side of a culture war balance or something like that. Yep. What's been very interesting is or like let's legalize homeless encampments in San Francisco or whatever. And what's been interesting is systematically. So like GrowSF has like really and Daniel Lurie and also. There's a really reset San Francisco in a positive way. Because they had to get the egg in their face to learn the lesson. Yep.

But I'm actually excited about the Democrats being negatively polarized into a free trade party. Oh, interesting. That's a funny take. Yeah. Because, you know, because a lot. Just as a reaction. Just as a reaction. Yeah.

No, no. That makes a sense. That's funny. We have five more minutes. I want to, I want you to walk. to walk me through, I'm sure you've studied BYD, I'd love to know kind of the history of that company, what your takeaways are, and what it takes to build an American BYD in America. And what makes BYD, what does that even mean an American BYD?

Why is that different than an American, like, D.JL. Yeah, exactly. Yeah, so I spoke to, I spoke to an ex-Tesla person, and I was like, I was like, would Elon ever build stuff for other people? And it's like, and I've actually asked this question for a number of different folks. And I've actually gotten a variety of answers. And it's kind of like he'll do it if it's on the main path of like getting something, getting to getting to getting to the like vertically integrated goal.

If that makes it makes me sense. But like it's unless like, unless Tesla was forced by the government to be like, you will build tanks or something like that. Like that they're not in that business and they're never going to be. And so if you think of like what what like VYD has in terms of capability, it's like it's a car company and a car brand you can buy a car from them but like everything inside that car is also like fractally built by that um so like the infotainment system they're the manufacturer of that whereas like quana um like whereas like quana or pecatron or something like that

may make that system for tesla yep um and this goes down all the way into the battery cells and all there stuff. There's like they're they're like the most vertically integrated company you could ever imagine. So interesting because you'd think in like a command and control economy, you'd be able to force a karetsu like in Japan even more, right? You'd be able to force cooperation between a bunch of different companies, but it seems like in China, maybe that hasn't happened with b.D. It's it's interesting because I think it's the DNA of the place more than there's like a more than more than the policy side. But then the flip side of it is so b yd makes stuff for other people and that's like what they do generally that's what they historically did they just happened to

be a nickel cadmium battery manufacturer that just kept acquiring businesses and like bringing them into the full until they basically had a car business a lithium ion battery business and kind of like all of the all of the like IP needed to build any electric electric device so like that's everything from like a smartphone to a car to like your dreams they build your dreams or whatever and so and so what's really interesting about this is like i can like i could go to a firm like this and i can say hey build me soup to nuts a whole device they will commit substantial engineering resources but those engineering resources it's a little bit less like maybe it's it's there's like contract manufacturers in the west and stuff like that but this is like no they'll do it with the b yd

parts and the VOD process. It's it's like they almost have like the best Lego set in in in the world and they're able to leverage all of that IP as just a really high starting point to be able to kind of develop develop all these devices. Yeah. So what I mean what does it take to build an American version of that should we be even thinking about that as a goal? Is that is that is that a different company or is that a you know a cultural shift in Tesla strategy? where do we go from here? Yeah, I mean, there would be one way to do it. It should be like defense production access, hey, Tesla built for other people.

But I think that would not go over like a lead balloon and probably is not a great strategic choice. Yeah. I do not want to intercept that idea. I don't think it's a great idea for Tesla for a bunch of reasons. But I do think that there's, I've been focused on like what parts of the value chain in kind of the electrified device universe. And I say that very broadly.

Like this is everything from EVs to stoves to. to phones and stuff like that. Where part of the value chain is like not made in the United States, really high level of integration, both like hardware, software, et cetera. And if you have better components, you can make better products. And this is where we realize that on the appliance industry,

just if you go and build appliances in the United States today, you buy electronics from China or Germany. And all the guts inside, it's kind of like you're getting your graphics card from a Taiwanese manufacturer. and your motherboard from another time when he's manufactured. Have you taken any trips to Germany, by the way? They've been asleep at the wheel in many ways.

I've actually never been to a German factory, which is saying something that's judgmental against myself, and I intend to fix that soon. I think a lot of what's been going on is all of, like, China's been just incredibly good at the final assembly and like that part of the value chain. And it turns out that's where a lot of the software-defined technologies start intersecting. It's like automated assembly, computer vision, like building all kind of like the firmware and software to make stuff work in an integrated way.

And like, that's the thing that I think people miss about the car industry. And this is probably the thing to say is the legacy car companies don't build cars like phones, whereas Tesla does and China does. And that's a really broad statement, but it's really like you're building an integrated electronic device, not a bunch of. of individual boxes designed by different firms that you've like plugged together. And and you need manufacturers like BYD like a BID or like a Tesla that can actually go and span all of these disciplines with the same people being able to put the people in these various groups being able to talk to each other versus how like a Ford car or a like one of a major U.S. appliance companies like Stove is put together where in some sense there's like a

corporate firewall between electronics box A and metal enclosure B, for instance. Can you talk about like zooming out in terms of this reindustrialization, reshoring industrial capacity? What's at the top of the priority stock? I mean, there are a lot of memes about like, do we really want to be doing screwing in iPhones and making those here? We've talked a lot about DJI. It seems like there's a huge gap between Chinese capability and consumer drone manufacturing versus America. Well, guess who makes DJI? Is that BYD?

I won't say. Okay. But then there's also like lower level, potentially like higher skilled activities like battery manufacturing with the, you know, mineral extraction, all sorts of stuff. How should we be thinking about it not just from a consumer perspective, but from like a industrial capacity governmental perspective? Yeah. So actually what's really interesting is if I go take an iPhone and I like part it all out on a table

in front of it and I say, who? who's actually doing the core engineering and IP of everything in the iPhone. Yeah. It's actually like the U.S. and our Asian allies. And Taiwan, right? Because Foxcon is a Taiwanese company. It's, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's all the parts. Like LG in a tech makes the camera.

Yep. Yep. Samsung makes the display. Right. Yeah, a lot of Korean tech in there for sure. A lot of Korean and Japanese technology in there. So, so, so the point though is where where is China really good? And it's like it's like it's the assembly, the integration and being able to kind of span all of these

disciplines. So if I was to vote, if I was saying what I think is really important is, I think Noah Smith has a, he's my tenant, so I have to show him. But I think Noah Smith has a good take on this, which is basically like the U.S. is missing out into the technology of the future. And China actually has explicitly said this, where they believe that the tech stack of the future is the electric tech stack basically. It's like, it's like batteries, power electronics, motors, that whole thing. And it's like you can build a robot. You can. You can build a robot. You You can build a drone, you can build a car, you can build smartphones and consumer electronics. That spans the gamut of like that is the technology stack.

And in some, and it's rare earth magnets, stuff like that. For some reason, the US just like, I think it's basically the 08 recession and like a lack of manufacturing investment afterwards. Meant that like we never actually picked up that stuff with one notable exception, which is Tesla. Yeah. And so and actually SpaceX is. well. So like Elon did this twice. We should reverse engineer why. That's why we're talking to Elon Musk of stoves. We're very happy. Many people have been saying this. The other people have also been calling you Noah Smith's landlord after you drop that he's your tenant.

The fact down there. Thank you so much Sam for joining. Sounds good. This is great. Before you can even say goodbye, just sound effect board. What were you going to say? What were you going to say? beep. It's great to have you, Sam. I'm excited for you and the team. And keep us updated. I know there's big news coming, so drop it here first.

Yeah, yeah, yeah. Talk to you soon. Talk soon. You know, a lot of people have been saying we need an American compliance company. We need an American company that helps you manage risk. We need an American company to prove trust continuously. Continuously. We need a trust management platform that takes your manual work out of your security and compliance

process and replaces it with continuous automation, whether you're, you need to trust management. whether you're pursuing your first framework or managing a complex program. That's why Vanta.com exists. So head over to Vanta. Vanta makes compliance fun. They didn't say that. I said that because I've used Vanta.

Fantastic. Well, we got Vincent from Prime Intellect coming in the studio next. We're talking about a bunch of stuff related to crypto and AI GPU mining. I think this is going to be a very interesting conversation. We talked, well, welcome to the stream. Vincent.

How you doing? There he is. Perfect. What's going on? We, a couple months ago, yeah, yeah, thanks for joining. A couple months ago, we had Bridget from Founders Fund on, gave us the high level overview, but I'd love to get it from you. Can you just introduce yourself in the company to kind of kick us off?

Yes. So my name is Vincent. And like I'm the founder, like co-forenancy of primate detect. And basically our goal really is to commoditize AI and compute more broadly. Really also by almost like, nether. networking all the computer in the world together and making sure like no GPU goes idle, but rather I can contribute to almost like an interplanetary like compute cluster that can like fund, for example, so I'm models, but also the people can just like use to ultimately save on like

compute like ultimately the goal really is realizing that like computer assist like gigantic market which will ultimately power all those different areas and it's quite inefficient and very distributed. So a lot of it is ultimately like research challenges to make sure we can like network computer. It's like quite distributed throughout the world. But also like verify it. Right. It's like you can't trust like the thousands or like millions of different like data centers and like the GPU nodes distributed across the world. So there's basically like a challenge to scale trust. But it's like you can trust one data center or one company, but it's hard to do so at scale. So basically we're taking those two problems. Okay. Why don't you

talk about the launch Sunday. Yeah. You guys, I hadn't seen, I hadn't seen the launch like that on a Sunday since the last seemingly few Trump executive orders. So you guys kind of realized Sunday. Yeah, Super Bowl Sunday. Why not launch a new model? But break down the launch just a couple days ago.

