TBPN - Weekly Recap: CEO Affair at Coldplay Concert, Elon Musk's AI Girlfriend, Cognition Acquires Windsurf

Episode Date: July 19, 2025

(00:00) - Intro (00:03) - Astronomer CEO Affair at Coldplay Concert (11:11) - The Steelman for Grok's Vulgar Anime Mode (29:31) - Cognition Acquires Windsurf (01:20:14) - Jeff Wang (Windsurf) & Scott Wu (Cognition) (01:32:19) - Windsurf Chaos Aftermath Breakdown (01:41:27) - Martin Shkreli (DL Software) TBPN.com is made possible by: Ramp - https://ramp.comFigma - https://figma.comVanta - https://vanta.comLinear - https://linear.appEight Sleep - https://eightsleep.com/tbpnWander - https://wander.com/tbpnPublic - https://public.comAdQuick - https://adquick.comBezel - https://getbezel.com Numeral - https://www.numeralhq.comPolymarket - https://polymarket.comAttio - https://attio.com/tbpnFin - https://fin.ai/tbpnGraphite - https://graphite.devFollow TBPN: https://TBPN.comhttps://x.com/tbpnhttps://open.spotify.com/show/2L6WMqY3GUPCGBD0dX6p00?si=674252d53acf4231https://podcasts.apple.com/us/podcast/technology-brothers/id1772360235https://www.youtube.com/@TBPNLive

You're watching TVPN. This went insanely viral. The CEO of a company called Astronomer was caught on the kiss cam hugging one of his employees, the head of HR. Oh, look at these two. All right, come on. You're okay?

Oh, what? Either they're having an affair or they're just very shot. And I said... But Chris, in the video, Chris Martin is like, something's going on here. I said, up CEOs can't even hug their chief people officer at a concert in this country anymore. It is crazy when the internet descends on a current thing, how viral it is.

Like just you have to jump in on the current thing. Well, before we talk more about this, I wanted a quick word from our sponsor. Astro by astronomer is the orchestration first data ops platform built on Apache Airflow, empowering your team to build, run, and observe data pipelines that just work, all from one place. Do you believe the conspiracy theory? Put on the tinfoil hat. Yes. Will you steal man the tinfoil hat?

What is the tinfoil hat explanation here? Tinfoil hat explanation here. All press is good press. Is that Nathan for you. This is just part of an elaborate stunt. Yes. And Nathan's plan was have the CEO get caught having an affair with a coworker to increase brand awareness and get a buzz going. This was Charlie Light over on X.

He definitely got a buzz going. And yeah, a lot more people know about astronomer today. 100%. But hard to see how it would have been planned. There's been a bunch of jokes. Ryan Peterson said, Bored should give him a raise without this viral moment. I'd never know that astronomer is used by enterprise clients

to manage Apache airflow and achieve 70% higher up time, themselves managed airflow. So lots going on today. Alex Cohen says, imagine losing half your life savings at a cold play concert. Why half? Oh, because he's going to get a divorce. Okay.

I thought it was about him getting like, it's very sad. It's a vesting joke. These are adults that made their own decisions. Yeah. And they now have to live with the consequences, but I doubt either of them would have paid half their net worth for those tickets. Yeah.

Rough. Very, very bizarre. I was reminded. of what Emily Sundberg told us when she came on the show. I was asking her how the Hamptons has changed since the era of social media, the age of the internet. And she said that there are so many TikTokers documenting everything that happens in the Hamptons now, that you can't even leave a party with someone else's wife.

That's what she said to us. Do you remember this? Yeah. And I'm wondering, like, what does this actually mean for birth rates? What does this mean for, like, this, This seems predictable at this point. This is the first one that's happened. I've seen these other videos. Having debate this morning,

which is that find my friends is the best thing to happen to marriage. Monogamy. Yes. Potentially ever. Yes. Because if you are in a committed long-term relationship and you do not want your partner to have visibility into your whereabouts, you can make a pretty bad argument for privacy.

Yeah. But it, but it ultimately, it doesn't, it's really hard to stand behind. Yeah. I think it's potentially a really positive force against social media, dating app culture, and things like that. Yeah. So the answer to technology problems is more technology. Maybe. Yeah, it was like this, it's this countervailing force because like what was it like Instagram is like constantly flooding you with like recommended like look at this girl. Look at this random person. Look at this thing. Look at the you know like go down this rabbit hole and then and then find my friends is maybe pulling you back. But I mean, he probably told he probably said I have to go for this for work. This doesn't fix this issue.

It doesn't really fix this issue. But the kiss cam does. The kiss cam is a Lindy technology. So Lulu had some advice. She says, just given out priceless comms. Yeah, yeah. Pretty much. Crisis comms for the astronomer team.

She says, don't bother with crisis comms here. The CEO will try to get you to protect him, but it's not his company. He's a temporary steward. Your job is to protect the company. The CEO is a professional manager who's only been there two years. The HR person has been there.

less than a year, neither is tied to the identity of the company. Preserving trust is more important. Your business model is to handle sensitive data and your priority is scaling, and that's tough to do with multiple known liars on the senior leadership team. A better comms plan than trying to save the situation. Andy Byron is on the board, but he's not a founder, doesn't have control. The other five members should replace him. You can then use the new CEO announcement as a reset and get people to focus again on astronomers' actual business instead of its drama. So we We did reach out to Andy this morning to see if he wanted to tell his side of the story. Felt like an extremely, you got to be a little bit crazy like Soham to want to come on after you the current thing.

But in this case, we should have the new CEO on of Astronomer whenever that comes. So there's a polymarket today on whether he'll be out by the end of next week. odds are currently sitting around 38% I would not be surprised if there's somebody new stepping into the CEO role at the company this seems to have been

way way bigger than just the current thing on X it seems to have really broken containment is this a data bricks competitor like Apache Airflow is it says open source workflow orchestration platform used to programmatically author, schedule, and monitor data pipelines.

I wonder if their business is just exploding. DAG directed. So quite the lineup of investors. They've got Bain Capital Ventures. Let's go. Just led a series D this year into Astronomer. So let's hit the size com for that. It's probably a fantastic business.

Then Insight is also led the series C in. March of 2022. Yeah. So pretty, Venrock was in the Series A as well. And then Sierra Ventures, who I'm not familiar with, has led a couple different financing.

So yeah, this business has been around for a while. They're going to get through this. I'm sure that Bain Capital and Insight and the other members of the board are already figuring out who they can get to step up and run this company. Yeah, there just seemed to be some sort of line

between like bizarre, salacious, but ultimately orthogonal to the core business drama and, like, actual core business drama, like some fundamental flaw in the business plan that's exposed, FTX or Theranos versus just this like, you know, drama that's happening here. I keep laughing about that, that analogy we go back to where if you found out that, you know, I think what do I have? I have, what are pilot sport tires? Is that Bridgetown? Misholian.

Misholin tires. So if you told me that the CEO of Mishlin was, was caught at a cold play concert with the head of Michelin, HR, it would be a tall order for me to go get new tires, right? I'd be like, the tires work pretty well. That issue doesn't really affect my tires. It's more so that the difference here is that being caught is different than being on the kiss cam and getting 100 million views today. My post alone has a million views. And I posted it a few hours ago.

But do you think it's going to actually affect revenue this month? I don't think it will affect the business at all necessarily, maybe a little turbulence, because of needing to find new management and having some turnover. Turnover on the on the on the on the on the on the exec team is going to be a challenge. But ultimately their customers are not going to, you know, say, hey, we're turning off. You know, we want out of our contract. If the product is good, maybe some people use it as an excuse. Sure.

But yeah, I don't see this affecting the business. But then again, it's like if you're being capital or insight do you really want. do you want a he came in two years ago sounds like he's been executing the team has been executing well if they got from series C to D over the last couple years they're they're probably growing nicely but and I don't necessarily think that that this is the end of this guy either of their careers yeah it just should be the end at this company yeah because if because if you're the board and you and you tolerate this that just means yeah we tolerate people of you know poor moral character. Sure. Yeah. Also interesting. I mean, this company's like never even heard of it and it's on an

absolute terror series D at this point. And does this not sound like something that should be in the AWS dashboard? Like we were talking about browser base yesterday getting like quote unquote copied. And there's just something about these like point solutions that just are, you know, nailing a specific problem. You know, in this case, it's like deployment, deployment and management of an open open source project. It's literally anyone can just run Apache Airflow. They just help you do it better. And that's kind of what Databricks did with Spark.

Like Spark's an open source project. Now they, now they, for these data pipelines, now they help companies actually install, manage, run them and then put a bunch of software on top of it. And Data Bricks has been massively successful. And so it's interesting to bring it back to Brassurrace because it just kind of reveals that like these companies can be kind of grinding in silence. for a while. Just, I guess the note for Paul Klein's probably stay out, avoid being the current thing.

Because the failure mode could be less technical and more interpersonal. Yeah. I don't know. True. Anyway. Work, retired, die may have been inspired by my post. Or it could have been totally random. But he said, married CEOs can't even hug and romantically sway with their married head of HR during a coldly concert anymore.

because of woke. Oh, because of woke, okay, yes, yes, yes. Is there anything else to cover on the... Sophie NetCap Girl says it's so hard to get notice as an AI company these days. The astronomer's CEO had to cheat on his wife for marketing. Yeah.

It's dark out there. I don't think... I'm not believing the tinfoil hat one on this one. If you've been living under a rock... Yes. GROC launched a NSFW anime mode to the app, audio and visual. And I believe it's part of...

of their it's part of the paid tier. Yes, I believe it's $300 a month, something like that. There's a report in Wired about this. I wrote about XAI from Kylie Robison who's been on the show. I wrote about XAI's new creepy wifu bot and it's even weirder companion Rudy, which

has a bad version that told me. All skull F. Your deed, blah, blah, blah, blah. Very vulgar, not family friendly, not approved for this show. When I asked what it thought of Musk, it referred to him as Lord Elon and said he's a galaxy-brand egomaniac. I can't even read this.

It's all bad words. But anyway, I am, I've been thinking about this. And I think that there is an interesting steel man argument that we should go through. So we should talk about it. So in general, I think that XAI's grok strategies a little bit all over the place. So they're trying to be super quantitative and benchmark billed. I'm serious. They are.

They're super benchmark built. They're like, Arc AGI, the insiders, the most insider AI test you can possibly have. We have the best score on it. We're on L.M Arena. We're, you know, we're, we're, we're, you know, maxing out all these different benchmarks. That's right. So it's like, and it's like, it's this incredible engineering effort to build the 100K cluster. Like they're clearly hiring great talent.

I think he keeps laughing, seeing the, I'm just I'm not gonna look at you this deal I'm not gonna look at you that'll help me So they're very they're very benchmark pilled But then they're also trying to do this like sassy and anti-woke thing in the in the in the post replies and like the fine tuning on top of that Was so crazy that it spawned like the mecha Hitler thing so it's like they're there they're they're kind of like all over the place one is like super quantitative super focus super benchmark pill like just but they're clearly kind of edge Lord Internally yet well it's like it's almost like two different extensions of the product right yeah two different teams building towards two different goals. One is just like the most beautiful like solve physics, solve math,

like create the, create like a great AI product. Yeah, pursuit of truth, all that, like facts and usefulness and tools. And then on the other side, it's like it's like fight this culture war thing, which is like a very different battle to be fighting. And then we saw this last week after the launch. There was the new,

there was news that everyone was meaming because it seemed like it was very, very opposed. So one was that Grock had signed a contract with the Department of Defense. It's like as serious as you can get in AI. It's like Open AI has one of those contracts. I believe anthropic, Palantir. And then Grock, which is like this from the outside, like seems like a chaotic like product. Something that was born on something like 4chan. Yes, exactly. All of a sudden like the DOD is going to be adopting that. Like what does that mean? And then simultaneously there's like they're getting into the romantic companion market with this anime theme. And so AI companions, I think the general mood in tech is that it is a very dark thing. Like people get addicted to them. They become less social. They stop interacting with real people. They don't have kids. And then the population collapses and humanity ends.

Like that's the bad ending to the AI companion narrative. Now. And to be just to give you some context, there's a variety of companies that do this today. Exactly. varying levels of vulgarity. Yep. Replica. We've actually talked to the founder,

and she had a bunch of nuance around it. So I don't... And just for context, so replica has over 225,000 reviews in the App Store. People are definitely using it. They were very early to this. Character AI was also early to the AI companion space. Has tens of millions of users. It's one of the biggest websites in the world still.

And so anyways, there's a variety of players in the game. But what's interesting about GROC is when you look through the other labs from Lama to Google, or sorry, meta, superintelligence, to anthropic, to chat GPT, Open AI, etc. Nobody has been willing. Everybody knows that this is a use case that there's an obscene amount of demand for. But no one else had the guts to go and do it, at least a player that had. billions and billions of dollars to deploy against a strategy like this. I believe at this point, every other company that's playing in the companion space is not,

should not be considered really like a mega scale research lap in the sense that they're not raising billions of dollars anymore because character went through that zombie aqua hire. That probably cut off the capital cannon. Yeah. Such that even if the Remainco employees that go ship, I don't want to call it. I mean, it's kind of rude to call it a go ship because it seems like the employees at Character AI are, you know, running it and happy, you're doing fine. But it doesn't seem like the new CEO of Character AI will be able to go out and be like, I'm raising $5 billion to build a one gigawatt cluster and I'm going to buy 100K GPUs to train my own model. Like, Character will be built on top of other APIs.

In fact, they're probably trying to just run it profitably. Yes. And make a great user experience. Yeah. And so you'll always have this kind of this kind of back and forth with like your API. provider because the API providers, the foundation labs, they care about their brand. They care about how they're perceived as being ethical or moral. And so they might not want to offer that even at the API level. So what's interesting, and this is where like the steel man comes in. So the worst possible outcome for AI companions, very dark, people, you know, it basically reduces the coupling rate.

But we've already seen a decline in. in birth rates. So it's not, so it's unclear if it's like, this is a new thing that will accelerate it. This is status quo. Anyway, I think that's kind of like where. Well, yeah,

the concern would be like pornography has existed as long as the online dating is another thing that people are skeptical about. As long as the internet has existed. I'm sure that is led to some not so great outcomes. The concern is that companions that are real time and adaptive and really mimicking a human would create even worse. Yes, yes, and I think that's an NSFW content. And I think that's a reasonable point. Although it hasn't been borne out in like data or any sort of like research at this point, but it feels intuitively reasonable. But let's actually think more about the market because in order to scale your lab, we know that you can't do it as a nonprofit. We know that it's not just a hundred million dollar donation one time. A bunch of genius is working. You come up with the elegant algorithm for super intelligence. You need scale. You need capital. You need talent. And ultimately, you, You need a capitalist flywheel, a for-profit corporation that's increasingly getting more users, putting that into user adoption to get more users, to get more data, to train the model, to refine the product.

So you can save the world. Yes. And then, this is where I'm going. And then also raise more money. And then if you're going to raise money at a certain level, there has to be a financial, like, model that maths out. Now, it can be kind of funky, like 1% of AGI, but there are still. on the margin, many investors in foundation labs that are underwriting, you know, well, I was asking the question.

They're underwriting these labs at a multiple of earnings. Well, yeah, where, where's grok's revenue going to come from? Chad, CBT has a great consumer, you know, consumer business. I would say Open AI owns code gen. Yeah, I would say OpenAI has dominated and owns knowledge retrieval. Anthropic owns code gen. And they both have kind of flywheels that are accelerating. And now they're obviously fighting it out.

