TBPN - Windsurf's Wild Weekend, SpaceX Invests $2B into xAI, Zuck's AI Data Supercluster | Jeff Huber, Scott Wu & Jeff Wang, Carl Pei, Garrett McCurrach

Episode Date: July 14, 2025

(00:36) - Windsurf's Wild Weekend (04:50) - Cognition to Acquire Windsurf (13:06) - Timeline Reactions to Windsurf Deal Collapse (26:43) - Windsurf Timeline of Events Breakdown (57:40) - Zuck's New AI Data Supercluster (01:10:53) - Space X Invests $2B into xAI (01:19:39) - Casey Neistat Joins ModRetro (01:21:10) - Timeline (01:30:01) - Jeff Huber, a seasoned technology executive and entrepreneur, has held pivotal roles such as Senior Vice President at Google, where he led the development of Google Ads, Apps, and Maps, and founding CEO of GRAIL, a company focused on early cancer detection. In the conversation, Huber discusses the transformative potential of artificial intelligence, emphasizing its capacity to enhance human capabilities and the importance of embracing change to stay ahead in a rapidly evolving technological landscape. (01:59:16) - Scott Wu, born in 1997, is the founder and CEO of Cognition AI, renowned for developing Devin, the world's first autonomous AI software engineer. In the conversation, he discusses the recent acquisition of Windsurf by Cognition, highlighting the complementary strengths of both teams and products, and expressing enthusiasm for the collaborative opportunities ahead. Jeff Wang is the interim CEO of Windsurf, an AI-powered code development startup. Previously serving as Head of Business, he stepped into the CEO role in July 2025 after Google hired Windsurf’s founders and R&D leads . Under his leadership, Windsurf continues operating independently, with Cognition acquiring its remaining product, tech, and team to integrate into its AI platform Devin. (02:12:07) - Carl Pei, a Chinese-born Swedish entrepreneur, co-founded OnePlus in 2013 and later founded Nothing in 2020. In the conversation, he discusses the stagnation in smartphone hardware innovation and envisions a future where AI-driven operating systems replace traditional apps, creating a more personalized and proactive user experience. Pei also critiques major tech companies for becoming overly corporate and losing their creative edge, emphasizing the need for genuine innovation in the industry. (02:41:43) - Garrett McCurrach, CEO of Pipedream Labs, is pioneering underground logistics to revolutionize last-mile delivery. He discusses the company's development of a subterranean network where autonomous robots transport goods through underground pipes to modular kiosks, enabling rapid and cost-effective deliveries. McCurrach also highlights the acquisition of a rapid fulfillment center in Austin to support this network, aiming to optimize delivery methods by integrating drones and autonomous vehicles for efficient, scalable logistics solutions. 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! Today is Monday, July 14th, 2025. We are live from the TBPN Ultradome, the Temple of Technology, the Fortress of Finance, the Capital of Capital. We have an amazing show for you today, folks. One of the best shows. It's the best day to be a journalist. It's the best day to be a live streamer.

It's the best day to be a commentator. That's right. Yeah. It's not a slur. To be in the commentary business. Commentary. That's not a slur. A lot of people ask us to not yell.

the microphones. We cannot help it. We just get a little too excited sometimes. But massive weekend. As soon as we got off the stream on Friday, the news broke that windsurf was being sort of pseudo-acquired. It was a trade deal. It was a trade deal. It really was a trade deal. And I believe this broke at 3 p.m. Pacific, which is just after market close. Just after we went off there. Just after, yeah, which one were they targeting? That's a big question. I think they were more worried about the TBPN coverage than whatever the market had to say about the deal. But the deal was that Demis Hesibis here has a post. He says very excited to welcome windsurf AI founders, Mohan and Douglas Chen,

and some of the brilliant windsurf engineering team to Google DeepMind, excited to be working with them to turbocharge our Gemini effort on coding agents, tool use, and much more. Great to have you on board. And so this was received sort of as like, oh, okay. So here's kind of the timeline as far as I'm concerned. immediately our initial reaction, we were here at the studio. Yep.

We were off air. Our initial reaction was, okay, another one of these quasi acquisitions. People call them shell. Everybody's going to get taken care of. It's fine. And immediately a lot of people started kind of freaking out on the timeline saying that the employees had been screwed. Our immediate reaction was, this doesn't make sense.

That would be very stupid. Why would all the parties from the founders to the investors to Google tolerate something like this. And then call it 24 hours later, I was still getting messages from employees that thought they were getting total zeros. And at that point in time, I started kind of reevaluating re-evaluating what may have happened. And there was a bunch. I think to be clear, like the current employees, they saw the news and they didn't get a check. They didn't get a wire transfer. And they also didn't even get an email saying, hey, we did all the calculation. And based on the share price, like, you'll be expecting this much money.

It might take a month for it to clear, a couple weeks to clear. But here's your expected payout. There was nothing like that. People apparently were crying, crying in reaction to the news. Well, here's the thing. This was a unique company, right? So windsurf launched in November of 2014. The product.

Or sorry, 2024. The product. But if you had joined a few months prior to launch, worked on the lead up to the launch, launched it, seeing this incredible growth, and then scaled to what you originally thought was a $3 billion exit to Open AI. And then you find out that you're actually, you're getting to, you're actually going to continue working at the company while dozens of your best engineers and your founders go and leave effectively to then go and compete against you, right, in CodeGen. And that roller coaster is just absolutely insane. And so really unique dynamic that was different than a lot of these other, you know, the character AIs, the scales, et cetera, where in those situations, many of the employees had been there long enough that they had vested a meaningful amount of shares. They had certainly reached their cliff.

In this situation, you could have joined in, you know, in August of last year and not hit your cliff. Not hit your one year clip, but been there for the entire run of windsurf as a product. Yeah. Like from zero to what, 40 million ARR? Yeah, that was the rumor. So, yeah, I mean, you watched the launch and you're like, cool. I got it right. I picked the correct startup.

I picked the correct rocket ship. I'm on board. Yeah, in Silicon Valley, you know, these options, these stock option contracts, they're kind of like lottery tickets, but my number came up. And then you go to the gas station or something to cash it in and you're like, wait, we don't know how much it's actually worth and it's not just like a tax issue. And so yeah, a lot of people very upset. And we'll get into kind of some of the debate around this.

So what's interesting is that I have Varun Mohan, who is the CEO of WindSor. he has not posted at all still. The last post he posted was on June 20th. So I think, maybe it was a little bit more recently. Yeah, to be clear, he's been completely muzzled. Yes, yeah. I mean, that's what we believe to be true. I mean, but it was weird.

If he's not muzzled and he's just chosen silence. Yeah. Yes. The last time he really engaged with anything on X at least was when... Wait, John, I have to interrupt because it's now live. Cognition has signed a definitive agreement to acquire Winsurf. Let's go. The acquisition includes Winsurf's IP, product, trademark, and brand, and strong business.

And above all, it includes Winsurf'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 Winsurf into the great business. It is today this transaction is structured that 100% of Winsurf employees will participate financially. They will also have all their vesting clips waves. Waves.

What? And we'll receive fully accelerated vesting for their work to date. Let's go. At Cognition, we have focused on developing robust and secure autonomous agents, while Winsurf has pioneered the Igentic IDE. Devon and Winsurfer 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 Devin's code-based understanding.

Delegate chunks of work to multiple Devin's in parallel. Complete the highest leverage parts yourself with the help of autocomplete and stitch it all back together in the same IDE. cognition and windsurf are united behind a share vision. It makes so much sense. For the future of software engineering and we've never and there's never been a better time to build. So there's a video up between Scott Wu and Steve over at windsurf and we're hoping to have them on the show later today if we can coordinate schedule. Oh that'd be awesome. Yeah, that'd be great. Cool. So anyways, this apparently Scott got to work like Thursday and not only negotiated, I mean,

to do this kind of deal during all of the chaos. There's 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 Windsurf 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 their GTM team but the fact that they were able to get this deal done in just just a couple of days is fantastic.

This is incredible. Wow, what a fantastic end of the story. Or a beginning, 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 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, an 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 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 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, 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 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 seven companies that's interesting the experience of CEOs like you look at the way scale i handled it Alex Wang is he's a generational communicator's been on the Ovant yeah uh yeah different dynamic great guy but you know

it's new luck lead in acquisition totally having having that sort of founder mode confidence totally fully in control of the company and you know it it you know everything you know we've heard from various parties says that Varroon was muzzled. But again, 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, you know, completely screwed, even for 24 hours. Yeah. And the evidence of that was overwhelming.

Like, you would see likes on your post. 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. It just flipped. And I said, okay, maybe they are. 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, 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. Are you going to be able to keep momentum or is churn going to be crazy? Totally.

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. exactly where you're going to say. They're getting ramp cards, baby, because Scott. Time is money. Save both. He's used 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, 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 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, let's just say hypothetically, you owned 100% of windsurf last week. And let's say a completely financial investor comes to you. 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, I want to buy a great business at a fair price. Let's do a deal. Yeah. Yeah. So that's the question is, is like if you were, if you owned 100% of wind serve, Jordi, 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, the last The last big post that Verroon, the CEO of Winsurf had interacted with on X, was this post by Technium who says, Winsurf wrecked.

And it's a quote of Nick saying, breaking, Anthropic just pulled the rug on Winsurf. WindSurf will be cut off direct, will be cut off from direct API access to Claude in less than five days, 3.5 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, I think I'm actually very excited about, about rappers, but there is this, there is this, 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, 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, hey, like, 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. Curser had to go through it. WinServe had to go through it. And Verroon responded to this and had a good analysis. It was basically making the case that, like, we can get through this. And I think that's true. I think there's totally a world where it gets true.

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, you know, it's developer tooling. How many, how many, you know, database software, enterprise SaaS products are on the public market? Yeah.

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 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 suppliers 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 web serve 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 ID 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, Windsor went from zero to somewhere around a $40 million run rate.

Anthropic this year has gone from the beginning of the year to $1 to $4 billion. And so they, you know, however you want to say, they've been 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. 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 Cursor is incredibly valuable for less experienced developers working on more vibe coding projects than like pushing the first. 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 ID stack and say, wait a minute, like, I'm kind of using this 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 reasonable points around like maybe now is a good time. to exit, right? Then, so after that, the question becomes, when you sell, you have, the board has a fiduciary duty to shareholders. 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

parado 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 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. Parader 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 good acquisition deal, everyone is pariah. it's a Pareto 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 Caldor 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 hosed. It seems like everybody would have done better on an open AI. Everybody would have done better on an open AI acquisition. Probably. And so when the $2.4 billion number came out on the evening of Friday, it seemed like, okay, not as great.

It's still everybody'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 remember. report the number, but people were messaging me information on how much Baroon personally made. And that was still in the context of... I mean, you can just do the rough math. Founder stake. 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, you build a great team and big tech wants you, like you, you know, I'm not upset about it. Yeah. 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 Bhance 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 Bihans 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 of hard power in the sense of board control and actual voting shares. 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 that was the fear that Verroon didn't do that, that he didn't go far enough. Yeah, there was another example from Parsh, Ilius Sukar's company. So one of his former employees says, we got news. Our startup was being acquired five days before my one year. 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 Parse and said, Ilya, Ilya quoted it and said, 100% acceleration for everyone but the active founders. We went backwards and revested our vested. Glad someone remembers, so,

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 and the core the core debate like your post went pretty viral you got two million views 4,000 likes and it 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. Yeah.

Launch the product. Yeah. Yeah. Thought that they were getting this three, you know, massive outcome in which again, some people would have not been able. I'm sure opening I wouldn't have kept everyone. Yeah. Right.

Totally. I'm sure that they would have made a bunch of people effectively revest into. There's always layoffs post merger acquisition. like that happens all the time. 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, that 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 a a knight in shining armor suit we were getting the steel man suit ready but then we knew we didn't have we will the production team will get the steel man knight of suit of armor eventually we need to order from a prop shop we take it it's on the way we're working on it yeah okay we're going 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 vesting 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 10 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. And 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 a fact 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. Now that's not the case now. But 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 windsurf's head count 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 headcount was? Couldn't have been more than 50, right? Definitely not. So you're looking at a 10x increase in employees who haven't really been like, they've been on this rocket ship, so I personally think they totally deserve liquidity and accelerated investing, which sounds like they're getting,

and it sounds like they're going to 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 go ship, like I didn't bail. You bailed.

Yeah. So you should. You should accelerate me. And I actually think that that argument's really good. Yeah. 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 ghost ship, but it was cool in the fact that they had 20 plus million users. They also had $100 million on the balance sheet.

And it wasn't this like insanely gnarly enterprise market where, and I know, I know people on the character team. And they were like, it's pretty cool. We have $100 million. 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 it's I was trying to think about that. Like is there a world where, you know, if the ghost ship had like stayed a ghost ship and they'd 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 Gaffan 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 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 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 textbook, they should be able to acquire this company, right? Like, cursors out there, they're not acquiring the market leader. Open AI is clearly going up to this market. And to the tune of, what's their evaluation, like 350 billion or something, like that. Like we haven't we should try to get an update there but like not it's not I'm not sure that the full mossa 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 gonna compete in this absolutely they have come out they already do

they already do and so yeah 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 are made 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 was magic yeah there was magic doc dev they were found apparently they were training their own foundation model for a while

and that was kind of like you know very capex intensive and and maybe slowed down some things in 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. Forks a little too hard. Yeah, they cross 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, like, 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 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 like like responsible for everything and I wasn't I wasn't necessarily saying like Lena Khan was 100% responsible for how this 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 Wu. Yeah. Seriously. Seriously. So the solution to

anti-capitalism is more capitalism. This is the Brad Gersoner point. 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. Exactly. So it really, it really is a great outcome for Google, even though I'm sure that their comp team was up all weekend calling people. Yeah. Like I have to imagine that this was like more room for that. 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 necessarily. Like the whole point of Lena Kahn's thing was that, you know, big tech is like squashing competition by, you know, buying these companies early. And so you had the story that that was served up to them, which was, you know, exciting company in CodeGen, a lot of traction. Open AI almost buys them. Google says, okay, we're going to buy them. That's Google and Open AI are arguably, you know, the two competitors that actually matter in search right now.

