This Week in Startups - Is OpenAI Really Worth $300B? ElevenLabs’ Series C & YC’s Funding Focus | E2079

Episode Date: February 1, 2025

Today’s show: The AI revolution is about to hit your household—Jason and Alex break down how general-purpose robots, AI-powered chicken coops, and voice clones are redefining daily life and work. They dig into OpenAI’s sky-high valuation, the surprising rise of DeepSeek’s R1 model, and why the AI cost curve is dropping at an insane pace. Plus, the latest on AI hardware, antitrust battles, and why the “No Buy 2025” trend could change how we think about consumer tech. * Timestamps: (0:00) Jason and Alex kick off the show. (3:10) Episode topics overview and fan participation (5:48) Meta's Ray-Ban smart glasses discussion (9:27) Paddle. Go to https://www.paddle.com/twist to get started with your exclusive listener fee-free period. (11:05) 11 Labs' Series C funding and voice cloning technology (18:09) Automation's impact on jobs and ethical considerations (20:05) Northwest Registered Agent. For just $39 plus state fees, Northwest will handle your complete business identity. Visit ⁠https://www.northwestregisteredagent.com/twist today. (21:22) Market trends towards sustainability and AI in smart chicken coops (27:04) Y Combinator's AI startup focus and investment considerations (29:47) Scalable Path. Get 20% off your first month at https://www.scalablepath.com/twist (31:42) AI in compliance, auditing, and personal staff replacement (35:06) AI development tools, hardware investments, and data trust issues (39:29) AI company valuations, OpenAI's revenue, and AI commoditization (51:04) AI ethics, SoftBank's strategy, and audience questions on AI hardware (59:27) Government AI funding, DOJ suit, and tech industry commoditization (1:09:21) AI advancements, consumer electronics costs, and computing hardware trends (1:12:08) Closing thoughts on technology's impact on life and teaser for next week * Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.com Check out the TWIST500: https://www.twist500.com Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Follow Alex: X: https://x.com/alex LinkedIn: ⁠https://www.linkedin.com/in/alexwilhelm * Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Thank you to our partners: (9:27) Paddle. Go to https://www.paddle.com/twist to get started with your exclusive listener fee-free period. (20:05) Northwest Registered Agent. For just $39 plus state fees, Northwest will handle your complete business identity. Visit https://www.northwestregisteredagent.com/twist today. (29:47) Scalable Path. Get 20% off your first month at https://www.scalablepath.com/twist * Great TWIST interviews: Will Guidara, Eoghan McCabe, Steve Huffman, Brian Chesky, Bob Moesta, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland * Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow TWiST: Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups Substack: https://twistartups.substack.com * Subscribe to the Founder University Podcast: https://www.youtube.com/@founderuniversity1916

You're literally going to have an optimist robot, you know, a middle class, upper middle class household, somebody who could afford a Tesla, you know, 10 years ago, like $100,000, Tesla, they're going to be able to afford to have a $500 a month robot, general purpose robot, getting those eggs, chasing away the, using the AI on that coop to know that the foxes are there, chase the foxes, grab the eggs, make scrambled eggs, make you a frittata to your specification. Wait for it. It's coming. Bring it. This week in startups is brought to you by paddle. serve software is global by default. But selling to every country is complicated. Paddle's merchant of record manages payments, sales tax, chargebacks, and refunds so you don't have to. Wherever you want to take your business, go there with Paddle. Go to paddle.com slash twist to get started with your exclusive listener fee-free period. Northwest Registered Agent. Starting your business should be simple. With Northwest Registered Agent, you can form your entire business identity in just 10 clicks and 10 minutes. From LLCs to trademarks, domains to custom websites,

they've got you covered. Get more privacy, more options, and more done. Visit Northwest Registeredagent.com slash twist today. And Scalable Path. Since 2010, Scalable Path is connected businesses with top-tier remote developers deeply vetted and ready to deliver. From JavaScript to machine learning, they've helped over 300 companies tackle big projects and scale faster. Visit scalablePath.com slash Twist for 20% off your first month.

All right, everybody, welcome back to this week in startups. Alex Wilhelm, Jason Calacanis here. Three days a week, Monday, Wednesday, Friday, or about an hour in 15 to an hour and 30 on the live stream. And then we added that down to the best 50 to 60 minutes for the podcast, for the replay crew. If you want to watch us live, just search for this week and start on YouTube. And then you can follow me, X.com slash Jason, X.com slash Alex. We go live on my X account. We also go live on LinkedIn, which has a very cool live product as well. Today is Friday, January 31st. Can you believe it? But I am super excited because I'm not as sick as I've been

the last. Literally it would be two weeks as of Monday when I got hit at the, um, Yeah, I mean, you got hit January 20th, literally at the day of the inauguration. I got hit with this influenza A and then some kind of deep lung thing. But I'm out of it now, so that's good. And the COVID outbreak at my house is over. Yeah, there you go. Well, I'm coming back to life, but man, these respiratory illnesses this winter, a lot of theories about it. I think it's just that everybody I was talking to a friend of mine, Will Barnes,

and putting aside conspiracy theories, there's a really interesting explanation. Because we all sheltered in place for a couple of years, the thinking is maybe we all had our immunity go down a little bit. And now that we're all out in the world again, doing stuff on mass in a large way. Hey, maybe things are starting to spread. But did you get it too in your household? Did you get the...

We have just had a series of colds. So there's always been one to three running noses in the house, Jason. And that has just been seemingly chronic for the last month and a half. So I don't even know if I'm sick right now because I don't recall not being slightly sick. So I'm just really excited for Sprint. I want everyone to go outside to the park and get outside of the strollers and just get out of the cabin fever a moment.

I've had enough snow. I'm glad you're going to go skiing, but here in Providence, if there was no more snow, I would be a okay with that. All right. Well, we got a lot on the docket. Let's just get started here. And for those of you who want to follow the docket, we're doing something new. This week in startups.com slash docket. You can just see the docket.

And then what we're seeing is some of the super fans, what we used to call the producers. We used to have a cool program where we let people subscribe. like on Patreon or something, and they would become, we would call them executive producers, producers, depending on the level they did. And it was never like some grand amount of money. I think it was like a low thousands of dollars a month. But what it did was, it kind of gave people permission to have fun, participate in the show. So I'd like you to participate in the show by going to this week and startups.com slash docket. And if you go there any day, you'll see the docket being gulf by the research team in real time. You get more data and you can contribute to it

by posting comments because we're using Notion, I believe. We are. Notion allows the public to post a public comment. Correct? That's how we have it set up. Absolutely. So if you're on the Twist 500 newsletter list, you'll get an email every single show day, usually about an hour to an hour and a half before we go live and people are dropping in comments. We just love the feedback. We love the interactivity. We love hearing from you. And also, Jason, you and I are two people. We're not going to see absolutely everything. So more eyes, more folks, more input. You might even call it crowdsourcing as we used to back in the day, but I love it. Yeah. And let's put a section there, stories you want to hear. So maybe at the top we could put

suggested stories, and then people could just comment there and just throw URLs in of things you want to, you know, rapid fire or, and then maybe questions, uh, startup questions. But let's review what we're going to talk about today. What's on the document? Quite a lot. First of all, 11 labs closed. It's enormous $180 million series C. We have some financial information to go through there. It's a round that I'm very excited about. A lot of commentary about DeepSeek and the Singapore-invdia connection. And if a lot of Nvidia chips are going through Singapore, we have data and a chart. Jason also soft think might be dropping an enormous new sum of money into open AI. There has been breaking news all day about tariffs. And then, of course, we have an antitrust story because it wouldn't be twist without

talking about antitrust and what the Trump administration is doing with the HPE Juniper deal and why it's a little surprising. And there was that Y Combinator. Hey, here's a bunch of, you know, they like to do their call for startups, requests for startups that we do as well. And it was basically get rid of these jobs, replace these jobs. So the static team size trend is now becoming a trend of compressed team size or consolidating teams size. And so let's make sure we put a list of our trends that we're following on the docket as well, maybe we're a link to it. And you can all see the trends that we're kind of thinking about here as we try to build a mental model of where the world is going. And I know that we were talking about the meta smart glasses.