Yes. So basically we like kind of like to take a step back almost like this first very large scale, distributed pre-training run into like one. which was building on like deep minds distributed low communication training to train basically a model across the internet across multiple data centers in similar efficiencies in a centralized setting where we um they were all the computers network in one data center and now that we switched to this kind of like oh one like post training like reinforcement learning paradigm um it's actually kind of like a paradigm that is like perfectly set up for distributed training because most of it is like those rollouts and basically um you can't can distribute them extremely well. Like there's basically less needs to communicate every training step. So what we did with like Interlect 2 was really scaling to like the larger model size, like a 30 roughly 30 B model that we basically trained, distributed across the globe with different

people contributing compute. And really basically built this on top of Quinn. So basically the goal was also to like take the best open models out there and improve them further for like actually quite like small amounts of compute. It was honestly like more like a proof of concept where we basically proved four different pieces. Like on the one side, basically we proved this like verifiable compute piece that basically anyone in the world could join with their compute. We don't need to trust them.

There's very like efficient basically ways to like make sure that they're basically like an honest compute contributor. And then the other piece was really making like basically distributed. reinforcement learning work. So basically decoupling those like role generations from the training itself. So you basically can train across the globe with like less frequency of communication. And what we basically proven is that like with quite a small amount of compute like roughly $100,000, which is not comparable to obviously kind of like the more like close AILabs. We've basically been able to like improve upon Quinn. And it's kind of like sets the foundation for us to

actually scale this much further and ultimately actually have kind of like a repeatable recipe to get like basically improve like the strongest open source models out there continuously for quite like small amounts of capital across different domains so we made it much better on math and coding but the goal is also to make it much better on like other domains and really like how to do so is like really scaling those like reinforcement learning environments I think yet will brown on like he joined us to work on this yeah I was going to ask what was the what was the us like recruiting the big dog WB. Absolutely dog.

I mean, I just have to imagine he's such a good poster, he's such a great guy to chat with. He could have gone anywhere, but he ended up with you guys. Yeah, I think it's two things like you should ask him himself, but I think like a lot of talent is gravitating more towards like open source AGI

and like to basically build in the open to publish in the open right like to be able to also like contribute to the frontier of like the most exciting research. And in a sense like I have friends. old may I and whose name you never heard because they can't publish, don't really talk about their work. Right.

So like I think there's this component. But I think then we are basically, I think like now like especially in the Western hemisphere I think like one of the only places that it's really catching up to the frontier. Right. Like there's obviously like Quinn and Deep Seek and others in China. But I think it's really a fumble by like America to basically be the close guy that is like not really almost like standing in for the values of like democracy and freedom to the same extend but I think like he is obviously extremely passionate about like open source AGI and kind of like

distributed like reinforcement learning so like he immediately hit the ground running on on basically scaling this much further so we'll have more like yeah like work we are building on top of like this direct chance distributed reinforcement learning like in the next few months already out which should like scale this much further I remember a couple years ago I was using octane render and they have a distributed rendering now where you can render CGI images on GPUs all over the world, and they actually have a crypto layer for render tokens as well. But this idea of distributed computation makes a ton of sense

in that context because each frame is unrelated to the other frame. So you can, if you're rendering a 90 frame sequence that's a few seconds long, you can just send each frame to a different machine. What have you learned from the successes and failures of the render network and what you're Otoi did with Octane. And is there any difference between those discrete individual frame generation and

something as complex as training a whole model where, you know, you might be, in theory, you'd need to load it all into one instance every single time. Yeah, like, great question. I think there's a few players like them and others that have tried us in the past. And I think they've been almost like in some ways, I think too narrow and like sure numbers. It's like rendering like it's nice. but it's not like the general purpose, like use case that we now have with AI, right?

So I think there's basically like our goal is really making this much more like general purpose useful for like every single like compute and AI use case. And I think that has been one big learning. It's basically being like most of our team are AI researchers and they come from the AI world, including the people that build for example the verification mechanisms, right? Like the verification in our case, it's like tiny over at like 1%, like the more like crypto native verification mechanisms. have more like a 1 to 10x over it, which they make it completely like unfeasible to compete with

centralized clusters. So I think that has been like a big learning is basically being very pragmatic and close to the AI researchers. So that's like the main community we're like building worth and engaging with and basically building four, right? So like all of our users are AI developers. And ultimately I think the biggest lesson has been like just creating value for for them from day one. It's like we launched basically our compute platform like two or three months in with like two or three people and and immediately got like a lot of users and scaled since then like basically that like any kind of like AI startup or developer can just like basically with our platform almost like like half like a global market on the one side.

But like we we aggregate all the hyperscalers, all the different data centers, even working with like folks like Aaron like a Latif on from Hydra. and all these guys to basically aggregate and orchestrate all these different data centers and hypers. And I think that has been another lesson. We are not trying to be like the exclusive, maybe marketplace where supply on boards. We just aggregated all the supply out there, which gave us a huge kind of like wedge,

maybe to like enter the market. Okay. Talk about some of the hardware where this is actually running a 30 billion parameter model at floating point 16. you're going to need 60 gigs of RAM. You're probably going to be on H100, not gaming cards, but are you thinking about bringing residual capacity online in the gaming market? Or are these like small data center operators that just have a stack of H100s

that are not using and then they're bringing them online? Yes. So basically I think what's been exciting is like actually this run was here to genius. So H100s and A100s could join. And I think it may be even like H100s. And like for future ones, Like actually for next one we're starting like even 3090s and like gamer cards can join. And I think what's interesting is you can basically with like this role generation and like basically synthetic data generation, you can distribute the tasks like basically based on their like difficulty to different cards.

Right. And to different models. So the goal really is like to have like a fault tolerant like your genius like pool of compute. Right. So like what's also a big one that we did already in the first run, but also in this one is as full tolerance. And so it's not only that you have like H100s joining and A100s and 3090s, but they can also drop out, right? Like they can join for a few hours when they idle. And I think that's like the border thesis is like almost like every GPU that is like idling.

It's like a market failure, right? Like especially in the world where increasingly like my theory is like the biggest almost like commodity in the world will be compute. And like it will be one of like one of the biggest slices of GDP. And it's like unfortunate of like half of that is like sitting idle instead of like curing diseases, generating like movies or like some like. creating the basically technological progress, right? And I think the goal is to basically just get to like 100% utilization of compute and we're very, very far from that. Yeah, yeah.

Well, what are you seeing in like the trend in chip size and scale? You know, obviously, NVIDIA is pushing those like DJX, DJX, like rack-mounted units, racking everything together with NV links. You can do even bigger models. Cerebrus is scaling up the single chip size to wafer scale. the theme of the last few years seems to have been let's not decentralized. Let's actually centralize further. And so where does this go?

What is your take on kind of the ever bigger racks and ever bigger chips for larger compute training? Yeah, I think we'll see both. And I think actually ironically, like an NVIA actually has an incentive to fragment the market. Like they don't want one buyer. They don't want AWS to be the only customer because AWS is building their own chips or like the big tech clouds basically have their own chips competing with NVIDA

right so NVIDA is very happy to give a bunch of chips to Corey a bunch of chips to Cruze, a bunch of chips to Lambda and all of these other guys right but then so I think we'll see both at the same time like I think like we'll have thousands and like millions probably over the next few years like of data centers there will be these gigantic clusters right like Stargate from open AI but I think at the same time

there's increasing amount of like capacity in almost like the mid-tier of like smaller data centers. But then I think like also on the other side, like there's a lot of compute like sitting idle everywhere, right? Like soon and whatever like autonomous cars, robots, like everything else. So we actually had like some of the biggest like car companies in the world reach out to us or phone manufacturers that are like, oh, we're sitting on like hundreds of millions, like billions of like phones or cars

that like have idle compute capacity. And I think we're not there yet. But I think we'll have like we'll have just much more compute everywhere. right like we'll have more like mega clusters but we'll also have like more mid-tier and small clusters mega cluster mega clusters uh i have a question before you leave can you can you give some uh any expectations around deep seek r too i've seen some crazy rumors flying around online uh i don't know what's what's real and what's fake news information warfare curious what you're expecting out of the next release.

Yes, like, I think they'll definitely catch up to the frontier. Like, again, I think to some extent, I think they'll probably be not as good, would be my guess, as like, Gemini or Open AI. But I think there's obviously this trend where I think like, and all the closed lab CEOs have admitted it, right? It's like that open source has catched up like very uncomfortably close to their lead. And I think that will continue. I think the close guys obviously have some advantages,

but I think there's also huge advantages, obviously the open source AGI space has. So I think the trend will continue that ultimately, the deep seeks and the coins of the world, but hopefully also players like Lama will catch up a bit more. Like obviously they've been a bit disappointing with their like Lama 4 launch, but I think they might also actually catch up again.

And then obviously I think like our goal is like to be able to basically build on all of that progress. It's like basically we kicked off our like largest synthetic data generation run the day deep seek dropped and like generated basically a lot of like verifiable like reasoning data that we could then use for example in this recent model. So I think the like what I see more is like basically that we can like improve open source AI progress like literally day by day week by week. Like it won't be a thing where we need to wait like four months for like some progress to come. But it's more like continuous basically progress. Well thank you so much for joining. this was a fantastic conversation. Yeah, I really enjoyed this.

And congrats on Scoopin. Yeah. WB. Legend. Truly, truly. Congratulations of the trade deal. Yeah.

But come back on again soon. I know you guys are going to have a bunch of launches coming up and appreciated your perspective. We'll talk to soon. Appreciate it. And if you're looking for distributed compute, go to Prime Intellect. If you're looking for distributed advertising, go to adquick.com. Out of home advertising. easy and measurable. Say goodbye to the headaches of out-of-home advertising. Only ad-quick combines technology,

out-of-home expertise, and data to enable efficient, seamless ad buying across the globe. They just make it too easy, John. I want to spend every single dollar we have on ad quick, billboards. Anyway, we got the CEO of backbone in the studio. Let's bring him in Manit. Excited to have you here. Welcome to the stream. How are you doing? Thanks for having me. Appreciate it. I feel like I walked into the middle of an ad read. You did. You did. You did. You did. We are 100. 100% corporate sponsored. Independent media is dead.

