Ep19. State of Venture, AI Scaling, Elections | BG2 w/ Bill Gurley, Brad Gerstner, & Jamin Ball

27:24I was at one point in time invited into the office of this PE firm. I didn't know PE very well. But they had had back double click and Google bought it for 3 .1 billion. And this particular firm may, I forget they made, they had a lot of it. So they made like a billion or a billion, too. And I said to them, I always say, congratulations, man, that's incredible. He goes, well, it's in a four billion dollar fund. Wow. You know, so you have an incredible outcome. Right. But the denominator is so big. Right. That you, it's just hard to claw it back. It's hard to get back to that. Which is why you can't, can't get to the four or five X because you have a, you, you have a power law outcome.

28:09And it returns 25 % or a third of the fund. Correct. Right. What we've witnessed is kind of this bill coming out of the 22 period, these two paths effectively, you know, the firms have followed. We've seen some firms downsize, founders fund, altimeter, a few others have downsize the fund size. But we see another funds that just said, you know, we're going to consolidate and we're going to get way bigger. And so I do think that, you know, if we look at a little bit of returns math on this. So we have a few slides. Well, you know, I love, you know, Fred Wilson's rule of thumb, you know, a third of companies fail.

28:49A third basically underperform. And then a third gets you your five to 10 X returns and recent breaks it down even more. Which, you know, says it all comes down to the 10 % that produce, you know, kind of that 10 X fund. And if you look at this stepstone data, you know, it actually shows that, you know, basically what differentiates those top tier funds. And by top tier, what I mean is that the top 5 % of a desial funds, they're earning about a four and a half X, you know, cash on cash return in their funds. You know, and go back and you can look across all of these vignages over the last 20 years.

29:29Now, I think there's a question whether or not any of these mega funds on these four or five billion dollar funds are going to be able to, you know, generate those returns. And maybe the reality is that these new LPs pension funds, sovereign wealth funds and others. Look at these as strategically important. And they, you know, they're less concerned about venture like returns and they want to protect the downside more. And so maybe you can sell the fact that you're going to have less mortality, right? And you're going to have less downside risk to the funds. But I mean, I think that that is really where the rubber meets the road.

30:06You know, when we look back at this, you know, this analysis, whether or not these funds are going to be able to generate returns that are equivalent to the top desial of historical funds. One of the things we don't know that it would be really hard to gather data and prove, but this zombie unicorn class, pre -LLM zombie unicorn class, you know, had it not been flooded with money. And, you know, there's a, there's a notion in science called the observer effect, you know, where, where if, you know, if VCs are too big and like, do you actually impact the result to the game on the field. And, you know, had that not happen in these companies grew up on a normal way, you know, in a more organic growth path.

30:56Would they have had more liquidity? Would they have had more investor returns? Would they have been more acquirable without these high marks on the head? And so did you, did you take out, you know, you're so we're so focused on the outlier, you know, breakout Google meta types. Did you ruin the two three four extra turns? Yes. Yeah. That does go away. Yeah. I think you, you totally removed it as an outcome path, right, which is to say, when you are investing in these companies at high prices, the only thing as an investor you care about is, are you an outlier outcome? Are you a 10x plus? Right.

31:33As a founder, you might say, I don't need that as employees, you might say, I might, I don't need that. And if I was sitting on a $600 million valuation, not $6 billion, it's going to be much different to go and sell the business for two billion. When the press stack isn't one and a half, right. So I think we've just, we removed a thick middle of an outcomes that would be relevant to everyone outside of the investors, where now the only outcome that's relevant to anyone is are you a 10x or are you a zero? And you made it a binary outcome for all constituents. And you forced everyone into that game, right?

32:11Obviously, all three of us are in an industry. We believe it's the engine, you know, that provides the fuel for, you know, incredible founders to go innovate the future. And it's really just a question of whether or not we're over capitalizing the business, whether funds are getting too big. But what recommendations bill might you have or jamming for founders or funders? Right. I jamming what I hear you saying is founders just be aware, right? Ask the questions. In order to be though you're putting in your capital structure. And like what their incentives are, are they sitting on 20 different boards?