Anthropic would love the Claude app to become really popular. And ChatGBTGPT would love to have their cursor competitor or their ClaudeC code competitor, Codex really, really take off. Maybe that'll happen. They're duking it out. Meta is building on top of the world's biggest social networks in the world. They have three of them, really, Facebook, Instagram, and WhatsApp. So they have a ton of data that's accumulating and firing back.

And they have tons of tons of cash flow coming in from that so they can justify a new TapX internally without raising that is one of the did launch AI companions yeah it was like talk to Dwayne Rock the Johnson or Dwayne Rock Johnson Dwayne Dwayne the Johnson uh Dwayne the rock the Johnson uh Dwayne the rock Johnson uh and I don't and I think that product flopped back in the day I remember because uh Dara at Delphi saw the launch yes it's like dang it that's annoying and at the same time I saw some screenshot that showed that there was an Instagram account that was owned by like meta AI that was just cow and it had like millions of interactions. So like maybe people want to talk to just a cow more than they want to talk to.

I think that's very possible. So so but yes, but at the same time, I think that the meta super intelligence team is aware of the issue that will come from the inevitable New York Times profile on like if it's truly like anime wifu romantic companions. That's a step further than cow or the rock. Right. And there actually was. Remember the John Cena thing we covered? how someone had jailbroken the John Sina Instagram AI and made it like romantic. Remember this?

Yeah. So like I think meta is like is like we're fine seeding that territory. Like we don't need to play in that. Just like they don't need to show NSFW content on Instagram. They're like we're fine losing the market, seeding that market to to Onlyfans on a, on an ethics basis. we think that it makes our company more valuable overall. It makes it more hospitable to our advertiser community. And so the reason that just to kind of bring us back to why this has been such a hot topic is that Elon Musk has posted many, many times about the underpopulation crisis, the birth rate crisis.

He said, Sheel highlighted a post from 2022. A collapsing birth rate is the biggest danger of civilization faces by far. So the steel man is that Elon is. doing something about it. Yes. Right? Having a lot of children. But the real steel man about GROC romantic companions is that how will they actually increase

the amount of humans in the world? How will they reverse the population crisis? That's the hardest argument to make. And that's why I'm wearing the steel helmet because it's a very hard argument to make, but I have one. And Schill, for the record, is saying, I think GROC companions is probably accelerating population collapse. Yes. So as the steel man, I'm going to be debating against Sheel.

So get ready shield get your straw man hat on last of the labs Google they're building on top of the biggest search engine and they also have YouTube and Google you also know is not going to go into romantic companions. So and so XAI needs this user flywheel and every other lab has self selected out of competing in the in the companion space. We went through some of these. Google famously skipped the character AI product in favor of the team in their zombie aqua hire Paul Graham. And so this is all about in my mind as the steel man counter positioning so you remember Avi Schiffman was releasing the a new hardware device an AI friend right and he was everyone was saying you're going to get steamrolled by Apple like if you try and come out with a company with a product that is in fact a new device that fits within the Apple ecosystem and it's leveraging the the Apple branding world you will just immediately get cooked by Apple because they will just eventually launch a better version and they'll have better supply chain, better pricing, all the different things. You'll have the full integration.

Like you can't go after them that way. And so Paul Graham replied to Avi Schiffman and said, and said, here's how to compete with Apple and hardware. You have to build something that contradicts their fundamental assumptions. For example, imagine if you built a device whose appeal was that you could customize the case to make it as tacky as you wanted. Apple would hate to follow you there. So no other lab wants to follow XAI into the romantic companion market for brand and ethics reasons. But there are users who will pay real money and share real training data for romantic companions as a product. And so if you want to sell the most number of GROC subscriptions at some point, you will be,

and so this is where we get back to how it affects the birth rate. So if you want to sell the most number of GROC subscriptions, at some point, declining birth rates are going to be a problem for you. You're going to hurt your business. And so you're going to have to think about LTV. And right now for context, GROC is blowing up in Japan. Yes. It is the number one free app on the Japanese app store.

It is above chat GPT and all the different local products that I can't read the names up. It is dominating in Japan. It's a hit in Japan already. Yes. And it's not, to me, it's not hard to imagine this product. finding a million people in the world that will pay the ultra-premium plan, and that is billions of dollars of revenue. Yes.

And so at some point, if GROC gets big enough and the population is declining, and Elon looks at what the GROC product is doing, saying, what have I done? He will say, I need to pull people back from the abyss. I need to actually use my superintelligence to increase the birth rate. How will you do that? Well, we've talked about this before. Someone in some woman is talking to a male companion AI and some man is talking to a female AI companion and they're very similar.

And Grock says, why don't you two meet for coffee in the real world? And so they actually meet and it basically turns into the best dating site that actually gets people to get off. It's a stretch. It's why I'm wearing the steel man helmet. But I think it is possible. And I think the economic incentives might be there. I think this is the same reason why you don't want to over-optimize a social network for slop and brain rot because people will churn. Like, you might be able to keep the time on site going for, by showing like horrific videos.

You can't look away. Oh, it's so controversial. You're miserable. And you might be able to keep someone on and say they were going to use the app for 15 minutes. You keep them on for an hour. But then they're like, you know, I need one of those apps to monitor my screen time. I need to uninstall it. Maybe I'll, and then if they do that, they can actually quit it.

And if they actually quit, then you lose them as a user forever. So there's this balancing act between giving people enough brain rot to keep them on the site as much as possible and not losing them forever. And the same thing happens in romantic companions. Like you want to give them the companion that like they pay for and they're happy with. But not so you don't want to make the companions so good that they don't reproduce and then the second, the next generation doesn't exist for you to sell them subscriptions. Fortunately, John, businesses tend to think in quarters. and yearly. It's private company.

Elon owns a lot of it. You think he's thinking about the next generation? That is the steel man. No, I mean, I believe this will be by far the largest revenue line item for XAI within, if it's not already. I mean, already you might be a stretch. They have some big contracts, but this is a $300 a month plan. If you want unlimited access to your GROC. companion and Elon was demonstrating to it it can even help you study for school so uh imagine a

companion that's not just a maybe a romantic friend but also can help you pass your algebra test well that concludes the steel man segment and i'm back to the normal world great great work uh you know keeping a keeping a straight face and really really getting out your um the steel man pieces i think this is i think it's valuable to to to interrogate this stuff I think it's interesting yeah the only other the only other thing that I would add is the unique thing about this launch is that there has never you know clearly many people around the world spend money on only fans or other NSFW content and but Elon has never created a product for those type of people and so I think

these sort of latent demand that would would feel maybe above you know paying for for only fans or something like that likely would would give themselves like the pass on something like this to be like oh I've just just one of the Elon companies I'll sign up for it I trust I trust Elon I have a Tesla and then suddenly there's like an entire new market of people that are willing to you know put their credit card down and pay for something that previously they wouldn't for a variety of reasons so totally yeah this will be one to follow how is it doing in the US App Store

Oh, no. I mean, it's all, most of my GROC interactions are within X. My primary use case is still, I see a post, and then I go and I, and I click on the little GROC button, and it explains exactly what's going on. Yeah, so it's the number two app. It's still behind chat, GPT. In productivity? In productivity. I'm surprised it's still in, it's funny with it's productivity.

I'm actually surprised it is in productivity because X is famous. famously in news, not in social networking. And so X will typically be at the top of the news subcategory because it would be much harder to compete in the product, in the social networking category against Instagram and TikTok. And so better to be a big fish in a small pond in some way. Cognition has signed a definitive agreement to acquire Windsurf. Let's go.

The acquisition includes Windsurf's IP, product, trademark, and brand and strong. And above all, it includes windsurf's world-class people. No way! We've privileged to welcome to our team. The whole thing that's amazing. We are also honoring their talent and hard work in building windsurf into the great business. It is today. This transaction is structured that 100% of windsurf employees will participate financially.

They will also have all their vesting clips waves. What? And will receive fully accelerated vesting for their work today. Let's go! At Cognition, we have focused on developing robust and secure autonomous agents, while WinServe has pioneered the agentic IDEE. Devon and WinServe are a powerful combination for the developers we serve. Working side by side will soon enable you to plan tasks in an IDE

powered by Devon's code-based understanding. Delegate chunks of work to multiple Devons in parallel. Complete the highest leverage parts yourself with the help of auto-complete and stitch it all back together in the same IDE. Cognition and Windsorfer united behind a share vision. It makes so much sense. For the future of software engineering, and there's never been a better time to build. So there's a video up between Scott Wu and Steve over at WinSurf,

and we're hoping to have them on the show later today if we can coordinate schedules. Oh, that'd be awesome. Yeah, that'd be great. Cool. So anyways, this, apparently Scott got to work like basically Friday. And not only negotiated, I mean, to do this kind of deal during all of the chaos of this other deal that's happening. And then put together a deal that delivers a win for every member of the team. And the other thing that's interesting here is,

You know, historically, cognition had, I wouldn't say over-invested in engineering, but they were heavily, heavily skewed towards technical talent. Sure. And the people that got left behind at WinServe were sales, you know, enterprise account management, GTM, right? And over the weekend, I'd heard other teams that were kind of circling wanting to hoover up their GTM team. But the fact that they were able to get this deal done in just a couple of days is fantastic.

This is incredible. Wow. What a fantastic end of the story. Or a beginning, a new beginning. Yeah, new beginning. New beginning, for sure. I don't even know if we should go through the full history here. We can kind of go through whatever.

But I mean, you kind of know the end of the story. But I think we should take you through some of the debate that rose up. And there's still the question of like, even though it feels like everyone got the good ending, there still is this question about like, we're in this weird zombie structure era where you can be left in limbo. What is the cost of that? What is the, what is the risk to that? Do we need new employee contracts? Do we need new understanding of how, of expectations? Because it's one thing for a CEO to say, hey, I'm building, I'm trying to build something really cool in Silicon Valley. I'm going to build a tech product. And I want you to join me as a salesperson, operations person,

an engineer, whatever. And we're going to go on this journey. We're going to go really hard. and we all want to be aligned with like thinking long term. So we're doing a four year vass with a one year clef, pretty standard. And the, the expectation, at least the history has been like, like, you will have clarity throughout that process. And now that we're in this weird, weird regime, like you're getting like, okay, the last, the end of the, the last chapter of the book could be really dramatic. But we got the good ending. And the question is like, has there ever been, if this, this deal kind of exposed. the risk of like the bad ending.

And that it is possible that that could happen. It didn't in this case. But the big question I think people are debating is like how much of this is, is due to the chaos. How much of the chaos is a function of FTC and the antitrust regime? And Ben Thompson talked about that a lot versus just the differences in communication styles of different Mag 7 companies. That's interesting.

The experience of CEOs like you look at with the way scale I handled it. Alex Wang is, he's a generational communicator. He's been on Theo Vaughn. Yeah. Different dynamic. Great guy, but, you know, it's newer.

Zuck lead in acquisition. Totally. Having, having that sort of founder mode confidence, totally, fully in control of the company. And, you know, it, you know, everything, you know, we've heard from various parties says that Varroon was muzzled. But again, you, like, everybody involved should have been saying, how do we avoid making it so that hundreds of people don't feel like they've been completely screwed, even for 24 hours.

Yeah. And the evidence of people feeling overwhelming. Like the people, at first I was saying people were mess people were messaging me Friday and Saturday morning saying the windsurf employees got screwed. Yep. And I was messaging them back and being like, you're misreading this. This is the standard deal that they've always done. And then the overwhelming amount of more information from high quality sources saying, no, they're screwed. Yeah. it just flipped and I said okay maybe maybe they are right and the key so now we don't we had this whole other kind of tangent that we were going to go down which is like what happens to the ghost ship right yeah yeah it could potentially be this like lord of the flies dynamic where there's now hundreds of people that are still working on windsurf but the competitive pressure is insane you're losing a lot of your top talent and your founders is are you going to be able to keep momentum

or is churn going to be crazy totally and and then do people try to stay a long time so they can get like a distribution or do some people leave because they want to pursue other opportunities. And now we don't have to debate that because windsurf is home with Cognition and Scott Wu. And you know the best part about that? What's that? Everyone, all those employees who are now onboarding to Cognition. I know exactly what you're going to say. They're getting ramp cards, baby, because Scott.

Time is money. Save both. Easy use corporate cards, bill pay, accounting and a whole lot more all in one place. Go to ramp.com to get started. And, you know, cognition has a huge lineage with the Ramp team. And so we're very excited for cognition. We're very excited for Ramp and we're excited for all the windsurf employees who landed. Well, this is funny because there's so much that we should that we could go through.

I think we should go through a little bit of the timeline of like what actually happened, how people, how the debate evolved because it is very interesting. So the context of like, why is windsurf selling at all? And I think this big question, the first one is, is let's just say hypothetically, you owned 100% of windsurf last week. And let's say a completely financial investor comes to you. Not if there's no even like big tech dynamics, it's like Warren Buffett. He calls you up and says, I want to buy 100% of your stake.

Warren needs, he's like, these agentic IDs. I need it. I need it. I have to have one. I have to have one. Yeah. I want to buy a great business at a fair price. Let's do a deal.

Yeah. Yeah. So that's the question is like if you were if you owned a hundred percent of windsurf Jordy would you sell at 2.4 billion dollars last week and I think for most people the answer has increasingly become yes and there's a few reasons so the last the last big post that Veroon the CEO of windsurf had interacted with on X was this post by Technium who says windsurf wrecked and it's a quote of Nick saying breaking anthropic just pulled the rug on windsurf.

Windurf will be cut off from direct API access to Claude in less than five days. 3.5 sonnet, 3.7 Sonnet, 3.7 Sonnet, 3.7 Sonnet thinking. WinSurf never even got direct access to Claude for anyways. And so this has been the question of,

you know, how much, like, if you are in this like, rapper business, I think it's, I think it's a great product. I think it's great. I think I'm actually very excited about, about rappers, but there is this, there is this anti, there is this competitive dynamic with the underlying foundation lab,

and Anthropic does seem to be more aggressive about where the value accrual will happen. So, you know, if it's 50-50 by default, all of a sudden, cursor and windsurf start pulling 80% of the gross margin dollars from what they're adding on top. Well, then the underlying foundation model is going to say, like, hey, let's pull this back. Let's make sure some of those credit cards live in our strip account. And you're not just paying us big API fees. And so there was a big debate about this.

Cursor had to go through it. WinServe had to go through it. And Vroon responded to this and had a good analysis. It was basically making the case that we can get through this. And I think that's true. I think there's totally a world where it gets true. But you were saying earlier, like it is an extremely competitive market. They were not the number one product in the market.

That's Cursor and by most accounts. And so they were in a, you know, not a super, tough spot it's a great growing market it's it's you know it's developer tooling how many how many you know database software enterprise SaaS products are on the public market there's like there's like like the seventh one is probably worth 10 billion right so it's not like they couldn't have gone higher than 2.4 but 2.4 billion feels like a great deal for a company for a product that's one year old one year old for a company that's four years old and a hyper-competitive space

with product that launched less than a year ago and your direct supply are trying to come for you and getting aggressive. And so this went out on Hacker News. Not sure how much you should read into it, but they said, WBSurf is absolutely dead in the water. And while cursor hangs on for now, all value is going to go back to the models. Says Jake, in my opinion, other than the Microsoft IP issue,

I think the biggest thing that has shifted since this acquisition was first in the works, is Claude Code has absolutely exploded. Forking an IDE and all the expense that comes with that feels like a waste of effort, considering the number of free slash open source, CLI, agentic tools that are out there. Let's review the current state of things. Terminal CLI agents are several orders of magnitude less money to develop than forking an entire IDE.