And so it was just the perfect story. And then the, you know, I think Scott over at Andreson had a good post that I, let me pull up here for a second. He was basically saying, there is an irony that LenaCon's activism has resulted in deals that are far worse for everyone except the people she was targeting. Wait, who's, who tweeted? This is, sorry, Martin Casato.

Oh, yeah, yeah, from Andreessen, 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, were 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.

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 and it was very clear that that situation was interesting too because 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 Nome 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 sign. is that that is a very important news 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, the, the, the, all of the facts come out over the weekend. And it was such a hairy deal that more deals needed to be. 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 news cycle. So you kind of skip the crazy news cycle. I think the world's too online. So I think I think it helps that that it wasn't a weekday. But I mean, this to me, this whole thing, you know, from everything that we've kind of triangulated this, 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 Hope and 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, 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, no. I just met my boss three months ago. 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 suggestion. It was intentionally ambiguous. And at the same time, the the employees left behind on the ghost ship.

Yeah. We're already talking with other companies. Other companies were coming to them trying to recruit them. You're coin in ghost ship because like everyone involved in the deal would prefer you to use the term remain. Co, Remain Co. But that's not as sticky as GoShip. So I think Go Ship without a, ship without a founder. I don't think this will be the last GoShip 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. 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 this guy, Publius, said in your, in response to your post, which I don't think anyone was talking about at all the entire weekend. This is cool. 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 now. Much better spot. But let's read through it. So Puglius 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 Windsor. 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 Winsor,

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 you 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. Very interesting. So Winserve 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 Windsurf they don't get a kick kick back from cursor so he's gonna lose millions of dollars hypothetically hopefully not but my reputation and good name is worth more with Google taking the best engineers from windsurf our large enterprise clients are screwed When they purchased windsurf 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 a top company in your category growing super quickly, you might turn into. go ship. Yeah, yeah. And so if 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 a trade deal. Yeah, yeah, yeah, exactly. 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 to see tier. 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. I'm going to keep working with you. 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. to automate compliance, manage 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 show. Incredibly blackpilt. But we're so back, Will, you're good. Wilmanitis said, the reason that tech has been able to grow so quickly and create so much wealth

that it is ritualized a set of norms around corporate governance that are very distinct 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 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. And or it could be like you found something in due diligence or you met a different competitor, but the like, you know, 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 yes and are still in business yes but they the it becomes very hard to be an effective VC yeah if your brand is you just pull term sheets yes yeah and some of those some of those folks have been banned from YC demo day other people have had like viral Twitter posts throughout 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 gonna tell the truth about X Y or Z um and

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 Big Tech broadly where you know the paychecks 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 You're gonna be there and you know the company's gonna 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 Sundar and 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. Yes. Which is big tech company does basically an aquire of the 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, this was Harry Raghavan's analysis.

He clearly, I mean, the guys, he's a good friend. He's obsessed with cap table math. I know. He was, I mean, 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 and that was unvested, which is a key detail, right? 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, like, 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.

It's just going to happen immediately because it's just like 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 question that I had and that I think a lot of people probably had is what is the governance structure of the ghost ship? Right. So Jeff, Jeff, Jeff, uh, Wang, who's coming on the show at 1 p.m. Oh, he is? Let's go. Jeff and Scott will both be coming on at 1 p.m.

Okay. Okay. And, uh, 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 probably, like, maybe they want to keep building windsurf, 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 Proto 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? Just throw the ring in, throw the ring into the Mount Doom. Yeah, the question was like, could you ever tempted? Could the new leadership, the leadership basically, 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 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 you would have employees 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 sea floor. 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 let 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.

Yeah. And it just don't cry yet. Poor Verroon. I know because because he was getting dragged 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. And it just seemed. like he was being like ultra like kind of like a psychopath being like, see you guys. Yeah. It was a good run. And it's like go go have fun building. It's impossible that 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. 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. 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 get hazed. Yeah, you're going to be hazed for 48 hours. You're going to hazed. But then... And it's going to blow back on us so incredibly hard.

Google didn't look good either in 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. Is 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. Yeah, 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 on your stream. Every time you go live. Yes. Every time you go live. And so, yeah, again, we want to pay us, license, license and keys for the patents. We did invent TV. We invented news, but we will open source it.

It's an MIT license type of situation. Modified MIT license. The only modifications is that you have to drink tap water. 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. That is the real question is, 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 down on the future first ballot Hall of Famer. Everyone was saying, oh, Neil Meta, Green Oaks, they did this sloppy deal, screwing over the employees.

Employees are great. Neil Meta potentially goaded. I don't know. I agree. It was well played. No, no, but the question is, how did Google, why did Google feel like they needed to do a meta style trade deal? in this category so 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 is at the same like like level of like AI research quality as opening I anthropic 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 yeah they just weren't figuring out what works in RL and so they had to bring over a ton of people to just be like how do we actually train this next model like behemoth They couldn't tame the behemoth. Like they gotta 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 100 K, 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 gonna be able to take what they build,

and then vended into Instagram and vended into all sorts of different places and use it to optimize the ads 1% and make a trillion dollars. Like they're gonna 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 behind on product. And 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 so here's the here's the, here's the, the, uh,

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, yeah, yeah, they've launched Jules, which is an async development agent. Okay. For code code, code. It's a Claude code competitor and open AI.

More so it's like a dev, yeah, Devon AI competitor. Devin competitor. And so now you have, uh, you imagine Google, has more ambitions around CodeGen, right? They've seen anthropics. Very few businesses actually 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 using it. I'm sure it's powerful. But you now have a dynamic where some, you have cognition and Devin, who got, I can't say cloned by Google, but again,

like they were the first, like, serious, like, enterprise coding agent. And so, and the WinServe GTM, you know, sales marketing team versus the former Winserve 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 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. Okay, really quickly, we got to, I want to track some polymarkets around Google. Google forced to sell Chrome. Remember, we were tracking that a while back. There was a question of whether they need to split it up, because the FTC, we've been talking about the FTC a lot. I will pull up this Google forced to sell Chrome. It is down at 1% now. No one thinks that they're going to have to sell Chrome. And of course, the browser war is heating up completely. And I was checking the, they're not tracking this Sundar Pichai thing.

Sundar Pitch AI. Pitch AI. He has been pitching AI very successfully. But the question of like competition is like it's heating up a ton in browsers and then now it's heating up in this and like the FTC should totally be sitting back and just watching the gladiatorial games play out. And yet like even though Lee the Con is not there. I mean look at the vibe coding market right now. Is competition not thriving? It's insane.

It's insane. Yeah. No, I completely agree. And so like I think. I think there's a lot of people that are making the argument that like, oh, you can't keep blaming Lena Kahn. She's not even there anymore. And it's like, she was there for long enough to really like lay out a new pattern and

just instill a bunch of behavior in the big tech companies that results in these, in these crazy deals. Anyway, let me tell you about numeral, numeral H.Q.com, sales tax on autopilot, spend less than five minutes per month on sales tax compliance. It's like an AGI for sales tax. That's right. Should we talk about Zuck's new super cluster? Oh, yeah.

Let's go through it. Okay. And there's some new reporting from the Times as well around their strategy, which we'll cover next. But why don't we start with Zuck hit threads this morning. He hit threads hard. With a thread. With a thread. It was very cool.

He had a great visualization. I hope we can pull this up. I'll put it in the tab. But basically, there we go. Jarvis. Send link to bangers. Send link to Ben. So basically he has this cool visualization of how big the Hyperion data center is.

And it's just the full size of Manhattan. And somebody was replying to this being like, he's building the cube. Oh, Sam Demico, he's been on the show a bunch of from Impulse. He's building the cube because there's this old visualization of like, if you put a billion people in one building in Manhattan, it would just be this cube. And so everyone who's like extremely pro building housing is like, let's build a cube. Let's build a cube. Anyway, the news is that Mark Zuckerberg is giving more details. He's announcing that like the super intelligence team is real.

It's been only rumored reported. He hadn't, he hasn't actually said, hey, we're doing all this. That was all like leaked reporting. He came out and posted on threads and he posted on Facebook too saying like, this is real. And here are the details. He says he's going to invest hundreds of billions of dollars in CAPEX, which is what? they're doing like 60 to 80 a year now. And so I guess like it's more just like he's going to continue that for a couple of years. He's not giving specific guidance on where the ramp is.

The 2024, EBDA was 85 billion. Oh, CAPEX or EBITDA? That was EBITDA. Okay. Yeah, look up to CAPX. CapEx was between 38 and 37 billion. Okay. And then some of that goes towards like Reels and then some of that's used for AI and then the AI stuff kind of slips over into Reels and and just other data center uses. But in general, he's going all in. He's continuing to invest billions. What's interesting is that he claims that META will be the first lab to finish a one-gagawatt supercluster.

So he's basically racing against Stargate and thinks that he can bring META's next data center online before Stargate. And he's calling his one-gigawatt supercluster, Prometheus, which is a hilarious name. the guy loves the Roman Empire, apparently loves Greek mythology too, but Prometheus is a very, very edgy name to pick, in my opinion, because Prometheus is the titan who stole the fire from the gods. And it's like, I get that it's like the seed of the seed of humanity, it's the seed of this new thing.

It's a great name in many ways. But also it's like, if God's real, like he might not like that. And that could be a problem. It could be bad. But, you know, Zuck seems to like, like, Icarusian names. Yeah. Because Orion. He likes flying.

I mean, he objectively likes flying close to the sun. He does. That's kind of where he feels at home. He does. The warmth of the sun. The warmth of the sun. And you know, the hot take on Icarus is that, you know, everyone talks about, oh, like, you know, don't fly too close to the sun.

You don't want to be Icarus. But you know who, you know the person who was, like, telling Icarus to do that? No. Surprise, surprise. No one remembers his name. His name was Daedalus and Daedalus was like, oh, don't fly close to the sun. Who do we remember? We remember Icarus. That's right. And so maybe hot take, it's better to be Icarus than Daedalus. If you want history to remember your name, even if you fly too close to the sun, even if you have a great fall, you will be remembered. That's right. So maybe it's a you know, Icarus gets rich. Datalus sounds smart. situation. Dayless sounds smart. Icarus gets rich. That's right. I think that might be the what's going.

New mental model. Anyway, I mean, I was also on one of the first shows we ever did. I was talking about how the name of the new VR headset, Orion is kind of odd because Orion is like this hunter, but was notoriously like over his skis with the hunting and was killing all the animals and like was smited by the gods and, you know, and basically like, it was like a textbook case of like hubris and overaggression. Like the moral of the story of Orion, who is the hunter in the stars, the reason he's in the stars is because of hubris. And so it's very funny to name your product like a tale of hubris.

Maybe it's a reminder. I seriously want to talk to Zuck about this because I'm very interested, like, how many layers deep does he go? Because, I mean, the guys, like, clearly, like, studies the stuff. He's like a student of the Roman Empire. More than me. I just Google it when a new name comes out and, like, look at the summary. I imagine that he reads it much deeper, and I imagine that he gets the joke and is doing this almost ironically, which I think is cool. Anyway, the other news is that they're aiming to scale up Hyperion.

So Prometheus will come online in 2026. So that's probably one year away, maybe a little bit more than one year, if it's toward the end of 2026. And then they're building Hyperion, which will be able to scale up to five gigawatts over several years. And that feels like simultaneously like crazy, insane, ambitious, amazing. I love it. I'm super excited for the capability coming out of that. And also like the biggest glass of cold water poured on the AI 2027 folks, like of all time. Because like I feel like everyone in the AI like is going to be self-reinforcing and just ripping is like, well, yeah, like the data center capacity will 10x every year for the next 20 years.

And it's like, we're going to 5x over the next three years. I don't know how many several years is. I imagine like three or four or something. But it's just funny to be like, like it's incredibly ambitious. It's the biggest data set ever, I believe. It's like this massive project. It's so cool. It's amazing.

And it still doesn't match the rhetoric of like the really crazy AI people at all. Totally. But, you know, it's fun. Anyway, that's the story of Zucks. Any other takeaways from the Zuck super cluster? Congratulations. We should ring the gong. We should ring the gong for Zuck.

Let's hit the gong. So there was some new reporting from Eli Tan over at the New York Times around Meta's new superintelligence lab is discussing major AI strategy changes. And so there is a picture that going close source or... Yeah, so I'll read through it. So Mehta's newly formed Super Intelligence Lab has discussed making a series of changes to the company's artificial intelligence strategy and what would amount to a major shakeup. week, a small group of top members of the lab, including Alexander Wang. Meta's new chief

AI officer discussed abandoning the company's most powerful open source AI model called behemoth in favor of developing a closed model. Two people with knowledge of the matter said, for years, meta has chosen to open source its AI models, which means it makes the, I'm not, I'm not going to read this. Any move towards a closed AI model will be. What is, what is software? Can you find that for me? They were about to say, they, the New York Times wrote, they're about to make the computer code public. What is the computer? What is code?

Can we explain this for our audience? Yeah, we should really break it down. We'll really break it down. Anyway, so Eli writes, any move towards a closed AI model would be a philosophical change at meta as much as a technical one. Meta has won over developers

for open sourcing its AI models and one of its top AI executives. Jan Lacoon has said that the platform that will win, but will be the open one. So, yeah, I think this is obviously still very much in flux. Build Mecca Churchill. Mecca Churchill. If he builds Mecca Churchill, instant win.

Instant emetic win over Elon. They're clearly battling it out. They're trying to fight in MMA wars, and they never got that fight down. Now they're fighting it out in AI. Build Mecca Churchill. It'll be such a good meme. It'd be great. Anyway.