32:54Are they clearly in the deployment mode rather than the investment mode? And if they're in the deployment mode, just know that. And know what you're implicitly signing up for. What bets are you making not just on your behalf, but on your entire employee basis behalf, where do they want the binary bet? Binary bets are okay for investors. I don't think early employees or founders necessarily want that. But I'd say that, you know, know what implicit bets you're making by the rounds that you're raising. Yeah, I mean, to that point, like this is super simple math. But if you raise 400 million or let's just say 100 million.

33:36Even if you're being conservative, what are you going to spend that over 36 months, you know, something like that? You're still signing up for a three four million a month burn rate. And there's no way that doesn't represent risk in some way. And the bigger you take that number, I used to always think about venture capital is, you know, you invest in a company and you grow that burn up until point. And then the job is to convert back against it and go to profitability. And with all this money, I mean, we're taking that point up to 10 million a month, 20 million a month. And this gets into who can grow out of that.

34:22And it ties into did you destroy that that middle because some of them just can't ever get there. And you then rely on the beneficence of the capital markets to keep feeding that machine. And sometimes it runs out. And then you're in a massive course. But but but my general response is unfortunately more sanguine, which is I think these systems are emerging. I don't think anyone person made a willful decision to force this reality. Correct. I think it emerged out of a combination of what was happening with interest rates in Zurpen and the raise rise of AI. And maybe the global liation of fundraising that brought sovereign wealth in.

35:11And it all kind of combined and created this mix that we're living with. And for the most part, I think we're all actors stuck in the game. Right. Right. I'm not sure you can escape it. You know, a couple of observations at the positive take. No, I know he wanted one. I apologize. I mean, I'll give you my my spin on that. Number one is, you know, I do think that pensions and sovereign wealth funds have, you know, stepped in to replace some of the money that came out of the endowment ecosystem. Right. Because endowments, you know, I think about the legends of that business who were allocating those dollars, you know, the Phil rotters of the world or the swindsons of the world.

35:59Right. Like they would phone up everybody on Sanjo road. And they would say you're getting over your skis. You need to back it off a little bit. Right. That industry is long gone. But I would also say I just, you know, saw news this morning, you know, FII, which is doing, you know, like I think an incredible convening of investors and leaders from around the world. I think they're doing incredible stuff. You know, in the GCC and Saudi in particular, but they said, we're going to deploy more of PIFS dollars on investments inside a Saudi Arabia, then outside a Saudi Arabia. Right. So I think there was like, and I've heard this as well from, you know, the UAE, they're going to consolidate the number of GPs.

36:42And so I think there is increasing focus coming out of sovereigns as well. I hear the same. I was just down in Texas talking to the Texas pensions. The same thing happening there. But when they consolidate that probably means more dollars into fewer right. Right. So maybe it's starting to crack that. I don't know. And so I don't know, you know, we've seen from that slide that I showed the total amount of funding has definitely come down by about 30 or 40 % over the course of the last couple years. So that's one half of it. The other half is there is no doubt that the outcomes that we're now talking about are much bigger than the outcomes we were talking about 10 or 20 years ago.

37:20So it would make sense to me. If you looked at a trend line for the industry, the industry and the number of dollars deployed in the size of funds should be much bigger today because companies are scaling much faster today and the outcomes are much faster open AI got to, you know, four and a half billion dollars of revenue in a fraction of the time it took Google and meta. And, you know, and so like that to me supports more dollars larger funds, but I do think the law of economic gravity prevails. There's a there's a certain fund size. I think it can deploy if you're aiming for traditional venture like returns.

37:58Then I don't think there are a hundred growth companies. Right. That you can go put in a fund of five or 10 billion dollars equally weight them and get a four to five X over any reasonable period of time. And we can, I mean, let's move into that. I mean, I think the enthusiasm around AI is part of what led to that reality. And, and if it didn't feel spectacular, it wouldn't have happened, right? Right. So it's total logical that those two things contribute to one another. Well, it's a, you know, so one of the topics we've been talking about all year is a, you know, is, is, is AI and GPU scaling.

