Liberation Day, Tariffs, US v China Open Source, OpenAI Fundraise, $CRWV, TikTok | BG2 w/ Bill Gurley & Brad Gerstner

26:32But it will, you know, we'll be interesting to see what happens on this front. And that leads us up to open AI making an announcement, which I'll let you describe. Well, you know, listen, we've talked here and Sam has been dropping the breadcrumbs on Twitter, right? They wanted to launch an open source model. They've been GPU constrained. They've been bandwidth constrained. But he got the announcement out this week, which I was thrilled with where he said, you know, we're excited to release a powerful new open weight language model with reasoning in the coming months. And we want to talk to devs.

27:05So here, he's inviting all these developers to participate and give feedback. He said, we want to make it a very, very good model. We're planning to release an open weight language model, one of our first since GPT two. And he says, we've been thinking about this for a long time. And the interesting thing is somebody, you know, in the replies I saw somebody said, are you going to make people buy licenses if they get a lot of users like meta is doing with llama. And he kind of takes a jab at meta and he says, no, we're not going to say no. Yes, you said no. He says, says, no, which indicates maybe we're going to out open, you know, llama.

27:44So that's that's on the one hand, you know, kind of opening eye on the other hand. Just just hold your touch in case people don't know, you know, the openness is a continuum. It's not black or white. And that's sort of all the open source technologies in the open source model world. Some of the players most notably meta with llama have a usage restriction against the free use of the model at 700 million. And that's what you were referring to. And so at least in a tweet, Sam suggested they won't have that in NERS. So back to you. Yeah, no, which I think is notable because remember at the end of this month, we have llama con, which is the developer event for llama.

28:28It's a big deal for meta. The launch of llama for has been rumored for a long time. And in fact, I think there are just a lot of people who are surprised. They haven't released it. But it seems to everybody they're going to have to release it ahead of llama con. What I'm hearing bill is that it'll be a 400 billion parameter model. It'll use like it'll be a mixture of expert model using, you know, 50 60 70 experts. It's going to have huge context window like 10 million context window, you know, and it's going to launch this month. I think it's terrific that open AI has now fully committed, you know, everybody on the team, Brockman, Kevin, et cetera, we're all retweeting this fully committed.

29:09And maybe even suggesting that this is going to be a more capable model and even more open. I think it's good that we have competition in the US for an open source model. And when it comes to the administration and what Washington DC is going to do, my best sense is they do not want to see a Huawei deep seek belt and road either with chips or with open source models. They do not want to see the world run on deep seek on, you know, Huawei 910 chips. And so, you know, this gets back to the AI diffusion bill and how we're going to restrict these things. I think they would love to see the world continue to run on, you know, US compute, US silicon.

29:52And they would love to see llama and and perhaps open AI's open source model around the world. They know it has a lot of distribution. So I think this was a really positive step forward on that. And you bring up an important point, which is, you know, you don't, you don't have to be, let's say something does happen to limit deep seek usage. The whoever's going to jump in to try and lead the open source movement in the West, if they want to be a global player, they don't just have to get left of of everyone else in the West. They still have to compete with deep seek on a global on a global basis.

30:29And I don't think, you know, it'll be interesting to watch. I'm very, very curious how this plays out. I've already asked Clement hugging face it. Maybe he will create a continuum so we can rank all these different models from an openness perspective because there's so many different facets by which you could be open or not. Oh, but actually, I had one more thing. It is a stint. You're involved in open AI. You can correct me or if I'm wrong, but you have been, you know, saying for, I would say a couple quarters now that the real opportunity for open AI is on the product side versus the model side, which, which hints at being more of a consumer product than say enterprise API business that they've also been in.

31:17If, if they think that also and I'm not involved, so this is a bit of a conjecture in my part. Being more open with your model is a really deaf move because it will put more pressure on other players to try and keep up and it will allow your model to have more pervasive usage globally. And you talked about running out of compute, you know, the minute you put that model out where other people can download it, they're doing that on their servers, not on yours. And so I just think it's a very clever move for the same reason. Google would have supported Kubernetes. You're, you're kind of wiping out the business opportunity for other models to play on the API side if you make yours open, which is a helps protect the competitive flank.

32:10And once again, great for consumers. Yeah, I think it's, I think, you know, it makes sense on a bunch of friends. On the first front, I think they want developers to develop on their platform and build applications for, you know, for open AI. And so this brings them into the ecosystem. Number two, I think that they fundamentally have a view that they want to build, you know, they want to build products and applications that move humanity forward with AI. And this is another way to do it at scale. You know, Sam has said publicly now, I've heard him several times say that he thinks that models are commoditizing.

