4 Tech Arguments (Number 3 Will Shock You), Mansion Section, John Arnold Joins | Viswa Colluru, Jake Adler, Adam Korsunsky

26:14She's talking to counterparties, Millennium, Citadel. She's on the phone constantly moving huge volumes of commodity futures at scale, kind of elevating herself past just the prediction market small ball and getting into the big leagues. That's the future. Jane says, would you rather your girlfriend insider trade egg futures or cheat on you? No, so this is not insider trading. Like, you can actually do this. You can be a baker and realize that prices are going up and trade the commodities markets. In fact, the commodities markets are designed specifically to give that signal, and that is the purpose.

26:56The purpose is to understand, okay, the weather is bad. People can trade that. uh fundamentally there's there's no law against insider trading in commodity markets effectively um but there's a question of like is this a consumer ready product like is this something that someone who is uh maybe doesn't have you know a desk and a research team and a bloomberg one interesting thing is i found egg prices up in september the market right now there's a 72 percent chance okay but there's only four hundred and seventeen dollars of volume yeah but if you're only buying twenty dollars of eggs that's enough depth so it is a viable use case it's not it's not fraudulent uh i think most people are responding to just like the sloppiness and like the the the clickbaitiness of like the weird hook uh but somebody posted one of these that was done by a much less prestigious brand in i think like weight loss it was some sort of weight loss pill but it starts with like this insane hook about a secret relationship, very soap opera script.

28:05And I feel bad, but I actually watched the whole thing because I couldn't look away because it was really the Pandora's box. It was, it was infinite jest for that three minutes. And all the comments were like, why did I watch this? And someone had put it on the timeline as like, this is the worst thing I've ever seen. Yeah. The funny thing about this, ad is it seems like there are no one like proofread it because there's a lot of elements of it that just are not uh not even phrased properly yeah but sometimes putting in those details gets people to talk about it gets people to go in the comments actually amplifies things it draws your eye in and so you never know with like uh the algorithmic ad generation where all this stuff goes uh what about the uh the interesting thing is i i think the the consensus this, and we're going to talk to John Arnold about sports betting and prediction markets at noon today.

28:59But there is another interesting side of this, which is people seem to be coalescing, at least the vibes and the timeline are like, this is not good. Like, this is like, either you should personally stay away from it. Like, I don't advise you to be sports betting. And I think that's john arnold's position uh there is a second debate point in question which is uh what about the uh the dopamine sites how do you feel about dopamine sites so in south korea the thing that the thing that i think is consumerism continue my current concern about the state of the hyper casino that our world has turned into is that like as an adult, I feel like confident in my own decision-making ability and the ability to see ads for gambling all the time, everywhere and still make the call that it's not for me.

29:55I'm not interested. You've never lost a dollar.

30:01I've tried one weekend. John, John got to witness me one weekend. I was like, look, I think I should, I think I should try this gambling thing. It seems super popular. I got to get to the bottom of it. I tried it.

30:15I'm running in the red. And this is generally true for being an adult. But that being said, like, you know, as a 30-year-old, I've been advertised gambling products for a decade now. Yeah. And my concern is that while adults have the ability to just make the decision, like, hey, this isn't for me, and you have, like, more. Yeah. If you start young, you're more likely to stick with it for a while. Yeah, but young people today are going to go through, that are growing up on the internet, are going to go through this just like, they will probably be served like a million gambling ads by the time they're 18.

30:51It's a lot. Yeah. Yeah, I guess I didn't get served. It's so normalized. It's so a part of society now. It's instantly accessible. If you're getting advertised stuff like this, that's basically saying like, hey you're you're you're you're sending this message that like this is your way out right like this is yeah the deep irony is like the way out is to not participate and be one of the people that makes it through without forming the addiction yeah uh but we maybe we need to run a slop ad about that uh we want to do a a slop ad like this where it's the same same premise oh i think my partner's having an affair and lo and behold they're just watching tbpn for three hours every day getting informed about technology and business news.

31:37What do you think about dopamine sites, though? Because dopamine sites, which is where... Explain this. Dopamine sites are fake shopping experiences. It's an e-commerce site where you can buy luxury goods, but you don't actually have to pay them and they don't arrive. So this is from an article shared by Adonis on X. The final frontier of consumerism has arrived in South Korea. This week, I placed orders for a$44 ,860 Patek Philippe hand-engraved watch, a$12 ,500 Hermes bag, a$9 ,800 Tiffany diamond ring. Cha-ching. I didn't realize that was the analog one. That's great. And a$7 ,350 Cartier love bracelet in yellow gold.

32:24I don't need any of them. I certainly can't afford them. Thankfully, they'll never arrive. Instead of Amazon, this individual spent the past week browsing a new breed of website known as dopamine sites, a trend that emerged in South Korea. These websites like Dopamine Shop and Food Never Comes recreate the entire ritual of online shopping. You search for products, compare reviews, add items to your cart, enter a shipping address, place an order, and even track your delivery. but it's all imaginary. Is this not as bad as sports betting? Is this not bad at all? What is this? It's sort of strange and sad and a reflection of our society that is so infatuated with pure consumption instead of creation.

33:15Yeah. And it's dystopian, but I don't think it's - for tbbn merch well you just create a cart well i was thinking you should make like uh dopamine arr where you log in oh build a fake startup it looks like a stripe dashboard and then you just see like you know there's a game that i played that is basically that it's like a cookie clicker game what are those mindless games uh i don't know like adventure capitalist yeah i played adventure capitalist and you just like click a button and it's like open lemonade stand and then And by the end, you're like farming robots on the moon. And you just watch the numbers go up.

33:51Yeah, we made a game called Burn the Runway back in the day. Oh, yeah. I put it in the chat. You can pull it up. It's still up. Wow. This is pre-vibe coding. You did it the old-fashioned way, by hand. It's crazy. Do you think this counts as LARPing? Because it's actually live action, right? But it's like the spirit of LARPing. You will eventually develop like an encyclopedic knowledge of luxury goods if you spend enough time on here. I don't know. So it seems like it's nowhere near as bad as something where real money is at stake because you are wasting time, but you're not wasting any money and there's no risk of downside.

34:24So why would you buy bananas? Well, that's the cheapest item. Okay. But you can buy the max amount of bananas and then – Oh, okay, okay. So you buy different things for your startup and then you wind up running out of runway at the end? Yeah. Interesting. Came over immediately. Wow. To put this into perspective, there were no AI companies even on this list. Then it was WeWork. You had early Andrel. Andrel had only raised, I think, a couple hundred million at the time. You had Quibi on there. Okay, okay. The whole. Well, it's not all bad in AI slop. There's a video that Ate shared by popular demand, his magnum opus.

35:06No, it is all bad in AI slop. You think this one's bad? Rewind. There's this guy, Henry, says, I am so beyond obsessed with this account. For me, this is the moment that I am now very, very, very bullish on AI video. There's an account called Jean Philanthro, who's like a French guy who's a boxer. It is just somebody using, basically making videos and then... Translating this guy with a funny haircut. Yeah, he looks very silly. And he got 230 ,000 followers on Instagram. Yeah, a million, you know... Oh, and he launched a coin. Hundreds of millions of views. And so the new meta, I guess, is making an AI character that's silly, strange, run up the views.

35:50And then I think this was one of the top tokens a few days ago. Yeah. Well, sounds like a mess. Anyways, over to eights. To what? This is the video you were talking about? Oh, yes, yes, yes. By popular demand, his magnum opus, he has repurposed the famous scene from American Psycho, the business card scene with pickles. New pickle. What do you think? I can't really hear it. We're doing IEMs, I guess. Very nice. Look at that. Picked them up from the deli yesterday. Good coloring. That's dill. And the brine is something called mustard seed. It's very cool, baby. But that's nothing. I remember when you had to do this, you had to go into After Effects, track the actual business card, roto out the hand so that the card, whatever you put on the card, was underneath.

36:43And then you needed to blend the new card in if you wanted to make a joke. It was very time-intensive. It took hours. And now you can even change the voices. It's pretty crazy. This is a nut pickle. There's something funny about a pickle coming out of a... Whole peppercorn. Extra crisp. Impressive. Very nice. Let's see Paul Allen's pickle.

37:16See, there's still like a spark of genius here, you know, mixing pickles with... Let's see Paul Allen's pickle. With the pickle. And the fidelity is... That subtle olive coloring. The tasteful thickness of it. All right, we can move on. We can move on. Let me tell you about Cisco, critical infrastructure for the AI era, unlock real-time, seamless experiences and new value with Cisco.

37:46Anyway, there's a white pill on the slop narrative. So AI video is clearly in the depths of the slopification. But code was there a year ago. People were saying that the slop code would never get good enough, and that if it did, it would destroy everything. DHH is out with a new speech at Rails World 2026, his opening keynote. He says, it pencils down, people. Writing code by hand is no longer an economically viable skill for most programmers at most companies. Of course, if you're in some highly secure environment, it might make sense to still write it by hand. And so it sounds like a black pill.