Whatever you build, Zuck. You got to sell it to people. You got to use Adio. Customer relationship magic. Adio is the AI Native CRM that builds, scales, and grows your company to the next level. You can get started for free. Tailwinds of the last decade are now headwinds. Says Bucco Capital Bloch.

He says higher rates, AI labor, compression, and available role salaries, business model maturity, managing margins versus growth, crowded knife fights versus Greenfield, less liquidity because companies stay private longer, slash forever. Worse MNA environment due to regulation, PBD, technology enabled outsourcing. So a little bit bearish from the Bucco Capital bloke. Sheel says, feels like a good time for everyone to learn about single trigger versus double trigger acceleration of shares.

So single trigger is if there is an acquisition, all of your shares vest. I don't know if this would, the question is like, how do you define trigger? Because these zombie acquisitions, you're on the go ship. knows if you trigger the trigger but double trigger means you have to be acquired change of control and then fired and so double triggers are it's hard it's very hard to negotiate that if you're just the 300 or the 100 almost never happens if you can go ahead if the CFOs who come in yeah CFO comes in doesn't matter if CFO's employee number 700 or number three like CFO is gonna get

single trigger always always I don't know maybe not always but like like the people who No, no, but you should know about it. You should know about single trigger and double trigger. The other interesting thing that I was digging into that we didn't really ever get to the point of understanding was for a long time, people were saying like, hey, you can debate all of the stuff about windsurf, but the employees on the ghost ship, the ones who are in the Remain Co, the ones who were left behind, they would have vetoed this deal if they could have. I think if you go to them today and say, hey, you're working at cognition, you're using Ramp now. They're going to be like, yeah, I'm happy. I'm happy. And it's not like, it's not even like they landed at a boring company.

I was saying like they could land at like, you know, some old line company that just picks them up. Like, well, what was that company that like humane landed at like HP or like they're like doing like smart printers now? Like that's not exactly like a like a upgrade in terms of status in Silicon Valley. It's not exactly a air horn moment. Exactly. You got to put your, you got to put these on. So you can experience the audio. Yeah.

But but but going to cognition seems like a great upgrade in terms of. of just like, like, you know, being at another cool company, you're still on the startup roller coaster, you're on the ride, you're, you have a lot of unbounded upside. It seems exciting. I mean, I don't want to take too strong of a position here, but Scott and the team at Cognition are some of the best. And, you know, if you just lost all your engineering talent and you're confident in your own abilities and you want to work with world-class engineering talent, yeah. Really great, really great place to end up. Yep.

Really quickly, let me tell you about fin.AI, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bakeoffs, number one ranking on A2, on G2, go to fin.aI. But the question that I was running through and I was getting to was, was single trigger, double trigger, like that does matter. That is important in acquisitions. But another thing that potentially could be relevant in a future actual. position if we get sort of like, you know, the windsurf situation, one of these zombie aqua hires,

with the bad ending where even years later you're like, I would have loved to have vetoed that. Like I really didn't, I never, I wasn't happy with the ending at all and I haven't changed my position for years. Not just, it wasn't just a few days of chaos. It was like forever. I was like, ah, I wish that hadn't happened. I picked the wrong company. The question is if you exercise your stock options, would you have a different outcome? And so essentially when you get, when you, you get a job offer from a startup, they give you a stock option contract that allows you to exercise and pay to buy stock, actual stock in the company, for a lower price. And the question is, your legal rights as an option holder are different than as a stockholder. So an unexercised

stock option makes you technically a contract creditor, not a stockholder. And so you do not have the bundle of statutory statutory and fiduciary law rights that attach to you. to stockholders. So if there was going to be like a class action for the ghost ship employees and they really did want to block it or they wanted to sue Google or they wanted to sue the founders or something like that, they would say, this is a breach of fiduciary duty and I'm a shareholder.

You had a duty to me. But they didn't in this case because if they had an exercise. I'm sure some of those employees had early exercise, it's a thing. But it's just an interesting piece of the puzzle that we fortunately didn't even have to go down this road. But I do think that, people might want to re-have this conversation,

because I mean, the chat GPT summary says, to preserve more robust remedies that stock law makes available, inspection rights, fiduciary duty claims, derivative suits, appraisal, exercise first, complain later. Exercise first, complain later. And so you can do a partial exercise, but if you don't own a single share of the company, then you don't have the right to actually sue the,

or you might have less of a claim to sue in a scenario like this. So it's a potentially rough scenario. Should we go through Elon? Let's switch gears. Elon is leading a massive $2 billion investment from SpaceX into his other company, X-A-I. Yes. We've talked about this. Nothing better than one hand washing the other.

That's right. This is what we like to see. It's so efficient. It really is. How else do you wash your hands, if not with one and the other? Yeah, try washing. It's impossible. Don't.

Yeah. Don't try to watch your hand. So Elon is taken $2 billion from the SpaceX balance sheet, which is what, at $400 billion now? And they're raising billions pretty regularly and doing tenders and stuff. So SpaceX is, I think the largest, the kind of neck and neck with Open AI in terms of private market companies. It's a 20-year-old company, very stable business. Starlink's thrown off cash. There's like so much that is mature about that business.

Obviously, still got to get Starship to work. Still got to get to Mars. Still got to go to the moon regularly. But, you know, exciting road ahead, but still, very solid business. And he's taking $2 billion off the balance sheet of SpaceX and putting it into XAI. And so the map of Elon companies is just getting crazy. Yeah, it's a Kretzu. It's a Kretzoo.

Everything owns everything else. So the question, the question that when I saw this news come out, yeah, what you say? My first reaction was that Mecca is going to love Mars. It's going to love it up there. It's going to be the first, potentially the first AI to get to Mars. My second reaction was, I actually think that if you add up the valuations of every Elon company, Tesla, taken at number seven on the Mag 7, 900-ish billion dollar company, SpaceX, 400-ish billion-dollar company,

X-AI, which is maybe getting valued at 200. It's a 200, right? Something around 200 now. That's great. And then Neurilink, which is what, at like 12, somewhere between the, like seven, somewhere around roughly around like double. Almost a, almost a $10 billion company, might as well be. So somewhere in that range.

Yes. It's actually interesting to think of if you rolled all these assets up together. Yeah. Do you think it would trade at a premium to all of their standalone valuations? I don't know enough about, in the public markets or private markets? Yeah, in the public markets. I don't know. I don't know enough about like, because I've heard a lot of public markets investors say stuff like, the market just really

It's a pure play in this. Yeah, but what's more pure play than Elon, Inc? Just Elon Inc. Because a lot of these companies still, even at various points, end up being founder bets. Totally. Like, Tesla is still a founder bet. Will Elon figure out autonomous vehicles? And I do think that there's this underrated narrative of like...

And XAI, too, at $200 billion. It's like, I don't think investors are underwriting the new AI companion today. Or certainly like the profit stream. or even revenue stream from the API business. Yeah, no way. Yeah, they announced a $200 million government contract today. They were underwriting Elon being able to get deals like that done, right? And even remember, Ben Thompson, we asked him about this.

And he basically said, I can't do analysis on Elon companies because they are detached from traditional business reality. And so my question is like, if you roll all these things up, Is this a $3 trillion company? Yeah. I don't know. I mean, the interesting thing is like, it does give you as a retail investor,

like you can pull so many different narratives. So like right now, just within Tesla stock, if you're a Tesla investor, you can look at what's happening with Tesla deliveries because of the political backlash or what's happening with the tariff war, the EV tax credit. And you can be like, that's bearish.

But then you can simultaneously tell yourself a story about, well, Robotaxi is going to be so big that it'll make up for everything. And then if that doesn't sit with you, you can be like, Optimus is going to be so big that it justifies a multi-trillion dollar valuation. So I'm still a buyer, right? Because you have these call options. And really, it's all about the rare earths on Mars. Yeah.

So imagine that. So right now with Tesla, I see like four stories and they're kind of like too bearish, too bullish potentially. Like the bearish ones are EV tax credit and, you know, not being able to sell as many vehicles. The bullish ones are like maybe he figures out Robotaxi. Maybe he figures out optimist, right? And that's why you might choose to buy or sell Tesla. Or Neurlink chip in your brain with the XAI companion.

When you put all of them together, it's like on any given day, you can, it's so much easier not to be a panicking. Right. You don't need to be panicking because you're like, well, yeah, like Neurlink got pushed back by the FDA today. but SpaceX landed Starship. So like I'm behind. Or like, oh, the starship blew up, but, you know, Nerlink made a monkey play CounterStrike. So like, I'm going long, right?

There's like always some good news to latch onto when you see the Elon portfolio as a whole. But there's this fascinating chart here. I don't know if we can pull this up, but it's the links between all the different Elon companies. So SpaceX buys, SpaceX buys five million annually in, vehicle parts, energy systems, and the Model X astrovan. So that's money flowing from SpaceX to Tesla.

Stainless steel alloy technology, Starship materials for Cybertruck go from SpaceX to Tesla. And then the Boring company purchased $300,000 annually in energy systems and uses the Model 3 for the Las Vegas loop. And so they're buying from Tesla. Starlink has a T-Mobile partnership, connectivity for vehicle, internet, and superchargers in Teslas. And then you have all these other things where like,

Neurlink might link into XAI. XAI did the all stock acquisition of XCorp. And then there's a study for robotic arm control and future mind-controlled limbs that links Neurrelink to Optimus. Solar City was acquired by Tesla. FSD is a separate product. So like all these companies are overlapping.

And the interesting question is like, is like should they just be that correct? And what is stopping that? Should they all just be under one, Musk Holdings, Musk, Inc? And if it was, I think it's that that would actually be extremely uncomfortable in the public markets because there would be all these crazy shareholder lawsuits where, so like, you know, if you were, if you were, if you were a shareholder in, in, in, in like, Musk Inc. And Musk Inc. is public and owns Neurrelink, you can. There's also, there's also this beautiful.

There's also this beautiful cottage industry of people that are effectively resellers of Elon shares that own a lot of these companies and wouldn't necessarily want this to happen because that kind of stops the gravy chain. Gravy train. I had somebody message me yesterday and said it's funny how investing in Elon Co's is not too dissimilar from buying watches from AD's. Because if you have a great relationship with your AD in this case, which is Elon, you can get direct access to the companies. But if you don't, you're on the secondary market just buying SPVs. You're going to Getbezzled.com, but don't worry because your Bezell concierge is available now to source you any watch on the planet. Seriously, any watch. Great transition.

So stop worrying about your ADs. Head over to Get Bezel.com. Anyway, if you're looking to buy Tesla shares, the one Elon Musk company in the public markets, head over to public.com. Investing for those who take it seriously. They got multi-asset investing. Industry-leading yields. They're trusted by millions. Anyway, in other news, is there anything else we should talk about with Elon Rippen?

$2 billion into XAI. I think we're good there. Let's move on to Casey Nystad. Some personnel news, baby. He's joining Mod Retro. That's chief storyteller. That's not a real title and it's not a real job, but I'm excited to be a part of the team. I love the candor. Cander, I don't know. I've mispronounce that. But he put out an 11-minute video talking all, breaking down the Mod Retro thesis all about how planned obsolescence is destroying great consumer electronics devices. You buy some and it's in the trash in a couple of years. It's collecting dust and he goes through some of the products that he's had when he was young that's still work as intended. They didn't need some crazy software update.

It was an IOT toaster. It was the things that he loves, the Walkman, the original Game Boy. And he breaks down how Palmer's thinking about building and the Mod Retro team is thinking about building a, quote unquote, like, game boy that's different from the other companies that are also creating similar, like emulator products. He's like, I got this $50 one. And it works. Like, you can actually play it. Now, you can't play it at a high level.

Like, the frame rate is not, like, the quality of the product is not at a level where it's, like, truly competitive. But also, it's kind of designed it just like, as like, you know, Timo level junk, basically. And it's just like, how can we just, like, slop it up for a little bit? Whereas Paul is still like artists. And so is tasty. Just getting to the quality level of the original, like, Game Boy Color. I have a Game Boy Color for my childhood. Oh, yeah.

And a while back, I just put in, it had been two decades. I just put in new batteries and just turned it on and just immediately booted up and worked. And that just doesn't happen anymore with modern electronics because after Tyler updated to glass. We made, we made, we made. How is it? Give us a thumbs up. We're missing a microphone for Tyler today. So just the thumbs up.

It's still good. We got a thumbs up. We got a thumbs up. Okay. We will be back on the stream shortly. We will, we will buy another camera. We will buy another camera. And we will also buy another mattress from AitSleep,

mattress cover. Go to Aidsleep.com. Get a Pod5 Ultra. They have a five-year warranty. 30-net risk-free trial. Free returns, free shipping. Shane Copeland over at Polymarkets says one day there may be more AIs than humans, creating pricing, trading millions of polymarkets on everything.

A unique benefit of on-chain prediction markets is the ability for AI agents to plug in. Multiple groups quietly print on Polymarket with agenic workflow. As AI ushers in super intelligence, Polymarket ushers in collective intelligence. It's happening. I'm using the best AI models. Oh, interesting. D-D's doing something over there.

I asked it to use modern portfolio theory, bet sizing and make calculated bet. Yeah, very interesting to see the interaction of AI and like Web 3 or like, you know, just crypto generally, crypto-powered protocols. Because it's like... This is one that actually makes sense. But there was an era of basically meme coins

that were just like, I'm not a normal meme coin. I'm an AI meme coin. But this is actually bringing together them, bringing them together in an interesting way. Josh Kushner, friend of the show, had an absolute banger. He said the goal of life is to be excited to go to work and excited to go home.

And I couldn't agree more. That's fantastic. Put that on a billboard. Josh, go to ad quick.com. Out of home advertising. Make easier and easy and measurable. Saying you buy the headaches of out of home advertising. Only ad quick combines technology, out of home expertise,

and data to enable efficient, seamless ad buying across the globe. Josh, I want to see that. You know, every VC fund has some, you know, occasionally trite catchphrase saying on their homepage. This is actually a great message. You should take out a billboard in New York City, thrive capital or thrive holdings or thrive. Our goal for life is to be excited to go to work and excited to go home.

