TBPN - Trump-Musk Fallout Recap, Circle IPO Post-Game with CEO | Dylan Patel, Jeremy Allaire, Kat Cole, Dana Settle, Anastasios Angelopoulos, Patrick Blumen, Blake Scholl

Episode Date: June 6, 2025

(05:24) - Elon-Trump Crashout Recap (27:59) - Timeline (43:34) - Patrick Blumenthal. Patrick discusses his experiences at New York City Tech Week, highlighting the diverse range of industry events and sponsorships. He provides insights into Ukraine's recent military operations, emphasizing the strategic impact of targeting Russian airfields to degrade their nuclear triad and the challenges posed by Russia's porous borders. Blumenthal also shares his perspective on the evolving landscape of drone warfare, noting the rapid advancements and the complexities involved in counter-drone technologies. (01:00:05) - Jeremy Allaire, CEO and founder of Circle, has a background in building internet software platforms and infrastructure. He discusses his journey from founding Circle in 2013 with the vision of creating a protocol for digital dollars on the internet, to the company's recent successful IPO, which he views as a significant milestone for mainstream adoption of digital currency. Allaire emphasizes the importance of trust, transparency, and compliance in Circle's operations, highlighting the company's role as a market-neutral infrastructure platform that enables other institutions to build upon its technology. (01:20:35) - Anastasios Angelopoulos, a Ph.D. candidate at UC Berkeley, discusses Lumarina, an open platform for evaluating AI models through human preferences. Users can input prompts to compare responses from leading LLMs like Google's Gemini, OpenAI's ChatGPT, and Anthropic's Claude, voting on preferred outputs to generate leaderboards across various tasks. Angelopoulos highlights Lumarina's recent $100 million funding round, emphasizing its role in guiding AI development by capturing diverse human opinions. (01:32:49) - Dylan Patel, Chief Analyst at SemiAnalysis, is known for his sharp analysis of AI chips, compute infrastructure, and global supply chains. He explores the technical and political forces shaping AI—from OpenAI’s scaling bottlenecks and China’s industrial edge to the risks of centralization and the potential of decentralized, open-source alternatives. (02:32:23) - Dana Settle, co-founder and managing partner at Greycroft, discusses her extensive experience in venture capital since 1998, highlighting early investments in networking equipment and semiconductors. She emphasizes Greycroft's focus on AI infrastructure and applications, as well as their sustainability fund in partnership with companies like Coca-Cola, addressing the intersection of AI and energy consumption. Settle also shares insights into the evolving IPO landscape, citing the recent public offering of Mountain, a company Greycroft invested in back in 2011, and discusses the impact of celebrity partnerships, such as Ryan Reynolds' involvement with Mountain, on business growth. (02:48:28) - Kat Cole, CEO of AG1, has a rich background in the consumer industry, having previously served as President and COO at Focus Brands, overseeing brands like Cinnabon and Jamba. In the conversation, she discusses her journey from starting as a hostess at Hooters to leading global brands, emphasizing the importance of customer experience and operational excellence. Cole also highlights AG1's strategic growth, including expanding manufacturing to the U.S., investing in clinical trials, and entering retail partnerships like Costco, while maintaining a focus on product quality and customer trust. (03:15:33) - Blake Scholl, founder and CEO of Boom Supersonic, discusses the recent reversal of the 1973 ban on supersonic flight over land, highlighting that technological advancements now allow for supersonic travel without disruptive sonic booms reaching the ground. He explains that Boom's XB-1 demonstrator achieved supersonic flight without generating audible booms, paving the way for their Overture airliner to operate over land. Scholl also shares plans to build the first full-scale pre-production prototype of Overture next year, aiming to revolutionize air travel with faster, more efficient flights. (03:29:45) - Timeline TBPN.com is made possible by: Ramp - https://ramp.comFigma - https://figma.comVanta - https://vanta.comLinear - https://linear.appEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.com Numeral - https://www.numeralhq.comPolymarket - https://polymarket.comAttio - https://attio.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

You're watching TVPN. Today is Friday, June 6th, 2025. We are live from the TBPN Ultradome, the Temple of Technology, the Fortress of Finance, the Capital of Capital. We have an exciting show for you today. Folks, we're going to be continuing to react to the Trump-Elon breakup. I haven't seen a ton of new news, but we'll cover anything that's popped up most recently. There's no facts, but there are vibes. Yeah, there are definitely vibes, plenty of them. But I wanted to give a little recap on what's happening, what happened this week on TBPN, because we are launching a new product every week.

We will be doing a recap video, trying to boil down the 15 hours that we produce into something that's, you know, one hour, two hours, something like that. Yeah. Groundbreaking, John. We're digestible TVPN. And so this week, what were the top stories? what were the most interesting things that we learned. One, the Ukraine drone attack, that was huge. Operation Spider-Web, a whole ton of drones were smuggled into Russia in shipping containers.

They emerged and went out and attacked bombers. We had Soren Monroe Anderson from Neros on the show to break that down for us. We also talked to Connor Love at Lightspeed, who does a lot of defense tech. investing. And of course, a couple weeks ago, we had Eric Prince on the show, the founder of Blackwater, and he had kind of predicted that the Ukrainian military was perhaps underrated. And we might be seeing something like this in the future. And so that was interesting to see play out. So we will take you through those kind of interviews, recap some of those. Then obviously we had the absolute meltdown between President Donald Trump and Elon Musk. That unfolded on X and Truth

Social. The two leaders... Dueling. Dueling. media social platform. Exactly. And although it's a highly political story, there are big business implications. Totally. Talking about what's going to happen in space between NASA, Boeing, different launch providers. Yeah, the implications for Tesla, SpaceX, Neurrelink, even the boring company, right? There's a lot of stuff that needs to be in your face.

And the potential impacts are substantial. Yeah. Then we also had some earlier stage founders on the show. Roy from Cluelly came on and went pretty viral, put on a show. You're surrounded by journalists. Hold your position. Cluley is a service help you cheat on everything. We got to actually try the app.

Someone was pushing us to try it and see how good the product is. But regardless of the product, he's also a phenomenal marketer, and he came on and put on an absolute show. And he's printing, apparently. Yeah, he's doing great. He can't spend all the money that they're bringing in. And so we'll give you an update on Roy and see where that business is. And then Kian, from Nucleus came on to launch Nucleus Embryo,

which he calls the first ever genetic optimization software that helps parents give their children the best possible start in life. Quite a lot of controversy there on the timeline this week. A lot of people hate it. A lot of people love it. And we'll let you. Kind of decide for yourselves. And then we had a whole bunch of AI experts on the show from Google, OpenAI, Ananthropic,

got to the front leading edge of the debates around AI LLLN. Poor John yesterday. You were fighting as long as you could. You didn't want to talk about drama. You got dragged into it. But we did get some great coverage from Mark Chen at OpenAI as well as Shulto over at Anthropic. Yeah, it was a lot of fun. Anyway, let's go into ramp.

Time is money. Save both. He's a use corporate cards, bill payments accounting, and a whole lot more, all in one place. No, let's go into the secondary reaction

to the Trump-Elon meltdown. First, we can call out Tesla's up 5% today. After being down, they were down 17 or they closed down 12? I mean, they're down 12 and a half percent over the past five days. So still not a great week. Okay.

Just hovering on that. hovering under that one trillion dollar market cap. Got it. But could be worse. And there's, you know, the timeline is still filled with Trump Elon post, Jason Kalakhanis from the All-In podcast. It's a must listen episode this week. This is what they were built for. He posts just a dejected meme.

Although I don't even know, is this for Mountainhead? Is this a screenshot from Mountainhead this post by J-Cal? Yes, it is. That I think is the character that. J-Cal most sort of sees himself in. And that is the friend in the group that, it's funny. So this friend in the group has like a meditation app. Yeah.

And one of the other characters acquires it for $2 billion to get him into the billion dollar club. Wait, it isn't J-Cal an investor in call? Calm. That's hilarious. It's kind of a funny reference. Wow. That's awesome.

Congrats to them. Fred Delicious says, a reminder that this all started with him carrying a sink. shows Elon carrying the sink into X and then one thing led to another. I got to say he looks younger and happier in that photo than we've seen him in a while. It was crazy time. Politics will wear on you. Definitely ages.

You've seen those photos of like Barack Obama before and after. It's like eight years and he's like gone cray. Yeah. He's like he's 40s. This was a fascinating. This was genuinely a fascinating discussion. When we were live yesterday, we were covering in light of the president's statement about the cancellation of my government contract, SpaceX, will begin decommissioning its Dragon spacecraft immediately.

We had Delian react to that. And some random, tiny account that just looks like, I guess they're verified, so it's a real account, says, this is a shame, this back and forth, you're both better than this, cool off and take a step back for a couple of days. Elon says, good advice. Okay, we won't decommissioned Dragon. It's so great that he's just reacting this.

I mean, the funniest thing about all of this is that, you know, It was like, this is the only new story. Like, you have to react to this. This is the most important thing. And I was like, oh, like, we get the Financial Times every day. Like, if this is a business story, like, it should be on the cover, right? It's not. The top story in the Financial Times today is Trump and Siegian Ping dialed down rhetoric

and agree to a new round of trade talks. U.S. president says meeting will be soon. State invitations extended. Investors remain cautious. And then also, there's a, story in here from the failed startup builder AI owes cash to intelligence firm and litigation lawyers and so you know the the global economy marches on while yeah I mean there were something else the kings of drama in in in the fact that

somebody was calling this I forget the account but they said we effectively had the political equivalent of a tactical nuke yesterday and the S&P is up almost two percent over the past five days wearing white suits for it. So let's give it up. Let's give it up for the stock market. We have two individuals coming on, two guests coming on to talk about. Yeah, we didn't even talk about our white suits. Yeah. The Circle IPO has been a tremendous success. Huge demand for still. But, you know, very, very excited IPO window is open. At least if you're a pure play stable coin company, I believe Circle is now valued at about a third of Coinbase. Yep.

which is fascinating, considering that a large amount of Circle's revenue actually goes to Coinbase. But that's great for Circle and the whole team and good for the market. And I'm very excited to talk with Jeremy in a little bit. And if you're designing the next product that you plan on taking public, go to figma.com. Think bigger, build faster. Figma helps design and development teams. Build great products together. get started at figment.com.

Simone Said says deeply hope someone remembered to put Luke Ferator on a chopper out of Saigon. Let's hear for Luke. Scroll respecter. You know he's going to be on to something bigger and better soon. Out of the swamp, into the valley. At this point, I think he could do

100 on 500 out the gates. I think he could get that round done. I think he could get that round down. I think he's somehow like, I don't know, too humble to do that. No, I know. He's a humble guy. But he don't. He could.

All that matters is that he could. Yeah. It would be amazing. And so there's a couple polymarkets that we should pull up. I have a screenshot here. The bigger, but I'd like you to pull up. The bigger news,

we've got to give it up to the Polymarket team. Polymarket is the official prediction market of X. Very exciting. We had heard something like this was in the works, but I didn't. Well, I had no idea because there was the Cali she rumor and then it wound up. Well, no, it wasn't a call sheet rumor.

Kalshi preemptively announced something. And then X retracted it. Okay, okay. And X from the main account said we are not partnering with Kalshi. And then a week later, they announced this big partnership with Polymarket. So congratulations to the Polymarket team. I'm super excited to see how this gets integrated into the product. So I want you to pull up, will Elon Musk unfollow Donald Trump before July?

That's an interesting market. Also, there's a market on will there be a reconciliation by the end of the week, I think? And then the other interesting one is, does this make it more likely that Elon becomes? stay's CEO of Tesla or less likely. I saw the market spiking yesterday to above 20%. Seems like he might have more time on his hands to focus on Tesla. So we'll see how that one goes. So pull up some of this polymarkets and I'll read some more posts.

There's a whole bunch of silly posts in here. Elon Musk rushing home to have a generational crash out. Somebody put a cyber truck, I guess, in GTA or something. That's fun. Who gets custody of Joe Rogan? I think he's the perfect moderator for all. I mean, if there were so many of these that went. extremely viral. You had who gets custody of David Sacks. Who gets custody of J.D. Vance.

Of J.D. Vance. J.D. Vance actually came out yesterday. It was pretty clearly picked aside, which I think is good, right? You should probably side with the guy that you're in the White House with. Of course. And then work behind the scenes to kind of massage things. Hopefully. Improve the relationship. I mean, the coverage of this has just been fascinating to me. So the Wall Street Journal has an entire article dedicated to just one post. Quote. Okay, so yeah, let's look through some of these polymarkets. Will Elon Musk create a new political party by December 31st?

24%. I wonder, I mean, he could put up the same amount of capital as some of the major parties, right? But when was last time America a third party? Like it seems unfathomable. And also I was talking to somebody about this who had one of my friends was predicting that the Elon Musk and Trump relationship with sour and I was like I don't know maybe it'll wind down soft I was kind of I was a soft landing guy I look really stupid in hindsight But but he was but he but I was wondering like just in terms of like not necessarily political capital but like popularity like who's more popular Trump or Elon I think Trump is wild wild wild wildly more popular. Wildly more popular.

Just generally, right? And they do polling on these things. Because, yes, you have the tech people that like Elon, but that's a much smaller segment of the market than, I think there were a lot of folks, like one of the weird things about the election was that, like, you would have like a tech guy voting alongside, like, you know, like a MAGA supporter from 2016.

Who was probably very deeply skeptical of Elon back then. Trump is a very successful social media entrepreneur, right? He has a billion dollar. multi-billion-dollar social media app. He has two and a half billion in Bitcoin treasury in that company now, I think. I mean, yeah, you, you, you, you called this morning or texted, I don't even remember at this point, but you know, your big question was, you know, who's more AGI pill? This is the big question.

And you had, you know, a pretty clear answer. Yeah. You said that your thesis, if I can, if I can spell it out, is that Trump is not, uh, is not concerned with the deficit because he read AI 2027. He's a fast takeoff guy. Yeah. And in his mind, he's like with, you know, AGI, you know, just right a quarter away. Yeah. It's very likely that the 2028 deficit and the federal sort of debt broadly just immaterial. Immaterial. Yeah, immaterial. And you just play it out, right? So, so, so yes, there's a huge increase in spending and there's not a commensurate increase in tax. Massive. Massive returns, right?

And so the government is going to be spending more money than it's making, and that's going to result in a budget deficit. And over time, that grows and grows and grows. And we're going to be spending trillions of dollars on interest. But if you truly believe in AGI, in super intelligence, you're going to see 10% of electricity being used on AI. You're going to see an incredible amount of economic value created by these AGIs. And the government will be able to tax that like any other income, like the rest of the economy. that will drive, you know, Satchanadella said, hey, I'm waiting for GDP to grow 10% a year. Yep.

If that happens, if you believe that happens, if you're AGI-pilled, you don't need to worry about the deficit. Yeah. And so I think that what this debate-Bet guy, right? He is big in the Stargate. He announced Stargate, right? And so I think what this reveals is that potentially Trump is more AGI-I-pilled than Elon. It's very possible. You wouldn't expect that to have been the result of this dust-up.

But I think that's what we learned. Totally. I think that's definitely a big takeaway. Definitely a big takeaway. Wild times. The Wall Street Journal has a whole write-up, but we've covered most of this. Once allies, they had a public flaring out

after Musk criticized Trump's legislative agenda. Musk attacked Trump, alleging his name appears in the Epstein files and suggesting he should be impeached. Trump responded by threatening to cut off government contracts to Musk's companies. Just six days ago, senior Trump aides swallowed their irritation

with Elon Musk and planned. a chummy Oval Office send-off to him. They briefed the president on allegations of Musk's drug use, so Trump should be ready to defend the billionaire if reporters raised the issue at his goodbye event. As late as Wednesday evening, Trump played down any conflicts with Musk in a meeting with Republican senators,

according to people familiar with his remarks, even though the billionaire had spent the past few days disparaging the president's legislative agenda over the weekend after Trump dumped Musk's ally as the head of NASA. So that feels like maybe one of the turning, points in this whole kerfuffle. The president made it clear that he wasn't planning

a high profile confrontation with his former advisor according to a person who talked to the president. That goodwill disappeared on Thursday, 13 minutes into an Oval Office meeting with German Chancellor Frederick Mears. The poor German chancellor just sitting there and being like, wait, this is supposed to be about Germany. I'm here to pitch Germany. And now you're talking to me about, no,

Now you're talking to me about Elon Musk drama. Like, I just want to talk, I just want to talk about German stuff. Cars, Mercedes, Mercedes. Or how are we going to sell more Mercedes in America? Yeah. Let's keep it focused. Let's not put the attention on Tesla. Let's talk about the Tycon.

How are we getting more of those over here? How are we getting EQS is over here? Yeah, yeah. Anyway, Trump laid out his frustrations with the mosque, marking the start of a whirlwind day in which two of the world's most powerful men went from friends to foes. By Thursday night, Trump had publicly toyed with cutting off government contracts to Musk's companies, said the billionaire, went crazy and suggested that he is suffering from Trump derangement syndrome. It was very hard as an ex-user to actually understand what Trump was saying,

because the truth social screenshots were so easy to fake, and the community notes was like a little bit slower. And so it was always hard to understand. You kind of had to read for it and kind of read through the lines and understand, this is clearly a joke. But Elon Musk kind of closed it out by saying, whatever, keep the EV solar incentive cuts in the bill, even though no oil and gas subsidies are touched, very unfair,

but ditch the mountain of disgusting pork in the bill. In the entire history of civilization, there has never been legislation that both big and beautiful. Everyone knows this. You either get a big and ugly bill or a slim and beautiful bill. Slim and beautiful is the way. And so Elon's kind of closing it out with like, It's kind of a adapting Donald's posting style there.

Yeah, yeah, yeah. I do wonder like, like how big of a deal is the, is the government spending thing. Like we've just been hearing rattling about these, like the deficit hawks have been pushing on this for decades. Like going back to like the Bitcoin people, right? Yeah. When did Michael Saylor start talking about this? And so it's a little bit of like, whenever I hear tech people say this, it's always like a little bit of like boy who cried wolf. I get convinced very easily by Joe Weisenpal saying like we issue debt in dollars. We print dollars like we can inflate the debt away. There's like a million ways out of this and like America's still the number one economy. I'm just kind of like okay.

Yeah, still the chart is deeply concerning. It's the kind of chart you want to see in an investor update. Yep. Not, you know, tracking debt, right? It's exponential. And yeah, it's rough. Anyway, anyway, let's tell you about Vanta. Automate compliance, manage risk, improve trust continuously. Vantta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation whether you're pursuing your first framework or managing a complex program.

The Walser Journal goes on to write the Trump-Musk blow up was long predicted, even people close to both men, privately believed that their relationship was destined to implode, but the fast-paced ratat-tat escalation still came as a shock to a White House that has grown used to curveballs, and a president who often defended Musk as his aides grew frustrated. White House officials and other allies of the president spent the day refreshing their social media feeds, watching as the situation escalated and texting Musk's posts to each other. It was a matter of time before all this shattered because two giant egos can't be there together, said Mark Short, who is chief of staff to Vice President Mike Pence. It's hard to imagine seeing it collapse as fast as this, but you can't be surprised by

this. Mike Pence went. Yeah, the only the only person that that had the truly perfect call on it was a guy working analyst. I got in trouble once before for calling a 24 year old, a kid, and I believe he's exactly 24. Oh, no. I mean, wise beyond his years. He's clearly has the chops of a perfect call. A grizzled 60-year-old political analyst. And so, congrats to him for the perfect call. The perfect call. You didn't see it yesterday. I think it's working.

The account is working analyst on X. And he crushed it. John, production is asking you to move that out of your screen, by the way. Thank you guys. And he basically called back in October of last year that the partnership would result in the largest Twitter battle in history. And yesterday it was, it was a very chaotic, crazy day on. X. It certainly was. It's very entertaining times. The Fisher has reverberated inside the

White House. Musk's top aide longtime Trump advisor Katie Miller left the White House with him last week, according to people familiar with the matter, and now works with Musk. Miller, who held special government employee designation, was with Musk at almost all times in the White House. She didn't respond to requests for comment. Her husband, Stephen Miller, is one of Trump's most loyal, invisible aides. He has defended Trump's legislative agenda and from Musk's broadsides in recent days and Musk unfollowed him on X this week. The Millers have spent had spent extensive time with Musk even outside the White House. The public clash between Musk and Trump also jeopardizes the

Department of Government Efficiency, the billionaire's trademark cost-cutting effort, Doge-affiliated staff, some of whom were responsible for pushing out thousands of federal workers texted one another on Thursday about whether they would be fired next, according to administration officials, the blow-up Thursday, caught top White House aides. off guard. Shortly before noon, Trump sat down in the Oval Office with MERS to chat about predictable topics, the NATO alliance, the war in Ukraine. There really is so much else going on to. It says, this was a chaos. It took about 13 minutes for the president to unload about his billionaire benefactor, expressing irritation that Musk had been critical of his legislative

agenda as too costly. It started gently, I've always liked Elon, said Trump, when asked about Musk's criticism of his big, beautiful bill, I'd rather have Elon criticize me than the But before long, Trump ratcheted up his rhetoric, Elon and I had a great relationship. I don't know if we will anymore, Trump said. And, yeah, there's this interesting take that like, Elon says. I can see them recovering. I could see it's bad right now. Yeah, we'll see.