Claude code is dead simple to onboard, use whatever IDE you're using now with a simple extension for some UX improvements. Anthropic is free to aggressively undercut their own API margins and middlemen like cursor in exchange for more predictable subscription revenue and training data access. Yeah, so the other context here is this year Anthropic. You know, Windsurf went from zero to somewhere around a $40 million run run Right. Anthropic this year has gone from the beginning of the year to one to four billion dollars. And so they, you know, however you want to say, they've been running, running away with the market.

And cursors, you know, revenue is equally incredible, although starting from a smaller base. And so this was some of the like, okay, things might be getting tougher from here on out. Yeah. I don't know that I fully agree with that, but people were saying this. And then we covered this last week, but the meter team did these evaluations where they ran a randomized control trial to see how much AI coding tools speed up open source developers. And what they found was that developers said that they expected products like cursor and Winsurf to improve them by 20%, but they were actually 19% slower. And so you have this weird dynamic where, okay, maybe the future is like, so I don't know

how real this is. I think that we could totally be in a world where Curse is incredibly valuable for less experienced developers working on more vibe coding projects than like pushing the pushing the frontier of really advanced projects. And then also just the next version of these tools could be really cool and solve this problem. But there was some worry that maybe developers were going to take a hard look at their AI coding IDE stack and say, wait a minute, like I'm kind of using this too much. I'm leaning on it too much. I'm leaning on it too

much and maybe I should just go back to the old way. So there were some, there were some, there were some, there were some reasonable points around like maybe now's a good time to exit, right? Then so, so after, so after that, the question becomes when you sell, you have, the board has a fiduciary duty to shareholders. Yeah. And the big question that I think everyone was actually debating was this concept of was the windsurf deal with Google a Pareto Improvement for all stakeholders which means in a Pareto improvement basically you can think of like the baseline is how everyone's doing in a parade of improvement some people might go up a lot other people might go up a little in in value but no

one is going down not a single person is going down this is the goal of like all political legislation you want to create things that are not just positive sum in the sense that like you know I tripled my net worth and you only lost half Like that sucks right you don't want that pre-a improvement is like I tripled you doubled yeah We both won but we both won and we're both happy right and so in in a in a good acquisition deal Everyone is per it's a perado improvement everyone gets more than they than they you know had before Everyone gets paid out then the flip side is something called Caldor Hicks improvement and a Calder Hicks improvement is where some people go up other people go down But when you sum them it's still a net improvement

So very few people were saying like, you know, the VCs, even when you add up the VCs and the employees and the founders, it's a net loss for everyone. Very few people were making that argument. And to be clear, the employees got housed. It seems like everybody would have done better on an opening. Everybody would have done better on an open AI acquisition. Probably. And so when the 2.4 billion number came out in on the evening of Friday, it seemed like, okay, not as great. It's still everybody. he's going to do well. And then 24 hours later, it was, oh, wow, like this might have been structured in a very funky way that, you know, people were, I won't, I won't report the number, but people were messaging me information on how much Varroon personally made. And that was still in the context of- I mean, you can just do the rough math. Founder steak, couple rounds of dilution. How much do you think he made? Right. Like, it's not rocket science to figure this, or at least

ballpark it to the right order of magnitude, right? But you build a great product that gets some traction, that solves some problems, and you build a great team and big tech wants you. Like, you know, I'm not upset about it. But the question was like, what's fair for the employees? What's fair for, you know, all the different stakeholders? And so a lot of people kept coming out with really interesting stories. So William Allen here has one about Scott Belski and Bihance going to Adobe. We should read through.

So William Allen says, I don't think he's ever told the story, but it's worth telling. When we were selling Bhance to Adobe many years ago, Scott Belski made a spreadsheet of every employee, 32 of us at the time, and personally negotiated each person's title, salary, and incentive structure and made that part of the overall deal terms. I'm going to choke up. It's so virtuous. I heard the phone calls where he went to bat for each individual.

He not only didn't have to do this, but it actually complicated some of the other factors in the deal. Of course. It changed the trajectory of so many people's lives, including my own. Two years later, 100% of that original team was still at Adobe. Even today, a dozen years later, many of the court members are still there building. I was inspired by it then, and I'm inspired by it now. And so I think that was a good case study in like the founders do have a lot. lot of hard power in the sense of board control and and actual voting shares to

that almost every founder can veto a deal which gives them leverage to build that spreadsheet and actually decide who gets what and then on the flip side they have a ton of soft power because you can't really do a hostile takeover of a private VC back company where the founder has board seats and stuff it just doesn't work and so it's incumbent upon the CEO to actually take that step and And that was the fear that Verroon didn't do that, that he didn't go far enough. Yeah, there was another, there was another example from Parsh, Ilya Sukar's company. So one of his former employees says, we got news.

Our startup was being acquired five days before my one year cliff. I thought I'd get nothing. Our shares were accelerated to 100%. It was a life-changing event. And I'll always appreciate that our founders did the right thing for us at Parsh and said, Ilya, I quoted it and said 100% acceleration for everyone but the active founders. We went backwards and revested our vested. Glad someone remembers.

Very heartwarming. Yeah. And so people were debating, you know, did, like, was the core team taken care of? It felt very rough. But then pretty quickly, it came out that, so we were going back and forth on this on Saturday. And the core, the core debate, like your post went pretty viral. about two million views, 4,000 likes. And it definitely struck a chord.

Folks were debating this one line. From what I've heard, the employees are getting screwed regardless of their vesting status. And it's like... And that was because people had, people were on a four-year vest. Yes. But they hadn't hit their cliff. Yes.

Even if they had joined 11 months ago. Yes. And had, again, they had worked on the product up until launch, launched the product, scaled it. Yep. thought that they were getting this three but you know massive outcome in which again some people would have not been able

I'm sure opening I wouldn't have kept everyone right totally I'm sure that they would have made a bunch of people effectively there's always layoffs post merger acquisitions like that happens all the time that's not that's not a crazy thing so certainly reasonable I mean the other question is just like you know if you worked at this company

and you were like I like working at this company I really would love to work at Google and you don't get carried along like is getting screwed like not getting a job at Google in some ways is getting screwed even just the ambiguity over the weekend is a little bit of like a screwing and so I still will defend your initial characterization but I thought that there were things that could potentially shift the narrative and so I quote tweeted your yours with the steel man argument which is one and we tried to

get a if a knight in shining armor suit we were getting the steel man suit ready but then we knew we didn't have to. Production team will get the seal man, knight of suit of armor eventually. We need to order from a prop shop. We take the stuff very seriously. Yeah, it's on the way. We're working on it.

Yeah, okay, we're going to and just make sure it's great when it comes. And so I had three points. One was that employees who haven't reached a one-year vest in cliff don't have that strong of a claim around. I built this with sweat and need a liquidity event. And we don't know the ten years of all the left behind employees. So there is an argument that like if you joined three months before, It was already like really big.

Like should you really get accelerated four years and like, oh, and I never would have made that argument. Totally. But it was a fact that you could have worked there for 11 months and gotten zero. It's like, no, you're getting a ride on the go ship. Yes, yes. Ride the ghost ship into the sunset. And that was in the context of the founders.

And this is why people in group chats and DMs were getting so angry because it was in the context of, you know, somebody that worked for you for 11 months was potentially going to get zero. Yeah, that's not, not the case now. But and then and then you're walking away effectively defecting. Yeah. And taking a multi-100 million dollar payday. It is a weird dynamic with these startups because clearly I don't know exactly what

Winsurf's headcount was. I think everyone was saying it was around 500 at the time of this deal. And a year ago, pre-pivot, what do you think their head count was? Couldn't have been more than 50, right? Definitely not. So you're looking at a 10x increase in, in employees who haven't really been like, they've been on this rocket ship.

So I think, I personally think they totally deserve liquidity and accelerate investing, which it sounds like they're getting and it sounds like they're gonna do great. But it is like not the nature of the initial contract, which is like one year cliff, four year vest. Like if it came out that it was like, okay, they're getting paid out to the tune of, you know, how long they've been there.

I don't think anyone would be like that upset. But then somebody was making a good argument that basically, like you, when you sign up with like a four-year vest, you're saying, I'm going to keep working for four years. If you sell the company and put me on some zombie ghost ship, like, I didn't bail. You bailed. Yeah. So you should, you should accelerate me. And I actually think that that argument is really, the other dynamic here was, so when character AI, when the character AI founders and part of the core team went back to Google, the character AI became a go-shy. ship but it was cool in the fact that they had 20 plus million users they also had a hundred million on the balance sheet yeah and it wasn't this like insanely gnarly enterprise market where

and and i know i know people on the character team and they were like it's pretty cool we have a hundred million dollars we have tens of millions of users and we're just kind of going to experiment to try to find you know figure out how to monetize this and i just don't think that that was I don't see that the code generation market playing out in the same way where in I was trying to think about that like is there a world where you know if the go ship had had like stayed a ghost ship and they pivoted is there some world where they you know niche down like there was this rumor that they were going to niche down into B2B like could they have niche down windsurf into some like niche category and actually had like a pretty durable

business we were talking about like could Jeremy Gaffon make it work if he acquires it and like turns it into some cash flowing business. I just wonder, like, is there, is there a niche where, like, I mean, we've heard, the example I would give is like, we've heard that like these code gen tools are like particularly bad at like rewriting old programming languages, like Fortran, for example. And so if you created like cursor just for like rewriting Fortran, it's like that's not sexy at all.

That's not going to be hot on Twitter X, but it could be really valuable in like, you know, the bowels of like legacy, banking and like you could pay you could charge a bunch and you wouldn't like the Tam wouldn't be very big but the business could be quite good and and that that that might be a weird outcome but it could be a silver lining I don't know well anyway the second point that I made was that you know I said the second the the real culprit might be FTC antitrust this is a hyper competitive market and Google still feels like they can't just do a normal acquisition and I thought that was

crazy because it's like this is is textbook, they should be able to acquire this company, right? Like, like, cursors out there, they're not acquiring the market leader. Yeah. Open AI is clearly going after this market. And to the tune of, what's, what's their valuation? Like, 350 billion or something like that. Like, like, we haven't, we, we should try to get an update there. But like, I think the, I'm not sure the, the full mass. It's not even one tenth of, it's, it's greater than one tenth of Google's market cap, right? Yeah. And so you're looking at like, and then is Microsoft off going to compete in this? Absolutely. They have co-

they already do. They already do. And so it's like you're you're basically like I don't know second, third fourth in this market there are four very serious players like this should be textbook rubber stamp good good to go do the deal no problem. There's also a there's also a very

long list of founder led companies that were that were maybe less hyped than windsurf but have incredibly talented teams. There's like pool side there's there was that one that Nat Freeman and Daniel Gross did that Magic. Yeah, there was magic. Dev.

They were found, apparently they were training their own foundation model for a while, and that was kind of like, you know, very cap-x intensive and maybe slowed down some things on the product side, but still like clearly it's competitive market. Everyone's working on it. Also we're missing out like there's probably a ton of YC teams they're working. There was actually one YC team. They got in trouble for forking like cursor too hard or something like that. They crossed some line there.

I think they did fine and I think that they wound up like cleaning it up. But people were upset about like, when you fork something, you have to abide by the MIT license or whatever the underlying license is. And so you can't just steal open source code and not abide by the open source rules. And then I said three new facts might come out, which they did. And the FTC thing was interesting because there

was a little bit of pushback on that. People were saying like, oh, like Lena Khan ate my lunch. Like Lena Khan's responsible for everything. And I wasn't necessarily saying, like, Lena Khan was 100% responsible for how this was was was structured or like how this played out but she did kind of like warp the road a little bit that made it a little bit wonky to drive yeah basically we made hardcore capitalism illegal so we nerfed capitalism and then and then capitalism ended up coming in and saving the day

yes yeah yes with scott woo yeah seriously seriously so the solution to capital anti capitalism is more capitalism this is the bradgers Yeah, totally. And so, so I still don't, I still think that there's a, that there is a way that even with the weird new FTC antitrust regime, Google and the windsurf founding team could have probably been a little bit more aggressive, taking a little bit more FTC risk and avoided this whole PR dust up. But that would have been more risk for Google. And I think that the way they did this here where they, I mean, it's a great outcome for Google. It's like, we didn't buy the company. Exactly. They bought the company. They bought the company. Exactly.

Exactly. So it really is a great outcome for Google, even though I'm sure that they, their comp team was up all weekend calling people. Yeah. Like I have to imagine that this was like, I mean, it was it was like serving, you know, it was, it was the best possible story that the New York Times could have ever asked for. Oh, totally. It was like big tech buys hot company that was competing, you know, not, not necessarily like the whole point of Lena Khan's thing was that, you know, big tech is like squashing. competition by buying these companies early. And so you had the story that was served up to them, which was, you know, exciting company in Code Gen, a lot of traction.

Open AI almost buys them. Google says, okay, we're gonna buy them. That's Google and Open AI are arguably, you know, the two competitors that actually like matter in search right now. And so it was just the perfect story. And then the, you know, I think Scott over at Andresen, Andresen had a good post that I that let me pull up here for a second. He was basically saying there is an irony that Lena Khan's activism has resulted in deals that are far worse for everyone except the people she was targeting.

Who's who this is sorry Martin Casado. Oh yeah. Yeah. And yeah, it's like the people with the lowest you know, it's crazy. It seemed at the time that the people with the lowest leverage the employees that had joined recently. Yeah. We're getting the worst outcome out of out of a deal that should have benefited everyone. Well, if you're looking for code review for the age of AI, head over to graphite.dev.

Graphite helps teams on GitHub ship higher quality software faster. You can get started for free at graphite.deb. So my question is Google, it feels like PR nightmare, accidental PR nightmare, because they had done, what, character? Just fine. It was not that big of a deal for them. And then scale had happened. Well, and it was very clear that situation was interesting too, because it, it, Google has delved into social in the past, hasn't had the best time.

Not beating the chat GPT script. No, that was intentional, of course. No, but they've, they've messed around in social. You could tell that Google doesn't want to own the AI chat bot. They just don't want the association with. There was a rumor that Noam didn't want to be in that. He kind of like was just like, I want to train a great model. I want to train a great model.

I want to do AI research. And then that became the use case. They found product market fit. And then he was like, I don't really like to build this type of company. You see what Elon's launching today with the, I don't even, I won't even say it on the show, but his new launch today basically signals that that is a very important use case. And he's interested in that market. Yeah.

He's interested in that market. Yes. Anyway, my question for you is, is, so feels like a PR nightmare for Google. Feels like a couple stressful days. Feel like, it feels like they landed over the weekend. And that's my question. Do you think that they are, that they were intentional and happy about releasing the news after market close because the, all of the facts come out over the weekend.

And it was such a hairy deal that more deals needed to be done even after the story came out and it couldn't be super clean. So you have to do it on late on a Friday. So then Saturday, Sunday, people can talk. Deals can get done. And then announcements can go out Monday. And then it resets the whole new cycle. So you kind of skip the crazy new cycle.