It's beautiful. It's beautiful. This is, this is. I think it should be on the billboard. Yeah. This is pro-natalism in tech. This is sustainable pro-natalism in tech, right? It is. It is. Being excited to go to work and also excited to go home.

Be with family. It is. Should we do Mark A. Andreessen talking about O3 Pro? This is fun. One of our buddies got one shotted by this. Yes. So Matt Schumer said, ask O3Pro, based on everything you know about me, reason and predict what the next 50 years of my life will look like. And Mark said, do not, let any circumstances do this. I would have told Mark.

He's like, you will take your fund public. you will run a massive firm, but it will be a ton of headaches. It'll be like, you know that little knee pain you have? Well, you're going to have to probably get surgery eventually. And, you know, I think the issue is like chat chvety

knows an incredible amount about the things that you're working through in life, depending on how you use it, but the things that you're working through in life. And I still think it knows, it does know a lot, certainly more than many other AI, many other software systems that I use like it probably even knows more about me than

Gmail but it's still only getting a slice of the picture and I think that I need to do this because I imagine it will be like you will you will continue to succeed as a train conductor because months ago I was trying to you know prompt engineer it into giving me stronger like more in-depth data about trains and so I was like I am an expert in trains I own many trains tell me all the different brands of trains and the prices, don't dumb it down for me. I am a train expert. And then I noticed that once they rolled out chat GPT memory, it kept being like,

you know, as someone who knows everything. Yeah, train expert. And I was like, no, I was just prompt engineering. I'm sorry, chat chbtee. You do this. You do this. You'll be like, yeah, and yes, John. You'll finally get that height reduction surgery.

I know you're always complaining about people saying, oh, I didn't know you were so tall. I mean, you're so tall. The funny thing about that is that's, that's just something that I would never go to chat GBT with right like discussion over whether or not being six eight is like good or bad or like I I just it wouldn't you have that conversation with chat to be so I don't know I should run this prompt I think everyone should run this prompt is kind of it's kind of interesting just to see like the state of AI right in the state of these models like how clear is it but I

actually quote tweeted this and said I the line from Terminator no faith but what we make which I know you haven't seen Terminator 2 you got to see this movie James Cameron come on it's one of the best ever someday someday but in that the whole the whole theme of Terminator is the idea that they are able that they invent killer AI then they invent time travel to go back in time they're trying to prevent the AI from taking over in the second run-through and there's this debate about FAPID and and and the refrain of the main character is no fate but what we make no fate but what we make like like we

are we are we have power over our future and I believe that. I believe that to be true. And so I think no matter what 03 tells you, go do what you want, carve your own path, make your own kind of music. So should we pull up this video of...

Yes. Palmer was talking with... I absolutely love this. This is from Kyle Harrison. Now I'll be right back, but we should play this. Yeah, I will try and pull it up. So Kyle Harrison is...

I'm putting this in the tab. Let's see. Let's see. So Kyle Harrison was clipping the impulsive podcast with Palmer Lucky talking about, Kyle says, a strong officiantado of conspiracy theories myself. Palmer Lucky has given a perfect direct answer to anyone who believes the moon landings were faked. And I thought this is very, very fun because as it's become more open to just talk about conspiracy theories generally, there's been a weird meme where people have gone from like,

I believe in one conspiracy theory to I believe in all the conspiracy theories. And if you believe in all of them, you're not really thinking critically. You're not actually thinking independently. And independent thinking is what's the most important. So how are we doing on the video? Can we pull that video up? I would love to watch this and react to Palmer Lucky on the Impulsive Podcast. Full screen if we can.

It'd be great. Let's see. It is loading. but he gives a direct answer to it's a very funny reaction this is a whole much of working on it this is a quote tweet of Mike saying topic at lunch today

what is one what is the one conspiracy theory that you have the most conviction in being true moon landing being fake was the consensus of the group Mike who you're hanging out with canvas outdoors you got some wild men in there it's crazy

I like the conspiracy theory that John Wilkes Booth was a British agent and killed Lincoln. This is a very interesting one. Have you guys heard this? No, you've never heard this conspiracy theory? Yeah, there's a conspiracy theory. Like, everyone knows about the JFK conspiracy. You got to go deep to get into Lincoln assassination conspiracy theories. But there's very little information about this. And I don't know if we'll ever get to the bottom of the... There was no Reddit. There was no, yeah, no 4chan at the time. But if you look at some of the incentives at play at the time, like, it's completely possible that, like,

someone was pushing John Wilkes Booth to do this and potentially it wasn't this reaction to the war or something. I don't know. This is an interesting theory that like I don't think many people have gone down. Anyway, do we have a chance to pull this up? Yes, no. Not working. Okay, we'll skip it. We'll skip it.

Let's move. Anyways, just to give people kind of the takeaway. Yeah, yeah, totally. The Palmer was basically, Logan said, I don't believe the moon landing was real. Palmer says the reason that I think it's real is the astronauts left these effectively reflectors on the surface of the moon and you can build your own laser system to beam them up, wait for the light to travel and then come back to you. And it will not bounce.

Like the laser won't bounce back if you just shoot it at any part of the random moon. You have to hit the mirror and they put a mirror up there so that you could do this. The real question, the real conspiracy theories, the real conspiracy theories ask how deep does this go? Who put the mirror there? Maybe it was aliens. Yeah. Because it could have been aliens and never went. A rover, you know, or like a non-human landing.

Oh, rover. I've never heard this term. Like an alien rover? No, like the Mars rover. Oh, oh, okay. So humans never went, but NASA still put the mirror there. Yeah. Oh, that's funny.

That's a wild time. But the real, but the real. We can't get humans there. But we can get a mirror there. So let's do that. And let's, so it's like the moon landing was like 90% real. Or let's just land a mirror on the moon. That's hilarious.

No, no, but the, but the real, the real theory that Palmer very clearly did not deny is that the moon, he didn't say the moon wasn't made of cheese. Jeez, I knew you were going to go to cheese. Yeah, well, hopefully we'll have Palmer on the show soon. We're able to press him on the moon landing further, get to the bottom of it, see how deep the rabbit hole really goes. But we have our first guests coming in the stream. Welcome to the stream. Jeff, how you doing? Hey, guys. Great to be back. Thanks for me. It's great to have you. For some reason, I'm missing it. Let me see.

John's not getting audio. Oh. Are we getting? Are we getting? I'm not getting anything right now. No. Jeff, I got you loud and clear. How are you doing?

You had a busy, busy. We haven't put up a traded graphic for you and the team yet. And I'm almost surprised. I really should publish an address. You know, I think they keep sending to the wrong spot. So that's okay. Yeah, what's going on? What's going on? Give it just give us the update since the last time you've been on the show I was checking the checking it in three months ago. We chatted and actually the question of the day was like what's going on with Zuck? What's going on with Lama for?

You know, where's this going and you know, I don't know not sure if Zuck is a follower of the show, but like you know, I did go back and I said I wouldn't bet against Zuck at a hundred billion dollars of free cash flow for a year and you know, I think that's panning out to be pretty true So yeah that was a great prediction How did you react? Did you catch the news this morning That first hit threads and then it was being shared over on X as well Around the new data centers Listen I mean you know it's hard to ignore a giant blue box on top of Manhattan You know it's like pretty freaking epic you know the technology pros love to see it

It's a good graphic right it is yeah very really great I think yeah that was great visualization I guess the the the The other question is, yeah, just like, what was your reaction to the windsurf news? We were chopping up on it. Did you go through the emotional roller coaster? Did you never lose faith?

What is it? I'm super excited to see what's, yeah, I'm super excited to see what Scott has to share here at a few minutes. Yeah, I mean, you know, obviously all kinds of weird distortions in the market from, you know, kind of former FTC policy, obviously hope that gets like cleared up quickly.

Yeah. I think it's a big get for cognition. I think it makes a ton of sense that kind of needed like a whole in that race. And, you know, while yes, the gentic coding is according to the long-term play here, like, you know, you want to, you can't go straight to streaming. You kind of want to start with the DVDs, you know? And so with cognition picking up windsurf, I think they're kind of buying that DVD business and can allow them really leapfrog to the age and stuff in the future. So it makes sense. It's excited to see what they build. Okay. The, like, where we left it as like the potential

risk of these like sort of zombie go-ship. aqua hire situations is that if a deal happens and we get kind of the bad ending where there's 80% of the workforce, 90% of the workforce, couple hundred startup employees who've been working hard for maybe a year and they don't get a good outcome and they're not happy about it. It could have a chilling effect on startup hiring and those folks could wind up just saying, hey, I'd rather just a stable bet in big tech as opposed to to a lottery ticket that even if the numbers hit, I might not be able to cash it in. And so my question for you, you have to, you compete with hiring people from meta.

The question I have is do some of these later stage or even, you know, big tech companies themselves start using that as a recruiting tactic to be like, look, like, you know, it's very possible that this company gets acquired in the next year and it's unclear, you know, I mean, they already do with like these RSUs are liquid. like they'll just show up in your account you can just cash them in but but what is your take do you think it makes it harder for you to pull people over from big tech into the startup world i think you know the true believers in startups you know are oftentimes you know yes they're buying a lottery ticket they sort of understand that but ultimately you know the analogy i think of is uh ships in harbor are

safe but that's not what ships are made for and i think like you know the best early stage founders and hires just like can't uh they have to live a certain way you know they kind of have to hit the high c's and see what they're made of um you know that being said like i think obviously as startup start to scale and they're hiring the 20th person the 50th person the 100th person the 400th person like that math really starts to make a lot of make a lot of of a difference and yeah absolutely i totally believe that the recruiters you know at the big tech companies are already weaponizing this to bring people in the door so yeah um um What about the, I want to know more about how you're seeing the hyperscalers pick different parts of the stack to plug in as like, as they build out like the AWS dashboard.

Because it feels like with like I wouldn't have necessarily expected like IDEs to be one of the places where potentially like AWS needs a play. they have Microsoft Azure has co-pilot now Google what was the one that they launched that was like jewels Jules but now they also have the windsurf team or some of them and like they might launch something that's that looks like a piece of software that's not at the API level above the API level what what other categories of like AI tooling wrappers that type of stuff do you think big tech is looking at or What do you think they will build internally? I feel like you have some experience here. Exactly where the value capture ends up landing is a big open question.

Everybody's nervous. You know, the SaaS companies in the middle are nervous. I think also the model labs are also pretty nervous about this. You know, nobody at this point wants to like have any two principles of a stance. You know, they'd rather have sort of an egg in every basket. And however it hatches, they'll come out on top. You know, I think that like obviously, yes, like coding has emerged. of the main, one of the largest use cases of AI today.

And it makes a lot of sense. It's a highly deterministic, highly controlled environment. It sort of makes sense that people who are using these tools at the edge also are the ones applying them to more software. And so it's a great use case for AI. Retrospective is sort of obvious, I think that like it was going to be a really big deal. You know, where the value capture really shakes out of the long term is anyone's to say. But I think like, you know, you can in some sense, you'll never regret owning the top of

the funnel. and having a direct relationship with an end user and being in the default in a given category, like that's Lindy. That goes back, you know, a millennia, right? You want to be the default. You want to control the direct relationship with the end buyer and you want to own the top of the funnel. And so in that way, like, you know, you may be pretty bullish about your models, but does that mean you shouldn't have an IDE play? Probably not. You probably still want an IDE play because, you know, you're not going to, you're not going to bet the farm on the models of winning the value capture at the end of the day. So.

Yeah, how bright is the line between engineer, AI engineer and AI researcher right now? Because it feels like the original narrative around a lot of the trade deals was like AI researchers can get a $500 million training run unstuck, and that can immediately unlock billions of dollars of value, save you tons of money on inference, like the math just works out so, so clearly. I feel like we've always had this divide between, I mean, to some degree, we've had a divide between like DevOps and product engineering, but the bigger, brighter lines have always

been between like engineering and sales or engineering and operations. But is there a new dividing line between like who's an AI researcher versus who's an AI engineer? And are companies like gaming that yet with like, I always see like the member of technical staff and I don't really know what that means. I assume if you work at open AI, you're smart and can do a lot of stuff. But like how niche is the skill set and how much of a dividing line is that? I think the skill set's still quite different. You know, if you're working at a large lab on a research team, you really are concerned

about primarily training, whether pre-mid or post training, you know, you're primarily looking at loss curves. You're primarily thinking about, you know, what benchmarks you're going to be exceeding at. you're thinking about what data sources you can capture to continue to train and fine tune on. You're experimenting with new approaches to reinforcement learning or other to like try to, you know, to peek out incremental gains and beat out your competitors. If you're an AI engineer, you're really thinking about like, how do I apply GPT4 to legal? And it's really kind of a different shape of both like skills and also folk eye and obsession.

So you know, it's not to say that like in the limit, like those, these things won't sort of converge or won't merge or some degree, but like in today, there's just a pretty bright line between the two. Yeah, what about the, I guess the question is like, deep mind seems very different from the Lama organization in the sense that like the Gemini models are truly frontier. And but the problem with Google's AI strategy feels like it's on the product side where not that many people

are downloading the Gemini app or a lot of people are. It's like millions and billions of hundreds of millions of people. But like, you know, market share on chat apps and like who has it in their home row? Like chat GPT is so successful, kids just call a chat. And Gemini is not really at that level yet. And so.