38:28But then he says, but the future of making software has never been brighter. Don't you dare black pill this beautiful moment. So you can go watch DHH's full presentation. Looking like a megachurch preacher. Yeah. He's having a good time. So our fourth debate, our fourth and final debate. To what degree is the AI build-out driving interest rates upwards? People are going back and forth about this. Interest rates are spiking. Specifically, the 10-year yield has jumped 12%. So it's actually, what is that, 1 ,200 basis points or something? Because you're trying to explain the move in the rate. So it's not that we're at 18%.

39:13We're at 5.18%, but we were down much lower in the fours earlier. And it's causing nervousness. You know, last time interest rates went up, the venture capital world collapsed, and nobody likes high mortgage rates. Can you afford a home? There's a lot of knock-on effects. We've covered this a bunch. The vanilla explanation is just the Iran war was unexpected. It caused an energy crisis. That caused inflation. That caused interest rate hikes and expectations for future interest rate hikes, and thus interest rates are higher. AI is important in driving the economy, but mainly a sideshow in this story around interest rates specifically.

39:59But in tech, there's a view that the data center debt is simply too good to resist. And so the capital markets are flooding over there. But there's a lot of debate around this. So Rune said, Iran oil prices is short-term driver, But broadly, this is due to demand pressure from extremely attractive AI CapEx opportunities that are borrowing at nation scale. They're certainly hoovering up trillions of dollars. I think the total data center CapEx hyperscaler debt is now almost 20 % of what the U.S. government is buying, something like that. No, so it's actually higher. I looked this up. So basically, hyperscaler and NVIDIA debt issuance as a percentage of total treasury bond issuance through 2026 has been like 70%.

40:44Whoa. And I think 2025, it was like around 30. Yes. And so Astrid Wild says, this is correct. Global yields will continue to go higher because why would you invest in literally anything other than data centers when they have such a short payback period and you can throw tens of billions at it? I mean, we saw ClusterMax 1, I think, had a few dozen neoclouds. ClusterMax 3, which we talked to Jordan Nanos about yesterday, had 326 neoclouds. And they reviewed, I think, or they rated 200-something of them. And then that's not to mention that there are also data center construction projects from the actual hyperscalers.

41:26The labs weren't on there. And then the chip companies, Jordan called out. He said, like, Cerebris will have a neocloud and Positron and Etched will have neoclouds. And so there's going to be a lot more of this. At the same time, there's the flip side of the argument. Deep Dish Enjoyer says this is definitely currently not true. Those opportunities are not riskless. And importantly, you can't use private illiquid AI CapEx as collateral. So if you're a bond investor and you're looking at two different markets, are you really shifting out of government treasuries that are historically the risk-free rate?

42:05That they have a monopoly on violence. They have the ability to tax their citizens to pay back the debt. A neocloud that's doing a data center, if they go bankrupt, you might actually suffer a capital impairment and get back 70 cents on the dollar, maybe 90 cents on the dollar. So it stands to reason that there is more risk associated with the AI buildout, and so they're not completely apples to apples. But I still think that there is probably some sort of effect here. So it's true that as real GDP growth increases substantially, rates should rise, though. but we aren't there yet um and roche has lots of scary talking bonds these days but it's mostly recency bias since 1960 the 10 years average 5.8 percent we're at five percent below average if you'd fallen asleep 20 years ago and woke up today you think nothing happened in the bond market the entire time ignore all the sovereign debt crisis talk inflation expectations are adjusting to something more historically normalized.

43:04Carry on. Carry on. So which do you think it is?

43:14I'll defer to John Arnold on that, John. Okay, we'll talk to him about it. I think that the recent spike is 80 % Iran war because I think that the AI build-out has been going on for a while and has been maybe driving rates upwards broadly, but the AI build-out has not been the thing that's been driving this most recent spike, which we've seen over the last 30 days. And it's not like we've been seeing a flurry of like, oh, wow, we didn't know that Oracle was going to back up the truck. We didn't know that Amazon was... So there's no... The expectations in the last month, on like like we've been covering this every day we haven't done that many shows we're like whoa we didn't realize that this was going to happen we didn't know that this was going to be a thing now maybe you could say jensen's securitization of gpus initiative with all the big banks maybe that's having knock-on effects now but in general it hasn't felt like there's acceleration that's a departure from the trend it's like yeah we're going to 3x compute every year we're on trend we've been talking about this some people don't buy it some people are skeptical but in general there hasn't been like a massive revision to the upside it's hard to say like yeah rates are spiking because muse is taking off and personal agents are going to drive token demand which is going to drive the build out further like we're not quite there yet there's a couple million yeah the other thing is when you look at these large pools of capital it's not like they're sitting there saying i was just going to go all in on treasuries but instead i like this is still putting capital at risk, right?

45:00And instead of make, there's a number of other investments that they might make outside of AI CapEx, but it wasn't like it's just binary thing like one or the other. Well, whatever you want to do in the age of higher interest rates, do it on public.com. Investing, for those who take it seriously, they got stocks, options, bonds, crypto, treasuries, and more with great customer service. So the Wall Street Journal is sort of putting the higher bond yields in context, saying the robust U.S. economy powers through rate hikes and rising bond yields. The U.S. economy keeps powering through inflation tariffs and higher borrowing costs, defying a run-up in treasury yields and a Fed rate increase that has the bond market spooked.

45:45The usual economic breaks aren't slowing growth, hiring, or an AI investment boom that looks to be unstoppable. To some, AI's potential returns seem so bright that even steep interest rates won't slow down tech companies' investments. And it does seem like the math on the AI build-out is wildly different. I was talking to somebody who was saying, like, he knows a lot of people that are falling in love with the spreadsheet. And so they want to start neoclouds and data centers because the payback period is shorter. I also saw an Instagram sort of like course hustler talking about how he bought a bunch of GPUs and is renting them to a data center and saw that as an attractive opportunity.

46:23A la like, oh, I bought a multifamily apartment complex. You must have watched the Dylan Patel interview, the recent Dworkesh one. Oh, yeah. Yeah, yeah, yeah. I mean, this is all related to that for sure. and also a lot of the AI build out a lot of the AI companies were very much born in the era of higher interest rates so I do believe that if you're a software company trading at 100x revenue multiple and you weren't forecasting real earnings for 10 years or something like that like the traditional SaaS playbook and interest rates go from 0 to 4 % that's a lot more damaging than okay you were already born in the era of higher interest rates and interest rates go from 4 % to 6 % or something, it's just not going to move the needle in the DCF that much because you were already discounting cash flows in the future, 4%.

47:15And so as opposed to zero, you're basically counting future cash flows as today's dollars. So anyway, that's the take from the Wall Street Journal. The Wall Street Journal also had an interesting article about real estate bargains in a higher interest rate environment. They say, looking for real estate bargains, watch these apartment loans. And it's an interesting article. So one pool of multifamily apartment mortgages issued in 2021 is already 53 % delinquent. And so what this means is that whoever bought the building had a floating rate interest rate and is now that the interest rate rise has put so much pressure under them that they might have to sell units, they might have to sell the building, and this is public information.

48:09So I actually went to Codex and was like, find a bunch of apartments that could potentially be on the market for way below market rates because there are public filings of the loan delinquency because those might be interesting things. I found some interesting stuff. Yeah, I mean, one indicator of just how brutal the whole multifamily investing world is, is like five years ago, the multifamily guys were extremely active on X, right? Posting multiple times a day, clearly like incredibly fired up, doing tons of deals. And then most of them have gone completely silent since then. And it's in large part because a lot of their bets are completely underwater.

48:53They're, you know, basically there's been a number of funds that have basically not just lost money but gone to zero. Yeah, no, totally. There's also some interesting local knock-on effects. Here in L.A., Los Angeles implemented a mansion tax for houses, in theory houses, above$4.5 million,$5 million, something like that. But it applies to commercial properties as well. So apartment buildings that change hands have to pay something like a 4 % or 5 % tax. And so that's obviously going to hurt the amount of building because when you go to sell and transact the building, you're taking this 5 % fee off the top.

49:37But it's also, yeah, putting pressure on existing housing stock. and sort of is like an odd knock-on effect because voters obviously go and say, like, yeah, if you can afford a$10 million house, you can afford a$500 ,000 transaction fee, go for it. And it was a very popular bill or change to the law, popular tax. A lot of people would be like, wait, my apartment is going to be taxed too because I just live in a building that's over$5 million in aggregate? Like this is maybe not what they wanted. And so who knows where that goes, but people are disappointed. Anyway, moving on to CrowdStrike. Your business is AI.

50:18Their business is secure. CrowdStrike secures AI and stops breaches. America's newest trophy asset is a country home in the Cotswolds. Cotswolds. I can never pronounce that properly. Harry and Meghan's return to the U.K. has put the region in the spotlight, a bevy of U.S. buyers are looking for homes in the area. Not very American to buy or invest out here. Strange to see that it's becoming sort of an American investment trend. Well, everyone saw what Paul Graham did, and they said, I want to be like that. That's right. I want to putter. Are you interested? Absolutely not. Yeah. Next story. Next story.

51:08A modern home in Silicon Valley, though. It lists for$44 million, sort of the Cotswolds of America, Silicon Valley, a five-bedroom house, which features four distinct courtyards, a pool, and is the most expensive listing in Palo Alto, California. Now, I want to do a little tier list. As I read you the various features, I want you to put them in buckets from F tier to S tier. So I'll read through the article, and I want you to quickly assign each feature of this$44 million Palo Alto home a tier. So for years, tech entrepreneur Asher Waldfogel and his wife, Helen McLean, dreamed of building a modern house in Palo Alto.