The future is corporate media, and we are leading the charge. But good to have you here. Can you introduce yourself and explain what Backbone is? I'm a fan, but some people might not be aware. Sure. My name is Meneath. I'm the CEO and founder of Backbone. Backbone is the leading platform for the future of gaming. The way I describe it to people is that every time there's been a shift in streaming media,

it's resulted in some of the biggest consumer businesses. like music streaming, you had Spotify and Sonos, and then TV streaming you had Netflix and Roku. And you can think of Backbone as the analog company for streaming games. We have a number of products. We sell devices that you can use to connect to your phone or any screen and play games on them. And then we also make an app that aggregates all the different streaming services like Xbox GamePass and others. So you can access them all in one place. You can buy our products in any major retail store, Walmart,

Target, Best Buy, et cetera. And we're backed by investors like Index and Sound Ventures. Yeah. So I got one a couple of years ago. I was not getting a lot of time in front of the PlayStation 5. And so it would drop my phone into the backbone and stream from the PS5 over the Wi-Fi to the phone with the backbone. It gives you the whole game experience.

Very fun. What has the relationship been like with the big console providers? can you break us down the different strategies? It seems like Sony has been very competitive launching something that's kind of like a competitor with the PlayStation. I forget what they called it, but it has a screen and device and does remote play. Microsoft's taking a much more open approach, letting you even stream Xbox games on PS5 and Thorsa Horizon is on PlayStation now.

And so what has been the relationship with the different major gaming platforms been like over the last few years. For sure. So I think, of course, each one has its own strategy. Microsoft in particular is really interesting because they're running this campaign now called Xbox Everywhere. Yeah. Where the idea is that you can turn any device in your life into an Xbox and run games

on any screen. And the way they're doing this is through streaming games from the cloud. So Microsoft's subscription service GamePass, if you subscribe to it, you can basically access the entire Xbox games catalog on any device that you like. own. And of course, the devices and software that we're making work great with GamePass and make the experience work really well in-to-end so you can do it on things like smartphones. So I think in Microsoft's case, you know, their goal is really to drive more GamePass subscriptions and just gather more Mal and Dow for their service. And it's super strategic to,

you know, their overall roadmap with cloud and all that as well. Why wasn't Google able to pull it off? I feel like they were early to that party game streaming. I can't even remember the name of the product, but it never really hit, like, major takeoff, or do I have it all wrong? And actually, it's better than ever. I don't even remember. So you're talking about stadia? Yeah, that's right. Stadia. Yeah. Yeah. Is Stadio still around?

What's that? Is it still around? No, no. It was shut up, unfortunately. Yeah. Classic Google. Classic. But, I mean, you would think they have all the resources. They're a hyperscaler.

They have GPUs in the cloud. They can do rendering. And they're also somewhat platform agnostic. so any game developer could go to Stadia. It just seems like super additive. I'm sure you had intimate, you know, interactions with them as Stadio as you were building the company. Why do you think Stadia didn't take off?

For sure. So I was at Google when they were working on it. That's actually was sort of part of the basis for the idea. Yeah. I went into the office one day and there was a demo that an engineer had built where you could use Google's cloud technology to stream games. to like basically a two-generations old Android phone. So you read GTA and like a two-generations old Android phone.

And I picked up this demo and I tried it and I completely lost my mind. I was like, we've seen disruptions in gaming across every single vertical, right? Business model, audio, content. But this has got to be the single biggest disruption in the history of the games industry, at least that I'm aware of in a long time. And so that kind of became the basis for the idea behind Backbone. I basically made a slide deck on why I thought it would be like a really big opportunity for Google. And I sent it to the head of product for YouTube gaming.

And then I realized they could go a bit wider. So I sent it to a bunch of the vice presidents internally. And basically a bunch of people ended up reading it. And it became one of the most viral slide decks internally from the company, like 15% of the company read it by my last day. And so I got to meet with some of the executives that are working on Stadium and other initiatives. I think there's no doubt that the technology was incredible. But I think other players like Microsoft just had a better go-to-market strategy and more content. Yeah, that makes sense.

I mean, the content's really, really key. Switching gears a little bit. How have you seen the industry react to the news last week around the App Store sort of payment policies? I imagine you've been hearing a bunch of chatter. Yeah, I mean, certainly if Fortnite were to return to the App Store, it would be pretty big. I think it's been like... It's under, it was resubmitted, right? It hasn't been approved yet.

Normally, Apple approves in 90% of apps get approved in 24 hours. We're on like hour 46. So everyone's saying Apple, what's going on? Dragging your feet, anyway. Yeah, I mean, I think it's huge. I mean, it means that if you're able to link out to external payment systems, you're basically going to be able to take in more margin as a game developer. And I think it'll, you know,

But how do you expect users to actually respond, right? So like, let's say you download a free game and you're like, okay, I want to pay, I'm willing to pay for this game. And you get the option to just subscribe in the app. Maybe it's at one price or subscribe outside of the app at a lower price, right? You'd have to offer, I imagine have to offer some type of incentive to get somebody to want to go to a separate webpage, right? So I can go outside of the app and I get maybe some.

Instead of 30. You're splitting the difference. You're splitting the difference, kind of. But then I imagine some users like the fact that their subscriptions are native and they can go into the app store and churn if they're not using something. And so how do you expect that? How do you expect developers to actually play it? And do you think it's, are they really getting back 30% or is it more like, you know, again, splitting the difference? So I think what we're seeing right now, and in Epic's implementation, they posted a tweet online, like the Revenue Cat CEO replied to Tim Sweeney's tweet and I was asking, like, how did you implement this? Did you use an app purchase? So in Fortnite's case, they show an option to do an app purchase. And they also show, you know, the web flow through Stripe or whatever. And that one is, you know, 20% kind of cashback or something like that. You get like 20% back in Epic credits.

Oh, there's like an incentive. People might have to. incentivize customers to transact through the web. But giving them back free credits, like points in the game, which they're going to value on a cash base. Tim Sweeney, absolutely dog. What a dog. I want to talk about the actual technology roadmap or tech tree to make mobile gaming even better.

What's more important? Better devices, faster chips, more memory, better screens, or just. ubiquitous 5G, Starlink, better connectivity, lower latency. Because Call of Duty, you can stream it on your phone. Probably Xbox GamePass allows you to do that. There's still a Call of Duty mobile that's optimized for the phone. And I think people probably play that one more on their phone than the streamed one. And so we're still not in the fully streaming era.

What are the blockers to get us to just one installation of the game everywhere? So I mean, both of those things are bottlenecks. And we often used to get in these like furious debates internally over like which one was going to overtake the other. And then we kind of realized after a while is a bit aimless because we just want the overall basket to succeed. And I think you'll see a lot of like hybridization where you'll have, you know, games that are relatively like thin clients, but like a very significant cloud component to them. Versus right now we think of this dichotomy of like fully stream versus native. And I think maybe there'll be some games that flip across the boundary line. I mean, Fortnite is one such example of that where there's a pretty heavy cloud component to the game.

What are you playing right now? Right now. So I don't know if you've heard about Expedition 33. Oh, yeah. I haven't played it. I heard about it. I'm just about to get into that. Okay.

That's been popping off on the internet. Yeah. And I've been playing a lot of Fortnite. Yeah. That's good. Were you surprised about the GTA 6 release date? It seemed like the market had been price. in a 2025 release and then all of a sudden it was like no 2026 um i mean it takes these games take

forever now the production costs of there's some really great articles uh online talking about like how the development costs for these titles of balloon because of like this need to have really lifelike graphics and realistic gameplay um so not surprising no uh what about tariffs i'm imagine that that was a tumultuous time for you uh obviously sidelis relief recently, but what's your outlook and what did it mean? Take me through the emotional journey of the last couple weeks of the company. Yeah, I mean, definitely short-term painful. It was awkward timing given the Backbone Pro launch, which just occurred this past week. And this is a huge launch for us. I mean, we generated, I think, around 700 million media impressions, which is more than,

you know, Beats and ORA and Sonos generated for recent product launches. And so it was a big launch and it was an awkward time because of the tariffs and made the pricing strategy a bit complicated. That being said, we think in the long run, anything that promotes, you know, free trade or reduces tariffs like globally is beneficial to the company because then we can offer our products in more markets than we do today at, you know, more of a fair price to consumers. Yeah. I got to pick up a backbone.

pro. I'm looking at it right now. I'm adding it to cart. John has always said the biggest risk to the show is that he just gets sucked into some specific game. It's like my one vice. Like you'll never find me like passed out drunk, but you will find me like 70 hours into like Metal Gear Solid for the third time. Anyway, this is fantastic. Anything else? Yeah. No, I'm happy for you and the team that you get a little relief on the terrace and congrats on the new launch. And look, I know you guys are shipping in about a week now. I'm sure there's a lot of work to get to that point. Head over to Backbone.com.

Pick one up if you're a gamer. Check it out. Anything else? That's all. Thank you. We'll talk to you soon. Have a great day. Cheers.

Bye. Speaking of sleeping easier, post tariffs, eight sleep. Go to Aidsleep.com. Five-year warranty. 30-night risk-free trial, free returns, free shipping. Pod 4, Ultra. I got an 88 last night, seven hours and 11 minutes. Not too bad.

What did you do, Jordie? Did I beat you or did you smoke me? A hundred. 100. He knows Brian Johnson's coming on the show. He's prepping. Proof of work. He's prepping. Anyway, we have our next guest coming in. Put it up. Put it up. 100. See, it's not a screenshot. I'm moving it around. There we go. Yeah. The new app is beautiful. Go download it. Anyway, folks, we got Aaron Ginn coming in, breaking down a new Wall Street Journal article. Boom. Boom. Boom. He's back.

Yeah, doing well, man. Can he put in those sunglasses of Jordi? I can't recognize me about them. Yeah, yeah, yeah. These ones? These ones? The pit vipers? Unfortunately, so there's some crypto, there's some crypto coin that people are using pit vipers to promote. So we've got to be careful putting these on. But they were sent to us from a, from the CEO of Pit Viper. He just likes TBPN.