38:36Will these AI models continue to scale will GPUs continue to scale. There's a lot of question whether or not Nvidia would grow in 25 25. But just as we, we saw a few announcements. First, we saw out of X AI, the classes cluster in Memphis, which I discussed at length with Jensen. Yeah. They announced this week that they're scaling. Elon said, we're now going to go from 100 ,000 GPUs to 200 ,000 GPUs in that facility. Did you see the video that Super Micro put out all this? You told me about it. Right. So it's, it's, it's incredible to watch what they built. Yeah. And if I think about for the last decade, data center, engineering and construction has been in the background.

39:26Right. Like, you know, meta had breakthroughs, Google had breakthroughs. Like we had talked about it, but wasn't something that people were posting videos on. I think there's some equinox shareholder that might disagree with you. But I would say we generally took it for granted. But now it's clearly becoming a much more important source of competitive advantage. And I would just say, you know, it's super impressive what they pulled off in Memphis. It all gets to this question of, you know, you were asking at the beginning of your, will we need or will we get to clusters of 200 ,000? Now those questions are clearly off the table.

40:05And so we have all these mega caps reporting this week. It's expected that CapEx will continue to, you know, continue on at this $250 billion run rate. Google came in tonight at $13 billion, just above the 12 .7 billion that was expected. So they revised that high higher a bit. But what do you just make out of? You know, as we sit here toward the end of 2024, do you expect that this is going to, you know, continue at this pace? Is this a sort of, you know, I've heard people describe it as a Pascal's bet sort of situation. You know, how are you thinking about, you know, where this all leads? I'd love to drill down on that.

40:51But, but let's come to it in a bit. Look, it's something we've never seen before. I mean, you know, if I think back to, and you and I are discussing this, but if I think back to the breakout companies of, of the previous generation of VC back companies, none of them had, I mean, massive CapEx. The biggest one was, was Amazon actually with their, with their distribution facilities. And it caused, it caused a lot of skepticism and they raised a lot of debt and they did things other people hadn't done before. And you know, I've discussed it. I don't think we've ever seen kind of a CapEx race before.

41:35And it's, it's, it's pretty mind boggling that these are being built at this scale. It's interesting, you know, to try and count how many people are going to want to do it. Like, you know, the hyperscares obviously are reselling this. So, so they're in, they're like an arms merchant to everyone else. You know, in, in Tesla's case, an X that is a ice case and, and Matt is case, they're consuming this, you know, for their own, that's right for their own good. And, you know, it, do, and I throw this back at you. Do you think they'll eventually be 50 of those that, that are, that are Tesla like that are want to build these out for themselves.

42:16No, I think they're going to be a handful of companies, you know, like take mag seven because the scales too high. Yeah, it's think about it this way. You know, if you look at Google in the quarter, GCP is accelerated its revenues by 30 plus 35 % year on year. Okay. So just to put that in perspective, they added about two and a half billion of new ARR in the quarter. That's like adding a data bricks in the quarter. Right. So it's only companies of the market. So I think it's really a big deal. So I think if I'm going to have that scale that can afford to spend $50 billion a year and, you know, I do think they're increasing advantages to scale both when it comes to data and compute.

42:56And so, you know, I found this Pascal's bet to be a good framing of this, which is if I were running any one of those companies, it would now be sufficiently clear to me explain explain. Yeah. So, you know, so Pascal's is French philosophy says, I don't know whether God exists or not. But if he does exist and I don't believe, then it's going to be a really bad outcome for me. And if he does exist, I do believe I have eternal life. So if you believe that the upside of AI, right, is infinite is eternal, right, is some really big outcome. And all your competitors are doing it. What else are you going to invest your money in?

43:34You have we said we said here several weeks ago. You can buy back your shares. You can issue a dividend or you can buy GPUs. Right. Do you think any one of these founders or you can do you can do license deals with companies you want to acquire. You can you know, so I think, but I think most of these people are in this game for this moment. But I think it raises a really interesting alternative question, which is it's pretty clear to me now that there are very few new entrants that are going to be able to do it. And I think that's going to be a great way to play in that game, right? You may be able to build an application that rides on those rails.