51:46The couple, however, worried about clashing with the Mediterranean-style architecture typically associated with their neighborhood of old Palo Alto. So they tapped an architect to design a home that paid homage to its surroundings with stucco, mahogany, and titanium-zinc plaiting. Where does titanium-zinc plaiting go for you? Kick it off. You like it? A tier? A tier. A tier, okay. We're leaving some room for an even better feature. They spent$20 million over several years bailing a house, completed in 2005. So now, looking to be closer to their adult daughter on the East Coast, they are putting the five-bedroom home on the market for$44 million.

52:22Wogafold is an angel investor who co-founded Redback Networks, a telecommunications equipment company. McLean previously had a career in fundraising. A couple purchased roughly... Career in fundraising, let's go. Generational run in fundraising. So the couple purchased the roughly 0.4-acre site. In terms of lot size, where are you putting 0.4 acres? Is that enough? F tier. F tier. Wow, okay, you need at least three acres to really make a splash and earn S tier. They demolished the circa 1930s Spanish colonial home, the house they built pinwheels around a central staircase. What do you think about houses that pinwheel around central staircases?

53:07uh i like classic california one-story ranch style homes you don't want a staircase staircase at all because the alternative is two staircases you have a front staircase a main entryway and then a back staircase this is a central staircase but you're no staircase guys so where is once the kids are are older grown up then you introduce the staircase i could explore it but But for now, I'm putting it staircases in general going in D tier. D tier. Okay. Staircases are out. It has 7 ,900 square feet of livable space. Where does that go? Split across multiple floors. I'm going B tier. B tier. Okay.

53:52Four distinct courtyards. Are you a courtyard guy? The problem with courtyards is they're very cool in theory, but how often are you actually like it's really just like a feature that goes on use. Sure, sure. I feel like the average courtyard gets like five minutes of someone's time annually. So I'm hearing like a C tier? D tier. D tier. Brutal for the four courtyards. What about the pool? It's got a pool. Where are pools for you? Pools are still underrated. Okay. So what tier? A lot of people would say pool's properly rated. Everyone thinks they're great. I think they're better than the average person thinks a pool is.

54:33I'm hearing S tier. S tier. Pool is S tier. Okay. I want to see what the pool looks like. Okay. Key feature of the home is a cast-in-place concrete wall or spine. Do you like a spine in your house? Concrete wall? Two stories high, 80 feet long. There's a little bit of control. I like it. I like it. some sort of a continuous theme through the home. Okay, yeah. I'm into it. B tier? B tier. B tier, okay. He said his wife and him are thinking of the next phase of life. They also have a home in Sun Valley, Idaho. S tier. Second home in Sun Valley is S tier. S tier, okay. S tier. Right now they're trying to emotionally let go and decide what to do next.

55:16Palo Alto is the center of venture capital and tech startups in Silicon Valley, home to some of the country's biggest tech titans. Sales volumes and prices are rising with a median sale price of$3.5 million for the three months ending in August, up 5.8 % year over year. Yeah, it's tough to get excited about this home in L.A. This is like a probably$12 million home, depending on where it's located. But over there. But over there. Apparently it's S-tier. Yeah. Apparently it's S-tier. Well, someone will pick it up, and hopefully they enjoy it. Hopefully they're into courtyards, they're into concrete spines in their homes.

55:54That's right. They make it a wonderful location. I think it's that time. It is that time. Let's bring in John Arnold, co-founder and co-chair of Arnold Ventures. Welcome to the show. How are you doing? What's going on? Doing great. Thanks for the invite. Yeah, thanks so much for hopping on. I would love to start with just a little overview of your career since it's been a fantastic journey following it from afar and hearing you describe it. But for our audience, how do you tell the story these days? Yeah, so my first job out of college was at Enron. So going there as a 21-year-old, it was kind of got there in 1995.

56:37If you remember, the company went bankrupt in December of 2001. And I was there too and through bankruptcy. and it was kind of a remarkable ride up and a very educational and sad ride down and probably learned more on the latter than I did on the former. But I came out of there. We can talk a little bit more about that if you want to. But I came out of there and tried to decide what I wanted to do next. You know, kind of really wanted to run my own division of something. I was running a trading desk at Enron. I was in very quick order, had become the head trader at Enron, which was the largest natural gas trading firm in the country.

57:20So I kind of had that top seat in the industry and I wanted to kind of take the next step and run a division of something. And so I looked at, you know, should I do this at a bank? Should I do it at an energy company, at another hedge fund? But I got the chance to start my own hedge fund. I got approached by a few people and said, we'll back you if you want to go do your own thing.

57:47Why wasn't your immediate impulse? Most of the people that come on the show, for better or worse, are like, I couldn't imagine working for anyone but myself. Why were you more excited initially about running a division at a bigger platform? form. Yeah, so I think the question was, how much of the information flow that I had at Enron that kind of helped create this kind of very profitable desk there, could I replicate on my own? And if you could replicate 95 % of the information flow, did that translate into 80 % or 90 % or 95 % of the profitability? Or was that That last 5 % was at all of it, right?

58:35Did 95 % of the information flow mean that you got 0 % of the profitability? Yeah. What was the information flow at Enron in natural gas in 1995? Did you know that you were stepping into an organization with a strong footing there? I know the later years pretty well, but I actually don't know what the brand positioning was to attract a 21-year-old at that time. Yeah. So if you look back at the history of the natural gas industry, and like many industries in American history, at one point it was very highly regulated to the point where the United States set the price of natural gas. and you had producers who would go produce it and they would say, if you produce gas, you get X dollars for it.

59:25It was viewed as an industry having some monopolistic characteristics and those characteristics were mostly around the pipelines. So there's not necessarily three pipelines between point A and point B and it's more of a monopoly type of industry. And so over the years, that kind of government price setting, as you can imagine, has a lot of downsides. And so sometimes you would end up with shortages, sometimes you would end up with surpluses. And so starting in the 70s under Carter and then continuing with Reagan in the 80s, you had a deregulation of a number of sectors, including natural gas. And the way that gas was deregulated was said that the production of natural gas is a competitive field.

1:00:11The end use of natural gas is competitive, but interstate pipelines are kind of monopolistic at times and should be federally regulated. And so kind of that happened. Enron at the time was this integrated natural gas company. And all of a sudden, you know, you have, okay, you have a pipeline division that has Chinese wall between the production side and the unused side. And kind of much like a bank, now all of a sudden you have to, somebody has to be that intermediary between the two. And so you have a producer producing gas in South Texas, you know, a certain amount wants a certain pricing mechanism over a certain time period.

1:00:51And an end user someplace else who wants kind of different characteristics about how their gas is priced. And somebody had to get in the middle of that. And in fact, Enron's kind of first business coming out of this deregulation was kind of Enron Gas Bank. Again, very similar characteristics to what a bank does. And so this industry was really kind of getting started in the late 80s, early 90s. And when I got started in 95, I had the benefit of this was not a highly mature industry. In fact, it was still trying to find its legs. And so as a young guy coming in, I wasn't that far behind because everybody else was kind of starting afresh as well.

1:01:31Yeah. How did you process the famous Enron pitch to commoditize and trade bandwidth? Did that like were there other people that were like, oh, they might be too homogenous of a market. I don't know if it can be commoditized or or was there at least some glimmer of hope there? Yeah, maybe luckily this was not my area. But I think there was kind of this notion that by kind of pricing and managing risk and connecting the producer of a commodity with the end users that you could create value. And so, you know, it started for Enron and natural gas, although, you know, the commodity markets had existed long before that.

1:02:18Oil had been a traded commodity for a long time. But electricity started to get deregulated. Enron kind of moved horizontally into that. And then it started thinking about what other areas, you know, what about water? What about trucking? What about bandwidth? And I think many of those, you know, had characteristics where you could tell an argument about how they could be an actively traded commodity. but many of which I think when Enron got into them was a little ahead of their time and didn't work out very well. Sure. Can you tell us the story of all the options that were open to you post Enron?

1:03:00There's the famous story of Ken Griffin and Citadel coming in. And I'm wondering, like, going back to that pitch of, like, the thing that a platform can offer, the actual profit pool that's available? How was that articulated? And how did you make a decision there ultimately? Yeah. So I think around this time, there had been a number of hedge funds that were doing these arbitrage-type strategies. And so Ken Griffin famously got started with convertible bond arbitrage. And there were kind of a number of those strategies. But they were limited in number. As they were successful, more capital came into them, and they started to get arbed away.

1:03:44And so the returns for the hedge funds that were doing this were starting to decline, and their assets were increasing. And I think a number of those hedge funds kind of had realized that they needed to start moving a little bit further out on the risk spectrum and take more risk rather than doing kind of pure arbitrage type trades. And the most aggressive of that was Citadel. And to the extent where whenever Enron went bankrupt, I think Citadel was already interested in the commodity markets, was already kind of trading some of them. But they viewed the Enron collapse as a great catalyst in order to get into it.