And I saw there was some data about that. Maybe we just start there. The news here is that Derry and all hands over at meta that leaked because they always do. Mark Zuckerberg unveiled that they sold a million of the Rayban smart glasses, and the commentary inside the company was, how do we get from one to two, one to five? But Jason, we discussed on the show that, you know, reality labs and meta's overall VR push has been highly expensive and some people say wasteful, but they do seem to have found a consumer hit in these Raybound glasses. And to me, that does show that, one, Snap was right, a little early, but was correct

with spectacles, and that also we're going to see a multi-form factor face computer world, Because if you think about where Apple's going with the Vision Pro compared to consumer VR, compared to this, all very different, all good services for AI and kind of consumer tooling. So I'm shocked it was that high. It's a lot of money. Yeah. And, you know, selling something that is under $500, under $400, under $300, every time you come down like $100, like a $100,000, like, a hundred bucks there, consumption goes up. People will try stuff. And let's face it, these VR glasses have always been like a Christmas present level, platform level purchase.

Yeah. Which makes it, you know, for most Americans, I usually put it at when it gets to a week's salary or something like that, you're really inconsidered territory. So if, you know, average person makes, you know, the United States, whatever, a thousand bucks a week, you start looking at that, you know, when things cost a thousand bucks, you got to like, hey, well, it's a whole week salary, whether it's a car payment or whatever. So then we go back down to the next level. When it's a day's salary, when it's $100, $200,000, people can get frisky. Ah, you know, I work today. Now I work five hours as a door-dash driver. I bought these $100 glasses or $200 glasses, people feel a little bit different about it.

So I think they're, what is the retail price on these now? Is it $300 or $2.99? There's actually price differences based on I think which models you get and so forth, but between $300 and $400. Yeah. So they're about to drop down to a price that, you know, I could see them selling 10 million of these, you know, a year where if you were thinking about buying sunglasses and having sunglasses that can record photos, like what's the difference. And so I always wonder why, or I wonder what the build of materials are on these and then how much they're losing on them. If this actually is a really good platform,

they could afford to lose money on it. Sure. And, you know, sell them at a bit of a discount. So, you know, here, what did they say there? These are 329, and they also have options in the 379. I actually, I was just fact-checking myself. I think they're actually kind of cool-looking, because I was worried that I was talking out of my backside.

But no, I had it right. I think if they got down to $150, they would sell at least $5 million a year. But then here's, okay, I'm always a big fan of corporations that have a lot of money, be very aggressive on pricing, going out there and building new markets, taking leadership, and just eating the cost for a bit because they have so much money. So if you were meta, Jason, how much would you be willing to lose per device on these things? I think I'd be cool with 50 bucks. Yeah, I mean, if you did $50 and you got to millions of people using these, would those people be posting more to their Instagram, would then their followers? engage more with their content because this content is unique. So there's a whole formula of downstream users. And then there's also lock in. So did these lock people in and create a moat for Instagram, you know, for Facebook? And I just, I don't participate in Facebook except to send

my occasional Instagram photos of skiing or food to it, uh, or stories like that. And so, you know, I, I'm amazed that there are still like old people on Facebook. Like a lot of the Gen Xers and my parents and their people between my age and my parents age are all over Facebook. My parents are on it and my siblings are not. There you go. Did you know you're required to pay digital sales tax wherever your customers are? Well, no one likes dealing with this type of administration, whether it's taxes or accounting, especially when you're in a busy startup. And that's why Pata has stepped in to put your billing and your taxes on autopilot. Whether you're launching a SaaS product or maybe you've got an app, perhaps.

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fee free period. That's paddle.com slash twist to unlock your no-fee startup period. This other story is about 11 labs, I think is super interesting. The basic reason 11 labs exists is because of agents, correct? So voice AI, and in their case, I think it's mostly aimed at kind of the customer's success and support function with some other bells and whistles, but it's not agentic in the way we think of agents like the Open AI operator sense, Jason. Got it. Okay. So they made, they're doing voice, which means either processing voice on the way in or processing it on the way in or processing it on the way out. So if you call customer support, an agent's going to talk to you, and that agent is going

to be powered by 11 labs. Yes, they have some of their own models. They also have a way that you can with words, tell the AI how you want to do sounds. You can kind of design your own AI voice. They have a consumer app that's pretty popular that lets people just use their voice AI technology to read stuff back to them. They've even built a new sound feature that lets you describe a sound effect you want, and it'll create that for you. So I think it's definitely been very focused on the AI voice application, but they're expanding more into just anything involving AI and sound, which is pretty exciting. But the news for everyone who might be a little bit behind is that a much reported series C was put together. It is a $180 million round at a $3.3 billion

valuation. And Jason, we've talked a lot about unicorns in the 2021 era context. I don't think that those companies that were raising at $1,2, $3 billion back in peak Zerp had $90 million. dollars in run rate. I mean, so this company to me is already almost old school IPO size a couple years into its life showing, frankly, how much revenue there is to be generated by leading AI startups. I view this as a pretty bullish overall event and the valuation, 37x, give or take, baking one year of growth, it's 20. So to me, I can kind of see this. I'm not that mad about it. Okay. So, yeah, they had according to reports, $25 million in 2023, and then it jumped up to 80 million, people estimating ARR was closer to 90 million, you know, and you can get the

reoccurring revenue just by taking the last month, if it's subscription times you by 12, obviously. And so if they're at 90 million, you know, 10 times that is 900, 40 times that is 3.6 billion. That's about where we're at here. So, yeah, it's not a crazy multiple given that they tripled revenue year over year. And so when you're calculating revenue for startups, if you're tripling revenue year over year, that is considered hypergrowth. If you're growing 30%, anywhere from 15 to 30%, in the public market, you're high growth. Yes. So if you put the Facebooks, the apples, Uber's, Airbnbs, and they're growing 15 to 30 percent year over year on larger numbers, billions of dollars in revenue, that's considered high growth. But at the startup phase,

you know, you're looking for tripling revenue year over year, which is roughly, you know, what high growth in the public markets would be 15 to 30 percent. So you're looking at, you know, would have 10, 20 times that velocity in order to get these premium valuations. And I guess this is being made by people doing API calls. So this is a business very similar to AWS. It's a cloud service. You use it to make sounds and to make these agents and to do voice. So it's, you know, destined to become part of the suite offered by people like AWS, Oracle, Google Cloud, and Microsoft Azure. That's who they're competing against. Yeah. Yeah, I think an underreported story, and I'm pointing that finger out myself, is AI companies teaming up with AWS, with Azure, with GCP, and using those as a sales funnel, a lot of noise was made this week about Microsoft quickly adding R1 to Azure, which people thought was kind of a flick of Sam Altman's earlobe, and maybe, maybe not.

But I do think that the distribution, commercial distribution available via major cloud platforms is enormous. So I view it more as like a potential partnership with the hyperscalerscale, Jason, versus a competition. I don't think Microsoft wants to get into the voice AI model game per se. There'll be open source models to do this. I don't believe 11 Labs is an open source model. There'll be open source models that do this. The regular language models will do it. And then you'll just be picking based on price and fidelity.

So, you know, it's always good to pull up the pricing page to understand startups and what they're doing. So if you go to 11labs.io slash pricing, we can take a look at what they're charging. And when you look at what people are charging and how they're charging, that's a really easy way for anybody analyzing a business to understand it. And they're selling credits from individual creators to enterprises. They have a plan for you. And for creators, if you want to make content, you can do this for 11 bucks a month.