32:45They're anti into the game. You know, they will continue to push the front tier. So he thinks they'll have the best models. But that general intelligence, you know, that average level of intelligence is we already see is going to be widely distributed. And that the battleground bill is really going to be fought around products and services. And I wouldn't say that they view themselves as an exclusively a consumer company. But clearly, Chad, GPT is a major thrust and major focus of the business. It's the market leading consumer application. Probably has 80 to 90 % market share. I think network effects are kicking in and other things.

33:20But I also think their enterprise business is if not the biggest one of the biggest and also growing at the fastest rate because remember the consumerization of the enterprise, one of the fascinating things that's happening in the enterprise is these are all users of Chad, GPT. So when the CEO shows up in the boardroom and somebody says, yeah, we're looking at bringing AI into the company and they're we're looking at, you know, Chad, GPT enterprise. It's an easy yes. It reminds me of when every CEO said, hey, get me an iPhone, you know, in the enterprise and they were on Blackberry and they all switched to iPhones because they loved using them at home.

33:56I think the natural thing for them to do. So it's not to say enterprise is going to be a battle. It's not going to be winner take all. But I think these guys do have their eyes squarely set on building to build enterprise. There's probably two different types of enterprise. There's probably a product that people buy user licenses for for doing white collar research type work where they may where I think what you said will be very relevant, like having the UI they're used to. And then there's the the separate side which is models that under the eye that type types of business processes that you're building.

34:34Well, one of the things you pinged me on this week was the investment round around Open AI and I'm happy to share what I can share. But you know, you know, what was announced? Yeah, well, I mean, they announced the long rumored investment that was led by soft bank, which many people described in the headline as a $40 billion investment round. I think if you read the breakdown of it, it's, you know, it comes in a couple of tranches. The first tranche being closer to 10 billion, the second tranche being closer to 30 billion. And it's an extraordinary amount of money. It's bigger than any I bigger than I think the largest IPO.

35:15Sons may be one or two that has ever been done. I've often described these as private IPOs, altimeter participated along with several others who were reported. And the valuation was like 260 pre which would make it if all the money were to come in a 300 post valuation. And so it certainly got a lot of attention this week. And you know, you asked me the question, I think Bill, just around kind of valuation. Right. How did we think about valuation? The first thing I would say is market leaders never look cheap. When I invested in Google in 2005, when I invested in, you know, Metta, when the IPO broke and we looked at those late stage private rounds, I certainly remember the Microsoft round in a meta 15 billion that was roundly criticized as being incredibly expensive.

36:05None of these things, you're certainly not going to buy a market leader on the cheap. But if you really look at this, I think that they've, they've said publicly they expect their revenues this year to be around 13 billion, right? To do 13 billion in revenue, it probably means you have to exit the year closer to 15 to 18 billion in run rate revenue. So as I look at this on a forward run rate for this year, you're paying something like, you know, 20 times revenue for the business. Okay. Now we also had a couple other announcements, you know, this week, there's, you know, there's the anthropic funding round and there's talk that they're doing a billion to two billion in revenue, a 60 billion dollar funding round.

36:46So that to me looks like something like 50 times revenue. So again, you got open AI 20 times and theropic at 50 times. And then we had the merger of X and X dot AI, which are rumored to have around, let's call it three billion in revenue and the combined market cap there's like 125 billion. So that looks like closer to 80 times revenue. So the market leader here, which usually trades at a premium, not at a discount, to me, you know, again, we can argue about the sustainability and could somebody disrupt them and is 20 times a good valuation in this environment. And yeah, but aren't they spending a lot of money on compute?

37:25And is it really high value revenue? But apples for apples relative to their peers. It certainly appears to me like, you know, 20 versus 50 versus 80. It's hard to say that this would be more expensive on a multiple basis than anthropic or or X dot AI. Yeah. And I also read that they're, they're like are still contingencies on whether the full conversion from a nonprofit to a for profit happens. So I think there's some stuff. If that's true, there's still some stuff to play out. But, you know, one thing I would say when I witnessed this from afar and once again, you're you're involved. I'm not so correct me if I'm wrong.