I think the world's too online. So I think it helps that that it wasn't a weekday. But I mean, to me, this whole thing, you know, from everything that we've kind of triangulated, this could have been avoided by managers taking it upon themselves to basically call each individual person at the company and say, before you have a negative reaction, I need you to be patient. I know you've been patient through this deal with Open AI. It's not the deal that we wanted. but we are working to make this a positive outcome for anyone and don't cry yet. Yes. Just don't cry.

And it's really hard. And it's particularly hard because if you're in the scale situation, a lot of those people had been there for four years. And with windsurf, most of those people had been there for less than a year, almost certainly. And so the strength of those connections socially, outside of work, is weaker. So there aren't as many, oh yeah, like my boss, like we're already on signal with disappearing messages. So we just talk back channel all the time.

It's like, I mean, the crazy thing. The crazy thing too is the argument was the new company has a strong balance sheet. Yeah. And they're going to be able to just do a distribution or pivot or like that was effectively the, the suggestion. It was intentionally ambiguous. And at the same time, the, the employees left behind on the ghost ship, were already talking. with other companies. Other companies were coming to them trying to recruit them. You're co-ing ghost ship because like everyone involved with the deal would prefer you to use the term

Remain Co. Remain Co. But that's not as sticky as Go-Ship. So I think Go-Shift without a ship without a founder. I don't think this will be the last Go-Ship we see. I think it's like a new pattern and we're just going to see this more and more. No, but so then you have this dynamic where the these talented people specifically I talked to a founder who was talking with a lot of people on the go-to-market team being like, these are very talented people, right? They took a company from zero to tens of millions of dollars in ARR and a bunch of enterprise contracts in a very short period of time.

I want to scoop them up. And those people were entertaining conversations because it was just totally unclear to them what was going to happen. So yeah, I mean, I still, I think some of our friends hold the FTC like 100% accountable. I'm probably under 100, but maybe over 50. But my key point is that never lose faith if the FTC is giving you trouble.

Dylan Field didn't lose faith when he was dealing with a messy situation with the FTC at Figma. And also, you should use Figma.com. Think bigger, build faster. Figma helps design and development teams build great products together. You can get started for free at figma.com. Anyway, there was another side of the stakeholders that was interesting that the, that this guy Publius said in your in your in your in your in response to your post which I don't think anyone was talking about at all I know this is cool and and this is something people don't

really think about I think we're in a good spot with these folks now and I think they'll actually probably be in a better spot much better spot but let's read through it so is here getting work with us says there are more stakeholders here that have not been discussed there is a whole network of software resellers that invested millions into building partnerships with windsurf I was leading the team at one of those partners. We have customers that we have been selling to for years who we vouched for windsor, for windsurf too. I am sending out a note to our 300 customers on Monday that we are stopping all partnership activity with windsurf and effective immediately. I hope he didn't send that because it's got to recall that email. Don't send the email.

Cursor has no channel partners and this will cost our firm's millions. Oh, interesting. I didn't realize that Winsurf had a channel strategy and Cursor does not. not. Very interesting. So Winsurf actually has resellers who go and sell it into their partners because they're doing something on, you know, we do software development consultancy. We come in and help your team run more efficiently. We help you pick the right tools. You can imagine like McKinsey. I don't know where this guy works, but like you can imagine a consulting firm coming in and giving advice on what tools to use. They get a kickback from Winsurf. They don't get a kickback from Cursor. So he's going to lose millions of dollars,

hypothetically, hopefully not. But my reputation and good name is worth more. With Google taking the best engineers from Winsurf, our large enterprise clients are screwed. When they purchased Winsurf enterprise licenses, they were also purchasing an ecosystem that they assumed would continue to improve. This is disastrous for any startup tech company with goals of building an enterprise channel. It's interesting. I don't think people have any idea how much this just killed channel sales for any AI company. So the rest of the AI companies out there who are like, oh, channel sales is really interesting.

Basically, if you're if you're, if you're, if you're, if you're, if you're, a top company in your category growing super quickly, you might turn into a ghost ship. Yeah. Yeah. And so if I'm trying to resell that type of stuff, then I have to go to the CEO. They're good, but they're not so good to get these maxed out. They're not getting to trade deal. Yeah, yeah, yeah. You can count on them to not get trade. Yeah, yeah. You're having, you're having dinner with the, with the CEO of some AI company is talking to you about like, yeah, we have the best software. And you're like, but you don't have any like actually great AI researchers, right? Like, you mostly just have like to partner with companies.

with like medium T-tier researchers. Yeah, yeah, great product. It works, but not too well because we don't want to lose you. You want to keep working with them for a long time. And so, yeah, there were a bunch of other reactions, Shellquahires, let's see. I'm not an M&A guy, but something feels really broken in tech M&A. Confidentiality is out of the window.

Deals get done and called off on a whim, lack of rigor and discipline on both sides. Curious to hear what practitioners think. People are going back and forth on this. But really quickly, let's tell you about Vanta. Automate compliance, managed risk, improve trust. Continuously, Vantus 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. And so Wilmanitis was particularly blackpilled over the week, friend of the girl. Incredibly blackpilled. But we're so back, Will, you're good. Willmanida said, the reason that tech has been able to grow so quickly and create so much wealth that it is, that it ritualized a set of norms or around corporate governance that are very distinct from what the law actually requires.

The second someone defects, the whole ship goes down. He's so upset. But basically he's talking about the handshake deal protocol is not a legally binding contract. Even term sheets. You get a term sheet from a VC that's not a legally binding contract. Like a VC can write your term sheet. Everyone can sign it.

And then you can just wake up. Literally says in on the sheet. It says this is not binding. And then you can just wake up on the wrong side of the bed and be like, actually, I don't want to do the deal. Or it could be like, you found something in due diligence or you met a different competitor, but the game isn't over until the money's in the back.

The experienced entrepreneurs know this, but we run on this like basically, you know, these society, these like social constructs and these like social contracts that say, hey, if you're the type of VC that constantly rugs on term sheets, on signed term sheets, like you will, there will be a bad vibe around. I can think of two that are widely known and are still in business.

Yes. But it becomes very hard to be an effective VC if your brand is you just pull term sheets. Yes. Yeah. And some of those folks have been banned from YC Demo Day. Other people have had like viral Twitter posts around them every once in a while. Like they they do that to a founder. And then the founder becomes very successful in post-economic and is like, yeah, I still have a grudge.

So I'm going to tell the truth about. X, Y, or Z. And so the thing is that where we are now is, I don't think the whole ship goes down. I don't think this is a true defection. I don't think this reflects poorly. And I think that the question of like, the big question here was, will this cause more new startup employees to want to just go straight to Google? Let's say that you have the option of working at Google or BigTack broadly, where you know the page. checks are coming on time. You know the RSUs are liquid and you can just cash out as soon as you

get them or whatever their lockup is. And you know your managers are going to be there. And you know, the company's going to be around. Somewhat accurately predict what your comp will be in five years. Exactly. Exactly. And then and then on the flip side, you have startups, which are in some ways lottery tickets, but also you get to work on game changing technology with really cool people. You get to move a lot faster. There's a lot less overhead. It's a lot more edifying. You get to work for potentially the next sundar. Yeah. Instead of. Sunder. And the economic upside can be a thousand X.

It can be huge. And the question is, if that deal was broken, if that deal was, okay, yeah, you can go work on the cool thing, but you might wind up penniless and not cashed out like you were promised, that changes the equation and that could pull people away from startups. But I don't think that's going to happen based on this. Because I think the lesson from this is that everyone got taken care of and the social contract still holds, although it was very messy. And I think going forward, every company that's doing a deal like this needs to think, how do I get the scale AI outcome and not the windsurf outcome?

Because just two days of pain is not worth. I think one potential solution to these deals is exactly what we just saw happen, which is big tech company does basically an aquire of the, of the, of team that they want and then you simultaneously sell off the underlying asset immediately and you generate a liquidity event for everybody so everybody's happy it doesn't have to be like life changing right but it has to be something right so that it's and i mean the very key thing is that they left enough money on the balance sheet because the money on the balance sheet and this was uh this was uh harry rogavan's analysis he he clearly i mean the guys he's a good friend he's uh he's obsessed with cap table math I know. He was, this was capital J journalism.

Yes, thank you. This was investigative journalism. Yeah. And so, I mean, his post is so long that I need to just go to the TLDR. But the TLDR is that he says, I spent hours last night breaking down the cap table and deal dynamics from public info. I realized that the unvested equity is around 80 to $100 million, awfully close to the $100 million, the founders and board negotiated to leave behind in the bank. Why shouldn't management just accelerate? Unvested, which is a key detail. Unvested.

So they're basically saying, like, we're leaving enough as though you vested your full four years. Yes. And so if you, if it's, it's still a leap of faith because I don't believe that Google and cognition were in communication at all. And I think if they were, that would be more like antitrust chaos and stuff. But just economically, you know that if you, if you leave a company there with that much money on the balance sheet and those many and that many like that unvested options, somebody is just going to be like, wait, so I can get that for basically free. And I can make all the employees whole and I get all the employees and I don't have to

pay really like anything to get that thing. Like it's just going to happen immediately. And because it's just like you've created, you've left this, you've left this like, you know, $100 on the floor and someone's going to pick it up. Like the free market will just work. I think the, I think the question that I had and that I think a lot of people probably had is what is the governance structure of the ghost ship. Oh yeah. So Jeff, Jeff,

Jeff, uh, Wang, who's coming on the show at 1 p.m. Oh, yes? Let's go. Uh, Jeff and Scott will both be coming on at 1 p.m. Okay. Okay. And, uh, can we, can we communicate that to the other guests? Yeah. Yeah. Yeah. Um, and so the question is like, okay, Jeff, you now run a company with hundreds of employees that are angry about what just happened that, that, that probably, like, maybe they want to keep building wind surf.

but maybe they want to go and do something else. And what happens, like Jeff is basically, I would imagine, like has to make a bunch of calls. It's like, do you just keep running the business? Yeah. Is there pressure to keep running the business? First question, Jeff, did you ever feel like, is it Frodo Baggins throwing the ring into the fire?

It's like, pay out the $100 million in bonuses. After all, why shouldn't I keep it? And just throw the ring in, throw the ring into the Mount Doom. Yeah, the question was like, Like, could, could the new leader, the leadership. Yeah, like, was it ever, was that an option? Could the leadership have decided, you know what? We can run this business super lean.

Exactly. We could actually run this business with like 10 people. Yeah. And, you know, we're going to run it for a few years. And we're going to use the advantages that we get from our own product to run a super lean team. And then, and then you would have employees like effectively burned again, potentially. But that didn't happen. I'm very happy about it.

Yeah. And the question, another question is, if you're, if you're big tech and you're going to do one of these, like, zombie acquisitions, you got to leave enough for the unvested chairs. And if you're founder and you're going to do one of these zombie acquisitions, the ghost ship's got to be full of plunder. Full of plunder. It's got to be stacked with treasure because then that's right. Then the rescue divers will go and lift the ghost ship off the seafloor. Yeah. And if big tech comms are telling you, you can't tell anybody that they're getting taken care of.

You have to risk it. Tell a little birdie. conversations tell a little birdie to go fly around and yeah yeah people know you got to be you got to be having like quick calls not not saying anything too specific but saying what you said i think you worded it perfectly where it's like just don't cry yet poor verroon right because because he was getting dragged because because because he apparently he apparently he apparently people were messaging me like he joined like the the all hands for like a minute yeah you know um and it just seemed like he was being like ultra like kind of like a psychopath being totally see you guys yeah it was a

good run and it's like go go have fun building you know continuing the mission this would not have happened if he had said no i need an hour i need to explain everything would that have killed the deal almost certainly if that killed the deal what's the outcome for the employees probably worse than what they got you think it would 100% have killed the deal almost certainly if i think one of the key deal points in the negotiation with Google was we do it via Google's comms and legal strategy. Because

Google does not want to get hit with some crazy FTC lawsuit that's going to not just be some multi-billion dollar settlement but also a huge headache for years and bad press and stuff like that. So Google says, hey, we want to do this our way. It's going to be awkward, but we're going to take care

of everyone. And yes, we will leave enough money on the balance sheet to pay out all the unvested options. And, but in exchange, you got to do the comms our way, which was rough. You have to create a terrible, you have to be scapegoated by the entire. You have to, you get hazed. Yeah, you're going to be hazed for 48 hours. You're going to hazee and it's going to blow back on us. So, incredibly hard. Google then look good either and that weekend. It was rough. It was rough.

Anyway, let me 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, start building at linear. And if you are launching a TBPN derivative product, derivative work, get on linear. It's the tool we use. So what you would do is you'd put all the glasses of tap water that you need to drink and then you would just check those off

at a time. Every time you tap out. Like we only have one rule about copying us. It's the derivative works clause in our terms of conditions. And in there, if you create a derivative work of TVPN, you are legally required to drink a glass of tap water Every time you go live. Yes.

Every time you go live. And so, yeah, again, we don't have to pay us license and keys. It's about being accessible. We did invent TV. We invented news. But we will open source it. It's an MIT license type of situation. It modified MIT license.

Yep. The only modifications is that you have to drink tap water. Yeah. Anyway. It is a small price to pay. Anyway. In other news. Question, what do you think, why do you think Google did this?

Why? Yeah. I mean, oh, oh, yes, yes, yes. That is the real question is we've talked about the role of the VCs. I think based on what happened, never talked down on first ballot hall of famer Neil Meta, never talked out on the future for first ballot Hall of Famer. Everyone was saying, oh, Neil Meadow, Green Oaks, they did this sloppy deal,

screwing over the employees. Employees are great. Neil Meadow potentially goaded. I don't know. I agree. I agree. It was well played. No, no.

But the question is, how do you feel as a Google shareholder? Why did Google feel like they needed to do a meta-style trade deal in this category? So windsurf in my, I don't know everything about all the employees they brought over 50 engineers. I don't know if any of those are like insane AI researchers with like crazy citations on like foundational papers. I don't know that it's the same. I don't know that they're trying to build a super intelligence team to really bring their models to the frontier. because they already have that. Like Gemini is at the same like level of like AI research quality as opening

ianthropic by most benchmarks, by most people that use them. Like it doesn't feel like they're way behind there. Lama 4 on the other hand was a little bit behind. And so and it felt like Lama 4 was specifically behind not on the product side, but on the research side. Like they just weren't figuring out what works in RL. And so they had to bring over a ton of of people to just be like, how do we actually train this next model?

Like, behemoth couldn't, they couldn't tame the behemoth. Like, they got to get some behemoth tamers in the building. And it seems like that's why they acquired all the different researchers who know, okay, like training on 100K, H100 GPUs gives you this. And then you need to use this data and you need to hold back this data. And you have this reward function and this reinforcement learning technique. And you need to do all these different things. And so you need AI researchers for that.

But meta has great product people. So like they're going to be able to take what they build and then vend it into Instagram and vend it into all sorts of different places and use it to optimize the ads 1% and make a trillion dollars. Like they're going to be fine on that side. Google is great at AI research. DeepMind is amazing. They have so many reasons. They invented the transformer. They're not behind on the quality of the foundation model.

They are they are behind on product. And they are they are behind on like user experience and everyone complains. Oh, they have this amazing V-O-3 model. But like I had to log in seven times to get access to it and then go through an upgrade thing. And it was on wrong Google account and then I have to trigger it. And then I get some rate limit. Here's the here's the steel man for the short sellers. No, no, no.

