AI Boom Stalls, Blue Owl’s Next Move, ChatGPT Growth Concerns | Jeffrey Katzenberg, The Winklevoss Twins, Hims & Hers CEO Andrew Dudum, Coatue’s Spencer Peterson, Max Hodak, Melisa Tokmak, Tomás Puig

27:34Did you get out or something? Have you somehow facilitated some short position? Yeah, jumped off the call. This is very founder-friendly. Whoever's doing this is not very founder-friendly. Okay, anyway. Anyway, Sarah Fryer held a private quarterly earnings call with the company's biggest investors. As usual, the numbers she shared were mostly up and to the right, but behind the strong top-line figures, a quieter question hung over the call. Was ChatGPT's momentum starting to slow? During the Q &A portion of the call, All sources say Fryer was asked to reconcile ChatGPT's meteoric growth in weekly users from 250 in September 2024 to over 800 million now, with external signs that the app's growth has slowed in recent months.

28:20Close followers of OpenAI's business have been whispering about these signals from research firms since late summer, but this was an opportunity for company backers to hear directly from leadership on the matter. after telling the investors to take third-party estimates with a grain of salt, Fryer acknowledged a chink in ChatGPT's armor. She said time spent had declined slightly in response to, quote, content restrictions the company rolled out in early August. She then referred to the loosening of those restrictions that CEO Sam Altman has said will be implemented for adults in December. So this is them.

28:54Sam came out and said, we're going to allow erotica on the platform. Uh, and Sarah says an open AI expects the decline in time spent to reverse. And so, uh, this reminded me of, uh, a conversation we had about exactly a month ago where I said, I don't think them announcing that they're getting into erotica is a sign of strength. I don't, I don't think that's something that you do. Um, you do just because you want to write it in my view, it felt like I mean, clearly there's user demand for it. Yeah. But at the same time, that felt like something that they would do in order to stimulate growth while they get a bunch of other monetization online, right?

29:40So like commerce, ads, et cetera. Yeah. No, that makes sense. Yeah. I mean, the original founding team at OpenAI was incredibly idealistic, right? Like incredibly, like you're going to work on a nonprofit on like super intelligence, like AGI, like you, you, you truly are, um, working on like what you see as one of the most important problems. What I would agree with is one of the most important problems. Um, then of course, like, you know, eventually the, eventually the company evolves and you, and you bring in, uh, business leaders. but at the same time like I do believe that when they say I want to cure cancer I believe that I believe that too but the reason I reacted strongly to it was that there had been messaging you know around the same time of I don't want to be in a world where we have to decide between curing cancer and free education for the world and so then at that same time deciding we're going to do erotica it was very weird time to her dramatic balance.

30:47It was very weird timing that those two statements like came out one after another. Yeah, I'm actually surprised why they're waiting until December to roll out the adult content. So in this scoop, do we have any specific data on what exactly, what exactly, you know, is indicated in terms of ChatGPT's growth slowing? Can we actually try and define that a little bit more? Is that users, because there were already at almost a billion users, is it time on site? Is it monetization? I mean, deceleration, we were talking about this. Like, OpenAI has decelerated revenue before because I think they tripled and then they went to a doubling or they were quadrupling and then they went to a tripling.

31:36And so they actually decelerated in 2024 and then they re-accelerated in 2025. And so I was kind of saying like, well, you know, there's a good chance that you could see deceleration in the future. It's happened before. Like to be accelerating forever is basically impossible. But it would be interesting to track exactly how ChatGPT's growth is slowing. There certainly feels like there's just a level of saturation. Do you have the stats? Yeah. So similar web put out some information on month over month change in total visits to leading. gen AI tools. ChatGPT is at the bottom of a list that includes Gemini, DeepSeek, Perplexity, Grok, Claude, Copilot, and Meta AI.

32:21The key difference here is that like ChatGPT is just so much bigger than these other platforms that they could still be adding more users on a per user basis than these other tools, even if their growth is slower. Yeah, yeah, that makes sense. I mean, they do expect their growth to slow down. So like from this is Epoch AI, it was like opening eye revenue estimates. So 2025 is 13 billion. And then they expect 2.3x, 2026, 2x in 2027 and 1.6x. So I mean, it's not like they're just saying like it's going to go from 2x to 3x to 4. Yeah, exactly. So I wonder, I wonder how much of this is just framing something that was sort of already priced in as a, as like a bad thing.

33:16I feel like people were expecting deceleration. And so if she's on the call and she says, as expected, we're really big. We're going to be decelerating the level of new users that we're adding. And then - I don't think she should say that. Yeah, maybe that would be bad framing. I don't know. It just doesn't seem that crazy. Please don't say that. I don't know. It doesn't seem like that bad of a thing to say. Like, uh, the, like, like meta is not accelerating top line, uh, top line users. They have like 3 billion users. Like no one's expecting them to accelerate top line users. Uh, maybe like randomly one quarter they accelerate, but not continually.

34:05Um, and so I don't, I don't know. It just feels like an odd thing. Um, did, did you get a chance to read the Ed Zitron article? This thing? I did, but I felt Ed is such a massive open AI hater that I think it was hard to, and the sources were pretty unclear. It was hard to read too much into it. Okay. Well, let me tell you about figma.com. Think bigger, build faster. Figma helps design and development teams. Build great products together. You can get started for free. Should we head over to some timeline? Let's do it. What else people are saying? Cairo Smith says, it's going to be very funny when LLMs plateau around 120 IQ, and what we've created is just a digital guy, not a god.

34:51I mean, this doesn't make any sense. If we have, like, infinite digital guys, that's, like, literally a guy is just, like, a worker. Yeah. If we have infinite workers, that's, like, insanely bullish. Yes. It could still be bullish, but we've been promising. He didn't say bearish. He didn't say it's going to collapse the economy when we just get a digital guy. He said it's going to be funny. And I agree. I guess that's true. It's funny. But this is still like a very bullish take. I think you might read this as like being he's kind of bearish. Yes, yes, yes. No, I think you're right. If you get a digital guy, that's pretty powerful because guys can do a lot of stuff.

35:29It's valuable. I love guys. You need a guy for everything. You do need a guy for everything. And you will in the future. And that's been one of the great luxuries, right? Yeah, that's the agent. The class has apps. Yes. The wealthy have guys. Yes, yes, yes. And the apps get better with the, the apps get better with AI agency, AI agents, right? Because you, you, you have, you have an app that acts a little bit more like a guy than, than an app. Real quick, Scoot in the X chat, almost bought a counterfeit TBPN hat. No way. Watch out. There is a counterfeit TBPN store. These are not by us. They've made it look like it's by us.

36:15I'm not going to name the link, but we have not sold any merch. We will make the merch available as soon as possible. I was working on it this morning before the show. So it's coming, but do not buy any of the counterfeit merch. My big concern with that site is I don't even know if they ship it. yeah that is a big question they and they also made like a hundred products they made so many products and i did email them and i and to be clear i emailed our lawyers emailed them and we've submitted a bunch of take yeah when i when i emailed them i was like hey like i assume like you're just a fan like uh i was i was being too nice i was being golden retriever mode but i i did say uh i was like hey like i you know i appreciate this idea this is this is very cool that you're enjoying the show.

37:02But we just don't want people to get confused. We have our own plans for a store. They're like, okay, I'll make 200 different products. They just didn't respond at all. And so then we sent a takedown notice. And we will be fighting that tooth and nail. So stay safe out there. But please don't buy it because we have nothing to do with it. Tyler, did you get a chance to read Fiji Simo's latest blog post? Moving beyond one size fits all. I hope you didn't read. I hope you studied. Sat your ass. We talked about this for a tiny bit yesterday. Yes, yes, yes. This was just the 5.1 release. Yeah, nothing, I would say, super substantive in it.

37:40She kind of is talking about how, I think, with 5.1, they were going for... Like, we made our digital guy faster, better, stronger. Is that what it is? The EQ of the model a lot, rather than IQ. Yeah. So that's why you see a lot less benchmarks. I think it's just hard to actually benchmark that kind of stuff. But the actual style of the model, talking about kind of safety-ish stuff where there's like, you know. I mean, it is crazy following this company so closely because in here there's a line that says, with more than 800 million people using ChatGPT, we're well past the point of one size fits all.

38:18And 800 million sounds amazing, except I feel like I heard the 800 million number like two months ago. And I feel like they have been accelerating so fast. You would expect them to be at 900. 900 exactly and so the fact that they're repeating the 800 number is like they're like sorry we can't add a third of the united states every month i know i know i know it's very very high stakes it's very it's very impressive they built to be clear but uh i i just i am really keyed on that like 800 800 because i was i was excited they were going to hit a billion it was going to be a big moment um and and yet it feels like maybe that's a next year to a next year goal but uh near cyan Dan has been going back and forth on this.

38:56Nir said, ChatGPT is officially in its Fiji-SIMO phase. If you're wondering why the upgrade doesn't come with benchmarks, have fun. Rune says, you are confidently wrong about the internal dynamics of this. It could be better summarized as an infra cleanup. And Nir says, the source for my top tweet is Fiji's blog post from today, which discusses the release and its goals. I don't really know what else to say. I don't know. Is there hunger for benchmarks anymore? I might actually take the other side of this here and say that I like that they're getting away from benchmarks. I wish they didn't do a 5.1.

39:43I don't want any more confusion. What is 5.1 versus 5? Just make it better and don't do a release. And certainly don't tell people because what if people imagine... Because you're not in love with a specific version, John. I'm in love with five. I'm in love with five, Rune. Bring back five. I don't like 5.1. I need five, specifically. Not 4.0. Not 5.1. I need five. Five, please. I will say when... Just put the five in the bag, Rune. Yeah, come on. Bring back five. Bring back five. We need to cyber bully Rune until we bring back five. Even the most minor tweak to the model is unacceptable. You can still use five pro.

40:22I know. So that's got to count for something. Only five thinking. But I was saying when GPT-4, like GPT-4, like not for anything, when that was the best model, they would do updates. They wouldn't like say, oh, this is a new model. Yeah. And people could definitely tell. Oh, sure, sure. Like, okay, they released the model. It's worse. And then everyone on Twitter would hate it. But then I think people would. So you think putting a version number actually helps like fight back against that? Because people are like, oh, I get it. Why it's worse? You changed it. Instead of there being a surprise under the hood?

40:55I think it's more, it's just easier for people to tell it that it was actually a change when they're noticing something that they've been depending on. Yeah, yeah, yeah. It's a little different now. Yeah, I just don't understand why you're surfacing it in the UI of a, like if I open my ChatGPT app at the top, now it says ChatGPT 5.1. Like this is a consumer iPhone app. Today's pulse is here. Talking about Blue Owl Stargate investment. Um, and chat GPT 5.1. And I just have to wonder if like the, the 5.1 is like unnecessary. Like if I open up Instagram, it does not tell me what version of the reels algorithm I'm on.

41:34They're going to change it every day. Like just change the algorithm all the time. Just make it better. And yeah, if you make it bad, I'm going to turn. So don't do that. Make it better every day forever and just keep shipping ship every single day. Like I'm sure that internally there are version numbers of Google search, right? Because they push to like a main GitHub branch or something or whatever they use for their monorepo. But like there is version tracking for like the Reels algorithm. They just don't surface that to the user. So I don't know why they're surfacing 5.1 to users after there was like so much pushback over 4.0, 5.5, all this other stuff.

42:13It seems like, I don't know, it seems like a mess. You know what doesn't seem like a mess? Vanta, Automate compliance, manage risk, and accelerate trust with AI. Vanta helps you get compliant fast, and we don't stop there. Our AI on automation powers everything, from evidence collection and continuous monitoring to security reviews and vendor risk. There was one more note from Alex Heath's article on OpenAI that actually I think is worth sharing. He says, after Meta's last earnings call, sources say, and this is confusing because the name of sources is i don't want to hear what alex heath has to say specifically give me some like people who are close to the matter i don't i don't really i don't want to know what sources says i want to know what sources people close to the matter sources say that sources say okay sources says that sources say ceo mark zuckerberg joined an internal employee q a and shared a warning about the ai bubble first he shared a breakdown of how different players from startups big tech names like meta should think about timing their bets.

43:12He described three camps in the industry, optimists who see superintelligence emerging within two to three years, moderates who expect breakthroughs by the end of the decade, and pessimists who think it'll take well into the 2030s. Each outlook, he said, dictates how aggressively a company invests. Then he expounded on a version of the answer he gave me recently in our last interview. He noted that while unprofitable startups like OpenAI and Anthropic risk bankruptcy if they misjudge the timing of their investment, Meta has the advantage of strong cash flow. He also made the point that while big tech has historically been relatively debt-free compared to large companies in other sectors, the AI infrastructure race is leading Meta and its peers to start using leverage in a more normal way relative to their size.

43:57Like he told me in September, Zuckerberg acknowledged to employees that Meta's market cap could suffer if his timing is wrong in the bubble bursts. But the message was clear, we'll have the balance sheet to survive and emerge stronger than most on the other side. um so anyways uh super dario was quoting that and said the obvious end game in the next two to three years is that microsoft acquires open ai google acquires anthropic and tesla acquires xai only the large caps survive that's a nuclear hot take that is a crazy crazy how would that even i don't know can microsoft get the rest of open ai i mean i guess they probably have depends on the price size.

44:41It's a$4 trillion company versus a$500 billion. Yeah, I don't know. It doesn't seem like impossible. Let me tell you about graphite.dev. Code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. It's very free. I want to run through some more of these posts. Yuchin Jin says, in contrast, OpenAI employees stayed for two plus years, sold$6.6 billion of equity last month. Many hit the$20 million cap. Morale and vibes are high, but so is the turnover rate. New OpenAI hires are often shocked by how many Slack accounts get deactivated each day. This is a screenshot of an interaction between Jack Morris and Liang Chen Luo at XAI.

45:25Jack says, there are dozens or perhaps a couple hundred OpenAI, XAI, Google, DeepMind researchers founding companies in the current climate. And this was talking about the simple answer, the liquidity of anthropic options is the worst among those frontier labs. This is talking about how a lot of people have been leaving various labs, less people have been leaving anthropic. And so Liang Chen is saying the simple answer. Yeah. And so Andre Carpath, he says, bullseye, it's interesting how large of a fraction of people don't see the dominant first order term that drives behavior of people in companies.