38:04But, you know, having lived through the Uber lift situation, which oddly had masa coming to the table also, you know, our world has just evolved into one where so many people believe in power at all. So many people believe it in network effects and that these markets are winner take all that you end up with these massive capital raising rounds. And, you know, it's not lost on me that both with Stargate and with this one, the headline numbers bigger than, you know, the piece meal when you start to unpack it, which, you know, for better, for worse, for my position, smells of being promotional. And, you know, and so why would you do that?

38:45Why are you why are you trying to have a bigger headline number? And that number does get repeated in the press. So it does work in that way. And I come back to, you know, I suspect the company sending a message to Anthropic and anyone else in the game that we're here for the long haul. And, you know, they probably didn't anticipate all the moves that Elon's made with X and Twitter. And obviously that is another deep pocketed player. But, but boy, you know, if you're, if you're on the Anthropic, you know, investment, you know, side, I'd be scared. Like, like, you know, I've lived through this before.

39:25It is a sport of kings, if you will. And then lastly, one thing that naturally falls out of that is unit economics get postponed. You have to believe in power law and the network effect. They've, they've, in addition to that headline number, you know, I think they've said publicly they expect to lose, you know, five to seven billion this year. And, you know, with an employee count of, I think, six to seven thousand, that's not going to run you more than a billionaire too. So there's some number between the revenue number you talked about and subtracting two billion for expenses and the rest is your operating cost of keeping the say, I'm machine going.

40:09And, you know, I ran some loose numbers and I come up around 15 or 20 bucks a year for a non -paid user, you know, just to, to run the servers on their behalf. And, you know, eventually you might get to advertising eventually. You may convert more of them to paid. These are, these are things we've seen play out over time. They played out with ad models. But once again, if you're going to try and lay chase to them, you got to be prepared to underwrite that cost yourself. Right. You know, listen, I think the analogy is a fair one bill. And obviously, Masa was involved in the Uber lift battle. So it's an easy one, particularly with his involvement here to say you've referred to it before as weapons of economic destruction, all of this capital.

40:53But I would remind you, there was a moment in time in 2020 where the headlines were the Uber would never be profitable as a failed business model. It will never make money. And here's a business that's going to do six billion of free cash flow. This is right. And so, and so the winner does take all the winner does take most. I will tell you as a shareholder, I speak with the leadership of the company all the time about unit economics. Obviously, if I'm investing in the business, I feel confident in their leadership around unit economics. I'm, you know, one of the things that I think's really important here is just like what's happening in the business.

41:30Right. Sam tweeted this week, they added a million chat GPT users in an hour. Yep. In an hour that they cross 20 million subscribers, paying subscribers for chat GPT. They cross 500 million weekly average users of chat GPT. In fact, they were, they're going so gang busters. They're throttling all their demand. In fact, I don't know if you saw David Sax's tweet where he said, America's leading AI companies are all reporting that demand is off the charts. So much so that they're being forced to impose rate limits. And he said, fortunately, we have massive new infrastructure projects coming online, which gets me to the point of why are they raising so much money.

42:10Right. And you and I are talking about taking the pod down to Abelene, Texas to see Stargate, to Denton, Texas, to see, you know, the core weave facility that they're standing up for open AI. And the fact of the matter is, I think that they need to bring on a massive amount of compute just to support the demand they currently have. I can tell you, when you look at the product pipeline for open AI, right, whether it's, you know, there, there are two or three models. They already have completed on the shelf. There's a lot of agent stuff that they want to do that's on the shelf. I think there's a lot of stuff they want to do around pricing, but they can't do these things today and open source with their current level of GPU demand.

42:52And you know, Sam went on online stuff. Anybody has a cluster of 100 ,000 GPUs, you know, send me a DM and you know, you may say it's promotional and hyperbole, but the round was already raised. It could be, it could be, I actually, I actually think, you know, in this case, it's true. I know they were pulling, you know, a lot of things offline just to support the demand. Now, the irony is, what was this demand coming from, right? And the demand, you know, because we didn't mention Gemini 2 .5 that happened to release, you know, in this last week. And part of the reason we didn't mention it is because literally on the day that they, that they launch it, open AI launches this upgrade to Imogen, where people are making all these anime photos of themselves that literally blew up, like demand for a billion anime photos a day from the United States all the way to India.

43:44And they can't support it. And some people may say, oh, well, this is an example of how dumb AI is. People are using it to make anime photos, but I would point them to Chris Dixian's, you know, blog that he wrote, you know, some time ago, where he says, listen, the next big thing will first appear as a toy, right? And there are a lot of things that we do for entertainment, a lot of things that, you know, we know that opening AI and chat GPT are being used for a lot of deep research. But the fact of the matter is that least is to this one. And I'm not going to get into the other, you know, valuations for the other models, but I'd say at least is to this one.