44:12But the idea that you're going to be able to build that level of compute or build a frontier model that's going to require that level of compute on an annual basis and compete with those companies. I think it's very, very difficult. Yeah, and another thing that I think the law of large numbers just starts to catch up as well. I think there's some capex spend from even a mag seven. The I mentioned that maybe the CFO voice goes up a little bit, but but the investors will start asking as well. And and there was another data point this week that may seem trivial, but there was a there's something that just came out yesterday that open AI is talking to TSMC about building a chip.

44:54And it's put their foundry ambitions on hold. Right. I start to foundry ambitions were a little too ambitious. But but in some ways, that's a nod recognition that, oh, well, that may have been too much money. And and with the burn rate that's rumored that they have like, oh, okay, maybe, you know, and so there is there is there is some rest like one thing I would say about the past scout thing is if that's truly what's on everyone's mind. And that's exactly how you would go over the top. Right. For sure. The exact formula. First, I mean, listen, there is some non zero probability. Just as Elon says, there's a non zero probability that AI is going to end up being bad for humanity.

45:37There is a non zero probability here that at least for some of the players, they don't see a return on that investment. Or you get a supply demand imbalance in the middle. Or you get a deluded return, right? That you all overspend and had you just waited and spent slower the cost of the technology would come down and cost you less over. I mean, look, there are there are there are people that will argue that the, you know, we're going to get in here and the first pass is we're going to place a bunch of programmers. But then we're going to replace a bunch of paralegals and then we're going to replace, you know, a bunch of, you know, imaging analysts and then, you know, and the longer that list gets and if you are successfully fine tuning models specifically for those particular tasks and that gets longer and longer and longer, that's big.

46:35So it leads me perfectly into this comment out of Masha's son today. You know, that we couldn't not talk about. But a rate, Masha at FII today said, nine trillion of cumulative catbacks on 200 million GPUs is very reasonable. He said, in fact, I think it may be too small. And he went on to say, you know, that if you took the most critical estimate. So of the value of AI. So he said the lowest estimate that he's seen on the value of AI is that it could do the, you know, what he calls artificial super intelligence, which is what he thinks will have if we spend nine trillion dollars. And so what he said, is that it would replace five percent of the global workforce.

47:25And it just so happens if you do the math on that, five percent of the global workforce costs about nine trillion dollars a year. So he said, imagine you were a single entity, single enterprise. The global workforce was your workforce and you could spend nine trillion cumulatively over the next seven years that you would then recoup in a single year through the efficiency's gained in that workforce. It would obviously be an NPV positive investment bill is Masha's nine trillion the top. Is it where all this? You know, I think the key math for for that number is that it was bigger than any number anyone else's.

48:03There you go. There you go. I do think though there's I mean many of made this argument, right? You look at IT budgets as a whole about half of that generally goes to headcount and people. A smaller percentage that goes to software and even smaller percentage of that goes to new spend in the year most of the software spend is just renewal. You spent it last year, you're going to spend it this year. A lot of people have written about this, but it's the great services to software rotation services markets are usually 10x bigger than software markets. If we look at how can spend attack IT budgets as a whole, it's not just let's replace this software spend with this software spend.

48:39It's less replace these call center agents. Let's replace these insurance people filling out forms in the back office. It's like replace a lot of this. Most of these firms replace, you know, employ hundreds and hundreds of thousands of people. And we're seeing those numbers. That's where, you know, I started. You know, the conversation about my walk with Michael and you know, again, this is looking over a 30 to 40 year period of time never have as he seen or have I seen the ability for companies to take out 10 ,000 people and actually see customer satisfaction scores increase. Right. There's always a cost to letting people go, but in this case, you know, you hear Zuckerberg talk about take out 20 ,000 people flatter is faster, leaner is better, we're getting more done with less.