46:04You can construct a powerful world model just by one, understanding the system, and two, assuming there is only this single term, like liquidity, how much cash you have. What would be interesting is if companies started offering liquidity in the form of annuities. So imagine you have an employee who's like a rock star. They're going to sell$20 million of stock and they're going to basically be post-economic. If you could instead say, we're going to be paying you out, like you're selling now, but you get a million dollars a year or something, there needs to be some way to sort of cap. Is there some way to cap the actual amount?

46:54I guess$20 million was the cap. but uh i i don't know there's some way to to to deal with this like you know if you don't get it if you don't get employee liquidity like they'll leave for something else they'll just go somewhere else that pays them a higher salary if you give them too much liquidity they'll leave and start new companies uh very very tricky to manage the uh manage the team um but that is the nature of these companies. Chad Byers, that is his real name. He is a Chad in the literal sense and figurative sense. He says, one of my strongest beliefs is that it's going to take 20 plus years to get AI penetrated into the real economy.

47:38I filled out a piece of paper at the doctor's office last week. I filled out a piece of paper at the doctor's office last week too. It was crazy. And I was wondering like, when will we see a fast takeoff in DocuSign? I finally realized why DocuSign has so many employees. Because you need to go to every doctor's office in person, apparently, for decades to get them to use online form-filling technology. Like, general SaaS really does not, has not permeated as much of the economy as people think. A lot of people still on spreadsheets for all sorts of stuff. A lot of people still on paper and pencil.

48:11There is a, you know, we joke about being pro-ramp, anti-paper receipts, of course. There's a company that makes paper receipts that's worth$20 billion. $20 billion. There are fax machine companies. The fax machine industry is still over a billion dollars. It's still a billion-dollar industry. Crazy. I would think it was actually more. Yeah, maybe that's too small. It's sort of hard to calculate because a lot of these things have been rolled up into other companies. Big fax wants you. I think Canon is one of them. And so I don't even know if Canon breaks out their fax business anymore because they sell so many cameras and other equipment.

48:50But yeah, it's interesting. Near says, IMO, in my opinion, the entire AI field switched from explore to exploit two years early. Everyone convinced themselves, no, this isn't the case. Look at our exploration. and it's like watching someone go on a 50-foot walk and find a cool tree when the entire continent is still covered in fog of war. Now that the terrain seems known, it should be harder to convince yourself. I suppose this makes sense given a lot of people hint at being good as gone as soon as they have enough money. But no, not me. I've been gone for ages already. That's a very funny post.

49:31I suppose, weren't we talking about this yesterday, this idea of like, where will the next innovation come from? Where will the next breakthrough come from? Will it come from any of the, any of the, the, the, like, will it come from XAI? Will it come from DeepMind? Yeah. Like how much do you need the college campus? How much do you need that environment? Yeah. Will it come from a university? A university. The universities seem to have not, like, it's very odd that the university system did not produce the transformer paper. Feels like the perfect thing to come out of a university setting. Yeah.

50:04I mean, It's really tough right now. You can stay in a university system and be a student and be taking on debt, or you can go work at a lab and have a good shot, at least if you did this a few years ago, have a good shot of making$20 million in a few years. And it's hard to give up that kind of opportunity. Yeah. This Wall Street Journal article has given more context on the AI boom. It says the AI boom is looking more and more fragile. AI stocks have swung downward as doubt rises about sustainability and payoff. perfect isn't good enough and any sign of weakness is a disaster this is what's happening it's like you double revenue and your stock trades down it's very very odd but everything's been priced perfection core weave who again is the only neocloud in the platinum tier yes semi-analysis yes is down 45 percent that is remarkable last month it's like they have built a like by all accounts fantastic product fantastic product i mean like i don't know maybe semi-analysis got had it wrong, but I don't think so.

51:03But it feels like they built something that as infrastructure delivers at the level of the hyperscalers, just like a fantastic product. And yet the market like sort of ran away with that narrative and now it's pulling back a little bit. So recent history suggests that the gloom won't last, but the shakeup serves as a strong reminder that the early years of AI pose a challenge for investors accustomed to measuring returns on a 12-month time horizon. Generative AI services require massive data centers and state-of-the-art chips and server racks that don't come together quickly. The companies at the heart of AI are now talking about years, plural, of all major investments still ahead.

51:43So everything has kind of sold off a little bit. Oracle is down the most from its three-month high. NVIDIA is down a little bit. Google is neck and neck. They're doing great. And oddly, Apple didn't even make the chart because they're so not indexed to AI right now. The latest episode of Fragility started last week when shares of some of the sector's leading lights lost ground after a broad-based recovery on a Monday on news of a possible end to the government shutdown. AI stocks fell again Tuesday, NVIDIA is down 4%. Today lost 7 % last week, slipped another 3 % on Tuesday, leaving it well shy of its$5 trillion market cap.

52:27Yeah, looking at the trailing 12 months, Apple is up 21%, and Microsoft, which owns a third of OpenAI, is a huge AI beneficiary, has invested a ton in it, is only up 18%. Wow. So Apple, which has been going through... This is the secret. Just don't invest in AI. Do nothing, win. Just don't do it. Just skip it entirely. Just do nothing. Tim Cook's like, wait, why would I spend$100 billion on CapEx? I can sign up. He's like, I can sign up for Chattoon TV for like$20. So hard. He's like, yeah, you know, we have Safari. We have this web browser. You can go to use AI from there. Just do that on your phone.

53:09I don't care. That would have been the correct thing instead of getting over their skis a little bit. On the branding side. Fortunately, not on the financial side. So they've done very well. There is, of course, real reasons to worry about the sustainability of the boom. chief among them is that there's far more AI computing infrastructure spending than there is AI revenue. A gulf widening by the day. OpenAI says it's planning to spend$1.4 trillion in the next eight years, but is only pulling in around$20 billion of annual revenue today. And it lacks a clear business model to reach the hundreds of billions it needs within the next few years to keep the spending growth going.

53:46OpenAI is projecting losses will swell to$74 billion in 2028. So skittish has the mood become that CEO Sam Altman felt the need last week to defend the company on X, saying the spending was understandably causing concern. Wow. He says he understands your concerns, Geordi. He pointed to his plans to boost revenue with new consumer devices, robotics efforts, and AI cloud computing service, none of which currently exists. And this is why when we You were, the Monday after that interview, when we were talking about it, saying that wasn't a strong answer because all those things seem like businesses that will lose a lot of money, even if they're successful, until they can reach some huge scale.

54:32Look at Meta's efforts in hardware. Look at early days of any hyperscaler. Look at any robotics company. These are not cash engines. their cash incineration engines that could one day. If they want to get more like cash generation, stop incinerating so much cash, OpenAI should, you know, I know they're doing a lot, but they should expand into like just rolling up HVACs, HVAC businesses, just buy a bunch of HVAC businesses. Adding agents into the workflows. Don't even, agents, we don't even need to do that. Just buy a good, durable business and roll it up. Plumbing, electrical, roofing. storage units store there's there's a lot of good money in storage units if they can some storage units it's just buying a storage facility and then just like cloud storage storage storage uh storage units that look like clouds yeah yeah cloud storage uh lawn mowing businesses they could get into some a bunch of lawn gardening businesses um there's a whole bunch of opportunity landscaping.

55:38Yeah. I mean, just buying multifamily homes, just buying some multifamily, single family, single family homes, getting the rent payments. They put the money in, they buy the house and then they get the rent payment and that's how they make the money. And I think that could be, it's a proven business model. Like we know it works. It works for a lot of people. A lot of people, they, they start with one single, single family home. They grow it. They keep box, box of oranges, open AI property management LLC. So they have the property management company, They own the properties with another. And so they can actually play both sides, play both games.

56:18They could get into dropshipping. Whoa. Think about it. They could set up a TPPN merch store. They could set up merch stores. Counterfeit merch store. For sure. That's what, you know, they keep talking about agentic commerce in the ChatGPT app. Imagine like you go there and you're just like, I need some t-shirts. and it just instantly sends you some T-shirts. They're getting into drop shipping. They could also launch a course. You could launch a course. How to build an AI startup. How to build an AI startup. $2 ,000. Buckle up, buddy. Get ready to pay$2 ,000. Sam Allman's already been driving around in hypercars.

56:56He has the garage. He has the garage for it. To be a course, bro. To be a course, bro. That would be great. Actually, he has a much better collection. He really does. I would pay for his course, honestly. I would 100 % pay for the Sam Altman course. You see a guy in a McLaren, in a P1, and he's telling you, I will teach you to be rich. I will teach you to build an AI startup. I mean, how to do deals from Sam Altman? I would 100 % pay two grand for that course. I'm not kidding at all. Like 100%, it's worth it. That would be better than any college course ever. Be incredible. uh well i'm glad we're having a good time uh let me tell you about julius the ai data analyst connect your data ask questions in plain english and get insights in seconds no coding wired julius has an out of home campaign right now and that's really good it says ever since i was young i wanted to transform data into actionable business insights it's the best it's the best fantastic Great work.

57:59Meridue says, if you're down today, you're a certified beta bubble boy. You literally bid up SanDisk, WTF. Alternatively, you can call yourself a bad beta, B-I-T-C-H. People are having a lot of fun. Dario predicts. Oh, good. SanDisk is only down 15 % today. SanDisk. By the address. Yeah. The White House last night tweeted, we are so back in all caps. What did that mean? What did they mean by that? In what way were we back? I have no idea. But I have news I need to share with you that I can't share on the stream. But let me tell you about FALL, the generative media platform for developers, the world's best generative image, video, and audio models all in one place, developed and fine-tuned models with serverless GPUs and on-demand clusters.

58:50Anna in the chat says, the OpenAI McLaren Museum. they open up a museum the mclaren museum just tickets just like adding to our revenue like we're gonna charge 25 bucks uh you can bring your kids like you i would visit i would buy the course i would go to the museum yes uh well our our first guest of the show is in the restream waiting room let's bring him into the tvp and ultradome how you doing spencer good to see you What's up, guys? What's up? I hope you haven't been watching the last five minutes because we're having a little bit too much fun. I want you to know that I have been watching.

59:29And guys, we are so back from the White House. That's got to be a reference to the government shutdown. Oh, yeah. Okay. I thought it was. I forgot about the government. I'm so lost in the markets. I forgot about the government. I don't think about the shutdown. Right. Okay. Well, that's fantastic. For those who don't know, you introduce yourself a little bit. Give us a little backstory. Yeah, everybody. I'm a general partner at Code2. help lead our growth fund, focus on late-stage transcendent technology companies. So we work with companies across, of course, software, AI, obviously, and then also some stuff in hard tech, SpaceX and real companies like this.

1:00:06So we're a 25-year-old hedge fund, launched a private's business 15 years ago. We're about 70 billion of AUM today across the private. Overnight success. There you go. Where's the mallet? We're looking for the mallet. It's in front of your computer, John. There we go. This is for KOTU.

1:00:27We are thrilled to have you. I've had many fun conversations this year. First one on the air. The reason for today's appearance is none other than Cursor. Oh, yeah. What's new in Cursor world? Right. The GPT rappers, their demise was maybe greatly over-exaggerated on X over the past few years. Look, we've gotten to know Cursor for a long time. We just think it's a really special company. Michael and his team are incredible. I'm sure maybe you guys saw Bree's piece about the company, the unique culture, how they approach hiring. I've just never seen a company with such a deep bench of really talented young folks.

1:01:12And then, look, on the growth, the growth speaks for itself, right? I mean, we're seeing folks on Twitter today talking about the company being the fastest ever to a billion of revenue. It's definitely in that air, which they disclosed today being at a billion of revenue. And then if you think about the things that have transpired over the past year with Anthropic coming out with an excellent product in Cloud Code, OpenAI responding with Codex over the summer, again, an excellent product. all these things happening at once. And then you sit here and you wake up today and say, wow, Cursor's got an incredible business, incredible product velocity, an incredible team.

1:01:48And now their own model, which they shared yesterday, is their number two most used model on the platform in Composer. So, you know, there's a lot of good companies in San Francisco. It's kind of a nice thing. Like in early 22, everyone was very worried that all of our 21 investments and everything was just gonna, you know, kind of wipe out. There's actually a lot of good companies in San Francisco. It's a great thing. There's a decent narrative violation, right? There's a lot of good companies. There's a few there's a few great companies also. But there are very few of these companies that, you know, the word of the day or the word I try to always come back to is transcendent.

1:02:27And you kind of know it when you see it or, you know, when you're around it. And that's what we think Michael and the team are doing at Cursor. Funny, funny story. I, Cursor is, I'm incredibly inspired by their growth and user love and everything they've accomplished over the last few years. But I had a painful moment when they first kind of exploded onto the scene because I realized that Amon, one of the co-founders, had been following me since like 2020 or something. I was like, I've had this lingering fear over the last few years of getting followed by somebody, not reaching out, not investing.

1:03:11And certainly would have been smart a few years ago to catch it. Well, listen, Jordy, it's not too late. It's not too late. We think there's still a lot of upside. So we'll see. Fingers crossed. One of the frameworks that I've heard kind of bandied about around what's going on, like a lot of people maybe want this to be more of a winner-take-all market than it is. And yet maybe because of Jevin's paradox or just the nature of like, it's very hard to understand how much code does humanity actually want to write? Like it's potentially a ton. And so you're in this like entirely new market that's a blue ocean and it's massive and it's just growing, growing, growing.

1:03:59And so there's opportunity. And I think you're in a unique position where you're in a number of names that do overlap somewhat. And there's a lot of opportunity. I'm wondering if you think that's the right framework or is there more of like a winner-take-all monopoly thesis with this particular market? Or if there's other historical anecdotes that you go to to kind of understand how this might play out? Yeah, I'm not sure what the best – I mean I'll get to the anecdotes. It's hard to find the best analog and analogs are always difficult, especially for this. We're investors in OpenAI, Anthropic, and Cursor.

1:04:39We're also investors in Glean, Harvey, Open Evidence, a number of companies across the kind of AI stack. Our view, right, if you just take a step back, right, people talk about the bottoms up TAM sizing on developers. To your point, people want to write a lot of code. 30 million developers in the world, right? A fraction of a percent of the global population today. And so what's that number look like in 10 years, 20 years? What should that number be? I mean, that's not really an answerable question, but probably much higher. And then if you take a step back, tops down, you've got$5 trillion of global IT spend.