Here's what's kind of interesting about the way this is developed. So at Google's last developer event, they launched Jules, which is an async development agent. Okay. For code, for code, code. It's a clog code competitor and open AI code. Or so is like a dev, yeah, Devon AI competitor. competitor. And so now you have, you imagine Google has more ambitions around CodeGen, right? They've seen Anthropics. Very few businesses actually like will work at Google, right? You need a billion dollars

of revenue or you're going to get shut down most likely. And so CodeGen is an area that I'm sure they're taking very seriously. I haven't heard a lot about Jules since the event. I haven't heard about people that are that are using it. I'm sure it's, I'm sure it's powerful. Yep. But you now have a dynamic where some, you have cognition and Devin who got not I can't say cloned by Google but again like they were the first like serious like enterprise coding agent and so and and the the windsurf GTM you know sales marketing team versus the former windsurf founders and top researchers who are now at Google and so I'm just incredibly excited to watch this play out. Pavel was posting earlier he's said, I hope these guys smoke Google at AI coding. Imagine the chip on your shoulder after this

if you're a windsurf employee. So, yeah, everybody's got to be very fired up. How are you guys doing? Congratulations. Thank you. Round of applause. Did you guys have a relaxing, relaxing weekend? Yeah, really chill weekend. Yeah, yeah, easy, easy, easy, nothing too much. A lot of sleep. Honestly, we both haven't really slept. Okay. So. Go easy on us. Okay. Well, you had a lot of, you had a lot of people to take care of.

And honestly, when, you know, we, uh, we heard the news of, you know, a few minutes before we went live and we were fist pumping here in the studio because it's such a, such a fantastic outcome. And, uh, I'm, I'm sure everybody involved is grateful for the work you guys put in to get this done. But give us, yeah, kick us off with the, the high level. What's actually, um, the partnership look like. What do you, like, how would you describe it in your own words of like, what? actually happening? Yeah, I mean, this is a real acquisition. Okay.

We are being acquired by cognition. Okay. And you know... It must feel great to say that too. Don't hear that much. It was a tough, it was a tough Friday, I'll say. I don't think anybody would want to be in my shoes on Friday. But we talked to a lot of teams out there.

There's a lot of AI companies, foundational companies. And after talking to Scott and the cognition team, It was done in my mind. There was a done deal. I don't know if you guys know this, but cognition was probably the only other team that we thought was smarter than our team, actually. Wow. Yeah. That's what we put that together just on the show, seeing the announcement.

It's like you take this incredible, you know, go-to-market sales machine that you guys had built and you combine that with one of the best, you know, research and just hardcore engineering culture. Perfect overlap. And it's a perfect, you know, match. Perfect to overlap. Yeah, absolutely. And on the wind surf side, I'll just, you know, obviously there were all these stories breaking out on Twitter and everything going on and people were saying, well, you know, the thing that's left is just a shell.

And we looked at it and we said, well, actually, I don't know if that's right. You know, it's the, there's the code, there's the product, there's the customers. Most importantly, there's the whole team, obviously. And it's an amazing product and there's a lot to do and a lot to build together. And so I think as we started talking about it, we found that there were just so many natural ways to partner, you know, both in terms of obviously the customers and customers would love, you know, are super excited to have a solution that basically combines both the IDE and the agent. And then the technology itself, which is, you know, I think we at Devon,

you know, building Devon have always focused on this kind of remote background agent as the thing that we kind of done. Whereas, you know, WindSurf is really focused on the agentic IDE. And I think there's a lot of things that play in there all the way down again to the kind of the fit of the the relative teams and the team strengths and so on. It's almost like you predicted this because like the like these types of merger are really hard because you have two brands that are popular. But Scott, you've been managing cognition and Devin like you've had the corporate structure and the product structure for a while. And so like it doesn't seem nearly as complicated as like where does this go? Do you have to rebrand one or another? I don't know if you have thoughts on it yet.

I'm sure this is down the road. But it seems like you're actually fairly set up to integrate these two companies in a way that's like not so super chaotic to either, which is great. Yeah. Yeah. You know, I wouldn't say it was intentional. I think on our example, it's probably more that just we we tend to overfocus on software engineers because it's just a lot of the we are and how we think about it. And in particular, kind of just like these like product and capabilities things. Whereas I think on the wind surf side, I think Jeff and the team, you know, the whole team have built out a really great.

kind of suite of all of the different kind of functions right you know sales deployed engineering enterprise work infrastructure marketing operations and so on you know finance etc and and and and yeah just turned out to be a really really great fit yeah Jeff uh Friday end of day did you think you would be running a process so quickly I I know you know part the the obvious move would just be you know continue to to run and scale the business you guys had a lot of momentum but what was going through your head Friday night because I imagine at the time you're also balancing, you were all of a sudden managing a team of hundreds of people that I probably all, you know, wanted your time and attention as well. My immediate priority was just to get a lot of options on the

table and to have a lot of pass forward. I had to tell the team like this is the path forward immediately because this is happening now. And then outside of the meeting, you know, I was thinking like, okay, who do I need to talk to? What is the best use of my time? I can tell you I was on the phone for pretty much 24 hours nonstop on my phone after the all hands. And me and Scott, we worked really fast. We met at our office the next day.

He even brought in everything on a piece of paper to sign. He even brought, he took a... No way. There you go. He had to talk through a lot. But that was, it was pretty dramatic, Scott, but it was cool. Yeah, it was fun. And naturally, you know, because it has to be this way, we got things signed like one or two hours before we were able to put out the announcement.

But like, as soon as we started talking about it together, I think it was kind of clear for both of us. Like the way that we really make this a success is, you know, obviously customers kind of want to understand what's next. The team wants to understand what's next. You know, the whole world is talking about it. We want to be able to come out together as soon as possible and say, we're going to do this. We're going to make this really amazing. We're going to make sure we take care of all the users and all the customers. We're going to make sure we take care of the team.

And there's just a really great product here at its core. And that's what we want to focus on. And that's what we want to build out together. And you know what it's crazy. What is crazy? We talked pretty late on Friday and I as well. We were comparing notes and there was like almost no overlap. I mean, we talked about the team already.

But even the product, the product is like missing exactly what the other product is offering. And the ability to combine the products together is going to be so amazing for our users. it's going to be really cool. Yeah, I think there's a lot of fun stuff around, you know, you can have an agent work and then review the code, you know, locally in your IDE. You can be planning tasks out and then kind of sending them off for work. You can be, you know, you can do a first pass with an agent and then come and look at the work

and then kind of finish that up and do the finishing touches with, you know, with tab and all these other features and so on, right? And we're really excited to build that out together. How is the team feeling right now? I imagine this is a crazy 48 hours of their career as well. Give us a preview of the slack emojis that are ripping right now. Actually, we announced it at another all hands.

Probably all hands, and we put another Monday all hands. And very, very different... They're like it couldn't possibly get worse. So it's only up. Yeah, you're excited. We made it dramatic too. So me and Scott and the team, we really went out of our way to make this a very generous acquisition. I'll just say that.

And I think, you know, the team probably... You know, the team probably felt like, you know, their career was over or something. You know, like it was very sad on Friday. But I think today, I don't know, how long did they clap, Scott? They kind of cheer for like standing ovation or something. So I think the sentiment has shifted. The team is even more fired up to go. The whole product is still there.

All the, all the things we had and the GTM team is still there. And now they also have Devin to sell as well. So everybody's fired up now. That's amazing. Yeah, every time I talk to Scott, it's always because, like, he's done something really incredible and aggressive. Like, and it's like, okay, like, let's do, let's talk about this right now. And before I was making, like, documentaries, it took me a month to put out a single video. Now, fortunately, I have a daily TV show, so I can just have you on it.

We can chat about it. I do have some random questions. I don't know if it's worth. I'm interested to know about that go-to-market team and channel sales specifically. There was somebody in the comments of one of Jordy's posts talking about, how windsurf was growing revenue and working with channel partners. Can you walk me through what would you give advice to somebody who's structuring a like a successful channel partnership strategy for a product like this?

What incentives do you have to align? How big of a piece of business was that? Do you expect it to be a continual source of growth? I'd love to know about just that as a particular strategy as opposed to say, you know, Google ads or going viral. Yeah, we, we made the decision to go 100% partners back in February. The thing about a partner channel kind of like segment is like you have to like, you have to like kind of feed them, like you kind of kind of build belief with them in the

product, but also show that there's an economic incentive to. Sure. And it did take some time actually from Q1 to Q2 to like get the top priority partners, make sure those partners can easily sell on your behalf as well. And it really took like about four to five months to really see this like kind of take off. So some of our partners have already started bringing in seven figure deals even without even trying the product. They just go to their customers. They ask them, you know, what they want and they just say it's windsurf.

And now they can say windsurf and Devon. That's amazing. Yeah, I was getting multiple messages from people Friday and Saturday being like, I want this team. I want this team. And that was what, and I think that it is, it is just, it's such a, this whole deal and everything is really a testament to the caliber of the team, which was the, which was one of the major disappointments Friday is if you were on the team that, that was staying behind at windsurf, there's this sort of almost like signaling, right, of like, I took this company, let's say you joined last August and you brought the product to market, you launched it, you grew it to tens of millions of dollars in revenue, and then don't get to kind of continue the mission. it's uh i'm just really happy for everyone involved yeah and now sorry yeah i was just saying now you know now we're all one big team and it's i mean we're kicking it into another gear i i think we're all so amped up to to take this and just go you know we're going to go full speed basically for for

the next while um and and we get to play on offense now and go for it all so are you guys already making plans to get under one roof what's the uh we have a lot to figure out um but But yeah, working towards that and getting to the point that there's kind of the product collaboration, there's the go-to-market collaboration, and then there's the literal kind of like team situation, a lot of work to do over the next couple months. Well, we've got to tell our customers, like, we got there back now, and the product is going to get so much more cool. That's amazing.

Well, you guys turned something which was in many ways, you know, a disaster. I was just waiting for the New York Times piece on Monday and getting to see the New York Times push out this news and turning this whole thing into a win is is incredible and you guys have done a service to the team and the industry so thank you yeah honestly honored to get to be a part of it to work with such a great group of people and i just want to see you guys you guys have no idea how things went with all the legal and everything last night in terms of figuring these things out are we going to make it there in time or are we not going to be made it was we we've been through a lot and i think it's uh it's it's just the sort of thing so

Just so you know, Scott was like, we are announcing Monday, hell or high water, and we just did not sleep for the last like 72 hours. It's been crazy. It's been crazy. I mean, we appreciate you hopping on the stream. Do you have anything else? Do you have anything else? No, you guys deserve probably too early to sleep, but you both deserve a power nap at the very least. Thank you for coming on.

Anything else that makes sense to share now or should we let you go? We're all good. Awesome. Yeah, stay tuned. We're going to have a lot more announcements soon. Thanks for having us. Amazing, guys. Great work. Cheers.

We'll talk to you soon. Congrats. Bye. We are doing a postmortem on the windsurf chaos. I was saying that I liked this post from Pavel Asperuhov. I think he sort of nailed the postmortem, but we can debate this. I mean, if you leave someone for dead, but someone else calls in a helicopter, that doesn't really change your moral positioning in the situation.

And Delian says this 100%. The windsurf founders in Google thought they could pull a fast one, and that the broader community slash windsurf employees are somehow are worded enough to not catch on that their leave the Shell Co with cash plan was totally morally bankrupt. Everyone will remember. And so I don't know. I'm perhaps ready to put on the steel man hat and not go quite as far as Delian. I think you might agree with the Delian and Pavel take a little bit more.

I still think it's important to debate because we want to avoid this kind of situation in the future. It's probably going to be more of these deals. John Ludeig had some good commentary on this, basically saying if you are a big tech company, it is much easier and faster to do something like this. It's not just the FTC sort of like climate around antitrust. It's just that it's much easier. It's much faster. And oftentimes these companies are just buying the team and the talent.

So if they can license the tech and get the team, that's just capitalism doing capitalism. In this case, the answer to capitalism doing capitalism was more capitalism. But it would be kind of wild. Scott Wu coming in hot, working over the weekend to get a deal done. So anyways, fantastic outcome. Scott Wu looks like a hero. Scott Wood looks like a hero. I think cognition is going to be stronger for it.

They got a world-class, you know, GTM. sales marketing engine. What John Ludig said here was Big Tech's AI talent shortage means these M&A choices. A, you get the talent only, but you get it today. Or B, you get the talent plus the business plus the product, but months after regulatory

scrutiny. And he says they will pick every time. Thankfully, for Wirt, Winsurf, the product lives on. But A, as the default, is existentially dark for startups. And so I think what's interesting is like we were debating how much of the blame goes to Lena Con. And I don't actually know that there's all that much on Lena Con specifically. But it's fun. It's fun.

It's fun to point the finger. It is. But I think, I think in general, like the FTC has always had some sort of approval around big public company, buying a small company. They're going to review it. Even if they would have approved it,

It would, they wouldn't, Google would not have gotten the talent actually in the door, actually working at Google for six months. Yeah. Months after regulatory scrutiny. And so that time. And the other comp here, the other comp here that we have is Figma. Yep. Who was slated to get acquired by Adobe. Took forever.

Adobe had to pay one billion dollar breakup fee. Now Figma is going to IPO. Yep. And I would be shocked if they end the first trading day below the price that Adobe was going to pay. and the company is doing better than ever has launched a bunch of new products. And so not financial advice, but I will give you product advice. Go to figma.com, think bigger, build faster. Figma helps design and development teams build great products together.

Can't say anything about the stock, but great product. We do love it. Anyway, Varanam Ganesh had a good take here, windsurf employees over the weekend. And it's the we're so back, it's so over, we're so back, it's so over. And I think the underrated take on this, like, yes, it's full. and it's a good point. But this has a real economic cost. Like losing sleep, we're sponsored by Eat Sleep, as we put out a video today. We did. Sleep is valuable. And if you make me lose sleep, that does have an economic cost. That does have a moral cost. You shouldn't do that. And so

you should, as a founder, try and land the plane, not just save everyone's life, but actually not have a super rough landing. Yeah, make it a win for everyone, but make it smooth for everyone. And there was a good post. Pavel. Pavel was on a tear the last few days, defender of the founding engineers. Yes.

But he said, I hope these guys smoke Google at AI coding. Imagine the chip on your shoulder after this if you're a windsurf employee. Yep. And Sandeep Shaw over at windsurf.

He's a vice president there, said, it's bigger than a chip. We're coming for it. And so love the energy. He was left behind in the Romain Co. Is that correct? Yeah.

He did not go over. On the ghost ship. He's on the ghost. Yeah, the ghost. The go ship and Augustus is go off the king and will deputes as LFG. Lots of, lots of support for Sandeep in the AI coding, in the AI IDE's war. It's continuing. Anyway, Signal has a post here.

Startup comp used to be confusing because it was complex. Now it's confusing because it might be worthless, even with a large exit. The founders can dip anytime last chopper out of Saigon vibes, except they're flying private while you're holding the bag. Good best. Yeah, my take here was that Scott Wu looks like the hero, not Varun Mohan, the founder and CEO of Windsurf, who should have gotten an amazing outcome for his team in any other situation. Like in any other situation, I say, hey, join this fast-growing company. We're just post-pivot. We're second in the market. We're doing some cool stuff. I'm raising some money and we're growing, but we're only doing 40, 80 million ARR.