But they've dialed it back. I'm glad, I'm glad they've both at least dialed back the posting today. Yeah. Yesterday, you could basically refresh. Yeah, you can get one of them firing. But today is the 81st anniversary of D-Day, of the Landings. And we got a fantastic poster from Anderl. We should share a picture once we take a good one, but they sent us one.

And so thank you to the Anderol team for sending that over. Anyway, let's tell you about linear. Linear is a purpose-built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product roadmaps. Is that a golden retriever right here? Nothing makes me bark like efficient product management and product planning. And that's what you get out of linear. I love linear.

Yeah, when John's using linear, this is all you're here. The song is getting crazy. It's amazing. There's some posts from Donald Trump here. Elon, these are from Truth Social, and they've been posted in the Wall Street Journal, so I believe that they're real. I'm very skeptical of the screenshots I see.

I was actually pretty disappointed with people just making, I guess I shouldn't be too disappointed with fake news. But, but, but, nothing really new. But, yeah, it's good. Elon was wearing thin. I asked him to leave. I took away his EV mandate that forced everyone to buy electric cars that nobody else wanted that he knew for months I was going to do.

And he just went crazy. The easiest way to save money in our budget, billions and billions of dollars is to terminate Elon's governmental subsidies and contracts. I always, I was always surprised that Biden didn't do that. Is there an EV mandate that forced everyone? everyone to buy electric cars? Like, I don't remember that ever being a thing. I thought it was just subsidies,

and you would just get, like, $7,500 if you bought an electric car. But I don't remember there ever being a mandate. Maybe at the state level. There's a bunch of state and local subsidies at the city level across a bunch of the different companies. Yeah, and I guess there's, like, EPA stuff where automakers need to have a blended MPG across their entire fleet. And so you see that funny, there's that, like,

Aston Martin smart car that they made? So I can give a quick break down to the different companies. So with SpaceX, they have 10 different NASA awards, a bunch of DOD launch, and then Lander Awards through 2031. There's $22 billion roughly under contract. Trump could put pressure on the Pentagon, NASA to kind of slow roll things, right? There's a bunch of, or, you know, push them to give contracts to rivals like Blue Origin, ULA, et cetera.

Tesla, they have clean car credits. Apparently it's about $1.2 billion a year in potential lost EV tax credits. Trump's saying that, like, I always was surprised that Biden didn't do it. I thought that Biden was, like, very much in the process of doing it.

And so part of the reason why Tesla stock mooned so much after the election was that there was the expectation that those wouldn't be canceled, but that was in the plan. before. Yeah. Starlink already has up to $3 billion in rural broadband subsidies.

Oh, really? That are kind of pending. And then this is smaller, but both Neurrelink and the Boring Company obviously are in highly. Yeah, FDA and then Department of Transportation and then a bunch of other groups. So you don't exactly want enemies in the White House? It's like basically Elon has more exposure than anyone on earth to a hostile government. Yeah, yeah, yeah. Which is why I just, I seriously hope it doesn't matter if you like either of them.

You know, I hope they can work it out because I would hate to be sitting here doing moments of silence for any of these companies. Or their shareholders. Or their shareholders. That's right. For sure. Trump was taken aback by Musk's escalation. According to his advisors, Trump told advisors he didn't believe he was harsh about Musk in the Oval Office, and he was surprised at how aggressive Musk became.

Trump's aides spent some time Thursday trying to figure out what Musk's goal was. The president told advisors Musk was just being a child according to White House aide. Around the same time, Trump walked into a White House meeting with the federal fraternal order of police and made remarks. He ignored reporters' questions and didn't mention Musk. White House staff huddled with Trump in the early evening. Yeah, I remember that. I remember seeing a clip of he's there to celebrate the police department and they're immediately asking him about Elon and he has to move on.

As of late Thursday, the shiny red Tesla that Trump purchased during a high-profile photo op with Musk was still in its parking lot, just yards from the Oval Office. White House aides joke Thursday evening that they hadn't decided what to do with the vehicle. So interesting to see where that goes. What a saga. What a saga. Wow. Back to work.

Back to build. It's time to build, baby. I will remember yesterday forever because we were live sitting exactly like this. And I could tell you had no real idea of what was going on. And I was coordinating with like 50 different people, the production team. Other people were texting me. I'm too AGI-I-Pilled for this stuff. We were getting angry messages.

I'm so AGI-I-Pel. People that I care about being like, I do not. care about AI. And I'm like, I do. I do. I actually just want to talk to your chest and shut up. But, um, but, um, this is the situation of the, of the, the, the, the, the, the, the, the steamroller and these guys are, now, now it's Elon and Trump picking up pieces of legislation in

front of the steamroller that is artificial intelligence. Yeah. Yeah. Well, uh, in other news, any sphere, the start up behind, uh, AI coding tool cursor has surpassed 500, million in annualized revenue and has raised 900 million in Series C funding from Thrive, Excel, Andreessen Horowitz, and DST. Absolutely huge week for Cursor. Very interesting media rollout here.

Well, this round has gotten announced like five times by now. That's true. Okay, so that's why Kate Clark at Bloomberg is writing about the revenue instead of the raise because the revenue milestones the new data point. and we already kind of knew about the raise. But there were a bunch of stuff. I mean, there was this Bloomberg piece. The CEO of Cursor went on Ben Thompson and did an interview.

It was fantastic. And Ben spends half the time just marveling at how young the founder is. And trying to kind of relate. No, it's so crazy. Think about, it felt like six months ago, we were talking. And people were saying Sam Altman should be Gen Z, right? Oh, totally. I said that.

Where's our Gen Z, Decacorn? Where's our Gen Z decacorn? CEO. I mean, Alex Wang, but but but there aren't as many and it just, it did feel like Gen Z was taking a while to find its footing in the in the private markets. Find, find their footing, a get to a billion dollar revenue run rate. Let's go. That's the expectation in this. Oh, and that the other data point, the two other data points, they're already being used by more than half of the Fortune 500, including Nvidia, Uber and Adobe. And they say this scale will

help us push the frontier of AI coding research. I mean, I want to know what's going on at the other half, like, are the other half on windsurf or are the other half like just raw dog in their IDs? I mean, they could be using, I mean, there's so many different options. GitHub co-pilot. But they better be using some. Somebody, SWIX was saying earlier this week that GitHub co-pilot is also at a, at a 500 million dollar rate.

That's crazy. Yeah, that's a public company if it was out in the markets. Pretty remarkable. But yeah, Ben Thompson was talking to the cursor CEO, and they were talking about how he got into software engineering. He's like, oh, well, like, you know, I was a kid, and I wanted to build video games, specifically mobile games. And Ben Thompson's like, this is a huge mark for, like, how young you are,

because there's tons of entrepreneurs that got into programming through video games. Oh, I was playing, you know, like this was me. Yeah, I played Counterstruck. Yeah, I played Counterstrike. I played Counterstrike, and then I would, like, modify the levels and modify the skins and the spray paints and like edit some config files and then eventually like scale up from there no cursor CEO started with uh started with mobile games and he actually built one that was like really really viral and really successful amongst software

engineers and so uh he's had a he's got to check that really stripe account yeah yeah what was there what was the activity in their stripe account when they were in high school yeah that's the investment thesis i mean yeah it would have been good one uh who is who is the first investor in cursor i wonder you're gonna figure that out but great Neo was early. Oh, yeah, Neo. That's right. But Thrive, Excel, Andrews and Horowitz, and DST are all in this series C.

There is $900 million. David Tisch was also super early. David Tisch, let's hear it. Let's give it up for David Tisch. Let's go. Round of applause. I love to hear it. He's not going to post about being early as much as the rest, but we're going to talk about it.

Absolutely. And, of course, Sam Bankman Free. also early into cursor. I thought it was Windsor, but it's cursor? No, it's cursor. Oh, my God. Wow, SBF, what a picker. What a stock picker.

I really wonder, like... So, yeah, FTX had a... Had a stake. Had invested, I guess, 200K. Oh, yeah, we heard about this. It had like an insane valuation, right? Or insanely low valuation. But it was kind of rumored

and the deal might have changed tans a few times or like the steak might have changed tans. They invested $200K,000, and they sold the position for $2. 200k. Yeah. I wonder how well those FTCs. If that was a fund, that probably would have been litigated or something. If that if if if you just looked at the FTX private markets like startup investments as a VC fund like they probably did pretty well. What was the other one? Oh, the anthropic. Yeah, they had a huge stake in it. They were also in world coin.

Oh my God. Wow. Sam should have just should just, should have just raised a fund not not had to deal with any of the dealing with crypto. Should have just gotten out of crypto pivoted to AI. Yeah. He could have done it. Yeah. Or told FTX users, do you want to be it in part of Sam's slush fund? Yeah, that was rough.

Instead of. Anyway, I think the story with him is not over. We'll see as it evolves. Apparently, he did get in a ton of trouble for that podcast he did from jail. Apparently, you can't just podcast from jail. Yeah, that was wild. He did that. Anyway.

Numeral. Did you see this post? Sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. Numeralhq. The golden retriever gets on numeral. That's true. You want to get a will?

Yeah, I just thought this was hilarious. Well, obviously, of OpenAI. Fame says this was the motivation I needed. Thanks, SFO Airport. It's just like billboard. Win the AGI race. Dominate the leaderboard. Win vibes.

He's just standing seriously in front of it. It made me laugh. Win the AGI race. Don't care about the budget. it don't care about the pork. AGI does not concern itself with pork. The lion does not concern himself with deficit spending it. Absolutely not.

Absolutely not. We can skip this semi-analysis post because, of course, Dylan Patel from semi-analysis is coming on the show today. And we will ask him about Jensen's new math rules and have them break it down for us. This is a very fun post. But anyway, let's move on to Uber is evaluating stable coins potential for payments, CEO Dara Kosh Hasharh, he says. Yeah, I wanted to throw this in here mostly so we'd remember to ask Jeremy about that.

Oh, yeah. Like all these different massive companies looking to adopt stables. Yeah, yeah. Apparently payroll companies should, might be adopting stable coins for, for like all of these different wire transfers that they do, both to speed up payroll, which is already pretty fast, but there's also a whole bunch of stable coins that should, if you put stable coins inside a payroll company,

you should be able to earn yield on the, on the, like, all the dollars that you're holding. Now you don't actually hold that many dollars just from running payroll because it comes out of the company's bank account, goes for like one day into the payroll company's account, and then it goes out to the employees, right? It just gets split up.

So there's not actually that much float there. But for tax withholdings, there actually is a ton of float because every paycheck you're taking out $1,000 and you're going to send it to the IRS. But you send it to the IRS nine months down the road or six months down the road on average, right? Because you're waiting. You only pay taxes once a year. So then half the year you're like on average. Sometimes you're holding it for 12 months. Sometimes you're holding it for one month.

But on average, that's like six months of cash and it's a lot. And so right now that's held in the accounts. but with stable coins, you could potentially get more direct exposure to the underlying treasuries. And so there could be some sort of boon for stablecoin or for both stable coin providers and payroll companies. So B2B SaaS undefeated, another beneficiary of modern technology. Just wait until quantum computing hits. Once quantum computing hits, everything changes in payroll. Every payroll company, especially global payroll companies, are really a really,

at the forefront of quantum. Oh, yeah. This is another thing. So what does the Elon Trump dustop tell us about Elon's quantum computing timelines? Because as you probably are familiar, quantum computing can break encryption. So guess what happens when quantum computers are ubiquitous? Oh, there's Epstein files. Everyone's going to have access to them.

And so if he really believed it. Quantum socks should be down tremendously today. Exactly. This is the trade. Stay out of Tesla. Stay out of, stay out of Rivian and Ford. You got to look at the second or,

you got to look at the second and third order effects. What does this tell us about quantum timelines? Probably that they're further out than we think. Because as soon as they crack those, boom, what's the first? What's the first file you're decrypting? The Epstein files,

obviously. Of course. Of course. Of course. I like Mike Solana's post about that. He's like, I honestly can't believe that we didn't know that already. It's just,

felt like internet lore that like of course Trump was in there because there's like pictures. But I guess like it's a different thing to be in the files than be in a picture. But the picture seems more damning. When I got at home yesterday, Sarah was like, hey, how was your day? I was like, did you see the news? And she was like, no, I've just been with the kids like all afternoon. She's just been bouncing around, swim lessons, music class, all that stuff. And I was like, oh, well, like Elon accused Trump of like being in the Epstein list.

She was like, wait, like, I thought, like, there's a bunch of, everybody's seen the pictures of, like, them hang out, like, having, you know. Yeah, there's video. There's video of them at a party together. And it was just kind of, like, assumed, I thought. But, you know, anyway, anything to get the, to get the internet riled up, Elon's master, master poster, he owns it. Anyway, regardless of your view on quantum computing, you know, you can express your view on it on public.com. investing for those tickets seriously. They got multi-asset investing, industry-leading yields.

They're trusted by millions. Go to public.com. Let's go to Naval. He says the majority of voters are retired either by age, disability, or make-work jobs. Paying for mass retirement requires crushing taxes, mass immigration, or rampant inflation. The only way out of a risky bet is on tech-driven growth. AGI will save us. But yes, the make-work jobs is interesting.

The AGI Pilled Lion doesn't control. concern himself with deficit spending. Or unemployment. True. I mean, this is one of my questions for most of the truly AGI-Pilled people. I try and formulate it as US unemployment over or under 10% by 2030. Because the US has rarely had higher than 10% unemployment, but AGI seems like something that could do a lot of jobs.

And so even in the Tyler Cowan model where, yes, medicine, and is resistant to AGI. Yes, like, you know, farming and land and plumbing and all these different things are maybe resistant to just like LLM-based agents, right? But even with that scenario, you should experience some pretty significant dislocation. And this is what that latest Dwar Keshe debate with Shalto was all about, how quickly can white color work be automated. Some people have very aggressive timeline.

Some people don't. But I always try and formulate it in like, let's put it in a concoct concrete something that's measurable 10% by 2030. And a lot of the AGI-pilled people, when they go, when they really unpack it, they start thinking about, like, well, wait, like, we're really good at creating fake jobs. Like, we could just have 10 more TSA-type programs. And all of a sudden, people are, you know, still employed. And it's like, yeah, my job is pretty chill.

I mostly just, like, watch YouTube and, like, oversee an AGI that does my job. But I still get my paycheck that way. You did a speed run to leadership in the census. Here in college, right? This is some incredible Coogan lore. Yeah, this was, I mean, the government's fantastic at this. So during the 2008 recession, there was a desire to pump money into the economy. More in the modern way we do that is basically with UBI and just sending checks to everyone.

But it wasn't always that way. We used to have to come up with an excuse. Schemes. Schemes. So this scheme was basically counting. Counting. It was a counting scheme. Counting scheme.

It wasn't an accounting scheme. It was a just a county. It was a government-backed county operation. Yes. And so the census, in 2000, the economy was ripping. It was the dot-com boom. And so all the census workers were basically volunteers. My mom actually volunteered, went around and asked people in the neighborhood.

It's actually kind of a nice thing to go meet your neighbors and ask them like, hey, like, fill out the census form. Like, we'll be able to get more votes for, you know, the upcoming election. And it's very nice to use people, and people are happy to do it. But in 2008, the economy had just crashed to that. 2010, the economy was in shambles after the recession. And so they decided to pay everyone like $20 an hour to do a job that people were previously doing for free and throw like way more resources at it to get like better census data. But of course, you can only spend so much.

And so I wound up getting like a management job there and getting paid a ton of money to do like basically nothing. You were managing hundreds of people. Not quite hundreds, but dozens. And it was actually my 21st birthday. And I remember going out and being like, yeah, guys, like, I can't really like fully take advantage of this and like drink that much tonight because I have to go to work tomorrow. You got to look after your team. And do an orientation for 40 people that range in age from five years older to me than 50 years older than me.

Like there was truly no one even close to me. It's still in school. I would pay a lot of money to have a video of you up in front of all of them talking. It was a wild time. Wild time. Learned a lot about the government. Anyway, we have Patrick Blumenthal in the studio. Let's do one more ad read.

Let's talk about out-of-home advertising. AdQuick.com. Out-of-home advertising made easy and measurable. Say goodbye to the headaches of out-of-home advertising. Only Ad-quick combines technology, out-of-home expertise and data to enable efficiency buying, seamless ad buying across the globe. Wrong screen share. I mean, we can talk about eight sleep, too.

Let's go. Get a pot-5 ultra. Pot 5. I had a brutal night sleep. I had a brutal night's sleep. It's been chaos. I think the two one-year-olds took the Elon Trump breakup really, really hard. Yeah.

I think the four-year-old as well, very, very difficult. It clearly, like, he can't really articulate if he's a Trump guy or an Elon guy, but he didn't let that on, but it was a dark moment for him. Well, they're all America guys. Exactly. Exactly. So it was kind of like, in many ways, it was an embarrassing moment. China one.

China one. The twins first two words. China one. Yeah, yeah, yeah. They're disappointed. Dada, China one. Yeah, but rough night of sleep. I got like a 64.

You crushed me. I mean, I didn't do much better, John, I got a 73. If you want to get on the official matches of TBPN. Go to Aidsleep.com slash TBPN. They got a five-year warranty, 30-night risk-free trial, free trial. free returns, free shipping. Let's bring in our first guest, Patrick Blumenthal. I've been on a podcast with it before. We did pirate wires together. Good to have you here in the studio. Welcome to the show. Long overdue. How you doing? Thank you so much. Break us down. Actually, first, let's kick it off with

an intro. What are you doing? Where are you? Are you in America finally? Last time I was on a podcast with you. I think you were halfway across the world. I am in New York City right now for the illustrious, decadent, incredible New York City Tech Week. Oh, fun. How is it? Fun fact. I created New York Tech Week. Co-founder right here. Yeah. Yeah. Yeah. Passed it off to Indreason after the first year. But yeah, the very first New York Tech Week was by yours truly. One of the biggest. Still on licensing. Yeah. Yeah. Bring you down for us. What are the best events been? Is it mostly VCs, entrepreneurs, there are a lot of pitching? How are the ads? Are there good sponsorships? There's a lot of ads and I think the like attendee to event ratio has like shifted massively

compared to previous years. I only went to two events by the way. So everything that I say take it with a grain of salt. I'm actually just in New York and then it happens to be during tech week. Cool. There's a lot of events, a lot of sponsors virtually for every single industry. Like there's a million NatSec events. There's a million at tech events. It's like virtually every industry, every type of person. What's the reaction? You seem a little tired, Patrick. Were you up a little late last night?

I've been up late a lot this week and the previous week and the week before that, to be honest. New York is an exhausting city. It's not quite the same as San Francisco. Do you sleep more when you're in Ukraine or New York? Dude, I actually sleep really well in Ukraine. I find the food to be so much better, too, so you can somehow smoke a bunch of cigarettes and drink a lot and still sleep really well.

It's a true meme. The meme is real. Nice. Interesting. What's the reaction been in at these cocktail parties to the Trump Elon news? That's a good question. It came up a lot last night. It wasn't actually a tech week party, but, you know, part of the it was a it was a couple of dissident right events we might call it. I think I think people don't care as much as Twitter to be honest. No one no one really had like any strong takes. No one's taking sides. I guess. Yeah. There's just not that much to go on like it's. It's, it's. It's still like crazy, but then in and out in a few minutes. But certainly something to track. But let's move on to the reason we wanted to have you on.

Can you give us your reaction and breakdown to the Ukrainian operation that I believe happened last weekend? We covered a little bit on the show, but I'd love to get your take and maybe just introduce exactly what happened. And then we can go into some of the history and implications. Yeah. So at a high level, what happened? Obviously, everyone heard about it. But, you know, specifically, Russia had a very, very big part of its nuclear triad get degraded. So they lost like 33% of their kind of air launch cruise missile capacity.

It's a bunch of strategic bombers that they manufacture during the Soviet Union, completely irreplaceable. And so one of the kind of big asymmetric advantages of Russia during the war has been that they can just launch a massive amount of stuff from really far away, like way beyond the range. of Ukrainian fighters, Ukrainian air defense systems. They use cruise missiles, which obviously have a propulsion on the munition, so it goes much further than it otherwise would. And they also have glide bombs that they've been using for the last three years of the conflict, which is basically just taking dumb bombs and making them fly much further than they otherwise would.

And so really all Ukraine has been able to do is destroy the platforms. Like there's just no way that they're going to shoot down every single cruise missile. They're not going to shoot down every single shahed. And so this is essentially the best thing they can do. It's just like go to their airfields and blow things up when they're still on the ground. You mentioned the nuclear triad. So these bombers that were destroyed were actually capable of carrying and dropping nukes, even though that's not directly relevant in this conflict.