49:32Right. When you look at span of control in companies. Right. There are some companies, you know, that stuff. And that's a number of employees per manager. Right. So you can imagine that will widen, you know, because AI will allow you to, you know, have more people. You know, who you can effectively manage. It'll be interesting. I do think that some of the fine tuning and of the math is still to come. And I'll use the coding example. You know, when we started, you know, ever, oh, we're going to replace engineers. But, but if you talk to someone that a CIO type, you know, say what kind of lift you get from a copilot product.

50:13They're kind of generally into 15 to 30 % range, which isn't, you know, if you're replacing somebody to 100 % or infinite percent. And so whether or not, and maybe customer service is different than coding in this case, where you can, you know, replace 100 % or 90 % of the people. But it's interesting to see as the analysis come out of these things with those different numbers look like for each of these different verticals so that you can get a better sense of that. But if, if, if you really can, you know, if, if Sierra Brett Taylor's company is right and you can replace 100 % of your customer service agents with this technology and get a more satisfied customer.

51:03And if they're multiple verticals like that, then you're right. This could, this could go on for a long, long time. I'd say, you know, and I'm, you know, there's no doubt in my mind that there's some sloppy spending going on. Right. Like you can't, you can't add this magnitude of spending without there being a little bit of waste. Okay. But it's also clear to me that the reward on the other side, there is nobody taking their foot off the accelerator. Yeah. When I talk to core weave, when I talk to Azure, when I talked to open AI, when I talk to Amazon, Google, et cetera, not one of them is talking about anything other than how do we find the facilities that can support a gigawatt or two gigawatts or three gigawatts of power to power up the clusters that they want to, you know, they want to invest in.

51:51And these remember, these are three, four, five year long investments. Another thing that came out this morning that I was kind of waiting on as a proof point because it didn't make sense to me that it hadn't happened yet. TSMC said they're going to do across the board 20 % price increase. And that's, I was like, this should be happening. And so seeing this. Right. Also indicative of this. Right. Indeed. Indeed. And maybe we can, we can close out here by talking about the markets a little bit. We always talk about the markets at the close. But one of the questions I keep getting asked, Bill, is whether or not this election is priced in.

52:29I mean, you know, in a lot of our text threads, we have with our friends, everybody's trying to figure this out. All eyes on the election, which is here in seven or eight days. And, and the question is like a lot of people looking at the prediction markets say an increased probability that Trump wins the election. So they're wondering, dude, is there still time for me to adjust my portfolio right ahead of this. And so you heard Drunken Miller talk about this this week. Paul Tutor Jones talked about it. I think Ray Dalio all said the market is fully banking on a Trump victory at this point in time.

53:06I probably wouldn't put the market is at 100%. But you know, there's 70 to 80 % baked into the cake. You can see the lot of stocks have moved a lot. And I peeled this back a little bit. I'm not sure if this is unbelievable. I'd love to see what's in this democratic spread trade bucket. It's down 20 % 30 days. I'll tell you, you know, I looked at it, you know, some companies in the solar complex, like M phase, etc. down 25 % companies in 30 days in 30 days. You know, companies like in the healthcare trade, humana and others down significantly because obviously they provide Medicare advantage and other other products that will get hurt that are expected to get hurt under a Trump presidency.

53:49And so if you look at the policy consequences of these two candidates, they're very stark, right. And I would argue that most. He's also talked about a MFM clause for drug prices and side versus outside of US. So at this point, what I say here and I try to find to my portfolio for the election, probably not. You know, I think that markets are have been quite efficient on this over the last 30 days. And my own sense is that the bigger surprise, right, if you thought that it wasn't 60 or 70 % likelihood that Trump was going to win, let's say you thought it was actually even odds. And you believe the polls that are out there, right.

54:31That whole trade there will unwind if Harris wins. So there would be a massive move in the other direction, right. If Harris were to win, I put both of them in the two hard bucket. But I thought I'd put them out there because we get a, you know, certainly a lot of chatter about it. All right. We're into earning season, Brad. So, and we had a couple like right before we just started today, I guess Google and AMD. What do you, what do you, what's your quick interpretation of what you're seeing and what do you expect? Well, I think we came into this week. We and lots of others like if you look over the course of the past several weeks, the mag five has underperformed software and other categories.