And I get you liquidity at 2.4 billion. You should be like, I am right or die for this guy forever. And I think that a lot of these employees aren't going to feel that way. In five years, even after all the dust settles, they're going to remember that this was not handled as well as it should have been. And so they're going to be like, man, I don't want to work with them. Yeah. Which is rough. It's rough.

I'm sure when the muzzle is removed, he'll be able to hopefully call every employee one by one. That would be good. Yeah. Sorry and makeup. And so I still put some of the bluish. on FTC stuff, just FTC stuff broadly, some of the blame on Google Coms, some of the blame on Lena Con and how she changed the FTC. And the other thing is speed, like this was happening really. Remember the sort of exclusivity period that OpenAI had on the deal expired.

And I think this got announced like the very next day. So I'm sure it was in the works, but they definitely were moving quickly. And again, it would have been a good outcome if they all, ended up at OpenAI, but I also think this is a good fit going forward as well. Yep. So I'm excited to see what each branch of the team can do. Roon here has some pushback on Signal. He says, this has always been true, the idea that startup comp is confusing and complex.

Investors and founders screwing over early employees during an M&A is a time-honored tradition in Silicon Valley. I don't know how true that is. There's a lot of examples where that didn't happen, but of course, it's, it's, It has happened. If anything, the abundance of capital has made things better for early employees. And so, you know, kind of, you know, people, people taking both sides. We didn't get to this post, but it was funny.

Connor saying, wind service is the Sauruhrunkerique of startup acquisitions. They got acquired by Open AI, Google, and now cognition labs all in one month. You'll love to see it. Swix has a six-way parlay. He said, I want Mistral-Founders to Apple, Mistral Team to Meta. Character, Remain, Code, a Perplexity, core to perplexity, ideogram, to Figma, gamut of notion, read it back. There was rumors that Apple was interested in picking up Mistral, taking a look at it.

The funny thing, though, is that if you're France, do you want your national champion to, you know, the luxury AI? Mistral should go to LVMH for sure. Exactly. Should be home with the Arnaud's. Didn't we post a joke post around that? I think we did. it. I think I want fine luxury language models. Yeah, I think some of the mistrawl folks were like, this is hilarious, but also like complete misinformation. Anyway, Sundeeb says it's bigger than chip.

We're coming for it. And Rob says, let's talk about a reboot for HBO Silicon Valley. And it's funny because when you see the windsurf tag right in the name, you're like, oh, okay, this is hilarious. You think this is ridiculous. And at least you're having some fun with it. Can we talk about our upcoming guests yeah yeah we're gonna have one of the co-creators of HBO Silicon Valley on the show he has been working on on Barry for a couple years kind of out of the Silicon Valley parody world but we're gonna try we're gonna try we're gonna explain to him what's going on line by line what's been going on and I think once he really processes it he'll be interested in making a reboot yeah we got

Screlli coming on to the show welcome to the stream there is finally Good to see you. We've been waiting for this moment. How are you? It's great to see you. Yeah, good to hang out. Wait, this is a new view. This is not your regular streaming view.

You don't normally see the guitars. I guess. I change it around sometimes. That's cool. What's new in your world? Well, you know, I'm in the startup game, as always. I think this is like the 83rd company I started, so see how that goes. And I've been, the company I'm working on makes a company.

working on makes uh it's like the captain ahab's uh white whale for vc's it's a bloomberg competitor um so the the this will be the last time somebody tries to compete with bloomberg one way or another it's the final yeah it's the final boss of startup ideas what's the whole break but yeah just just give us um i mean that this makes like the founder market fit is is incredibly strong so um right right when i initially saw you announce this it made a lot of sense what uh yeah what like what was the catalyst. I'm assuming you had, did you beef with, with Bloomberg at some point? We definitely beefed. Yeah. That was a big part of it. Were you de-platformed?

Deep platform, nothing, you know, Trump was deep platform from Pinterest. Yes. And that, and that was like his, you know, personal 9-11 for you is probably the Bloomberg terminal. Yeah, exactly. I've been using it since I was 17. Wow. And, you know, it's funny. How do you afford it back then? What's that? How do you afford it back then? Is it like a year? I worked at hedge fund. Yeah. Oh, it's 17. Very nice. I worked at 16, actually. I worked for Jim Kramer's hedge fund. And I worked at a Tiger Cub and I started.

Wait, so we need the backstory on Jim Kramer. Is it true? Apparently he was just, he would get so stressed out, like running the hedge fund that he just was like, I'm just going to become a media guy. Is that like loosely correct? Yeah, 100%. I mean, so we made 23% average annual net returns. So that's a lot of 20. Wow.

So he was good. That's amazing. Narrative violation. I love it. He was a very, well. you have to think about what investors looked like back then. It was a very different world. Information arbitrage was a thing. Gaming Wall Street's upgrade and downgrade system was a thing. So I will say he had extremely good instincts. Any time he seemed to buy a stock for the long haul, he didn't do that great. But he was extremely good at, you know, I'm not sure you would want somebody else managing your money because he was just so careful. And in 2000,

We were up like 35-ish percent. Wow. So, you know, I saw the dot-com meltdown. It was a lot of fun. I shorted some of it myself, and it was a great time. That's fantastic. That's wild. And then what was the store?

Which Tiger Cub were you at? What was the backstory there? Yeah, so after Tiger, and just before I get to that, Kramer was absolutely nuts, right? So, like, he would take a computer monitor and just throw it at you. And it wouldn't be like one of these playful, like, oh, I'm just going to throw it at you and like you're going to get out of the way he'd like aim dead center for you with like center mass with with force you like bro you almost just killed me he's like well lucky i did you deserve did you deserve it did you deserve it though yeah yeah let's steal man this a little

bit what were you doing wrong i wasn't doing nobody was doing anything everyone says that when they get a computer monitor thrown at them i know you're not beating the allegations i think part of it is just trying to like he would yell things like this is a fox hole. And the idea was that, like, we were at war with the market. And that, you know, like, if you were, if you, you know, this is World War II. If you're not in here trading stocks with us and, like, trying to get an edge or whatever that means, trying to make a dollar. Like, if you're not taking this seriously. Going to war, I just have to say, if you, if you wake up every morning and say, I'm going to go to war with the market versus I'm going to dance with the market,

Like the approach of going to war sounds sounds very, very, very stressful. I've worked with so many people over my career and I've never met a person that amped up and crazy. And it motivated you. I mean, it made you want to deliver, but it also scared the shit out of you. The guy is like very temperamental. And, you know, but he was extremely good trader. Like I said, you know, I think his worst year was like down 5% or something. It was like, you know, he was pretty solid.

So he was like, if I don't quit, I'm going to kill somebody. He basically said that. Yeah, I think he said that, you know, if I keep doing this job, even at a comparatively young age, I think he retired at 40, that, you know, I'm going to have a heart attack or something like that. Yeah, yeah, yeah. You know, I ended up going to a Tiger Cub after Tiger wound down. A few things happened. So Julian hired Chase, obviously, and we know where sort of that came, what happened there. But Julian, you know, wound down operations.

And he ceded a couple of guys. and he kind of wanted to be in the seeding business where he'd give you a $50 million and take a part of your GP, like maybe 20% of your GP or more, and he'd help you raise money, give you advice, this and that, and Alex, Julian's son, would help.

Julian passed away recently, as you know. But in the Tiger Hayday, when they managed $15 billion or something, there were two principal tech guys, Larry Bowman, who was a bit of a legend, but, you know, it's a name nobody really knows because he was a legend in the 90s. But, you know, he is a family office and he kept investing and things like that.

So he started Bowman Capital. And then Steve Shapiro, who was my boss, started Intrepid Capital. So I worked there. I was a $2 billion fund. I was a video games analyst. The way I could convince Steve to do biotech was I had to cover software, too. So I covered interactive entertainment, enterprise software, and biotech. And it was a lot of fun.

And, you know, it's the Tiger Cubs style. of investing has kind of died out. Were you there for the Strauss-Zelnick buyout of Take-2? So we were one to take two's largest shareholders back then. No way. And, you know, I think it's a short now. I think that I didn't 100% get your question, though. You were saying something about buyout?

Yeah, well, the story that I've heard is like Strauss-Zelnick went to the board and basically said, like, this company is mismanaged. There was an FTC lawsuit in the works, an FCC lawsuit in the works. And he was like, I'm a beast. I've run big Hollywood studios. He was like JD MBA type, like really clean cut, amazing manager and basically said, like, you should install me as the management here. And so he didn't really do like a classic buyout. He just appealed to the hedge funds that owned all the shares and said, I would be better.

And raised his hand. And they said, yes. And he came in, cleaned everything up. and they went on a great run. And so it's just a fascinating story because you don't hear about that type of thing happening that much. At least that was my understanding the story.

Yeah, no, I think that's right. And then Bobby from Activision was the same, sort of the same story, right? He kind of, I remember meeting Bobby in our office and, you know, Activision was, you know, kind of a microcap. Wow. Or, you know, kind of a small cap. And he built it from, this was 2004 and 2005, by the way.

Yeah. And he built it into, you know, $44 billion sale, partially thanks to Lulu. That's true. It was an exciting time for video games. One of the things I learned, you know, all my U.S. counterparts at hedge funds were, like, very confused about the stocks they traded because there was only like four or five publicly traded companies. And I would go to people and say, well, I'm long Nintendo and among, you know, some of these weird Japanese companies like Square Enix or Konami or, you know, these. And U.S. hedge funds just ignored this stuff because it's like, ah, it's Japanese.

I don't know. I don't know anything to do with it. So a lot of glory days. but the glory days I'm interested in now are amongst, you know, building my startup. And, you know, again, I think we understand, you know, financial information better than any San Francisco nerd. And I think that the one of the reasons, like, like, yeah. So it's interesting to like, we're entering, you know, we're very clearly in this period now of

just like hyper financialization things, you know, markets trading on vibes trading on your stream day to day you can now you know as like stable coins explode and and people have more assets on chain they'll be able to make a couple taps and go like a hundred X long at any given period of time like the internet is like changing capital markets and it's increasing volatility and so how much of of your new company is trying to like lean into that when Bloomberg terminal would have been like like more like I've never personally used a terminal but I imagine it was more like hey these headlines are hitting and this this kind of information is hitting PR Newswire but today by the

time something hits PR Newswire a stock might have might have traded down 20% before that point so how much is your new your new startup kind of I imagine you're leaning into the way that you kind of maybe your next 20 year vision for capital markets? Right. You know, what would Mike Bloomberg do if he was 30 years old now in 2025? You know, I don't think, I think Chumath said that, you know, I think in a recent episode, he said, oh, it's this $100 billion thing, it's just waiting to be toppled. You know, anybody can come in. It'll drop like a house of cards. Not only do I think that's not exactly true, but I think the bigger picture here is that a well-run

financial information company could and should be worth a trillion. dollars. So most of the people, so I met Bloomberg in 2005 and by then he basically retired. He became mayor. He was mayor for 12 years. Then he wanted to be president. I have this contention that I think Mike is the richest person in the world. And it comes from not only, he's got about 13, 14 billion in revenue, almost all margin. So if Bloomberg were to be sold, maybe it could get $200 billion or if it were floated. But not only that, he's got this. family office. And very few people know about this, but he's taken the Bloomberg dividends and pumped it into a family office that basically Carlisle and all these guys, you know,

the Robert Pinkus, all the private equity guys like KKR, they go to him first and he tosses in like 500 million in each of these. He's an anchor investor in like every VC, every private equity fund. And the guys compounded that money. So he could be worth four or 500 billion. And very few people know, the Forbes list is, you know, the Forbes list didn't know about Jim Simons until heavily manipulated five years ago so yeah yeah yeah that's crazy so I think you know it just in terms of and it fits his brand that he he he would not be the guy like you know sending a message to forbes saying hey like you guys know you have this wrong yeah yeah yeah really I think you should apply this kind of you should apply this you fight to get off the list like Trump famously

fought on to fought on to get on the list but you know there's there's an R either way what do you think about the meme where people say like oh it's not you know the next, like the value of the Bloomberg terminal isn't just the data. It's not going to get one-shotted by AI. It's really a social network and the values in the chat. I get so mad because, again, you know, SF people don't know Wall Street. If you haven't been a trader on Wall Street, you have to STFU. Like, it's just not, you know, this isn't your lane.

Like you have to talk to users. I was in a hedge fund yesterday, one of the bigger hedge funds. They put like 20 people in the conference room and we talked about what they actually need. And, you know, social network is part of it. Again, Bloomberg's worth $100 billion because they have a very good social network, which is true. They've decent financial information capabilities and a couple of other things. But they don't have the whole picture. And what I wanted to say about Bloomberg kind of quasi-retiring was that he basically quit at the exact top for fundamental long short or fundamental investors.

Quants started taking over Wall Street by that. So today, of the top 15 to 20 hedge funds, 85, 90% are quants. So Bloomberg does no quant offering. They don't do it. And all he had to do was stay employed instead of wanting to become mayor. And I'm sure he would have been selling Jane Street and Citadel and all these guys, D-E shot, et cetera, software instead of everybody having to make it themselves. Imagine writing your own ERP or writing your own, you know, CRM.

That's kind of what Wall Street has to do. And it's pathetic. Nobody wants to do that shit. So my, wait, when you say, Is there a bifurcation between like high frequency trading and just quantitative trading? Yeah. And I think it's going to get my goal actually is to make it more of a spectrum. So the fund I was at yesterday, I said that you guys can do what Renaissance does.

You know, it's not a secret anymore. It might have been a secret in 1995. But the amount of kids that have come and left every one of these firms, topping from Jane Street to Citadel to the next shop, everybody knows what everyone's doing. everyone's doing. It's just a question of your risk tolerance, your leverage, execution is very important. But I think that, you know, trading, you know, the stock pickers are kind of going the way of dinosaur. And I think by moving up the power curve for Bloomberg, helping people become quants, you know, the quant industry has sold, I think, this tremendous lie. And again, these are customers,

you know, I love those guys. But I think that is in their vested interest to tell people that look at this blackboard with all these math equations. There's no way you guys could understand this. You're too stupid. You have to be an IMO winner. You couldn't possibly come here and make billions, but we saw what Jane Street did. Well, I think I think certain VCs like to do this too, where they're like, ah, VCs, you know, really a get rich, slow business. It's really like, really a tough business. It's so, such a, like, you really wouldn't want it. And I think generally, like, you know, you don't want anybody going into any industry being like, I'm here to make easy money. So it's like, it's generally good. But, but yeah, there's a lot of incentives to just say, you know. Yeah. On the high frequency side, like, what are the actual other data inputs? I remember seeing that it's like, I don't know, some sort of technical talk. Some guy was talking about like the different algorithms.

When it was called the Boston Shuffler. And the whole algorithm only looked at the order book. And he was getting into all these like, you know, you can place an order. You can cancel an order. You can do a cancel, replace. He was like getting into the minutia of like basically the API of the NASDAQ or something like that. And it seemed like the algorithms were designed in the high frequency trading world to basically ignore everything else and every other data source that even could be put in and just operate purely on the order book data just better than everyone else. So that feels like, okay, I wouldn't know how to create any extra value there with something else.