They're not yet. They're all nuclear capable or a lot of them. Yeah. And so, you know, you have ballistic missile submarines. You have strategic bombers. You have ground launch ICBMs. Yep. And ideally you want all three because the idea is essentially that, you know, you have

essentially that you have too many nuclear assets in too many different places that, you know, you want essentially deterrence. So even if the U.S. were able to first strike with, you know, hypersonic missiles, every single ground silo that the Russian Federation has, they'd still have a bunch of strategic bombers on station, a bunch of submarines on station. So we would still be screwed, basically. It's crazy to think of Russian nuclear submarines, like just trolling around the ocean. I feel like they've been like so pushed back, so contained, but of course, that's obviously a... Well, that's the point of nuclear submarines. You can go go and just hang out for quite a long time. How, what do you think the, is this type of attack a one and done? They operated it on

cellular networks, which was a surprise. Do you think that Russia will make changes that make that a lot harder in the future. What's your kind of reaction there? I think the reality is that Russia is a very porous country. Like, it's exceptionally easy to get things in and out to their advantage and to their disadvantage. People don't realize how many Western components are in like every single Russian drone. They're still heavily, you know, using Western companies and components for virtually everything. They get it in through a wide variety of ways. But to our advantage, obviously the Ukrainians can do the same thing as they've demonstrated in this case. I think, you know, the future attacks are going to rhyme. They're not going to be exactly the

same. Like what Russia is probably going to do is improve their jamming operations at airfields that traditionally have not been subjected to Ukrainian drone strikes. They're going to change their procedures around daytime operations. So generally, one-way attack munitions, both on the Russian and Ukrainian side, happen at night. It's kind of random that like on a Sunday, more than, morning, basically, you know, there were a couple hundred Ukrainian drones hitting all these airfields. It's quite uncommon. And we don't know where the failure was on the Russian side, like, were the jammers online, and the Ukrainians just knew what frequencies the jammers were working on. And so they just operated outside of that. Was the Russian jamming guy who just sits there with

the big red button, just not at his station at the time, because he wasn't expecting it? there's kind of a lot of open questions around that. And I'm sure there's going to be like procedural changes. But when you when you kind of step back from the specific attack of like big trucks with garden sheds that are containing all these drones near air bases, and you just look at the basic kind of formula there, which is civilian infrastructure near military assets, the attack surface is just really wide. So like it could be a rail car, it could be a truck, it could be a van, it could be a ship

in a port, right? The military facility doesn't have to be an air base. It could be a factory, could be the Kremlin, could be any logistics depot, could be a base. And so when you multiply all that complexity, basically, across the 11 time zones that Russia has territory with hundreds of critical facilities, it's kind of unstoppable, to be honest. Yeah. That's interesting. How are you thinking of investing in drones as a category? You've been on the ground in Ukraine. You've seen, I'm sure, a lot of the stuff that they're doing, which is evolving constantly. I'm sure you've met a lot of the American drone startups. And obviously, you know, there's a huge range of players from Neros to, you know, Anderol to, you know, counter drone startups like ACS. But how are you looking at

the category and where do you think it's investable? So I think Ukraine is interesting specifically. And then I'll answer your question. Ukraine's interesting specifically because you have a lot of like consolidation around the same exact ideas. So like I've seen a lot of drone factories spread out around Ukraine. They're all making generally the same stuff within FPVs at least. And like you have different components like, oh, this FPV we're going to use fiber cable for it because this area is jammed. But at a high level, every FPV in Ukraine is like exceptionally attritable. It's like 3D printed, very cheap components from China are now sometimes domestically produced.

but like very, very cheap. Those are not really what I think of as venture backable. You also have obviously all the added unique risks of their factory might get blown up by a cruise missile. The founders in many cases are also active duty soldiers. So you have to kind of underwrite the additional risk of them getting killed on the front. Not to be so morbid, but it's true. In the U.S. ecosystem, more like a traditional startup, obviously, like there are no founders who are active duty in the U.S. there isn't exactly the same set of risks, and they're much more focused on selling to

kind of the Kremdala Krem customer or the DoD. So the capabilities are just much more exquisite. And so there's a lot of stuff to bite off because the U.S., similar to Russia operating in 11 time zones, the U.S. operates in every time zone because we have bases literally all over the world. And so every single climate, every single potential adversary, Iran, China, North Korea, Russia, etc. They demand different solutions in each theater. They demand different solutions for different operations during different times of the day, different weather, like all these different things. And so the reality is that there's actually a lot to invest in. Specifically with drones and counter drone

stuff, I think the future of like the integrated air defense system, like you know, we think of as like the Iron Dome, it's going to be much more heterogeneous. So like Israel now has like five or six different types of missiles they use. They're testing lasers. They're testing a kind of other couple stuff, but it's like a much more stationary and static type of system. The integrated air defense system with the future is going to be like three or 400 different things. Like this is going to jam this one thing. This is going to intercept this one thing. This, you know, is just hitting an FPV so it can be a small gun like in the case of ACS. And then other things, you know, you need ballistic missiles to destroy other ballistic missiles. So you basically are going to have this.

like a command and control system that senses all these different things and then essentially triages. What is Russia doing on the FPV drone side? We've heard that Ukraine is producing, I think, millions a year now. It seems like really, really mega scale. Has Russia been able to match that at all? Or do they take a different tact? I don't know where the official numbers are, to be honest, but I would be surprised if Russia was producing less, to be honest. I mean, I think certainly within the same order of magnitude. Obviously, there's very poor fidelity on the Russian side. But one thing that you can just look at, and this isn't just FPV drones, this is just drones broadly. One of the things that you can look at is like how many she heads are attacking Ukraine every single night?

Sure. It's in the hundreds. Like they're literally just lobbing hundreds of Chehed drones at Ukraine every single night of the week. And so I don't know if you guys saw, but they did their quote-unquote retaliation last night. It was basically like any other night. They just lobbed a bunch of drones at Ukraine. You know, the Russian economy now is like literally entirely a war economy. Like I don't know what it would look like as, you know, defense as a percentage of GDP. Yeah, that's one of the big issues with peace, at least on the Russian side, is what happens to the economy if you no longer need to be producing, you know, huge volumes of tanks and drones and missiles and all these other things.

It's so depressing. So many great mathematicians there, they should just be building. hyper-scale data centers and racing for AGI. They have the talent and they're focused on kinetic warfare. Fighting the last war. Well, that's probably got to end the war so that we can do joint AGI development with Russia. Exactly, exactly. Yeah, or maybe just more brain drain. I wonder if there are more Russian scientists that are leaving because of how crazy the war effort is

and if that'll make it easier to recruit brilliant scientists. There's a lot of people just hiding to, mostly on the Ukrainian side, because Ukraine obviously has the draft, but a lot of Russian scientists left in the first few days of the war through Georgia and Armenia, and now they're just like refugees. And then a lot of Ukrainians within AI and tech, obviously a tremendous amount of them have joined military and they're now developing in drones. But there's still a lot of Ukrainians. They're just like hiding in their houses, basically. And their wives just do all their errands for them. Like they're not allowed to leave the house because they're going to get conscripted. So their wife gets gross.

streets and everything. Can you talk to me about what is actually involved in visiting Ukraine right now? Is this something where you need to fly to a different country and take a train in? Is the airspace dangerous? Do you need a visa? What does the State Department think about visiting Ukraine right now? If anyone in the audience is considering going, what's the vibe on the ground? Where do you stay? How do you actually get connected? Can you walk me through your experience visiting Ukraine? Yeah, it just kind of depends on what you want to do. So, I don't know how specific I should be about my next trip, but the more east you go, the more difficult things become, obviously, in both in terms of getting approvals, but also just like transportation and then also your risk tolerance would have to go way up. So like, you know, hypothetically, if I go to Harkeef, which is very close to the Russian border, it's basically on the Russian border.

The risk considerations are just very different, both in terms of what to expect every night from Russian strikes, what to expect in the context of the war, like there is always, some kind of an offensive going on around Harkeith. And so you do have to be careful. You know, what I would say is that I obviously have high risk tolerance. What I would say is it's not as dangerous as people think statistically. So like, you know, the likelihood that you're going to get killed even in a drone strike when like if you're in Kiev, let's say, or Harkeeb and they're striking it hundreds of times per night, these are big cities, you know.

So the likelihood that you actually get hit by anything is pretty low. In terms of getting it in the country, you have to fly in through Poland, basically. So you go into Poland and then you drive into Ukraine. And it's a big country. So it's like 14 hours from Poland to Kiev. Yeah, I mean, we've heard, I mean, we saw during the global war on terror, like there were plenty of journalists that made it in and out. Obviously, it's extremely dangerous, but it is doable if you're careful enough. Can you talk about the public relations strategy around the Ukraine attack on Russia?

I found it interesting that we were getting like high fidelity video, really detailed analysis. It felt like... Yeah, first party video. Exactly. And the sentiment in the early war was very much like support Ukraine. Then there was recently some pushback about, are we spending too much on this? Is this even our war to be fighting? And that was a kind of political football that went back and forth, both on the left and the right in some ways.

This makes, this feels like it feels like the takeaway. is that the Ukrainians are innovative and they're adapting and they're not letting down. And so maybe it's not time to back down and supporting of them. Is that deliberate? Where do you think this goes from here in terms of support from America? I think there's like different groups of people that the Ukrainians want to kind of attract or get attention from these kinds of attacks and the reason why they're so public about it including posting footage is that they're trying to basically convince the rest of the world

that they're worth supporting in a very pragmatic way. It's like forget about the fact that Russia started the war, that Ukrainians are being killed. Any of that's kind of irrelevant. The main calculus is, hey, yes, we are, you know, one-fifth the population of Russia. We have a much smaller economy. You know, we have manpower issues. All these things are true. You know, Russia historically, you don't want to fight a land war against over an extended period of time.

We do these operations. The Ukrainians do these operations because it's a way of showing that they've essentially found asymmetric ways to offset it and that if you send them money if you send them weapons if you provide intelligence support they're going to keep finding new ways to do it so it's just them basically showing every six months really we're going to find a new way to reinvent ourselves and they keep russians on their feet basically very cool well good luck on your next trip stay safe out there and enjoy the rest of new york tech week appreciate it i will thank you guys so much be safe pat we'll talk to you Great talking to you.

Bye. Next up, we have Jeremy from Circle. I'm so excited for this. I'm still learning about quiet periods and when folks can talk, but we certainly not in a quiet period today. And we're so excited to have Jeremy on the show. Welcome to TBPN. How are you doing?

How are you feeling? Congratulations. Thank you. Thank you. I'm feeling good. It's been a really intense couple weeks. and obviously a really exhilarating last couple days. You got any sleep last night?

I did. I did. I managed to, my family was able to join me for the ceremonies here in New York and got dinner with my family and got some rest. Yeah. We talked to Brian Armstrong about the initial rollout of the Circle partnership years ago. This has been a classic overnight success very clearly. Probably your overnight success, yes. Overnight success.

We love an overnight success on the show. But can you give us a little bit of the history and the story you told about the company when you were taking Circle public? Yeah, absolutely. I mean, look, my background had, you know, prior to this been building internet software platforms and infrastructure from like programming language, developer tools, digital media platforms. and I was always interested in sort of how the open internet and open networks could change the way different parts of society work. That was what animated me.

And in 2012, I got deeply into the technology behind crypto in 2013 really formulated this idea that, you know, it would become possible to build a protocol for dollars on the internet where you could issue a, what I thought of as a full reserve dollar digital currency that could be made accessible in the internet. a protocol like HTTP. So you could have a protocol for dollars on the internet. And I believe that we could do that on these blockchain networks, which were super nascent at the time. And there's no legal framework for any of this. And it was like, you know, totally crazy. But we believe we could do it. And, you know, I think the belief was that over time these networks would become scalable, the infrastructure would work. We could come up with laws and regulations. And that once we achieve that, that basically the storage and transmission of value would become like a commodity free service on the internet, money velocity would explode.

And then in particular, I was really excited at the founding of this idea of programmable money and smart contracts, which was like ideas on napkins at the time. And that ultimately, not only would you just sort of have this explosive way to, and low-cost way to move value around, but actually the utility of money could increase dramatically. and that you could actually rebuild the financial system into an internet financial system, which is how we founded the company, a circle internet financial, originally. And so, you know, we've just been pursuing that. And now, like, it's actually happening.

Like, the infrastructure works. There's laws and regulations. We have these full reserve digital dollars that have, like, central banks and prudential regulators looking at them. And the technology is sort of starting to kind of go into the background. It's no longer crypto. It's stable coins. and it's digital currency.

And so, and we've built, I think, right now, a really interesting business to bring that. And so that's sort of the origin of it. And so kind of it's been, you know, it's been a long road for sure. Congratulations. I have like 12 more questions. I know. We don't have a ton of time.

You know, I want to get into, you know, some of kind of two angles, how you're thinking about partnerships on a go-forward basis with institutions and then partnerships with, you know, other large, you know public companies it seems you know we saw Uber in the last 24 hours in the headline talking about you know exploring stable coins we were talking about payroll companies potentially and I and I feel like this gives every you know I my last company was a fintech company we enabled use stable coin investing with USC and so I've been a big you know believer for a long time but you know you guys

being public now the market reaction to it it feels like it gives every single institution in the world permission to say hey let's a this technology in a meaningful way. And so it truly feels like you guys are on day, this is like day, day zero. Yeah, I mean, look, I think this is like a mainstream moment for the adoption of this technology.

We're classically crossing the chasm, right? From early adopters to like mainstream acceptance, the technology usability, the laws and regulations. And, you know, having a publicly traded company like this, I think it really does matter to trust, transparency, compliance, governance, things that really matter when other major companies to figure out who to build with. But at the core of our business, our whole model is we're

a market-neutral infrastructure company. We're like a platform that people can build on top of. We have banks and neobanks and payments companies and fintechs and exchanges, custodians, like every type of institution we work with already. And they face us as a market-neutral platform. And that's really, really important. We're not competing for end users. We're not competing for businesses. We We want to let other people build on top of both the kind of public utility that we put out on the internet, like our public protocols, and like the kind of market infrastructure of the money issue inside of it. And so it's now, it's definitely getting to a point where, yeah, I think major public

companies, commerce firms, internet firms, financial institutions of all types really can build on this now. It works. It's liquid. You can connect to it around the world. We have the ability through innovations like CPN, our recent product that we launched, to abstract away from an end user perspective,

a lot of the things that are, you know, tend to be barriers to entry and make it work compliant as well. So it is a really, I think, significant moment. I do think that, you know, lots of mainstream companies can now really feel like they can do this. And there's a great platform company to work with. I'm wondering about other real world assets.

that's on change programmable money. A lot of the conversation around I want something that's low cost, high speed, programmable, and stable supply, that makes me think gold, stable gold coins, basically. I'm sure you've gotten this question before, but why didn't the market evolve that way? Or even that original, like 1999 Peter Thiel talk about you're going to be able to transfer $1 worth of S&P 500 to someone else. And there seems to be some demand for that type of stuff. but the market didn't just break that way.

And so what's actually going on? Yeah. Well, I mean, look, I mean, the dollar itself has extraordinary network effects. 65% of trade is settled there. Sure. And frankly, like a huge driver in our business right now is demand for digital dollars around the world. People, households, firms want to hold these safe, full reserve digital dollar instruments that have the utility of the internet. It's like when people woke up and said, hey, I can use WhatsApp and I can communicate with others.

I don't have to pay my carrier, these SMS fees. and it's over-the-top internet money. And so people have figured that out and people want dollars, even though there's a sell America trade or whatever you want to talk about or there's a fiscal cliff or whatever it is, like all these things that are there,

people still want a unit of account and they want the power of the internet as a medium of exchange. And relative to almost every other fiat currency, the dollar still remains super preferred. And so I think that's certainly going to be the case for a while. And so I think that's there.

But the programmability piece is the really exciting next step, right? How can you intermediate financial arrangements, commercial arrangements, labor arrangements, arrangements between AI agents, like all of these things that can be machine mediated with provable code, you know, tamper resistant provable code on the internet, which is what smart contracts give us. We're just starting to see the unlocks there. And it's going to be an entrepreneur and developer-driven phenomenon for sure. That's amazing. You mentioned AI agents. Ben Thompson was reacting to the MCP standard and the lack of a payments layer in there, at least in this version of the specification. Is there, do we need a V2? Is this one where we saw? Well, you know, it's a great question. We're working with all kinds of teams on agentic payments. And I'll tell you, you know, we worked on a new standard. Actually, it's reusing an old standard. We worked on it with CoinBase. and a couple of others, which is X402, which is essentially an un... It was a protocol extension of HTTP,

which was originally a protocol extension to support payments native to HTTP. No one ever did anything with it. And so it is essentially the payment request, like, a feature of HTTP. So that's been reincarnated and where Stablecoin is the payload. And so now you actually have built into HTP an extension, which is a Stablecoin payload. And so it's like literally designed. designed for AI agents that need to basically handle these.

And it kind of abstracts away what chain you'd use underneath. And so it's pretty cool. And we're pushing it into our dev products, so it's Coinbase and others. And so I think actually, like, that was part of like, you know, early on Mark Andreessen complains. I was about to say.

Yeah, I mean, that's the famous thing. Hey, we had this thing there and no one did anything with it. Well, now we have something to put in there. And now we have the demand, which is like machines that talk to each other. And so it's interesting how a lot of these things kind of come together at the same time. Yeah. Do you have a view on that idea of micro payments on the web?

It just feels like we have micro transactions that happen across APIs. They just get bundled and reconcile at the end of the month. There's still a ton of value in stable coins. I'm not saying that like, oh, the narrative is bust because that might not be the endgame. But we saw this with Bitcoin where people were saying, oh, there's four different ways that this could break, privacy, blah, blah, blah. it wound up in having a very strong narrative. It kind of narrowed down the focus, but it's still a wildly successful technology.

Well, I mean, look, at a high level right, we think about the TAM here as legal electronic money, and then narrowing that down a little bit. You have cash and non-interest-bearing demand deposits, which globally is like $60 trillion of the money supply. And so if you can have a digital cash instrument that has the superpowers of the Internet and the like, that can basically move and transact at almost no cost.

There's an enormous amount to grow into. Now, the other part of the TAM is all of the different utilities that we have for storing it, moving it around, and those are being reconstituted on chain. And so you start to think about, like, okay, you know, cross-border payments is one that we talk about a lot, and we're seeing a lot happen there. The kind of point I like to make is, like, when's the last time you sent a cross-border email?

And sort of like, well, that doesn't make any sense. We're like we're entering that era with money, right? Where basically like stablecoin money, and that could be a business that's got a $10,000 payment to buy something from someone in Asia to, you know, get product in Latin America. It could be an investment, right? I want to make a $10,000 investment in a startup in an emerging market or in the U.S. Or it could be, and as we see today, like the biggest electronic trading firms in the world are moving hundreds of millions of dollar transactions. over blockchains using USDC to settle bilateral trades, the exact same transaction is being used to buy a 25% digital,

a 25 cent digital object in a Web 3 game. And it's the same, right? Just like if I send you an email with a picture of my breakfast, and you send me an email with a CAA dossier, it's the same payload, it's whatever it is, 25 byte or a bite of data or whatever. You know, it's the same thing. And so, you know, that's the cool thing about this, very, very scalable.

And so you don't need like streaming payments or micropayments as like a killer use case. You just need to be able to support all these different kinds of value exchange, just in an internet native architecture. Can you talk a little bit about the geopolitical environments internationally that are most receptive to stable coin adoption? You could see demand for crypto products track or correlate with authoritarianism, but then you have the pushback of a lot of authoritarian countries. might want to ban or restrict or make something illegal. Yeah. So will we see more almost counterintuitively or like as a second order effect? Will we see more stable coin adoption in more democratic countries first?

Yeah. Well, what's interesting is the demand for stable coin money is very global. And we do see it, for example, in countries where there's weak regimes or the banking system isn't as adequate or there's not as effective access to dollar banking. Sure. And so that's a valuable thing for the people and businesses in those markets. But it is sort of this, again, this over the top phenomenon. Like, you know, WhatsApp came over the top and like all of a sudden everyone was a Facebook customer.

And then you're dealing with Facebook for whatever issues in your country or, you know, the Arab Springs were an example of like, hey, everybody could like share media with each other. And like, whoa, we just lost control of things. And so I do think there are geopolitical dimensions to this. I think we're in the very early. But then you guys have have partnerships in Japan that allow you to launch USC there. We do. And that's our philosophy, right?

Is if a government is going to have rules around, you know, stable coins in their, in their society, you know, we want to make sure that like those rules are fair, obviously. And we want, you know, that stable coins that are allowed to be used to be held to really high standards, right? high standards of trust and transparency and compliance and governance and things like that. So that's important. And what we're now seeing is in markets where stable coins have exploded, Korea, Brazil, Turkey, South Africa, Kenya, like all of those governments are working on stable coin rules right now. So I think it's a space where that's intersecting. And so, yeah, we've dealt with this in the history of the internet, right?

When the internet started, like you needed a broadcast license to have a radio show in Italy, right? It was like a, or there were national monopolies that were the only entities that could actually do radio shows in Italy. Well, now here we are, right? So I think there are these kind of transformations in society ultimately votes, you know, on what they want to adopt, but it is still a political economic negotiation. And monetary sovereignty is not something that the internet has really faced off against, you know, in a big way. But, you know, people talk about Bitcoin as doing that, like as this non-sovereign store value, but then when you have kind of exportable digital fiat, then it does become a slightly different issue.

Can you talk quickly about the competitive dynamics on a go-forward basis? This IPO was massively successful. It seems like they're at right now, from my point of view, infinite excitement for Circle and USC. That's obviously going to inspire a lot of different groups, whether it's early stage startups to other institutions to compete. And I can imagine myself why you guys will continue to dominate, but I'd be curious to hear from you. I mean, look, I think the way we think about our business is that we've built a stable coin network, and it's an internet scale platform and network utility.

And we take very much like an internet platform mentality. We want to build open public infrastructure. We want developers to build on it. And developers build applications. that integrated to it, which adds utility, which then expands interoperability. And so you create these really great classic developer flywheel effects.