You get 100,000 credit limit. And you can make 100 minutes of ultra-high quality text to speech per month. 100 minutes of conversational AI with up to 10 concurrent requests, et cetera. And you get these professional voice cloning to create the most realistic digital replica of your voice. So I'd love for our team for the next episode on Monday to just try this. 11 lab, please. Just sign up for this and let's try making a version of me doing an ad and just take a couple episodes, put it in there, and let's see if we can make an ad and how hard it is for a content creator to do this. I love that. This is another example of like, my lord,

if we could actually make a better version of me reading the ads, that was higher fidelity, That was CRISPR, and that could be made in real time. You start thinking about the possibilities. Now, everybody loves a host red ad. Great. But imagine if we IP or, you know, used localization content and somebody like, I don't know, let's say LinkedIn, wanted you to be able to talk to a local rep rather than, you know, just going to a LinkedIn form, right, to get your job listing. Now imagine, you know, the Australian audience and, you know, whatever, 5,000 people in Australia here at the ad. And at the end of the ad, it says, hey, go to, you know, talk to Susie at LinkedIn Australia.

They're having this, right? And they just made a Google sheet, you know, a database of, you know, the 20 different regions that they're targeting, who the ambassador was for that region, for this SaaS product or for, you know, whatever, you know, cloud service it is that we're promoting here on the podcast, you know, that could be very powerful and it would be in my voice. So I think that's what's coming and that and that's going to be super interesting for folks. You know, that is such a great positive take on voice cloning. And I think we often just hear the bad stories like, you know, parents, a strange son gets voice cloned and they get ripped out of $500,000 or whatever. But I like the optimistic take there. And I think it's going to be pretty cool for sales organizations. Because imagine if you just

take out that customization, that voice, maybe not your voice per seigneur, but like, you know, one of their best AEs. And then you, you know, You could do so much that's automated on the sales side. My concern only becomes, though, that eventually, if we only have robots talking to robots, I wonder if they're going to be able to actually do deals. Because you have to have a human on one side of the AI doing the answering, I suppose. It does feel like we will be having a moment, and we'll come up with a theme for this. But, you know, it's kind of like they came for my job.

And so when did they come for your job? Is I want everybody to think about this, because we're all like really high on, you know, Waymo and Tess the self-driving Zooks and self-driving to save lives, but there's also going to be millions of jobs that are going to go away because of that. It'll take 10 years or so. And then here, you know, when did they come for the podcaster's job? And here we are. You know, I'm literally talking about, hey, maybe we don't need me to do this. And if you look at the notebook L.M, it does that podcast feature to like learn. And it's a bit of a gimmick right now. But it will get to the point where you will have a podcast created custom for you every day

that knows what you're interested in and some AI reporter will read you the news as BobaFat or whatever your favorite character is and I don't know if that'll be I think there'll be a counter to it which will be people will want a more authentic, imperfect, acoustic, bespoke, artisanal and you see that already.

You have mass production of food. People can get literally a dog food I was talking to Mike Jones from science labs, and, you know, we have an investment with them in this sour boss candy there, and they did liquid death. And he was recalling going and talking to Walmart or Target or one of these big people, and they were talking about innovation. And the big innovation was putting cereal in dog food bags. That was the big innovation at Walmart.

In other words, you know, you've seen the big dog food bags? Imagine buying one of those for your family with cornmeal. flakes in them to spike everybody's glucose and make them fire, etc. I was about to say, I think the Maha team will have a really big view on bigger bags of corn cereal. Hey founders, you want to build the next great billion dollar business, right? Well, you're going to need two things, a killer idea and a properly set up company. I can't help you pick the idea, but I can help you get your business started the right way with Northwest registered agent. With Northwest registered agent, you can form your business for just $39 plus state.

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slash twist. That's northwest registered agent.com slash twist for just $39 plus state fees. Your business can be up and running in no time at all. Get more value, more convenience, and more peace of mind only with Northwest registered agent. then I'm looking at the counter, which is on the Maha side, which I'm a big fan of, well, people making overnight oats from raw oats and, you know, using, you know, more organic products. And so there's always a counter to, you know, the processed. So the more we process stuff and the more we create efficiencies, the more people are going to also want organic efficient stuff. And we're putting our chicken coop in next week. And there's this

really cool company. You can look it up. But I met this founder who has a chicken coop company. And it's a smart chicken coop. He sent me one. I don't like to take free things, but he insisted and he sent it. And I was like, okay, fine. And so we're setting this up this week. And here it is. I'll give him a free plug here.

But we're going to have a coop. And this one is a smart coupe that has HD cameras and water my coop door, all weather design. It monitors with AI, has real-time insights. And remember I talked about the ridiculousness of like, oh, there's a cold plunge app, go-polar. Well, people responded to that clip, you know, in a big way, thanks to the team for making an nice.

clip of this, you know, you can make very niche things with AI with small teams. Now, here is a smart chicken coop. And I said to, I like, oh, wow, I might be interested in, you know, investing this. And then he told me how much he'd raised. And I was like, oh, my lord. Now, what are the problems with chicken coops, Alex, you ask, is maintaining chickens. Yeah, it's, it's hard work. And your chickens get slaughtered by predators. Yeah. And so they just looked at, like, what makes owning a chicken coop hard? and it's like monitoring the chickens, making sure they don't get in, know if there's eggs,

you know, maintenance, whatever. And they went down that list and solved it. There's a big movement in the United States to get off the grid, you know, with solar, with batteries, and with protein and with vegetables. And when we have robotics,

you're going to have, 10 years from now, you're going to start to see people who are living off grid with batteries, with solar. You're already seeing that, with Starling, with these chicken coops,

and with an optimist robot, for 500 bucks a month instead of a car walking around, bringing the eggs from the coop to your house and making you scrambled eggs. 10 years from now, you're literally going to have an optimist robot, you know,

a middle class, upper middle class household, somebody who could afford a Tesla, you know, 10 years ago, like $100,000 Tesla, they're going to be able to afford to have a $500 a month robot,

general purpose robot, getting those eggs, chasing away the, using the AI on that coop, to know that the foxes are there, chase the foxes, grab the eggs, make scrambled eggs, make you a frittata to your specification, wait for it. It's coming. Bring it. That sounds awesome. I'll take it. I'm, look, I like breakfast, but I hate cooking in the morning. So bring on the frittata, bring on the omelet, scramble it,

don't care. But I want to go back. So those coops are $2,500 at the top end, which is less than I expected, frankly. But you said how much money this guy raised, are you, can you tell us? Because I couldn't find a crunch-based profile for this business. I don't want to say, because I didn't No, but it was basically he had left the seed stage where we invest pre-seed with Founding University, put the first 25K check into a company before they're incorporated at a million dollar valuation. Then we do an accelerator where we put money in at like a $2 million valuation, like Ycom and other people. And then we will participate in five to $10 million valuation seed rounds typically, keep our pro rata,

put a little bit more in to support the founder if the terms are reasonable and there's some growth. And then we leave it up to the seed community, seed dedicated funds and for Series A funds. And so if you're interested in any of that, go to launch.co, I'll go to founder.com. That's where we like to invest. So, you know, sometimes we're not the right investor for people who are at that Series A phase because there's other folks who do that kind of investing. Well, I mean, shout out to the chicken coop guy. My sister in Sunnyvale, which I'll just, I won't say any more details about that,

but she has chickens in her backyard because she has a particularly large lot. And I thought she was going full on crunchy granola, like our hometown back in Oregon. And it turns out she was just ahead of the curve. So apparently I should ask what she's doing next because apparently everyone We'll do it in five years. I previously lived in the Tony outpost, since I don't live there anymore, I'll just say it, of Hillsborough next to San Mateo, which is like one of the higher zip codes in that area in terms of the average home price. And many people had chickens. You couldn't have roosters, though, because they would wake up your neighbor.