Jammy. Yeah. The question is like, is like the problem that Google's trying to solve feels like a different problem from the problem that Facebook is trying to solve. And the question is, can you acquire and acquire talent that actually solves that problem? Or is there some sort of like,

underlying structural problem of like how big Google is that is actually slowing down product development. My fear is that like you get some great product engineers in, but then you're still hamstrung by Google's scale, Google's HR department, their legal department, how they think about, oh, well, like we can't launch this unless it's internationalized on day one because we're Google. And so all of a sudden you have these great people who've been able to like go zero to one on a product, get it really viral and like create a product that like people love but they can't do that within the confines of Google so yeah what do you think about that I mean the the potentially more specific question is are you betting on Google plus windsurf or or cognition plus windsurf if they're

going after the same you know developer sort of engagement right if these if these you know if the products effectively converge yeah yeah I mean like Law, the idea that you ship your org chart remains quite stable and true. And you can kind of take that even one step back, which is like you ship your culture as an organization. Obviously the org chart is one manifestation of your culture. You know, I think that if Google leadership does not give these this new windsurf or half windsurf team, like a really long leash and a ton of autonomy, like, you know, there's going to be some level of like a, you know, immunore response and they're going to throw them back

up again. I think you really have to give those folks a long leash and that has to come through the top, it has to come from the top, right? It has to be, you know, either founder or C-suite level where they're getting the green flag to really run hard and ignore stuff like internationalization. And, you know, maybe you stuff to get the legal sign off, but like you get a dedicated team to legal people, you know, at your beck and call to unblock you whenever you need to. Yeah. Yeah, I want too early to, you know, bet on the horses here. So I'm not sure I can bet on the I mean even even like the like the ADA rules like accessibility rules like when you're a startup you move pretty quickly and you're still you still have to do a lot

of the accessibility work but if you're like 90% there it's like if you mess up and the screen reader breaks on one page you're like looking at like a $5,000 settlement to just say hey sorry like we messed up like one person couldn't use this and yeah we feel bad and we paid you and we're good but if you're Google it's like there's going to be an army of lawyers who are like Like, how can we squeeze them on this, get them to settle? It's just more economic power against that. And that just naturally slows things down.

Yeah, it's very interesting. How are you, what are you expecting out of open source broadly, open source models broadly in the next couple months? We saw Open AI delayed their launch, just basically saying, like, the takeaway was effectively not quite ready, need a bit more time, want to ship something that we're super proud of. At the same time today, there was some reporting that, and unclear if it's true yet, but reporting that says maybe Lama will shift away from open source in general. So I'm curious, generally excited for Open AI's open source model,

but what are you thinking? Yeah, it's a great question. I mean, China obviously continues to bring the heat on open open source, you know, regardless what we think of the CCCP and their motivations, like just yesterday over the weekend, the KMEA model came out, it's already doing incredibly well on benchmarks, a bunch of developers and founders that I know are pretty excited about that model. And so I think that like at the end of the day, like, you know, if there is some belief that like if you have a very good model, that it could sort of run away and eat an entire market, you know, if so facto, you're fighting against everybody else who doesn't

want you to be able to do that. And so I do think that like to some degree the margins will be competed away. I think that more things will be open source in the future. And I think that also, you know, if you think about the workloads, we don't use super computers to write our email. We just need basic at home stuff. It works just fine. And the same models can, you know, same idea can be extended here. You know, while the frontier models are going to be developed, you know, kind of developing and figuring out new science and hopefully letting us don't die, right? We'll see. I think that, you know, So for a lot of like business use cases and consumer applications, honestly, the intelligence bar is just like not that high. And the capability overhang that's already in the models today continues to be quite large as well.

I mean, there's a lot of, you know, people joke there's $100 million inside your laptop. You just to figure out how to unlock it. Well, it's a billion dollars inside of these model weights at least. And, you know, we've got to go unlock it. Yeah. What's your like temperature check on just like overall progress stagnation? Like are we, are you feeling the acceleration? Are you feeling a deceleration?

Dwork Hesch, last week, updated his timelines, kind of pushed them out. Still very aggressive timelines. But what was your reaction to that? It feels like I'm seeing a few memes about like, no one knows how to scale RL. Or like, you know, yes, we're seeing impressive stuff on Arc AGI from GROC 4.

But keep in mind, we went from like 7% to 14%. And this is a test that kids can do. And so it feels like everyone's saying, like, we need new research, we need new breakthroughs, we need new paradigms. what's your overall temp check on timelines and just like yeah i mean listen i think that like ai continues to be really spiky and it's really hard to intuit where it's strong and where it's weak and it's

you know we wanted to be strong in all the ways that human intelligence is strong we also wanted to be strong and all the ways that human intelligence is weak you know sort of project all of our hopes and fears and dreams like onto these things um and you know i think in many cases are still not there um just today uh chroma released a technical report um the topic of context rot and And so the question is basically like, okay, this model's got a million tokens, but does it? Like what can you actually do with those million tokens? Needle and a haystack, certainly one benchmark, but we demonstrate across the sweep of other approaches that actually these models, like they can start to fall apart really early, like way earlier

than you might think. You might see reasoning performance drop off even around like 10,000 tokens or earlier. And 10,000 tokens is like not that much. And so, you know, what I don't, you know, this what I want as a builder is I don't want a model that has a 10 million token context window, but kind of maybe sort of work sometimes. Like I want a model that has 60,000 tokens, but is perfect at paying attention to that model, to that context, and perfect at reasoning over that context. And so, you know, we hope that this report will both help developers understand what's possible to build today. But we'll also create a new set of benchmarks to the

model labs who care about because I think this is ultimately what people who are building care about. Okay. So I mean, that seems like victory left for you. Give me the update on Chroma, Ragh, and, you know, because it's it. Yeah, I mean, just to kind of set the base case, like, there was a lot of like, oh, like, oh, Rag's going to get one shot by just huge context windows. I saw a million tokens and it was like, that's a lot of stuff. I feel like I could just stuff everything in there. And then I was talking to Dorkesh about can we go even larger?

Can we get to a billion token context window? And, and he was making some of those points, but he was also just saying like the like the inefficiency. Yeah, the inefficiency, like it scales quadratically. And so just getting to a billion tokens is not a thousand X harder. It's like a billion X harder or something like that. But give me the update on like Rag as a research effort, what Chrome is doing in terms of a product. And then some of the actual use cases, when this works, where this breaks down, like how it fits in the overall puzzle.

Yeah, the big question has been, is long context all you need or not? And, you know, maybe it will be something. So I don't have a time machine, I've not been in the future, but I don't care about someday I care about now. And I care about the community developers that we serve and giving them good information so they can really reason about what is this stuff, what is it useful for, how can I mix it together to create value? That's what we really care about.

And so I mean, the research was not really commercially motivated, right? I think no good research is commercially motivated. You have to go in with just like a question and, you know, a thesis and you'll just see what happens. Like you can't go into it with a bias. Yeah. And I think really, you know, the, bias from us came from intuition from us building stuff.

We noticed that actually once models start crossing these certain like thresholds, stuff really starts falling apart. And this is what you talk to anybody building in the space. They'll tell you this firsthand. This is their intuition as well. Yeah, like a million tokens, maybe, but like it really starts to fall apart after a certain number of tokens. And so we wanted to like really try to quantify that and reason about that and

put numbers around that. And so you start to think about like, what are the solutions there? Well, one solution, solution certainly is to use retrieval. Obviously, you know, we are biased. in that way, we think Chrome is a great tool for that. We're also seeing increasingly people use re-ranking in the loop. We're also increasingly seeing people take a large context window, say like 10,000 or 100,000 tokens and breaking it into mini small LLM calls because the fewer the context, the better the model can reason.

And so that process of doing sort of a map reduce, so like splitting it into many pieces. And then having these like huge army of parallel small, small, fast, cheap LLMs, like process of that context. is also, I think, emergingly a best pattern, a best practice. But, you know, it's still early. I think that, like, we didn't really want to go into the technical report either with, like, hear all the answer, and we don't know all the answers. We want to motivate, like, here's the problem as we see it. Yeah.

Well, speaking of other, like, research and technical reports, what was your interpretation of the meter report that suggested that code tools were, like Cursor and WinSurf were actually potentially slowing down a set of, of developers. It wasn't a huge study, but it seemed like a shocking result in the sense that it was, people were expecting a 20% increase and they got a 20% decrease roughly. And one of the developers who was actually in the study chimed in as well and was like, I think I know what's going on. I'm like leaning on this tool too much. I'm doing a lot of waiting for stuff. And so maybe some of this just naturally is cured by speed, but would love your take on that report

if you read it. I mean, we as society are going to figure this out the hard way. We're to figure out like how much of our sort of reasoning should we externalize to AI and how much of that reasoning that we then have to integrate to process what it thinks, right? And there's probably also, there's also a news over the weekend about, you know, open AI making you dumber or chat to be making you dumber and kind of headlines like this. And of course, the exact claims you always want to dig under the hood and look at the actual study design and their actual claims versus the salacious headline. But I think it just speaks to how early all this stuff is. Obviously there's like a ton of excitement, people wanted to change the world. And, you know, I think exactly how it gets integrated

into our workflows over the medium and long term. Like, you know, it's the classic thing where like over the next year, it probably won't look like that much, but over the next 10 years, it's going to look totally different. And so, yeah, we'll just wait 10 years and see. But yeah. Yeah, talk about just condensing down information in the context of, of Rags specifically, but also just the other, the other techniques for this. What I'm interested in is like, Andre Carpathie recently was kind of thinking through what the future of

reinforcement learning could look like. And he draws on this very interesting story that I think most people will be familiar with, which was that for a long time, if you went to any LLM and said how many how many incidences of the letter are in the word strawberry,

it would get confused and it would give you the wrong number. And this was because of tokenization. Each piece of the word is broken. down so we can't really see the letters and so the solution was that they they kind of baked in some sort of like system prompt apparently that said yeah if a user asks you to count letters split it into individual letters and iterate through it one at a time and then you just kind of like figured out the cheat code for that particular type of problem the problem of course then is that like

humanity's job is unbounded and there's a billion different versions of that that come up all the time in the context of work and like that's where you have all these little edge case failure modes and that's probably why you know I still have to book my own flights or something or you need a human to book your flights because using all that stuff there's just too many edge cases so his his solution is like we need to develop a reinforcement learning paradigm that goes and finds those hard one lessons and bakes them down and saves them and that feels like something like compressing of information because you're not just going to want to stuff all that into the context window again you're going to run into that problem.

So just talk me about your reaction to Carpathie's post and then just kind of how, how RAG might interface with the next models, whether on the training side or on the inference side. Yeah, for sure. I mean, I think learnings from the system running can be integrated both into the data systems that underwrite that system can also be integrated into the weights. Now whether that's through RL or different means is sort of going to be dependent on the use case. One way that we've been thinking about it is we're calling this the inner loop and the

the outer loop of context engineering. So if your context needs to be tuned to do a good job, context fraud is real and motivates the need for context engineering. And this is the job that many application developers are doing, have been doing now for years, is like solving that problem of what should be at the context window right now.

That's the inner loop. The outer loop is how do you design a system that will get better at the job of the inner loop over time? So how do you capture signal from your users? How do you capture feedback from agents? How do you capture all that data? How do you analyze all that data? And then how do you bring that data back into that interloop problem?

That could be obviously number one, massaging and changing the knowledge and data your model has access to, as known as Retrieve-LGabinet Generation. Or it could also be applying it to weights in different many stages of the pipeline, including the LLM itself, the embedding model, Rerankers, all the above. And so, I mean, this concept, we just sort of put out,

like a week ago we gave a little short a short kind of conference at ramps office in new York on context engineering NYC let's hear the ramp listen you got to do it you got to do it and uh and uh and this is the first time i've really seen this posit in such a clear way and so you know okay we don't have all the answers but i think this is the question people will come to ask in the future is like not only how do we build a system which works today but how do we build a system that gets better over time automatically. And that is like the outer loop of context engineering. I want to get your, how you're thinking about GROC last week was an intense week

from everything from the fiasco. I think it was on Tuesday with the GROC bot just going wild. Maybe it brought more attention to the launch Wednesday, which was extremely impressive. But then later in the week, you know, people were realizing that like the reasoning model was or like part of the kind of reasoning loop was like kind of making sure that it understood the boss man's views by, you know, what is, what is Elon? So my question. Find the coverage and then reinforcing that wrongly. Yeah.

So as I went into the weekend, I was thinking this will be interesting to see how GROC can do in the enterprise. And then this morning they announced like a $200 million deal with the government. So I think that's a good stamp of approval. but I'm curious, like, kind of what insights you have around, you know, some of the, basically, like, larger potential customers and how they're even thinking about model selection for, for, you know, different products and applications. Yeah, you know, I think you should probably wait. I think actually, again, ramp plug has, like, the graph of, like, you know,

anthropic and chat GPT or anthropic and opening eye revenue growth. You know, let's wait to see when Grohawk makes a dent in that. That's not to say they will or they won't. I don't know. You know, there are these headwinds that you're talking about, which is, you know, you could either see as a feature or a bug depending on which way you'd look at it.

I mean, you know, there's things like, there's things that are not like. It's kind of hard to predict the future here. I guess what I want to know is like, what is the flip side? Maybe we should just talk to ARA at Ramp about this, but what's the flip side of that chart? We know who the sellers are,

Open AI, Anthropic, Gemini, and then Grock, and there's, like kind of a long tail. But who are the buyers? Because I see individual like prosumer, knowledge retriever, I would pay $200 for a better Google types. Yeah. And one of them. Then there are the developers who are paying for developer tools. But then what is like the third bucket of like buyers for tokens right now? It seems like it's a lot of companies with like kind of point solutions, little I'm stuffing an LLM in my enterprise SaaS, speeding something, up cleaning up some data but do you have any insight into like kind of what's the third wave

that's coming that everyone listening to this should start investing in now I'm just kidding I think you're right that a lot of the spend while a lot of the spend is consumers you know a lot of the spend is also business enterprises they're using it for really boring stuff process automation broadly you know those buyers you should expect to be like way more conservative about like the tool they pick you You know, the adage of he never got fired for hiring IBM definitely also applies here. And so sort of reasoning about like who is the IBM of this space and why I think will like help you determine where that spend is going to go. Yeah. That's a great question because from a from like a from like a being on the frontier as a brand, I would say open AI.