44:19I was an early investor in Google, as early investor in meta, I saw what those early consumer products look like, what those demand curves look like, what that cohort retention look like. And I would just say to you, that, you know, what I see out of chat GPT reminds me a lot of kind of those winner take all consumer applications. They're not infallible. It's not that they can't be assaulted. You know, Groc has been a great model, you know, launched by Elon, but I think they really do have a big moat. And I think the network effects are kicking in. And I think that not only are they order of magnitude bigger, but they're also growing a lot faster.

44:57And so, you know, I think that the consumer business here will ultimately be valuable. But to your point, the unity economics can be crap along the way. And it's up to the company to launch the things like advertising, pace, you know, different pricing tiers, et cetera, that, you know, bring all those things. Let me ask you a question. Yeah. Since since we you went down that avenue, I think they've announced, is it 20 million paid users on and 500 million total users? So you have a four percent conversion rate. How do you think about paid versus advertising that conversion rate? What is how do you think about the business model with those facts on the table?

45:41Yeah. I mean, honestly, I think that right now, we probably, you know, we're throttling chat GPT. So when you bring on more compute, all those numbers would be higher, right? If you just have more compute. Secondly, I think most of chat GPT users are using a model that's like a year old, right? Because we haven't been able to upgrade the, they haven't been able to upgrade the models because I don't think they can support the things they want to do in the upgraded models from a GPU perspective. So my suspicion is when they're able to do that, that they're going to have a lot more flexibility around things like pricing tiers.

46:16Sam has said he doesn't particularly like advertising, but at some point they will obviously have something that they think is beneficial to consumers that will be around that. If you look at operator, if I say to operator book me the four seasons hotel in New York next Tuesday, and it does that for me, which I think they're getting a lot closer to you. And I have this back and forth on that. But, but, but, you know, let's just stipulate that even you believe at some point they're going to get there. And if we're driving that kind of value for users, either you user will pay or the merchant will pay.

46:47I think they're all sorts of business models that will evolve around that. So my hunch is you're going to see a mixture of advertising. You're going to see a lot of different pricing tiers. You're going to see models. I don't think we're going to have this, you know, this long menu of model choices that forces the consumer to understand the difference between 0, 4, many and 0, 3 and 0, 1 and, you know, all these different models. I think you're just going to have a smart model, chat GPT 5 or chat GPT 6 that may be coming sooner rather than later, that's just going to make those choices for you.

47:18And so I think there are a lot of weight. But, but, but, you know, we talked about this in the past, but, but I've, I've often felt that one of the reasons that Google is so susceptible to disruption is how they've maximized the revenue per visitor. And I personally don't think there's any way when that world you're talking about that agent world evolves that that that partner in a hotel is going to pay a fee anywhere close to the to the fee that's paid to Google buy someone that's marketing a service that I always say using LTV math versus transactional math. I just don't think there's any way you can get there.

47:58And so that's a huge disruptive advantage for, I think it's a huge disruptive advantage for OpenAI. Well, let's click on that for a second. You know, we have our friend Glenn Fogel who runs who runs booking .com and credible CEO. They've been an incredible business. And they're one of the largest advertisers. Historically, I've been one of the largest advertisers on Google. I think it's been reported that Google generates one of their largest advertising categories in the world. It's travel hotel, specifically booking is one of their largest global advertisers. So you sell a hundred dollar hotel room and you take $20, right?

48:36You booking .com. That's called take 18 to 20 bucks. And then you pay a portion of that to Google, maybe half of it, maybe more than half of it. Well, actually, actually to be fair in many circumstances, they'll be using what I call LTV math and no pay more than 100%. Oh, no, they'll pay 50 bucks instead of 20. Because and then I'll say, well, the customer comes back twice in a year. We get to break even in the first year. And we're going to hold them forever. And this is why that won't work in the agent world, which is no one's going to think that way. Because if you're a white label service that's underneath the agent model, the most you can share is 10 of the 20, right?

49:19Or whatever, you know, it's it's it's so so there's there's no doubt there's competition coming to that. You know, Google's traded down from 200 to 150 and change and you know, they see that disruption coming their way. The irony here, right, is we still have, you know, this anti -trust investigation with with with Google. I always I always get a, you know, a laugh out of the fact that finally in 2025, the first time we've actually had competition for Google, like very clear that competition is coming to all those categories. And now we get around to talking about breaking up their search monopoly.