He said, have some pit viper. It's pretty cool that they like rotate up and down like this. Yeah. I've never actually worn any of these. Anyways, it's great. It's great to have you on. always great the prime intellect see i was on earlier and he said that you guys are working on some stuff together just cool yeah yeah yeah like they're handling the higher level like training layer

or doing the underlining infrastructure uh distributed layer uh but they yeah like going back to about the uh op-ed that i wrote uh i've been uh more or less battling slash encouraging administration to take a more reasonable approach to the threats that wawa has against our dominance on AI. And when the, I met and know the people who under the Biden administration that wrote the January 15 ruling that we don't really know by the way, like what's going to happen. We just heard rumors that things are going to change and they're going to be more positive towards Jensen and V-Vidia. But generally speaking, they wrote this kind of the precursor framework that people understand is it created a G18 of AI countries, which included like Japan, South Korea,

Taiwan, America, Canada, and some European countries, about half of Europe. And the original Biden ruling, these are bureaucrats. Like, there's not, there's no, it's very vague law area under governance. They're basically operating under 1980s missile technology proliferation law. Those are written back whenever we had Soviet Union. But, but so they're kind of regulated under that and the Biden administration, you know, a couple days where they're leaving, decided that they would create this kind of G18 of countries and then a hundredish other countries that were going to be basically prohibited or

require a license and then you know absolutely no-go countries car tier three the tier three countries are quite logical right there like livia you know Venezuela right that's like oh okay this makes sense but if your two countries that required license was like greenland Portugal you know Switzerland Austria uh all of eastern europe was on the crop list all you know the presidents right now and ginsons and the gulf region all that was on the crap list. And then like kind of random countries like Mexico, Mexico makes all of our servers. And the original kind of premise around this was regulating cheap power.

So it was mostly anti-competitive. They didn't believe that Mexico got you to use it. They just thought, oh, they have cheap power. So we should just, you know, say, oh, that's bad for America. And so I've been advocating for this kind of idea of like this new Monroe doctrine, thinking that AI is more of a forward operating base of America, uh, Due to the deocons and neoliberals, we have over 300 operating, for an operating basis of the world where our special forces are active and doing things that they don't tell us.

And so I basically have been trying to kind of think about the AI is something similar, where the every deployment that is an American deployment is real estate that we own. And that running the world growing, like growing on our infrastructure is better than growing on Chinese infrastructure. And it's either or. And I think that under the Biden administration, there was this view that they couldn't do anything. Like, oh, they just make iPhones. They did not to be overly tried, but I think they had a kind of a less view where it was. And as the data came out with more and more advancement on the Ascendline under Huawei, more advancement under Deep Seek and Maness,

it became very much clear that this actually was a race and that they were significantly closer than we thought. And so the goal then is proliferation. And that's essentially what the Trump administration, the Commerce Department announced. last week was that they were going to embrace a trusted proliferation model, which is what I've been having to be for this for deployment of Nvidia gear running on an infrastructure or running on our frameworks, because it's either us or that either world uses the dollars or uses something else. Like there's not this kind of secular world where trade happens and it doesn't include a country,

it involves us or involves somebody else. And that's becoming more socialized and more accepted. And so now they're trying to think of other ways to try to advantage, proliferation, Tom Cotton introduced to build to GPTRAC, GPUs, not for a bullish on that, but you know, like there are other ways not people trying to think about doing this rather than just saying, hey, Portugal, you have good beaches, the OGB is for you. Saudi Arabia, we can sell you about 35s, we can sell you even, you know, ICBMs and no nukes on it, but hey, you can't get the Blackwell series.

That's too risky for us to do for you. So it's a great resetting that's happening. It's good for America. Yeah. Yeah. Yeah. What is your take on the recent Saudi Arabia deal, 18, thousand Nvidia Blackwell chips going in with hundreds of thousands on the way it seems

like it's an affirmation of everything you've been saying but what's your interpretation yeah like i think it it's one way while always already deployed there uh so i think that was a wake up call and there's also a ton of chinese um cloud companies are doing deployments in the gulf region uh but you know it's it's positive because it's again it's it's you have to realize that people are going to get this regardless. So another good framework is because this is all like leading at stuff and people get confused about what's actually happening. He also overly express our actual dominance on a particular area. But think of it as like a mig platform versus Lockheed or Boeing. Like you're not going to tell a country, hey, you just can't have a fighter jet. They're like, we're going to go get some mix.

Right. We're going to go get some. I forgot the reign of the French one, right? That drops, you know, baguettes from the airport. Whatever that French land, right, whatever that one is, right? Like, I forgot the name of it, but the, the, so it's like that. It's like it's an either or question. So we either have a decision to engage with the country or not, and then if they don't, they're going to go somewhere else. And with Saudi Arabia, which is a very clear ally of ours, very clearly out with Israel, the leader in the region with Israel, we have to be in a position of they understand this.

Like, like the Gulf region kind of gets real estate and put crap in the in the, in the billing. They kind of like they understand that, right? And so it's something they can feel they can be very successful in. And as well as it gets to kind of the, the, you know, the Jetta Tower, Birch Gleva thing of like we're ahead. We're winning the line, right? Like all these like crazy projects that won't happen. Don't tell. Yeah, but our data centers, but, but our data center, you know, and obviously Saudi will have fantastic partners in Nvidia and I'm sure many other, uh, hyperscalers, uh, for their new AI factories. That's the new aim. We got to stop saying data center. It's AI factories.

Yeah, tokens. But yeah, isn't this not? Is it correct to call it real estate today or is it something else? Well, I think the dynamics behave like real estate. Like, that's how the actual investors think of it. And that's how they get finance. The execution is different. Yeah, yeah.

So like the way that this flows out, what I believe is what like is the premise of our model, why we're part of like over about almost a dozen seven or a summary project. projects. We're kind of the, for, for Nvidia, they, they advertise us to a lot of their growing data centers internationally as Hydra is the best sovereign AI go to market provider in the world. So like we're really, really good at this. And our operating model is is much more, I think I mentioned this last time, I think of it as like the airlines industry, that that the commercialization of AI is really resides in the platform. And that platform is Jensen. It's not anybody else. It's not anybody else. It's. It's Jensen. And that's just like Boeing. And you have these kind of like rare birds that are coming out, which is open AI. But the technology model run open AI, as we know-only accept, is relatively commoditizable. So its real value is the brand.

It's the accidental consumer product company has been Thompson, like to say. So when you have the commercialization happening at the platform hardware layer like Boeing, you create lots of billion dollar companies, you know, American Airlines, et cetera, Emirates, whatever. But you don't really have this parabolic power law outcome like you had with software defined nodes like Google or Airbnb or Twitter or something to that effect. So when you have a world of it works like that, Jensen becomes the play. Jensen is the platform.

You can still create lots of different successful companies that are very large. But I'm very skeptical. You're going to see this huge outlier into the stratosphere like we saw with other software-deprient modes. Rather, it looks more like the airlines industry where there's lots of various. successful people, lots of very successful, you know, winners, but there's no clear category leader. There's no clear, like, so far ahead that nobody, nobody kind of will ever touch it. Because the fundamental product is a product that gets deployed in a data center that gets run and commercialized and all the value is created there and everything else kind of plugs into.

It's the fastest way to become a millionaire. Start as a billionaire and buy an airline. Yeah, you lose a lot of money, right? Yeah, this is a famous thing because, like, yeah, the value doesn't really accrue to the airlines in the way that it does to consumer tech companies, of course. I want to talk more about this idea that, like, it is valuable to America to have foreign AI models running on American infrastructure. And maybe we could go back to the F-35. If we send an F-35 over to another country, they have the ability to use that however they want. We don't really have control over that. We don't necessarily have a kill switch. Obviously, it's good economically because we sold it to them. We get some money. That's nice. But is there is there is there is there some downstream benefit to well now we're really allied with you because yeah, we sold you the planes, but you're still going to have to remain friendly with us as we resupply and send you more screws and bolts to to maintain these planes. Is there a similar analogy in AI factories or data centers where sure yeah, you bought 18,000 Nvidia Blackwells. But.

If you don't keep working with us, those are going to die. You're going to need to replace stuff. And you need to keep us an ally. Is that the goal? Yeah, like that's my goal because I believe America should win. I don't believe in a multipolar world. I believe in a new one road doctrine. I believe that we should reshore to the Americas.

And some of that will be here. Some of that will be Mexico. Some of that will be in El Salvador. We're already, you know, monetizing El Salvador with prisoners. So, like, why not them make fiber optic cables? Why don't they make fans? Why don't they, like, for, in the, in the service supply chain or textiles like Mexico is the cheapest place for us to

manufacture it's been that way for over a decade but they don't have the technical capability to do it which is why you don't see that there but but in the new monroe doctrine uh my my thesis is that we reshore critical things to the americas and then we have these we have these external allies that reinforce that just like the old minimum re doctrine was americas and we had britain then forced it and with us and so the same thing goes to the ring of fire from south korea down in singapore that becomes our allies in that region, we ship America goods there. They become America enclaves, but they're relatively sovereign. They're their identity or their military and partnerships like that,

not only advance, you know, like you said, like, sell goods, like there's announcement with the Boeing, like, I mean, they already bought Boeing. Like it's so it wasn't, both Riyadhair and Sadiya, they're Boeing platforms. They don't have as many air buses out there, because Airbus has a, just so, you know, like this is a very technical thing, but their engine design is not really compatible with sand that well. So that's why they prefer belly because it's more adaptable high heat. So either way, like that's an advantage to us because it's a form of soft power that we can allow the proliferation of not only safety for Americans globally, but it makes us rich. Like trade is American. It's not secular. It's not something that just happens. Like we define it.

The dollar is a platform. Trade is us. We define, we do we really open those oceans because we say that it's important for us to trade. So there's kind of like this weird thing happening on the right that there's like these two types of like China Hawks. There's like OG Chinahawks, which is like me, who believe that the way you beat China as you win, then there's these new China Hawks, which are like protectionist, semi-socialists and want to withdraw from the world. They believe in a multiple world.

And they kind of crept in, but they're actually a little, they're more on the left side of the spectrum. and the tariffs and kind of attitudes around Nvidia, that's when you hear these things of like, we shouldn't sell the world like kind of can wait on us or we don't need their goods, we shouldn't trade. Versus the original OG John of Hawks were like, no, we should trade.