1:04:27And they sent a whole team down to Houston, kind of set up offices in the hotel across the street from the Enron building and just started interviewing almost everybody on the floor. And they were just kind of recreating what was the edge that Enron had? What was the org chart? Who was doing what? Who were the real kind of value creators of the field? And I could kind of see what was happening. I didn't really want any part of it. And so I kept kind of, you know, the recruiter was calling me. Will you come talk to us? And I saw people around me were doing that, and I just said no. And then there was kind of a weekend trip with a kind of industry trip.

1:05:10I was headed to Aspen. Ken Griffin called me at the airport and says, you know, can I talk to you? I said, I'm actually headed to Colorado right now. He calls back a few minutes later and says, if I come to Colorado tomorrow, will you meet with me? I said, of course. If you're going to put that effort out, then you're serious about it and I'll meet with you. And I had a great conversation with him. I had great respect for him, great respect for the Citadel organization. But by that point, I realized that the economics for me would be better if I did my own thing. and that the real value that they could provide me is capital on day one.

1:05:53And if I could raise that money, then I should do it on my own. How did you think about risk when you were getting your firm, maybe in the first three years of building your own firm, having gone through, been able to experience, at least participate in, be involved with a firm that experienced total collapse. I feel like that probably does something to your psychology. At the same time, you were quickly able to put up the kind of returns that typically would take a manager taking on extreme levels of risk. But I imagine that was probably priority number one, don't blow up. Don't blow up. Yeah, I think that's priority number one for anybody managing money is don't blow up.

1:06:43And, you know, especially if you think you have an edge and then there's real value in getting to come back tomorrow and play again. And so the biggest challenge was coming from a corporation using a corporate balance sheet and not really thinking about capital usage. So now all of a sudden I have just an investment account with X amount of dollars in it. And I got to stay under that in terms of capital usage, as well as thinking about what's the right value at risk that I should be running. And these markets, the natural gas market, especially in that time, could be exceptionally volatile. And so there was huge risk in – there was huge tail risk.

1:07:35And that created a lot of the opportunity was that there was – you could get paid if you had capital to provide some insurance at times. but to do it smartly, to size it correctly so that whenever you had to pay out on that, you could, again, show up the next day. But I think that the biggest challenge for me was this transition from corporate balance sheet to running my own money.

1:08:07I think most people have heard the story of how you made your first dollar. I'd love to have you tell it again. But I'm wondering if there's actually like a true lineage between your trading baseball cards to running arbitrage at Enron in 95. Or are these sort of just coincidences that these two things happen? Or do you think that there is a clear line between like what it takes to make it as a trader showing up early in your life? Yeah. I actually think that there were a number of similarities between these two things of trading baseball cards and trading natural gas. And to some extent, sports cards are a commodity.

1:08:49Maybe a little bit less so today as there's so much specialization. There's the one of one card or one of 10 cards, trying to make them not commodities. But back then, they really did feel like commodities. And, you know, I made money by knowing what every product was worth at every moment. And so I kind of connected, you know, when I was 15, 14, 15 years old, you know, through this dealer network that was on an early bulletin board that kind of connected dealers around the country and into Canada. And I was one of the few guys in Texas. And so there was a lot of kind of geographic arbitrage that I was doing.

1:09:36But also just, you know, that the prices were volatile. They would change week to week. And if you knew what a product was worth in New York that week, you could go around and, you know, buy things cheaper and send them up to New York and make that money. And so kind of that notion of know what every part, what every product within the industry is worth at all times certainly stayed with me and was a skill I used throughout my trading career. And I think the second part was kind of just this entrepreneurial aspect of that I wanted to do my own thing. and you know you kind of took some courage at age 27 to go out and start my own firm hire people put most of my capital at risk and just say let's give it a shot and if it doesn't work out and I'm still young I can go do other things but let's give it a shot it feels like there's a sort of fork in the road that's been intentionally designed to potentially take advantage of young people where you can get into sports, which are fun.

1:10:52I mean, every kid plays sports as a kid, peewee football and little league and AYSO soccer or whatever. And then you can get into cards and then you can get into natural gas trading or not even getting into cards, but the sort of digital representation of cards that, you know, function as, as slot machines and sort of fully disconnect the, the, the sort of like passion for the thing from, from the just sort of like finance, you know, it just becomes purely sort of a financial activity. Um, and we, we were talking earlier on the show how, um, you know, I feel very lucky to be, you know, uh, uh, uh, you didn't get hit with the gambling bug.

1:11:35Yeah. I, you know, as, as a, as a 30 year old, I, by the time we entered this sort of era of hyper gambling and everything becoming a casino, you know, my prefrontal cortex was, you know, developed and I could say like, you know, maybe that would be fun or, or maybe, maybe there's some money to be made there or, or lost, but it's not for me either way. Um, but, uh, but it feels like there was, there was maybe a beautiful moment where you could just be into trading cards and then establish a business, you know, arbitraging, but not go down this crazy road. The industry was much less of the lottery system that I sometimes feel it is today.

1:12:20There was a card that was just pulled a couple months ago that got auctioned today or yesterday for$8 million, this Cooper flag card, right? And so someone, you know, buys a pack of cards, gets an$8 million lottery ticket in there. And I think there is this kind of waterization of much of society. You see this in a lot of financial markets today. It's not sexy to buy the index fund and just sit on it. And as the markets have progressed, you've gotten to shorter and shorter time frame trades that are more in the binary nature of I either lose one or I make 10 and that have a lot of characteristics of a lottery.

1:13:10And so back 20 years ago, this was day trading. And there was only so much risk out there. That was more of one for one. You can make one, lose one. But then financial, quote unquote, innovation happens and people come up with products that allow you to take a lot of leverage, either through options or through just straight leverage. And so if you put a dollar up and try to make 10 or try to make 100, and there's this kind of whole conflation between investing and trading and gambling. And there's always been some gray area across those. But you open up a Robinhood app today, And it's, you know, do you want to, you know, do you want to day trade?

1:13:59Do you want to buy zero day options? Do you want to gamble on the sports game tonight? Or do you want to buy the index fund? And it's kind of all presented as this is all investing. And I think that's a really, really scary message that we're teaching, you know, the 16, 18, 20 year olds today. Are you, so I think a ton of agreement there. I'm interested in where this goes forward. Obviously, there are things individually you can do, just like stay away from the aggressive gambling products. There are things that you can do in your community, encouraging people not to take on unnecessary risk and stay with the safer investments.

1:14:41On a national level, there is a conversation about regulation restricting, banning more aggressive financial products. There's another side, which is maybe fund more education to teach people about this. It's sort of what we did with cigarettes, where there was a lot of regulation for who could buy them, but also a lot of education where pretty much everyone knows that they cause cancer. There's labels on there. And I'm wondering if you're more optimistic that we get out of this with an education strategy or through a regulation strategy, or is there no hope and it's every man for themselves and they have to resist the temptation individually?

1:15:25Yeah, education strategies take a long time. Yeah. And you also have some vices that catch on like wildfire and will eventually burn themselves out. And you can look at a lot of illicit drugs will have that type of characteristic. Yeah. And regulation is always going to be slow, but I think it's faster than the education side. I think the scary thing today is that there's a number of products that have kind of been, again, innovated to be of higher intensity and easier access than what they've ever been in the past. and the challenge is regulation lags on those. And so you can think about things like marijuana, right?

1:16:19And like the marijuana of 20 years ago is very, very different than it is today. And the access is much more available today. And you can think about pornography. The intensity of porn today is very different. The access today is very different. And gambling is the same way. You know, historically, you either had things that were high friction and high speed of play. So think about like a slot machine where you have to go to a casino. Oftentimes that meant getting on a plane and going someplace. Right. And you sit down, you could pull the arm of the slot machine pretty quickly. In fact, it was too slow, so they made it a button.

1:17:03So you could just sit there and boom, boom, boom, boom. Right. But there was friction on high speed of play. Or you had something that was low friction, like I could buy a lottery ticket at the supermarket when I'm buying my meat. But it's low speed of play. If I have my ticket, I wait eight hours or three days or I find out whether I want or not. Yeah, trading cards now, you can buy a pack of cards, but you don't have to wait for them to arrive with you to know what you got. And you can decide, I don't want any of them. I'll just roll the dice again. Right. Roll the dice again. Yeah. And so what gambling is today, with access through the phone and being able to, I don't even want to wait three hours and figure out whether my team won or not.

1:17:46I can bet on the next pitch. I can bet on every play. There's one minute markets now. Do you think Bitcoin will go up or down over the next one minute? And so that is effectively a binary option in one minute, which is fairly close to just a pure slot machine. Yeah, flipping a coin, right? Yeah, flipping a coin. Exactly. Because no one has information on a minute-to-minute basis. I mean, maybe somebody has. But yeah, certainly not the average gambler. Yeah. And so you're mentioning earlier just about, you know, luckily this is happening when we're older, but I have a teenage boy and teenage boys are kind of the most susceptible to these things.

1:18:31And there's tens of millions of teenage boys out there who are all getting drawn into these products. And I think there's real risk to society. And so the question is, you know, what's the right way to allow access to products? I have libertarian bones in my body. I think we need to be careful about banning access to products. But what are the right smart guardrails to put on them? Yeah, in some ways, multifaceted approach to regulation would help a lot of companies that are in positions where the right thing to do for shareholders is actually to make the gambling product, right? And we've seen this because there's investing apps now that make more money from gambling products, whatever they want to position them as, than stock trading.