So you could have up to like six chickens or 12 chickens per acre or something. There was some local ordinance. But one of our neighbors who lives in a multi-million dollar house would have so many eggs. And these are people who obviously are millionaires. They don't need to do this, but they wanted to have organic eggs. They would come by every month and just drop off eggs in our house. And they were the most amazing, organic, beautiful eggs, you know, for colors. Best neighbors ever.

That's a hack right there. Pretty great neighbors, yeah. So I think this is where we're going to be moving. And actually, you know, I hate to get all, you know, Zuckerberg and go into my Joe Rogan era. But I also wanted to learn how to butcher them as well in case, you know, there's some civil unrest or we have another COVID, God forbid, or some kind of pandemic. I would like to have a protein source off grid to be able to manage these kind of issues. And so my daughters are not happy about that. They said I can't kill the chickens.

That's where I draw the line. Not because I have an ethical, I mean, I have ethical thoughts about meat consumption. I'm a big meat eater. So just that's where I stand. But I recall a day, this is a little bit off topic, I'll keep it short. But my child of the best friend's dad had gone hunting and had shot a, I think it was an elk if memory serves. And they slaughtered it at home. And I walked into their garage. after they had done that. And, you know, that was enough for me on the butcher reset. I'm good. I think the silence of the lambs. Have the lambs start crying?

It was brutally gross. And I'm a little squeamish by nature about bones and tendons and stuff. I like my wings boneless, you know? That's where I stand. There you go. Okay. On the chicken coop front, though, I love the niche idea. Let's talk about what Y.C. wants to fund because sadly,

chicken coops are not on there. I wanted to bucket these for us. That way I could break down, Jason, you know, like this topic, that topic. There was one topic. it was AI, essentially. So where YC's focused is that, kind of three categories, AI infrastructure, AI applied, and then hardware, which I'll talk about at the end. So very briefly for everybody, a request for startup from YC used to come out once a year. They've increased that cadence, basically saying things are changing quickly. As we've all seen with Deep Seek, things can change

overnight. So no beef with me there. Makes sense. What's on the list? Okay, they would like to someone to build an AI app store with a focus on securities who can keep your data private. Just imagine instead of the App Store that has Canyon Crush and so forth on it, an enormous number of AI-specific apps that are consumer-friendly. That seems obvious to me. Questions about platforms? We'll see. I like it, Jason.

Yeah, an AI App Store is an obvious idea. And there was a version of this, which was prompt engineering stores. There were people two years ago, we talked about it here on this podcast, selling prompts. Of course, that was a short-lived business because now with reasoning in things like deep research and 01 and some of the new products by Gemini and the, products by ChatGPT and OpenAI. The reason things built in, so if you don't know how to do a prompt, you can just ask it to make a prompt, or it makes a prompt.

As we saw, when we use deep research on the program countless times. So I do wonder if this is going to actually exist outside of Gemini and other places, because they would, if it's going to exist, it's going to exist in those places. And there is one inside of ChatGPT. They called it plugins at some point. Yeah, they made a store for that and it was terrible. No one used it and it kind of faded away. That was a rare aborted product launch from Open AI.

People forgot about that, actually. It's kind of disappeared. Sometimes it takes two or three swings at the bat. So, you know, that was using like integrations into kayak, let's say, or, you know, into Redfin or other, you know, Zillow. And it was kind of clujy. That, as I predicted, would be built into Gemini. When you do Gemini now and you ask it about a flight, it gives you a Google flights data inside of it. So it's pretty obvious Google's going to win a lot of those.

and it'll probably the AI app store will probably be the app store. So, you know, if you open Google Play, it'll probably be like the AI agents will just live there. Just like games or ringtones and some of those other. Remember there was a ringtone section in, you know, the app stores for a while

because they were trying to make that into a thing where you could... Oh, that was a moment in music business when ringtones were a serious percentage of total music revenue. People forget, I mean, if you're young, you weren't there for it, but people used to have clips from their favorite songs play,

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So it was kind of fun. Like I put the Imperial March on my first iPhone and I use a Star Trek. To this day, when I get messages, it's a Star Trek. what is a communicator called on Star Trek? Not a phaser. It does like that, you know, kind of anyway, that was, you know, and my phone ring used to be the Imperial March,

which got quite annoying forever around me. So that's where I think that will live. And then these compliance and AI audit tools, those are already happening. So compliance and audit, whether it's KPMG or whatever service it is, those audits cost a lot of money. And I think they want to replace people.

I think that these are going to be better suited like tax GPT is doing or some of the legal services. There's the one legal AI company that Sequo just did a big round in Harvey. The guide on the side is going to be what's happening. You're not going to take the legal doc, the legal certification or the CPA out of the loop with these compliance tools. They're going to do the first pass at it. And then there's going to be human in the loop. But probably fewer CPA is required to review work than to do it all de novo.

So it's probably going to be a compression back to our staff. team size becoming compressed team size. Another place where the YC folks are looking is building AIs to replace personal staff. They point out that wealthy people have had access to private doctors and private coaches and all sorts of things. They think that's going to become A-I-fied and more generally available. I think maybe, we'll see. You mean an example of what they mean by that.

You're talking about like your personal trainer or your personal assistant. Yeah. So basically, if you're wealthy enough to hire a human to do a task. for you on a regular basis, either to help you do something better or to do something for you, they expect AI, maybe AI plus robots, Jason, back to your optimist point, will fill that niche. And I agree with this in time, but I don't know if we have the technology yet to replace, frankly, the human connection that I enjoy in those roles. I like the human element in someone knowing me who isn't a computer.

These things already exist as personal coaching in apps. So Nutrisense, a company we're invested in, has a nutritionist that you can include in your subscription when you're looking at your glucose monitor to kind of coach you through things. We have another startup Blaze that was using AI to help people with coaching for like, I don't know, race car driving, and they had human in a loop. FitBod and other investment orders used machine learning to look at your last work and make you a new workout. So this kind of concept has always existed and you can just take whatever rich people pay for. I did a tweet about this just a week or two ago that went viral.

A rich person paying for a high-end product will eventually make its way down and it will be everybody's personal driver. And that's what Uber's, you know, everybody gets a chauffeur and have a situation. Yes. DoorDash, everybody gets a personal chef, Airbnb, everybody gets a second vacation home. You can just take things that rich people experience today, which might be a masseuse, which might be a personal trainer. And then you can abstract it, use technology, use AI.

to make it more available. And that's really what Fitbit is doing, a FitBod, rather. So if you go to FitBod, I think it's FitBod. Is there a URL we just starts for FitBod. You know,

a personal trainer knowing what you did and then knowing what equipment you have and then making you a new workout, that is, you know, a hundred bucks or 200 bucks if you live in a city.

If you go to a person every week, and now you can do that for $59 a year. So it already exists. I think it's a fine premise or a fine framework to think of startup ideas, for sure.

The way that I maybe just down then is use AI and the deflationary price movement of technology products to take things that are currently too expensive and make them more mass available. So it's essentially the same story we've seen with technology just in an AI context. Okay. I mean, again, that's cool, but we've also done it in a mobile context before in a cloud context. So this is the next kind of platform iteration. A couple other quick things before we let everyone go. Dev tools for AI agents, I thought was a pretty cool idea.

how do you help people build more agents quickly and better? I think everyone wants an AI agent that does stuff for them. I don't think many people have them, so I like that. And then the other one that stuck out to me was software to support open source AI usage. So who's going to build the companies that will support other people using open source software? We had WeV8 on the show, Christopher 100 company, Vector search open source with services on top, great model, venture applicable. And so I think we're going to see a lot of good work there. And then hardware, Jason, just really quickly,

they talked about startups to accelerate data center buildout. I liked that. I liked that they didn't back away from the idea that we need still, mass investment in hardware because for like 48 hours there, I feel like everyone was like, oh, deep seek solved the hardware problem. That wasn't true. No, it wasn't.