But then from like a, you know, scalable infrastructure, I would say GCP and. Gemini, but then from like a model agnosticism view, I would say Microsoft. It's a tough question. I don't know if the IBM has emerged. Maybe you have a strong opinion. Maybe Jordy does. But overall, I mean, great, great catching up with you as always. Yeah.

Anything else, Jordy? Now congratulations on the launch of the paper. Yeah. I mean, very exciting results. So thanks for, thanks for funding it. Good to see it. Have a great response. We'll talk to you soon.

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But she's into this stuff. She's not just hanging out. And the livery was absolutely fantastic. So just to give everyone some context, so we have Scott Wu from Cognition and Jeff Wang from windsurf joining any minute now where the studio crew is getting everybody set up. We are ready whenever. Bring them in. 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, nothing too much. Jeff and I, honestly, we both haven't really slept.

Okay. So go easy on us. Well, you had a lot of people to take care of. And honestly, when, you know, we heard the news, you know, a few minutes before we went live. And we were fist pumping here in the studio because it's such a fantastic outcome. And 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 high level. what's actually the partnership look like what do you like how would you describe it in your own words of like what's actually happening yeah I mean this is a this is a real acquisition okay we are being acquired by cognition okay and you know 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 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. Yeah. That's what we put that together just on the show, seeing the announcement.

It's like you take this incredible 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 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, WinSurf is really focused on the agentic IDE. And I think there's a lot of the kind of things that play in there all the way down again to the kind of the fit of 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 Devon. 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 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 over focus on software engineers because it's just a lot of we are and how we think about. And in particular, kind of just like these like product capabilities things, whereas I think on the windsurf 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, et cetera. And, and yeah, just turned out to be a really, really great fit. Yeah. Jeff, Friday, end of day, did you think you would be running a process so quickly? I know, you know, the obvious move would just be, you know, continue 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 were also balancing, you were all of a sudden managing a team of hundreds of people that I probably all 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 how to 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's going to talk through a lot. But that was a, it was really, it's pretty dramatic.

Scott, but it was cool. 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. The way that we really make this is 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 it. 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. Yeah. And you know what it's crazy. What is crazy. Like we talked pretty late on Friday night 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. And we're really excited to build that out together. How is the team feeling right now? I imagine this is the craziest 48 hours of their career.

Give us a preview of the slack emojis that are ripping right now. Actually, we announced it at another all hands. Probably all hands. Then we put another Monday all hands. And very, very different. They're like it couldn't possibly get worse. So it's only up. 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 sit at. And I think, 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,

like he's done something really incredible and aggressive. Like, 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 how, like, 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 made the decision to go 100% partners back in February. The thing about a partner channel kind of 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, a testament to the caliber of the team, which was one of the major disappointments Friday,

is if you were on the team 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, I'm just really happy for everyone involved. Yeah. And now, sorry. Yeah. I was just to say, you know, now we're all one big team and it's I mean we're kicking it into another gear I think we're all so amped up to to take this and just go you know we're gonna go full speed basically for for the next while 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 yeah we have a lot to figure out but but yeah we're maybe get some sleep first getting to the point there's 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 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 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? Are we not going to be made? It was we've been through a lot. And I think it's just the start of things. 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? 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'll have a lot more announcements soon. Thanks for having us. Amazing, guys.

Great work. Cheers. to talk to you soon. Congrats. Bye. And next up, we have Carl Pei. No, not yet. One second.

That is amazing. Yeah, what a great story. Absolute dogs. Absolute dogs. That is the perfect match. Cemented in SV lore. Tech lore, for sure, for sure. Didn't know, I mean, I knew Scott could fundraise.

Yeah. I didn't know he was this kind of, this caliber of deals guy. Absolutely dog. Absolutely dog. Will we read through some timeline? What else we got? Figma has such a homey feeling. I spend all day in and I really enjoy it.

It feels cozy, safe, good to come back to. Shout out, Zach. Giving Figma a little shout out. Let's bring in our first studio walk-in. First studio walk-in. Let's go. Welcome to the stream, Carl. How are you doing?

Welcome. This is fun. There we go. How are you doing? It's great to have you here. We haven't done this much before. No, we've had a few people in studio, done a few, usually when we're in person, we're on the road, but good to have you come here.

Would you might kick us off with the introduction on yourself, the company? Yeah, my name is Carl. I have a company called Nothing. We're the only new smartphone company to have emerged in the last 10 years. I felt like tech got really boring. I was a big tech fan. I got the latest iPhones all the time. I sat up to watch the keynote.

I was based in Europe, so the time zone wasn't always the best. But in the recent like five years, I haven't done that anymore. Like every iteration is pretty much the same as a previous one. And I wanted to do something about it. So what did you do to spice it up? What was the first feature and then walk me through all the other feature? Please, boy, I want to see. So we're in a very big industry, right?

Like 1.2 billion smartphones are sold every year. So we're not trying to reimagine the category. We're trying to find our niche. So we started with industrial designs. So if you look at our products, they look pretty different. Totally. Before actually starting to make products,

we made a design book. We took inspiration from movies, from architecture, from furniture design, and we created this little mood board. And then we based all our designs on that. So if you look at our different products, these are our headphones. This is a smartphone.

You can immediately tell, even if you don't see the logo, it's from the same company. Totally. Yeah. So design is how we started. If you ask our users, why they buy our products, design is number one reason. And then lately, we've been working more on the software side.

It is funny. A cell phone should be the ultimate personal accessory, yet the, but yet they've all converged onto the same exact form factor. It's so funny because John and I have the same. Exactly same phone. And we get confused on. And we get mixed up all the time. I grab it.

He grabs mine. Yeah. I mean, how much do you think we are at like the end of history for differentiating on like quantitative specs? Because for a long time, it was like, okay, I need to go with this one because it has just a faster processor. But that kind of disappeared. And then there was software lock in. You want the blue bubbles or whatever. But if we truly get to the end, then we're going to get it like every watch tells the time the same.

People spend a lot of money on certain watches that say something about them, right? Same thing with cars. But what's your view on like just staying on the frontier? How stagnant is the frontier? We're pretty much at the end. You think so. We're not all have the same suppliers. We buy the same screen, screen, same processor, same battery.

And you don't think that there's going to be any sort of like crazy breakthrough where, like this happened with the Apple Vision Pro where, you know, Mark Zuckerberg was certainly like doing everything to stay on the frontier VR headsets. And then Apple allegedly does this crazy thing with their supplier where they're like, you know that thing that you're making in the bench top that costs like thousands of dollars for this screen with this pixel density? Let's just pull this forward and just like eat that cost to just leapfrog everyone and have the best screen. Now they made a bunch of other mistakes so the product didn't take off. But they at least nailed it on the screen front.

Everyone agrees that Apple Vision Pro has like the best like resolution at least of the modern VR headsets. So you don't think that there'll be like a, Oh, wow, the next iPhone has twice the battery light. They figured out something crazy. Not anytime soon. And I would probably say that the first phase of the smartphone wars are over. And Apple and Google One, we have the biggest platforms.

iOS has like a billion users. Android has 3 billion. But I believe that the next war is just beginning to happen. And that's going to be all about reimagining the operating system. The previous generation operating systems are very mature already. But now with AI technology, I think we can build something really different. So yeah, how are you, how are you thinking about partnerships? I mean, John, John's probably said this 200 times on the show,

but all he wants is better transcription. Oh, yeah. I can say, it's simple. Oh, you know what we did? I don't know if the people there can see it, but. Hold it up. Hold it up. If you hold this.

Oh, wow. Now we're actually recording this meeting. Okay. Okay. Oh, you see the waveform there. You see the way form. You see the little red light linking. That's a nice text.

And after the meeting, you can just have AI summarize the notes. And my question is, is that using transformer based transcription AI or is it using the old thing that gets every other word wrong? We're using a model with whisper. I think we're using Whisper plus Gemini. Okay, so yeah, it's gonna be fantastic. Amazing. And for some reason, no one's thought to implement that in the old stuff. And it's getting to a point where I'm like deeply frustrated with it. Because my standard workflow for I need to send someone a text message this long is I open up the chat GPT app. I click the whisper button. I talk to it. Then I copy it. Then I then I paste

it into my into my text message box because I don't trust the standard transcription in iOS by default. It's very, very frustrating. Anyway, I want to talk about the second smartphone war that's coming. Who are going to, who's going to be in that war? It feels like Apple and Google are going to continue to compete. You're going to be there. It feels like Johnny Ive and Sam Altman and the opening I team want to play in there. There's probably going to be other folks. I feel like they, in a lot of the kind of teaser content, it's really around saying, like, this is an additional device in your stack. They're not going as far as to say we're going to fully replace the phone. Yeah, I guess why not just do try and do like an add-on or like a fourth device, third device?

I mean, most Apple people have like Apple watches, phones, the iPad, the computer, you know. For me, like the smartphone is one of the best devices, especially for applied AI. Yeah. Because it's got all the distribution. 1.2 billion our soul every year. We have it in our pockets every day. We charge it every day. We use it for 4 to 6 hours every day.

It's got the distribution, but it also has the data. We do so much on our phones. So if we're going to build a really intelligent operating system, we need the distribution scale, but also the depth of data to create a really personalized experience for each consumer. I do believe that in the next 10 years, we will all be carrying another sensor as well, because sometimes the phone is in our pocket.

and we need another sensor to capture data for us. I don't believe it's going to happen that quickly, though. Other sensors, glasses, something we've been debating on the show. Could be glasses. One of the challenges, though, is like you're walking around, a lot of these, you know, the meta ray bands are like actual glasses, sunglasses. Are people going to be carrying multiple glasses that they're using differently throughout the day?

There's a lot of questions. I don't know what the form factor is going to be. It might be glasses. It might be a pin. It might be a necklace. Yeah. But I'm not super bullish that it's going to come in the next two, three years. What do you think of the idea of...

Which is a challenge, to be clear, if you're a seed stage company and you need to generate traction in sales now. So to pick a new form factor, you guys can almost from your position be like, well, we have the supply chain. We know we can build hardware. We can, in some ways, kind of see what, how this next device evolves. Exactly. We built this machine, right?

Because making hardware is very tough, especially smartphones. like from having an idea to actually shipping the products across like 40 countries servicing the consumer it's a machine building the brand building the fan base so I think whenever a new form factor comes out it's quite easy for us to quickly follow and have distribution worldwide well what do you think about putting a camera on headphones we've seen like patents of other companies doing it I'm just not sure what we would use it for it seems like there it seems like meta ray bands are like we want a camera on your face and we will give you

headphones for free via speakers that you can kind of listen on someone's call but for the most part it's so it's so close and so localized that if someone's taking a call on the meta ray bands back there we won't really hear what the other person saying and then Apple I think is the company you're referring you're like alluding to potentially has a patent and people have been kind of rumoring that the next version of AirPods Pro might have a camera on there. And so then you could ask Siri, take a picture of that, tell me what it is. Are you bullish on the idea of visual intelligence?

Because when I've walked around with the meta-ray bands, I like having an LLM at my fingertips, but I'm very rarely actually saying, what is this can? Because I can look at it and it says Yerba Mata. It says Mardiina. It says Mango King-Kilat. I don't need Naya to do that. What I do need NEI to do on my glasses is tell me what's the history of Yorba Matae? And I could just ask that without taking a picture.

I can give it the, like I'll be walking around and some idea will pop it in my head and I'll be like, I need to know the history of the state of California. Tell me when it was founded. Just give me the data. And it's nice to have an LLM at my fingertips, but I don't actually need the visual intelligence. I see it on my phone. I have the new button where I can pull out visual intelligence. I'm not a daily active user of any visual intelligence project, but what are you?

Are you bullish on it generally? Long-term, I'm bullish. I don't know exactly how it's going to play out. But for your use case today, we already have a chat-t-votee voice integration in our earbuds. So if you connect these headphones to our phone, you can just click a button to make a phone call with chat-tip-te-voice. Yeah, that seems good enough. Yeah, good enough for now. Yeah.

Is it, do you think the technology industry broadly just so badly wants there to be a major platform that they just talk, that in some ways? And it makes sense in the context of like Zuck, right? Zuck has spent the last decades, like basically being like, you know, very, you know, the platform layer just kind of messing with it. Yeah, it's been a hassle. It's been a hassle. So like it makes sense to invest tens of billions of dollars to try to make sure that you have a real,

you know, horse in the next platform race. But at the same time, it's, I think if you love technology and you grew up the way that I think the three of us did, you have this desire for there to be like, because it was, you would just be fun and exciting. Totally, totally. Even if you look at the phone and you're like, okay, this might be, this might be the dominant platform for the next 30 years still. Yeah.

Yeah, I'm super excited to see what the industry builds. Like we need people to try new things. For us, we're still going to be focused on the phone because I believe there's so much cool software we can just build on the phone. Yeah. Of course, we're thinking about what comes next and we're prototyping, but that's not where our main focus is. Sure. the changes to i message a uh a catalyst for you guys they they allowed like red receipts and

deliver the rcs i see it as a positive for us yeah it has to be a positive i'm curious if it was did it did it make a material difference or no because i think it's not just about the color of the text message it's not just about the read receipts it's actually about the color it's about the color the color's more important than it's way more important really and that hasn't been solved so yeah Yeah, they need to add that to the protocol. What color message do you want this to show up? And then all the Android users. There's so much social pressure of having the blue bubble.