1:19:27And we even saw four months ago, there was a series of headlines around how Meta was exploring building prediction markets, which I always felt was completely at odds with their stated goal and mission. but at the same time, you can make the argument as a meta shareholder that they have a lot of attention. There's people that are making a bunch of trades based on information they get on meta, and that product should be integrated into the product because it's generally legal. And it just feels like companies in many categories will get punished by not rolling out these products because their competitors will, and they will onboard more users and generate more revenue and be able to spend more money on marketing.

1:20:15And it's sort of this like really, really vicious cycle. And so I've gotten to the point where I pretty strongly believe that a lot of this stuff needs to be pulled back or banned. Of course, that sort of human desire and energy to speculate will just naturally flow to other places, right? You saw in some ways the AI trade over the last year sucked a lot of the wind out of the sails of like crypto, right? There was like way less appetite for Bitcoin when you can make 10x on some bottleneck trade. I did want to get to as much as we could spend hours talking about our casino world. I did want to get your point of view on how you've processed the overall sort of AI super cycle.

1:21:03There's so many different elements of it that I'm sure you've drawn. You have experience in through the early 2000s in that period, whether it be obviously energy markets coming into play in tech for the first time in a really meaningful way, massive capex and debt cycles and seeing some of these companies that have historically had pristine balance sheets figure out all these super complex structures. and then I actually want to get into compute markets as well and how we should be thinking about that from your point of view. But maybe start how you've processed sort of the last five years and maybe your mental model for where we are today.

1:21:50Yeah. You know, I probably started talking to people in this space around the 2020-2021 timeframe and then kind of like everybody in 22 was kind of surrounded by it. What I'm amazed at is the number of predictions that came true. Yeah. And when I heard it as a guy that's kind of outside of the tech world,

1:22:22that it just seemed farcical, the growth that they were projecting, that they were saying that things would keep scaling forever. And tech people have been wrong so many times. VR and flying cars and self-driving and NFTs and all this stuff. And then this was the one where it was like, oh, again, with the crazy predictions. And then it's been right on track. Very different. Yeah, and that you could keep scaling. And that you would never hit that plateau. And again, like in every other field, you hit plateaus, you start getting kind of significant decreasing marginal returns inputs. And that was my expectation of how this would play out.

1:23:10And it certainly hasn't. And so I think I've been open to the possibility, but skeptical. And now, whenever the big money was coming into data centers a couple years ago, and you had kind of the calls for the bubble, I was, you know, I think my view was just because a lot of money is coming in doesn't make it a bubble. Right. Now, it is true that, you know, you always say it's different this time. Right. And occasionally it actually is different this time. And the real test for the industry is, you know, can you find useful products and services that people are going to pay for? And if so, it works out great.

1:24:00And if not, it's going to be overinvestment. I do think that every commodity market goes through these booms and busts. And that's because you have the producers see the same price signal. Producers and end users see the same price signal at the same time and typically react in the same way. And so that creates, you know, whenever prices are high, people increase investment. There's a delay before that comes on. Oftentimes the end users have figured out ways to kind of optimize their demand or define substitutes. and then you get that bust that happens because too much capacity shows up in the future.

1:24:44And I think that's the big risk now with data centers is that every megawatt that's been built thus far keeps being worth more, right? And it's kind of a highly backwardated curve where if you can provide a compute tomorrow, that's worth a lot of money. compute in two years is worth less compute in five years is worth a lot less right but everybody is seeing that that if i can build today and supply today i can make a lot of money by even renting it out in the short term and i think the question is is everybody overbuilding a little bit because they look at the same price signal and say you know even if we overbuild we're okay because we can sell it to somebody else.

1:25:31Yeah. Yeah. Or even, or even, you know, you can imagine some of these models saying, well, yeah, you can discount the rate by 60 % and we're still, we're still making, you know, we're still going to be making money here. So of course there's, that should be plenty of margin of safety when in reality, you could see a much larger, you know, drop depending on how, how much of an oversupply there is. Yeah. Have you been able to tease out the impact of AI on markets from other factors? I mean, we were looking at 10-year interest rates are very high. There's been a big spike over the last 30 days. All the tech people are sort of saying, look, it's evidence that data centers are just too good.

1:26:22And so everyone's investing there. At the same time, there's a war in Iran, and so that might be a bigger factor. But even in the GDP numbers, it's very hard to actually get to a ground truth of the impact on productivity. The Internet famously never really showed up in the productivity statistics. An incredible amount of wealth was created. So how do you think about teasing out the different effects? Does it even matter, or do you have a process? Do you have a view right now on how much growth or effect on markets AI is actually driving? Yeah, I think it's really hard. I think you did a great job kind of setting the stage for the difficulties the field is having.

1:27:06I think the financial world and economists are notoriously just very bad at predicting interest rates and inflation. and it's even hard to describe why have rates spiked so much just in the past month. And part of this is there were times when everybody was scratching their head about why are rates staying so low for so long? And now it's kind of the opposite, that inflation is manageable at least today, kind of at the 2.5%, 3 % levels, having the 10-year, what, 5.20 or so today, it seems like those rural interest rates are at a level that I think people, many economists were doubtful that they would see again.

1:28:03And so I think that the question is this, is how much of this is being driven by the AI super investment cycle? And is there just too much demand for capital because there is both all the sovereigns are issuing enormous amounts of debt, as well as all everybody associated with the AI industry is trying to do the same. You know, I think it's always easy to kind of assign causation after the fact. But trying to predict where this is going in the future, it's ended the careers of many a trader. How do you think about the bullwhip effect? One thing that a lot of tech insiders have been pounding the table about is why isn't TSMC building new fabs fast enough?

1:28:53We finally got AI working. It's going to continue to increase and scale, scale, scale forever. NVIDIA is ramping up. Everyone's fighting for chips, and yet we can't seem to get TSMC to mention AI on an earnings call. They're starting to, but they've been burned before. And I'm wondering if there's parallels in other markets that you've seen, and how do you actually think about the nature of that bullwhip when it actually comes around? Yeah, and I think that's exactly it, right? And that, you know, if you're a commodity producer, like, you know, the memory companies, you know, kind of are after you've kind of fallen for this, you know, the boom bust, you know, that you expanded capacity at the top of the market.

1:29:41And again, like every all your competitors saw the same price signals and did the same thing. and you have that bust and that bust just causes so much financial pain that at some point, you're like, I'm not doing this unless you, my customers, are going to sign a three-year, five-year off-take agreement at prices that pay for the whole factory and then some such that if we've overbuilt, that's on the customer, that's not on me. And you can certainly understand why A couple of years ago, all the hyperscalers were asking memory companies and the chip companies to increase production, increase capacity, because it would be beneficial to the hyperscalers who were buying this stuff.

1:30:29And the producers were just saying we're just much more hesitant to do so. Because, again, a couple of years ago, AI could have gone a number of different ways. and it's gone the bull case to date. But where it goes from now, I don't think these companies want to bet their future on it. And you've seen the same thing kind of in the oil markets where the reaction to high prices, the industry's interest and investor interest in funding, kind of recycling all the money back into drilling is much lower than it used to be. And investors are saying, like, we fell for this in the past. Like whenever you're making the big returns, pay them out to investors.

1:31:12Can you sort of reality check me on my history around the shale revolution? I'm interested in could that have happened anywhere other than the United States? How much of it is a technology story? How unpredictable was it? Because right now in tech, everyone's talking about energy. People are talking about nuclear capacity that might come online in 2030, 2035. If it comes, I don't think it will be a surprise to the technologists who have been raising money and proselytizing and evangelizing for nuclear. But from my perspective as like an energy outsider, the shale revolution looked like something that was an unexpected boon to energy in America.

1:31:59But what was it like on the inside? Yeah. So the shell volumes have really been over the past 20 years. But this industry kind of got started maybe 50 years ago. So in the 70s, federal government started investing in the technology through some basic science grants. In the 80s, George Mitchell, who was really the grandfather of this industry, started investing and using his company's capital to go test wells. It was really in the 90s, whenever George Mitchell came up with this water fracking, that you could see wells start to become economic. And the industry kind of had the bonus of the commodity boom that happened in the 2000s, kind of culminating in 2008 when natural gas got to$13.50 versus the$3 it's at now.

1:33:08Oil got to$147, where a lot of those wells, even though they were expensive to drill, were economic. And that's when kind of that 2005 to 2008 period was really where kind of the shell started to work. Yeah. You know, the technological triggers had happened and you had high prices. And then the 2010s, you had kind of the industry really start to figure out how to do this at scale and get all the benefits of coming down the learning curve and the benefits of going from drilling a well here and a well there to really kind of turning this much more into a manufacturing process. process. And then 2020 is it's now a mature industry.

1:33:57So it was 50 years in the making. And I think the question is on nuke, what happens? In many ways, there are aspects in which United States is very conducive to the nuclear industry. We have very robust capital markets. We have a lot of great technologists here. We have a lot of land in the United States, very deep electricity markets so if you come on with a gigawatt of power sure you can place it very easily yeah and you have bipartisan government support for the industry sure right so like all those things are working for it and the downside is that the u.s actually has fairly cheap electricity yeah we have fairly high cost of labor especially kind of the craft labor and And to build a nuclear plant requires a lot of labor, at least today.