49:52I mean, it's ridiculous. I don't think that's I think that's the last of our problems. But I do think we're going to see business model evolution around these different categories. So let's just say bill that it settles out at 10 bucks, right? That the hotel, the hotel's are clearly willing to give 20 bucks. Let's say it settles out at 10 bucks. Well, how that's all upside for opening our eyes. Right. But it's replacing 50 for Google. That's my only point. Yeah. Yeah. No, I bet. But by the way, another thing played out in this space, a little, a little out of order of our competition. But there's this acronym.

50:23People are starting to use MCP that is a way for you to represent your service. Like if you were booking .com to a to a model. So that it's not simply scraping your website, which is certainly not the ideal way to do this thing. That standard, I believe, got started in a traffic, but open AI has agreed to support it. And so another factor that plays out with whoever's most aggressive with the open standards is they might be able to take a lead in defining these things, which could be advantageous to them. And I got to tell you, you know, I meant to say this earlier when we were talking about the open source stuff.

51:03But I got to believe the anxieties high at Google. I got to believe the anxieties high at meta. We've seen some high executive shifts and departures, also at Apple in terms of who's in charge of these things. And so I see those moves. And I think that must represent anxiety. You know, these are, there's a lot of stake. And so I, it'll be really interesting to see how open people are, how willing they are to be open with their models, how aggressive they are. Because I think it's a really critical window. I'm talking about like next three to six months could dictate who's standing on top of the hill five, 10 years from now.

51:46Well, the tectonic plates, as I've said, as we've said for now, two years. This is the first time they've shifted in this magnitude in 20 years. All right. This is a 20, 20 year event for 20 years. The search paradigm ruled everything in consumer internet and Google stood at the top of that mountain. And it took something, you know, it took an AI level shift. It took chat GPT moment. And then getting to the scale of maybe a billion monthlies and 500 million weeklies to even lead to this conversation. But things happen very slowly, Bill, as we know. And then they happen very fast. And I think that's your point.

52:25Yep. Before we run out of time, we had an IPO, which we haven't had very many of. Let's talk IPOs, both core weave, but after that, let's just talk about IPOs in general. Well, that's great. You know, like, as you know, we're shareholders in core weave since a couple of rounds ago, we were one of the largest buyers in the IPO. We're happy we did, you know, you know, I have to say on Friday, it was pretty damn nervous, Bill. It broke the offering price. Went down to about 37 bucks a share. I think today they had some announcements of this deal with Google where they're going to provide Nvidia grace black wells through through core weave.

53:07So Google's going to be buying a bunch of Nvidia chips through core weave. And one of the big criticisms of this company was they were too dependent upon Microsoft.

53:19But Nvidia, Coherent, Mistral, and so I think they've really, you know, emerged as the leading AI kind of cloud and the stock in the last couple days, despite the fact they took a public last Friday. I mean, talk about taking a company public into a category five hurricane. I mean, we had, we had like liberation day, staring us in the face and they had to fly into that. And you know, as you pointed out, it wasn't the least controversial of IPOs, but I have to give credit to my intertor and his team and listen, I'm here in Silicon Valley. They started this company five years ago. It's worth over $30 billion today.

53:57It's played a really important role in standing up, open AI, and a lot of the leading AI labs. And I just think that's a good thing for all of us. But it's not, you know, it's also fair to ask the questions that you've asked, you know, around, you know, kind of the durability, if you will, about core weave in the revenue. Yeah. And look, it's, you're absolutely right. It's so funny. We sit around and complain about the IPO market, not being open. And you know, for the entirety of 2024, the markets were up 30%. You know, the sun shine was out and no one was going. So here, someone finally gets the guts to go and the markets, of course, have turned the other way.

54:38And that's why, man, I, like anyone that tells you when you're ready to go public that you have to wait on the markets to be in a particular place, I would tell them to shut the fuck up and like, like, take your company out. Like you can't control that thing. That's an external factor. And I also believe a lot of people because of my stance on direct listing said, was this a good IPO, a bad IPO? I mean, as you said, there's stuff moving all over the place. Like you have, you have a leader in their field, unquestionably, huge revenue growth. Their business model isn't fully unpacked because the CapEx has invested so far ahead of the product.