As I tell everybody, do not trust any data or information or the government of China. It is a dictatorship. they, you know, lie, they steal IP. It's just, you can't trust any report out of China at face value, whether it's like Ali Baba's earnings, I wouldn't trust it, or it's a claim about, you know, TikTok. Do not trust anything at face value. And this idea that they spent $6 million probably leaves out hundreds of thousands of

illegally imported H-100s via Singapore that they're not putting into that cost. And then you compare it to the cost that may be opening eye and Sam Altman quotes. Well, Sam Altman is going to pump up the fully baked cost of doing a model. Why? He wants to scare people from creating competitive models, right? So he's trying, and he said, don't even try to out hustle us, you know, in building these models. You will not be able to compete because we have so much hardware. So he's trying to freeze the market. Therefore, he will say it's a hundred million to create chat chipt three. It's a billion to create chat chipt three. It's a billion to create chat, GPT4, it's going to be 10 billion. He's pumping the number up. So you can't believe him

on that side, because he's going to overestimate it. And then coming out of China, they're going to say, well, it was $6 million. Well, it was $6 million maybe to run it in terms of the electricity. And if you divided the cost of the H-100s that are illegally in China through Singapore, allegedly, by, you know, a 20-year lifespan per hour. You know, you get the idea. You can do fun with numbers. And so can I just say, though, that I feel like everyone, I feel like they're getting hit for something that they didn't do. So what I have here is the Deep Seek V3

white paper. And they say that the training costs of DeepSig V3, assuming the rental price of this GPU at that cost per hour, per GPU, pre-context post total. Like, they tried to provide a reasonable accounting here. And then I think what everyone did was they conflated

this, which is for V3, which is not R1. R1 was a improvement on that with other additional features to make it better for reasoning. But I think everyone went, oh, R1 costs six million, they're liars. Let's, let's, let's, let's, it's. It's just not apples to apples comparison.

And so, you know, you have one group, that's what matters. Yeah, and you have one group saying, okay, well, we spent a billion dollars on H-1s, and we use those H-1s to make this LLM, therefore it's a billion dollars. And, you know, you can just have all kinds of fun with numbers, depending on how you depreciate the asset or the utilization of the asset. Uh-huh. You know, and $1 an hour to rent something could be $1,000 an hour, depending on how you frame it and the devil's in the details. Yeah.

Can I actually a headline though, Jason, about the China point? Because I don't mean to argue against your point that China's GDP numbers are a little bit sketchy. But I love this from the Atlantic Council. China's economic performance, new numbers, same overstatement. So, sure. Hard to agree with everything about not trusting biased sources. And when he comes to investors and people like Sam Malman, they are talking their book. and I always read it with that context,

but a good reminder to everyone out there too. And I think that's probably a good segue into this peak valuation. I had said, you know, I thought we were hitting peak Nvidia. You know, sometime in the next couple of years, you would have this sort of peak

invidia moment in terms of competition is coming. People are going to make their own chips. And then software will become more efficient, as we saw with R1, using maybe more commoditized hardware, less generation of hardware, better software, better techniques, etc.

Because constraint makes for great art. If you give somebody one sheet of paper and say, write a great song, they're going to be very thoughtful. If you give them a laptop with unlimited storage, you know, the song may never arrive. And so sometimes you need, you know, a little constraint, right? Like, where you're not going to get your paycheck unless you submit this song. I always tell the story about Bob Dylan and Blood on the track. So putting all that aside, I also thought we were hitting peak valuation for Open AI. Yeah.

Because there seems to be so much headwinds against them. However, Masayoshi-san, who loves to counter any kind of reasonable valuation, is reportedly looking at putting $25 billion into Open AI at a $300 billion pre-money, yeah? I think it might be post. The $300 billion number is very fuzzy. This is all from the Wall Street Journal's reporting. But, I mean, just keep in mind that they were worth $157 billion before. And that's what Jason said, was maybe peak. So this is effectively a doubling.

And that's such a Mossa move to just. just like, well double it out of zero. And you love him for it. I don't know if I will want to put my own money into Open AI at $300 billion. But I do want to make a comparison here because I think we lose a little bit of comparative scale. So the other day, Deep C comes out, NVIDIA loses, what was it, 17% of its valuation in one day? $600 billion largest. 600 billion dollars, exactly. At the top of the market cap. Off the top of the market cap. So do you think that Open AI is only worth half of what

Nvidia shed in one day. That's what Mawkes- Yeah. I think you have to make two bets here. One is what's the actual traction in business of Open Aang? Is it the consumer business of people buying chat GPT for 20 bucks a month? And, you know, how much of the revenues at? Or is it the API, people hitting the API and paying them for requests and they're

in competition with AWS and Microsoft Azure, which has all the weights and put up R1 as a way to maybe even more than flick, you know, Sam Waltman's ear, but maybe put him in his place and say, like, listen, we're agnostic. If people want to use R1, which is based on allegedly stolen training from OpenAI, we're going to actually support that. Think of, like, let's just pause there for a second of how cut growth Satya and Adela is. Sam Altman has claimed, and OpenAIs claimed that R1 was stolen from OpenAI and that they're, you know, have these reports of people, you know, hitting their API and doing this sort of learning and reinforcement learning, et cetera,

and training it on opening eye and it's stolen, yada, yada, they stole our IP, they stole our IP. And what does Microsoft do the next day? Yes. They support it on Azure. And they're like, here, go ahead. And it's cheaper than anything opening eye offers. Well, you know what Microsoft has become over the years

an oddly strong supporter of open source. And people forget this transition. People are often still stuck in that 90s mindset of like, you know, Microsoft 1.0. But Microsoft's been messing with open sorts for a minute now. And they don't care if you want to run R1 or an open AIM model on Azure, pretty much, as long as you're doing it on their compute. If you're doing it on their compute and you have their credit card.

And then the third piece is, what would the valuation be based, so you have the valuation based on it being a Google competitor, right? You ask questions, you get an answer. Will people pay 20 bucks a month for that sustained over time, or is there an advertising model that merges? Then there's a second piece, the API going up against Azure and Google Cloud and AWS and Oracle and everybody else. And then the third piece is something else, artificial general intelligence, something else emerges that is worth $300 billion. So if you were to put these in buckets, we do have some reports on their previous revenue for each of those product lines, yeah?

So we know that they were supposed to have reached $3.7 billion in 2024, which is, to be clear, an enormous revenue amount in a real accomplishment and not to be diminished. The breakdown that I've consistently seen is that Open AI makes most. of its money from subscriptions, the $20 a month that I pay, the corporate account that launch has, et cetera, whereas Anthropic, which is smaller and is probably closer to the billion-dollar run rate mark, has a lot more business on the API side. Those API calls from corporate customers. Now, I don't think that either of these starting points means that they won't converge at some point in time, but I think that this is the cluscier for Open AI, because

if they get project started off the ground, if they raise more money from SoftBank, they will have had every single possible advantage that they could want, right? So they are supposed to go from $3.7 billion revenue last year to 11 or 12 this year, according to some reporting about internal projections and so forth. If they get to $12 billion this year, everyone will shut up. Yeah. If they don't, we'll see. Yeah, and these prices keep coming down.

So my understanding is with R1 coming out, opening eye is also going to lower, you know, the token cost and everything like that. what we're going to experience over the next couple of years is, I mean, the cost of running jobs on AI is just depreciating. Like, is it 10x a year, five X a year? We're going to need another Moore's law for how much it costs to do a job,

you know, uh, and there's some unit of a query and how difficult it is to do that query. Because now if you can start running these things locally on a couple of MacBook, you know, MacBooks or M1s, you know, where are people going to actually send their jobs?

and then it becomes about fidelity. And I actually think, you know, AI queries, these might become so commoditized that we look at them as good of a business as storage and bandwidth, which is another way to say a commodity business. I think this is becoming modified so fast that anybody who wants to create a robot,

self-driving, a SaaS app, a mobile app, you know, pick your, you know, verticalized agent they're going to be able to create it so cheap that it all becomes commoditized. What happens to self-driving as a concept if there's so much AI, there's so much training data out there. And it's so cheap that, I don't know, any car manufacturer can just say, fire up this open source AI, fire up, you know, all of this training data and we're back in the game and everybody has self-driving. That's, you know, 99.5s at the same time. Then it becomes just a manufacturing issue. Who can could manufacture the most cars and run the most at-scale network.