Like my friend told me that at school, his daughter's teacher is like handing out homework through AirDrop. Yeah. And his daughter was only one who had to raise their hand and say, I don't have an iPhone. Sorry. Yeah, that's rough. Yeah, the social pressure is big. On the blue bubbles and the idea of like tech is almost a status symbol and a personal

expression. I was joking earlier that if Open AI wants to build a phone, they're going to have to contend with the blue bubble issue. They should do like gold bubbles or like the Trump phone. I think Trump was launching a phone. I'd love your take on that at some point. But, you know, is there a hierarchy of colors that you should be thinking of? Is blue intrinsically more welcoming than green? I think because of how the ecosystem has played out, you just have to go blue if you want a chance. Sure. Yeah. So we're on our phone business, we're not targeting the U.S. very strongly just because of

this reason. Like we can't see a way past the blue bubble situation. Okay. So yeah, walk me through the landscape of your non-U.S. competitors then. Who's actually in the market? What are the different markets that are interesting? Like where's the biggest opportunity? If we're talking about building the next generation operating system, I think we got to put

China aside because China will have its own ecosystem with the world. with its own players and the rest of the world will have its ecosystem. I believe you need data and distribution to be able to build the next OS. So of course the smartphone companies will be contenders like Apple, Google, Samsung, and us. There's only four smartphone players outside of China today. But then there's other companies with a lot of data as well, like meta, for instance, or Open AI. It could be any one of them. Have you ever done like a post-mortem deep dive on the Facebook phone?

I had it. Back in the day, yeah. I didn't even know it existed. Yeah. Wait, it was actually a real thing. It was real. It was built by HTC, I think. Oh, interesting.

Okay. Yeah. I think Chamath worked on that project. An interesting, like, a bit of Silicon Valley lore. But I wonder what the, like, is the lesson there differentiate more on design? Is that what you learned from that? Or is it more, like, price for performance? What are the different levers that you think you need to pull to pull something?

Probably like PMF. Yeah. Like people have certain expectations from a smartphone. Like great cameras, great battery. You can't underperform any of those things. You've got to be competitive with the latest iPhone, the latest Samsung. And then you can add your flare on top of it. But your flare cannot be significantly different from what people are used to.

Yeah. Like I believe that in the future, for instance, that apps are going to go away. There's only one app on the phone. It's the operating system. Interesting. But we can't ship a phone without any apps. Like people love their apps. So you can have a future.

but it's going to be like a step-by-step process to getting there and you got to bring the consumers along the way yeah talk to me about how do you think I can imagine we're a world in which more and more of the app apps on that you use day to day or just eaten by the operating system something like weather for example I don't love my weather app but I will open it up from time to time and there's a different scenario where I just you know transcribe what what's you know how's the weather going to be this afternoon and it just knows where I am and it just pops it up and says, you know, it's going to be 72 and sunny.

But then for other things, like, don't you think there'll be some networks that endure? Like, for example, like something like Estrava, somebody's really into running. It's hard to imagine that that just merging with the operating system. I see it slightly differently. I think broadly there's two categories of apps, like waste time apps and save time apps. Yeah. Waste time apps are more like entertainment apps. Yeah.

And the save time apps are just utility. I think the utilities are going to be really easy to replace in the beginning. But when it comes to Netflix and Spotify and those entertainment apps, it's going to take some more time. But eventually the OS will partner with apps and apps can still exist in a container just not as a separate thing you launch. Yeah, yeah, yeah, yeah. What have you learned from the history of bloatware on smartphones? I worked at a startup years ago, 15 years ago or something that was running a Siri competitor and part of their business model was getting like Blackberry to

pay them to pre-install their app and it was like a pretty good deal for Blackberry and this way in this case it was a pretty good piece of software and so it just it just obviated the need for the customer to go and click pay for $20 for this app at the same time customers have notoriously been like why do I have 75 Verizon apps on my phone and they get kind of they get kind of frustrated with that what's the good condition for that. What's the bad case and then where does it go? The smartphone market is very big. So on the lower end everybody has a ton of bloatware and I think that's okayish

for the consumer because they get a better priced product that they shouldn't afford otherwise. But if you're operating on the high end and you have a ton of bloatware then it's kind of weird because people are already paying a lot of money for your product then have ads inside of the product. That's kind of how I think about it. Yeah. What What are the key break points for phone pricing, like, internationally even? Internationally, probably around $300. Like that's the main category. Here in the US, it's very different.

It's like a barbell-shaped market where the ultra-premium takes a lot of share and the low-low-end, like burner phones, take a lot of share. Oh, interesting. How much are your burner phones in the US? I don't have the numbers, but probably like 20% of the market. Okay, wow, yeah. I meant in terms of price, like, are we talking like, $100, $150, yeah.

Oh, so really, really cheap. Interesting. How much capital would you need to deploy to be able to make a cheap phone, high-quality phone in the United States? Are we talking like- Manufacture locally? Yeah, yeah, yeah, yeah. Like, would you need like $50 billion to set up all the different-

Cap-X or OpX problem? Well, yeah, the question is like if you have to basically like not just do the assembly, but like recreate all the sub-suppliers, you start adding that up. And it gets... I don't really know. because we partner with a bunch of factories all over the world. So if we wanted to manufacture in the U.S., we wouldn't know who to go to to partner with.

We do a lot of our manufacturing in India. And there we've seen that the government has been pretty successful. I think India is now the second site in terms of volume after China. And they have incentives to, like if you manufacture locally and export locally, you get some cash back. And I think that model really works. So if the U.S. is serious about this, It's more of like the structural incentives that need to be set up for this to run.

Yeah. Interesting. What would it take to, is there anyone trying to build like a Tata nano of phones? Like something that's like smartphone level, not burner phone, but at like 75 bucks pop? They're, they already exist. They do. Yeah, yeah, yeah. Like for Africa.

Okay. Are they delivering on the promise at all? Yeah. They're doing a great job in Africa and other markets where people People need cheap phones. You can get a smartphone for like 50 bucks now. Yeah. Interesting. What about, how do you guys think about, have you integrated wallets for stable coins? Is that something that should happen at the operating system layer for a phone? I'm sure you've been. I haven't thought too much about it. For me, like there's no real use case for crypto yet.

No real use case for crypto. What about store of value, bro? We just haven't seen anything with real PMF yet. What about Bitcoin? That is PMF. Yeah, that's like one of the only things. Yeah, I get you. Yeah, you're probably not trying to sell that many phones into sanctioned countries where the citizens really want to get dollars on chain. Can you walk me through the relationship between manufacturers and telecommunications companies?

I remember, like, years ago. And this is the absolute last question because I know you've got a heart out. Oh, yeah, yeah. We've got to make time for the hit the gone. Every market is different, but in the U.S., there's basically very little relationship between brands and carriers because there's only three carriers. And they're playing a user acquisition game against each other. So their main way of acquiring users is not through selling unique hardware.

It's mainly the bundle, right? How much data do you get? Do you get free Spotify? Do you get Netflix? So for a small brand like us, there's basically no play with a carrier unless we build a groundswell of support with our community or have like really, really innovative products. I think our products are becoming more and more innovative and fresh.

but we probably need a couple more years before we have a product that's really different for the U.S. Very cool. Hit the gong and then we'll let you go. Well, do we need a number? Can you give us anything? How big is the company? How many employees have you sold? We're about 750 employees.

Wow. We're 0.2% market share globally. That's actually huge. Yeah, we've done more than a billion in revenue and we're doing a billion this year. What? Okay, okay. Okay. Okay.

Okay. Smash the gong. right behind you. Very well deserves. Give it a solid. Congratulations. And thank you so much for coming by. Really appreciate me.

This is incredible progress. Thanks so much. Great stuff. Really buried the lead there, for sure. Are we hopping straight on with Garrett? Or we got 15 minutes. I guess we got 10 minutes. Yeah.

To the next one. I want to go through. Is there anything else you want to go through? No. I like this in the how to spend it section of the Financial Times. We have a review of something we've been hunting for, which is the best hotel gyms in the world. There we go.

There we go. So if you've been to a hotel gym on Chess Day, you've probably been disappointed because many, it's hard to find a hotel with, what is it, bigger than 50 pound dumbbells. 50 pound dumbbells. And we believe, we haven't fully verified this, But we believe this is due to a market failure in the hotel gym insurance market.

Insurance market. And so I think that there are two tiers of insurance, one for like a CrossFit gym or power lifting gym that has free weights and also barbells, and you can do hang clean and clean and jerk and all that stuff. And then there's a different level of insurance underwriting for things like treadmills and bicycles

and free weights that go up to 50 pounds. And so that's why, when you're traveling, you see a lot of gyms that don't have, they won't, you can't do squats. There's a leg press machine. And so they lead on the machines because the risk of injury is lower, but the risk of gains is also lower.

So we are going to understand where you should travel because to get access to the world's best gyms. Hotel gyms are a mixed bag, even in top flight spots. Working out can be jarred, can be a jarringly subpar experience. That's right. Could not agree more. Machinery might be decades, old. The water cooler might be might date to the 80's office era should get Rora. For years

hospitality didn't invest in gyms as unlike with restaurants and spas, the gym usually doesn't bring in any extra revenue. That's an interesting dynamic I hadn't thought of. So yeah, I mean, if you put in like a nobu in your hotel, that's going to drive a ton of extra revenue, whereas your gym will not. So increasingly charge me per set with the 75 per pound. Yeah, charge me per pound. And then you've got to put the bigger weights in because like I'm going to want to lift heavy. Profit, maximizing strategy. So, but increasingly top hotels are pivoting. It's important I keep the same fitness routines as when I'm at home, says Emily Oberg,

founder of clothing label Sporty and Rich, who works out six times a week. Her favorite hotel gyms include the Ritz Club in Paris for the pool and the Il San Pietro in Positano. It has it has Alfrisco cardio equipment, outside cardio equipment, tennis courts and views. It's motivating if the space is also beautiful. Jim lighting needs to make you look and feel good while working out, says interior designer Kelly Weirschler. Acoustics should amplify without distracting. Materials should perform functionally while still feeling refined.

I couldn't agree more. Have you been to any of the proper hotels, Santa Monica Proper Gym? I haven't, no. She designed the Santa Monica proper Kelly Wersler. Yeah, there you go. Okay, so the best concept. These are awards from HTSI in the Financial Times, how to spend it. The best concept goes to Power in Ireland, a great gym chain in the lobby of the hotel.

Power, Ireland's leading boutique workout provider, has partnerships with the Dean hotels in Cork, Dublin, and Galloway, and the Mason, also in Dublin. In the gyms, there's a functional fitness area with a custom athletic rig and AstroTurf track, a lifting area, free weights, and a cardio area equipped with technology, Techno gym skill run treadmills, rowers, ski ergs, watt bike pros, and more. There are several 45-minute classes, including run and Metcon. Guests can recover afterwards in the Hyper Ice Suite, which is stocked with massage guns and foam rollers. Rooms from 200 euros. Not bad. The most scenic is at the Amman Zo in Greece. It's an Amman property, of course.

There we go. Summer escapes are all about, picturesqueath locations, seafront settings, a quaint and quiet locale, and often ancient European history. This Amon property, Jim, offers all the above. And then some. The resort has its own UNESCO protected ruins, but it's the outdoor shaded weights area. Let's give it up for hotels that have ruins.

That is the real cell, according to Tim Blakey, a personal trainer and founder of the workout at Prime Body. We go on holiday to be outside, he observes. There's a slight breeze. The sun is usually out, and you can get your nature fix while you lift weights, rooms from 1,500 euros. Also not bad.

Oh, hey, they have the proper hotel. Did you know that? This is going to be in here. The proper hotel in Santa Monica. Best for recovery. It has an immortal chamber where tech-infused lounge chairs pulse with electromagnetic fields to deliver red light therapy to reduce inflammation and combat jet lag.

There's also VO2 wax testing. Let's go. Okay, that's cool. Yeah, it's funny though when you walk into it, I mean, you're going to do a hotel gym. What are you really care? about at the end of the day John the how much weight you can throw around so and they say at the proper hotel in Santa Monica don't be surprised if you see Brian Johnson on your way out my personal

favorite hotel gym sense a Sense a porcupine creek this is Larry Ellison's basically four seasons competitor and they've done a really nice job with it okay we got to go through there's a few others, the most exotic, the best for classes, but the most exclusive. This is what I want to know about. The most exclusive hotel gym in the world, according to the Financial Times. Surin at the Emory in Knightsbridge. Guests of the All-Sweet Emery have full access to Surin, a comprehensive wellness club with only 140 vetted members. It costs 15,000 pounds per year to join. I thought you were going to say per month. The gym is small, but it has 360 degree mirrors so it feels bigger.

LA celebrity trainer, Tracy Anderson, has licensed her name to Surin. It's the only place where you can book her dance cardio workouts in the UK. Alternatively, guests can request the surround. Isn't that kind of disappointing, though, that the nicest, like the most exclusive gym in the world is 15,000 pounds a year? Like shouldn't somebody make, shouldn't somebody make like a $100,000 a month gym? I think you just designed home gyms in mega mansions. Maybe I did. With an entire team of specialists.

So you can pay the 15,000 pounds a year for a membership, or you can book a suite for 1,600 pounds per night. So maybe, I don't know, what is that? It's in pounds, so that's like 15 bucks, US or something? It is pretty funny the dynamic of, this is the most exclusive club in the world, but if you just book a hotel room, you can go to it. Yeah. That's a bit silly, but this is where it gets good. So if you book the hotel room, it's sweets only.

You book the hotel room, it's going to cost you 1,600 pounds a night. They have a weights trolley that you can request, and it brings the weights to your suite. It includes dumbbells, kettlebells, skipping ropes, yoga balls, resistance bands, and a leather gym ball. A Peloton bike can also be installed at a whim. So you can be in your room and be like, I don't want to go to the gym. Bring the weights to me. And they will bring them to you on a trolley. That is luxury.

I love it. Anyway, lots of fun in the How to Spend It section of the Financial Times. Any other news? Let's do some timeline. The other, yeah, some timeline. I like this post from Dylan Patel. He said AI Bros. When I tell them Boeing outperformed Nvidia,

META, Google, Broadcom, AMD, and Microsoft this year. I got to pull up the Boeing chart on public.com. I certainly do. So year to date up 34%. Wow. Let's give it up for a great American. Only 34%. How does that outperform Google and video meta?