1:34:55Siting anything is hard in this country. And you have this kind of very bifurcated utility system. We don't have a national utility. It's kind of state by state. It's utility by utility. And you have their investor owned. And does the investor get the benefit of this? They certainly get a lot of the risks. And then last, I think we just don't have the workforce that's trained on in this field today. And so like in some ways, maybe the optimal thing is we develop the technologies here and they get built somewhere else where it's just easier to build and cheaper to build. Yeah, we've seen that with a couple of nuclear companies that have done their first plants in Southeast Asia and internationally and seen opportunities elsewhere.

1:35:45but I'm certainly hoping for it to hit America. I have one more, but please, Jordy. How have you processed the growth of the private markets and the subsequent disconnect between the private markets and the public markets? I've been personally having made, at this point, 70-odd early-stage investments over the last number of years. I've been really feeling like the inflation like inflation the feeling of inflation in the private markets where you have companies that are a 10 billion dollar company but only because there are a bunch of venture capitalists with 10 billion dollars right and so you just have these prices pushing up not based on the quality of the underlying asset or or the category and I just so my head is really thinking about how long can you have this disconnect like the the disconnect can't sort of continue forever with how extreme it is right now.

1:36:47And so I would expect it to correct sometime in the next two years. Maybe, you know, who knows? But how are you processing it? Yeah, we're certainly seeing that question right now in the energy tech industry, right? Where a year ago, it was kind of probably the peak of almost exactly a year ago, a peak of a lot of the SMR, small modular reactor nuclear companies. And they've kind of been on a steady decline since. And then a few months ago, you had, you know, Fervo go public. That, you know, had a great kind of first day, first couple of weeks. It went public at a big number. And that's kind of gradually sold off.

1:37:28And when Fervo went public, you know, a lot of companies in the energy transition space thought that the IPO door was open. And everybody called their banker. The bankers call all these companies and say, OK, get ready. We're going. And then everything is kind of sold off from there. And now they're all getting the same message, which is, OK, the door closed really quick. And now what do you do? And the highs are higher in the public markets, but the lows are lower too. So if you have these companies that still need to raise a lot of capital, going public, if you catch it right, can work out really well.

1:38:15It can also kind of be handcuffs on you. That if your stock trades poorly from the IPO on and you have to go do secondaries in the market for a stock that's down 50, 60, 70 percent, it becomes enormously difficult. And so there's a lot of CEOs of those energy transition companies who are now trying to decide, do we force this? Even take a lower valuation and try to get public, or do we stay private where we can have more nuanced conversations? We only have to convince a few investors to come in rather than the whole market. Yeah, they'll be more stable. Yeah, the other dynamic that is endlessly entertaining to me is companies repricing based on the category leader in their category.

1:39:09So you saw this with SpaceX, right? Like SpaceX is probably like a thousand times more important than the next space company, right? But every company right after the IPO starts to, like, reprice in the private markets based on that. And, you know, you can see the logic from the private market investors. But, again, there's those disconnects that have to be righted in the fullness of time. Like, you can't know. It doesn't matter how big your venture fund is. Eventually your businesses are going to price based on market realities. last question I had for you I know we're over time how did you process the compute markets ban we saw recently we saw a couple prediction market players try to put up compute markets and apparently they got a tap on the shoulder from Washington and were asked to shut down shut down the markets seemed somewhat curious but how would you read into that?

1:40:20Yeah, I haven't followed this too closely. I've always been somewhat... The big question is that compute is not a commodity where one data center is providing the same product as another data center. And in order to have a real tradable market, you either have to deliver into a certain product that needs to have a lot of buyers and a lot of sellers that are able to take that specific product to create an arbitrage-free type of ecosystem. Or you need some type of index that the industry trusts that might look at across a number of different types of compute and say A compute that has characteristics in this range, the cost for that for the month of September is X.

1:41:23And so, yeah, either a robust index or a kind of physical delivery product. And I think both are really challenging in this field of compute. There just aren't that many short-term deals. The transparency into those is difficult. The distinctions between the chips and the design of the data center and all the specific needs is just different. And so trying to either come up with the physical delivery mechanism or the index that everybody trusts to be right is really hard. Yeah, the other dynamic is just how much more valuable compute is to a couple companies relative to the broader market, which feels quite different than some of these other commodity markets.

1:42:16I did have one, my second final question, and then we'll actually let you go. How much have you opened your mind to various sci-fi predictions, given how correct many of them have been in the last, let's say, from 2020 until, 2015 until 2025? So many of them sounded, you know, crazy at the time and almost impossible. things happen that were almost impossible to predict. And given how correct many of them were, it's hard not to place way more weight on them going forward, except that they actually only get more insane from here. So you have to take another leap of faith. Yeah, it's a really interesting question.

1:43:07I'm a natural skeptic. I've always kind of been a bear trader. and make more money when the markets are going down than when they're going up. I would be a terrible VC because of that. And I would tell you all the reasons why this company is going to fail rather than why it's going to work. I think getting to an entrance into the tech sector that I've had of late has helped kind of open my eyes. And rather than being naturally skeptical, I try to be kind of naturally open-minded to this. but in terms of specifics, um, you know, I think the, the next 10 years could be crazy. It could be a normal technology.

1:43:46Right. And I think that's, that's this huge question here. And, and I try to keep my mind open to both of those. That's a good point. We're going to find out one day at a time. Yeah. Just one day at a time. Well, thank you so much for taking the time to come chat. Yeah. I really enjoyed it. Really informative conversation. Yeah. It'll be great again soon. Yeah. Great weekend. Have a great rest of your day. We'll talk to you soon. Goodbye. Let's move right into our next guest. We have Viswa Kaluu, the founder and CEO of Inveda, with a huge fundraising announcement. Get that gong ready. Viswa, how are you doing?

1:44:21Welcome to the show. Thank you for having me, long-time listener, first-time caller. Sorry for the delay. We had to shift things around. I'm so happy that we get to talk to you. Let's kick it off. Jordy's warming up the gong already. Tell us about the most recent fundraising round. The most recent round was a lot of capital to get a lot of medicines to people.

1:44:41Viswa Colluru:There we go. And what's important is it allows us to build. 311 million.

1:44:51I'm guessing I'll be back. Okay. So, yes, what you're building.

1:44:56Viswa Colluru:We're building, the easiest way to describe it is think of it as a sequencer. But for life's chemical code instead of life's genetic code. Sure. About 400 ,000 compounds have been discovered by the collective human endeavor from throughout history to now. And it's expected that there's about one to 10 billion. So 99 percent of what makes up you, a tomato in your garden or a random sample in the Amazon rainforest is still a mystery to science. And that's because we've never built anything that can take a biological sample and answer two really important questions. What are the molecules and what do they do?

1:45:40Viswa Colluru:So we've built the tech to do just that. Talk about the positioning of the company as actually developing drugs, going through FDA processes versus selling a software product to existing pharmaceutical companies or versus focusing on more general use artificial intelligence technologies? How did you land where you did and what are the benefits of that approach? As far as we can tell throughout the history of the industry, there's only been one way to build a big company in this space, and that is to make and own drugs. And even the biggest companies in this space are largely underpinned by cash flows from a single blockbuster franchise.

1:46:26Viswa Colluru:Something like 70 % of Lilly's EV is forward sales multiples of the GLP-1 plus family. 80 % of Novo's is the same. And 30 % of Sanofi's is half of one, a drug called Dupixin for eczema. So if you want to build a large and impactful drug company, the rule is super simple. Make drugs and make drugs that matter. Give me some timelines. AI is focused on curing cancer, and I feel like we've got to cure peanut allergies before we cure cancer. It just seems easy to me. Am I misinformed? What are your peanut allergy timelines? You know, it's just something that seems a little bit quicker to test than cancer, which could take months to actually fight and verify that you're in remission.

1:47:11If you have a GLP-1 for peanut allergies, you probably test that. This weekend, John, figure out how to give yourself a peanut allergy. I need a million dollars compute, I think. And then fix it on Sunday. But the more anodyne diseases, are those actually more tractable or is it a straight shot to cancer and like the big ones?

1:47:30Viswa Colluru:I think they're both difficult in different ways. I'll start with the simple fact that cancer isn't one disease. Yeah. And it's thousands of diseases. and we just call all of those diseases cancer for something that grows without control and invades other organs. So I think that's going to have to be disease by disease. And we've made a lot of progress for a lot of these diseases, but it's going to help, I think, for us to be very specific about what cancers have been most recalcitrant and why. And I think I'd love to see AI come up with completely new ways, whether it's molecules or mechanisms, to be able to hit cancers that we struggle the most with.

1:48:13Viswa Colluru:Common diseases are difficult for two reasons. They're complex and multifactorial. So in other words, obesity is something you understand quite simply as excess fat in your body. But we now know that at least two organs, likely more are involved in obesity. So your fat tissue, your brain, your muscle, your pancreas, all of those coordinate to ultimately give you that. The second reason they're hard is the way each of these factors collude to give you obesity can be massively different across the population. I was just reading something as I was waiting for you guys since you went over that 10 to 15 percent of patients don't respond to GLP-1s.