55:18So you can't look at the income statement and say, oh, the right, you know, economics are perfect. And there's, and there's questions about what is the appropriate depreciation schedule and all these things. But, but I am glad to take out, and I'm glad that it's done fine. They've had basically two customer announcements since they went out, which shows how fast to say, I world moves. And I think that's why the stock went from 40 to 36 and way back up above that now. Let's hope that it brings more IPOs to the table. This company needed capital because it's a capital intensive business. And those are the ones that tend to, you know, come to the markets eventually, no matter what.

55:59We have this offsetting reality, you know, that the stripes of the world and data bricks and others are choosing to delay being public and have massive access to private capital. And maybe that's a discussion for another day. But there are a few others, Clarenus, in the pipeline, you know, we've talked about cerebris being in the pipeline. And so I'm always hopeful. I'm always kind of just wanting for there to be more companies that are willing to move into the public markets. But the offset of what we talked about at the beginning is going to be there. And so we'll see how those things interact with a choppy market.

56:37Well, you know, and somebody else I should mention is Morgan Stanley. I mean, they took a lot of heat last Friday, you know, on this deal, why are you bringing it now? The stock went below 40. CNBC was roundly critical of, you know, of the company, you know, and of Morgan Stanley. And the stocks at 60 bucks or whatever it ended today at. And so again, you know, we feel good as shareholders. I feel good for the people involved in the company. Obviously, there are still questions you know, that remain about the business. You mentioned depreciation. The one thing I tell you about the depreciation argument as it relates to this company is, you know, a lot of people push on, you know, there's a statement by Jensen at a GTC that, you know, hoppers may not have value because Grace Blackwell is so much better.

57:27He was a little more aggressive than that. And he called himself the chief revenue destroyer. And basically made statements that I think if you interpreted or interpreted accurately would imply that maybe you should have a two -year depreciation, not a six. Like he made it sound that way. And he took a lot of heat and he probably wishes he hadn't said it, but he said it. My view on this is like, listen, because we got to square this circle. We have, you know, the SACS tweet, you know, we know that inference demand is off the charts. Everybody has, you know, is demonstrating their need for more GPUs to run inference.

58:08Everything in the world is becoming, you know, inference. We've talked about that at length. And so my view is this, you know, like when you talk about two years for GPUs, they're going to cutting edge GPUs are going to be used for cutting edge training for the, you know, frontier models in that first two -year period. But all these things are going to continue to get used for inference. And the right way to think about core weave, you know, and, you know, I think the consensus margins of for this business are like 25 % EBIT, you know, over the course of the next couple of years. How did they get there?

58:38You know, so think about their, their unit economics bill, you know, their, their, their capex, their op -ex. So they got to, they got to, get a data center, they got to pay for all their operating expenses, then they got to buy the servers. So the way this works, I think, is they sell a four -year deal to Microsoft or a four or five -year deal to open AI or four -year deal to Google or whatever. They expect to pay back all the capex op -ex and GPUs in three years. And so the fourth year, which is a four -year guaranteed contract, the fourth year is your profit margin, right? And then anything you earn past the four years, that's all gravy on top.

59:16And the consensus earnings are not giving them any credit for anything after the end of those contract periods. Now what I'll tell you is, you know, and we've done a lot of research on this. There's still a lot of A 100s in use in the world today. In fact, Jensen has talked at length about that. That's a 2020 product. So we're in the fifth year, and A 100s are still out there being used by almost everyone that bought A 100s. You know, and then if you look at it, I think Jensen at GTC said last year, the opening I had just retired the V 100s. That was a 2017 GPU. So that's like a seven -year life cycle that they were using those four.

59:57And so I think that we have a lot of comfort that at a minimum, people are going to be using these things for four years, a couple years for training, a couple years for inference. I've yet to hear of anybody throwing away any GPU because it doesn't have value. Remember, the way CUDA works, the software that runs these GPUs, it constantly gets upgraded. It's like my Tesla, right? I had an old Tesla Model S, like seven years old, but it felt like a new car because my software got updated all the time. And so, and frankly, the, you know, it still got me to the places I needed to get to. It wasn't as good as the new model I bought in December with full FSD and everything else, but it didn't feel like a really old car because the software was constantly updating.

1:00:41I kind of think of that the same way for these GPUs. The GPUs are getting better every year, even though the hardware remains the same. So I'm not nearly as worried about that depreciation schedule. It seems to be a, you know, a big hit on the company and lots of people are talking about but they're out the door and, you know, put it on this big new deal today. But look, the pushback on that is obviously that, that it's not a zero or one. Like, you make it sound like it's binary, you either throw it away or it's super valuable. And what it inevitably happens is the earning power of that product drops over time.