Trade is peaceful. It's great. It decompresses issues between countries, but it doesn't mean we give away the farm. It just means that we rebalance and we make it fair. And it was kind of this hot minute where it's like these like, Like, Neo-Chinawks got in charge and started doing this kind of crazy things with terrorists where we had no way, freaking deal what was going on. Like, believing that terrorists to make us rich is one of the most profoundly illiterate things.

Like I've ever heard from, I've got a background's an economist, but they like, it's literally stupid. The places that have highest tariff was in the world are absolutely poor. And the places that make external revenue service. No, like I get I'm pro that right. Because I don't want to pay taxes, but taxes are fat. But so the, but I'm willing. to engage in some type of fevery if it means that I'm safe when I go to, I just came back from Belize, but I'm safe when I go to Belize. I'm okay. I'm okay engaging that. But America only wins

when we have this peaceful economic transaction that occurs as a countries that want to adopt more pro-Western frameworks. We should support that because when the world becomes more West, it becomes safer. It becomes more prosperous. People have rights. We had Sam from Impulse Stowe's on earlier, and he was saying that free trade is almost becoming a liberal policy. You know, it's a liberal position now to just be like free trade, you know, just because from a reactionary standpoint. I'm curious if you're what you're expecting out of the Qatar visit, which I believe is happening in the next 48 hours.

Yeah. Like, one is the cutter, we've already been talking to the world family there. Like they definitely want to get in GPUs. They're there, have you ever been to cutter, by the way? It's so, you have you have? Yeah, briefly. It's, it's absolutely bizarre. It's a, imagine like the largest country club in the world as a country.

And there's like, everything is clean and well done, but like in the street and you're walking. It's mostly just like servants. And there's like no people. It's like, it's very weird. And they have so much money. It's, it's they, they even build like the cutteries, right? There's only, I think 300,000. and total citizens and the total number of like the broader servant class is like around

3 million in the actual city but they're so wealthy they have they they do these um you know sand dune thing uh which i went to go do and they build these homes in the middle of the desert like these massive camps and they just like have these hundred thousand dollar uh they just going up and down sand dunes all over the place or there's like these huge camps it's like they have so much money it's awesome and they're trying to get into yeah uh power and energy is related to data centers but that there's a there's a tricky problem which is that they have a habit of of being anti-israeli uh obviously something happened to bingi and trump nobody really knows that something happened uh you know and bichie could not be the

most friendly uh you know person to deal with so something happened there but the keteris like to think themselves as like the switzerland or the region in reality they're just more pro Iran and pro pro al-Qaeda. And so that's a, that's a, the one thing that I never understand me is that the ultimate goal of every Trump, you know, conversation is a deal. That's what he loves. He loves deals. And so us being particular hawkish on any type of country, I think is kind of not who

we voted for. It's, we voted for somebody to make deals for America. And that includes a jet, which I don't know if it does or not. I heard it was. It was not. It's a rumor. Yeah. Yeah, it was that new S747 or something like.

Yeah, it seems like a rumor at this point. Like no one really knows one way or another what's happening with that. But it's an interesting story, certainly. No, I had no problem. Like, he went to go see Kim Jong-Nung. Like, whatever the bad thing. No, no, I completely agree with this. That's a great take.

Yeah. So, like, I have no problem meaning of people. And if that means more, I want them to be more pro-Israeli, and I want them to, they will get the release Last American. That's a win for our country. Yep. And that's what I voted. I voted for Trump.

And I wanted him to do deals. I wanted him to break the mold. reset relationships and make it more pro and create more allies like swing more people to our camp regardless of the history figure out how to how to do deals and and build more allies in the American sphere I want to talk about the learning curve Huawei versus Nvidia specifically is that a dynamic here with pushing invidia chips abroad is there is there value from actually advancing the technology staying on the cutting edge just by increasing the volume of shipments in manufacturing we've obviously seen the TSM on the learning curve but but

what is your take on the Huawei ascend versus Nvidia Hopper Blackwell kind of fight that's unraveling right now it Americans need to realize that like like lithography is not like a white technology it's not like why people like own it It's a technology math. It's available to anybody that can work on it. Sure. And their ability, yes, it's not TSMC level. Stretch, they're probably at five nanometer.

They're more likely at seven, but probably stretched at five. TSM's at two. It's about to go to like, you know, 1.5, I think, or something to that effect. But the thing you don't ever underestimate is that China, from a supply chain perspective, is almost completely sovereign. Not only do they dominate rehearse, but they have the entire manufacturing infrastructure to make wallet. And that is a type of competitive advantage that we don't have.

And so now, again, like, it doesn't mean we become central planners and, like, drift into, you know, Linnaeus or Trotskyi thinking that, like, oh, we should just centrally plan this entire thing. Like, that's not my view. I view as comparative advantage, it works. Like, as Jordy was saying, like, all of a sudden liberals remember that Adam Smith exists. And, you know, that TDS has benefits, right? It pushes people to, because it's not a philosophy. It's a psychosis. So, yeah, yeah.

So it doesn't have an orientation. It's just not that thing. Yep. But, you know, like, we have the ability to win because we still are the best. But they're just going to take a different approach. Like, they're going to take advantage of their power. They're going to take advantage of the fact they move fast and they're cheap. But a new AI Belt and Road initiative has already started.

They're already around the world. We know this. We see them at, you know, different data centers that we work with selling their stuff. And it comes as a fully complete solution with deep seek open, like a manis models combined with infrastructure, combined with support. Manus has has that kind of distribution already. No, like Huawei is designing for their open source ecosystem. So so Huawei is being the hands of heat out there building. I think what I'm asking is like, have you ever run into a country that's not China that's like, yeah, we have we

have Huawei ascend and then we have Deep Seek and then we have Manis because Manus came out of nowhere just a couple months ago feels like that would be a very quick ramp to be like it's deployed in another country as a part of the AI Belt and Road initiative. Deep Seek I can believe in Manus. It is. So yeah, give us the update on that. Yeah, yeah, yeah. It's deployed.

Deep Seek and Manis are everywhere in Europe. Like they're everywhere. And again, it's open source. Open source works as a distribution strategy. They're not open source because they give, they try to care. They don't care about open source. They care about defeating us. And so the approach that, this is why Open AI made that announcement of we're going to do like this combined deployments of software plus like infrastructure is because they're mimicking what China's doing.

But the proliferation of the open source models, go look at OpenRouter. Like you can just see the growth in other models. Those other models are Chinese. So it's a race that actually is a legitimately an arms race where there's not much. much of a like what is the ceiling right like if if we have to kind of

think of it as imagine your multiple countries that someone invented a new technology like the nuclear weapon like you're the reason why UK, France, Israel, USSR,

India, basic proliferation that happened was because America said no we're not going to give you any intel even though we promised by treaty actually that the UK and France would have our intel after Oppenheimer did what he did

And then that's what started the race is like, okay, well, we can't just have America have it. We need to have it, right? And so what is the actual break point at which all of it stops? It's like, how do you, it's like, it's like, it's like, it's a kind of different, it's not an economic question, right? It's a, it's a top-winter question. And that's why the Gulf region announcements are really exciting is because fundamentally that region is going to serve Europe. It's probably not going to serve America. It's really going to serve Europe because they can say all they want.

They want to build this many data centers or whatever, but the trying to make the EU do anything, is, you know, it's trying to convince an opiece person to stop eating. They're rather just using those impact. Like, it's not going to go anywhere. Like, they need some sort of, like, injection to finally do something. And the Middle East region and the Gulf region is just really good at this stuff. They're good at real estate, building power, deploying crap. And in the airlines world, that market is dominated by Europeans.

Europeans use Emirates and Qatar to fly to Asia to fly the region. I think it's going to be really similar. So we're able to dominate Europe through those relationships. But if we weren't going to do it, my guess is like a year or two, Huawei would have some big announcement of doing with probably Qatar, probably the country I think of first, maybe Kuwait. But yeah, and we still have to lead, but we have to realize that Huawei is going to make inroads and places that we have decided to not.

And we just have to accept that. We can't stop. Yeah, I'm trying to think of another. Like, Venezuela. How did the Manus investment from Benchmarks sit with you? A lot of people that are, a lot of people have pretty much everybody has an opinion. Well, everybody's got an opinion on it. Yeah.

But there's varying. A lot of no comments, actually. I think everyone has an opinion, but not everyone's willing to share them. A lot of people have opinions offline. Why not share it? Oh, just because of like competitive dynamics and benchmark. They don't necessarily want to talk trash about another firm. Yeah, and I think that's the right stance generally, for the most part.

Yeah. Unless you're done. I mean, no, I mean, I don't care. Like, we could free change. If they want to do that, that's the prerogative. If the Georgia Department wants to, you know, go after that investment, as I told me they're going to, that's their decision. Like, is it a free market, free exchange of ideas? I believe your capital is your capital.

And if you want to deploy it to a Chinese model, then what I question your patriotism, probably. But, you know, it's your right to do that. And it doesn't need to go much farther than that. Um, but Vanis has serious adoption and we should think of it as, I think that's a main benchmark, we think about it is like, you know, one that they're going to create, you know, a TikTok style like relationship. It's not real. All this stuff is a figment of our imagination. I think it actually matters to Chinese. It doesn't. But it's that, that's just an excuse. The reality is like they want to win. They want to make

money. And in some respects, I understand that. We're capitalists here. And in another respects, you have to think about it from the patriotism perspective with like we're not really interested in, it's one thing to like maybe even allow GPUs to be sold there, which is going to happen. And by the way, uh, GPUs are all the trade deals include dubus man. Like to think that, that we're really that serious about like we don't want them to have infrastructure. It's like it's it's total baloney. Like they it's such an easy gift for the administration. We're the best. We want to make a crap ton of money. We like that Nvidia's really. We like that Nvidia's rebuilding here. It's an easy give. It's not, it's not, it's not even hard to debate over.