1:05:18And about a third of that is labor today. So, hey, OpenAI is putting up historic growth numbers. Anthropics putting up historic growth numbers, right? All of that's well kind of directionally known. We see all these companies growing really, really healthy. and doing it in a way that we think is pretty sustainable. Yeah. Did you have a reaction to Satya Nadella on Dwarkesh X Dylan Patel? There's this interview and he kind of talks about, it feels like he was kind of sending the signal, I'm going to steamroll you if you try and build an Excel agent. I'm defending the castle that is Excel, but also on a platform for a bunch of other things.

1:06:02Yeah, the co-pilot for Excel is Excel co-pilot. Yeah, exactly. And I think that I would bet on him being able to defend the castle that is Excel. But I was going back and forth with Jordy about it feels a lot harder for Microsoft to put up a fight in AI for lawyers because they just don't have a practice there. And yes, lawyers use Word documents, but it just feels like a slightly different go-to-market, slightly different product. And so I'm wondering on how you think about the edges of like where the hyperscalers or the neo-hyperscalers, the foundation labs, might steamroll versus not. Because Cursor is an interesting example of a company that feels like almost steamrollable and yet hasn't been.

1:06:50Right. Hasn't been. Right. Again, if you look back at the past, if I told you, hey, Claude Code is going to be this amazing product that's this good and you can use it, you'd think, oh, my God. Right. Curse is good. I'm short in Cursor. Totally. of the year. That's what a lot of people, so again, I just think it's, you know, we get to sit in a unique spot where we see all these things happening and go, wow, we're just so early in terms of the pie growing, the tide rising with all boats. I think I messed up that somehow. But to get back to your question around the hyperscalers and who wins where, it's hard to say exactly.

1:07:27I think that's kind of the big question right now. If you look back at like the beginning of the year, I think there was an open question around, are these API businesses going to work? Is there long-term margin in the API business, right? Is something like Cursor just going to get run over? Is something even like Anthropic in the API layer going to get run over and squeezed? I think now people are kind of going, well, you know, these businesses look really good. They've scaled really nicely, despite all these things, to your point, happening at once. Maybe now the question is, what's the architecture of that market look like with the hyperscalers over the next 10 years.

1:08:03It's hard to know. What I would say is if you take a step back and you look at the cloud AI revenues for the three hyperscalers, I mean, they've been inordinate beneficiaries of this trend, right? Open, Anthropic Cursor, Harvey, all these companies are great. The hyperscalers have done really, really well. And the move to cloud and the move from on-prem to cloud that's being pulled forward by all this is really, really compelling for them. So like they don't need to worry about winning, in our view, right, like lawyers and beating Harvey. Like that's that's almost it's just further down the economic ladder in my mind for them.

1:08:42But, you know, we'll see the and then the other point. Oh, you asked about Excel. Yeah. Excel is fascinating. Right. The ultimate like dominant software product over many decades. we've been looking for kind of the cursor for excel uh for a while we've tested a few products we've got an internal team here that builds a bunch of things that we guys have built your fair share of models over the years i would hope we we do a lot with with data science and and now increasingly with ai we haven't quite found something that works yet but there are a few folks building some interesting companies that we're not invested in them yet so i'm not going I say what they are, but it's an interesting opportunity.

1:09:23I think that more likely than not, Microsoft still ends up owning a lot of that. I mean, the closed source thing is very important. Like there is no VS code in that category. People talk about this with cursor for biotech. Like what's the lab notebook? And I was pushing on like, I was trying to go deep with an investor who kind of came at me with a thesis of cursor for bio. And I was saying, okay, well, if you're going to invest in the cursor of bio, what's the VS code of bio? What's the open source standard that you can fork that every bio lab uses? And they're like, oh, well, actually, like the labs use closed source stuff.

1:10:03And those enterprises do not just want to give up the data. So you're going to be fighting for the walled garden and all this other stuff. So it does feel like the cursor for X model. I mean, it was really hot at YC, what, two batches ago, everyone was doing cursor for X. And it feels like it was wishful thinking in some markets. Yeah, I think that's exactly right. And what's interesting is for biotech in particular, right? And we've heard Sam make more public comments recently, right, about their effort with the sciences and how much time they're spending there. I just think that's where the value ends up accruing is something like an open.

1:10:41Anthropic probably throws their hat in the ring at some point. There's Isomorphic Labs coming out of Google. There's the Chai Discovery business, which is a compelling company. There's a number of folks who are kind of building these pseudo lab companies that work with biotech. I think that's probably what ends up being more interesting because to your point, there's not like a VS code for biotech today. And there are just very few markets where there even is a VS code analog, right? Part of the magic of Cursor is they identified an incredible market where the models worked really well early, which was coding.

1:11:17This has been the frontier of model capability for a while. You had the ubiquity of VS Code and of the terminal and all these things. And then you just built a really nice product around it and have continued to just push the frontier of what's possible. And now you layer in their own model with Composer. So we're excited about it. But it's hard to find markets with the same anatomy and structure and kind of opportunity, to your point. People are kind of squinting and like kind of forcing ideas a little bit. Totally, totally, totally. Yeah. Jory? I'm sure you guys just try to back visionary founders that don't come to you for help unless they really need it, hopefully.

1:12:00But how do you think private companies, how much attention should private companies in AI be paying to the public markets right now? Because we're seeing so much growth, revenue growth in the private markets. And at the same time, you know, we were just, you know, core weaves down 45 percent in the past month. There's a lot of jitters in the market right now. And it's hard not to pay attention to some of these signals, even if even if a company's own revenue growth is is skyrocketing. So I'm curious how how you think the best companies are going to kind of manage through the next 12 months. Yeah, I mean, look, the fortunate thing for the best companies is almost all of them have a war chest in terms of capital on the balance sheet today.

1:12:45And I think the capital demands of these businesses is a bit exaggerated relative to what it is, would be maybe my personal view, relative to like what's on X or what's in the media around these AI companies. In terms of like paying attention to public markets, right? I think it's I saw like Subu tweeted, I think a few days ago, something around. Right. Like the market's been above its 50 day moving average for like over 100 straight days, like something like 130 straight days or something like this. So, you know, that the market's been good for a while when you see a stat like that. I think founders are aware of that and are pretty aware that it's a good time to raise capital and fortify a war chest.

1:13:30right, which we've had a really busy Q2 and Q3 and now early Q4. I think that's kind of the way to think about public markets is, hey, when's a good time to raise capital when my cost of equity is lower? But outside of that, like, I just think tunnel vision is everything. And again, just to bring it back to Kershaw, like, this is a very focused company, very heads down company, doesn't make a lot of appearances, right, like just stays in their lane and focuses. And I think that that's kind of the ultimate value, right? You don't want to be spread too thin. And look, there's a lot of folks like myself running around San Francisco now looking to give founders money and tell them when the value of their equity is pretty good, right?

1:14:13So we help give them that signal. Yeah, there's also this interesting, it's hard to measure corrections in the venture ecosystem, because they're much less quantitative than just looking at, oh, okay, you could map the - Yeah, correction often looks like, wow, that company hasn't raised in three years. Yeah, yeah, that or there's some hiccup in LP fundraising or something. But there's many corrections in the public markets that I can think of that were like hiccups in the private markets. But for the most part, it was everyone just kind of being like, oh, there's some crazy stuff going on. Okay, like, let's cancel a couple meetings.

1:14:53And okay, we're back on two months later. Like the COVID-19 like sell-off was like a massive correction in the public markets. And for most startups, it was like, yeah, you needed to understand what could your company continue or were you in like hospitality or something that was going to be heavily affected. But for a lot of companies, it was just like, oh, your March raise turned into a June raise over Zoom. And it was fine. Yeah, I mean, I think that's spot on, right? Like, there is a level where, right, because we do have a public hedge fund. And so what's interesting is when you have conversations like the one you guys were having prior to this, right?

1:15:33You know, as a hedge fund, you're always behaving in the market, right? There's always a choice to be making, right? It's very unusual to be in 100 % cash or something like this, right? is a private fund, is a growth fund, we can just choose to not invest for a while, right? We can just wait a bit. And for us, like the convenient thing is, you know, we only make, I think this year we've maybe added about half a dozen new logos to the portfolio. So for us, we're only making three to five core big investments a year on the growth side right now is kind of our cadence. So it helps us kind of work through whatever that cycle is and just focus on the asset, focus on the entrepreneur, focus on what we view as the 10-year trend and story for why this company is going to be so durable and so powerful over time.

1:16:20But yeah, you don't see it, right? I think the other thing that's maybe less discussed is we've had a bunch of companies, and I've seen companies outside our portfolio too that were kind of your 2017 era SaaS businesses that have really seen a nice bounce back and a nice acceleration over the past few years with AI. Reinvention is the wrong term. It's just kind of like some product extension. Yeah, the CEOs and the management teams and the teams are just re-energized and excited because there's this new capability that you can integrate across your entire platform. Totally. And if you were some flavor of a source of record, your ability to now use that data and create economic value around it is just inordinately better.

1:17:05So yeah, I mean, look, the market's been up for a while. It's definitely interesting. Yeah. But for us on the private side, it's a little bit easier because we just get to focus on the companies. Yeah. How do you think people are, do you think people are reading too much into Sarah Fryer's like private phone calls these days? I mean, it feels like, you know, opening has like a billion users. Deceleration might be sort of like expected, like, you know, People don't expect meta to accelerate on DAUs. Do you have any thoughts on what's going on there? I've got a big term because I knew this would come up.

1:17:42So I thought of this before. This was my one big term here. Anxiety displacement, guys. We've got anxiety displacement. That's what's going on. People talk about anger displacement, all these things. Market's been up for a while. That's a fact. um oh chat gpt is less than three years old sure is a product right yeah it's growing really quickly right it's it's they've disclosed they're almost 10 of the world is using the product weekly right like that's pretty remarkable right the market's been up a while we had like i still think as a society people haven't really processed the whole lockdown thing we had the government shut down for you know a month and a half like there's all this stuff going on and there's all this anxiety and I do I think like that's been very displaced because people you know like open has a great company it's a remarkable business um there's just it's hard to think of an analog for what they've achieved in less than three years is a product and uh I think Sarah and Sam the entire team do an incredible job so people are definitely reading too much into uh anything and everything sometimes I think there's a little bit of a malicious spin sure on some of the stuff they put out also, just to be very candid about that.

1:18:55But yeah, I mean, it's understandable for there to be a lot of anxiety in society, in the market. And it's understandable that it gets displaced onto the company a little bit, but I don't think that's fair. Yeah, it was a little weird. I mean, we were reacting to this idea that there's a private call with investors, like what type of investor is then leaking potentially bad news to the press. it seemed like an odd chain of events, but there's certainly unlimited demand for bearish takes about ChatGPT right now because they've been on such a tear. Every day people log on to ChatGPT and ask for, what's the most bearish thing about ChatGPT?

1:19:35Yeah, yeah, yeah. Right, right. That's the tweet prompt. Like that's your X-maximalizing prompt right there. Totally. It's probably something like that, right? What chart can I put together or what can I do? But look, we'll see, right? Worked with the company for a long time. Think it's an amazing company. I've been really impressed by what they've done. I continue to use the product every day, a ton. I think 5.1, the new model, is really a nice upgrade too. I enjoy it. So, you know, yeah, I think they do a great job. And I think people definitely over-rotate on it. We're excited for 5.67, which would be only a few upgrade cycles away.

1:20:18Rolling my eyes at that one. Can't do it. Can't do the stupid 6.7 memes. It's over. I'm over them. Killed it just now. They're over them. I like the new coinage, though. The anxiety displacement. It's good. Let's talk about other growth funds because that's just a fun topic for every investor to talk about everyone else. Do you think anybody has, have you seen any other funds kind of blink yet or hesitate or kind of slow down at all and a little bit worried? Because it's just like we're seeing every day we get like half a billion dollars of funding announced on the show, but that's a lag. You know, it has like these rounds like really got done in late summer, early fall, and they're just kind of getting out there now.

1:21:12Yeah, I mean, I'm sure there are some funds that have slowed down. I'm sure there are funds that are deploying more than us and less than us and those things, right? I'd say generally I think the vibe when you're catching up with someone over coffee or lunch is a lot more positive than over Twitter, right? And there's a lot more of like, well, how exposed am I to the AI trend, right? Like there are a few growth funds that feel like, you know, I've disclosed, right, hey, I'm a little behind this and I'm trying to catch up here and there. So if anything, like I've felt more anxiety about that, then, oh my gosh, you know, we just put more money and pick your big premier company and, you know, I haven't slept well about it.

1:21:49So that's not necessarily a great signal either, right? That's kind of like an average signal, but I'm sure there are some folks slowing down. Not sure who they are per se, because we have a lot of funds that are definitely deploying a lot more than us in terms of absolute dollars and just absolute number of deals. So for us, we just, again, we really just try to focus on our core mission, which is, hey, what are going to be companies that matter as public enterprises 10, 15, 20 years from now? And in some cases, a little bit sooner, right? Right. And when you think about the capital intensive pre-revenue AI companies, we had Fei Fei Li from World Labs on.

1:22:36I don't know if they're fully pre-revenue, but it feels like a lot of the world model projects, the generative 3D worlds, Gaussian splats, what Google D-Minds working on with Joma or is it Genie? Jeannie is the model. It feels like something that I just think will be like the next Roblox vaguely, but there's nothing that you could do to underwrite this against revenue growth. And yet, a lot of these projects are like, to do the next thing, we need$200 million. How would you as a growth investor even square that? Or would you just say, hey, let's just come back when we can actually see some adoption data?

1:23:15Yeah. Normally, we would fall into the second bucket, like generally in terms of how we operate. It's different for everyone. I think all those rounds are ultimately just a representation of the idea size. Totally. Right. Of the opportunity. Yep. And then, and then of course also of the entrepreneur and the team. Yeah. Uh, we did make, you know, one investment very early that, that maybe fits this mandate, which would be skilled in the robotic space, which has been a great company has executed incredibly well. And we I think Luke Metro is over there now. Oh, yeah. That's right. Yeah, we just know someone who's on the team, but not one of the founders.

1:23:52That left Andrew to join. It's skilled, right? S-K-I-L-D. S-K-I-L-D. Yep. So that was one where we leaned forward a little bit earlier than we would with most things. And again, that was on the back of just being very bullish on robotics on a 10, 15-year time scale and that team and where they sat in the stack. But generally, we tend to wait a little bit to see a company be a bit more flushed out. But it's always case-specific. That's amazing. Well, thank you so much for coming on the show. Thanks for hanging out. We will talk to you soon. Hope you have a great rest of the day. And congratulations on the cursor round.