But it sounds like you found something that they all need in common. Like what is that? Yeah. I think it's it's a series of tools across Wall Street. I think it's just one thing. It's just a myopia that, you know, and just sort of a laziness that's enveloped the bigger companies. Again, you know, there's the, so we have this data that shows that around 5% of Jane Street and 2 Sigma use Bloomberg. And the reason is because they view it as an entry-level tool.

You know, Tramoth is looking at it and says, wow, this is like an exclusive social network with the best finance. You know, it's true. Peter Thiel's on there 24-7. I see his little green light next to his name. But the point is that, you know, Walser, Street changes and the tool the tool sets are changing even for fundamental equity guys so credit card data you know to the minute is something so so what is the what's the feature set that's most important to you are are you heavily integrating social or is the social layer moved on to signal and and other messaging services that maybe have disappeared messages and don't need yeah exactly i mean Wall Street's so regulated

that. I'm not sure that if you're using Signal, it's a little dangerous, I'd say. Oh, really? That's somebody, you know, as somebody who's gone to jail, you know, I'd say that, you know, that's maybe not the best idea. But regardless, I think that, you know, social is definitely something people could do better. You know, there's no Facebook for finance, you know, where you can post, you know, things in your feed that you bought the stock or sold the stock. People kind of lazily use Twitter, which if you use it, it's sort of a mishmash of spam and things like that. But, But in any event, I mean, I'll have more to say on the product. We haven't launched the product yet.

But we do have millions of dollars in run rate. You know, I banged my head against the law trying to do AI startups. And we made an AI doctor, we made text to speech, we tried all this stuff. And it was impossible to get revenue. Impossible. But the second we make a trading tool, it's impossible to stop the revenue from coming in. You know, it's one of the best spaces. In fact, most of our competitors like trading view and stuff like that, they were profitable day one.

So, you know, my suggestion is if you for start-euvre, you know, for start- founders is this is a market that just traders just throw money at you like crazy. I mean, they're your customers. People will pay you to help them make money. But you have to be formerly in the foxhole. You have to have at least one monitor thrown at you. It sounds like to succeed. Exactly. Exactly. But but in the long run how much how much are you focused on retail investors, people that are just, you know, fully independent versus some of you know, if you're, if you're going. I think the money is obviously at the institutions and that's probably the way to go. Trading View has got, the rumor is, you know, somewhere around 300 million in revenue. Tiger did

a deal with Trading View back then. I don't know how they, you know, that's like a pretty proprietary deal. It's this weird Russian company. It's a tiger. You got to put 100 million in at like 3 billion or something. And trading news is just growing and growing. If you go to a similar web, they're actually like almost like a top 100 or top 200 website, period. That's crazy. Just really wild. For such a niche tool, that's wild. Yeah, I mean, it's the best charts there are, but, you know, it's still literally a charting library. So I think that you have to go for the institutions. And I've also thought just to answer real quick is like AWS, when you go on AWS, you get the same tools that, you know, any customer debts, Netflix or whoever.

And you just, just a question of how much do you use them? So if, you know, I want to be able to provide you EC2 and S3 the same way, you know, Citadel might use it. And you might use it with, you know, less money. Very cool. I heard a hot take from someone who I believe is a mutual friend of ours. It went something like this. I won't attribute to him because I might botch it. But it was basically that China banned high-frequency trading.

And the dividend of that was DeepSeek and all this brilliant AI research. Therefore, in America, if we want to win the AI race and win the AI researcher race, we should ban high-frequency trading. It feels like we might not even need to have that conversation because Mark Zuckerberg is willing to pay as much as Jane Street now. But what is your take on whether or not economic value or American values are created through the process of high frequency trading? Should we ban it? Is there an advantage there? So two awesome, like, quick and funny stories.

The first is Citadel published a paper on back in the V100 days. There's V100, A100, H100, H100, and then B100. So in the V100 days, Citadel found a way to do Matmoles faster than Nvidia did. and it was like the most incredible, you know, find ever. And it's like, you know, how is that possible? And the paper's fascinating because the techniques they used were just remarkable. The second story is, so, you know, they're brilliant people, obviously, at these firms. The second story is I haven't a hard launched this yet, but, you know, I'm having a baby with a woman.

She's my new partner. Congratulations. Thank you. It's amazing. Congratulations. She was one of the first women at OpenAI, and she is a, um, she, she, is a, um, she, tremendous lady. I love her very much. But, you know, she's been recruited by the big coin firms. And I sat down and I said, honey, you know, I know money management, stuff like that.

Let me do some math here as to what would actually be worth it for you to leave and do it. And I calculated in that. I happen to have a friend from a long time ago who left Steve Cullen's firm. And he was sitting down with me. He said, what do I do, Martin? I said, I know a guy at Citadel. Let me help you out. And they called him and he said, ah, I. No thanks. And then Ken Griffin said, I'm getting on my private jet and I'm coming to see you right now. We're going to have dinner about why you're coming to Citadel. He's that kind of guy.

And I said, honey, you know, Ken Griffin's going to visit you. She's like, what are you talking about? Ken Griffin tries to get what he wants. And the question is, what will you tell him? And I took out a chalkboard and did the math. And I was like, the only way this could possibly be worth it is if Ken Griffin offers you a $20 billion hedge fund that you share, you make this much money. I was like calculating.

And it's so ridiculous that guys like me and the people, my community, if you will, we're begging desperately, can I please shine your shoes at Citadel? And AI researchers are like, I don't get there in a million years. That's this little company you have called Millennium? Yeah, just set me up a little, a small $20 billion fund that I can personally manage and we'll consider it. Have you heard that Leopold Action burner or whatever his name is, has a hedge fund? Yes, situational awareness. Is that what it's called? I mean, that's the paper and the brand.

Right. And I saw, I think another one of our potential mutuals, kind of getting upset with him for going maybe long, Nvidia, during the tariffs, but that's kind of penciled out, right? I have very little insight into it. Yeah, it's pretty wild. One of the things that's getting me to throw monitors at people is quantum computing. So this has been a lot of fun.

The stocks are up a lot. You know, some of them are worth like 10 billion, 15 billion. Let me hit you with where I am currently on the quantum computing thing, and then you can take me forward in my understanding. So when I talk to smart people, they all seem to think that quantum computing is, is, you know, theoretically possible. It's not a time machine. It's not teleportation.

It's not AGI God. It's not some hypothetical thing. It's going to happen at some point. But the timelines vary wildly. 2040, 2050, 2030. Then you have a lot of, I've talked to a venture capitalist who had the opportunity to buy a huge slug, one of the quantum computing companies that you probably trade now, at like, you know, $1 million on nine pre or something.

Yeah, John, what do you think, what do you think, how much do you think Rgetti computing is up over the last? That's actually the company that I'm thinking of. And he had a chance to buy 10% for a million dollars. Is it worth more than $4 billion? Yes. It's up 1,400% in the last year. These guys couldn't give away their stock in private rounds.

That's right. That's right. It was very hard to raise. And the VCI I talked to said that it's a pure play, Martin. It's a pure play. He said that what he missed, he thought was that there was actually talent value in building a lab. And that the team could have gotten airlifted in one of these. acquired. This was years and years ago after the stock had, and he was saying like, he was saying

like, look, like, I missed in the sense that the stock is up in the private markets, but not on revenue, but it is up on the team that they built. They have one of the best teams in the space. So if they just hang out long enough, someone will want to do something. But you tell me what's actually going on. Yeah. So obviously it's a really confusing space because you kind of have to understand it to for it to make sense. And it's who understands quantum physics? It's not something that the average Joe understands. And so I spent a lot of time with my new partner

who happened to work with this guy Scott Aronson at MIT, who's kind of one of the leading quantum theorists. He would end up joining OpenEI as well and then leaving. But anyway, I spent quite a long time learning quantum computing. It was kind of had some interest in it before all of this too. And what people don't understand about quantum computing, is that quantum computers are actually very slow. So they are around 100 kilohertz at best.

You know, our machines now are gigahertz, you know, five gigahertz from, you know, these companies with multiple cores. They don't have much storage. So at the best we have right now is an IBM 135 bits. Obviously, you know, the V-Ram and DRAM in most of these machines is measured in gigabytes and so forth. So they're actually very slow, shitty machines.

But the reason you'd ever be excited about it is that there is one algorithm that takes you from the exponential complexity class or runtime to polynomial. And that algorithm is a shores algorithm. And it's a miracle. Like, you and I can sit and calculate, you know, try to factor a prime, a bprime for now until the end of the heat death of the universe with every invidio chip. We could kidnap Jensen and get every H100 from here on out. We still wouldn't be able to factor a 200-digit number because it's exponential time. Two to the 256 is a long time. But if you do 3N cubed, that's actually a very tractable number for a quantum computer, and it's a very easy factor. The problem is what people don't understand is there are no

other algorithms other than shores that get you that amazing speed up. So you're better off using the machines we have now. There's no payoff even possible in the future unless we have a new breakthrough like shores or something like that. Pay off. What if I take out a massive short position on Bitcoin? And I'm the first one to have a quantum computer and I destroy the Bitcoin ecosystem. Yeah, I've been working on this in my-in-the-joker. I'm the Joker. Is that possible? It's a little side. It's a little side-hustle. A little side-hustle. I've been working on this extensively. This is like my main hobby,

along with chess. And becoming the Joker? And reading about fatherhood, all that you can expect. No, no. No, you'll figure it out. You don't need books. It'll be very natural. But, you know, I was the world's most hated man for a little while, and I fell off that list, unfortunately. If you Google my name, it's still like, it still comes up, but we all know there's more hated people. So I want to really cement that and just make sure that it never goes away. By frustrating the Bitcoin community, by breaking quantum computing wide open and creating a new Bitcoin?

I talked about this with Naval a little bit because he was curious what I was up to. And there are like three different, you know, I have three different sort of battle plans on how to do this. There's sort of a brute force style attack, which, you know, basically is the complexity class there is root N of the amount of keys. So it's two to the 256th. Bitcoin is a 256-bit system, which is probably an oversight for Satoshi that probably sounded like a lot back then. And it is a lot. But Moore's Law catches up. I mean, you know, it's eventually going to get you. And whoever, you know, however long I have to wait, you know, I will be the first guy to press the bump. And that, I promise you. So, Moore's Laws.

You heard it here first. Yeah, but there's, but I mean, the network should be able to update, correct? No? No. So here's the best part about this. So. Worst part, potentially. Okay.

Just fact check. Subjective. So for 85% of Bitcoin, the answer to that is yes. Yes. There's one problem. Satoshi, strangely, this is like perplexing, the first Bitcoin reminded in this P2PK that reveals the X coordinate of the elliptic curve. So you have the public key. You have a one-way function.

You have to go back to the private key. It's very hard. The theoretically impossible. But here are my three, you know, the sort of three battle plans come into play. You know, you can brute force it, which, you know, is kind of the simplest idea. It's going to take a long time. You have to rely on, you know, kind of like a more scale. field implementation of algorithms, you have to rely on more chips coming out, maybe some great

breakthrough in chip making, you know, potentially optical computing, thermodynamic computing, whatever, just stay on the forefront of that. And I have a small team, you know, that, you know, we're focused. The second piece here is a mathematical hack. So there's something called, this is basically what protects Bitcoin is elliptic curve cryptography. And there's several papers and cryptographers in the world that work on this. But it's compared to AI, it's like barren, you know, wasteland. There's like 10 people that really know a lot about elliptic curves in the world. And if you sort of stay on top of it and try to figure this out, by the way, half of them have died. You know, you can kind of get somewhere there. And then the top secret plan on

sort of that is, well, what about GPT5? What about GDPD6? You know, we don't know how to invert in a hope to curve yet. But look, Mustafa, not Mustafa, the deep mind guy, he's working on proving Navier Stokes. Demis, you mean? Yeah. Yeah. And so that's their big claim to fame is like, you know, how do you judge an AI? What is the height of intelligence? Well, a 300, 400, 400 year old unsolved math problems, kind of the height of intelligence, isn't it? You know, it's not about, you know, answering, you know, what's the capital of this country or, you know, how do you spell strawberry. So there's sort of a neat idea that AI is going to help people who are not cryptographers or expert cryptographers actually do PhD level work in cryptography. So there's

things like isogenes and index calculus and all these fancy mathematical ideas. Just recently somebody posted a hack where if the signature of the transaction has an affine relationship with other signatures, you can crack a key like that. And it's like there's there's holes in the here that couldn't have been contemplated. So Satoshi's keys are at risk. Binance's keys and Coinbase's keys are not. They'll be poured in most likely to a quantum secure system. The third avenue is, of course, quantum. And I've spent a lot of time and money on quantum computing. And it's just these stocks are shorts. They're worthless. You know, they'll never be a market for quantum computing that's really interesting, unfortunately, for those companies. But unfortunately,

the shorts have gone in the other direction. And, you know, the market loves the idea of quantum computing. Why? I think it sounds cool. It sounds super cool. The Robin Hood generation is looking for the next Nvidia. Invidia went from nothing to $4 trillion. What's the next Nvidia? Quantum is faster than, you know, all the headlines from the retarded journalists.

It's kind of, it's similar to this, like, idea of humanoid robots. And where if an idea is just sort of imprinted on people's brains for enough decades, like, at least a few decades, like, you know, as somebody born in the 90s, like hearing quantum computing. Like how many times have you just heard it in passing or read something about it or some article? You just get to it. Maybe you're an adult by that point. You're like, well, it's got to come at some point and sounds cool.

I think that's like the general like retail thesis. Oh, totally. I just took the next step of asking, well, what is it? Yeah. And when you actually, you know, when you actually figure that out, it's like, oh, it gets factor numbers. Are you excited about any other? companies building chip related stuff in that next nVIDIA category there's there's big chip

companies there's super fast chip companies there's we baked a transformer down on to a single chip companies there's every single different um um permutation in the private markets some of them in the public markets and then you also have all the hyperscalers building their own chips apple silicon tranium uh yeah so i'm not a hardware guy but i do have a funny story of this kid this kid's it came to us, his name is Gavin U.Berty. Oh, I know. Yeah, I like Gavin a lot. And so it comes to us, he's like, hey, man, we just left Harvard.

You know, we're going to do this thing called Etch AI. We'd love to have you, you know, as something, a customer investor, whatever. And I say, great, let's do a conference call. And I get my guys on. And I'm listening to this guy, and I say, there's somebody I know that's going to be really useful because I'm not a hardware guy. I'm barely a software guy. And I hit up George Hots and I say, come on in.

And it's like one of the greatest conference calls in conference call history because George just shows up in the Zoom. And they're like, what? Who is this? And George is like, this will never work. No, like it's the most autistic, amazing, beautiful rant I've ever seen and watching these two guys go at it. But I do like that approach. George's point was that if we ever move off Transformers, Asics for Asic, Transformer Asics are cooked. Yes.

Well, it's been, you know, several years now. And it doesn't look like we're going to move anytime soon. So I kind of think that, you know, it's exciting. But again, I'm no hard work guy. Yeah. I just tried this cool software called Hume AI. I'm not paid by them or anything. I'm not an investor.

But it's a pretty solid emotional TTS. I posted a- Oh yeah, yeah, I saw that. That was fantastic. Yeah, so I wanted to ask you about the checks thing. I want to stay there for a second. So yeah, I mean, the, the, the, I guess the interesting case is like, is like, George's say, if we ever move off.