1:48:53Viswa Colluru:Whoa. Right. And it has probably something to do with the fact that hormones affect GLP-1 massively. So women tend to respond better. And there's lots of other things that are just beginning to come out from the data. And these are the two things that make common diseases more complex for AI. But I think there's no reason to stage gate, we should absolutely attack all of them at once, and continue pushing the frontier for better medicines. So each of us can live, you know, a better life on a day-to-day basis. And that's the test we want each of our molecules to pass. So yeah, I mean, it seems like you're taking a pretty broad approach, but is there a decision criteria where you're looking at the economic opportunity of a particular drug and treatment versus the total harm cause?

1:49:45Like obviously cancer is at the top of the list, peanut allergies a little bit lower. Or are you more just like, let's generate a bunch of stuff and see what the impacts are. Oh, turns out we cured cancer one day, and then the next day we cure peanut allergies, and it's sort of a random downstream effect. How much of it is you picking the target versus just seeing what you're capable of?

1:50:09Viswa Colluru:Yeah, I'm glad you asked. So at Enveda, we haven't started efforts on trying to treat cancer yet. We're focused on really large diseases that still have big, big swaths of what we call unmet medical need. For example, if you suffer from asthma, there hasn't been an oral medicine that isn't a steroid that has been approved for over 25 years. Interesting. Wow. Right? If you are one of the many, many Americans and the world's citizens that has trouble managing your weight, you can get on GLP-1. In one or two years, you're likely going to be off of it for one reason or another. And then you have no idea what to do about your weight.

1:50:50Viswa Colluru:So our first two drugs are hitting exactly those problems. We want to make a safe non-steroidal oral for diseases like atopic dermatitis or eczema and asthma, for which there's millions of people in America alone. And there isn't an ideal solution. And our second molecule discovered a new hormone that's produced after you go for a sprint. So it's essentially the chemistry of exercise. And we did do it what semaglutide did to GLP-1. So we put it in a pill that you can take once daily. And we think it'll allow you to maintain your body weight and metabolic health over the long term, giving 55 million people in America an off ramp over the next seven years that will have taken a GLP one and then not know what to do next.

1:51:33A lot of discussion over should we give super intelligence a wet lab? What is the actual human in the loop? I mean, it feels like you're hiring. It feels like this is a very rigorous process where you're coming up with candidate molecules, taking them through the full FDA process. But how do you make sure that your product is safe? Are you confident in the current system or do we need to create new rules or slow down? Or what's your view on the future of actually getting new AI aided, AI designed products in the hands of Americans?

1:52:08Viswa Colluru:For better or for worse, three quick things. The first one is Enveda's core AI models allow us to understand what evolution has already made. So they're not optimized for creating new things, either benevolent or malevolent or anywhere in between. And so this allows us to, for example, push forward our frontier very, very quickly without being particularly bottlenecked by the safety question. Second is for people whose models are designed to make molecules. I think that the most important aperture or filter that those models have to pass through is the simple fact that most things that a model can design are not something human chemists can make.

1:52:50Viswa Colluru:And this doesn't get talked about often at all, but 99 % or more of the chemistry that any particular model comes up with is constrained by the physics and energetics of putting it together. So I'd say just because AI can come up with an incredibly powerful toxin doesn't mean that it'd be produced right away. And that's the bottleneck, even when you're trying to make medicines produced by AI. Third, I think the big bottleneck overall that encompasses issues one and two really is the fact that AI is really bad at moving things in the physical world. And I think a lot of biological surgery, whether it's of cells or genes or assembly, involves things that require custom workflows and automating and roboticizing that still is an endeavor that we're not very good at.

1:53:41Viswa Colluru:So unless there's a rogue agent in the loop with the AI, I think it'd be hard. Now, could a rogue agent be significantly more damaging? Yes. But I think it's a more human-centric problem than it gets written about. Okay. I like that. Well, thank you for breaking it down. Congratulations on the progress. Yeah, great to meet you. Wish we had more time. But come back on. Yeah, we'll have to have you back on soon. Because you have more updates. This is really great. Congratulations. Sign me up. Thank you. We'll talk to you soon. Congrats to the team. Goodbye. Let me tell you about console.com. Console builds AI agents that automate 70 % of ITHR and finance support, giving employees instant resolution for access requests and password resets.

1:54:20Coming back on the show, we've got Jake Adler, founder and CEO of Pilgrim. Jake, how are you doing? Sorry for keeping you waiting. No problem. Good to be back on. Thanks, guys. What's the latest in your world? You raised some money? Anything gong-worthy? Anything that's going to make Jordy stand up and smash that while you're giving us the important details? Deafening us all? What happened? Yeah, so we closed the$25 million round to build America's first biology prime. Fantastic.

1:54:55There you go. It's so funny. Like two weeks ago, I was – it's been probably a year since you've been on the show. But two weeks ago, I was thinking about you and Pilgrim because of all the biosecurity talk. And I'm like, he's got to be raising a new round just because it feels like you've been building to sort of meet many of the current and future problems of our world. Yeah. How are you pitching the company right now and then the specific products? Because there is sort of a differentiation there between being America's biological prime contractor and Kingswell, the actual product, correct? Yeah, there's certainly been a bit of an evolution, but I think the core thesis has remained the same, which is really this idea that we're just trying to deploy biotechnology more efficiently.

1:55:48Sure. So there's an abundance of really compelling technologies that languish in academia. And the bet at Pilgrim is really on the mechanism to take these really critical technologies and get them deployed. so you know at the core when i think about you know what we're building today with like a system like argus so you know this is one of our early prototypes that we deployed uh the the idea really is is to build up what is a really substantial uh wedge and get technologies like this into the hands of the warfighter today uh but on the basis of building what is a bioprime it really does come back to that core mechanism uh of being able to actually get technology into the hands of war fighters sooner uh and ensuring that more you know war fighters can go into conflict and actually be able to return home.

1:56:30So it's been a very exciting mission, but it's all really revolved around just the idea of getting bio into the hands of the people who need it the most. The sign behind you says, smallpox, keep out. Is that because there's smallpox in your facility and you don't want people coming into the facility? Or is that because you don't like smallpox and you want to keep it out of your office? You know, you'd be shocked, you know, how easy it is to procure some like really gnarly biological agents. Black pill. Exactly. But we don't have smallpox in the office. We have a bit of monkeypox here. And we're able to procure a couple of chemical weapons as well.

1:57:11But the amount of validation that's required for these things is bewildering. They'll call me up on the phone and be like, do you know what you're doing with these things? And I'll be like, yeah, we work with the government. And they're like, that's all we need to hear. Which is, again, incredibly alarming, considering a lot of the infrastructure we have like deter you know a bio weapon attacker to stop the proliferation yeah none of this has changed in like 20 years yeah it's a it's been a really cool mission you know it's a a bet that we made nine months ago on on argus and you know candidly you know you look to things this year like uh you know for example the pentagon shutting down four months ago due to like a false anthrax alert yeah like there are really serious events that are transpiring and And I think that the rate and the incidents around bio have grown dramatically.

1:57:56Moving to a point now where I think just due to the sheer lack of that infrastructure has become incredibly alarming. Okay. That Argus system looks portable. It's on a tripod. Where do you deploy that? I've heard about, in terms of our biodefenses, sometimes airports, wastewater treatment systems. There's a whole bunch of other places to plug in. How did you land on that portable of a system as opposed to tapping into basically like a stream of biological data somewhere else in the American economy or American industrial system? I think the core bet is really on the platform itself. We really want to move beyond what is the current precedent, which are these very manual workflows.

1:58:43Right now, for example, if I was to pull Jordy in and have him go work the line at TSA, for example, and some guy comes through and I gave you the best and most portable sensor in the world, able to tell you whether or not some person has Ebola, the question quickly becomes, what are you going to do with that information? Right. So we definitely knew that the system itself had to be portable, but it had to go just beyond from a platform standpoint, just doing the detection, actually enabling identification and characterization of the threat as well. The reason that we opted for this form factor first was very simple.

1:59:16It's really on the basis, especially in the airborne environment, that that is the primary mode of transmission for viruses and for pathogens. Right. So when we're thinking about how these viruses spread between populations, it's very important that we're actually monitoring the air. There's a lot of information that we don't typically see. So we wanted this system to look scary and really to stand out in an airport environment. Because we have to make a statement to our adversaries that if they attempt to come into our country and attempt to proliferate a biological weapon, that we actually have the defenses in place to be able to deter and identify that proliferation very quickly.

1:59:53So that alone is really what contributed. But the core platform, being able to detect viruses autonomously, that's just going to be deployed across all of these different types of media, wastewater, clinical, everything. Last question for me. On the actual sensor fidelity, is this going to be something where I'm going through the airport, I take off my shoes, they take a picture of me, they scan my thumbprint, I give them my ID, I give them my boarding pass, and then I also have to, like, breathalyze into this thing? Or is this passive? Like, are they taking my saliva? Are they going to take a pint of blood from me?

2:00:22Like, how far does this go? Yeah, you know, I think if we make the TSA line any longer, people aren't going to be very satisfied. Really, the goal here is simple. We just want to monitor the environment. A lot of tools in the past, like you would call it contract tracing. And even just thinking about just how crazy of a time COVID was. I remember my sister Lysol wiping bananas. This is sort of like the world that we are living in. A lot of the technology that has been built tends to be hyper personalized. And what we recognized more than anything is like the current timeline to even detect a thread in the air is like a week.