It's like, oh, you want that. Sure. Now give me reduction of fentanyl, right? Give me, you know, stop tariffing auto imports by 100%. Like, that's just the stuff they really care about. So this is an easy win. But there will be a, like a separation is happening to where China clearly is embracing and winning open source. They will have comparable advantage, at least a reasonable alternative on Huawei, probably in like 12 months, which will basically be like an H-100-ish. And it'll be cheap, large-scale, easy to install all open source. So the next phase, if we want to actually win China is what the Trump administration is doing now, which is trusted proliferation.

The second phase is like we got to get serious about open source. And we have to be very intentional that the closed model thing is just not. not going to work. It's not a serious durable mode. I think most investors would probably agree with that now. It's a myriad of a models approach. And we have to be in this game. Otherwise, it doesn't matter if we have the best infrastructure in the world. If the LOMs themselves are all clawed behind closed door, which is never going to reach this traction, we're just never going to reach this level adoption. And there are so many levels of advantage China has on open source right now. We have to be serious.

What are you expecting from Deep Seek R2? We've been, we just asked the prime intellect CEO that he had his own take. What are you expecting? I think you'll be, the rumor is like mostly on Huawei. I haven't validated that. That's the rumor I keep hearing. It probably will be very good because this is accessible. This is math.

It's open research. It's like physics. It's like thinking that we can control physics. Like physics is available to everybody. to explore and discover. I think it'll be very good. I think it's a Quinn 3.5 was very good. And Manist just had an update again.

It shows that I, unless we were heavily invest with, I guess, you know, Gemini or or Lama to really like up their game, that Europe's going to continue to use that. The Middle East continued to use it. And it just is what it is. Like we can't stop people from doing this stuff. It's available to everybody. Yeah.

So, I mean, walk me through. this hypothetical scenario where let's just use like Switzerland as an example or something like Switzerland wants to control their own AI for their own population so they build SwissGPT.com

and every Swiss citizen is going there as the front end to their AI experience but that in one scenario that is run on air-gapped Huawei ascend data centers running Deep Seek and Manus to actually

do the computation, but the data is not being exfiltrated. What is the risk there? Is it just that we're losing the economic power from selling into Swiss, the Switzerland market? Or is, are we worried about some sort of like Manchurian candidate in the weights shifting the minds of the Swiss population or something like that? Like what is the risk of the power occurring in that scenario? I mean, I don't really worry much about like everyone knows happens in 1989. You don't need your tandem score happened. It's not them when deep seek tries to delete itself like yeah, yeah, yeah.

Everybody knows, right? Yeah. It's very obvious. Like, you know, is president she, you know, Winnie the Pooh would possibly be like, you know, we don't really know, right? He did, he did disappear over six months after COVID. So if he's Winnie the Pooh in a little outfit. So, yeah, like the, the issue with the, I believe, well, sovereign AI is that mostly

the content internet is American English. The estimates are like 70%. Yep. So that's most of the training data. Although if you look at the proprietary data, what does that be? I just did it. 70% of the internet is American. Let's go.

We're just excited about that. So they basically think of like cybern AI, what is the data that they're going to be training on? Yeah. And because if the internet is English, American English, it's our slang, it's our, you know, The second is Spanish and third is Mandarin. Yep.

It's actually government documents. That is how most people are training the governments or training their own subset sovereign AI. Legal cases, it's law, right? And none of that crap is going to Amazon. None of that crap is going to Corey. Like they're going to build that to their liking. Sure.

So then what is the end in use case? One is that most of this is mutual sur destruction sort of frameworks. That is Switzerland doesn't do it. then maybe Austria does that they have a leverage or Switzerland. So they're like, well, I can't have that. So I have to do that. Think of it as a, uh, you ever watch show billions? Yeah.

Uh, love that show. So, yeah. So Axelrod, right? Everything he thought about was like both him. It's like, it's like two lanes of thought. It's like him winning and him not being owned by one of his competitors. And that's the way G, G. G.

It's like, it's like, I think he gave it from the first. Like sure it was an advantage of my, my country like Xeroad doing the investment. But. Most of it's just like, I want to screw over that other person. And in investing traders today, they're doing GPU's AI stuff, not necessarily because necessarily as a return today, because they're trying to figure out, is someone going to screw over me somehow? Because when you put something into an LLM, it's immediately everywhere, right?

Like anything now, like private information is even more valuable than every report because LMs make information so accessible and can substantiate content even easier. And so private information, been significantly more valuable. And so how Switzerland would deploy that, in my view, would be basically spying other people to providing an alternative within its own government about how to actually use elements eternally.

And so I think we as Americans need to just take a step back and realize that not everything the world does has to make money. People just kind of do stuff sometimes because they think they should do it. And we know as Americans, We don't really get that. Like, it's hard for us to kind of put our hands around.

So commercial. Yeah, exactly. It's like the, we're so far away from Reagan where we just built crap because we're like, Soviet Union could do this to us. We're just going to do it. We're so far away and we're, we're so dominant for so long that we're lazy. We're self-absorbed, lazy people who think that Pope Leo had, you know, is a Chicago Democrat.

It's a, you know, I'm not a Catholic, but he's, you know, he's, you know, He's certainly not. And like, oh, he said this about immigration. And I'm like, do you know anything about Catholic doctrine? Like, do you read anything? Like, do you don't like, it's, we, we define so much international dialogue by America's framework when the world doesn't work that way. Yeah.

Yeah. Real quick, I want to have a couple, a couple more questions. And then we have a pretty hard stop here. But who is going to be the American open source AI frontrunner? XAI did an open release of GROC 1. Open AI is planning to have some strategy around open source. Do you have any type of, do you have any expectations here? I don't think it'll be open AI.

I think it's either going to be Zuck, Elon, or somebody else that we just don't know about it. Yeah, cool. last one uh do you expect to be satisfied when a tic-tock deal gets announced or extremely disappointed because the rumors that we've heard so far are that uh it doesn't necessarily get at the core issue what's the wrong with that inference is the important part right yeah that's a good question uh so do i think it's propaganda oh absolutely do i think it matters in terms of of the trajectory of our culture to know like like creating blaming Chinese boogeyman but like on the fact that our kids are lazy and stupid is asinine it's it's

classic like white guilt sort of ducking Freudian frameworks and like the reason why is then it's actually you know like your kids will actually be fine they're they're leaning very heavily libertarian so they're actually good this kind of like late millennial because i'm a i'm a midlife millennial so i'm more gen xer so this kind of like late millennial early next gen that are very Marxist in their kind of like frameworks and they've been told things about there were objectively lies about our country of how like life works and success works and yeah I feel bad for them like because they were told things that were not true but like saying that oh the reason why you know Chinese kids are doing math because TikTok like

encourages math is it's pretty stupid like it's like no maybe just like no my my first My frustration was, you know, if you're in the middle of an ideological war, trade war, you know, sort of great power conflict, we're not, you know, multi-polar is not possible. It's just sort of like the U.S. or nothing. Why would you allow your adversary to own what is effectively like one of the largest news channels into the U.S. population? And why would you kind of ignore, that, right? Because even, even, yeah, getting, you know, delivering brain rot, like, Americans are going to get brain rot from somewhere, right? They have an insatiable appetite. But I'd prefer to be, no, I'd prefer to be an American made brain rot. No, but the, but, you know, you know, these platforms do influence public opinion and, and, and, but anyways, probably a longer conversation. We'll have you back on when the news gets announced and, um, always a pleasure.

Yeah. Have a good day. God bless, guys. Cheers. I want a hat. Jordy, I won a hat. Oh, I got you. You get a jacket, too. You're going to get the full set.

You're going to get the full set. Thanks, Aaron. Great chat. We'll talk to you soon. Bye. Find your happy place. Find your happy place. Book of Wander with inspiring views.

Hotel Grated Gathees. Dreamy beds. Top tier cleaning, 247 concierge service. It's a vacation home, but better folks. Also head over to getbezzled.com. Your bezel concierge is available now to source any watch on the plan. it seriously any watch. And our next guest is Dan Gray. I have been following him for just a few days, but I wanted to have him on the show. He's put out some fantastic posts about venture

capital market dynamics. And I thought it would be interesting to have him on the show and pick his brain and have him break down what he's seeing in the venture capital markets. I want to talk to him about large scale of VCs, the cram down in the angel and seed market, all the fun dynamics. So welcome to the show. Dan, if you're there, can hear you. me? How you doing? Long time listener, first time caller. Glad to be here. Yeah, great to have you. Can you take me through your, actually first let's kick it off at just the introduction. How, who are you? What do you do? Break it down for everyone. Sure. Yeah, I'm, you know, my kind of day job is head of insights at Equidam, where it starts at valuation platform.

And that's kind of the perspective from which I come at all of this. Yep. I think what I'm what I'm most known for is like long walls of text on Twitter about the venture industry. And what was the most recent long wall of text that you put out? Yeah, that was kind of like a summary of like the last year or so of observations. Like not a very optimistic title. Yeah. Like the venture capital and ailing asset class addressing a lot of the challenges that we've seen. Yes.

But it moves towards like solutions, you know, better practices. some ideas for how the industry can evolve. So everybody comes out of it better. LPs, founders, GPs. So what are the key cracks? Why is venture capital ailing? What are the key problems that you're seeing? What are the indicators? What are the metrics that you're tracking? Because a lot of people have been saying, we're so back. It looks really good. There's big funds. Everyone's doing well. Everyone's making money. It seems like it. So this is kind of an odd take to see, but open to hear the argument, obviously. Yeah, I think kind of what we see is. at the moment, if you look very broad, big picture is like stagflation.

There is, I would say, less activity than before, but prices in concentrated areas are much higher. And for a lot of people, that's a very bad thing. You know, if you're a founders fund and you can win on merit and get into any deal you want, you're doing fine at the moment. That's okay. If you're Andreessen Horowitz and you have the scale to buy into any deal, you're also doing fine. But a lot of my writing is actually really aimed at like the,

middle of the market, GPs who, you know, could be doing better maybe if they, if like, better practices were more accessible to them or if the market was a bit more stable. And similarly, LPs who have a difficult time picking, you know, if they're not already in like the founders funds and USVs, how they can be guided towards better decisions and better returns. So, yeah, is this just affecting new managers who raised funds maybe during, ZERP or are you seeing cracks in kind of the legacy firms that have dropped out of the public eye? They're not as competitive, but they've been in the game for a decade. They have kind of an institutional structure. Maybe they're not raising multi-billion dollar funds, but they have a

model where it's like, yeah, a $300 million fund every two years. We deploy it. It's great business. All the partners are going to retire wealthy. Is there risk for that type of mid-market VC firm? I think the the ones that are struggling the most at the moment are perhaps the ones that haven't evolved as quickly as the market has shifted in the last year. So we've seen this much talked about bifurcation into what I call venture banks.