1:01:16And so there is, I think, a reasonable question, you know, should it be more of like an accelerated depreciation schedule, the idea with depreciation is to kind of, you know, they say the useful life. So you'd kind of want it to mirror the earnability of the asset over time. And so six years straight probably isn't the best fit for that. But we'll see, we'll see what happens over time. You know, there appears the incumbents in this world where at four years ago and pushed it to six, which wasn't, uh, what, it, it, it, it, and the answer may, the answer may lie somewhere in between. And, you know, like I said, I don't think they need it to be more than four.

1:01:58In order to achieve the, the, the margins that they have, but they're also to your point. It's a highly levered business. They got a D lever the business. So there's a lot of things in play here with core weave. That's why, again, if you look at the, the multiples it's trading at, um, well, I don't know what they are today, but the, the multiples it came public at, we're not overly taxing from our perspective. But there's a lot of headwind for all these AI companies. I mean, you have Nvidia trading at 19 times fully taxed earnings. And so, you know, there's a lot of skepticism in the world. Notwithstanding all the stuff we hear about demand, a lot of skepticism in the world about, uh, AI.

1:02:34I riddle for you before we move on. Yes. Would you sales force Netflix, square, Amazon, Palo Alto Networks, Facebook, Snap, proof point, NetSuite and core weave having common? No idea. They all broke issue. Oh, wow. And so, wow, when the talking heads on CNBC and others are critical of a company because they trade below their IPO price, it's just such a wrong way to look at things. And, um, you know, I think one of the reasons those high quality companies get price to perfection is the founders are stronger minded and have more leverage and negotiate more on this agreed upon price, which would also go away with the direct listing.

1:03:21But boy, what a silly way to think about quality, whether or not, whether or not you give away more and pop. That's what a lot of people think. You know, I don't like that. Right. You know, well, I kind of thought that maybe you thought this was a perfect IPO because it ended day one at precisely 40 bucks, which was the offer. We engineered. Let's be realistic. You also, you also, there's some peculiar terms in this company that you may have played a part in that the series, C, as I put right at like 3875, no doubt in my mind. People wanted to make sure it priced above that, which may have played a factor here.

1:04:01Who knows? Um, but, but let's move on. Let's talk about one more thing before we go. So much news in one week. Um, the, uh, the TikTok thing, there's new information as we speak. Tell me what you know. Well, I mean, listen, there's a lot of rumors swirling, which not surprisingly, this deal is, you know, set to expire or need to be extended by April 5th under the terms of, of the first congressional extension that was made by Trump. They've, you know, they've made very clear that, you know, there are a lot of buyers for the TikTok asset, um, Bill and that the president has, wants to put together a deal.

1:04:42And, and, and, of course, we have all these tariffs going on on China. And so I'm sure this will end up as part of a big trade negotiation as it pertains to China. But as you know, just for everybody, you know, we're shareholders. I've been a shareholder in this company since 2015, one of the earliest venture capital rounds in bite dance, the parent company, which, you know, which owns TikTok, you know, and for the last two years, I've agreed largely with Elon and Saks and others that we should engage with China. We shouldn't just shut down TikTok. We should make TikTok abide by the rules and regulations, right?

1:05:14That we have in this country. And, and, and that's what this whole legislative unwind was about, you know, the fore sale of spin out TikTok, you asked. So here's what I'm hearing. I'm hearing that there will be a new company stood up, you know, and I'm not privy to any information. I'm not party to, to these negotiations. But I'm hurt, you know, let's call it TikTok US. And that TikTok US will be partly owned by bite dance. But I think they have to keep that ownership threshold under 20%. So let's call it 19 .5 % owned by bite dance. That it will be owned partially by just the existing shareholders.

1:05:51Remember, the shareholders in bite dance, 60 % of those are US investors like altimeter. So that we'll get our shares in bite dance, or in TikTok US. And then 50 % of it are thereabouts will be new investors. So think folks like some of the rumors I've seen Amazon and Dreson, Oracle, you know, et cetera. And these are investors who are not currently in the cap table of bite dance. So altimeter or co -2 were currently in the cap table bite dance. So we're not going to be part of the new investor syndicate, or at least that's my understanding. So imagine they stand that up and then the question, where would that money go, Brad?

1:06:34So the money would go into this new code, right? So the new code would be capitalized with a bite dance. Now that's my understanding that it would go into new code that new code would get a license to the algorithm. And it would be up to new code to audit that to audit the data. Because remember, that's the whole point here, Bill. Like we want to have some control over, you know, the algorithm and the data. So it makes sense that Oracle would be involved. And that's just remember TikTok runs on the Oracle cloud down in Texas. I think a logical question is, okay, like what's the big, what's the so what here?