And that's what we've done, and we've done that with liquidity as well. Like it's got to be available, the digital dollars, etc. So this is a, you know, it's a business that has network effects. And those are, I think, strong network effects. And then it's a business that there are these very significant hurdles we've had to work on for 10 years to become licensed, become regulated, to become supervised, to become trusted, to integrate into these different government regimes

and the like. And that's a lot of work. And it's definitely work other people can do. So I have no doubt that given the TAMs that we're talking about, that there are going to be a lot of great companies. And what I've sort of said is, I think this is a winner take most, not a winner take all market. And you sort of see that in the market structure

a little bit today. And I expect that market structure to persist. And I think three to five years from now, within that set, you know, set, that market structure. There's probably a couple players that don't exist yet, but will exist, and will be double-digit players, right? So it's just hard to know exactly who that's going to be. But I think at the end of the day, like we want to build things that are useful for end users, for developers, for businesses, and provide that and keep innovating. We're a product-led company,

a technology-led company, so we want to just keep doing that. And as long as we do that, I think we can continue to grow and thrive. Yeah, you guys are in an incredible personally John bought a car this week and were the dealer able to accept stables he probably it would probably be getting delivered today but instead it'll be Monday I look forward to never people internationally with stable coins years ago it was fantastic experience it was in Argentina I have one last one last one once you once you've had stables you'll never go back right it's like oh wait and I can't believe this yeah I have one last question and then we'll let you go sorry for going too long

But I want to understand the shape of your business. I'll give you some examples. There's the Silicon Valley muscle. There's the Washington, D.C. muscle, and there's the Wall Street muscle. And when I think about the Bitcoin project originally, it was almost entirely technology, no regulation, no financial work. The grayscale Bitcoin ETF was very little technology, almost all lobbying and regulation and Wall Street financial. Are you a perfect blend of all three? Is there some focus?

Has it shifted over time? Are you out of the woods on the DC stuff? And now it's just finance from here on out? Well, I mean, look, I mean, you know, the best way to look at a company is to look at its OPEX and within its OPEX, you know, the largest piece of it is labor. And so when you look at the labor OPEX of Circle, like approximately 45% is product and engineering. So we are very technology driven and that is leadership from a amazing, you know, engineering and product leaders, mostly out of Silicon Valley, mostly

based in Silicon Valley. And so that's by far the biggest because we're operating this infrastructure and platforms and software and the like. And then the second biggest, which is, you know, maybe 20% is what I'll broadly call like our control functions. And so that's like risk, governance, compliance, you know, financial controls because we're like this digital currency, the market infrastructure, right? So the control piece is really, really key. And then you have like, yes, we have a legal policy and regulatory team that is much larger than a tech company.

And is expanding because we're now needing to work with and collaborate with governments all the world. Yeah. So that part doesn't slow down. I think as this scales, like the work that we need to do with governments only increases, the control infrastructure, the product and engineering should kind of chug along. But yeah, that's well, yeah, I think about the compounding advantage of yeah, you can compete with us, just, you know, get, you know, hire a team that can interact with every government on earth.

It's perfectly regulated and perfectly. You're welcome. Well, you know what, though, I say this, which is like, you know, I've done the yeoman's work of like legal bills for like a decade. And so, like, you know, Everyone gets to ride on top of all the legal and regular. Yes, Satoshi had it so easy. Sure, but relationship still matter. So she had no legal bills. Well, thank you so much for coming on. I'm so excited for you and the team.

Yeah, this is fantastic. Classic tenure, 12 year, overnight success. I love to see it. Thank you. Have a great rest of you day. We'll talk to you later. Awesome. Cheers, Jeremy.

Come back on soon. We have Anastasios from L.M Arena. We're going to get to the bottom of what the best L.M is. What the best LLM is. Welcome to the stream. Anastasios. How are you doing? Pretty good, how are you?

I'm great. Congratulations. You have news. Can you first introduce the company, the news, and everything that's going on in your world? Sure. So, Elamarina is an open platform for evaluating AI via human preference. What it is is you can go to the website elamorina.a.i, and you can type in your prompt, and what you'll see is responses from two anonymous LLMs. And the LLMs are, you know, some of the best

Gemini from Google and ChatGPT from OpenAI and Cloud from Anthropic and they're sort of randomly sampled from a pool. And not only do you see the response of it, you can also battle them against one another to see which one sort of win for your vote. And then if you choose, you can vote for the one that won, and then we use that data in order to construct leaderboards. So we have a leaderboard of the performance overall,

but also in subcategories like math, coding, instruction following, and so on. And we sort of see it as like the people's voice on AI progress, right? Because you can go that you can express your opinion. A lot of the tasks AI is doing this subjective. And by doing so, you can sort of guide the field. Yeah.

So you raised money recently, is that correct? Yeah, we raised 100 million. Wow. Congratulations. Yeah, thank you so much. It just speaks to the strength of our community and our duty to continue to improve the product for them. So the real business model.

Yeah. business model because I think people might not be so familiar. There's a lot of benchmarks out there but you're actually building a huge business around this. Absolutely. The business model is to help you know one of the biggest problems that we see with AI-driven software today is people just don't know how to build it reliably. They don't know how to pick the right model that to use for them. They don't know how to build like an agentic system with multiple sub-components in such a way that they're going to be able to ensemble it together into a piece of

software that's like reliable and performance. And it's hard even to define what these words mean, because a lot of the job of AI is to interact with humans. And so when you're interacting with humans, a lot of the responses that people give are subjective. So how do you make sure that you are using your models in a way that ends up satisfying your users, ends up making your product better and better? Yeah. You know, we're hoping to be able to address that product because we have such a big community. Millions of people come into the site and giving their preferences,

and we have a whole competition landscape of all the different models against each other on all sorts of diverse tasks, Not just in tech, but also in medicine and real estate and school and so on. So talk to me about the death of traditional benchmarking and the rise of big model smell. Have you been able to quantify the unquantifiable yet? Sure. So I wouldn't really describe it as the death of traditional benchmarking. I would just say that benchmarking is entering a new age where there are different types of benchmarks that are needed. So what does a traditional benchmark do, just zooming out?

What you do is you say, hey, here's like a particular vertical that I want to evaluate. Let's say I want to evaluate image classification. Well, then I'm going to collect a bunch of images. I'm going to classify them. And then I'm going to basically give models a test. I'm going to grade them based on how well they do on like a held out set of classified images. So what is the problem with this in the current day and age? Well, these days the way people are using AI is like so broad that you could never like annotate all of it with datasets.

Like you could collect a data set, it's going to evaluate that thing, but not everything. And you could collect 20, and that's going to, you know, evaluate 20 things. But really, there's like a million different things that you should be evaluating. And, you know, arguably, even every individual has their own point of view on, like, you know, all these subjective tasks. And so that's why things like Ella Marina come in as sort of a different orthogonal signal. Yeah, maybe it's still useful to say how well is my model doing on image classification or multiple choice question answering. But maybe I also want to know, you know, whether people like this small. why they like this model, whether they're using it in the ways that I intended to be used,

which in which parts of the space is it good and bad? And our perspective is those are the questions that we can answer by gathering a massive data set of human preferences, and then going backward, basically inverting the problem and saying, let's mine that data for all the analytics that we can get so that we can tell you which model is best for you and for your use case. And that's where I think the power is in this sort of new age of benchmarks. What about humor? humor can we expect any type of benchmarking from Elam Arena around just making the user laugh? That's a great idea. We should have a leaderboard for that.

Because I think that that's a potential trap that humanity can fall into is al-LOMs get so good that you just refresh the button and laugh over and over and over and over and then all productivity is lost and it's just the laugh button, you know. If you're making people happy, you know, making people like ask that's not a bad thing yeah what I also scroll YouTube like looking at my favorite comedians and I think they they provide me value totally yeah I have I have a post here I want I want your reaction to I said now that AI can beat every every intelligence test we need new evals for the other human traits

specifically I'd like to quantify courage fortitude gallantry mirth equanimity yearning stoutheartedness gravitas panache this would help me pick what LLM to use How close are we to being able to quantify courage in an L-O-L-O? I love that so much. We need your vision. Yeah, I don't know how close we are to courage. Maybe we need to up the stakes. You know how it could be in the real arena where they have some risk.

We have some chips on the table, you know? Yeah, yeah. Our intern said you could probably do this using control vectors. And I said, I don't want to put the courage mask over the Shogoth. I want to understand the base level of courageousness for the Shogoth as a whole. Is that still a control? So we went back and forth on that. We're getting biblical here.

I love it. Yeah, it's great. Where are you guys going to be? You obviously raised $100 million. Where are you going to be investing? What are kind of some things coming down the pipeline that you're excited about? Well, the majority of our effort these days is going towards taking the platform that we already have and making it a lot better for our community.

Basically inviting more people in because, as you can imagine, how does our platform work? Like, people come to the platform. At this point, millions, but we're hoping tens of millions or more, of people will come to the platform and vote for the AIs that they like best. And then we take those votes and turn them into a number. Right? So what's the most important ingredient here is getting people into the platform and loving the platform to play with all these different AIs and like ranking them and toying with them and so on and so forth.

And we want to build great product features for them so that they continue to love it and come. So just investing in Ellermarina.a.a.i. That's like where we're really targeting a lot of our energy. We have Dylan Patel coming on next. He recently dropped the AI Mandate of Heaven tier list. He's got Open AI up at the top, followed by Anthropic, Deep Sea, Google, X-A-I down at B-tier. Meta and Apple are struggling a little bit lower down in D-tier and L-tier. Does that track with you?

What have you been most excited about in the recent developments out of the foundation model labs? What do you think is like underrated right now amongst the various foundations? models? Well, I think in general, the thing that excites me most is that there's a lot of competition these days. And there's also a lot of new modalities that are coming out. So, like, you know, all the time we're seeing that the models are improving, improving, improving, and the pace is not slowing down. These things are getting way, way better. And there's a lot of the most brilliant people in the world that are just here, like, in the crucible, developing, like, the best AI models. And then we're going beyond text, right? It's going from text to

People are now doing audio and people are doing video. And I don't know, there was a big video model release, you know, last week with V-O-3. That was huge. Yeah. And- Are you already doing tests against the different video models? Because right now, I mean, I've put the same prompt into SORA and V-O-3 and it wasn't

even close at this point. Obviously, the next iteration will be maybe more competitive. But it feels like we're kind of too early to do those types of evaluations where people would just immediately identify. a V-O-3 video, but then there are some other labs out there, like runway, that are doing cool stuff in video, and maybe it's harder to tell than people think. So we have an sort of initial cut of a video arena that we're going to continue improving that was built by some awesome graduate students at Berkeley like.

So we have that and we're going to continue building it. But I think one benefit of some of these strategies like arenas is that they can actually provide kind of a touchstone for the field to come together. and say hey here's here's what we're going to try to improve let's go and then maybe it would motivate some labs to actually continue to like build better and better media models because they want to you know they want to be winning the game what what has been your take on the the the llama journey there was some accusations of like benchmark hacking a lot of people have been saying well it's you know like never been against zuck he has a he has a he has a capital

Canon and a huge incentive to stay in the game. And so we could be seeing some exciting things out of meta in the coming weeks or even coming months. I mean, all this stuff moves so fast. The leaderboards are constantly shifting. What's your reaction been there? So I would just say that we should all be gunning for meta. We should all be rooting for them because they're releasing open models. And so I think open models are really great for the ecosystem.

So I think I and everyone else should want them to succeed. Now, you know, there was a little bit of weirdness in the last release. I think it's okay. You know, they have a big group of really talented people. They're going to move on. And, you know, the models they released, they're good. They're getting better. And I hope the trend continues for them.

Yeah. How is the AI safety debate shifted recently? It feels like meta almost could have had a little bit of an out by, you know, years, in years past, years passed when a model wasn't performing up to standard. You can never really tell if the foundation labs were really worried about safety or they just didn't want to release the product yet. It was an easy kind of out. We didn't see them take that this time.

We didn't see them say, hey, we're delaying because of safety concerns. Has that kind of melted away from the discourse in your community? Or do you think that there's a world where what your building could be used to evaluate safety? because there's so many different dimensions of safety now. I completely agree, and we definitely want to make safety of priority in evaluations. We have a red team arena now that has been out for a little while, and it's still a little bit of a prototype, but we're going to keep working on it. And I think it's really critical.

I don't know about the initial question about whether or not that's used it as an excuse or not. That's kind of, I don't know, that might be above my pay grade. I don't hear a lot of those internal conversations. But I certainly think that subjective evaluations are going to. to be important for safety. Jordan, anything else? No, this is great. I'm excited.

Yeah, thanks so much for coming on. Congratulations on the milestone. Great to meet the two of you and keep in touch. Yeah, come back on again when you have news. See you guys later. Bye. Cheers. Really quickly, while we have our next.

I feel like humanity has a duty to everybody should be required. It should be forced. You got to go on Elm Arena daily. Five minutes a day. Every person on earth. What do you got, John? We got Bezel. Getbezzle.com.

Your bezel concierge is available now to source you any watch on the planet. Seriously, any watch. And our next guest is here. Dylan Patel from Semi Analysis. We'll bring him in. Welcome to the show. Dylan. How you doing?

Boom. What's going on? Yeah, this live audience is fantastic. I mean. We actually do have a bit of a live audience. We have four people in the studio today. But we also have a soundboard going. Let's go.

Let's go. If you want to drop a big number or anything. Yeah, if you have any big numbers to throw out, we'll hit this gong. Why don't you just hit it, John? Dylan's been on a generational rock. Yeah, yeah. Just hit it for semi-analysis. There we go.

You got the Gog cam. It's so loud. I'm sorry. What's happening? How are you? Great to meet you. It's fantastic. I'm having a fantastic day.

That's awesome. I really enjoyed your China Talk episode, the update to the AI lab tier list. I wanted to, I asked some folks about that. I have some follow-up questions, so maybe that would be a good place to start. Open AI, I mean, it sounds like they're not backing down from bigger and bigger training runs, but can you give me a little bit more insight into what it means to do a big training run now?

Because they're still pre-training, like the RL stuff is scaling up. Like, what is the shape of the next big run if that's even the right term to use in this era? Yeah, so there's efficiency gains on multiple layers, right? So pre-training, you're not simply just going to scale it larger and larger as your only avenue of spending resources, but you are constantly getting efficiency gains, right? Something that lets your model be 10% more efficient to run or train, but involves changing the algorithm. So people are still doing pre-training constantly, but they're not, you know, opening eyes Orion or GPD 4.5 was a run so large. that they literally can't scale it up any larger until like end of this year when Stargate starts being operational, right? They literally just don't have a cluster that's bigger. So it's primarily them

evolving their model architecture continue to get efficiency gains, right? So for example, GPT4.1 was an efficiency gain over 40 and they're going to do another one of these sort of efficiency gains step up in model size somewhat but not as far as 4.5. So that's on the pre-training side. But all the eyes are on the reinforcement learning side, right? That's where they're doing all these crazy things or cool things, right? Whether it be, you know, O3 specifically for just regular reasoning and O4 is coming out soon enough, or it's deep research or it's multi-agent systems, there's tons of work they're doing, spending, training, compute on training larger and larger models in terms of more compute spent on RL, not necessarily model size, right? Because your

model size is baked in at pre-training. Yeah. With Stargate coming online is, like, is there really no other way around that? Like, I feel like AWS is really big. There's, like, other big clusters out there. Can they just not get access to those? Or do they truly not exist? And will Stargate be, like, first of its kind?

You know, I think it's, it's funny that my little, like, autistic obsession became the most political thing in the world, right? And so, like, you know, you have, you have, you know, obviously U.S., China, now Middle East, Like there's all these geopolitics here. But of course, like the politics are between the companies too, right? So there's the whole like Open AI Microsoft breakup, right? There's a reason Stargate is not in Wisconsin, right? Microsoft had a huge data center they're building in Wisconsin.

That's where it was going to be. But now Stargate is in, you know, Texas. And it's not being done by Microsoft because Open AI and Microsoft had all these politics, right? A lot of which were really well reported, but a lot of which have been sort of silent. But, you know, and it's like, okay, well, is Amazon getting? give Open AI compute? Absolutely not, right? Is, is like Google going to give opening I compute? No way, right? You know, it's like, it's like there's companies getting bought by Open AI. The deal hasn't even closed and they're cutting, and profits cutting off access, right? You know, sort of with the whole windsurf thing.

So it's like, you know, it's like these things are so political. And little nerdy autistic boys don't know what to do with politics. Yeah, yeah. How much of that dynamic is driven by just like true AGI pilling at the top level of the hyperscalors versus just this is potentially a multi-trillion dollar yeah this is potentially multi-trillion dollar outcome and like we need to have a player we need to cut off a competitor what is there a dynamic there I mean I don't think those things are mutually exclusive right like whether you're like truly AGI pilled like open area anthropic type people where you know you want for the benefit of humanity or you're like you're like Andy Jassy or like Satchett Della or whoever it is, right, your, you know, whoever you are at the hyperscalers,

you know, at the end of the day, it's profit is AGI, right? If you have AGI, you hope you can profit off of it, right? The people at the labs would like be like, well, I don't know if AGI would let us profit off of it. But in the meantime, as we're building towards AGI, that is a, you know, trillion dollar, $10 trillion, multi-trillion dollar thing that you have under your control. Yeah. Do you think we'll be able to tax the profits of AGI even if we can't reap them?

Because I was looking at the Trump-E-Lon breakup and I was wondering, what does this say about their AGI-I timelines? Because if you really-I-pilled lion does not concern himself with deficits. Yeah, if you believe AGI-I-20207 or A-2027, like the budget deficit doesn't matter, right? Like, we're going to be printing 20% GDP growth. We'll be able to pay back trillions of interest in just a couple of years. So I think it's quite funny. You know, this opening, I'm sorry, this Elon and Trump's sort of drama. Like, you know who's, you know who's like sitting there like, yes, yes.

I know who. Sam, of course. Let's go. Because he's like, you know, like for a long time, Elon was like, I'm not going to allow Open AI to become a nonprofit or become a for-profit, right? And he's suing them, right? And part of his like, I'm sure part of his calculus for like going all in on Trump and, you know, saying he loves.

him more than a man can love any other man like, you know, you know, four months ago was like him thinking he could, you know, convince Trump and the IRS to not let them convert, right? Now, like, it's like very obvious. Like, what's the impediment? Like, they're going to get, going to be able to convert. Well, at the same time, Trump was always a Stargate guy. He's a big Stargate guy. He announced the project, right?

Trump is a big number guy, right? Yeah. You get the $100 billion and he's like, hell yes. Hell yeah. Just because this is what it's about, right? Yeah. Yeah. Before we move on from the OpenAI, the next big run,

how real is the narrative of like they're going to pull ideas from Deepseek? I think it was like FP8 was one of the innovations. There were a bunch of other innovations. Some of those were specific to the restrictions of chips, but it felt like some of them might be generalizable to just more efficient training runs. Are there real learnings for the American labs that aren't GPU poor or GPU restricted from Deepseek? So I think there's certain things that Deepseek did that the rest of the industry had already done in terms of like the open eyes, right? FP8 training was one of them, right?

Open AI has been doing FP8 training since at least 2023, perhaps earlier, right? Now, on the flip side, there are certain things that like Deepseek did that were a bit beyond what the labs had done, right? And so one of those things is like how sparse a model it is, right? You have a mixture of experts model You have so many experts in the model But you don't activate all of them For every forward pass of the user, right? And so GPD4 was 16 experts, two of them active, right?

So that's a 1 to 8 ratio GPD4-0 ended up being like a 1 to 32 ratio But deep seek actually went even further They were 1 to 64 I wouldn't say that that's something that like the labs weren't planning to do But definitely Deepseek did leapfrog a little bit Right went a little bit further as far as publicly available models.

And I know Google's models aren't as sparse as open AIs, right? And so everyone has headed that direction, but Deep Seek definitely went a little bit further. So I think it's like, I think some of the more interesting stuff that Deepseek did was around sort of like, you know, making it open what the reinforcement learning, verifiable reward paradigm is. Making it open how to do really efficient inference systems, right? These are the sort of things that I think deep seek did that a lot of people can learn from. And also, there are special attention mechanisms. There's some interesting work there. Even as far back as mid last year when Deepseek released a paper, everyone was like, wow, this deep seek company has really good research.

Right. So I think there's things people can learn. But also there's a lot that like the labs had already done. They just weren't like maybe they didn't go as far or they did it. But it wasn't like they were passing on all the cost savings to the user, right? Because they like to have margins. Yeah. How much of the deep seek narrative around like it happened because China banned high frequency trading is real and should we ban high frequency trading in America if we want to pull AGI timelines forward? This is this is great. I think like like some of the most cracked people I know at Anthropic and Open AI are X like quants, right?

Yes. Like Anthropics best performance engineer who like writes all of the like, you know, improves the performance of their, whether it's Traneum or TPU or GPUs, he's from Jane Street, right? And it's like, they're like, they're like, they're missionaries. The, they're still mercenaries over in the high frequency trading bucket. With a few laws,

we could move those mercenaries over. I'm not saying we should do it. I'm just saying, I want to know your take. You there? Yeah, I think, I think, I think that the, with, you know, with the mercenaries, right,

it's like, well, the labs can just pay more money, right? And they do, right? Sure. They're luring over the people they want with these crazy salaries. I think we're kind of going back and forth on the, can you hear us okay? Are we good? Yeah, I can hear you. Okay, perfect.

Let's maybe let's move on to Google. What was your reaction to the Google I.O. news? And I mean, you put them in A tier. They have this incredible V-O-3 model. How much of that is due to the cornered resource of YouTube? Is that a durable advantage? We kind of saw the open web get scraped by every single LLM foundation model company. We saw all the code and GitHub kind of get exfiltrated one way or another.