Yes, but that's why I think it's smart that Waymo and Tesla and we ride are trying to do quick commercial applications of self-driving because if it does end up just being, I can get a Ford, a GM or whatever, and they're all the same, then no one really has leverage. But if I don't buy one, because I've already been captured by Waymo or Tesla or someone else, who just wants to tell me a robo taxi by the minute, by the hour, by the day, by the ride, that's a completely different model. So it's a race in that way to the point of commoditization of a model.

Now, about the AI curve, I'm going to show a post from Dario Modi, the guy who runs Anthropic, and he did the blog post about Deepseek V3 and the training costs. And he said that if the historical trend of the cost curve decrease is 4x per year, then we would expect a model

that's 3 to 4x cheaper than 3.5 Sonnet, one of their models, about now. He argues throughout this that essentially the lower cost for training deep seek V3 is in keeping with the cost curves we're seeing today. The crazy thing is, if this persists for another 18 months at the current rate, it will change the world forever by bringing such high-level models to the market at such low cost. That's why I kind of get excited whenever Open AI drop something and they're like, it's really expensive. Please don't use it too much. Like, O3 is supposed to come out today. Yeah.

I guarantee you O3 is going to be expensive as hell today. but in six months it's going to be three pennies a call from three different companies. I mean, yes. It's a, I think open source is going to win the day, and there's a great irony here. I talked about it on All In, which will come out today as well over this weekend. It's kind of rich that Open AI stole everybody's content, got caught with their hand in the cookie jar. You know, and then they're complaining, and then they flip to a closed source, flip to a for-profit. So they do all these things that I would consider unethical, or highly unethical, stealing a

people's content without permission, flipping from a nonprofit to a for-profit, then they're crying foul when somebody does their original mission, which was to open source. And now it just happens to be the Chinese doing it. And they have stolen some content apparently, or they don't have the same content regulations there. They don't care about IP over there. They just steal it as quick as possible. And that's their philosophy of it. And now opening eyes crying foul. I think open source wins. Sorry. That's just my belief. I think open source is going to win this. And if I did raise 30 billion and I was Sam, you know what I would buy? I'd buy Cora. I'd buy Reddit. I'd buy Twitter. I'd buy the New York Times. I'd buy the Washington Post. I'd buy the

Disney Corporation. This is where actually the value might reside. And especially if the New York Times wins its lawsuit. If the New York Times wins its lawsuit and then Disney joins the New York Times, Washington Post, Reddit, Quora, just pick anybody who is at-scale data. And they all start creating a voting block and they just go to every single LLM and say, If our data is in there, we're going to just hammer you with lawsuits until you say, uncle. And when that happens, that would be the equivalent of if the content industry had been as coordinated, the news industry, the magazine business, as the music industry was with Napster,

with Google. Can you imagine if Google couldn't index New York Times pages or all content, CNet back in the day, all that stuff that was in there? If they had just said, yeah, no, you can't index us. And as a group, we will not let you index our content unless you pay us a license. Google would have had no choice. and Google would be giving 70% of their advertising to the content creators or some number of them

just like the music industry does with Spotify. Spotify has to give what, 60, 70, 80% of every dollar. 65, I think, is their current kind of gross margin rate? Yeah. Yeah, so they have to just ship that money. 10% of Google's search revenue that went to content providers. Dude, I would be like rolling up in a bit late today. Like, I mean, like, that would be so much money for me.

Do you know how many millions of words I have published over the course of my career that has just been taken? I don't feel bad for Open AI. I also agree that open source is probably going to win. One thing I don't know and I need to look into this more is what is the possible copyright exposure of meta with Lama and their open source models? Because I don't think that just having something to be quasi open source obviates the copyright risk of using copyright information in your training. So I'm curious if we're using Open AI as the example here, but even if a lot of the open source AI groups are going to have the same problem. They will have similar issues and they will get injunctions against them.

And it'll be a little bit more clujy, like who do you sue and who do you get an injunction against? But there's nothing that says like some open source community couldn't get a legal letter saying, hey, you use Star Wars and created an open source Star Wars model creator and you're making Star Wars IP. We're going to get injunction and make GitHub or GitLab or any number of places that post it or fork it. And we're just going to send legal letters to them and shut it down and put it in

the underground, which is what happened with BitTorrent, right? Or other services, those things just became underground services. They still exist. They just don't exist in a mass way because the legal options are so much better and fluid and affordable. And just more ethical. I think people like to be ethical. They won't be if they're getting ripped off.

I pay for three music services. I pay for Spotify. Yeah. I pay for Apple Music as part of my bundle. And then because I got into high fidelity, I started doing co-buzz. Q-U-B-O-Z, I think it is, which is like this French high-fidelity thing. And so I'm paying unnecessarily, I guess, for Spotify

because I have Apple music in the family, but my family prefers the interface, but Apple music comes for free. And then actually with my YouTube subscription, my premium, I get YouTube music. So you have four, and also you have some access via Prime. Oh, yeah, maybe my Prime has free music in too.

I think there's some music attached to Prime as well. So that means, Jason, you are literally the most important music fan of the world. Thank you for supporting the, arts. I do this in a slightly different fashion. I buy vinyl and tapes and CDs from bands that I love when they have records come out. And I have a tape of Fit for an Autopsies, latest LP, the nothing that is. I don't have a tape player,

but it was small and it was like 10 bucks and I'm like, I love you guys. I think it's cool to do that. I love, you know, people doing that. And you'll see there's two vinyl. Somebody gave me a gift behind me. Those are two Dyer Shreates of the original Dyer Shrates albums that somebody just handed me at a conference. Someone knows what you like. Yeah, and just put it on the shelf.

They'll never get plays. They'll just be on the shelf forever, but I like it. Once my front living room stops being a in-house daycare for my girls, I can put my record player back in there, and that'd be great. Closing off the Open AI story,

a couple of notes about this. Open AI did participate in the last $6.6 billion funding round for Open AI. So SoftBank already has about $500 million into the company. that way. It also did later last year a $1.5 billion tender offer. So they already own about $2 billion worth of buy-in in equity in Open AI. So if they do another $15.25 billion.

And then what happens with the conversion? You know, like they keep pinning these valuations to Open AI. Open AI keeps hitting these record revenue numbers. So how does the nonprofit collect on that? What happens to this like 10x or a thousand X? Then we turn to open source. I mean the the layers of rules that have to occur and then layering this amount of money on top of it, what happens if they legally can't flip? What happens to all that money? Does it get returned to investors?

I mean, I would love to understand the legal risk that Thrive Capital is taking Kushner over there, Josh Kushner, or Masayoshi-San, like, they're putting LP money into this potential house of cards. And if they can't flip into a for-profit, do they just get their money back, but what if the money spent? Like, this is a large amount of risk to take for tens of billions of dollars or any billions of dollars. Absolutely.

So, I don't know, man. I just, this seems like pretty frisky to mid. Oh, it is. It's what we're talking about soft bank, Jason. Yeah, fair enough. The mobile pizza company and the dog walking company, they don't care. And that's what I like about it, because everyone else is trying to like, do what we do? You know, what's the revenue multiple?