1:07:16And I'm hearing that the valuation for TikTok US could be pretty low, which I would expect, right? Because remember, the, you know, Trump has said, maybe we'll put this in the US sovereign wealth on. So he's negotiating the deal. I expect that he wants to get a pretty damn good deal. You didn't mention what percentage was for that, but is that part of the capital to? No, no, no, no idea. No idea. Yeah, one particular question if you go back six months, maybe three or six months, there was a lot of discussion that would suggest that the parent company bite dance had no interest in this deal. They'd rather shut it down than do this.

1:07:56Have they changed their mind for some reason? Is there new, a new perspective from their side? Well, I think remember if we go back six months, there was a camp that said, shut it down. And there's a camp saying, or we'll just take it, right? And like I think that the company's perspective, you're meeting the founder of the company, he basically said, there's no way to separate the algorithm between TikTok US and TikTok rest of the world. Because creators in the US create content that go to the rest of the world and vice versa. And so like if you took away all the US, it does so much damage, you would, you would be better to shut down TikTok US and just have invite the US creators onto the French platform or the the United Kingdom version of this or the Australian version of this via VPN or something.

1:08:48So I think the big change here Bill is this idea that US TikTok and global TikTok will continue to use the same algorithm. And it's just a license to the US TikTok would be my guess was part of bridge or breakthrough. I think a key thing here is like, how does altimeter or Sequoia or other US investors remember 60 % of the investors in bite dance are US investors. And the investors in places like altimeter, they're pension funds, they're teachers, they're firefighters. And if you think about the fair value for bite dance, I think most people, although it only trades it, let's call it 300 billion.

1:09:29Most people think the fair value of this is closer to a trillion dollars or certainly to 800 billion. So if you take 60 % of a trillion dollars, that's 600 billion in locked up venture capital value for all of the endowments and pension funds, etc for US investors. That's more than almost every other unrealized venture gain put together Bill. Right. And so if you're able to take this company public, that turns into DPI, like hundreds of billions of dollars of DPI that goes out to the investors in these venture. This company being TikTok or bite dance. This company being bite dance. But we had to get the TikTok deal done as a condition required to get bite dance public or bite dance out the door.

1:10:21And so remember bite dance about 90 % of bite dance is business is not TikTok US. 90 % of the value of the company is things like doiyan, which is the Chinese version of TikTok and dao bao, which is the Chinese version of chat GPT and TikTok around the world. And so there's a huge and profitable business inside of China and in rest of world. And we're just debating this piece in the United States. And so as a shareholder, I will tell you that whatever the dilution is caused by this, it's nominal relative to the value of the total. And what I really want to see get done is just certainty, right?

1:11:01Certainty for the company. I think it's good for the US that TikTok will remain. My kids love it. And I don't, yeah, you know, I'm glad we're going to make him abide by the rules of regulation. I think it's a win, you know, for for team Trump. I think it's a win for bite dance room. But remember now, we just hit him today, Bill, with 54 % tariffs. Okay. So there may be a conversation that has to occur before she and Trump. I thought this deal would get approved by China. Now I'm not so sure. So right. And the Chinese government could probably block the deal. Exactly. So just because we announced a deal, if we do hear a deal announced over the course the next few days or over the next week, doesn't mean that it's a done deal.

1:11:42But I'll leave on an optimistic note. Okay. Let's do that. I think that the president wants to do a deal with she. I don't believe we're going to have 54 % tariffs against China. We have two, it's too important to the rest of the world that we can cooperate with China on things like ending the war in the Ukraine, things in the Middle East. Yes, they are a, you know, there is a great competitive struggle between the two countries. But I think that ultimately, you know, the president will cut a deal. He said that he liked she invited him to the inauguration. And as we know, he's a deal maker. And now we've got the everything from the Panama Canal to negotiate over to, you know, TikTok to all the other trade deals between the two countries.

1:12:30So I suspect that that when we get back to what really came out of Liberation Day and what really matters, I think the most important thing that matters is US China bilateral trade relations. And I think that's going to, that's going to really dictate the direction of global growth and the direction of US and China economic growth over the course of the next few years. Important to watch. All right, man. Take care. Great seeing you. Have fun at the games. Take care.

1:13:07As a reminder to everybody, just our opinions, not investment advice.