Is that something that is going to be a sustainable advantage for them, at least in video generation? So to some extent, it's like everyone trains on YouTube. Right? Like every company takes you takes YouTube into it makes it into transcripts, trains on it or even takes the videos and trains on it. Every video model company is ripping stuff from YouTube. This is like very well understood and known. But you know, there's limitations on how much you can steal from YouTube, right? I think my favorite sort of clip of all time, one of my favorite clips of all time is like when someone's like, hey, Mira, did opening I train on YouTube? And she's just like, you know the beep, you know the beam. Yeah, there's definitely some data that got out.

But there's the scale of data. Like with YouTube, it feels like just if you were to tokenize it and then compare it to GitHub's tokens, like you're looking at orders of magnitude. And that seems important in terms of just general data. Right, right? I don't think you can just rip all of YouTube like that, right? Like they have protections against that, right? Sure, you can get engineer ways around like pulling some videos.

But like, YouTube gets 500 hours of video uploaded every, is it like every minute? It's like it's like it's insane. Yeah. And I mean, just the storage costs alone. like you would be able to see the storage center for the copied YouTube like from space. Well, speaking of scraping, I'm curious. So, so Reddit and Anthropic are in a lawsuit right now around anthropic scraping, Reddit. I was surprised that they didn't have a deal in place.

Do you think there was, you know, meanwhile Gemini has a deal? Open AI has a deal with Reddit. Do you have any insight into why Anthropic would, you know, not even make something happen when clearly it's sort of a valuable and important? platform to train on? I mean, like, the data is the vote, right? And if you can get away with getting the data without paying for it, then you're gonna do that, right?

And I think, like, you know, I don't know about the legalese, but like, is it opening eyes deal with Reddit like $100 million like a year or something insane? Yeah, it's like, it's like 60. Yeah, they're like, they're both around 100 million a year, and that makes up about 20% of Reddit's overall revenue. But of course that revenue is super high margin. It's 70 million, 70 million a year.

Yeah, from both. Google is 60. Yeah, okay. Right. So like if that's the case, like what is that like lend you, right? Like $70 million a year is a ton of either, you know, it's like 70 researchers, right? Or it's like, it's like thousands of GPUs, right? So it's like, you know, which would you rather, you know, like YOLO and just not pay for the data?

And now like Anthropic can probably just like, you know, fight it out in court for a couple years before they finally pay Reddit, right? Yeah, before they're going to have to pay as much as Google and Open AI. Well, that would seem unfair, right? So like they're kind of going to get away with like having not spent the money. So maybe that's a good, good sort of view. Obviously there's also the view of like, well, it's not actually like stealing data because it's like training on it, you know, whatever. Yeah, yeah, yeah. Totally.

That's interesting. On XAI, you put them in B tier. there's a world where Elon being on the outs with Trump draws more scrutiny to some of his companies like Tesla and SpaceX. XAI feels like completely off of the political agenda in Washington. So maybe this is a bull case for XAI because Elon has more time to focus on it if he's not spending less time in Washington.

What's your view on XAI right now? I have a fun anecdote, right? So I have a buddy who works in like manufacturing optimization at Tesla of like specifically how they like press the steel parts and like you know make make the body right and he's like dude i've had a meeting with elon in like nine months i'm fucked right like i just like what am i going to do like he's going to come in so so the thing is like Elon's amazing because he comes in and he's like why are you doing it this way yeah why why why do it this way and then and then you have to like either do it that way or come up with a really freaking good reason why not and

he's just such a first principal's thinker but now but but for like nine months it was like well, I'm going to continue to drive down the path that I think is best. Ideally, you want that rapid iteration, right? It's like, you want him to come and just like get angry at you every day instead of once every nine months. It's actually better. I mean, like, it depends, right? Like, maybe it's not every day. Maybe it's not every week.

But like there is a level of like, he comes in, he resets all your priors and you like reset your roadmap kind of. And like the flip side is like, you know, for the employees, it's like, well, I might now have to go back to working like 100 hours a week. whereas when he was gone, I could work like 40 to 60, right? And it was great. So I know Tesla definitely had a lot of neglect. I know Neurrelink had a little bit. X-A-I some, but X-AI still had quite a bit interaction from Elon, but obviously that's just going to grow more.

And so I think it's probably a good thing that these companies have Elon coming back and devoting all his time and effort. The flip side is that X-AI does have like a government. like facing like sales as does anthropic as does open AI and now is like XAI is going to lose out on those sort of government sales but at the end of the government sales are like pretty small relative to private industry where where do you expect uh most of XAI's revenue to to come from a year from today that's that's a great question um I don't think it's consumer right because probably most of their revenue today is like the Twitter is subscription right

I guess because XAI is X now, right? So the categories that matter, it's like consumer developers and then traditional enterprise, right? And is there like... People don't seem to be plugging GROC into cursor or windsurf, and we haven't seen people then grok, but it's just so early that maybe they could win in certain, you need anti-woke receipt processing or something.

Yeah, so it's just at some point, you know, there's going to need to be a lot of revenue on the XAI side. I can't, you know, X, the Everything app can do a lot of work. Maybe they add payments and things like that. I'm curious, I'm curious if you think that the merger is actually net good for X, the social media platform in the long run, because my concern is that it's actually X, the social side of the product that will really suffer over the next few years. But I'm curious what your read is.

I think, I think it was clear before the acquisition that X had a lot of and they didn't generate enough profit to pay it off. So their EBIT was like bad, or not EBIT, sorry, just their earnings period. Obviously, before interest in taxes, it was fine, but they just had so much interest payments. And so that's why I think XAI acquired it. It is beneficial, right? XAI does get access to a data source that no one else has. And like the fastest data source out there, right?

X is way faster than any other. data source out there. So I think that's hugely beneficial. But as we think about like, what is the highest value ways of organizing the world's information and acting upon them? And it's like today everyone's sort of highest revenue thing is code, right? Curser just hit 500 million ARR. Right. And, and, you know, all these other, windsurf just got bought for this crazy amount of money, right? Anthropic is growing revenue. Even copilot at Microsoft and GitHub, apparently is it doing 500 million a year and run rate. Yeah. But like, like code is, is like where all the money is being made today.

And the question is like, I think all of the labs sort of like at least open AI, Anthropic, especially Anthropic, believe that like code agents, software agents is where the most money and most progress is going to be made over the next six months. I think XAI also believes this to a large extent, but they also believe some other things, right? But, you know, I think, I think automating businesses

and helping them become more efficient is going to be where most of the money is made, not consumer. So, yeah, I mean, I guess you kind of, I can maybe guess your answer, but do you think Anthropic needs a dance partner or any dance partners? Because you could see them going out and getting Pinterest or Snapchat. I don't know if that would be valuable, but they're kind of the one LLM that doesn't have a huge consumer front door to their product. And maybe that doesn't matter on the revenue side, but maybe it matters on the data side. Yes, I think they're just too AGI-I-pilled. to think consumer matters at all, right?

Like, they don't care about voice modality, right? Like, I just don't think it matters. And it's like voice matters a lot, right? At least for like consumer applications, right? They don't care about like image generation, right? So it's like, do they need a dance partner? There's a really good Mexican song called Asia by la solo. And so like, I don't know if you know it,

but it's like got a freaking trumpet and everything. It's such a good song. And it's like, no, they're going to stay. They're going to dance alone. They're going to dance alone. Are you staying in the Elonverse, are you worried that cheap robotic arms will take the jobs of humanoid robots? So I think like colloquially, like everyone just talks a lot about humanoids. Humanoid robotics.

But it's like most of the applications that I think are automatable in the next two, three years do not require legs. Right. Like if I go to a warehouse, if I go to a data center, if I go to a factory, the floor is a flat slab of concrete. Yep. Right. I do not need to spend all this weight and energy and power on legs when I could just throw wheels on it, dude. Like, come on. And so like that's that's like one side of it. And the other side is like human manipulation. It's actually funny. Like, AIs are going to be way better at us than like software than they are going to be at like just manipulating, right? Like picking things up. Right. Like it's like it's like hands are freaking incredible. And no we aren't even close to, you know, human. level hands on a physical basis, let alone the AI that we have in our brain that's developed over thousands and millions of years versus the sort of language capabilities which have only evolved over the last 5,000, right? So I think it's going to be hard for humanoid robots to

be like take off immediately, but there's tons of applications where, you know, humanoid robots will still be able to do basic things, things that are capable, like low risk of getting it wrong, so you can try again. And then the other aspect is, you know, what about, what about like I cut the cost of a humanoid robot in one-tenth because I have wheels and so I cut weight down dramatically and it's way more efficient. And instead of having fully formed hands,

I just have like three gripper fingers, right? And that's all I need for like, you know, data center automation. I just got to plug in things and take them out, right? Unscruing things. Maybe my arm is just a screw and then the other one is like a three finger, right? And it's like, this is way, way cheaper and specialized to the task than a humanoid. Not that I'm like against humanoid, But as far as like, you know, robot arms, yes, that's part of it, right?

Like a lot of tasks, it can be a stationary robot arm. But the important thing to consider here is that literally all of this will be made in China. And none of it will be made in America. Why is that? The supply chain for Chinese robotics is... Soundboard, we're very pro-American here. Yeah, the audience is very America-pilled. It's sad, but it's like...

The supply chain here is like China's, China makes more robots. You know, if you go back five years ago, China made as many robots as roughly Germany, South Korea, Japan, and the U.S., right? Now China makes more robots than all of them combined, right? And the cost that they do that at is way lower. And like, well, the Japanese companies argued that they're, that the Chinese robots are shit. Yeah, but like you speed run up like quality faster than you speed run down on cost. Yep. And like the same applies to like Germany, although Germany sold some of their best robotics companies to

China and all the tech got transferred. But like, you know, it's like we don't have the manufacturing supply chains to turn, you know, raw goods into motors or into actuators. And if we can, you know, or when we do, it's like it costs 10x as much. And so it's just like it's impossible at least in the, without like some huge industrial policy for the US to compete here. So, I mean, it seems like there's almost an analogy there to the semiconductor industry where China has been lagging there for decades, but has done a lot to at least catch up to the lagging edge. Are there any policies that, that are investments or industrial policy that China did to at least stay in the game to the degree that they did that we should be stealing from them

and doing here for robots and manufacturing? 10-5-year plans back to back. Yeah, we need 10-5-year plans. I think the funny thing is that when you look at industrial policy, the way China does it sometimes is more capitalistic than the way we do it. Now, obviously, like, you know, giving a bunch of money to an industry is not capitalistic, but the exact policy mechanism of the Chips Act versus what China does is like so much better, right? So, like, China does, like, oh, you just get like X subsidy for manufacturing a certain amount, right? Rather than like,

oh, it's a company by company deal and this company gets this money for this plant, right? Or, like, hey, we're just going to subsidize the land in general for this. Or, hey, if you build a fab that is 28 nanometer, you don't have taxes for 10 years, right? And so stuff like this is what China's done, and that's had them, like, dramatically increase their semiconductor spend. You have things like the National Railway Company is now making power semiconductors, right? Because they make profit, and they're like, well, if I make fabs, then I can blow all my profits from the railway in that,

and then all my fab profits will just be profits without tax. Right. And so now their largest railway company is, like, the third largest power chip company in China and like top 10 in the world and over the next few years they're going to be top five period right across the whole world and I think like things like this are like interesting industrial policy and probably we can get like the car companies you know and various you know like John Deere and like all these like automation like these mechanized things to get them to start pushing into robotics right because like BID is pushing into robotics and like

Obviously, everyone knows about Unitri, but, like, you know, Xiaomi's making cars and getting into robotics, right? Like, all these companies are getting into robotics in China because of industrial policy. And they did the same with autos, right? EVs. They went into EVs because of industrial policy. Or they went into semiconductors because of industrial policy. Like, America doesn't have that, right?

Like, we just have maybe, you know, we have the startups who are mostly just buying Chinese equipment and repackaging and pretending like they make it here, like figure. or, you know, like, test, right? We have American VCs who put American flags in their offices. That's got to count for something, you know? I mean, I'm not saying it's not noble. It's just like. No, I'm just joking.

On Unitary, what do you think the perception of Unitary is in China? Because if you're a believer in the wheels and the different actuators, it feels like they could be more like China's Boston Dynamics, where it's like, oh, a bunch of cool videos, but not a lot of actual applications. But the reaction in America to unitary videos is, oh my God, there's this crazy wave coming. But maybe that's a misperception.

I love that every video of them is just like doing war things. Like, you really want to scare the West? Totally. Why don't you just have it like petting bunnies? Like, you know, trust us. The Chinese robots are not dangerous. They should be doing that. Yeah, I was wondering, like,

I fully expect that there will be one of those. like North Korea style military marches with 100,000 humanoids and it will just be terrifying, even if the capabilities aren't actually there for real war fighting, just the demonstration. Did you see the humanoid marathon in China? Yeah, yeah, yeah, yeah. But anyway, so to answer your question, right? Unitree, yes, we see the humanoids, the robot dogs, but they've actually released a robot dog but with wheels. And so it's just like two, it's like sticks and it has wheels. And they're releasing

a humanoid with wheels. Actually, they just showed it off at this conference in Singapore that one of the guys on my team was at. And so like, they're coming with the mobile manipulators, but also you have to recognize like for the cost that they make in $10,000, Western companies make in like $75,000 or $100,000, right? So like the quality of hardware they can make. So that's also like an important consideration. Yeah. You said something earlier around all the, you know, the next value in models coming from automating businesses.

Is the right framework for that agents? Is that how you, how someone should conceptualize it or is it an entirely new paradigm that's less about, you know, agent, human kind of collaboration and more so just like full autonomy? Yeah, I mean, I mean, the dream is always multi-agent systems, right? many different agents working together and just doing the job. And then, but today, you know, the time horizon for human model interaction has been growing rapidly, right? Initially it was like seconds, right? It's getting to minutes or if you use deep research, like 30 plus minutes, right?

And this is going to start extending to many places like code. You know, if you use Claude code, you know, the time interaction is like minutes, not seconds. And so I think it's it's it's and it can even extend to tens of minutes. I think I think these agent systems will it'll be it won't be like a hard like hit right like everyone's expecting sort of like oh we have chat bots now I have agents but really it's going to be like a blended curve of like yeah you know like just like the amount of interaction the human has with the system it becomes less and less and less over time. That's a good framework. Sorry to move back to China but Alibaba, Quinn. I mean, it seems like they're just pumping out like a million different open source models. What's the reaction been to the American research labs?

Have we actually learned anything from that? We've had some folks on the show have been just generally excited to play with so many different research tools. But are they trying to commercialize that? And I guess my big question is like, what is the actual chat GPT of China right now? Like what is the consumer front end? So on the latter point, the consumer front end is deep seek offered through the clouds? So some of the cloud companies like Bidutensin, et cetera, offer deep seek the model, but through their own platform rather than through deep seeks. And some of them will offer it through deep seek themselves directly.

But the interesting thing to note here is that we sort of have a very big dichotomy here. Part of the reason deep seek costs so much less on inference than U.S. models is because this is because this. speed of deep seeks models, right? And there's this curve, right, of like, how fast does the model respond to you versus how many users you can batch together, right? So if I have like, and it's a system and I'm only serving one user, it's going to be screaming fast, right? But if I'm serving hundreds of users, each individual user is going to be slower.

Now the total collective number of tokens I'm generating is much higher. But this is interesting because when I use open AI, I get 100 tokens per second. I get 200 tokens per second, right? Same with Google, same with Anthropic, X-A. AI, et cetera, right? Like you type the query and it goes like maybe twice as fast as you can read so you can skim it, right? But if you do that to Deepseek, it's like 20 tokens a second, right? And I can read faster than the model outputs. And that's a conscious decision because they're limited on compute on, hey, I want to serve as many users as possible. And so the chatbot style applications are actually very like bad. And that's why

Chinese people tend to use like open router a lot to access like open AI inthropic models through in China, even though they're not supposed to, or accessing other companies' models through other methods. So I wouldn't say that there's truly a one consumer front end. Rather, it's that as soon as Deepseek came out, the government started pushing all the companies to offer Deepseek.

But there still isn't a good consumer experience, right, in China. Moonshot is probably the most popular one, but their models aren't that good, right? So it's like, I don't think it's one out yet. Yeah. How much of an issue is owning the application layer if you're an independent country that doesn't want to rely on American or Chinese foundation models like what we've seen with Mistral and Le Chat? There's this world where you spend all this money to build this data center in your country. You spend all this money to train a model.

Maybe you're not at the frontier, but you're close. You're in the game. But everyone just by default in your country just goes to chat.com. And so unless you're willing to ban chat GPT and you're not going that far, like, you haven't truly won in terms of deploying your model with your view on free speech into your populace. Yes. I think, I think that's going to be challenging for, like there are sovereign AI efforts in all these countries. But like you mentioned, right, Le Chet is not like that successful in France. You know, and this is the, and Mistral is the closest of any, like, sovereign AI besides China and the U.S.

So, like, you know, you're going to get all these models, but people are just going to use the consumer. Like, you know, it's like, am I going to use, like, like, Google models are so popular in India. Or, like, perplexity is, like, ridiculously popular in Indonesia for some reason. Like, I don't know why, but, like, these are just, like, frontier models instead of, like, from American companies rather than, like, the domestic model that could be made. And so I don't expect any sovereign AI efforts. So, so that to, like, truly succeed on the model level, I do think that, like, Sovereign, I can mean many things. It could mean, I'm making a bunch of data centers.

It could mean I'm making a big neocloud company. Or it could mean like I'm going to make the full stack with the model. But at any point, if it doesn't get economical, you can only just rent out. Like most of the cost of the GPUs, you can just rent them out to someone else, right? And then like try and recuperate your cost. But you can't really do that with a foundation model that you've trained that has like mediocre weights. Right. So that is kind of.

Right. It's like you burned all this money and flops on something that's effectively useless because meta's open source model and deepseek's. open source model and Alibaba's open source models crush you. Yeah, yeah. Speaking of meta, I've been trying to work through what's going on there. There's obviously kind of the dust up around Lama 4 launches. But somebody asked me, like, what is the bull case?

And everyone always says, like, oh, recruiting or some beneficial thing or benevolent thing. But I was wondering if there's a reasonable case to be made that if you try and just project out what META's LLM spend would have been on other vendors in five years, it would have been so big that even if they're constantly on the lagging edge, they're still recouping the investment in training Lama just because they will be able to serve it internally. Is that a reasonable, like, thesis?

Or is there something else going on there? What do you think of the motivations and problems with that project? I mean, they have, like, internal Lama models, too, that are trained on their internal code base that they can use internally, right? So that sort of stuff is like something they could just never get elsewhere. But I think it's a multifactor thing, right? Like the bull case is obviously a personalized AI assistant on my glasses. And that's just always on my head, always serving me up slop.

So truly waiting in the consumer use case. Right. Like truly that's the real worst. That seems to be what meta is actually going for. But as far as like, you know, today they roll out WhatsApp. app, Instagram, and Facebook models, meta-lama models to everyone, and they claim they have 500 million

monthly active users, right? Which is a lot, right? Now, imagine if they didn't offer that, right? Would people start using chat GPT instead, and now they're out of that, a meta-ecosystem? And their screen time goes down and they look at less ads. Or does, like, Apple intelligence become more powerful

and people go to Apple intelligence for their AI because that's the AI that's the AI that's most accessible. And now all of a sudden, meta who already has been screwed by Apple multiple times on advertising is now getting screwed even harder because all of the like more and more of the data keeps going to Apple and there's no way for meta to get access to it. So it's like there's an existential threat here too, right? And so I don't think, I think it's like prudent that meta spends on these models. I'm also like a lot more bullish on meta long term than like most people are. People are like looking at Lama 4 as like a

single point in time of like, wow, this really sucks. But there's like two models there, right? There's like Maverick and their scalp. One of them is really bad and one of them is pretty good. What about behemoth? Isn't that another? Don't they have a third? Rough name? Yeah, but they didn't release it. Rough name. But yeah. Yeah, it is a weird name because it's like very demonic and it's like you're unleashing this demon. Well, the funny thing is the architecture is super similar to GPT4. Oh really? But like yeah, it's like extremely similar. It was just like a very funny naming scheme because like the behemoth is like the untameable beast and like they couldn't tame it to get it out the door.

And so like the name really mimics like what happened with that project. But so yeah, I mean, what are they gated by scale or there? I mean, the cap expense seems to be growing, but similarly to all the other hyperscalers, is there anything that's unique about meta over the next couple of years that could kind of give them a compounding advantage there and allow them to kind of come from mind? I do think they are still spending less on Gen A.I. than other hyperscalers. Note that like 60, 70% of their GPU spent is on recommendation systems and like standard business. And like nowadays that means like creating Gen A.I. ads and those have more click through rate.

Like that's the that's the holy grow for the next six months for them. So it's not like there, there's no Gen AI in there. But like a lot of it is on their classical business. But generally like they are a player to be reckoned with, right? Like Open AI has Stargate. meta has their Louisiana project. I don't know if there's a fancy name for it. And everyone has their big projects.

And so when we get to 26, 27, everyone's going to have these gigawatt scale data centers with close to a million chips. And the game continues to fight on. I don't think that, like, this is a temporary setback for meta, but they continue to recruit. They continue to have good talent. They'll be reorganized, right?

Without pain, you don't get better. right? So this is a learning experience for them. So on meta and scale, they partnered with Constellation on this sort of basically agreeing to purchase nuclear energy from Constellation for the next 20 years. What's your updated take on nuclear? We obviously have these new EEOs to help support it, yet it still feels pretty far out, at least for bringing new energy online. How are you thinking about the category?