Masa goes, I like Sam. Do you want $25 billion? dollars? Okay, but for fun, I'm going to read this lead from the journal, because it's just, it's too funny for words. Reading for everyone from the Wall Street Journal, in his newly built palace near Tokyo lined by stone statues of Roman emperors and surrounded by an 18-holt golf course, Masayoshi-san was stewing after declaring for years the imminent arrival of the artificial intelligence revolution, the chief executive of SoftBank had missed out on it. Quote, I haven't been able to do anything he thought, according to a speech he gave to SoftBank Investors

last year, can I just get old like this and die? I love this guy. He's awesome. I mean, greatest investor in the history of investors. I mean, this guy. Well, I mean, you just take the swings, you know, like if it takes a certain amount of Hootspah, Cajonais, to be able to make giant swings like this and not care about past failures or zeros and then just keep momentum investing.

This is like the ultimate momentum investing. and it's great that it exists in the world to a certain extent, whether I would want to participate in it as an LP. I don't know. I mean, I've chosen not to. I do a different type of investing, but hey, more power to them.

I think we have some good questions from the audience that we could potentially hit. I saw somebody was... Yeah, let's drop one. So here we are from CCCC. If Stargate goes through isn't a big chunk of that budget for hardware, and would this be a bullish sign for companies like GROC and Invidia? GROC is a company that does AI inference hardware. Sure.

He used to offer it as a kind of a purchasing now offer kind of via cloud service. And Nvidia, of course, makes all the chips. Just to be clear, CCC, I think Jason and I are still pretty bullish on the hardware component of AI. And worrying about open AI's valuation, I don't think undercuts the overall story of the need for a lot of spend on hardware's chips and network and equipment. We're just concerned that maybe this one company with this one model and this one historical corporate structure might be having a valuation attached to it that will be difficult

to earn into. But Jason, your thoughts? You know, sometimes we overbuild capacity for certain things, and sometimes we underbuild that. We've underbuilt electrical capacity in the United States. And at a point in time, we overbuilt fiber and we overbuilt storage. And then, you know, creative entrepreneurs look at the plummeting cost of both of those and created YouTube. And then YouTube was like, you know what? You could upload unlimited. And there were used to be caps. I think maybe YouTube it was like you could upload a five or 10 minute video. And then they went to an hour and then, you know, Google Photos or Gmail started at whatever gig and then it went to terabytes and then it went to unlimited essentially. So you can create products and services

that are based upon overbuilding. And so one person might overbuild capacity and then another person might find a use for it. And we saw this happen in the big data revolution. It was too expensive to store storage locks. So I remember when we were doing email newsletters in the 90s, Brian Alvey had set up these QMail servers for us, and we had all the delivery stats. And I loved looking at the delivery stats, but he said, listen, you know, we have to put another hard drive in. We got to put another, you know, disk array in. And I was like, yeah, but what are we doing? And there was like, oh, there's a piece of software to roll all this up and then give us the top level reports. So then we started saving the top level reports of opens and closes.

And I was like, man, it would be really good to have this granularly to see which people open the email every day, which one's open it every other day. But we had to literally have discussions about how many of the logs we wanted to store. And the same thing with page use on and gadget. And we basically at a certain point said, don't just delete the logs and keep the top level of reports and we paid for some software to just keep PDFs on another hard drive because it was getting too expensive. Somewhere along that journey, cloud computing came out and we didn't have to rack servers anymore. Then it became a discussion of, well, what's our storage bill? The same thing happened with this very podcast. We were spending 10,000 a month storing these like, giant,

in files. And then we realized, you know what, we'll just put the final edit on YouTube. It's in 4K. It's in HD. We always have it. It's always stored there. We have a backup on, you know, this other storage system. And then Lib Synth and other people started making it free or close to free or unlimited. So that's what we'll see with this overbuilt. If it's overbuilt, people are going to do seemingly ridiculous things with that extra capacity. Some of them will be amazing. Some of them will be superfluous and silly. And, you know, people can afford it. So I'm not too, worried about it, to be totally honest. And I, the only thing I am worried about is the government paying for this. We're in this whole thing of trying to control our spend. And I saw some headline

go by that maybe Sam Altman and these guys were trying to get money from Trump to do the buildout of these servers. Absolutely not. If there's people like Masayoshi-San out there or, you know, sovereign wealth funds or venture capitalists, they should be paying for the build out of this, not the American public. Hard know on that. Enough with the public paying for everything. I don't want to see Sam Walton or anybody else going with their hat out asking Trump to give him $100 billion for us to win the AI race when it should be won by open source. Wow. Lots to unpack in there.

I'll say that as far as I've read, there is no public money in Project Stargate confirmed. I know that he probably wanted some, but I don't think he's going to get it. And I think your point about soft bank is correct. But the last thing I'll say on this is, you know, Sontia over Microsoft has said that we're building out this capacity because there's so much demand for AI inference of just using kind of models out in the wild. And Anthropics said that they are compute constrained. And part of the Open AI Microsoft beef has been Open AI has wanted more compute than Microsoft was willing to give them. So to me, there is the chance that we are going to overbuilt, Jason's point. And if we do, there'll be some positive benefits of that as well.

I'm just not worried about overbuilding right now. If we were opening- This is the job of capital allocators. There are capital allocators out there who have choices of where to put their money. They can put it into municipal bonds. They can put it into treasuries or they could put it into core weave or project Stargate. Back to Stolen IP. That's like a protected series.

This is a really good series and a really good movie. Like how do you just go out with the audacity and steal the term Stargate? I wonder if they paid. Jason, they stole the internet and then they chewed it and then they're spinning it back to us for a dollar. I mean, come on, man. Who cares if they steal somebody's IP for their movie? Do you think Vasa cares if Sam? No.

I mean, literally, that is a beloved science fiction series. And they just, I mean, why don't they just call it Star Wars? You just steal that. Star Trek Wars. Yeah. I want to hit a couple of things, though, before we move towards it in. First of all, we have talked about antitrust on this show at nauseam because it's a big deal for venture for startups. The news is that over at the DOJ, after Trump took over,

there has been a suit from the DOJ to essentially block the HPE Fieldbockered Enterprise and Juniper deal. And here is the logic from the DOJ. We've excerpted this. I'll read it for folks who are on the audio part. The proposed transaction between HPE and Juniper, if allowed to proceed, would further consolidate an already highly concentrated market and leave U.S. enterprises facing two companies commanding over 70% of the market. the post-merger HPE and market leader of Cisco Systems International. This substantial lessening of competition in a critically important technology market poses the precise threat that the Clayton Act was enacted to prevent.

Jason, this strikes me as an incredibly reasonable argument against a combination inside of an industry. However, it's also a technology deal worth billions of dollars. Market feedback was surprise at the Trump administration's move here. This is not startups. This is big companies. This is public companies. Does this make you worry about the? the Trump administration's posture towards technology combinations.

I'm just curious. This has to be a multi-year investigation. So while Trump's been in office for 10 days, I guess, 11, this is obviously probably been in the works for at least four years. For whenever this deal was struck, they started looking at it. So I don't know when they started this investigation. So while Trump has inherited it, I think looking at router technology, you know, which is what these folks are in. Dell has these, obviously Huawei, which is banned in the United States, and countless other people build these. These are commodities. You know, routers sending data and packets is a commodity business, and it is a race to the bottom. You can go on, I talk about this Unify that I love. I'll give them a free plug here. This is like an upstart. Unify is this incredible IT company that I'm in love with. And if you go look at what they build and you just go to the pricing section for the routers and you just click on like the dream machine here. So if you go to like

switching and you just prick any of their switches, professional, professional Macs, enterprise, these things are unbelievably cheap and they're using the same ones in homes as they're using in enterprises. And then you go over to like camera security, click the next tab over camera security, then click the next tab over door access. And you look at all these integrations that they have VoIP the next one over. They have taken the entire stack from Cisco and commoditized it. And if you go anywhere and you see Unified routers, these routers for Wi-Fi cost $100,000, the switches cost $500.