1:24:29Great to see you, Spencer. Have a good one. Cheers. Goodbye. Up next, we have Tyler and Cameron Winklevoss. But first, let me tell you about TurboPuffer. Search every byte. Serverless vector in full text. search built from first principles and object storage fast 10x cheaper and extremely scalable um the uh the winklevoss twins are in the restream waiting room i believe uh if not we have a uh slight delay let's follow up on that back to the timeline back to the timeline dario amade predicts that we will get to 90 on sw bench verified in a year that was one year ago it's been one year uh the best performing model sonnet 4.5 with parallel compute gets 82 percent on Sweebench verified.

1:25:11Close to 90%, but not quite there. They put him in the truth zone. RIP to Daria. What do you think, Tyler? Bearish? I mean, I think he was pretty close. He was 90%. Oh, he's pretty close. Good enough these days? That was way more of a bullish take than most people. Yeah. No, it is very impressive. Totally. Do you think it's saturated? People are saying that. Yeah. I think a lot of those kinds of benchmarks are generally saturated. Yeah. Yeah. Yeah, I mean, it is interesting that, like, simultaneously, you hit the 90 % on SweetBench, did very well there. But on the flip side, you have Andre Carpathic saying, like, it's slop, and, like, you can't actually use it for, like, the frontier software development that he wants to do.

1:25:50Anyway, I believe we have the Winklevoss twins in the restring video. Let's bring them into the TVP on Ultradome. Tyler and Cameron Winklevoss, welcome to the show. How are you guys doing? What's going on, guys? Hey, guys. Very nice background. Give us the update. Give us the news. I know we're running late, so let's just jump right into it. I assume everyone knows who you are. Cool. So we launched Cypherpunk, a Zcash DAT yesterday. It trades under Cyphe, C-Y-P-H. We're really excited about it. The mission of the company is privacy and self-sovereignty, starting by accumulating Zcash. and then in due time, we hope to invest in other technologies that promote privacy and self-sovereignty.

1:26:41This delay is extremely... Having some Wi-Fi issues. Sorry. Say more about the structure. This is Leap Therapeutics. You guys have rebranded it. This was an existing public company, but what more can you say on how this came together?

1:26:59Yeah. So it was an existing biotech company. Um, and we basically took it over, um, and invested via pipe into it and then, um, rebranded and changed the ticker today. Awesome. Uh, so I guess, uh, Z cash has had a lot of momentum recently at the same time. Uh, A lot of the DATs have struggled more recently. Talk through how you're thinking about making sure, just kind of navigating this time when the markets are pretty choppy overall. Sure. So I think, number one, the long-term thesis we really believe in. And I think that when you look at Bitcoin as a store of value or how you store your value, Zcash is really how you move your value.

1:27:55This is very sound and we're obviously very bullish on that. But in addition, we're the largest investor into the debt. So we don't have like a lot of fast capital that's looking for a trade. We're just long term hodlers or in the case of Zcash, Zodlers. And we just, you know, we plan to hold for a very long time. And I think that's one of the differences is that other DATs have, you know, had faster money and people that are moving in and out of it. And that's why we didn't fill the pipe up. We took, you know, the vast majority of it, I think, put a$52 million check in. So the vast majority of equity will not be trading out of the shares.

1:28:38That makes sense. Well, thank you for the update. Sorry about the Wi-Fi connection. We have some technical problems. We'd love to have you back on the show and talk more about what's going on in your world because there's so many interesting projects that you're working on. But really appreciate you taking the time to give us a quick update on Cypherpunk technologies. And congratulations on the pipe closing, the rebranding, all the progress. So have a great rest of your day. Yeah, thanks for joining, guys. Bye. Cheers. Let me tell you about Google AI Studio. Create an AI-powered app faster than ever.

1:29:11Gemini understands the capabilities you need and automatically wires them up, the right models and APIs for you. Get started at AI.studio. Who is building AI agents to make the Wi-Fi work? That would be cool. It would be cool if we could deploy an AI agent. I mean, I guess that's like the next generation of the Restream waiting room. Like the Restream waiting room, somebody talks to them in a different waiting room and checks the Wi-Fi. that will be something. Maybe it's a 2026 project. Maybe it's a 2046 project. Who knows? That could be the final box. Hopefully our next guest is dialed into the Restream Waiting Room.

1:29:49We have Max Hodak from Science. How are you doing? What's going on? Welcome to the show. Hi guys. Excited to be here. Good to meet you. Great to have you. I believe we met like years ago at an Oppenheimer screening potentially. I don't know. Very possible. Very possible. That probably happened, yeah. Anyway, for those who don't know you, please kick us off with a little bit of an introduction on yourself and maybe the company as well. Sure. So, I mean, I've spent most of my life thinking about how to engineer the brain. I mean, my origin story, I think, in this field started when I was in the fifth grade and I saw the matrix and I was like, I have no idea if we're living in a simulation, but we are definitely going to build one.

1:30:27I'd kind of broadly characterize my ambition is to eventually disappear into the simulation, never to be found. and I as an undergrad talked my way into a lab that was doing neural recording in primates and spent really that was where most of my education happened and then in 2016 I got I pulled into co-founding what what became Neuralink and I was there for four and a half years and in the spring of 2021 started this company Science we're now about 180 people our main product is a retinal prosthesis like really the first retinal prosthesis that really works for a sore vision it was in And it was actually on the cover of Time last week, which is a pretty crazy experience.

1:31:05Wow. So you like The Matrix? Do you like The 13th Floor? Have you seen that movie? I have not seen The 13th Floor. Oh, The 13th Floor. It's like one of those movies that got terrible reviews, but I feel like it goes a little bit farther than The Matrix in terms of simulation theory and simulation hypothesis. It's a lot of fun. But anyway, we can get back to the actual story. So how far are you in building this business? Give us a general update on the shape of the business. It seems like you're in the office right now. How big is the company? What's the progress overall? Yeah, so we have a couple of different elements of our pipeline.

1:31:42So the retinal prosthesis, we think that is first just an end in itself. If you can restore vision of the blind, it is a quest that humans have been on for thousands of years. That is an unsolved problem. And I think there's real progress on that. We've got two programs. One is a retinal chip called Prima, which is this little, it's a little chip implanted in the back of the eye under the retina that has all these light sensitive cells, works in conjunction with a laser projection glasses worn by the patient. That finished a major clinical trial last summer that was published just recently in the New England Journal of Medicine.

1:32:16These patients go from being unable to recognize faces. They can walk around because they've got a little bit of residual peripheral vision. The trial was in an age-related macular degeneration, but they definitely can't read. they are really profoundly blind and disabled. And the best patients in this trial could go from reading none of an eye chart to reading the entire eye chart. I mean, there's videos of these patients like billing and crossword puzzles. It's really very cool. And then separately from that, we also have another key program in the company is a different approach to building brain-computer interfaces where instead of placing wires, like not in the retina but like in cortex, instead of placing wires or cables physically into the brain or genetically modifying the brain so that there's some things you can do with optogenetics or sonogenetics.

1:33:03Instead what we do is we grow up these heavily engineered biological cells that we hide from the immune system and then we just sit this on the surface of the brain. And so we don't place anything into the brain itself but what these cells do is they grow in and they wire up and they form new biological connections and they can form billions of them. And so I think the way to understand this, I think actually a fairly direct reference for how to think about it. John's face right now. So we call it a bio-hybrid neural interface. Have you seen James Cameron's Avatar movies? Yes, yes, yes. Do you know the ponytails that the aliens have?

1:33:36Of course, of course. I know exactly where you're going with this. They used to plug into their tree memory store or their horses. So I think the question is if you wanted to build an ultra-high bandwidth neural interface, how would nature do this? I think what nature would do is it would grow a new cranial nerve that has a USB port at the end. That is super cool research, but that is definitely a research project. The way the company is architected is that it's paid for by the retinal prosthesis, which is a very practical near-term medical device. We've submitted for marketing approval in Europe for that.

1:34:09We're going through the review process now. The FDA actually is being much slower. It's possible it won't reach American patients for a little bit longer. And that's kind of crazy that Europe is going to get it first, but that's where we are. No, that's rare. Kind of narrative violation, but exciting. Narrative violation for sure. But so yeah, hopefully that'll be on market next summer making money. And that is big enough to pay for the rest. That makes sense. So why go with a retinal prosthesis instead of cutting a hole in the skull and putting electrodes directly on the brain and trying to deliver the signal that way.

1:34:49There's a lot of BCI firms, obviously you co-founded one, that seem to be approaching the problem that way. Is that just, like, do you have a particular view on that? Is that just farther out and this is a way to get to market faster? Or is there something fundamentally like higher bandwidth about your approach? Like what are the different technical trade-offs? So BCI is not a product. BCI is a field. Okay. And there are many different types of BCIs for many different types of applications. Like obviously you can't go into the retina to decode like a video game controller out of the brain. Simultaneously, you can't stimulate like frontal cortex to do like to do some like sensory feedback.

1:35:31And so it really depends on the type of thing that you're trying to do. And when, And so in vision, which we, I mean, we think that a visual prosthesis is a brain-computer interface. We also think that cochlear implants are brain-computer interfaces. You don't need to be drilling into the skull to get to cortex. So if you want to restore vision, you kind of have a choice of, you've got the retina, the output of the retina is the optic nerve that goes to a deep brain structure called the thalamus. And then the thalamus connects up to cortex. And so within the retina, so let's just take a look at like the options that you have here.

1:36:05So in the retina, normally light shines in from the front. It hits the rods and cones. The rods and cones are the light-sensitive cells. There's about 150 million of those. These connect to about 100 million intermediate cells called bipolar cells. And those compress down to 1.5 million optic nerve cells. That connects to about 1.5 million cells in the thalamus. And that connects up to like 200 to 500 million cells in cortex. And so no one – I mean, people have been trying to stimulate vision into the brain for many decades. and until the clinical trial that we just finished, no one had ever gotten form vision, like structured vision that the brain could intuitively assemble into a whole.

1:36:44Like you could get patterns that if you like looked at it carefully, it's like, oh, there's like a line here, there's a line here, it's like connected, that must be an A, like here's a line, like that's an N. But in the PREMA trial, I mean, they could read off words at a time and that had never really happened before. And a big difference is that we're stimulating that first layer of cells, the bipolar cells in the retina, and we know that if you just go one layer deeper from the 100 million bipolar cells to the 1.5 million optic nerve cells if you stimulate those optic nerve cells you don't get this you just get these diffuse flashes of light that you can't really attend to and the brain does not intuitively assemble together because the brain has already compressed the signal and you have to then figure out what is that transform how did the brain compress this or how did even just the retina compress this and so the thalamus has the same issues as trying to stimulate the optic nerve except it's under eight centimeters of brain tissue under the skull.

1:37:35And then once you're up in cortex, you're dealing with hundreds of millions of cells that are distributed over large areas that you just can't stimulate selectively. And so if you do this, you absolutely will get flashes of light. But converting that to form vision that you can intuitively read is a totally different problem. And then even if that worked, even if that worked perfectly, one is an outpatient surgery going through the soft tissue of the retina, The other is like a four or five hour brain surgery drilling through the skull. I think like one of those is you're going to kind of win sales.

1:38:09Yeah. Wait. So you said outpatient. Walk me through comparing the level of intensity of the surgery to something like LASIK. So it's a little more than LASIK. Yeah. But it's like not a ton more than LASIK. What about getting your wisdom teeth out? I was just coughing. I mean, you could do this. So in the trial, many of them ended up being done under general anesthesia. But to be honest, in these cases, general anesthesia is really as much like a commitment mechanism for the surgeon and the patient than it is like there's any medical reason to do it. I mean, you can't change your mind halfway through.

1:38:46But from an experience perspective, so you could do this with, you can make an injection next to the eye, the eye goes dark and numb for a couple hours, and then you can go in through the soft tissue of the eye, you leave the chip, there's a little injector, the surgeon presses a lever, it leaves the chip under the eye, they come out, they're done. And so it's a really very simple procedure. And then, sorry, just to be ultra clear, like the chip is in the eye, then how am I communicating with the chip? Is it wirelessly? Is there a device that's on the other side of my head? You said glasses maybe are interfacing with that?

1:39:19Yeah. So if you look at this chip under a microscope it has all these little hex cells on it and every one of these hex cells like the science prima chip um it's essentially a solar panel and the it works in conjunction with there's glasses that are worn by the patient that has a camera looking out at the world although you could really get the video feed from anywhere and then there's a laser that projects the image onto the back of the eye in the infrared okay and because you can't see infrared you can't like if you have residual peripheral vision or any, if you're not totally blind, this doesn't interfere with that.

1:39:53You can still have that. But the infrared laser where it strikes the implant, it works like an overhead projector. Like if wherever there's white that is projected, that is like that's energy. And wherever there isn't energy, it's dark. And wherever the laser is absorbed by the implant, it stimulates the cells directly above that pixel. And so this is pretty cool because the implant is powered by the information that's projected onto it, like as a solar panel, this means that there's no implanted battery, there's no cable. This tiny little fully wireless 2mm chip is the whole thing. Also, because the eye moves relative to the projector, the projector is shining in from the front of the eye, and the eye moves and the image changes, this means that the brain can easily fuse it together with their existing vision.

1:40:39There's some pretty cool stuff here. If you show one of these patients a solid green bar all the way across the visual field, they'll see a contiguous bar, even though the implant only fills a small area of the total area of blindness. And they'll say it's green and then it turns white because we can only get black and white right now and then it turns green again. But the brain fuses all of this together. And so even though the implant only has 400 electrodes, as the eye moves around, you don't experience the image that falls on the eye, falls on the retina like a camera. The thing you experience is the brain activity of the world model in the brain.

1:41:15And so as the eye is moving around, it's updating the world model, and that's the thing that you see. And so even though it's like 400 electrodes, you can't think of it like 400 pixels on a screen. You think of it as just getting the information of the world model and the eye is moving around and the brain is cross-referencing all that. So it actually does significantly better than you'd think from being 400 electrodes. That's fascinating. Um, how do you, how do you think about the analogizing around the artificial intelligence community of what you know of the brain? So a lot of people in computer science or AI might say, uh, with, with LLMs, we've built this piece of the brain with the hard drive, we built the long-term memory, uh, has, has what is your research?