Yeah, so even like in general, building new nuclear reactors is still going to take a really long time. And if you're a believer in AI 27 or AI 2032, whatever the number is, that's too long of a timescale to matter, right? Like, you know, this is still in the deficits can be largest possible time frame. I think I think with regards to like nuclear, that's the case for standard, you know, gen 4 reactors. but when it comes to like SMRs, they didn't ease the most important regulation, right? Which is that like the concrete containment zone, you know, this containment zone for the SMRs

still has to be like monumentally big, right? Even though it's like a much smaller, much safer thing. And so they didn't ease that regulation. So I'm not that bullish on SMRs yet either. And basically like, yes, you can sign these deals for nuclear power, but that's nuclear power that was already being used by residential. And now those residential or like industrial whatever it was, just turns to gas.

Or on the flip side, right, if you look at Louisiana, Meta's Data Center uses gas, right? Or if you look at Stargate, it uses gas. Or if you look at Memphis, Tennessee, XAI, it uses gas, right? Like, you know, you look at Amazon's Indiana facility, Project Rainer, it uses gas, right? Like, everyone just uses gas and like, that's... Are the ESG commitments that the hyperscalers made

in kind of the prior era, like, informing any of, like, are they acting as like handcuffs or shackles or leg weights going into this next energy buildout? So the funny thing is, some of them have backed off a little bit, like meta and Microsoft have backed off some. But the other thing you can do is just like pretend like you're still green.

And so what you do is you do this thing called a PPA, which is a power purchasing agreement. So you can set up like solar panels like 100 miles away and they'll generate power only during the day, but that power generated during the day is enough to cover the entire night of the data center as well. but the actual electrons being consumed are not from the solar panels, right?

The solar panels are just selling it to the grid, but you purchased it and sold it to the grid, whereas the power that you're buying from the grid is, like, coming from a gas plant and the actual electrons you're consuming are from there. So then you're pretending to be green because you have this solar PPA backing it up or you have this wind PPA backing it up.

But in terms of actual electrons being consumed and new plants being built, it's gas. Yeah. And so I think this has, their regulatory ESG stuff is like, malleable enough that this is allowed. They're working through it. Let's talk about some of the other sci-fi concepts for energy generation.

People are starting to talk about data centers in space. People are talking about data centers in the middle of the ocean with tidal energy. Basically go where the energy is basically free or you get something for free. Maybe you get cooling for free or land for free. Is any of that relevant to what you've been focused on? So Microsoft tried putting a data center in the water before for cooling, right? And that didn't work. And it's the same reason why space data centers won't work anytime soon.

And as far as tidal energy, tidal energy is interesting. I think it could work. But, like, you know, it's a bit of ways. The main thing on why data centers don't work, whether you're sticking them underwater or you're sticking them on a barge in the middle of the ocean, or you're sticking them in space, is that GPUs are really, really unreliable, right? So we've done a bunch of testing of GPUs. We reviewed 40 different clouds up to thousands of GPUs, in fact, in some cases, but hundreds usually.

And many times, it was called ClusterMax, right, where we tested like 40 different clouds, including like Amazon, Google, et cetera. Everyone's GPUs are unreliable because they're inherently unreliable. And what happens when a GPU is unreliable? Sometimes it's as simple as, oh, turn off the server, turn it back on, right? Sometimes it's unplug an optical fiber, you know, a transceiver and plug it back in, right? Sometimes it's like take the GPU out of the socket, put it back in. This is like the vast majority of fixes. I don't know why you need to do this, but like that's how tech works, right?

You unplug it, you plug it back in. And like you need people to do that, right? Yes, robots can potentially do it, but we're not there yet. The space of a data center, like the physical size of it isn't that large, really. Like they're big in an individual basis, but like they're not even covering like a basis point of American land even in like a decade. right it's like they're very small so so like gpues are really unreliable which we've sort of proven with like cluster max and then the other aspect of space data centers that's really dumb is like how does heat get removed right heat gets removed because like you have atoms contact the heat they you know whatever's hot they take the

heat away and they're more excited as they leap right you're taking cold stuff you're making it hotter and you're sending it away whether it's water or air right but at the end of the day you're radiating that heat out of an evaporation tower or chillers or whatever into the general air around you on land. But in space, there's no medium for you to, like, how many particles are hitting your spacecraft and carrying away heat? And also those particles that are hitting your spacecraft are generally quite excited anyways,

but there's just like very few of them. And so, like, there's no way to radiate heat away, and these things consume tons of power. So, like, they're unreliable to consume tons of power. Power is cheaper in space, right? Solar panels, you can have them, like, constantly having sun. But like, it's like, you know, what about the fact that, like, you got to radiate the heat away? Like, people, people try and put, like, tiny little piece, computer chips in space and satellites, and they have a hard time cooling those, right?

So it's a, it's a problem that I don't think is, like, feasible, something that's feasible in the next sort of, it within the deficit spending is okay timeframe. Are you going back to that? Are you bullish at all? Are you bullish at all on new consumer hardware? you know, dedicated hardware for AI, you know, Johnny Ive joining Friend.com. You might be calling in from a Rabbit R1 and we don't even know. Are you excited at all about kind of a third device outside of the phone or the computer? Yeah, I think, like the Johnny I've, say, Maltman video is so cinematic.

It's so good. I'm excited for the product simply because the video is so good, the quality of it. But like, like, I don't know, like there's, I've seen the, I've seen the, this Apple device that has like a, it's basically an AirPod with a camera, right? And like that, that's pretty cool. Or like the AR glasses, right, with the cameras on them, like the metaraybans, or, you know, all the other iterations of that. I think that a new device is definitely coming. With how good AI is getting, it means that the form of human computer interface can change. and it can be more natural and more seamless, right?

It's not going to be typing on a computer in front of a, on a desk. It's not going to be, you know, you're still going to have that. You're still going to have your phone, right? But really, I think like this like hands-free compute device is coming. And it's enabled by AI. Now, we'll Meadow win, will Apple win? Will Open AI and Johnny I win? Yeah, I like friend and the founder's really cool.

Will they be a runner at all, right? It's hard. It's a hard space, but I think like there's three companies that like seem to have a shot and it's like Apple, meta, and maybe open AI Johnny Ive. Yeah. And Avi, of course. Yeah, and Avi coming from behind. The domain is just, we got to give it up for the domain. The domain is so good.

Friend.com. Got appreciate it. He spent a fortune. It's worth every penny. On Apple, you put them in L tier. If Warren Buffett can learn to love Apple at age 75, can we AGI pill Tim Cook at age 60. or however old is, is it possible? What needs to change for Apple to become dominant?

They have so many advantages. They've tons of line time. They're dominant in humor. It's the AI that's made me laugh more than any other model. That's true. The tech summaries that go crazily wrong and hallucinate weird things, very entertaining product, seriously underrated as a consumer product. But what's your experience?

Breakdown what's happening at Apple, what changes you predict, what changes you would recommend? So I think they're clearly not that AGI filled. They haven't spent a ton on data centers and things like that. Now, they do have like hundreds of megawatts going online in the next two years versus like the hyperscalers have gigawatts, right? So it's like, you know, it's like, okay, there's still an order magnitude off and like how much they, you know, want to fume. And then like the flip side is that Apple has started building an accelerator

that hired some of the best people from Google. they already had a good chip team anyways because their chips for their phones and their Macs were good but it's like getting the talent they didn't have they're partnering with certain companies and they're like they hired some of the best people from Google including their head of rack design like rack architecture

so it's Apple's definitely keeping far enough behind that at any point they could leap into action but the challenge is always going to be like how are you going to get people to join this company And so this is sort of like my bull case for like, or not my bull case, but like a possible scenario for like thinking machines is that they just get acquired by Apple, right? Like because at some point Apple will realize, oh God, we need talent. And it's like there's no talent out there for us to hire. When we try and hire, they're like no, screw this. And Tim, Tim barely makes 70. He doesn't even make 75 million. He makes 74.6 million, which is like a junior open AI researcher if they joined two years ago. So it's like how can they compete?

Dude, that's Open Eyes janitor, bro. Yeah, exactly. Is Lisa Sue cooking? She acquired Brium earlier this week. Can you break down that acquisition? Was it exciting to you? What's going on over there? Yeah, so they actually acquired two companies this week.

They acquired Brium, which is more like LLVM compiler people. I think it's more of like an aqua hire. It's like 10 people or something like that, I think. It's not that crazy, but it's more commitment that they care about acquiring software talent. What's funny is when they acquire a company, the people at that company are getting paid a fair salary, right? Like a very good salary. Whereas sometimes they're hiring process, they don't pay people enough, which is why they don't always get the best talent. Which is something that we've sort of mentioned. But yeah, yeah. So Bram's like an ML compiler and things like that.

And then Untether is another one, which was like making an AI chip. and they aquired them as well, mostly for the staff on the hardware side, I imagine, because they just need to move faster to be able to release chips as fast as NVIDIAs, because NVIDIA is just like clockwork spinning out new chips. They're trying to go to that yearly cadence and such, right? So I think Lisa Sue is waking up to, you know,

how important this opportunity is and that she needs to spend a lot more. But note, they're still spending a ton of money on buybacks when they could be spending, I mean, so is NVIDIA, but like, Nvidia is also making, like, you know, godly amounts of money. AMD's making good money, and then they can turn around and reinvest that,

but they're not reinvesting as much as they should. I think, you know, these are good aqua hires, both on Tether and Brem, which are, like, both aquaires. They also bought, like, Nod AI, right, a while ago. Not AI is where AMD's sort of, like, god of GPU AI software is. Anush, he came from there. Like, he's the king.

And that acquisition was really good, because they have, again, like really good software talent that they were able to pick up. It's just, you know, we need them to move faster if we want to take them like, you know, super seriously. But the right direction. What does your read on the Nvidia earnings and kind of the lack of guidance

around the training to inference switchover? Do you have a better idea of what's going on? It seemed like they had quoted a 40% number earlier. They didn't include a new number. But this seems like an important narrative or maybe it's not around the actual work. workload shift and then I want to know if that's like relevant to AMD at all is there an opportunity there yeah so I think that in video is going to have a hard time knowing

oh really how much compute is going to inference versus training it's actually just like hard for them to know sure right they don't get to know what workload their customers running they can guess they have the most data to gas but like they can guess would people not want to tell nVIDia I feel like if you're buying you know a hundred million h 200s you might just be like yeah sure I'll tell you what I'm doing with them right now like no problem I'll fill out your survey. Here's my NPS. I think these companies are very secretive, right? Okay. Yeah.

You know, people, like, opening I won't tell NVIDIA what their model architecture is, even though if they just told them what their model architecture is, they could optimize their next generation chip to it way better, right? And so, Nvidia just has to guess, right? And like, hope that they know what opening I is doing, but they don't, right? Like, they have a good idea, right? And so, like, I think, I think that's one aspect of it. The other aspect is that the lines between training and inference are blurring, right?

In the days of pre-training, your cluster would be training, training, training, and then you deploy in inference clusters. But now with reinforcement learning with verifiable rewards, one interesting thing is that traffic is not usual, right? It's like it oscillates. And actually on the weekends, chat GPT is used very little relative to weekdays. During work and school hours, chat GPT usage is huge. During night, it's not really, right?

Except for when like Ghibli slop is like trending. It's the only time you have like, usage, you know, higher during non-peak hours, which is like work day, right? And so what's interesting is that these clusters have lower utilization, but now I can turn around and start using these clusters at night. For example, I can spin down a percentage of them and I can turn them to reinforcement learning with verify our world. I can generate a bunch of data, verify it, see if it's good or not, you know, whether

it's math problems coding or some other reinforcement learning paradigm like computer use. I can do it. And then I can throw, I can keep that data. Then if I ever need to switch over to, back to inference, this user is just picking up. I just like, okay, stop. You know, no more of that. Here's, you know, put the normal model on there and start doing inference. And that can take like a minute or less, right?

Like, so it's like there is, there is a blurring of lines of what is training versus inference. And then, and then the other aspect is like, can AMD get in there? Right. What's interesting is that, you know, AMD has generally taken this approach of like, hey, we're like 80% of the cost and we're the same performance, right? That's sort of where MI300 sort of shakes out. Some scenarios it's higher, some scenarios it's lower, but we're like 80% of the cost. Now when you look at this new generation of GPUs they're launching, I think, next week, MI355, it's two-thirds of the cost of Nvidia's Blackwell. But performance-wise, is it two-thirds or is it less, right?

Or is it more, right? And so this is going to be a challenge. It's going to be going to rely a lot on their software. Meta's really excited about it, but not too many other customers are. And so the question is, like, can AMD get in there? They're targeting inference mostly. But Nvidia's moving the game really fast, right? They're coming up with these new software libraries that don't just like, it's not just Kuda, right?

It's like they're building the entire inference engine, right? And AMD can't plug into that. It's called Dynamo. So what Nvidia is doing around Dynamo is really locking AMD out from inference at the non-hyperscalers and labs, because it just doesn't make sense for anyone else to try and replicate the software that NVIDIA is giving away for free on NVIDIAGPUS. What do you hope to see out of companies like Prime Intellect over the next one to two years? I believe you're an investor in Prime Intellect, is that correct?

So I'm sure a little bit conflicted, but yeah, talk to. Yeah, I mean, I invested in the seed, but like, to be clear, like, I'm pretty impartial, right? Like we had this Cluster Max review and we didn't give them the best review even though I invested in them personally. So it's like, you know, this is I think, but I think what they're doing I'm really excited about, right? AI is super centralized, right? And this is the only path I see forward mostly for central is like that. AI continues to be more centralized. There's fewer and fewer players.

They have more and more control over our data over automation of the entire world's economy. You know, this is potentially quite scary for someone who likes decentralized power systems. and capitalism and such is that centralization begets, you know, tyranny. Not that I'm like being that dogmatic, but like their technology is mostly a technology reason, right? They had cool demos around decentralized training. They've trained models in a decentralized way. They've done reinforcement learning with verifiable rewards now in a decentralized way.

I'm very excited about the research they're doing there. And they're open sourcing everything, right? Which is the cool thing, right? You can just go look at what they open source. You don't have to like trust, you know, anything. It's like they have some pretty good software. I'm hopeful that there's a path to all AI and power, not just continually being centralized until we, you know,

are like enslaved by the machine god. Except if semi-analysis were to centralize it, I feel like, you know, that'd be an exception to the rule. People should be able to trust you, you know, benevolent sort of dictator, world leader. I could see that. Call me the Likwan you of AI. Yeah, for sure.

I wanted to go more into those like studio Ghibli moments. When people say, quick, quick, fire off. Would you hire somebody with a studio Ghibli profile picture? Is that a negative signal? That's good. In our Slack, someone has a studio Ghibli profile picture. Okay. Yeah.

Okay. I like it. And his public profiles are also studio Ghibli. Okay. Wow. That's good. Wow. But you know, whenever there's like these big meme moments, like everyone says the GPUs are on fire, obviously they're not literally on fire.

but what is breaking? Because is it that there's actually more unplugging and plugging it back in in the data center? Like when we see Studio Ghibit go out and like, you know, the queries are clearly failing. What do you think is happening internally? Is it just too much load? Because I feel like the chips are under incredible load during training, right? So like that can't, like they're used full times. But why are we seeing so much failure during these like spikes?

What's actually going on there? With training, we know what's happening, right? We're saying, hey, in this iteration, you're going to process this many tokens, you're going to update the weights, you're going to exchange them all. Okay, here's more data for you to train on, right? And you just keep iterating many times, you know, every 15 seconds or 30 seconds or 60 seconds, you update the weights, and you do it again. And you know how much data you're sending.

With inference, you know, you have these clusters, and it's like, it's that curve again, right? If I just have one user, it happens really fast, great user experience. I have tons and tons of users happens really slow. and while I am serving more users and I'm getting more output each individual's user experience is worse but at some point it gets so bad that you either run out of memory

or hey a GPU does break and all of a sudden you're dropping requests constantly right so not only does the user experience get bad because it goes from fast to super super slow right like look at how fast Ghibli is processed now right it's like crazy fast compared to what it was initially but also like

when something bad does happen you can't just be like oh, take all these requests, route them to this other GPUs, right? It's, oh, all these queries fail, right? Like, oh, like, I got more requests than I'm able to handle. Well, these users, I'm just not going to let, I'm just not going to start processing their requests. I'm saying, sorry, it doesn't work, right? And so that's sort of when the GPUs are on fire, that's what happens, right?

Now, also, I think it's mostly that dynamic of like you add at that incremental user and things break. Or if something breaks, all those users now have their, stuff broken. Well, thank you so much for coming on. Everyone in the audience should go to semi-analysis.com if you're not already subscribed. And we would love to talk to you again. This was fantastic conversation.

Super fun. A million, a billion. A trillion. A billion. Hey, add a, yeah, hit the size gone. Go add a new plan on semi-analysis. Five million a year. Yeah.

And we'll ask some of our VC buddies that just have a bit too much We will shame them into, oh, you're not on the pro plan yet. Yeah, yeah, yeah. The max tier. The presidential, the presidential plan. You're on semi-analysis is ultra-max. Wow. Wow.

You must not be serious with artificial intelligence. Oh, you're not, you don't really invest in AI. Oh, you're not about the AI thing. You're more just like software. You're more of a tourist. I get it. Yeah, more of a tourist. Yeah, yeah, you're B2B SaaS guy.

Yeah, it's cool. It's cool. I'm sure you make a good living. I'm sure you make a good living. But anyway, this is fantastic. We'll talk to this. It's great. Thank you.

for having me on super fun. We'll talk to you later. Bye. That was a lot of fun. All right. You're going to love this, John. I think you were too locked in. We're going to have Blake from Boone Supersonic.

Calling in at 215 minutes to talk about the new EEO. Oh, is it political? You know, I can't pay attention to politics when I'm talking to an AI person. You know, I can just get too locked in. But that is fantastic news. Very exciting. I see your post. Blake will be joining TBPN live at 215 PMPST to discuss the new

supersonic E.L. Very excited to talk to him. And we have Dana Settle from Greycroft coming in the studio. How are you doing, Dana? Good to see you. Hi. Great to see you too. What's going on? Thanks so much for joining. Very exciting times. The IPO window is squeaking open and it's open more every day. We talked to the founder of Circle today. Very good showing. We'd love to talk to you about that, what's going on in the markets, what you're investing in today. But would you mind introducing yourself for the audience members. For anybody that's been living under a rock. Yeah, living under your data center, as you like to say.

Yeah. Thank you. Yeah, Dana Settle, a co-founder, managing partner at Graycroft, been a venture capitalist for a very long time. Started out in 1998 on Sand Hill Road. Wow. Seen a few cycles. Yeah.

What was the first big deal that you kind of really, really tracked or invested in or followed? Like, were you tracking? like yeah what what deal allowed you the right to be a VC for more than maybe four years because it's you know the first four years it's kind of like kind of make a break for a lot of people but eventually you know there needs to be yeah what was the story yeah it's a good question um so you know when i first started a venture we were investing in all kinds of things but more you know it was like networking equipment and semiconductors and storage and you know sort of that was building the last, you know, the really the first generation of the internet.

And so some of the companies from that era were, are no longer exist. They're actually bought by much larger networking equipment, you know, companies, etc. But a similar dynamic, you know, where we would invest. I didn't, wasn't expecting this question. So I'm facing it on the name of this company, but literally it was like, you know, from, oh, QTera. God, optical equipment company. And it was, you know, in like 18 months sold for $2 billion.

Wow. Wow. There we go. That's amazing. Yeah. Just to be clear, though, I was, you know, I was the number two on it. Of course, of course. Yeah.

Yeah, but that's great. It is fascinating how much the networking equipment space has kind of come back into focus with the AI. We talked to Kevin Wheel over at Open AI. He's on the board of Cisco now, right? Yeah. And so, and we've talked to another founder who was working on optical cabling in the data center because as we scale these models. And so everything old is new again.

But what is most new for you? What have you been focused on what's been in the news in the last couple weeks? Yeah. Well, I mean, in terms of what's new and what we're investing in is certainly in all of the, you know, sort of AI, everything from infrastructure up through applications. So that's not nothing terribly surprising there. But it is interesting to really look back to the history, you know, sort of history of the internet and see how much things are repeating.

right now in terms of what's being built. The other thing that we do is we actually have a sustainability fund, and we've done that in partnership with some strategic partners, so Coca-Cola and eight of their largest bottlers globally. And what's been so interesting about that is there's such a huge intersection, essentially, between AI and sustainability. People don't really think about it. But if you look at energy consumption doubling by 2050,

I mean, something's got to give. It's all oil and gas right now. But I think that's where we see a lot of opportunity, not just in renewables, but actually in like the software and hardware for sort of reimagining how all of that's consumed. Yeah, you imagine that all the hyperscalers are going to need to kind of re-evaluate the ESG mandates. There's already a lot of companies in the space like Crusoe energy started by flaring natural gas plants. There was wasted energy. and there's obviously a ton of news in solar and nuclear and all sorts of stuff.

The energy landscape has been fantastic. Would you mind taking us through the latest IPO experience? How was that? I'd love to hear that story kind of from start to finish because there's so many VCs that have been in the game for a long time and not actually been through that process because companies love staying private. Well, other reasons too. There's probably one bigger reasons.