They're like Andresen Horowitz and thrives, et cetera. And the kind of traditional model of VC, which is contrary in investing, a bit more disciplined, you could say, on that front. There's a few people, a few funds kind of stuck in the middle. And they're a mid-sized series A firm who's still trying to invest their AI, and they're having a very difficult time right now.

So you kind of have to pick your lane a little bit these days and lean into the strengths of what those two different lanes offer. Did you ever read Everett Randall's post on like the Tiger Global and the squeezing between what was he calling it? He had some great phrase for it. playing different games, why Tiger is eating your lunch and your deals. It was kind of talking about how Tiger and the crossover investors came in and they were just commodity capital that you just show up with a deck and get a term sheet the same day.

And it was very much like venture bank versus the, how do you describe it? He said the, he described one of the funds as like J.C. Penny funds, which is very rude, is the dead zone. So there's Tiffany and Co, which he said was like benchmark, founders fund, like the really like prestige sequoias of the world. Low velocity, higher IRL, main advantages signaling, building a board of directors, but it's expensive capital. Then you have the Walmart, which was Tiger Global, higher velocity, lower IRA, but they're built to accept a lower IRA, although that didn't play out very well for Tiger specifically, but in theory, these venture banks are kind of playing this Walmart category. But the dead zone was the JCPenney where you're not super differentiated sending a really strong signal to the market that we have picked the winner. They're going to the moon and so get in or get out.

But you're also not super founder friendly, not taking a board seat, just dumping cash in a company. Is that dynamic still real in your mind? Has it grown or has to have things changed? Yeah, I think it's very real. It's definitely real. And you can see that in a lot of the liquidity issues today. So you have, you know, the big like venture banks, let's call them. They're finding more opportunistic liquidity through secondaries for like the huge winners that they invest in who have the strength of brand and the size to generate a lot of liquidity in that manner.

Where other VCs would traditionally get liquidity, IPOs and MNA, we all know, has been very slow. And that slowdown for a range of reasons, but it's part of because the industry became so bloated and confused for a while. you know, hopefully as this bifurcation is better understood, those more traditional managers are like teeing up companies for exits in a healthier way. You know, they better understand the kind of exit metrics you need. Yeah. As opposed to the venture bank model. Do we need to kind of redefine these terms of venture capital? Because it used to be, there was like angel investors, then venture capitalists. They would do series A's and maybe series Bs. And then there was growth equity, private equity. And then like, yes, a hedge fund might take a large position in a late-stage firm, but they weren't

seen as VCs. Now you can have a VC firm that I'm pretty sure this venture capital firms that have never invested in a company at less than a $1 billion valuation because their whole business is maybe we buy secondary or we buy common or we do growth stage and we're really only trying to be along for the unicorn to a $100 billion ride and we'll do that all day long because there's so little downside. And by the time we're investing, the company has durable revenues, is growing, product market fit. So we're not even trying to underwrite the founder

or their ability to explore the idea maze. We're just piling in. We still call that venture capital. And maybe that's, is that a problem? Or do we need to think about the market differently? I think it's definitely helpful to think about it as a slightly separate beast. You know, venture capital in my mind is finding, you know, the non-consensus companies.

and then you fund them through into like legibility into growth, growth capital, and ultimately to an exit. That's how you generate your liquidity. The new game today is kind of like this financialized version of venture capital where it's not necessarily about like finding great companies and taking them to exit. It's about like funding through the like the incremental milestones and hitting those incremental metrics to raise bigger funds. You know, and you do that through pursuing TVPI in a way. that like it's slightly disconnected to generating value in the traditional sense. You know, TVPI is a, so has slightly different drivers, you could say. Yeah, do you think that part of the

reclassification as somewhat other asset classes into venture capital is driven by a desire to mimic the fee structure of a traditional venture capital firm in other in other industries? So I'm a, I basically were doing public markets investing and I might be able to get one and 10, But if I call myself a VC firm and I play a little bit differently, I get two and 20 or something like that. Do you think that the branding matters when VC firms go out to LPs and try and raise money? That's a good question. I'm not really sure about that, to be honest. I mean, I'd hope LPs were scrutinizing that a little bit more, but perhaps not.

What do you do you look at any data on the health of the sort of retail in the private markets, right? like the everyday angel investor are you seeing more or less activity today than in 2021 early 2022 i would take quite a bit less probably like a third less at the moment because so much attention it is concentrated on AI and i think a lot of angels frankly have just resigned themselves like they're not going to get in on that game yeah interesting yeah i was thinking i was uh i was even going to consider doing a poll to anybody within, you know, just a poll on X or whatever. But I think if you ask the average angel investor, would you sell your entire angel investing portfolio for 15 cents on the dollar today? And I bet you that, I bet you the honest answer is

that like 90% of, uh, of people would because angel investing is this like weird dynamic where to me I, I legitimately feel addicted to angel investing. Like it's a weird thing, but and I joke about this, right? It's like all these kids, you know, these kids that grew up in San Francisco and their parents are addicted to angel investing, you know, just like refreshing their, refreshing their email on the first of the month, you know, waiting, waiting for the update. But it's, but it's this interesting, you know, dynamic where it's honestly one of, you know, to me, it's one of the most interesting ways to spend free time. It's just like meeting exciting founders, but at the same time. liquidity timeline. Timeline just, literally.

Even if you make money, it's like, well, I didn't get to enjoy that in my 30s. Yeah. Yeah, totally. And I have, I have buddies that are, that are towards, you know, the end of their careers or maybe even retired that are, that are basically, like somebody recently said to me, I don't want to make net new angel investments because I don't want to deal with this when I'm like potentially in a retirement. You know, like potentially like, you know, retired to Hawaii, right?

I don't want to be worried about, you know, figuring out, oh, when, you know, when should I try to exit in this position? Dan, can you break down this idea that most venture capitalists don't understand risk management and only 10% of venture firms are making it to fund for? What do VCs get wrong about risk management? What does risk management even mean? I thought the whole point was to be risk on, swing for the fences. That's a great question. It's a real fundamental point as well. I talk about like the importance of risk management in venture capital and people do give me a slightly crazy look like the point is risk.

Yeah. But if you properly manage risk like in a systematic way, you can take more risky bets. Like that's kind of the point. Like if you understand the maths of portfolio construction, how big your checks I'm going to be, you know, what the outcome is likely to be, how many you have to write, what maximizes your exposure to potential unicorns, you know, what discipline across. the whole portfolio looks like you can take more risk on an individual investment basis. And yes, so what does a, what does a poorly risk managed fund look like? Is it, is it just not building concentration in the winners, not leaving money in the fund for pro rata and follow-ons to kind of ride the winners up as they become outsized winners? I feel like that was something that

we heard from like the last generation of managers that got a $50 million fund. Then everything got marked up in ZERP and all of a sudden they had to make these decisions on huge pro rata checks out of their main fund where there really was no new data about the company and they were still at a seed level but some big firm had come in and preempted a series A or series B and so all of a sudden you can't do the normal thing of wow there's so much traction on this company I need to really make sure my fund has a significant ownership because I did get a foothold in but I need to build that position. Is that what's going on or is there something else, another dynamic? Yeah, that's a part of it. That's quite a big part of it. I think the, like, the fundamental

thing is the having a right sized initial portfolio, the number of investments that you make to begin with. Yeah. That should be diversified enough. And, you know, the average might be like 25 today. Maybe it should be 50. How do you even calculate that? Is that based on like historical trends in like the number of unicorns or something? Like, how are you, how are you thinking about that? Yeah, exactly. There's great work done by a few people. Dave McClure from 500 startups. He has an article on this. He talks about 100 startups should be the portfolio size for a seed fund. Wow.

Because of the small percentage that eventually become unicorns or decacorns. Yeah. And you fundamentally don't know to begin with which ones are going to work out. That's kind of the problem is VCs over concentrate. And of course, if you're, you know, I've spoken to some great. GPs about this concept and they always push back because they have 15 companies and they're all doing great. And that's like, fine, good for you. You're in the top 2%. It's the other 98% that I'm kind of thinking about. But is that really a way to get to out like by definition, to be in the top

2% don't you have to behave like the top 2% and just actually like consider it a skill issue and just make sure if you're trying to get, you know, I can see the argument if you, if you're trying to get past fund for, which is like the milestone. You need to have bangers in the first fun, right? Like even if, even if you're not necessarily, even if your ownership is not amazing, you need to be able to prove that you can get into winners at all to some degree. And so I've seen that strategy play out fairly nicely,

where as long as you're in a handful, you know, just showing that you can get in is kind of like key proof points, even if you're not able to concentrate, you know, five plus percent of your of your fun in a single company yeah do you think do you think LPs are more willing to forgive on mistakes of portfolio construction not sizing into winners easier than missing winners and having like okay yeah you built the portfolio perfectly you got concentrated into your winners properly but you didn't have any of those really sexy companies in the portfolio well I'd like to think ultimately what matters

is, you know, the end multiple, the IRA, the performance of the fund. And everyone, you know, the majority of emerging managers come out swinging for the fences every single time they want a 10x fund. And in doing so, they are like, are themselves boom or bust? If they fail and it's less than returning capital, they have no room to learn. They can't improve for the next fund. You know, there's no step two. If they are a bit more conservative, a bit more diversified, and they return,

like 2.5.3x, maybe they get a fun too, and they learn and they can improve and earn concentration over time. Isn't there something beautiful about the fact that both startups follow a power law and venture capital firms exhibit a power law? Like there's a, there's a kinship here that it's like, hey, we're all either going to be rich or poor here. There's no median outcome. You're not just a bank to me. You're not going to be around unless this works out. You're living under the power law just as much as I am as the entrepreneur. I would disagree with that, to be honest with you. Please.