55:14And I think people are pretty concerned about the CapEx guides. There's been a lot of talk about that. I came into this week and said to my team, I think it's largely priced in at this point in time. I said I thought the whole mag five would probably trade up three to five percent this week, including Google. Google came out tonight. You know, they grew their search revenues by 12 percent. They grew YouTube revenues by 12 percent. The stocks up, I think four or five percent after hours. That all smells right to me. It had traded off a lot, you know, going into this period. I think the more interesting thing Bill is if you look at kind of.

55:51Hey, can I say just a quick follow up when you said they were worried about the CapEx guide, which way were they worried? They were worried that it was going to be even higher. Yeah. Okay. So from your analysis earlier, it's a good thing if they want to spend more. Well, no, I think that, you know, there is, I mean, remember these CapEx expenses have gone fairly parabolic in the last couple of years. But operating income, so margin expansion and top line growth have outpaced the increase in CapEx. So people have tolerated it. What won't work well, right? Let's say we had a recession next year and then, you know, earnings were, came in a lot lower than people expected or top line growth came in lower.

56:37But there was, you were unhinged on CapEx. I don't think that would be a particularly good equation for the stock. So some people were quite worried about this. But I think, let's talk about Google in particular, right? I think there's a lot of concern and chatter in the world. I've been out out there talking about it. Chat GPT is consumed an extraordinary percentage of the time and energy that I used to spend in search. So it's kind of, you know, hard to believe that it's not really having an impact on search revenues, but it's not. And so if you look at this chart, this shows the search revenue growth over the course of last eight quarters.

57:16I mean, they've accelerated search revenue growth from 20, you know, end of 22 and early 23 from like, you know, 2%, 5%, all the way up to 14%, still at 12 % today. So part of the question is how long can search revenue growth stay at this level? And one of the key questions there was whether or not the AI enhanced search results were going to monetize at the same level as non -AI enhanced search results. So they call these SGE. And it turns out that they, they, they set on the call tonight that they're monetizing at the same level. So that's a really good data point for Google if true, which is they can layer in the answer at the top, push the blue links down the page without losing a lot of revenue.

58:08I mean, this has been argued both as a positive and negative, but the searches that were, I guess stolen most quickly by a chat engine or more of these kind of encyclopedic type searches where you're looking for information. Whereas the big money searches for Google are travel and new car home and those kind of things big purchases. And so those may not in fact be the ones where they're inserting much of this. So you may be, you may be talking about the long tail of their searches. For sure. For any way that aren't that relevant to the big dollars. You know what I'm saying? I don't know. For sure.

58:48I mean, a lot of people think of these as the knowledge graph searches. You know, I've been using, you know, all last night I was using chat GPT to study help help Lincoln study for his AP history exam. There's not a lot of monetization of that in Google anyway. So that page could write the same. Right. So so that monetization is about the same. Now we've also as you know, we saw this week that an anthropic released computer use. Right to take control of my browser to you know what we've been discussing. Book that hotel or book that airline ticket. It's Klugey. You know, a lot of people, you know, but it's a step in the direction.

59:25A lot of people thought that Google was going to release Jarvis this week, which is their version of this open. So I'm just funded a new browser company. Client or did I think? Open AI will certainly do this. Agentic. So you know, the fact of the matter is Google is already discounting this. It's trading at the lowest multiple, you know, in the mag five. So I think people are saying at some point it's going to have some effect. We don't know exactly when, but I would just say for this quarter, you know, super solid quarter out of the company. And then you asked about AMD. AMD's down about 10 % after hours.

59:57Despite, you know, continuing to have blistering growth. And I think what's going on there is there was some talk at the beginning of the year. The AMD could capture maybe 10 % of the data center market. And the fact of the matter is when you, they gave some forward guidance tonight that suggests they're going to stay at about 3 % of the GPU kind of data center market relative to Nvidia at about 90%. The company's done extraordinarily well. Lisa is an amazing, you know, CEO. And I think there are a lot of good things in the works. But you know, they're not closing the gap in terms of share of market.