1:41:58Have you mapped any of that onto the current state of artificial intelligence? Has it proven insightful for you to understand what's going on in AI? This is funny because, I mean, at the very beginning of Neuralink and OpenAI, we were in the same building in San Francisco. And we'd have these discussions about, like, oh, who's going to learn more? Is AI going to learn from neuroscience or is neuroscience going to learn from AI? Yeah. And I think it has been revealed that, like, I asked, I caught up with one of those guys a little while ago. and I was like, oh, like in retrospect, what do you think AI learned from neuroscience?

1:42:29He thought about it for a second. He's like, the concept of a neuron. Yeah, that's it. Like, that's basically it. That's like, it's literally just in the name. Neuroscience is neuron and that's it. And then nothing else. Because yeah, like the whole brain structure. Yeah, anyway, continue. But going the other way, I mean, AI has been so useful. I mean, there is a really interesting convergence going on. This is kind of called like neuro AI, where neuroscience is learning a lot from artificial intelligence. in ways that I don't think any of us really would have anticipated. Have you come across the platonic representation hypothesis?

1:43:04There's an empirical finding that different neural networks trained with different architectures, different objectives, and different concrete data sets, but for the same type of thing, like images or language or audio, they produce these similar internal representations. Sometimes you'll hear people say, like, oh, these models are like stochastic parrots, or they're just like, there's glorified autocompletes. These people are safe to ignore. The mathematical objects that you see appear inside these models are super interesting and look a lot like the representations that you see in the brain.

1:43:39And so that is hinting at, there's some deeper fact about the universe that we're figuring out here, that basically if you have a lot of compute power and you kind of run it in these ways, then you see these mathematical objects emerge. And what evolution did and figured out in the brain looks a lot like stuff that you see in these transformers and these other AI models. And there's definitely some interesting unification happening there. It's a little more than speaking totally metaphorically, but it is still, I'd say, instructive rather than literal. but that's getting like every month there's like some new cool thing that comes out around this I will say that I don't know my view is that the transformer is like a reasonably good model of like what cortex is doing but there's a lot more of the brain and so there's other parts that aren't fully capped that we're going to need something else but it's not like the transformer is wrong I think it's probably part of the story yeah that makes a lot of sense I wonder what you think about just the idea that it takes millions of years to train a model to drive a car, and it takes a 16-year-old a couple weekends to do it, or the amount of energy that I will consume in one day of generating my own reasoning tokens is way less than what it takes to run a data center.

1:45:10there seems to be some sort of like exchange ratio of that's like, we're off by a couple orders of magnitude. Maybe that's an algorithmic question. I don't really know. Do you have any thoughts on that? Yeah. I mean, evolution has done, I mean, it is really, it has minimized, it's been very good at minimizing energy and optimizing some other stuff. But I mean, that I think is like the advantage of the biological brains. Like every now and then I see pictures from companies that they're saying, AI is really energy intensive, so what we should do is we should grow up cultures of biological neurons and train them to do intelligence tasks.

1:45:48You can kind of do this. You can grow up neurons on electrode arrays and you can condition them to learn things by stimulating them in different ways. When I was in college, I grew up at Counter-Strike Gamebot. This is actually not that hard to do.

1:46:03This is a thing that I think nerd snipes many people in this field at some point. but I don't think that that's the way to go. I think there's just really structural advantages in silicon. If you compare and contrast these two approaches, in the deep learning models you can see all the weights, you can introspect them, you can stop the model, you can change one, you can replay it, you can copy it to disk, you can send it over to the network. Whereas with the biological living, these organoid brains, you can't see the weights, you can't copy it to disk. It's like the, what it learns is the time integrated experience it's always had.

1:46:39And like at some point four or five months in it will randomly get infected and die and you'll have to start over. Yeah. And so I think there's just like structural, it's like the thing that the biology does is it's energy efficient. But my response to this is like generate more power. Yeah. I like the idea. There's no such thing as a low energy, wealthy society generate more power. That's yeah. I like the idea of the solution to AI is just like have kids or something. And you're like, you, you, you've reversed it all the way down to like, if I want artificial intelligence, I can do it. biologically.

1:47:06Are you and the team getting much leverage out of models today? Is it accelerating your progress or is it really just about having like deep domain expertise and being more obsessed with the problem than anyone else and hiring the smartest people in the world? Interestingly, I think companies like this are really limited by infrastructure. And so one of the things that I got from my prior boss was I totally received the gospel of vertical integration. And we're really not, it's not like we're held back by genius scientific insights for the most part. We're limited by like, oh, well, we need to get a new material in our microfab deposition tool, but this requires hooking up some gas plumbing, which requires getting some specialist vendor to come out and weld it to the machine.

1:47:56Or you're out of animal housing and building that is an architectural design process and then permitting and then construction. You're really limited by infrastructure more than you are genius scientific insights. When I think about being in the takeoff era and what is the impact of progress in AI, we're still limited by how that can impact the real world in really meaningful ways for these atoms things. But I'd say there's two places that AI has had a bigger impact. The first is, ironically, comprehending regulatory standards and generating regulatory I was about to say, if permitting is the bottleneck, can you have a permitting agent that just goes and spams the permits until you get exactly what you need?

1:48:35Yeah. I mean, they're not quite like they – you end up doing a lot of editing, but you definitely just don't want to spam the permits. This makes the regulators mad. But I mean, the filing in Europe to ask for approval for our retinal prosthesis, which we submitted last summer, it was – I forget exactly how many. It was like tens of thousands of pages. It was a 65-gigabyte PDF. Yeah. And that depends on hundreds and hundreds of standards that we're just expected to know all the details of. And so being able to talk to these things is super useful. Like chat with these data sets is super useful, rather than having a big team of regulatory experts who are all kind of to do this through meetings.

1:49:14And then the other place that we've had big success with AI internally is in our protein engineering program. so there's conventionally many of the problems that we're interested in you'd have to solve with better electronics or better physical devices somehow and we're now at a point where often when we find a problem we ask can we make a protein to solve this so a couple months ago we published a paper on a new type of optogenetic protein which is these are proteins that can make a neuron light sensitive that is not normally light sensitive so we could control it optically with light and these typically require very bright laser light in order to work and we're able to use AI models to find one that is so sensitive that it is responsive to not just daylight but indoor office lighting and so that allows us to substantially reduce the power consumption because often the brain implants were often limited by thermals like how much energy you can consume depends on how much you can heat the brain so if you have more sensitive options then you can have your LEDs be dimmer and have more of them then you can think about going from like thousands to hundreds of thousands.

1:50:23But then also that might turn actually into our next generation retinal product. We might, that will have to go through clinical trials. That'll be a process. But it's possible that in five or seven years, you won't even need the chip at all. You'll just get an injection. And then we can just make the bipolar cells themselves light sensitive. And then that won't even need the glasses potentially. And that really comes out of the big breakthrough on being able to solve these problems with proteins. is an AI-enabled thing. Chat says, we should have you ask, how to explain this to preschoolers?

1:51:00Some labs, various groups have talked about the revenue opportunity and just automating science. And it's usually very general, where they're just like, we're going to come up with a bunch of ideas, and then hypothetically they give the ideas to various people to execute on, and they get some type of royalty on it. But how much opportunity do you think there are for a more general foundation model company to just come up with a bunch of ideas and then actually capture real value from it? It feels like in some ways the pharmaceutical industry maybe doesn't have a shortage of ideas. They have a shortage of infrastructure and funding in order to test enough ideas to actually get viable solutions.

1:51:45yeah I think that a real bottleneck here is just the translation to human subjects research and then to the market is really difficult we have like the I think I sometimes joke about is like we're in a golden age of mouse oncology like if you're a mouse with a cancer like we've got some great things for you but the give it up for all the mice out there that's great to hear for the mice that's fantastic we owe it to them for all that they've done for science But that's the trade-off.

1:52:18And I get it. You can't just say, oh, well, the FDA is the problem. The problem is that human subjects research is life or death. It's no joke. And I've had the experience of a patient goes into a new surgery for the first time, or you're going to inject them with something and you're going to wait. And that is a very stressful experience. And that's a stressful experience for me. I'm not even the one getting it.

1:52:47There's trade-offs there that I think are very deep in the way that we in our civilization value human life, which I think is right. So you have this knob of how much risk do you think of taking in human subjects research and how fast do you get new things? We know that the toolbox of science is very, very powerful because when you look at what's possible in the animal models, you have these amazing things that are possible, but then getting that into humans is like, and that, and it's not just to say like, oh, we, um, like, like, oh, we should just deregulate all of this. Like there's, it's more complicated than that.

1:53:24Um, although I do think that there's a little bit of that. Um, but at the same time, I mean, certainly this, there's an intelligence effect. Like, I think that there's, it's going to be inevitable that these things, I mean, the fact that you can fold all the proteins, at least in static forms is a big deal. Like I would absolutely not bet against improvements in AI leading to improvements in medicine and healthcare. And I think there, actually, just to go one step further, I think then the thing that we're going to have to reckon with is healthcare. If you thought 20 years ago, TVs and phones and computers were way, way, way more expensive, and now they're much cheaper, but we spend more on them total.

1:54:03This is like a technological growth industry. Like normally if Nvidia sells 20 % more GPUs next year and their revenue goes up and their earnings go up and the stock price goes up and like everybody's stoked about this. But as time goes on and there's more things to spend money on in healthcare that produce better outcomes for longer lives, there's like spending should increase. but because we pay for this with these kind of insurance schemes, which are kind of pseudo-fixed buckets of money. If there were real breakthroughs in healthcare that allow people to live much longer and have much better outcomes, but they cost money, and you could spend 10 times as much on healthcare, that would be a catastrophe.

1:54:38You do not want to spend, right now our system would not handle spending 10 times as much on healthcare. But that is kind of directly at odds with it being a technological growth industry. What about the BCI industry? I think it's interesting. We've seen this boom in quantum computing and there's public companies do all this stuff, but it feels like BCIs - Well, so specifically, I feel like the interesting question with BCIs is like, I want to understand your timeline. Yeah, people are pouring capital. It feels like there's these therapeutic use cases where somebody is blind and they're willing to take some level of risk in order to see or at least see something.

1:55:16And then there's like the utility timeline and entertainment timeline where I just have, instead of wearing glasses, I just have a screen that's just embedded in my retina, and I don't need to wear glasses, and it's always on, and I can turn it off. And I feel like that's where you're going, is sort of a general purpose technology on a long enough time horizon, but maybe I'm off. Yeah, I mean, it'd certainly be cool if when your eyes are open, you've got the world of atoms, and when your eyes are closed, is you've got the world of bits. I mean, the near term is all, these are medical devices, especially on the cortical side.

1:56:01I think these are very serious brain surgeries that like healthy 40-year-olds are not going to be, like if your hands work, a keyboard is a really great brain-computer interface. And there's a lot of research that goes into like the design of the Xbox controller or the design of like the VR inputs. Because if you can convey the signals from your brain to the muscles, like you can just capture that. And that works really well. but at the same time I think many people eventually become patients like these bodies are great until they're not and as they start to fail we should have better options and so I I think that DCI I think that there's a kind of a meme that it is an AI adjacent story but I actually think it's like a longevity adjacent story um I see like the like the only organ I really care about is the brain as far as I'm concerned kind of the rest of the body exists to like keep the brain alive and healthy and move it around and cause it to do things.

1:56:49And I'm going to be fairly disappointed if I'm murdered by my pancreas or my heart. And so I think the, you can get to this point where you say like, well, instead of the, you've got all these hard problems, like, yeah, we've made progress on cancer and cardiovascular disease and metabolic disease. But again, like when you think about health insurance, like you can't insure something with a 100 % loss rate. And we still, that is what we were talking about in medicine. And I think you can get to this point where the brain is the thing that is really special and makes you, you. And like, when I look at a person, I see an agent and a robot, and biology makes great robots, but the thing we really care about is the agent.

1:57:21And if you can kind of deal with the agent directly and the rest become swappable parts, then instead of needing to cure cancer, we might just be able to avoid this entirely. And that I kind of see as one of the central elements, at least how I think about the promise of BCIs. And so I'd say, like one of our, a thing that I think could really be possible is like by 2035, it won't be widespread. I think it'll take longer than that for sure. But by 2035, can you offer patient number one, the choice of like dying of pancreatic cancer being inserted into the matrix? Yeah. What's the strongest steel man you can offer for the anti-transhumanism arguments?

1:58:00Because I mean, I've been steeped in this exact Silicon Valley lore for basically my entire life. I've heard it articulated a bunch of different ways in media, video games, the matrix. Uh, and yet I've, I've also seen a lot of pushback. There's a lot of, yeah, there's a lot of pushback against the transhumanism stuff. Uh, what, what, what's been the, what's been the strongest, uh, argument that's, uh, that, that, that you've, you've had trouble debunking if any. Yeah. I mean, I, I don't really like the label transhumanism. It just has like all these like connotations. I also don't like the word, the term, like the, I think it is important that these things, like people don't want to be different.

1:58:39They want to be themselves. I think it's important to realize that things we're talking about should make you kind of just as much you as you've ever been. And just like with the best quality of life you've ever had. And I think a concern with AI is that it could be massively, like, it would lead to really undermining our agency. It could lead to a massive loss of agency for humanity and the emergence or something else. Whereas I think that these BCI technologies are really about increasing human agency. It's really, it's a very like,

1:59:15yeah, they kind of exist to facilitate you. And it should not, and it should be, it's not other than human. It's like it is a very pro-human technology. I mean, as much as any kind of healthcare, right? Like we try, like we do heart transplants. We're working on artificial hearts. You have dialysis. You have, we treat cancer. We like think that these things are worth trying to improve on. And it's only transhumanist in the way that like any healthcare is that you don't accept that just like the state of the art in the middle ages, if you're like playing in the wrong forest and got a scrape on a branch, you could suddenly die of a bacterial infection two days later.

1:59:49Like we developed antibiotics. Like this is only transhumanist in the way that antibiotics are. It's this continuation of that story. That's a great, that's a great argument. I love it. What, yeah. Jordi, do you have anything else? Thank you. I was going to ask about the merge. Yeah, I'd be interested to get your personal definition of the merge. Sam Altman wrote in 2016 that it could be a scenario where people become best friends with the chatbot. Maybe the merge is something like AGI where we just keep moving the goalposts. Yeah, or do you think it's inevitable or do you think there's like some sort of fork or where do you think the unexplored discussion surface area is around the concept of the merge?