I think it's a better world for everybody if the VCs are more stable. Okay. They are very power law. They are boom and bust. They don't really have to be. Interesting. Interesting. Well, yeah, this is great.

This was great. Thank you for coming on and sharing. Next time you have a report. Give us a heads up and love to have you back on. Yeah. Yeah, we'll talk to you, Dan. This is great. Cheers.

Thanks so much. Let's run through some. timeline, let's give some updates, whatever else is in the news. I've got an idea before we jump into the timeline. Should we talk about Figma? Of course. Tell us about a figma. The design tool of my dreams, it's a tool that I've used for my entire career at this point.

Think bigger, build faster. That's great. We should have an airborne for that. How you design, explore your ideas freely and iterate quickly. We should make an actual old school. style radio ad for this. But anyways, Figma launched a bunch of new features last week at config, one of which is very cool. They allow you to generate marketing various types of assets based off of your brand book. It's called Figma Buzz. So exciting new feature from them

alongside sites and kind of the core design tools that you probably already use and love. So go check out Figma Buzz and sites. And thank you to Figma. show. Should we talk about some timeline? Let's do it. Jason Calcanus of the All In podcast is is taking the movie industry to task. He says the movie industry is effing clueless. Make a $19 a month. All you can watch $10 plus $10 for each kid and $49 for a family of five. Watch the money pour in. He wants a subscription. Movies would be huge if you made it a season pass like the ski industry did with the Epic Pass. Show old movies too for bonus points. AMC will slash prices on Wednesday is the news.

By 50% starting in July, the goal is to get more people in theaters between weekends. What's interesting is that I saw a separate article about how the modern instantiation of movie pass is wildly successful. Have you heard of this? Well, yeah, apparently AMC has a subscription product already. They do. They do. I think the interesting thing that Jason called out is showing old movies.

I think one of the challenges is that there's so few new movies. movies coming out that people are genuinely, you know, wanting to get up and go see. Yep. I don't know if old movies would do it, but. They do re-releases all the time and they are available and I don't think they build as much hype because I think there's some weird dynamic in the movie industry. I think unless you see the billboard and the hype and like you're texting your boys. I think it comes down to scarcity that they need to pull movies off of every, off the internet entirely.

Yeah. for a year. It's good. And then just build it up and being like, we're bringing it back. You know, the people, some people will be like, well, I have a DVD. I can watch it any time. Good luck playing a DVD on your home entertainment system. If you got it in the last five years, not going to work.

Anyway, Stan with the All In podcast, Chamath Polly Hoppetia says, not nearly enough. People are talking about the implications of Klarna rolling back some of their AI bets, not knowing any of the details. I can guess why. Replacing determinism of humans with probabilistic code. is fraught with edge cases and require new ways of software development and process engineering that aren't well solved. The implications to an entire generation of AI apps will be as severe as more companies come to terms

of the difficulty in getting products to work reliably in production with AI in the loop. Customer service may be the first funeral signpost. The result will be that many startups need to pivot to simply use AI for narrow use cases and otherwise act deterministically. So what will, so what have people funded then? an AI company? No, not really, just a really overpriced SaaS company at AI valuations. Interesting. What do you think? I mean, I thought the conversation with Owen yesterday from Intercom was super insightful, right?

They are incredibly well positioned to deliver AI to CX teams and unlock the power of it, but they're not saying, he wasn't coming on and saying 99% of tickets are solved by AI today. He believes that, you know, we can get there over time. And he, his hot take was that, you know, AI was, you know, better than humans already. At a lot of things, right? It stays on script. It doesn't get tired. It doesn't get short.

It's not temperamental. All these things that, you know, end up creating a better customer experience. Yeah. Once the quality is at a certain point. It's this idea that like we, we overestimate what can be done in a year, underestimate what can be done in a decade. you got superhuman auto-complete for every single one of your customer service agents. You got much better ways to navigate a knowledge base effectively and just serve up a better Google search search uses as a knowledge engine.

And so that should drive those, but trying to go full Klarna mode and saying, you know, we're not hiring anyone. We're going to be a one-person company, probably a little aggressive. Yeah. Anyway, Avi Schiffman, founder of Friend.com says, I met my investors LPs and realized I'm just working for college endowments and family offices. Activate gold and retriever. Yeah, you are.

And it's good. It's an opportunity. It's an amazing blessing. I mean, we heard about this from Andrew Reed talking about when he was pitching Dylan Field at Figma. I brought him into the Brown conference room and said, hey, like we work for Brown. You have an opportunity to run it up for Brown.

Yeah, you have an opportunity to run it up to go long Brown. Exactly. And it's not just college endowments, it's teacher pension funds. It's, you know, you're supporting firefighters, all these things. So you're supporting, you're helping big oil, right? I mean, that is part of the beauty of like the intertwined financial system is that losses are born across the entire economy so that any one company that blows up doesn't destroy everyone's pension. but when there's big winners, everyone kind of benefits if you have a pension or you go to one of these schools, like their endowment is enriched and they do more research and science and all sorts of stuff. And so you have kind of a, I mean, it's just diversification, right? It's just diversification. And so, like, you don't hear as many of those stories about an individual Main Street investor

that lost all their money on a risky startup bet because Angel investing is, while addictive, it is for high net worth individuals and accredited investors only, but they still have exposure to the venture markets through LPs. Yeah. Prime Video has renewed Beast games for not one but two more seasons.

Y'all are not ready for the big stuff. We have plans as Mr. Beast. Very interesting. This was one that was like hotly debated about whether it was good. It's hard to track because you can't just look at the YouTube metrics to understand if Beast games

is truly successful for Amazon Prime. But we have the data now. season two and season three confirmed, they probably wouldn't have done that if it underperformed. So interesting watching a YouTuber transition to mainstream media or, you know, bigger platforms. I mean, Amazon Prime's new media, but still, you know, a huge company major network. He's clearly worked out a fantastic deal. And we've seen a bunch of this. And it feels like it's more of increasingly social media is a proving ground for Hollywood.

Talk about Pat McAfee, what he did with his podcast, took it to ESPN eventually. I think we're going to be seeing a lot more of this as people build independently and then ultimately leverage the distribution that comes from something like Amazon Prime. So, congrats to Jimmy. We should have on the show. Dalton Caldwell says the S&P 500 now has three YC companies, DoorDash, Airbnb, and Coinbase. Let's hear it for YC. Can we get a Sizgong or some plat thing or something?

Can you do some amazing things. Congratulations to YC. I can't wait to go back to the next demo day. Yeah, me either. It is actually crazy how long big that YC has done this because no other incubators is even close, right? And I'm excited for the update in 255. The S&P 500 is now 60% Ycombinator companies. For sure.

Certainly, if you expand that to YC founders running companies, probably even bigger. Yeah, PG says 497 to go. 497 to go. PJ, I like it on a conquest. Good job. And all are consumer tech. Yeah. Right. Everybody says build B2B Sass until you see some of the biggest outcomes.

Just wait. I mean, a couple of those payroll companies will be in the S&P 500 pretty soon. I'm pretty sure. All three. Hopefully. Aiden says Uber would be a lot cooler if it was called American Express. I just love this guy. Seven likes. Low Tam. Low Tam banger. He also had another post that we didn't get to yesterday that was like if the airline's calling your name personally as you board the flight, it's basically like flying private. I thought that was funny. Anyway, shout out to Aden.

Great, great programming. Great hacker. Airbnb is launching, they're unveiling their next chapter. This is going live today. I don't actually have the update, but Brian Chesky has been in the founder mode. So they're launching new services, businesses. Oh, interesting. There's a redesigned app.

So remember, they condensed a bunch of launches into one. Yep. And they're expanding. Airbnb experiences for a while as well as business trail. Yeah, expanding beyond homestays. and I guess they're going to invest a quarter of a billion dollars into this new sort of business line. It seems like an extension of their kind of experiences product. But anyways, hopefully they can.

Hopefully they don't crush under the weight of competition with Wander. Honestly, that's my only hope because I love Brian Chesky. Founder Mode CEO. Love him. They're going to be feeling that he's. They're going to be feeling the heat from wander for sure. Adam DeAngelo said at Kora we recently tested switching from Zoom to Google Meet for a week. Google Meet is better in many small ways, but bit worse in one big way, audio quality,

particularly background audio noise cancellation and echoing. That kills it. So we're staying on Zoom. That is funny. Just like, hey, I did this A-V test and we're sticking to Zoom. And Sundar Pachai responds. Sundar. Founder mode.

We'll follow up offline as we haven't experienced this. As read notes below, it works pretty well in my experience. We will debug to understand the root cause and fix. Thanks for flagging. Thank you. Would love to switch if this is fixed. And Nathan, a buddy of lens, says, I have the inverse experience. Zoom is, well, rubbish in it.

He's British. Or French, maybe? I don't know. He's over in Europe somewhere. Well, rubbish. Anyway. In it? Hilarious.

Anyway, Teddy Blank had a coinage. Once your VC has, what was it? The actual coinage was something about. about once your company's LinkedIn profile picture is the founder holding a microphone at a conference, you're cooked. With one of the. Yeah, with one of those. Which I don't think is really true necessarily because a lot of the big CEOs, they wind up doing that anyway.

Bezos, Steve Jobs. I'm sure all these guys have been pictured with lab mics. But still, funny to see that, yeah, if you grow up too much. So anyway, shout out Teddy. Anything else you want to cover? Should we get out of here? It's 205. Thank you for watching.

205. Any more plugs at Aurora.com. Go to Lucy. You should always go to, you should always go there. Eight Sleep. But, but no,

I'm excited for the show tomorrow. We got Brian Johnson calling in as well as Mateo from Eight Sleep. It should be great. And, yeah, go and leave us a five-star review on Apple Podcasts or Spotify.

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