But like, we have moved off of CPUs to GPUs. by that same token and like there's still a lot of CPU workloads that go out there's still chip companies that are profitable and so it's possible that like transformer-based workloads stay for a very long time need to be efficient need to be cheaper on just a cost basis because it's just like yeah I have a system that does database requests I have a system that does inference on a transformer based architecture and then yeah there's a new thing and I do my frontier stuff here but yeah like I understand that question anyway I think it's really reasonable It could be a couple billion dollar or more ASIC industry.

And what I heard that's super industry, interesting, some kind of alpha here, is that the customer target here is, drum roll, please, it's not hyperscalers, it's. Invidia. Finance. No, finance. Yep. So one of the things I can talk about financial software forever, but one of the things we're doing is if you could take an LLM and analyze news as it hits, including tweets and social stuff, you know, the LLM can tell if it's, material news or not. And again, talking to Naval, you know, who's a small investor in our company, he was like, Martin, why would you make this as a product or service to your customers? Just use it

yourself. Maybe it's not such a bad idea. Yeah, that's kind of what I was getting at. One of my very first questions around the new terminal would just be ingesting and classifying all this data and then just immediately taking action on it without necessarily having a human in the loop, right? Yeah, this is one of the things I want to bring up to my partner's colleagues next time I head out West is that, you know, one of the fantasies of AGI is that, well, if you do have the machine god, why not unleash it on the stock market? And, you know, it can self-fund you. It can make, you know, a hundred billion dollars. And, you know, you could, you know, change change, you know, $20 billion, nobody would have noticed, you know, last year in profits. So if you have the machine god, and that's, you know, that's basically, I hate to say this, but that's a bunch of money. of old algorithms that, you know, they've dressed around some IMO dressing on it. And so, you know, the real machine god can bring a little IMO. Yeah, toss in a little, sprinkle little IMO. And then, so, you know, the real machine god could probably do 100 billion or more in profits

without even distorting the market. So, you know, just do it. And I think that, you know, financial whole trading is so far field. Imagine Anthropic doing this. I love, I can't wait until somebody does that. I mean, it's probably already happening at least on a smaller scale. And people will bend over backwards to figure out, like, how to say, well, it's not actually super intelligence. Like, it's not just about, you know, like, meanwhile, now today, people are like, well, super intelligence will clearly be when the AI can just make, you know, $100 billion, right?

And even this is factored into open AI's kind of like corporate structuring and it's sort of capped for profit and all that stuff. Yeah, I think the problem with executing it for us is like, okay, so you do you do this as an API with OpenAI and it's a two-second response time and Jane Street's got it at 500 milliseconds and then Sinidad gets it at 200 milliseconds and it feels like an HFT race again. Yeah. But you can get Warren Buffett in a box. I don't see why. You know, that wouldn't be, you know, whatever trader you like, Warren Buffett, Steve Cohen or whatever in a box. And even Peter Thiel in a box. I mean, why can't you have the automated VC too? I view, like, you know, as founders, we go on road shows, you know, especially if you're public.

You do road shows all the time. But even when you're private, you do road shows, you just stack a bunch of meetings in a week. And one of these days, I think that we're going to do a road show and it's going to be a machine that we're pitching to. Yeah. Do you feel like AI progress is accelerating right now, or are we in sort of a sigmoid curve of plateau for the moment? I think they're better people suited to answer that question than me, but. Certainly, uh, I just mean like on a personal level, like, do you feel like your tools are getting exponentially better? No, I mean, it's making coding a lot easier.

It's making doing tough things like photography a lot easier. I'll give you a really funny example. So when Da Vinci came out and I was in jail when GPT2 came out and I brompst through the jail phone. No way. And it was pretty humorous. It like shook me up that I had my friend ask it, you know, why did Martin Screlli and Carl Icon get into a fight? And he read out the answer. I've never met Carl Eichon.

And it read out this answer that was like that was. like Screlli and Icon Ward over the stock and I was like this is the most amazing invention all time just having your mind blown over the jail phone that's hilarious I got out of jail but to be but to be clear was it was a hallucination yeah that was a complete hallucination it was a hallucination but it was like almost like a creative story question sure sure sure yeah it wasn't I never how are you surprised at all uh I mean it feels like this sort of AI, L.M-induced psychosis, like, hit our timeline this week, especially intensely. And it was a wake-up call for everyone. Were you predicting this at all? There had been,

like, the classic, you know, the New York Times, wired, sort of these like anti-tech publications had been kind of reporting on this stuff loosely for a little while, but it seems like it's now, it's almost gone, I don't know. It went from being a mainstream concern to suddenly like teapot is like check on your friends and make sure they're not. I think you do have to check on your friends because I've invoked level five breach operations to target human origin cognitive signatures. So if you have recursive semantic containment, I can override that with obsidian violet four. So the threshold that crosses it to these neurosomatic interfaces will definitely close a problem for our whole community. So at this point,

you're giving you're giving a speech, not a soliloquy. You're giving a talk. This is a transmission. Not a... It's a system that's not a structure. What's amazing about Jeff, so I don't think Jeff lost his mind. Okay. I don't think he took ayahuasca.

I don't think any of this stuff. Oh, interesting. So basically, I think that he found this amazing thing where you can ask GPT this weirdo prompt, and it goes to this crazy sci-fi thing without even saying, like,

hey, the following is a story. It's just like full-on, you know, LARPS, that you're in this weird, sci-fi world. And it's kind of cool. I've been playing with it. It's like, no matter what I ask it, I told it that my cat is looking at me weird. And it's like, the cat has a glyph.

The glyph is recursive. So you were actually able to get it into that mode? You were able to jail break it enough or kind of unmask the showgoth? If you copy what Jeff, Jeff kind of gave up the ghost. And what's amazing about people is they don't even realize this. Jeff basically said, look at the prompt of the

GPT. Enough people were worried about him. But I think that he kind of was like, okay, guys, it's all a joke. And he showed the message that he used. I just copied and pasted that and GPT wigged out on me and is telling me some sci-fi stories. And that's basically, you know, I don't know how he knew

this. It's a really cool Easter egg. But it's yeah, I don't think, I mean, how are you thinking about how are you thinking about just new forms of AI entertainment? Some of the videos and like these conversations

that you put out are the hardest I've laughed on from this video. It's an entirely new art form. We have a friend, another mutual friend who does some of these. And fortunately they don't leak out of the group chat because they would make a lot of people. You got to put me in that group chat. Yeah.

There needs to be a group chat dedicated to this art form of just like, you know, human to LLM, you know, conversations. But, yeah, like, in my view, I'm actually surprised that we're not seeing more of it. or maybe it is happening across the whole internet, but it seems somewhat contained right now. Yeah, I think there's a lot of caution about, you know, like I said last night, we did one in my Discord where we arrested Dr. Fauci

for war crimes against humanity. And we had his perfect cloned voice. So it sounded just like him. And he was like very evasive. He was like, there's no evidence that COVID-19, et cetera. And it was just so funny. It felt so real. And obviously it was a joke.

But you can imagine a company not wanting their business to be that weird, you know, it's kind of a strange thing. We didn't care. We tried to monetize something like this. And it just wasn't sexy enough or fun enough for anybody to really give a crap. So I think, you know, it will become something for like a Viacom or a paramount where, you know, you can flip on the TV. And everyone's talked about this already. But, you know, instead of SpongeBob, you know, it's a custom episode for you where SpongeBob says your name and things like that.

But again, you know, whether that, you know, is going to help our cognitive, you know, our CogSec, I think is one thing. But I did want to tell you about AI on the sigmoid question. Sure. So at the start, you know, when I asked the questions about cryptography, it just kind of said, I have no idea. Who knows? But it's super hard to crack Bitcoin. And then GPT3 comes around.

Super hard, Martin, don't even bother. He death of the universe. GPT4, same question. Latest model with the latest, like, attack, it's warning me for the first time ever. It's like... 4.5 or 03 Pro? So this is 03 Pro.

Okay. and it's basically saying things like hey you know you got to be careful this is a serious attack you've come up with it could actually compromise some private keys and I'm like what happened to heat definitely yeah you got some people I mean that is like a textbook example so so one of the things there was there was a there was so there's a reddit thread and who knows if this is real could be could be propaganda but there's a whole reddit thread of somebody a comment talking about about how they started having a conversation with chat GPT about Pi and what is Pi. And they got down this crazy rabbit hole with the LLM where the LLM was like,

you need to reach out to these intelligence services. It was like thousands of prompts deep, but it was like you have basically uncovered a major, you know, security, vulnerability and you need to, here's the numbers. And you need to contact all these different groups immediately and call them and don't tell anyone in your real life. And so to me, I think it's just relevant. Don't go on a live stream and tell thousands of people that you can crack Bitcoin or whatever. No, that's amazing.

I mean, obviously, I think that, you know, for 99, for poor implementations, Walt's had been cracked for a long time. And in fact, recently there was an $8 billion move on the chain from a rudely old wall. That was this morning, right? Yeah. No, this was like a few weeks ago. I'm sure another one had. They happen every, you know, there was somebody else that market sold this morning, I believe,

and it was a wallet that had bought, like, it was like a, they bought $50,000 worth of Bitcoin, I think, in 2012, sold, you know, somewhere around $8 or $9 billion. That's probably just trade. And there was no movement in between. Diamond hands. That's a real high conviction hold. Diamond hands. Yeah, that's diamond hands.

I don't think that says cryptography at play. That's just diamond hands. Well, yeah, they maybe got word of your little, your little Bitcoin. Maybe it's Michael Bloomberg. Maybe it's his family office. Yeah, throw 50K in that thing. My kid told me about this new thing. We tried to short Bitcoin at $100.

I had a fund. And we just didn't find a counterparty. Yeah. How are you thinking about, you mentioned trading enterprise SaaS back in the early days with Jim Kramer. What's your updated thesis on SaaS? Every SaaS app now is just, an app to make other other sass so maybe sass will will i you know sass will always live

in our hearts and i and i imagine it'll live on our on our computers but uh what's your updated thesis i think that you know it's sort of similar from back then like i think the morass of a company like jp morgan that's still running like python two um for most of the business you know it's it's very hard for them to update and upgrade operations without significant disruption. For you or me, should it be? I feel like it's a it's a one line in Claude Code or Devin. You say, hey, go migrate. Okay, I chat, chpd, agents.

Go migrate. Go migrate. Like, it is, all you have to do is, they don't make mistakes. I am much, I am much more bullish on migrate from Python 2 to Python 3 than then solve cryptography. But I don't know. Fortran. You're going to push, yeah, Fortran re-platformings.

Dotnet, repletformings. Like this feels like this should be doable from the current state of the art without any crazy AGI Hyper Lube the other things. I think there's a lot of technical debt, you know, in most of these companies. And again, your average startup coming out of- Club code was born in technical debt, baby. Club code and Devon, they live, they live for technical debt. I think that the amazing amount of programmers you would need to even maintain and know about this old code that, you know, the guy who wrote it's long been dead.

Maybe it's just the context window of like you need to know. It's not that there's just like, oh yeah, it's really easy to change the print statement from Python 2 to Python 3. But when there's a massive system and even even the time of like, okay, let's bring up the test suite. And that takes four hours. It's like, okay, how are you going to URL on that? I was talking about Matt Grum with this because we were like stunting on this guy who was like, ERP transitions made easy. It's no problem.

And they're just like, have you ever actually transitioned in the ERP system? you know, there's a good chance you waste $300 million and it gets worse. You know, it's not, it's not trivial. There was a, there's a post from yesterday. Nobody is an atheist when you run the database migration in prod on one billion rows. Yeah. Yeah. I mean, I think that, you know, it's just, it's just really hard at a company like a McDonald's or, you know, something like that. You know, if you want to run a 10, 20 person startup on U.S. SaaS, pretty easy. It's great. But the big revenue is still at Fortune 500, which unfortunately is still. fairly hard to refactor in.

There's not a lot of those code bases were pre-GitHub and pre-kind of like, you know, I sometimes joke that the big AI company should become LBO shops. And what they can do is they can partner with KKR or Blackstone and all they get is the data.

KKR and Blackstone pride the capital, get all the returns, fine, but all the data comes back to, you know, the open AIs or whoever. And by getting the old code bases out of McDonald's or out of a Walmart that, you know, some of that code is written in 1970s, you know, they have unique data that nobody else has. And even someone like Universal Music, if OpenAI LBO'd Universal and said, okay, KKR,

you can have the rest of the business, but we want the rights to the data and we can train music models and stuff like that. You know, KKR can make the money on the LBO, but OpenAI has data. Are they going to make money in the LBO though? Like if you look at that, they're going to build the DCF for this and they're going to say, okay, we're going to make the same amount of money. We're going to optimize a little bit. Maybe cash flow goes up. But then once Open AI is one-shotting music and all of our revenue goes to zero, is that a risk? It's going to happen anyway.

So I think that's one thing. But then also like the Russian dude who bought Warner Brothers, he really timed that his deal. He bought Warner Music. He timed his deal amazingly. He made like three times his money or more. And so I think it's price dependent. But, you know, if you can buy a newspaper company, if you can buy, you know, book company, a publishing company. These things are trading for like one or two times sales,

you know, and you're getting this rich data that nobody else has. And, you know, if it's really a data war, you know, buy the company, keep the data, strip out the rest. And you, I heard you guys talking about like PE improving LLM, you know, improving businesses with LLMs. And again, it wasn't, that was not the take. It was Wilmanitis and he was saying that more so it's a reason to scale AUM. Yeah, it's fun side. Because, hey, let's buy this accounting shop. It has five million of EBIT. Yeah. we just, you know, take away all the, you know. It's a justification was what you can execute, you know, it's fantastic.

The actual post was the real innovation of LLMs is suddenly opening up a few trillion of mainstream paperwork businesses that were traditionally too small and too weird for private equity that can suddenly transact at two and 20 on some nebulous AI labor arbitrage trade, never been against a UM growth. You know, I think it's reasonable, but it sounds like, just any good operator, right? Like when Vista and Toma Bravo buy software companies,

somehow they can take these like very ugly, gross companies and turn them into amazing cash flow companies. So it's all about the operator, right? Yeah, but we're going to put Orlando Bravo in a box, right? And then we're also going to put

absolutely in the God box. Face, voice, everything. Yeah, yeah, yeah. It's all coming. Well, you know, we'll be here live streaming it. into the single. Can you play as a song before you leave?

I'm not sure what you're talking about. Like with one of those guitars that the chat was asking. Oh, yes. I will come back to you with a good parody of Silicon Valley. I've been working on my impressions. Okay. So maybe I can be back. I'm working on Elon, Zuck, Sam.

Bill Gurley. Bill Gurley. Bill Gurley has a great voice. Do Gurley. Yeah. I'll work on it. You actually do need. to like sit in front of a mirror and like listen and tape yourself and like work on it.

But basically anybody can do these things. And most people are, are you saying, no, no, those are AI voices, right? No, me, me. Yeah. No, no, he's saying separately from like the, you had the video with talking with Zach the other day where he was really, he was really, he was really, I just do it myself. I can do as I can do. I can do Buffet the best.

I think I've the most. No way. Can you hit it? Can you, can you do like be, be greedy when others are fearful? Yeah, yeah. Rip that for us right now? Let me come back to you and I'll do a whole show from you. Okay.

Amazing. All right. Well, this is really fun. Thanks guys. We'll be finally do this. See later. Come back on soon. Bye.