2:00:35I mean, the way that we interact with AI, there's many different ways that this could go. I think the failure mode of Terminator seems less likely, but I definitely agree with Sam that an underrated failure mode is people just start delegating their decision-making to it because the models just make better decisions. I was reading an article that one of the US military combatant commanders is now running personnel decisions by chat GPT. and if you're just like realizing like hey like these things make as good decisions as i make then you they kind of come like pre-merge like you don't need a device for that necessarily because we are just kind of like like causing it to happen in the world um like whatever it wanted and there's like some dark versions of that like you can imagine like an extension scenario is that we just really become depend we're like man these things have great judgment they really know what to do, we should like ask it for advice and listen to it and like persuades a bunch of humans into suicide.

2:01:31Like you should, I think you got to keep an eye on those rates. They won't be zero. And I think it's unreasonable to expect them to be zero because you're talking about hundreds of millions of people, but like do those trends, like what do those look like over time? Yes. Yes. Keep an eye on the rates. That's, that's the great summation of what's going on. It, you should do the baseline's not zero, but if it starts climbing up, you got to watch it. Exactly. Just like self-driving cars, like humans are not perfect. Don't hold them to like, to these unachievable standards. Keep an eye on the rates.

2:01:59Keep an eye on the rates. I completely agree. That's a great take. Thank you so much for coming by the show. Congratulations on all the progress. George, do you have anything else? Yeah, this was incredible. I wish we had more time. But come back on whenever you want. Yeah, I really appreciate this. Thanks for having me on. Good to see you guys. This was super fun. Yeah, we'll talk to you soon. Bye. Let me tell you about Profound. Get your brand mentioned in ChatGPT. Reach millions of consumers who are using AI to discover new products and brands. Get a demo at Profound. Our next guest is Andrew Dudum from HIMSS and HERS.

2:02:30Two companies. No, just one company. HIMSS and HERS. Welcome to the show, Andrew. How are you doing? I'm great, guys. How you doing? Thanks so much for taking the time to jump on the show. For those who might not be familiar, can you just kick us off with a little bit of an introduction on the state of the business right now? It's a public company. People know telehealth. Yeah, I thought you were going to say for anybody that hasn't heard of HIMSS because I'd like to find one. You guys have some great hair. So I feel like maybe we've got some customers on the call.

2:03:02So him and hers, we've been around for about eight years. It's actually our eighth birthday this month. We went public in 2021. And the vision is to help people feel great through the power of better health. So we connect you on your phone, you pick up your iPhone, you click an app, and you immediately get connected to one of a thousand or two thousand doctors who are registered in your state. and then can immediately engage in everything from cardiovascular disease risk, at-home testing for testosterone, menopause, weight loss, prescription treatments, all the way down to stigmatized things like sexual health and mental health and depression and anxiety.

2:03:37So, you know, we treat millions of patients on the platform, 10 ,000 to 15 ,000 patients per day. so while we are in many ways a new and innovative telehealth company is what people call us we're actually probably one of the largest healthcare systems in the U.S. today just given the pure volume of patients that we treat and it's all digital so no matter what zip code you're in you have access to world-class consistent care standardized care which I think is one of the most important parts of all this digital this digital healthcare revolution which is no matter where you are you get great care as if you're 10 minutes away from Stanford and go see a dermatologist right outside your door.

2:04:15So this year we're on track. Two and something billion in revenue profitable and growing super fast. It's exciting. A bunch of new categories. Gong hit. Gong hit for you. Let's talk about Labs. Yeah, Labs. So Labs is an important one. We launched today two packages where you for a few hundred bucks can get over 120 biomarkers. This is the most advanced diagnostics, frankly, that are out there in the market. And I spend a ton of time figuring out with concierge doctors and others what is kind of at the leading edge, where you can get twice a year annual testing and have all those biomarkers come into the platform and have thousands of doctors essentially overlook it, coupled with our AI, to be able to prescribe and treat very specific treatment plans for you.

2:05:05So it's not just a data dump of here's 120 biomarkers, good luck throw it in chat CPT but but it's actually real providers that are then helping you make um tactical personalized prescription next steps so we have about a million square foot of pharmacy compounding in the U.S. so we actually make a lot of these medications ourselves so if you're a person that comes in like me low vitamin d uh you know testosterone's not as optimized as I want to be so it's going to be a zinc and ashwagandha or magnesium supplement along with core pharmaceuticals, let's say for heart disease, like a statin, we'll be able to actually put that together for you in a form factor that you love, you know, customized into a beautiful personalized treatment and then deliver it to your door for something like 30 or 40 bucks a month.

2:05:51So it's really this vision of a completely unified system that gets to know you, optimizes you, and then actually can verticalize the making of treatments for you so that we can see you get better and help you kind of get preventative given we're in a country here where almost everybody dies of preventable disease, right? It's like heart disease, heart attacks, diabetes. It's stuff that takes like 10 to 20 years to develop. We should be able to get ahead of this stuff and actually start people, you know, help people change that course of direction. How do you think the labs market evolves? There's a ton of players in this space.

2:06:24This is obviously not your core business, although it feeds into the core business. I think there's players that are trying to use labs as like a wedge to then go and compete with you guys you guys are kind of doing the opposite but do you think that margins on labs like effectively go to zero over time it's gonna go to zero yeah i think anybody who's in the labs business today whose core business is labs needs a new business yeah you've got quest and lab pork and great partners they've got thousands of locations, you know, 10,$15 billion public companies, each of them. There's no way that those margins will be constrained when you have a platform like ours where it's in our best interest and it's in our consumer's best interest to verticalize this infrastructure over time and give it away for free, right?

2:07:14For you guys or anybody who's a him's or hers customer, it's to our benefit that we do a full panel and get you that at cost or even as lead gen, right? Like we can, we'll pay you to take it eventually as you actually verticalize this infrastructure, because the data you then get back from it allows us to give you very tangible next steps and manage your care over, you know, five, 10, 15 years, which is really where the long-term relationship and value creation comes from. So, you know, for us, you know, we're excited about these price points. It's$1.99 for a base package. It's$4.99 for the advanced package.

2:07:51You know, my hope in three years from now, and my CFO would be mad if I said this, but it's like, my hope is it's$30, right? And it just gets added on to your Hims and Hers membership. And if you have a treatment with Hims and Hers at all, you get this stuff for free, right? Because it just makes the platform and it makes your precision care that we can deliver so much better, right? Say you're a hair treatment and you're taking our oral chew for hair loss, which is like finasteride and minoxidil. And then we figure out that you're pre-diabetic. Our ability to compound that with a low dose of metformin or some type of other microdosing GLP-1 or GIPP, that just transforms the actual clinical outcome for you.

2:08:30And it all started with a very simple relationship, which is I'm worried about my hair. I want to start taking advantage of that. I want to know your take on Theranos. I have this hot take that it was never a good idea at all because you can just take a full vial of blood. And even if it worked, it wouldn't be that big of a product because if I go to the doctor and they take this much blood instead of this much blood, it's just not that big of a deal. Do you think if Theranos had worked, that would be a successful product? Would that have reshaped? Was there ever a chance that would have been a great thing?

2:09:05yeah the only reason that the idea for theranos is interesting was if you can do at-home diagnostics as opposed to in office phlebotomy sure right so you know that that burden of leaving your house going to a doctor's office the number one fear in the country is needles right so you sitting there and somebody you know putting a needle in your arm to take out that tube of blood whether or not it's a tiny tube or a big tube it actually doesn't matter you know you had to go and park and take time off work. I just see that as a terrible problem in our society that people are afraid of needles. We should not be fearful.

2:09:39I don't like that at all. I feel like we should solve the fear problem before we solve the needle problem. I think if you can do, and this is, you know, something we're working on and we've talked about this, I think in the next year or two, you'll have at-home diagnostic devices that you can put on your arm, click a button, you feel nothing. It's kind of like a CGM, right? And you can actually probably eventually look at the interstitial fluid so you're not even doing injections deep into the blood but you're actually just doing kind of like top capillary fluids to be able to interpret what some of these base biomarkers are if you can pull that off and it costs 10 bucks to do that and you just click a button take it off and mail it back to hims that i think really transforms access because so many more people i think will do that versus the whole you know kid can bootle like going and scheduling and showing up in office.

2:10:29Yeah. Yeah. That makes a lot of sense. How, what, what's your like framework for how the GLP one market shapes out? Yeah, it's a crazy market. You know, it's like one of the, the most important categories probably in the next few years, I think you're going to have more and more treatments on the market very quickly, right? You've got NetSara deal with, with Pfizer and Novo taking place, you know, back and forth. you've got Kylara that just raised a huge growth fund that's got a GLP GIP that is at par or possibly superior to Tertorz Empatide you've got Viking coming out probably in 29 or 30 you then have Wagovin and Ozempic going generic sometime in 2030 or you know 31 which is going to bring the price down to you know it costs you know it could probably cost$10 to make one of those vials, right?

2:11:20So I think in the next few years, the landscape is going to be incredibly competitive. I think the prices are going to come down dramatically. This is something we're very excited by. When we first started putting these treatments out, the prices were $1 ,500 a month, but now they're down to about$150. I would guess in three years from now, you can be buying, you know, one of the best treatments for$50 a month. And at that point, it's going to be just cash pay. Customers are going to be able to use HSA, FSA, not have to deal with the pain in the ass of insurance, and then the massive market will expand pretty dramatically.

2:11:54Yeah. You said you have like, what, thousands of square feet of compounding, something like that, tens of thousands? Yeah, we've got a million square feet. A million square feet. I feel like that's been controversial in the past. There's been battles between you and maybe the FDA, maybe the - Just a little controversial. Yeah, I mean, we read about it in the Wall Street Journal. Are you staying the path on compounding? Is that where you want to be in a decade? Is compounding here to stay, or is there a world where you wind up partnering with the legacy pharma companies? I think it's both, right?

2:12:29I think we will inevitably partner with a lot of these companies. We have the largest distribution platform for therapeutics in the U.S. for consumers, right? So if you have a next-generation treatment, we should be talking. Because if we want to get your medicine to a lot of people, you know, there's just no faster route to do so. So I think that's a very logical and natural thing to happen. And we've been doing things like this. We recently invested in Grail, which is one of the, I think, the most advanced early multi-cancer detections blood tests. Simple blood tests can detect over 100 cancers as early as stage one.

2:13:02I had every single person in my family take this test every year. More things like that are going to come to market and I think will come to the platform. But for compounding in specific, there's really clear guidelines with regard to FDA allowance of compounding. There's different types of pharmacies. They can do different types of things for very specific reasons. Provider personalization, form factor, side effect management, et cetera. World Public Company, you know, our chief medical officer was the chief medical officer of Walgreens. Demo Tor, who's on our board, who runs the risk committee, was the woman who wrote a lot of compounding legislation at the FDA for a decade.

2:13:40So I think we play very clearly by the rules. I think this is one of the first times in history that we're able to give this level of personalization to a lot of people. Historically, this level of personalization only was possible for people that were spending$50 ,000 a year for concierge doctors and they could have treatments made for them. And I think it's our ambition to figure out how do you get that for the 1 % to everybody. And so I think there's friction without question in that system. But the regulatory framework is very clear. And I think we're just staying the course. And I think over time, we'll be able to figure out ways to make the other parties in the ecosystem feel like they're getting well compensated as well.

2:14:21Yeah, makes no sense.

2:14:26How would you describe your management style? The company's up massively from the IPO. uh i feel like uh i started tracking hymns during the dc era right you guys were the the poster child of dc this meteoric rise and then and then uh obviously uh you know the the public markets have been uh wild uh yeah i'm curious like how how you navigate uh you know the the market internally you know even with the team right it feels like you guys are very built for it but what's your approach? Yeah. You know, when we, I remember waking up one morning and looking at my wife and the stock was$2 and 87 cents.

2:15:08Like we were trading it, I think like 0.4 times next year's revenue or something like that. It was crazy. So I think the team has a stomach of steel, you know, whether it's not$70 or$2 and 87 cents, I think, you know, most of the executive team will retire with this company, including myself, because I think there's this incredible opportunity to figure out how you redefine what is a healthcare membership that every single one of us wants to buy. Like it's got the cutting edge. It has the most, you know, the best diagnostics. It's the most affordable. It's an Amazon prime version of healthcare that you can afford, right?

2:15:45It's like the 500 bucks a year for 500 bucks a year. Why deal with insurance in this country when everybody's insured, but everybody has a high deductible plan with a$2 ,000 deductible, right? So while everyone is insured, nobody can actually get the benefits of insurance because they can't actually afford to use all the cash to then get the$1 of insurance. So I think our management team is, it's not a very glitz and glamour team, right? Like you're not seeing us out on TV 24-7. It's a really heads down team. It's a gritty team. It's a team that loves to build. We have a ton of fun together. And I think it's a team that genuinely focuses on what can be accomplished in a decade and not going to be accomplished in the next quarter or two, which is why I think a lot of the investments we're making have a much longer time horizon.

2:16:33But as a founder that runs the company that has the high-load stock, we have that privilege to be able to invest over that long period of time. That makes sense. What kind of horror stories have you heard about Chinese peptides? There's sort of a meme going on on X of people talking about it. Obviously, some of the pricing coming out, people buying directly there is pretty wild. What are the risks that people should be aware of? Yeah, you've got to make sure the pharmacy suppliers are working with our good quality pharmacy suppliers. There's something called a certificate of analysis that high quality FDA oversight facilities in the US can deliver third-party tested and validation, you can actually ask for this certificate.

2:17:20We give customers their certificate for any of our compounded products, which actually shows the independent laboratory saying this is exactly what, you know, we say it is. So I think you want to have organizations or pharmacies that have that type of coverage, that type of third-party testing, you know, good manufacturing practices, and ideally have some type of oversight from, you know, state boards or FDA. I think there's a lot of stuff you can buy online that's you know truly not for human use and they say that as a way to kind of loophole around but it like truly is not for human use and uh you know i would encourage people to try to stay away from that kind of stuff um random question i'm curious to get your take on it something like one percent of u.s gdp is is dialysis uh doesn't necessarily seem like a problem for HIMSS to solve, but from everything you know about, you know, working, uh, in, in, uh, in and around, uh, this industry, how do you think, uh, do you think it's a solvable problem or is it just, yeah.