2:01:01And, you know, that means like by the time you find out about a pandemic, it's typically in the newspaper before one of our sensors are even picking up on it. Or like Google search trends for I lost my sense of taste or whatever. Yeah, like literally, right? It's like these very small ideas. So we wanted something that would be quick and monitor the air. And it's like the joke more recently is like a Shazam for the air. I like that. Any plans to put it on a robotic dog? You got the drug sniffing dog, the bomb sniffing dog. I like the idea of a pandemic sniffing robotic dog could probably carry that payload.

2:01:38Maybe. Who knows? What are you thinking? Yeah, I mean, it could certainly be interesting. I think that there's also a possibility of putting this thing on drones. Or wheels. Yeah, you can drive around. and shot on wheels. Yeah. Just like having run after people at TSA, just like coming up to them and staring at them. Yeah. It would certainly be very interesting. Well, good luck. Congratulations. I'm glad you have fresh funding to help keep the airwaves safe. Yeah, very important work and fantastic progress. Yeah, we love to see it. Great to see you, Jake. Thanks so much for coming on, Jake. We'll talk to you soon.

2:02:10Have a good one. Let me tell you about Codex. Codex is a powerful workspace for getting work done with AI agents, whether you're writing code, analyzing data, creating content, or automating business workflows. Codex helps you move projects forward from start to finish. Our final guest of the show is the co-founder of Free Bean. We have Adam here with the first parents, but there's been a little Easter egg this whole show. We have his product here with us in the TBP and Ultradome on the desk. Crack and open a can of ramp. How are you doing? How we started the show. This was a dream of Geordie's.

2:02:41He had this idea a year ago, two years ago. I was searching for more ad inventory. We had more ad inventory than any show on earth, but I wasn't going to settle there. I wanted more ad inventory, and I thought we're drinking. We're not getting paid to drink on the show. How do we fix it? You're not, but now you have some new ad inventory courtesy of Ram. Yes, and Freebean. So, yeah, tell us about you, your business, your career. Get us up to speed on all this. Absolutely. I'm Adam Krasinski. I'm the founder of Freebean. Freebean is a targeted, trackable, and tangible out-of-home advertising medium built on free coffee.

2:03:20We started the business while I was in college as a senior at the University of Michigan. And I've never had a full-time job. So, yeah, go for it, baby. Very, very, very great story. Yeah. Thank you. How much do you know about the sort of like white space in advertising inventory? I'm obsessed with app love and finding that people were playing hyper-casual mobile games. They went and found this pool that wasn't on Instagram, wasn't on Facebook, and they blew it up to a huge business. At the same time, on the other end, I know someone who did free napkins and fortune cookies for Chinese restaurants but put ads on them.

2:04:02And it was pure margin because the napkins are pretty cheap. And so they would go and say, hey, restaurant, do you want some ad-supported napkins? and the advertisers would say, yeah, we'd love to put our logo all over that bar. What is the shape of these opportunities? Why did you pick beverage? And then how has it actually been going distributing this to various places to get in the hands of consumers? Distribution has been going incredible. We just crossed the 100 ,000 can mark across a bunch of different channels, accelerators and incubators in partnership with Entrepreneurs First, Antler, Techstars.

2:04:37Conferences and trade shows are a huge channel for us as well. And then on the consumer facing side, college campuses and things like that. The reason for beverage mainly is because it's tangible and consumable. We like to say that this is an ad you sip, not skip when talking advertisers. It's really one of the only formats that's actually consumed. It's super unique. And the reason we chose coffee, 66 % of US adults drink it every single day. It's an extremely popular beverage. And it allows us to target virtually any type of demographic, regardless of what brand is on the cans. It could be Ram or it could be Red Lobster, another customer of ours.

2:05:18Their customers all drink coffee, or at least two-thirds of them do. So it allows us to target those people effectively and drive high return for our advertisers and brands. Yeah. What's the sweet – oh, sorry. A fellow Michigan student just texted us, or a former student, just texted us, didn't graduate, but just texted us if you plan to expand into beers. Is that a potential category? I have been asked that a lot. Alcohol is tough, so we're sticking with coffee for now. Maybe down the line we'll expand to beer, but we'll have to work through the regulations on that one. Straight shot to the original Four Loko recipe.

2:05:59Bring it back. Wrap it in a brand. Four Loko might be the move. I know you, on YC Demo Day, when the guy had the humanoid and you were like, can you shotgun that Ramp cold brew? And then somebody was like, oh, Four Loko. So maybe. These are shotgunnable, though. Maybe in the future. What is the key to success as a brand partnering with you? I go to you. I buy a bunch of cans. I mean, the brand looks great on the actual can. But then should I mail these to my customers? Should I have this at my conference? How should I think about actually getting the most out of the palette when it's delivered?

2:06:39Do you handle logistics if I want to send it to my customers to remind them that they should be talking to my sales reps, for example? What is the right way to actually get this in the hands of potential customers? Sure. So when it comes to distribution, if we're looking at gifting, something that Ramp does a lot of actually, there's usually third party fulfillment partners who will handle the packing of those cans and then shipping them out to maybe a prospect or something like that. for the right distribution channel for the brand, it's dependent on a couple of factors. Some brands take the approach of, hey, this is a brand campaign, or some look at it as an acquisition channel.

2:07:19And conferences work extremely well. We've been outside some major ones. Figma Config with Paper went super viral on Twitter. And they basically called it the highest converting booth at the conference without a booth. Because Paper was everywhere at their direct competitors conference. And so, again, you think about putting something that's tangible in somebody's hands where traditional advertising formats don't really deliver anything to the consumer. Billboard companies, the consumer just sees a billboard. But when you allow a brand to put something in someone's hands for free, especially something that's expensive and increasing in price, you create this reciprocity effect where a person is opting in to seeing an ad and they're saying, okay, I'm going to take an ad.

2:08:09I'm going to take a free coffee as well. And it just drives higher return for the brand. Yeah. Uh, last question for me, talk about, uh, what it takes to work with you. Do you have hard minimums? Do you have maximum capacity right now? Uh, what's the sweet spot of a brand coming to you? Is it a thousand cans for a conference, 10 ,000 cans? What's a really down the line pitch for you these days? For a conference, it's primarily dependent on the size of the conference. If we're talking about Dreamforce, a brand is going to want a lot more cans. If it's a smaller conference, they'll want a lot less cans.

2:08:49We do have a hard minimum specifically for our storefront, which we just launched our grand opening on Wednesday in New York City between Ryan Park and Grand Central. It is the world's first free coffee shop. And as you can imagine, the coffee is literally free. You walk in, you ask for coffee.

2:09:10What are the different brands can I enjoy free coffee from? So at our storefront, we have Ramp, Novig, Warp, Outset, Heaper, and Bland. wow you can get ai voice supported coffee you can get gambling supported coffee you can get enterprise payment supported coffee it's really like a choose your own adventure kind of thing it is what i think is also really interesting there's a negative sentiment around ai advertising more so new york than san francisco of course but people don't seem to care and as i alluded to where you provide value to the consumer, they're like, hey, I'm opting in to get this advertisement.

2:09:53And yeah, it's okay if a voice AI company is saying, hey, call this phone number to learn how customer calls can help. Yeah, nobody's vandalizing these. Any plans to add a speaker to the can, the bottom of the can so it can chirp out? While you're enjoying the sip, you might be interested in learning that ramp customers save an average of 5 % on their expenses? Probably no speaker, but we are exploring thermochromic ink, similar like a Coors can, where if it's cold, it displays something different than when it warms up a little bit. I like that. I like it. I love your clarity of thought on this opportunity.

2:10:35Thank you. It's clearly very sharp. I love it. Yeah, I'm excited for you to scale to billions of cans annually. Thank you, guys. Thank you guys. I appreciate it. Come back on the show soon. Yeah, let's do it. And we have a bunch more advertisers, so let's get them all on board. We got more cans. We need more cans. Let's. We have a solid amount of crossover, more than you think. Yeah. Ramp, MongoDB. Yeah, fantastic. Ramp, obviously. We'd love to do more. There you go. Thank you so much for coming on the show. Great to meet you, Adam. Have a great weekend. We'll talk to you soon. Sounds great. Goodbye.

2:11:08That's our show, folks. We'll be back on Monday at 11 a.m. Pacific. Leave us five stars on that. A lot of excitement. I'm heading into the weekend. Yeah, a lot of people. I mean, you can feel the energy in the Ultradome. Okay. People are sitting here. We're hanging out. Let's go. We've got three more sleeps until Monday. Yeah. People are counting it down. Counting it down. Counting it down. Have people been counting down the days to Christmas? I feel like we missed the road to Christmas today. Pull it up. What is it? I think we're at 90 days. A nice round number. That's a huge deal. We've got 90 days until Christmas.

2:11:40So start shopping. Start shopping. Start planning. Start thinking about it. Yeah, and again, this is the weekend to get on it, get your tree, get set up, and get after it. It's also only 455 days until the next Christmas, so you can start thinking about that as well. But you want to focus on the next 90 days. We'll see you Monday, folks. See you. Goodbye. Goodbye.