The cost of these things is essentially free compared to when I started in the industry. The equivalent of these were, you know, when you were putting them in, you would basically say, we're going to put, you know, $4,000 for each PC on people's desk to set it up. And then we're going to spend $2,000 or $3,000 to set up the next. network for each person. Then we're going to spend two or three thousand dollars for, you know, each person's share of the server capacity. And you would build server. So you'd be looking at an enterprise. You've had a thousand people in your company. Let's say you were, where I work, Sony music is a thousand people. Sure. You would say $10,000 per person every four years.

We'll spend $10 million on IT to put in this infrastructure. Now, the same PC is $500. The same router per person is $100 or $200 per person. And then, you know, it's all done with Wi-Fi, you can do cables, whatever. It's all been commoditized. So this is the kind of case that makes no sense. It's a commodity business. It doesn't matter if it consolidates down to two or three players because anybody can undercut it. And even when you look at the Unify stuff, when you go to UI.com, they're not sponsors or anything here. They're looking for things to do. They have EV charging they added, right? They're doing digital signage. They're looking for things. They added premium audio to their offering. So when you go to integrations, they've now added essentially a

Sonos competitor inside their product. Now, why would you have that? Well, some number of people who use these networks want to have music in their offices or their cafes or whatever. So the long tail of these things, then you go on to Amazon and you look at Netgear, like the real cheap consumer stuff. Then under Netgear, there are commodity ones that look exactly like Netgear, probably made in the same factory that have some, you know, Bozo logo on it you've never heard of. So there is nothing to worry about here. This is just overreach. Consumers have won this already and enterprises have won it. It's silly that we're even having this discussion in the review mirror because this was settled 10, 20 years ago. Yeah. So all of that was kind of what I was

thinking. But here's the part that surprised me. And here's why I brought it up, because this is not just a Biden-era DOJ hangover. Over in CRN, there was a quote that says from someone who is party to this overall transaction. My first thought was this must be a holdover from the outgoing DOJ leadership, so I was shocked this assistant attorney general was appointed just recently by the new administration. So this is actually a potential data point that the Trump administration, even though you and I make a disagreement on this case, might have more antitrust teeth than people thought. And if that's the case, there will be some sad faces out there, but I don't think. It's $14 billion, right? Is that what this acquisition is going to be for Jennifer? It's nothing. Like, what are we doing here?

God, I'm not going to use the R word, but this is R word. Silly. This is silly, Jason. We can say silly. It's silly. Shockingly enough, HPE and Juniper are both very mad about this. And just really quick, before we go, I want to show the chart. We mentioned it earlier about NVIDIA's revenue via Singapore, how other companies

might be getting these chips. This is a chart, Jason, that shows. Okay. Well, I think you'll just understand this from the get-go. But if you track reported revenue from NVIDIA who sells chips to Singapore, a country that you are allowed to send chips to, their revenue from Singapore went from $1 billion in the second quarter of 2003 calendar to about $7.7 billion in the most recently reported quarter. Where do you think those chips are going, Jason, given that Singapore is such an enormous place? Yeah, I mean, the population of Singapore divided into this number would be really interesting to sort of see like how much. just have fun with numbers. I think Singapore is a tiny country in terms of population.

It's six million people. So it's $1,200 per citizen of Singapore into Nvidia spent. If that was the U.S., that would be $400 billion. Anyway, it's pretty obvious what's happening here. Invidia knows what's happening. Our government knows what's happening. Singapore knows what's happening. These things are getting on a slow boat to China. That's what's happening, folks. And so these export controls, if we're going to be serious about them, you know, Singapore and NVIDIA and the government are going to have to get on the same page here.

The perception I have about all this is this race is reminding me of nuclear proliferation, which is there are nine countries that have nuclear weapons. And the only way to stop this is to control the hardware, the metal, the materials. Yeah. It's going to be pretty hard to do. obviously, but we did it with nuclear proliferation. Russia, France, Germany, UK, United States, South Korea, China, Israel, they deny it, India. And I guess Pakistan has some rogue stuff. North Korea has some rogue stuff. So Iran has some program. So you're looking at like nine or so people

confirmed and then, you know, a long tail of three or four people who are mucking about. Ukraine obviously gave them up when they, you know, separated from the USSR. In exchange for security, A little footnote there. Don't ever give up your nukes. Yeah, just, just, hold on to them. Hold on to them, never give them up. It'll not work out well for you. But I think that's what we're going to be looking at here, potentially, is, you know,

just slowing stuff down, but that's the most you're going to be able to do. And it's going to create abundance for everybody on the planet. So I think the hopeful version of this is like nuclear power, we could have clean energy for everybody. The downside is nuclear weapons. With AI, we could have robots getting your chickens from your chicken coop and making you eggs and having free food and having free products and services that go down to zero. What is it going to cost to make a car when there are no humans in the factory? What is it going to cost to take coal out of the earth if we even needed to or do any speaking of berries when robots and AI do this perfectly?

We're going to see the price of food, energy, and products and services continue to plummet. You can buy a flat panel TV now for $200, like a giant one, $300. Like open up Amazon. I was shocked at how cheap our most recent TV was. Just to give people an idea of this, you pull up a 50 or 60 inch cheapest LED on Amazon Prime right now and you sort it by price for a 50 inch or 60 inch. You might be able to get a Vizio for, you know, at Walmart. A Vizio might cost you $200, $300 for a TV that 15 years ago was $5,000.

But Jason, I literally, this is just a blank search, logout at Amazon, 60-inch television. 60-inch. The second-inch cost $300. The third, 55-inch costs $240. That's insane. What does it cost? To get it to your house. Like, the shipping cost is 50 bucks.

Free delivery tomorrow between 8 and... I mean, what are we talking about here, folks? I mean, just keep doing the math. That 55-inch TV, like I said, 10 years ago, would have been at a zero, right? 20 years ago, we'd be at a zero. You'd be talking about, at CES, it was 3,000. So we've seen this happen with TVs. You're seeing it happen with the M4.

You look at the price curve of the M4 Mac Mini. This computer, 499, I believe, is the entry price, 599, is more powerful than anything else in the lineup right now without a monitor. And that's Mac. That's like the high end. You look at it in a Chromebook. You can buy a Chromebook for $99. You can buy a Chrome box for $99 bucks.

you can buy a stick PC for 50 bucks. The cheapest Mac Mini that runs the M4 non-pro is 600. You can spend up to, for an M4 Pro, you can spend up to 1400. But that's a 12-core CPU, 16-core GPU, 24 gigs of memory and a 512 gigabyte SSD. That's for somebody doing rendering of like CGI. But like, but like, but think about like five years ago. Yes. You would have gotten half of that for twice as much.

And that's the cost group we talked about from Dario and Anthropic. and everyone else. So this is why I remain optimistic. The world has many things going on in it that I feel into about, but I do have pretty reasonable confidence in the fact that technologies can make our lives better. I want to put one more thing on our docket to talk about for next week and for our Noddy Gang to maybe start talking about, which is anti-capitalism slash hacking capitalism themes. I want to just sort of talk about this next week at some point. There's a trend called no-buy-twenty-five, and then there's Apple selling less iPhones, a trend we've talked about here for a couple of years

and people skipping, upgrading it. This No Buy 2025 combination of a reaction to inflation with fire, you know, financial independence, retire early, overworking, all this kind of stuff and this abundance that's coming is a very interesting trend I want to explore next week. No Buy 2025, very interesting. I have lots of thoughts about this too. have an essay brewing on the different perspectives on what AI is going to do to prices,

employment, consumer surplus, and so forth. So great. We'll get to that. I'm X.com slash Alex. He's X.com slash Jason. We are Twist, Monday, Wednesday, Friday. This week is startups.com slash docket. Twist 500.com. Your handsome and lovely, everybody. Goodbye. There we go. All right. See you next time. Bye-bye.