I guess they all round trip because of the tariff things. Yeah, and Vita is only up 18% year to date because a lot of the election stuff started getting priced in. Yeah, yeah, yeah, yeah, totally. No, that makes a ton of sense. Well, well, we have our, we have our last of the show joining now. I'm going to let you take the intro. I will be right back. Let's do it. Can we bring in Garrett? I will say how I will say what up. How you doing? What's going on?

How's going? It's great to have you here. This is the first time, correct? Do I have an first time? First time. I'm surprised it took this long. It's great to see you. You've got some exciting news today. Hit us with a quick intro on yourself and the company and then we'll get into the news. Sweet. Yeah, my name's Garrett, CEO of Pipetream Labs. Pipeline Labs, we build the infrastructure to make autonomous logistics scale. Amazing. Give us the quick catch us up to speed on the history of the company. I know we first met back.

I think it was in 2021. You've been very busy since then. And then I want to get into what you're announcing today. Yeah. Well, likewise, man. Congrats on the show. Thank you. Studio looks sick.

Yeah. Incredible. Have to come in person next time you're around. Yeah, I got you guys. So yeah, the announcement is something we've been working on for a long time. You know, the kind of first product we were working on at Pipetream is, you know, what we see is like the fiber optic cable for autonomous logistics. How do you move a lot of things really quickly and really cheaply?

So we put underground pipes in cities and then we have these robots that go through the underground pipes and deploy orders to what we call portals, but they're like ATM-sized kiosks. It's a modular system made to be able to be retrofit, you know, whether that's into a building, an apartment building, underneath the road, and uses just standard construction methods that cities are used to using for non-invasive construction going into buildings and through public right-of-way. So we got, you know, that's something we were working on. We got that to a really good place and something that we kind of thought about a lot when

we were starting was, you know, if we're working on the fiber optic cable. We wonder if there's also going to need to be kind of like the cloud architecture for autonomous logistics. Because as you start to move things really quickly, and we see this with drones already. Like drones are like this magical, they're magic. It's incredible and they're so quick. And yet it's still taking like 15, 30 minutes sometimes. Like I had one that took 40 minutes because it's so, it's so hard to pick out of the those stores that they're picking from.

And they're picking out of the stores because those are the, you know, the closest storage areas to where the customers are. So it's kind of like an inefficient system. You have this really fast delivery method and a really slow processor to get that thing out of storage and into the drone. So that's something we thought about a lot. So, you know, me and my co-founder Cannon were a huge retail nerd. So we're always diving into Costco and Walmart and Amazon and the history.

of just logistics and retail as a whole. And what we realize is like, man, it is time. It is time for a time of logistics to scale and no one's stepping up and building the fulfillment centers that are made to rapidly dispense. So we had learned a lot, worked with a lot of partners who taught us a lot about how to run those facilities and decided, you know what, it's time to go.

So we just acquired our first rapid fulfillment center here in Austin. It's going to be what feeds the network here in Austin. And yeah, that was the other announcement. So is this, just so I'm getting it correctly, so is this set up in order to serve the, like, you know, original pipe dream infrastructure and then also traditional drone delivery as well? Yeah. So the way that we see it is if you have something at a rapid fulfillment center, the goal is how do we get it into the customer's hands as quickly as cheap? as possible. And a lot of the times that you know, you may want to move it through the pipe dream network to a closer location. You might just want to put it into a drone directly. It may be a

heavier item. It may be a bundle of items and you want to put it into a self-driving car. I think for the foreseeable future, I think it's going to be even like really load dependent as well. I think autonomous vehicles and drones are going to be kind of like the GPUs of the autonomous logistics scale up. We're going to be constantly constrained by their availability. So our goal is to be really good one at dispensing really quickly and dispensing into the right modality. And constantly figuring out what is that right modality for that address? What is the right modality for that time? and making sure that that order is getting into that right modality and getting into the person as cheaply as quickly as possible.

So what is the over the next year specifically, what delivery form factor are you most excited about? Yeah, I think the two that we're most excited about is autonomous delivery right now is still pretty cost constrained. The cost per delivery is still really high. So you're either passing it out along to the customer or you see a lot of the times it's heavily subsidized. I think especially on the drone side, that's going to come down a lot over the next year. And so that's the one that we really want to be the best at doing. We have an internal goal here at the team that we want to, by the end of next year, we want to have done the most drone deliveries of any company, which is crazy.

It's not like a super high bar right now. But I think that is a resource that's really underutilized. And is there, what is the regulatory framework that, drone deliveries are needing to happen within right now, specifically in Austin. Like I imagine peer to peer, I could just put something, you know, attach something to a drone, take it up, fly it over to a buddy's house and drop it. But then if you're trying to do this at scale, I imagine like you have to keep a lot of other things in mind. Yeah, it's right now, it's not such a straight pathway to be able to do it city by city. So each company who,

is doing the drone deliveries has to get their own regulatory clearance. And so it is like pretty big hassle. That's changing pretty rapidly. We just had the executive order to make that pathway clear up. I really think especially as you start to get more consumer demand for it. I mean, it's just if you go and look at the reviews from people who have experienced a drone delivery, it is, it's borderline a religious experience. It really changes like how you think about commerce as a whole. So I think that's going to change for the next couple years. You know, I think there's a lot of companies that have died saying drone delivery is going to scale the next two years. They've been saying that for the last like 15 years.

So it's a tough thing to time. That's why, you know, we want to get really good at drone deliveries and be really careful and just kind of learn right now, be ready for that scale and really focus on pickup as well. Pickups is a huge, um, industry. It's one that doesn't have a lot of infrastructure to it, so it's still such a bad experience, but it's still one of the fastest growing ways that people experience retail is ordering ahead and picking up, especially in grocery. So that's one where we saw the ability for us to go into grocery, make it a really, really great pickup experience. That's something that you can do right now, make really good margins on, learn. And then as a really great pickup experience,

as those autonomous methods decreasing costs specifically due to better regulation, then we'll start to add that on as we go along. Amazing. Anything else? I think that's it. Good to see you again. The last time we talked, or I mean, we talked a few times, but I interviewed Garrett like two, three years ago or something, all about how Amazon had been talking a big game about drone delivery.

And I was like, let me talk to everyone. else who's been been working in this space and it's it's a fantastically massive market that is incredibly difficult to actually get things to work and once they start working it's great so yeah I think the key thing is staying in the game finding finding a sustainable business model that's not dependent on you know dependent on adoption over a 15-year period versus a 15-month period I remember when we were when we were talking we were We're new, like, it's just such a, it's, it's one of those businesses that you just like naturally noodle on.

Like, okay, should you go to like people that are building new prefab home communities and install a bunch of pipes in the ground when they build the buildings? Or should you do some sort of boring company thing where you get really good at drilling into old, old, you know, neighborhoods? Or should you do flying or driving? Like, there's so many different modalities. So very exciting that you're kind of exploring all of them now. So congrats and good luck. Yeah, appreciate it. Thanks for having me on.

All right stuff. Yeah, we'll talk to you soon. Talk soon. Bye. All right. See you guys. In other AI acquisition news, we almost missed it because, you know, Sundar did everything he could to drown this out.

But we surfaced the post and it's about Mark Zuckerberg acquiring Play AI, poaching the entire team. And they are joining the meta super intelligence lab next week. Zuck cannot be stopped. He has the Thanos gauntlet there. They completed a deal. Who's on the, who's on the, who's on the, who's on the, The cap table? No, no, no.

It's the researchers, I guess. It's the team. I feel like we played a very big role in this meme becoming bigger, but a lot of people have run with it in different directions, and it's been amazing watching it grow like this. The Play AI group will report to Johan Shalquick. Cool name. I'm not sure I pronounce that. Who recently joined Meta from a separate voice AI startup called Sesame AI.

I remember this. That was a controversial one because Sesame is a new company, and then, you know, shouldn't losing people to Zuck already. But the entire play AI team is coming over. And I believe it's a YC company because I saw one of the YC partners posting about, hey, this is out now. Another 100 million for Gary.

The dark night, the dork night rides again. Never go up against him. Well, in other news, over the weekend, Janick Center made history as the first Italian man to win a singles title at Wimbledon. Naturally, this is according to Bezell. He celebrated with a rose gold, Rolex Daytona Oyster Flex on the wrist.

So thank you for doing the most important work. It looks absolutely fantastic. Yes. Cover of the Wall Street Journal for this, by the way. In Bloom, Italy's Yonix Center celebrates Sunday in London after his men's singles championship win over Spain's Carlos Alcaraz. I don't know if I'll tell us enough to know how to pronounce that. Poland's ego-swattec defeated blah, blah, blah, blah. And yeah, more coverage.

but he's looking happy with the trophy. I love how little attention you play to tennis, John. You know what I do follow, though? I follow hitters. I follow watches. And Jensen absolutely mugged the rest of the tech world. He really did. With one of the most insane Richard Mills.

You don't see him in a short sleeve t-shirt much. No. He took off the leather jacket for this. And this is such a come-from-behind moment Because we're talking about his, the lack of wrist game. And we've been doing risk checks on Jensen for months now. Carp was, was early and right. Carps, yeah, oh, for sure.

With the aquanaut with the orange strap. Zuck's been ramping up, putting up insane F.P. Jorns. Really, any time he steps out of the house. He has a cubitist. He's got, he's got a stack collection. And everyone was saying, even, even Jensen's, family relative, Lisa Sue over at AMD was mauging him with a Rolex we saw.

But now, never doubt, Jensen, never talked down on a future first ballot. Oh, the stocks up. Three percent of the last five days. Obviously. Obviously because of this. Obviously because of this. But this watch is really, really special. I mean, what I love about is that it's just so thin.

Like when I think Richard Mel, I think of the silhouette, the, the outline this kind of like, well, it's almost like a bowed rectangle, which I think is a very cool, unique design. I think of the skeleton. It's checking those boxes, but then it's just so thin. And it looks fantastic. And Jensen is wearing it very well. So we need to do a deep dive on because the story is crazy. It's basically this long time executive who decided he was going to make a luxury watch brand. Yes. And to actually just decide. It's easy to say I'm going to start to watch company. Yeah.

Very, much harder to, like, actually crack the code and be able to sell watches. I'm surprised some of our friends haven't started to watch companies, given how many companies they're spinning up every two seconds?

Yeah, a certain one in particular. It'll happen eventually. It'll happen eventually. The last, another post, somebody posted RIP McKinsey. You don't need a 300K consultant anymore. You can now run full competitive market analysis

using GROC4. And our friend, Bucco Capital Bloch says, I'd like to see an LLM provide regular consulting to turbocharge opioid sales, be a trusted partner for autocratic regimes, and help young people get hooked on e-cigarettes. Very negative on the consulting firms. Who speaks for them? But we got it, we got it. We got it once. Let's give a round of good work. McKinsey. The white shoe firms, they do great work. Yes, some mistakes were made, but overall, good farm team for. future PMs in big tech yeah so in other news monumental labs the has raised some money over eight million dollars most recently in a seven million

dollar seed round led by Alexis Ohanian seven seven six this is the company stone carving alert yeah they're carving stones they're carving you heard monumental labs you thought new new foundation model no AI robots can already carve stone statues entire buildings are next the stone carving startup monumental labs has raised money they have a new HQ almost 40,000 square feet in Greenpoint Brooklyn so the cool thing here so so they they are opening this new facility in greenpoint which is makes total sense to be the home of what will become the largest fine art stone fabricator in North America and possibly in the world when it opens in the fall makes so much

sense in this you know a lot of people would you know that this company was non-obvious But then if you think about what we would pay for stone statues here in the studio, and I think what a lot of people will pay. Of all the MAG7 CEOs, potentially, just hypothetically, I don't have like a mood board for that or anything. Yeah, it's not like saved on my phone. Yeah, we want to make the Mount Rush more of the Manosphere, you know. For sure that too. Yeah, yeah, yeah.

It's Mag 7 watching over the Manosphere. No, but I think, I think, you know, if they're can really crack the congratulations to the Monumental Labs team that's a very exciting company and led by Alexus Ohanian friend of the show and also he says looks like the secret is out can't wait for you all to watch because he is going to be a guest shark he's going to the upcoming season of Shark

which will be Wednesdays this fall on ABC and stream on Hulu he's gonna really have to really go shark mode because Alexis is known to just be a really nice guy really really really found a very sharky that's very funny not not not I mean uh sharp elbows I'm sure getting into deals sure you know but um but yeah he's gonna uh I mean but there's always room for yeah just offering an entrepreneur on shark tank a nice fair deal you wouldn't you know he's not going to be offering you know like can just give me 20% of top line forever yeah I mean as a personality I think you'll fit in great I think you will really add something in the show so very excited for him go check it out and final post

from Adam Singer. I was going to end on this too. The CMO of AdQuick, out of homemade, easy and measurable. It says, love seeing out of home from the new gen of tech media brands, great brands, do things online and in the real world.

Our software makes this really easy for all. And I just want to give a quick shout out to Adam for betting on us early. Yeah, it's been really helpful. When we just were two guys, two suits, and a stack of posts. We'll never forget that. And you'll go do yourself a favor

and sign up for ad quick. Yep. After you're done with that, make out of home advertising easy and measurable. Come on people. I don't even need to read it. It's really not complicated. After that, leave us a five-store review on Spotify or Apple Podcasts

or Apple Podcasts wherever you listen. And I can't wait for tomorrow. There was a couple weeks of news since last Friday. Yeah. And I'm sure there will be quite a bit more tomorrow. The other piece of news, the information launched a competitor to us and they had some technical issues. So if you know things about computers, please,

contact them yeah tell them tell them the technology brother sent you and that's our show see you tomorrow cheers goodbye have a great monday