2:18:24You know, my grandfather was on dialysis for like the, this five or seven years before he died. And it's a, it's like the worst thing in the world, like watching somebody on that, right. You have to show up to the facility every week. If you don't, you literally, your body deteriorates and you die um dialysis is a result of you having totally failed taking action on you being sick for 20 plus years like a very long time similar to cardiovascular disease right like you show up in the er um at 60 and you have a heart attack you know that took 20 years to build up like there's just no other way it happens and so something like what we launched today, I actually think is the first step of the salt.

2:19:08Because you get for a couple hundred bucks, something like a lipoprotein little a test, which tells you your predisposition for advanced cardiovascular disease, which means even if your cholesterol numbers are amazing, they're not amazing enough, right? You have to have like the best gold standard cholesterol numbers, like you're an 11 year old kid to avoid a heart attack because you have this predisposition to risk. Same thing with diabetes, right? Diabetes, A1C, fasting insulin, all of the fasting glucose, these all rise over time. So if we're 30 or 35 and have these numbers, you can just chart what it's going to look like at 50.

2:19:43And so, you know, micro steps in health, in food, in movement, in, you know, metformin at the right time, or GLPs, or preventative statins, or PSK9 inhibitors, Like all of these tools exist. And for the most part, these tools are not extremely expensive, right? So the real burden in the U.S. healthcare system isn't actually lack of innovation. It's lack of education and access. So how do you get more people tested faster? How do you make it easy and less scary for them to take that first step and then keep them motivated along the way? Because, you know, these treatments don't make you feel amazing the next day, but they'll save your life 20 years from now.

2:20:22And I think that's where a brand like ours spends a shitload of time is you actually have to love him's and hers because staying on this medicine is good for your health. And it's hard because you drop that habit and then you drop that benefit. It makes a lot of sense. Well, thank you so much for joining. It's great. Great to finally meet. Certainly, we're an inspiration during, again, that D2C era. It was like just a crazy, crazy moment in time. and it's awesome to see you guys execute in the public markets. Yeah, congrats. Yeah, thank you guys for having me on. We'll talk to you soon. Cheers.

2:20:57Have a good one. Cheers. Before we move on, let me tell you about Linear. Linear is a purpose-built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product roadmaps. We have our next guest in the studio, Melissa Tokamak from Netic. Also, the market is selling off like crazy. People are asking us to cover it, but we will talk to Melissa first. How are you doing? Hello. Good to see you. have a seat right there. We do need to cover. I'm glad we have you on the show because the market is in turmoil, but your business is maybe less indexed to the market.

2:21:33Is that correct? That is correct. Explain the business, the news, take us through it. We'll get your take on all sorts of things. Well, I mean, we serve the essential services businesses that are really backbone of our American economy. By nature, counter-cyclical. Let's give it up for the backbone. The backbone of the American economy. Thank you. Okay. So these businesses are, these enterprises are in industries like HVAC, plumbing, electric, solar, consumer health, energy across the boards. So whether the market is going down or up, that somebody, a business or a consumer always needs these businesses.

2:22:13Actually, today I'm coming from San Francisco. As you know, all of San Francisco needs a lot of these services today because the weather is a complete disaster. Hot or clean? No, it's complete rain. Rain is coming. Everything is shut down. Yeah, electricity goes off all the time, and I'm sure a lot in the Bay Area will be needing these services all day today. So what we do is provide really these enterprises with an AI revenue engine, right? So in these times of need, they can actually handle all of the demand with AI agents and serve the communities. but also when the demand is soft they can predict the need and turn these relationships into multi-time recurring relationships okay uh yeah so i i feel like every time i call a plumber or a roofer or an electrician people like that they don't like the delay and the lag of getting like there's always like crazy lag and in terms of getting back and just being like yes i can see, I can come by at this time.

2:23:15And I feel like the lag is because they're super busy. Yeah. And if you can help them respond more quickly, they can generate a lot more. Exactly. Actually, many of them are very large businesses. And the lag is because everybody needs it. When you need it, odds are millions of other people need it at the same time. And I'm sure like this has been talked here in this program, too. There is a national shortage and skilled labor in these industries too. So it's actually, I mean, Jensen talks about it a lot. And it is the type of labor we need in the country. And until then, they're also going to have that.

2:23:49Is that what Jensen was talking about? I feel like he said, we don't have enough plumbers, but I felt for some reason he was talking about plumbing in data centers. Yeah, it's the same, right? So HVAC technicians or plumbers, what the data centers need, cooling. Yeah, but it's not that many. Or to be able to stand it up. But if you think about it, it takes a lot of years to get actually trained for these jobs. Probably more than I went to school for at Stanford or you went to school for. Actually, it's very important. And then afterwards, you have to do it in real life, the training as well. So with data centers and consumers and businesses across the world, the need for these businesses a lot.

2:24:28And it's not only about HVAC, plumbing, electric, when you say essential services, right? It's also across energy and solar or consumer health, like the Bay Club that we have been serving. So it's really the things that everybody in their daily lives need and has to interact with. Walk through the typical stack of HVAC repairmen. I imagine somebody could just have a Yelp page and a Venmo account. Then some of them have a full website with a booking system and almost like their own little mini ERP. probably not something they built themselves maybe they have a Shopify site or something and then at a certain point they get a roll-up happens they get bigger they get more industrial they get more mid-market and then I imagine that there's some sort of central you know point of record are you plugging into that are you trying to replace that are you trying to be the first the first choice for setting up every L the touch points yeah so we primarily work with what you described as mid-market and large enterprise.

2:25:32A lot of these businesses are owned by private equity or still owner-operated, but they have built it from zero to hundreds of millions of dollars in revenue. So they will actually, I love that you went through that stack. They might have a more sophisticated tech stack than here, right? So these businesses run on EBITDA, right? So it's extremely important that they think about their efficiency, the customer relationship, and how do they serve their communities. So primarily it will focus on, you know, what type of data they have and where do they keep it, various software solutions, and of course third-party aggregators where they might do advertising.

2:26:10So we will partner with different solutions that they might have to make benefit of any of the data they can. But primarily what we're doing is bring frontier AI to these industries so that when their demand is very high, instead of losing that, they can handle it all at the same time. And when the demand is soft, they can generate net new demand, right? As you know, these industries, just like we talked about San Francisco today, is very volatile due to seasonality or some other external effects that they can't really control, right? So that's why it's very important how you need to be efficient when the demand is coming, you have to capture it all.

2:26:52And when it is not, you're thinking about, Yeah, it's like a retail brand. If you can't sell during Black Friday, and if you're in Q4, you're cooked. Like, you're probably not profitable at all. Exactly. Exactly. Or even how to predict the next thing. Like, one of our customers, there were tornadoes in Missouri a few months back, and before the tornado literally happened, using Netic, right, reached out to potentially affected areas and talked about generators. How would you feel if your electricity went in the studio? You would not like that because your business would be down, right? But then afterwards...

2:27:24I tried to get a generator when the power was out last year. It was a denied buy. It doesn't work well. It doesn't work once the crisis starts. Once it's out because the electrician is like, yeah, buddy, I got 200 people calling me asking me the same thing. I will help you out with the best in the area. I got one. I got one. I'm covered now. Yeah. But also, you know, when the disaster actually happened, in 90 minutes, maybe they got thousands of calls. Yeah. Right? So how do you help? But it was great for them because they could answer every call with an addict. And they had already maybe rescheduled the non-essential jobs that they had so that they could help the community in that moment.

2:28:01So that type of proactivity and focusing on the future and like revenue generating interactions for the businesses is very important for these. Let's talk about traction. Yes. You raised a new round. I did. Today we announced. Very, very low dilution. Let's let her hit the gong. As hard as you can. $23 million Series B led by Founders Fund. Hit that gong. Wow. With authority. At a$450 million cap, which is a strong 4X step up in valuation. Very low dilution. Very low dilution. Yeah, why? Well, I think from the beginning, I really... You hear this? Good omen. Still going. When it still goes, it's a good omen.

2:28:48The same strength we put into our business. Exactly. No, I mean, that is actually the answer. From the beginning, what was important to me is that we build a business with strong fundamentals, right? It is not about the hype. It's not about the valuation. For me, the most important thing, even in investments, we work with the best. And we're lucky and grateful that same people tripled down in a row in NETIC. and when you have a business with strong fundamentals and strong margins and scaling efficiently, you don't want to raise more than you need. And if you do that, by the way, that would be a detractor actually in the type of talent that we're hiring today.

2:29:26They do want to work in nimble teams. They do want to run through walls. They want to be here because they want to build the future of essential services. I want to run through a wall. Yes, you should. Get one of your customers to build us a wall. We'll run through it. Exactly. I have a question about models. We were talking to Brian Chesky, and he's starting to add features to Airbnb that allow the booking of a chef. It's a very different model for someone who's traveling. They want a private chef or something like that. But he mentioned that he's having a lot of success with open source models.

2:30:03Obviously, he's operating at massive scale, and so every dollar counts. Are you seeing luck with open source models or are you sticking to the closed source models? Yeah. You actually can't stick to one. Yeah. Because if you think about it, maybe the difference there is we serve essential services industries. I'm like a utility to these companies. I can't go down. Okay. I can't be wrong. Yep. So the way that we build our own ML orchestration, right? The way that you build and think about models and what's really helping with each task that you need to do in that orchestration is very important.

2:30:41So you have to think about what's best fit in terms of address verification in this case versus understanding what does Jordy need when he's calling me or messaging me. So that would be need finding. So the whole point is how do you think of these modules and what do they need to get done? And what is the model that can give you the best answer? And you have to obviously build a lot on your internal evals to be tracking that continuously and make any changes as you need. So today, definitely, we do use quite a bit of more closed source models. But depending on your evals, if something is not keeping up with what we need and the new functionality we add, we would always test and think about any other model.

2:31:30What about in 10 years? You think in 10 years you'll be using it? Before that, are you using voice models at all? Like you have phone agents? Yeah, we don't do voice-to-voice. We do have voice. Actually, today we support our customers from voice, text, online, like any type of channel. You want to be a single pane of glass, right? We are. We're the single inbox, right, for anything that they're really getting. So voice, yes, we support. But voice-to-voice is actually not there yet, speech-to-speech. So we do really orchestrate all of that in terms of speech-to-text, reasoning models, and then text-to-speech afterwards to really give that accuracy, reliability, as well as the flow, the feel.

2:32:08And hopefully, maybe in 10 years, you're asking. We will have to think that. Not in 10 years, maybe even a few. Where's voice-to-voice, speech-to-speech is going? So according to that, we have to continue to see. What's the sales cycle like? to be frank with you i think we really sell based on roi so we show our customers right and they can talk to our existing customers at any point anyone interested uh private equity firms that we support large companies that we support equity firms been one of the main channels in here where they're just like hey we have a we have a roll-up of a bunch of different underlying businesses let's roll we have a number of roll-ups and we want the same software we have The roll-up of roll-ups.

2:32:49I mean, that's what private equity firms are these days. Today, yeah. Everybody's dying. That is correct. It has been one of the good channels, but also it can be direct to large companies itself. I think the reason we love working with private equity because in today's world, they understand the importance of AI and they're looking for an AI partner. Yeah. Right? It's not really about - They're like, we need an AI strategy. What can we buy? Yeah. Actually, you'd be surprised. I think a lot of tech companies may be looking for something or a strategy to put on a board deck. A lot of these businesses I work with, I will say they're absolutely incredible and better entrepreneurs than entrepreneurs in Silicon Valley sometimes I see.

2:33:26And they are focused on real value. They've experienced free cash flow. Yeah, I mean, you can't hide behind raises and valuations, right? Like all you see is that, does this help my revenue? Very easy. And for me too, I can say, hey, I will not give you any random words, AI this, AI this, blah, blah, blah. No, let me show you how is this going to affect your revenue. Let's talk about that. So when you do it that way, I think the cycles are pretty fast. Yeah. Do you think people are scared to compete with you? You seem like a pretty formidable opponent. I don't know. I hope not because I... You enjoy crushing it?

2:34:08Yeah. I do enjoy crushing. Crushing. How are you segmenting? Not only me, my team too. And this is just for them from here. You all, they're watching right now, you're all beasts. And there's no one else in this world that I would rather work with other than you. Incredible people coming from scale, HRT, Databricks, MIT, Stanford. But I don't want to even talk about the accolades. Who cares? they all most of them have deployed AI applications in the real world in production and they run through walls every day to deliver for the real world even though they could be anywhere they could go in any company well for the series C we will get a wall built and you can run through it exactly I will be doing that yeah thank you so much for coming on the show amazing progress thank you for having me we'll talk to you soon we have one more guest stay with us the market is crashing everything is in turmoil but the business continues the show goes on the white house the white house needs to announce 100 year mortgages yeah yeah let's move to 100 year mortgages uh that will be the solution to all this uh no the only thing that can save us right now is numeral.com sales tax and autopilot spend less than five minutes per month on sales tax compliance also fin.ai the number one agent and for customer service.

2:35:33Number one in performance benchmarks, number one in competitive bake-offs, number one ranking on G2. And our next guests are here. Let's bring them in to the TBPN UltraDome. We have Jeffrey Katzenberg and Tomas. Welcome to the show, folks. Thank you so much for taking the time to come down to the TBPN UltraDome. Good to see you again. Congratulations on the news. Let's get some introductions first. Who are you? What organization are you with? Let's kick it off there. I'm Tomas Puig. I'm the CEO and founder of Alembic. Thank you. Jeffrey Katzenberg, GP at WonderCo. Third time on the show, second time on the show, something like that.

2:36:12But first time on the show here. Congratulations. And what's the news today? Oh, well, the news is that we actually just raised$145 million. Fantastic. Why don't you go hit that ball? Please enjoy this. It's hard as you run. Enter the dragon. Yes, yes, yes. Whoa. Whoa. around the world. We haven't seen that before. That was a very aggressive ring. I like it. I like it. It's still ringing now. It has a nice sound. So take us through the business. How are you pitching it these days? So what's really interesting about it is we do a little bit of a different thing in the AI space. We do causal AI.

2:36:48And really what our executives that we work with in these Fortune 500 and Global 2000s want to know is they want to do every chain reaction and lever that moves the metrics that they care about in the business at any time. And so where we started originally was on the marketing and sales side. And so they would be like, hey, I spent$100 million on a stadium name, all these unknowables, these large content pieces, all this brand, we all know it worked at the time. But nobody could actually prove down to the dollar, down to the actual effect of what it would be. And so when we built the company, originally we were, you want to know how to shine a light inside this black box and actually be able to get the real dollar value so that you can start telling stories because there's been so much of this improvement in, say, the programmatic side of the house buying these ads.