But there's been a lot of pressure to start. stay private, right? Well, it's really interesting. I mean, I don't know, that's like a whole other tangent and I'm kind of obsessed with it because it is really interesting. If you look at, you know, what the public markets are today, which I think is really interesting. It's just really different. It's almost going back to potentially what it used to be, you know, where it was like smaller IPOs and it was actually, you know, access to growth opportunities to more retail investors. So anyway, but our most recent IPO is a company called Mountain. And it's a pretty amazing story, incredible founder, serial entrepreneur, technical background.

And really, you know, he essentially started the business. I mean, we invested actually in 2011. So this gives you a little bit of a sense of the journey and patience. Overnight success. We have a soundboard here. I like that. It's every founder we talked to. I mean, we talked to the circle founder and it was the same thing.

He's like, I've been doing this for a decade. You know, today's the focus. Actually, well, it's funny to see Jeremy Aller, you know, talking about, I mean, I remember when he had a video search startup in the last, you know, generation. And so it's really interesting to see these, you know, things sort of come full circle. Incredible entrepreneur. No pun intended. Yes.

But anyway, back to the story of Mountain. Back to the story of Mountain. So Mountain, Mark Douglas, you know, really. again, incredible founder. He had started one type of an ad tech business, essentially, back in sort of the display days. And when we first invested, just to give a sense, it was a $4 million series B. Okay? Wow. No way. Just think about like what that means today. Now it's like $4 billion. It's a series. That's around for ants. It's around for ants. But it needed the capital and it worked. Yeah. And so, and really, you know, that market changed pretty dramatically when all

of the regulation around cookies, et cetera, you know, happened. And Mark had the foresight to take what was 100 million plus dollar revenue business super profitable and essentially build an entirely new business, saw that connected television would be the next major ad platform. I mean, and again, seems very obvious now, but wasn't, definitely wasn't consensus at the time. And he essentially just built that out of cash flow from the old business, sunset that business, and built this one up to now the company that went public two weeks. We're talking to the founder of AG1 next. I'm interested to hear your take on celebrity partnership.

There's so many different configurations, whether it's just the celebrity investing, just like any other investor, and then maybe they've added some value to co-founding the company, incubations. What is your view on the role of celebrities or people that bring differentiated value ad in the startup ecosystem? Well, I think what you just said is the key, which is differentiated value ad. And, you know, in the case of Mountain, we did partner with Ryan Reynolds and his marketing agency. And, you know, and that was sort of a fortuitous connection. But, you know, it really just, I actually was introduced to Ryan and his team as they were sort of thinking about what to do with their agency. And it was just in this moment or I was like, wow, what you guys are trying to do in terms of really making ads that sort of, you know, move at the pace of culture.

Like, I have the perfect platform for you. And, you know, really, Mark and Ryan just sort of saw eye to eye on really how to build this business. But again, that was so really authentic to Ryan and his team. It's just like what they want to do. They want to make really cool ads that really resonate with people, not to just make ads, but really, you know, to sort of make them at the pace of culture. And Mountain is the perfect platform for that. And that's why I think it's worked so well.

And we saw literally, I mean, the crazy thing is when you think about, I think about celebrity or influences being largely marketing. I mean, and so if you sort of look for like a dollar for dollar replacement, totally. Mountains inbound leads went from like 2% to over 60%. Wow. That's crazy. Well, it's also interesting to think in a B2B business like Mountain, like somebody like

Ryan Reynolds effectively acting as a sales rep and just like messaging a CEO and being like, hey, I'd love to set up a demo with you. And it's like that, just that impact alone in terms of bringing spend on the platform. I mean, we've been kind of joking about this. We talk about ourselves as like enterprise influencers because all of our sponsors are basically B2B companies for the most part. And it's just like it's kind of a new era, but it's working. And Ryan's clearly carved out just a very unique position.

He's not just somebody you just pay to show up for an ad. And there are celebrities that have built great businesses on that. But he's taking a very different tact. I'm curious, when you made the mountain investment, was there any, was there people maybe in the investment committee or other investment? investors that were friends that sort of were writing off TV at the time digital was exploding. And now, you know, looking back, it's like TV advertising has exploded. It's continuing to grow. Even in the U.S., I think in 20, past, sometime past 2030, it'll be well beyond, you know, $100 billion in spend just here in the United States.

So TV advertising is clearly not going away, but I could imagine 10 years ago a lot of, you know, a Facebook PM that, became an investor would probably have written a memo that said, like, this market is going to, go away or at least shrink. Yeah. And I would clarify, I mean, a couple things. I think 10 years ago for sure. I think TV advertising has changed. I mean, this is largely advertising on connected television, streaming television. So really, the distribution is fundamentally changed. But, yeah, I mean, we actually had investments in some companies that, you know, like 15 years ago. that were actually, you know, improving the process for television ads.

And we sold those businesses, gratefully, and made a profit on them. So but so when Mark proposed this, I think what was counterintuitive is all of those businesses were subscription. I mean, the idea was not to have ads in those streaming services, right? Yeah. And so what's happened in the last five years is now all of those streaming models have moved to where the majority of subscribers that are coming on. I mean, if you look at the public earnings from, you know, Netflix and, you know, Disney, et cetera,

that the majority of new users are coming on to their ad platforms. Yeah. Yeah. Do you have, I mean, I'm sure, I'm sure, you know, investing and being in L.A. often, like, there's probably celebrities that come to you with like, hey, I want to get into a venture. I want to have exposure one way or another. And there's so many different models. Do you have any recommendations for all the celebrities that are listening?

for the best way to get exposure to tech or just patterns to avoid so that they don't get over their skis. Yeah, I mean, look, I think it's like anything. Like whatever you're truly really curious about and you really want to dig into, I mean, that's where you should spend your time, right? I mean, I think if you're just sort of dabbling, I mean, I guess if you want to have investments to sort of talk about because you think it's like just in the zeitgeist, then great, like invest in some funds, you know? Exactly.

I was saying to say more seriously just LP. Yeah. Either LP or like be deeply involved in the company. But yeah, exactly. Or if you just want to, you know, kind of learn about investing, like that's a great way to do it. I think if you want to actually be, you know, direct investing, angel investing, you know, I think actually, again, just sort of following like your true curiosity and the areas where we're also where you can really make an impact. And that's why I think like with, you know, again, going back to Ryan and his team, I mean, they're amazing marketers. I mean, like best in class.

And so, you know, I think that's where, you know, I would just sort of like encourage any, any celebrity to do what they're truly passionate about. And I think if you, you know, look at where things have really worked outside of, you know, Ryan, I mean, I think, you know, what Gwyneth has done with Goup. I mean, I think it's just, these are just very natural to, I mean, there are things in Goup kitchen, which is another, you know, sort of spin off from Goup. I mean, it's, it's the food side. of it. And it's, again, it's just what's so natural to her. It's what people expect her to be

sort of recommending and excellent at, right? Yeah, yeah, yeah, totally. What about, what's your, how, what are your thoughts around the evolution of LA's ecosystem on a personal level? I think my last five LA County investments were in the gundo. And haven't done, haven't done much outside of that. but I'm curious, are you disappointed? Are you accepting? Are you still excited? Do you see a lot more growth here? It seems like San Francisco has certainly sucked a lot of the oxygen out of L.A.

if you want to be. I had one portfolio company that was a consumer AI business that was in L.A. and just, like, had to bail almost within two months just because of a talent. A $350 billion company popping up in San Francisco will do that. But yeah, what has your been? Give us the temperature check on Los Angeles. I mean, look, I think there's no question. I think there's a sucking sound back to the Bay Area.

And, you know, again, it's sort of like early days of any major technological shift. You know, I think that's naturally going to happen. It's Silicon Valley. And so we actually opened an office up there for the first time last year. We've hired a new partner up there, team up there, and we're all spending a lot of time up there. I mean, for us, I mean, I love L.A. I moved here. I did spend 10 years in Silicon Valley before moving here, but I moved here almost 20 years ago. I think L.A. is an incredible market, and I think having access to this market and really having a deep understanding of a lot of the

industries and network here is super valuable. But the talent density from a, you know, just technology standpoint right now, Silicon Valley is just a super important. place to have a strong network. And so we're, you know, we're spending time both places. We've also, I mean, we are spending time also in, you know, the gundo and in other, and, you know, on other things, which are certainly big growth areas in LA. We also led an investment that we think is super exciting called What Not, which is LA-based company, you know, fastest growing, largest live streaming shopping, you know, platform in the United States.

So, I mean, we think that there are always be great companies here and continue to be. But there's definitely an AI talent density in the Bay Area. I think we were talking to Gary Vian and told us to put up. Yeah, when whatnot exits, it'll be like, L.A.'s back. L.A.'s back. And then people will be like, oh, I never lost faith. I never lost faith. Yeah, that's hilarious.

Well, we had Scoply also last year. That was pretty, pretty great story and continue to have a big here. Yeah. Service type. Mountain. Space here. SpaceX. Yeah.

There's a couple. It's not the worst place. We're doing okay. Yeah. But I think LA kind of like surprises people when you dig into the numbers as opposed to it. It's not as loud because Hollywood is the thing. It's the it's the Hollywood town that happens to be above expectations that in tech and hasn't made as much noise about it. Anyway, this has been fantastic. Thank you so much for hopping on. Yeah, super fun. Congratulations on the on the big win. We'll talk to you soon. Thanks so much. Great to see you guys. Cheers. Have a good. Any other breaking news that we need to cover in between our guests? No, we're good.

No politics? Yes. We're set back. Let's talk about AG1. Let's talk about consumer packaged goods. Let's bring in Kat from AG1. How are you doing, Kat? Good to see you.

Welcome to the show. Boom. Hi. Georgie, I'm going to let you take the intro. Thank you so much for joining. What's happening? How are you? I'm great.

How are you guys? We're doing great. It's Friday. We wish it was Monday. We like podcasting a lot here, so the weekends are always tough. But how are you busy? Sorry for your whine down. I know.

I know. I know. I know. I'm sure you feel the same way. Why don't you give a quick intro, a brief history we don't like to do, make this, you know, biography, but I would love to have you kind of give your background for the audience. Sure. I'm Kat.

I'm the CEO of AG1. I have spent several decades in consumer. I started opening franchises around the world when I was a teenager and had incredible opportunities in restaurants, food and beverage and franchising for the first 20 years of my career. By the time I was in my early 20s, I was in a teenager. Teenager got a backup. What were you doing as a teenager? You just sort of sprinkled that in there. but I'm sure it's a good story.

Yeah, I started working at Hooters restaurants as a hostess when I was 17, putting myself through school. I'm the oldest of three girls. We left my dad when I was nine, helped raise my sisters. And so restaurants are very commonplace for young folks who need to work to start to work. And I grew up in Florida. I used to pick my first real job after soccer refereeing was picking up cigarette butts at a nightclub in the morning, I would get there at like 6 a.m.

And that was my job. So very familiar with the sort of restaurant grind. And it certainly allows you to bring, it's easy to bring the sort of service culture mentality into startups when you're, you know, responding to like tickets online if you got your start in restaurants. Yeah. I mean, that that closeness, right, that proximity to the transaction, to the customer experience. If you're paying attention, it never leaves your bones and your soul.

And so I stayed in that industry for many years. I was with Hooters for 15 years, helped grow that business around the world, and then moved on to a Rourke capital, really big private equity firm and restaurants and franchising, owned portfolio company at the time called Focus Brands, took over Cineabon when I was 30 years old as president to turn it around out of the Great Recession and then built that business into a billion dollar global revenue business,

then built a licensing CPG division out of that parent company and eventually ran focus brands, the parent company, a couple billion, eight brands, 80 countries for four and a half years, so 10 years at focus total. And all throughout that time, I was just becoming more passionate personally about nutrition and fitness. I had kids later in life. I'm 47. I have a five and seven year old. My mom had breast cancer when I had my second, my daughter. And so health became this person. obsession. And so while I was running these big mass market brands, some of them were sweet treats and fun for you, but some were better for you, Jamba, Moes, Schwarzkes, McAllisters, I wanted more, like more bleeding edge of health and nutrition. So I started angel investing in better for you

businesses quietly on the side. That eventually coincided with when I left Focus after a 10-year career running those global franchise businesses. I was introduced to the founder of then called Athletic Greens, AG1. I had been a customer for a few years. And, you know, here we are. That was four years ago. Amazing. What was your personal process diligencing AG1, given that I'm sure, you know, you looked at hundreds of businesses run these sort of massive organizations? I guess what were the qualities?

Because I think if I remember correctly, the time you joined AG1 was when almost everybody was writing off direct-to-consumer as a category broadly. They just said it didn't work. The economics weren't there. you were giving all of your, you know, you would eventually have to pivot to retail and then that was completely changed the business model. And you couldn't really get to scale. Yeah. There were a few things. One, I did similar diligence to some of our investors, which is we were customers. I was a customer for two years. And when you have a personal experience with the product and real passion, for me, it was energy, immunity, gut health support. It made a big

difference for me as a busy professional mom. So I was a bit of a fan girl of the product itself. But that's just one layer. The second was I actually advised the founder for half a year before I joined. And so talk about diligence. I had the opportunity to get inside the business, get close, meet the team, understand product. And as every layer I listed, what I learned was even better than I could have expected. And I had a bit of an ego moment where I'm like, oh, this company's so much smaller, you know, than the other ones that I've run is, is this really what's right and best for me, even though I love it? And very quickly, I got over that too.

This is actually a brilliant time to jump on a health and nutrition rocket ship that's better than anyone knows and has incredible upside. So after advising, I joined in November of 21. So what were the first challenges when you came in? It sounds like a lot of things were going right, but there's probably some area that you were focused on. Yeah. I mean, there was a ton going right on the outside. Everyone said, oh, you guys are crushing it. We did this fundraise, right?

120 million raised at a 1.3 billion post. Wow. It was still the end of the frothier era, like end of 21, beginning of 22. And the business had done 160 million that year in revenue and bootstrapped up to that point. So the founder was an incredible capital allocator, incredible subscription business, 90% subscription, growing at, you know, multiples, not percent. So that's what was good. That's what was great.

Fresh round of capital, the only round of capital we ever raised. and a lot of tailwind in the category, in the industry, and a clear leadership position. What was wrong is that we had scaled so quickly, and we only had one manufacturing plant in New Zealand. So all of that green powder was being blended in New Zealand, and most of our business had grown in the U.S. And so job one was scale the operations to support growth. to launch a few additional products sooner. I wanted to go into retail sooner. But we had no business doing anything new until we really built the infrastructure. And that was expanding manufacturing to the US, which we did immediately to support the US business. So now New Zealand

supports the rest of the world. Other source, we own our source, source, highest quality ingredients globally, then blend in those countries. And certainly that's helped us in the tariff volatility. moment and so that was job one the second was then it was very clear pretty early on that even though there were there was so much energy and tailwind and growth in the supplement category of wellness and a lot of that was getting hyped up and promoted on podcasts and with influencers and creators and we were certainly a part of early very early in that trend we were fortunate that some of our early customers became thought leaders and had famous podcasts but it was a

very clear that science was going to be a critical part of marketing for this category where it historically had not been. So a few years in, first, short operations. Second, actually pulled back marketing a bit and reinvest millions into double and sometimes triple blind, randomized placebo control clinical trials, which take years to build a PhD team, to scope the trials, to conduct, to analyze, et cetera. And so those were the first two things. So operations, supply chain, which includes like QA, maintain our NSF Sport third-party certifications. There's a lot of like high quality standard we needed to protect as we move manufacturing and expanded it, which was a little scary as we put our product in

the hands of other blending facilities, but the team did it beautifully. And then make massive industry leading investments that would take an annoying amount of time to be completed and pay off and then use those two things as the foundation once we got them in place to then innovate. So we wrapped up last year, $600 million in annual revenue, one product, one channel. Yes, all the gods. John's going to hit the glass of the game. Crazy.

Congratulations. Yeah, the scale is just wild. Let the gun have its waves. Yes, we deserve it. Our customers deserve it. That's fantastic. But it is time. And it was time a year ago to make some thoughtful.

large focused moves outside of that single product single channel model. So just this last week, we announced a direct to national partnership with Costco. So we are now a multi-channel company, went straight from no retailers to and all of the largest. I don't think I don't think people realize how significant winning in Costco is because I'm an investor in a company that expects Costco, like in the first, I think, 18 months to do add 50 million revenue to the business. It's like extremely significant. It could easily be into the nine figures. And so it's great if you can just go from, you know, one channel to

adding retail as like this individual, you know, channel that you can really focus on. Yeah, if you're running a small CPG company, our recommendation is just just go into Costco. And win in Costco. Just win in Costco. It's easy. Is that easy? For anyone out there with like a $2 million CPG business? I'm curious like how much, I'm curious if you think like most of the issues in D2C and consumer brands broadly are just operational because like when I think of the structure versus structural where it's like, hey, you have a good product. It be a good brand and you're just or a brand that could be good. Yeah.

Yeah. And it's just a lack of pure leader. leadership abilities internally because like we're very close with the the Ridge Wallet team and that's a business that like shouldn't be a multi hundred million dollar revenue business right it was the original product was a you know they should be podcasted in the early days the LTV was like the LTV was like the first the value of the first that's it the first purchase right and so you would think there's no way this business could really scale or be massive and and

they have against against the odds but I'm curious as you look at other D to C businesses, how often are you thinking this could be great, but it's just not like, it's actually just like an operational lack. Yeah. It's interesting in D2C is I've seen both ends of the spectrum where something is actually demonstrating outsized growth, but there's not a lot of there there underneath. And it's a window of time before they hit their cack wall. And they end up having a lot of unit economic challenges.

And it doesn't mean retail will solve those challenges in particular. And then you see others that have beautiful products, incredible retention, but just haven't mastered the art of e-commerce marketing. And so for us at least early on, I think people gave us way too much credit for being amazing D to C marketers. We were not. We had a phenomenal product that it didn't matter what type of marketing we used to have people learn about it, right?

marketing is just awareness and trial. What keeps people ordering months and years, I've got over 500 customers that have been with us for a decade, a decade. They've been drinking AG1. That is not because a podcaster told them something. It's not because of a billboard or sponsoring a sports team. It's their experience. And so I don't think we can remove consistent quality and that compounding resulting both growth from those customers individually, but we We call it the referral quotient, our number one driver of customer acquisition or post-purchase survey. How did you hear about us?

How did you first hear about us, friends and family? Number one, buy a mile, bigger than podcasts, bigger than influencers, bigger than television. We're full funnel. We're pretty well distributed from a marketing strategy. I was just listening to you guys talk to Dana. She's amazing and their portfolio is phenomenal. And whether it's television or community and activations, it's all a part of our approach. But D to C really has to have that incredible experience to have its chance.

I mean, we were rewarded for our focus, right? Pretty unusual to get to 600 million with a single product. And we weren't even on Amazon. This is just drinkag1.com. And that's unusual. And I do think that might be part of a challenge for some D2C businesses. If they don't get traction or they're not seeing that retention or the LTV they want, then they go wide, like skews and offers.

and you get distracted. But if you can focus and really differentiate, then that traction is there. And the unit economics perform to the best that they can as the algorithms change and as the structure, to your point of structure of digital marketing changes. On the other side, retail, yes, it's a revenue channel, but it's brutal.

And your product is in the hands of someone else. And, but it is marketing, right? It is eyeball. The shelf is a billboard. And so if you can do it, Well, I believe it is synergistic with D-2C, not the maybe predicted or feared cannibalization that some might think going into retail. I'm glad we didn't go in early.

This is our time. This is the right time for us. But we have an unusual business and that people stick with AG1 for so long. Yeah. Do you have a reaction to the news this week or last week that Nike is going back on Amazon, sort of a pivot away from their direct consumer strategy. Yeah, I think Nike got a little too inspired by you guys. I think they might have trying to copy you guys.

They saw you putting up phenomenal numbers. They're like 81 was the last holdout. They're the last holdout. If they're there, all bets long. Yeah, exactly. Welcome back, Nike. Yeah, but they seriously said we're, you know, we're not going to do Amazon. We're going to focus on our own Nike.com.

And the direct response marketing, and that's the other thing. You guys have blended. You guys do, I'm sure, the vast majority of your budgets around direct response, but when you came on board, suddenly the AG1 brand was aspirational. Totally. It was like, you know, cool. And it was leveled up. It felt like, almost like fashion.

And that's been a critical part of the Nike brand is putting the celebrities front and making the athletes, the heroes, and that kind of fell by the wayside during the direct response era. Hopefully they're getting back to it. People were talking about Caitlin Clark has signed with Nike, but most people don't even know it because the particular shoe that she wears is. like a limited release, and so they've gone this, like, very odd strategy. So just general lessons from Nike or reactions to the relationship of Amazon there. I mean, look, it's similar to us,

and may we be a Nike one day? What a phenomenal brand. Seems like you're on the way. But they've had their bumps as all scaled companies do. And we, several years ago, as part of that pullback in that lower funnel marketing and investment in human clinical trials to raise the standard in research, we also moved the marketing spend we protected to more upper funnel, right? Building brand, brought an incredible CMO recently, former CMO of Yeti. He is a creative genius and really deeply believes in community. He always has niche to be mass. Like go to your people, be deep, be there for them. And we have a lot more ground game happening now. And so that investment in full funnel marketing, you get a greater return if you're in more places, including the world's largest

e-commerce retailer being Amazon. So for us, and I know this was a part of Nike and even some other brands calculus and either going off or never being on, for us, there was so much tailwind in organic search and growth. We didn't need to be there to grow the way we grew and we could barely keep up with the growth that we had. It got to a point where three things changed for us, and I can't speak for Nike, but I'm assuming this is a piece of the pie. One, there was a growth of counterfeits and resellers. And to protect our brand at scale. And, you know, this isn't a shoe.