1:00:36The tide is rising for both parties, but the opportunity clearly for them. And it's in its off big now. Right. Is to is to try to try to try to pierce a larger share of that market. But we didn't see any any. You know, back on the Google thing, we're quick. I just have a really hard time like in my brain separating kind of my own user experience shift and how few were Google searches I do. To accepting the idea that, oh, well, they're going to add it into like I don't, I don't go back there and say, oh, this is better like with it added in and ads and stuff. I prefer the complexity or I really do.

1:01:19So I don't I don't feel. Right. And so that to me is the leading edge, right? Like at the end of the day, could Google give you that same clean experience that Chatsy PT gives you? Of course they could. Right. But they cannibalize that that's what innovators dilemma means. They cannibalize their core business. And so they either have to, you know, have a product that looks different that still has the blue links that still has the sponsored ads. Right. And you risk losing user affinity. Right. Or, you know, so to me, it's one. This other challenge that I've that I think is hard for people to understand, but I've explained it a couple of times, which is their revenue per visit is going to fall if they complete the transaction.

1:02:02Because someone is spending marketing dollars to take that customer to their website and run the transaction with the hopes that they'll come directly back to that website. So they'll spend 50 to 100 % of first transaction. There's no one that's going to if if if Google or Chatsy PT or whoever convinces kayak or whoever to be a white label rails in the background. The amount of money they're going to give you for that's going to be like 5 % of the transaction. Bill, you brought up you brought something interesting. So like this new browser, right. It's coming called browser base. And I think this is a really interesting concept to think about kind of transitionary states versus end states.

1:02:46Right. The transitionary state today is we're going to have agents that essentially can scrape websites and view it as if I'm doing it. They're going to recognize the button and click the button. They're going to go here. What if we reinvented the browser and built it in a way where it's not a button for a human eye, but everything is some composable API that an agent can recognize and an agent can go interact with. And so you're not scraping the website where you would lose the eyeballs. You're building a new browser for agents versus humans. Is that the end state? There's lots. I don't know the answer, but it's a.

1:03:19It could be your question. You have to rebuild all the rails too. I mean, everything has to start to look like stripe. There has to be a, you know, a travel that striped or has to be like you have. You need. You need a transactional network. And that's not what we have today. Yeah. Like, like, yeah. Like we have a this. This. Browser based, you know, world that sits between the consumer and all these businesses. But it could happen. And boy, we've talked about voice. Like if you just start talking to your computer, it's a very different world. That's not a browser. Or it's not the browser we know.

1:03:57It could very well be a different, you know, entity. Yeah. Well, I think the way you go over the top. And why I'm so so excited about, you know, the equivalent of computer use across the board is, you know, in the same reason, perhaps the Elon says you use a humanoid versus a non humanoid robotic form. Because a humanoid works in a world that was designed for humans. Right. And the thing about computer use, you don't have to build all these new rails and everything, which takes a really long time to negotiate all of that stuff. Instead, you just give it, you pick what is use of the world that already exists.

1:04:35You know, straight out of the gate. So I think this, this is something I really wanted to make a point on. I think it's super interesting to watch. Which categories and which verticals fall into place first and why there was an article out this week that was looking at, I think, open AI as a scribe. And they highlighted that it failed like a lot. And so if, you know, and this is also an issue with like self driving like if the cost of a 5 % error or 10 % error is super high. It's going to take AI a long time to get there. I already argue programming is that way you can't have 5 % or 10 % self driving cars self driving.

1:05:20It may turn out that customer service. That's just fine. Right. Because the best thing class today already has that error. Sorry. Just because of human failure. And so it will take AI a while to get to where it has the kind of lines you need to solve certain problems. And that's why I'm still intrigued by which verticals are going to line up first and get knocked over. Well, another good conversation. Jam and great blog. Thanks for having me. Great blog. And I imagine you're we're going to get a lot of feedback on this one from LPs and founders. So we'll make sure to put it in the notes. Great to see you both.

1:06:03Thanks for watching. Take care.

1:06:14As a reminder to everybody, just our opinions, not investment advice.