It's something people put in their bodies. That's a safety issue. That's a brand issue. So when part of our thinking of getting back on was being the programs that Amazon in particular, transparency and others that they put in place to take down either of those fraudulent products, people infringing on IP, or unauthorized resellers. That was critical for us. We would not have come back on in the way that we did in as big of a way if those programs

were not in place for this category in particular. It's about quality. We had to add holograms to our box with randomized unique numbers on all of our packaging. We did this pre-Amazon because it wasn't just Amazon, all the marketplaces. I'm talking real counterfeits, like weird typos and Grinch Green Powder, getting caught by customs. Imagine getting a phone call from your general counsel. And she's like, we just got a call from the feds or customs.

Something that says NSE for sport. And you're being a brand. You're being a very, you know, like a politician about this. But when I talk to portfolio companies in the supplement space about Amazon, it is just their number one, one of their biggest pain points and just a massive source of frustration around counterfeiting, around, you know, all the sort of issues that you're- When we got back gone, it was gone. Yeah.

And now we're a meaningfully scaled business, right? So they've really, this is not being diplomatic. I had a ton of risks to my brand and it is now gone on that platform. That's, those are the facts. The other issue was that because the resellers were there, even if it was real product being resold. I couldn't tell you how old it was, the shelf life, the stability. So I still had a quality concern, but as big of an issue for e-commerce marketing was it was driving my ratings into the ground. So our brand ratings on Amazon were awful.

And so if you would search AG1 on Google, you'd get these great ratings from our site or other sources. And then Amazon, two stars, three stars. I mean, it's horrific. And so as soon as we got back on, resellers are gone, counterfeits are gone. We have a limited product assortment there so we can be there meaningfully, but keep D2C is the place for expansive skews. Ratings went through the roof because customers are having a better experience. So it's search.

It's about search and discovery as well for us. Where is your team getting the most leverage from AI? There was news this week from meta, talking about wanting to be, you know, basically help advertisers actually generate ads. Dylan Patel was talking about that. And in general, you know, when you talk to brands, like the number one thing holding back their growth oftentimes and efficiency is creative. So it's very exciting.

We're finally there with V-O-3 where it's not at least a drop-in replacement for some B-roll or stock footage that you might pull out of the shelf. So yeah, that's a fascinating question. It's, God, the technology is unbelievable. It's unreal. So for us, the first place AI showed up in the business is our customer service and customer happiness. We partnered with Sierra.

We were very early with them. And I have no affiliation with them otherwise being a happy customer. And they partnered with us to craft what we needed. And what we got out of efficiencies, we redeployed into human resources for concierge programs, for loyalty programs, which we were actually very late to develop as a subscription business. So I used, there was a financial benefit. There was a speed benefit for, like we learned that 50% of our customer inquiries were things. We already knew this.

We just didn't have to solve that Sierra helped us with. 50% were just managed my account. You know, like that stuff can be odd. That's prime for AI. So for us, AI was first there. Then we have tools that our team or supply chain team have brought in on transparency and tracing for ingredient sourcing since we own. our sourcing. And so it's really helped us track and monitor and enable all because we have

pretty rare high standard specifications of our ingredients and have unusual levels of testing of ingredients. And so to manage that through the supply chain has been very manual. And so AI has helped us there. Then to your point, marketing. We have some interesting thoughts on AI. We are using it for, as you said, digital background, digital B-roll, anything that isn't supposed to be real product and real human because the supplement space has both good actors and not we are holding ourselves to a standard of if we're putting a person on camera or if we're showing our product right or wrong it's going to be real and but everything around it the enablement the editing we are bringing every AI tool we can to make that more creative um and more efficient yeah we were

were talking to a food photographer earlier today who was very nervous about artificial intelligence and AI image generation, but was hoping that some of the rules around the way food is photographed from the FCC. They basically marketed. Yeah, and marketed because you've seen those famous pictures of like, here's the burger. I wouldn't say the name of the company that does it. But here's the photo and here's the actual burger and they don't look anything alike. And you can imagine that being a big issue, even if AI can be used in the post process,

there's probably still value to showing the customer exactly what they're actually getting. Last question from my side for now. Do you think that people should be significantly more concerned with the supplements that they choose to put in their bodies? There's this, obviously in the Silicon Valley, the tech world, people will take any supplement if it's like, hey, this is going to make you 1% more focus today. They're like, I will buy this from some sketchy website and take it today. And, you know, you keep coming back to this sort of like traceability testing, you know. We see this with the creatine gummies. Yeah, well, that's an issue too, but there's often.

But, I mean, if you test supplements, it's like, yeah, you could be supplementing lead and not knowing it, you know. And so I think that not every supplement company has the same standards. And I don't think people fully appreciate the potential consequences of that today. Yeah, I, you know, the very fast answer is, yes, people should be incredibly discerning while there are truly so many companies doing the good work, third party certifications, publishing certificates of analysis like us on their site, all kinds of third party labs. There still are so many who, whether intentionally or not, in the mildest form of the issue, what is on the label is. not what's in the product, right? So you think you're supplementing with X amount of this ingredient and whether it degrades because of the shelf life and they are blissfully unaware or their manufacturer pulled one over on them and they are unaware. I would say you're responsible in those cases if

you're going to sell a product. That could be happening and in that case it's just in, you're not getting what you pay for. On the other side, to your point, there could be ingredients that you don't want or don't know are in there. And so what I would encourage people to do, whether they're Silicon Valley or anywhere is recognized this is a huge industry and where there is growth, there will be both good and bad actors. And the great news is there are ways to know who and what to trust. You've got to look for third party certifications. And don't just take the words that someone types, third party certified.

What third party? NSF for sport is the gold standard. They're incredibly expensive and a pain in our asses. Because if I change one thing in this formula, it has to go back through their process, through shelf life testing to prove what's on the label is what is in that bag. Yeah, you actually have to go, you have to really verify too. I helped start a company in the water filtration space. And we went through the full NSF certification process.

It costs hundreds of thousands of dollars. And then we have competitors that will put the NSF badge all over their website. And they're like actively getting sued by the NSF for legal battles. But they just keep it up because it increases conversion rate. But if you go below the surface, it's like there's just nothing. That's right. I think the other piece for people to think about too is this is unfortunate, another layer of confusion is you also then have people doing what you just described, starting their own labs. And then they are testing product with some unknown methodology and then creating viral content around whatever they find. And that just makes it harder for the customer to know.

So I would just say this is not, and anything you put in your body should not just be a listen to someone and click and buy and put it in your body. go to the website, look at the ingredients section, look at the research section. Do those supplement companies have any research on human beings at all? And I mean, you can imagine, you know, because you've got investments in the industry, having four double-blind, randomized placebo-controlled clinical trials with over 100 people proving the same outcomes of supporting gut health, 10x gut bacteria, beneficial gut bacteria, covering nutrient gaps in four different populations, that's not cheap. And but we have to, right?

We're the leader. We don't make claims. We can't substantiate. I could have done two studies and that's enough to say clinically back. We did four. We're just, we have to lead because there is so much to be questioned with those in the middle. And I will offer if anyone is starting a supplement business and if they genuinely want to know

how to do this right, I will help them. My team will help them. It is bad for the industry for people who don't take this stuff seriously. That's amazing. Well, thank you so much for hopping on. This is fantastic. Congratulations of the massive revenue numbers, all the progress. Yeah, it's amazing.

Classic overnight success. We love to see it. Yep. Come back on next time you have news. This is super fun. Love to talk to you. Thank you, guys. You're out.

Great to see you. See it. We are shifting gears over to the supersonic world. We have Blake Scholl from Boom, Supersonic. Is the speed limit lifted? We post speed limit. I want to go 2,000 miles an hour tomorrow. Smiling. He's smiling. Something must be good happening.

What happened today? We've been live for the last few hours. We got a text message. We got to have you on. Yeah, nothing, nothing big. We just actually, we actually broke the sound barrier today permanently because the band is reversed. No way. That's amazing. John's going to hit the gong. Oh, that's for you, Blake. Congratulations. We've been hoping for this for a long time. So the rules are going to change and you can go supersonic as fast as you want so long as the sound is a gong.

Yep. That's great. I would happily let gongs ring upon the fields of America. From sea to shining shining sea. I'd love to see it. I mean, I know this news is breaking, but how did you find out about this? Was there expectation that this was going to happen? Who are the folks who have? have been working on this and then break down what actually happened. Yeah. Well, I mean, in certain sense, people have been working on this for decades, you know, since 1973 when it first went in place. And we've been working on it very intensely since February 10th,

which is when we announced we could do, we could fly a supersonic without an audible boom. Yep. I think it was that, that night I left LA where our test flights were and went to DC. And by the way, it was horrible flight would be much better supersonic. It was like left at 11 p.m. Got it at like 4.30 a.m. It's awful.

It should totally be supersonic. And then by the time I landed, they had an invitation to the West Wing. So the, so we, since then, what we did what, to me felt like a very long,

frustratingly slow campaign. But what everybody tells me in D.C. is actually supersonic. So a bipartisan bill dropped three weeks ago in the House and the Senate. called the Supersonic Aviation Modernization Act, which, by the way, I think we should still pass because that locks in all of today's goodness.

And we just sort of continue to educate people. By the way, we don't have to have the boom anymore. By the way, not all booms are created equal, not all are bad. And that's something a lot of people can get excited about. So, I mean, I know a lot of the technologies about flying at very specific speeds at specific altitudes, doing all the math to make sure that the boom bounces back into the atmosphere, something like that.

What kind of speeds does that actually work at? What are we expecting? Because supersonic goes well past, it goes basically infinite, right? Right, yeah, exactly. So there are two ways you can kind of tackle Islamic boom. One is what you're just describing. Make it go away entirely by making it make a you turn and go up to space. And the great thing about that is there's nothing to argue about whether it's too loud.

The less great thing is it only works up to about Mach 1.3. You can go about 50% faster, but you can't go 100% faster or 200% faster. Put that in terms of like a commercial airliner. If I fly at like 500, 600 miles an hour, you're talking about like 700, 800, maybe? Yeah, well, let's talk about in terms of flight times. So with a 50% speed up, which is what's achievable routinely, you can leave New York at 9 a.m. and be in San Francisco at 9.30 a.m. So it's a three and a half hour flight.

Okay. Wow. Which is like, that's a W, right? Yeah. Now, you know, if you want to go higher than that, faster than that, you have to convince yourself that some way or other the boom is not a problem. Yeah. Okay.

And I don't think, people don't agree about the answer to that. You know, I want to get out there, fly the airplane. I want to hear some real booms. I've heard a bunch of booms in Mojave. By the way, we were doing our test flights. Booms are commonplace down in the Mojave Desert, military mix them all the time. And there's some that kind of get your attention. You're like, wow, we probably shouldn't do that.

At least not at least not at night time. At most, that's a daytime thing. But there are others that like sound like somebody like dropped a book on the floor. And, you know, and those are, you know, so think of it as like the wake of a boat. The bigger the boat, the bigger the wake. The closer the boat, the more the wake you feel.

Yeah. And so if you have a right-sized boat as sufficiently far away distance, it really ought to be considered an on-issue. So, you know, I think we're still kind of taking in exactly what's the language and the EO. you know, but my, my expectation is that this will be a one-two punch where, you know, if there's no boom, there's nothing to argue about.

If there's in the boom, there should be a way to sort of demonstrate that it was an acceptable one. Yeah, yeah. So specific flight corridors where people are opting in or something like that. Yeah, I mean, it's just pretty new quarter. The, the, you'll hear and not, if you're in kind of boomful mode, that the boom corridor is actually like 50 or 100 miles wide. Very wide.

I mean, you know, we can't build a railroad in this country. Yeah, yeah, yeah. Like, you know, which is like the positive thing is like, I imagine if when you're traveling over oceans, we can, you know, have a little bit more flexibility. Yeah, there has never been a restriction over ocean. So that's the, fortunately, there's nothing to do there. So the way our first airplane overture will do this is it'll fly boomless over land at like plus 50%.

And then when we get to the coastline, you know, he gun the throttles. and then you go to full 2x speed. Yeah, yeah, yeah. Yeah, and I'm sure that the economics change when you can do 1.3 mock over land because that's just a, there's so much more overland air travel generally. So it's just a bigger market,

so it justifies everything over in the investments. It does. And the economics are actually really interesting. So if you fly sort of lightly supersonic, it's worse for fuel burn, but you can do so many more flights at the same airplane, you save a bunch of money on other things. And so on overture, going right under

speed of sound and going boomless supersonic is actually the same dollars per seat mile right? Right? Like the fuel size gets a little bit bigger and the cost side. The cost side like any the cost side like any huge but the revenue is going to be I'd pay 10

times as much to get from New York to SF. Obviously. I mean time is money save both ramp.com also boom boom supersonic you can go to both time is money. Everyone's going to save you time. But if the boom comes down

reflects, bounces back up. And I'm in a plane there. Is that going to break my plane's windows? What's the thing? Yeah. Okay. So a few people ask that question. It's a good question.

The answer is Concord did that for 27 years and nobody noticed. Oh, interesting. And one time they tried to test it. We know the pilots that were doing this. They arranged for like a 747 to be here where Concord's kind of passing overhead. And they had told everybody on the 747 that they might get to hear something. And they didn't hear anything and everybody was super disappointed. Okay, so it just doesn't really affect.

Maybe you feel something that feels like turbulence. I don't know. It's like a nothing burger. But it's not going to blow the windows out, which is like the worry, of course. No, I mean, if that was going to happen, you know, Concord have knocked out every other airplane in the sky. Yeah, of airplanes fly above. Yeah. Airplanes fly below.

So Concorders booming for 27 years over with the Atlantic and like nobody got hurt. Yeah. Wild. Anyone else? So I'm a look at this, by the way. It's like the energy intensity and some of the physics of sonic boom are very similar to thunder. Right? So you could be like, oh my gosh, like, you know, could boom over the water, like disturb the median habels of like, I don't know, the aquatic spot a gal or something.

Sure. Well, anything that was going to be put out of commission by a sonic boom was long ago put out of commission by a thunderstorm. Sure. Yeah. Sure. Was there anything to you that was surprising about the EO? what what what what what what what what what what what did you maybe not I mean I had I admit I haven't read it word for word yet yeah

I read I read the fact that party and I need to like calm down and read it there's there's a lot of stuff in it um that that appears to sort of like you not just say great you should be able to fly a supersonic but you know advances R&D and you know I got to read all but I want to say what I read it yeah yeah I'm sure there's a ton of work to be done on like the licensing and approval and and everything that happens with certification. Some of those things might need to change or speed up. Some of them might need to stay in place if it's a safety issue, of course.

But what's next for the company? What's the next milestone that you're tracking? Let's go. So we're building our first engine. Okay. And that thing is like 60% the parts are in the manufacturing process. And we'll go run that bad boy later this year. You know, the skeptics always say a startup can't build a jet engine for scratch.

We'll find out. Yeah. And then we'll start building the first full-scale pre-production prototype overture next year. Very cool. It'll be roughly three years. Okay. We're going to be back in like there's a bird in the air. But last time that we flew it, look like a fighter jet.

Yeah. Yeah. Next time, it's the overture, which it looks like a, it kind of looks like a Concord and a 747 had a baby. Yep. Amazing. It's got this little hump up at Frond. You know, it's not a double-decker, but it's a really unique airplane. Not yet.

We have to get the gold-plated 747. Those are really hot right now. Lots of people giving them to their friends. And so I could imagine handing these out to world leaders being pretty effective. I have to ask, did you have any, did you get a chance to watch the rehearsal by Nathan Fielder? You give me a blank stairs. He's probably too busy.

Locked in. I don't, is this sounds like a pop culture thing of which I'm ignorant? Yeah, yeah, yeah. Well, the reason it's relevant is because this sort of comedian, Nathan Fielder, has a show called The Rehearsal. He learns how to actually fly a commercial aircraft to demonstrate to the FAA some of the issues they have around safety.

Specifically on pilot communication. He identifies that the vast majority of commercial air crashes that have happened over the last few decades have been the result of a captain making a mistake and the second in command not having the kind of energy or confidence to stand up to them because we're meeting for the first time. And so he dissects this in a bunch of hilarious. And it's very entertaining HBO.

And my main takeaway from your answer is extremely bullish for boom that you have no idea. There's a certain class of hard tech founder. I always noticed Scott Nolan, he'll post like he'll repost like their announcement like four days later because he's like so in the trenches that like I'm like Scott like you know you launched three days ago. Like you should be retweeting at least like the post because he's so offline. But anyway, I have one last question about being online. You've been learning from Elon about manufacturing online. You had an interesting back and forth where you were talking about manufacturing parts. I barely followed it.

Can you explain what did you learn from Elon about manufacturing? Yeah. And yeah, yeah, break that interaction down. So Elon has this thing he talks about called the Idiot Index. which is a beautiful Elonism, right? Yeah. Where it's sort of a, like you've got a final part, and you divide it by the part cost.

Like I can say it's a turbine blade. It costs, I don't know, a real world example. We've got a set of turbine blades cost a million dollars for a set of turbine blades. What is the raw material cost? $1,000. So what's the index, a thousand X? Like the cost goes of a thousandfold in the manufacturing process. And so it's a sort of measure of like, what's the money efficiency of the manufacturing

process. There's another thing that I think is actually even more important that we call the slacker index. And the slacker index is how long it takes to get something out of the supply chain divided by how long it actually takes to make it. Oh, so more time-based. Right. Like so we were getting these three printed turbine blades for our first jet engine and we go quote them in the stupid old aerospace supply chain. And the quote comes back and it's like it's six months and a million And I was like, wow, okay, well, how long does it actually take to print the blades? Oh, like 24 hours. So what's going on the other 179 days?

You're like waiting for you. And I was like, oh, it must be that the machine is like really hard to get and they're like only a few. Well, no. Turns out the machines are off the shelf. They've got them in inventory. You can get one in two weeks. And by what do they cost?

Two million dollars. So for the price of two engines worth of blades, we were able to buy a 3D printer and print our own blades. And so what happened? It compounds from there. If engineers can only make a new blade every six months, they really work the blade design, because I don't want to get it wrong because if they get it wrong, it takes six months to fix it.

But I think it can print it the one the next day, then all of a sudden the rate of iteration goes up, and there is an engineering hand-wringing and trying to get it right the first time goes away. Yep. You want low Idiot Index, and you want low Slacker Index. I love it. I love it. Well, hopefully this EO unlocks a lot of that,

and we can bring down the Indy Index, bring down the slacker index and get a flying super sonic light band definitely had a high idiot index so I'm glad that's been deep sixed well fantastic we are one step closer to a supersonic podcast I love and I cannot wait yeah I haven't forgotten you're on I know I can't wait it's happening it's happening well congratulations enjoy the weekend hopefully you can advance the technology but also celebrate a little bit and we will talk to you soon Blake thanks so much for having on jumping on and We'll talk to you soon. Bye.

Bye. Let's give a little air horn for a supersonic flight. Yeah, I love it. I can't wait to hop on a boom supersonic, take it to an exotic locale, stay at a wander. Find your happy place. Find your happy place. Book a wander with inspiring views. Hotel great amenities, dreamy beds, top tier cleaning, and 24-7 concierge service.

It's a vacation home, but better folks. Any other posts we need to go through. We talked about polymarket partnering with X. That is fantastic news. Shane Copeland has the news. He says, proud to announce Polymarkets partnership

with X and XAI as their official prediction market partner. I'm very interested to see how this actually integrates. Obviously, polymarket's gotten very good

at sharing images with a very catchy image and then the market, not just the, like the polymarket screenshots have been kind of a staple of X since the election.

But they've gotten better at that. I'm wondering if we're going to see the data actually hydrate live like community notes so you can attach a polymarket to a post and it will stay updated. That would be very cool. So you could be tracking it on the post. It'll all be very interesting to see where that goes.

What else should we talk about today before we leave? I think we covered a lot of it. Scott Belski is coming on the show next week. Very excited for that. He has a post that I was just enjoying because it's about product leadership. He said underrated characteristic of top product leaders compulsiveness, obsessively capturing decisions, ideas that need to be taken, baked that would otherwise be fleeting. This is how I felt about reading this post.

Incessantly iterating over options in mind, morning till sleep. This is what the golden retriever does. The golden retriever incessantly iterates over options. Should I get the ball? Should I get the snack? Should I roll over? Try and get a belly road. High energy.

High energy, trying to be efficient. Not always getting it right, but doing their best. World-class products are crafted via compulsion. There's no better example than the golden retriever. Golden retriever never says, nah, I don't want to get the ball today. Yeah, no, never. So go out, get that ball. Enjoy, be a golden retriever this weekend.

Fantastic week. Timeline and turmoil, lots of chaos in tech. But we're still here. We had incredible IPO. We had an incredible IPO. The IPO window is open. Yep. We had some drama.

Some drama on the timeline. But who knows? It's a new week. We might see completely new things. things and the and the relentless march of techno capitalism and artificial intelligence, well, it marches on. And as always, we're newsmaxing. Ben is standing behind the camera right now, giving us a threatening look.

He says, go leave us a five-star review. Spotify, Apple Podcasts. It does help the show a lot. Thank you. And we hope you all have a fantastic weekend. We'll see you Monday. See you Monday. Goodbye.

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