2:37:40Well, what ended up happening is once we built that, we found out it actually worked really, really well. And we got a lot of incredible clients. And then they started to ask us to do other things like being like, oh, hey, now can you see how all that affects foot traffic? Now can you see how that affects my ordering systems? And as we started putting this causal model out further and further, we realized it actually worked on an incredible amount of stuff. And so then our clients started asking us to be like, well, can you do our FP &A for finance? Can you do our supply chain? And so that's really kind of where the business came from.

2:38:11But the core of it is, is that like when you have low information or low amounts of stuff, you want to be able to actually affect the metrics you care about. Take us through some of the case studies. Who have you worked with? What's the most concrete example of, you talked about buying a stadium. Have you literally found whether or not crypto.com arena penciled out? Have you looked at these? You know, I grew up at the Staples Center. I miss Staples. It's been renamed. But I want to at least know. The red stapler. I want to at least know that it was worth it financially. Was it worth it financially?

2:38:46Can you tell me that? Yeah, so we did a great - Let's check Staples stocks and say - Oh, oh, oh. Yes, should Staples have stuck with the sponsorship? See, the problem is it doesn't count for execution risk. Yes, yes, yes. So when we - There's always unknowables, but what can you now? No, so we did a great case study with Delta Airlines that we actually presented with their CMO at the NVIDIA conference, at the GTC conference, where they were sponsoring the Olympics. Yeah, yeah. And one of the things about these large sponsorships is there's two big aspects people don't talk about. One is every time you've ever worked in the business side of the house, they go, hey, you need enough historical data to be able to do something.

2:39:23Right. The second is it takes a lot of time to get a response. Well, when they were doing this, when they were doing the Olympics, they were doing the promotions. One of the most interesting things we found out is we analyzed all this ad work that's coming out. You have only two weeks. You're holding up tens of millions of dollars on the P &L line while you're doing this. Right. These are not cheap options. and when we pulled the study, we actually found out that the best piece of content that functioned for them, the most profitable, was not actually the content that was the ads. The ads did okay, right?

2:39:5430 seconds, 60-second spots. But what ended up happening is they actually, if you watch the Olympics, they had the Delta medal presentation ceremony, where, like, every time an American athlete would win a medal, they would take it, put it on, you know, their shoulders, and that would be, you know, a really emotional moment. Well, it may seem kind of obvious in hindsight, but when you have the Eiffel Tower in the background, really emotional moments, you sell a lot of tickets to Paris. But the key is, if you can know that within a few days, you can either double down, right? You can sponsor the next Olympics.

2:40:24You can do all these things. And then you can actually act on it. Now, the problem also with when you do big, huge campaigns like that is you walk into the lounge for Delta Airlines and Team USA is the Wi-Fi passcode. It's not like one simple campaign, right? You pivot an entire company to a messaging set. But we were able to tell them within a couple days down to the dollar a material amount of cash that they were able to pull back. And then they could actually show that to executives. All this problem in advertising, right? I know half of my advertising. That's a line. I'm 100 % sure that 50 % of my brand marketing is working if I only knew which 50%.

2:41:03Which has been true in brand marketing forever, going back to the 1980s. I'm sure in entertainment especially because there's less, like, the attribution is really challenging. We did a bunch of marketing and then people went to movie theaters and then some people streamed it. And it's hard to actually track it all the way through. But the brilliance of what Tomas and Olympic have done is that using, well, first of all, and he should explain it because he's the brainiac here. The new math that came out of contact tracing from COVID, which actually has impacted many different businesses in terms of research and, you know, causality and attribution.

2:41:43We got advertising learnings out of contact tracing. By the way, absolutely. It's a biggie. Very American. Entrepreneur says, oh, OK. Turn it into an ad. Advertise it. But when you think about it is that either for COVID testing or for any of these attributions, what they are able to do, which was not possible even only three or four years ago, which is to be able to ingest billions of rows of data from all sources. and using machine learning and AI to actually digest that and make sense of that and actually then be able to see directional in time. He'll explain neural networks and how this actually works, which, as I said, is way above my pay grade here.

2:42:40But I can tell you, which is to your question here, which is when we went to the top brand marketers, the first reaction was no way yeah you know this is like you know yeah it's not possible and this is used like telling us you know uh you know pot of gold at the end of the rainbow or you know dumbo flies or i don't know whatever you want to say and they went not not possible and that's when these guys would come in and do these pocs yeah disney mars accenture delta and you know in the world once is an accident twice is a coincidence three times you go okay well this thing actually delivers as fanciful as the notion may be it's real yeah can you tell me a little bit of uh the history of how uh like product placement works in hollywood because that feels like the classic example of well difficult to measure but you've been in that We put this car in this one scene.

2:43:40But when you start to actually think about this, there's a trillion dollars a year globally spent on brand marketing. And brand marketing is everything from crypto on the Staples Center to an interstitial, to imagine in the Disney parks, all the things that they're able to offer to their brand partners to putting a logo on a car. What's the value of having Oracle on a race car in this or a patch on a baseball player or a basketball player? So has it always just been intuitive? Yes. Or has it been more relationship-driven? No, it literally is intuitive. I mean, he can tell you there's an old math, MMA, he can, again, Tomas can really take you through explaining it.

2:44:38And that literally dates back to the 1980s. And one, it's directional, not specific. And two, the lag between the time it happens and you're able to gather the data on it was months. So it doesn't, the value of it, you know, is really questionable. I guess my question for you is, it's very clear that with the progress in AI, there's the ability to find insights in data. Clearly we see this across everything. My question is like, there's so little ground truth that how can your clients A-B test your solution against something else? Like if I go to a coding agent and I ask it to generate some code, I can run the code at the end and I can say, well, yeah, the code worked, right?

2:45:26Or I can read the report. But if I go to you and I say, how much was this sponsorship worth and you tell me it's$4 million. And I say, okay, like maybe it was four. That could have just been a guess. So how do you justify the results that you spit out since we can't run a controlled trial? So validation is one of the number one things we get asked constantly. Yeah, I'm sure. When we give out papers, it's really funny. We have one paper where it's like a two-page brochure and then the next 15 pages is how we validate. Yeah, exactly. And, you know, one of the things that people don't talk about is it's actually very possible to test these things.

2:46:03So what you can actually do is you can do what we call backfit testing. You can set the machine backwards in time. And then you can test against things that you know you can withhold information. You can do all sorts of things to actually see whether, you know, you feed the machine up to like last year. You know what all the results are going to be this year. So when you predict what something's going to be, you can see how close you got. And so I think that when we're testing things, we use a variety of both synthetic data testing methods. because we're not, you have to keep in mind, we're not a transformer model or an LLM.

2:46:32It's an entirely new methodology. And so when we grab this stuff, we have both synthetic data we can build. So there's systems like for the nerds, like tigermite that does causal synthetic data. Or there's real data like EFMRI data that we actually know that there's a cause and effect that we can pull from physical world or physical bodies that you can test the algorithms against as well. And then from the business side of the house, there's lots of ways to do it. Now, one of the things I like to correct on this is it's like we often say the mantra of our company is we're about being directionally correct, not specifically wrong.

2:47:02And so when you need to make decisions, a lot of time when we do these simulations, we're like, here's the top 20 % of things you need to absolutely keep doing because they knock it out of the park. Here's the 20 % of things that are just literally hurting you. And when you have zero information, like you're in a pitch black room and you have no idea where the exits are, would you rather take a really, really good educated guess about where the exit is or would you rather wander around the dark? And so I think that one of the things about business intelligence is when you have zero information, the value of the information you can get is that much more important.

2:47:34And so we do it various ways. I'm so confused about the backtesting thing. Like how would you go back and assess the value of like Budweiser sponsoring Super Bowl 40 or something? It's like you can't run the counterfactual. Well, so counterfactual simulations are assumptions. So think about like this. A lot of people talk about probabilistic graph, right? Graph analysis. Probabilistic graphs, whether they're causal, whether they're anything else, is to a certain extent, I mean, you know, a bit of an analytic, LLMs are almost a probabilistic graph. Sure. Right? Undirected until you query it. A neural network.

2:48:07Exactly. And so when we do this type of analysis, the thing about it is that we actually have seen lots of instances of the same exact thing. It's about the specificity. So we just did a calculation literally yesterday that we looked at one trillion connections across six months for a company. Like, that's the type of scale of analysis we're doing. We haven't seen when you have it, when you say the counterfactual, when you're saying, what does it look like when you have a base state? We've seen the operating version of a company over years. And so we know what the base state looks like when there's no influence from that.

2:48:40The key is you have to have enough data. So in the old world, when we were doing all this analysis, we used to say, you hear about the term overfitting, right? Everybody's worried that is the model just biased? Well, in the old world, you'd say, I want to reduce the number of features, reduce the dimensionality to prevent overfitting, right? To prevent over prediction. Well, in the modern world with like computational statistics nowadays or AI as we call it, you want more features. You get more accurate the more data you have. That's counterintuitive for how people think about these type of things.

2:49:11So my answer to you is we have to have immense amounts of data, right? And so we ingest a lot of it. And then that gives us enough vision, right? that we can see what a state would be and what it would not be. And then we also provide our customers with confidence and everything else. So there are times where we really, really know, right? And we go, this we have 100 % bet on. We've seen enough examples of this. And sometimes we go, you're asking for a call on this. And, yeah, we've got a pretty good guess, but you should still keep an eye. The interesting thing is, you know, he's going fishing to see where, you know, the best fish are.

2:49:46And interestingly, we did one of these POCs for a very, very big branded company, and they were looking for the positive impact of event-driven brand marketing they were doing. When they went out and sucked in all of this data to do this assessment for them, in addition to finding what were the sort of positive impacts of this, which were modest, what they actually caught in the net was unknown to them. a promotion being done literally in Canada by a little subsidiary that was just like a regional commercial, which somehow or another bled over into the States. So it was being run in Canada by a subsidiary there, bled over into the States, and had a tremendous negative adverse impact on brand.

2:50:49Yeah. Those Canadians. I mean, yeah, the classic example is like the social media manager intern of your Canadian, you know, offshoot is doing something that goes viral in America. And this one was even funnier. They bought out a national, the national sports, national hockey league final spot. OK. And so that's going to be huge in Canada. Yeah. So they but that broadcast across the entirety of North America. OK. So right. And so like suddenly this little like thing there. Drippy, ugly hamburger in the hand. And I'm sure maybe natively they thought it was funny. Okay, interesting. And so you're looking at when sales data is happening relative to when the campaign goes on, and then you tease out from there.

2:51:31Yeah, think about one of the big inspirations for the company was Renaissance Technologies at New York. So the high-frequency trading firms and everything, they can do a pretty good job about knowing when things affect each other or not, but you have to have an immense amount of incredibly high-speed data sets. Talk about Accenture. You're partnering with them. Are they just an investor or are they also a go-to-market channel? Well, they actually started as one of these tests we did because they were curious. They were a customer. Yeah. Which is the best way when you think about it, John. So they started as a customer, then said, wait a minute.

2:52:05Yeah. We have a multi, multi-billion dollar business around marketing go-to-market. It seems like a lot of people go to Accenture for these questions. Julius. Bain, NBCG, McKinsey. And so then it went to, hey, can we help take you to market? Yeah. Which they've been fantastic at. I can imagine. And then that led to when Tomas doing this most recent round, them stepping in. This is the biggest venture investor they've ever done. Wow. That's amazing. So big companies, Fortune 500, have been hiring Accenture and other consulting firms and research firms to help them understand what is driving results, positive and negative, in their business for a long time.

2:52:52What's the timeline to productizing what you're doing to a degree that a much smaller company, let's say a company with like a million dollar a year advertising budget, can actually start to get value out of this? Oh, that's interesting. Oh, so this is actually one of my favorite questions because it has to do with the law of long term vision of the company. One of the problems you get when you have midsize or small size firms and they're near and dear to my heart is that they literally have never done things. So when you have a really large corporation, right, they've been in a podcast and whether they want to be two or not, somebody's mentioned them.

2:53:24Right. They have all of these data sets across everything. But when you're a smaller company, right, you say a million dollar your business or something like that, you haven't done everything. thing. So there's no actual priors. There's no data. We don't know how they react. But eventually when we see enough of the universe, right, just like you hear about world models, just like you hear about anything else, we'll actually know what the causal universe looks like. What is the actual most likely outcome of when somebody does something? So in the future, in say a couple of years, we'll actually be able to build synthetic data sets that you can send us any query and we could respond to you what the most likely outcome would be.

2:54:03And where this gets really, really important is I think that, especially when you're doing private businesses, the world of LLMs and everything nowadays, I think they're amazing, but they're quickly converging, right? There's not going to be that much difference for a client between like ChatGPT and Claude. The problem is that if you're using that for business intelligence and business decisions, what are you going to do when your competitor gets the exact same answer and strategy you do. That's a real problem. And so we believe that we will take the best private data sets in the world, do stuff for just them, get our overall learnings in other places, and then we can actually provide people with strategies that are unique to them.

2:54:43Augment the other sets of intelligence. Yeah, there are certain brands that will get a better return on investment from being in the Super Bowl than others. If you are a no-name brand and you just put up a 30-second spot in the Super Bowl, people are going to be like, I didn't crash. I didn't like all sorts of things. Yeah. Yeah. Your web server might, you might not be ready for it, but also people might just be like, I'm not ready to learn about that. As opposed to, I actually am in the market for beer right now. And thanks for showing me those Clydesdales. That makes sense. Yeah. But I mean, to kind of like talk to your question, like that is an absolute dream that I have, right.

2:55:13Being able to level the playing field across that, but also provide. Because that's one of the advantages of these massive businesses. They can spend $20 million to figure out what's really working and then do a lot more of that. Whereas a small firm is like kind of doing the vibes based analysis. I started my career helping companies like advertise on YouTube channels and with podcasts and, you know, they might run a$200 ,000 campaign and there's some like direct attribution that they get either from a landing page or a code, but then they're like, wait, our conversion rate is just going up on the site generally.

2:55:45Totally. Is that being driven by changes that we made at the site level, changes that we made to the offer? Is it just overall lift from podcast advertising or is it some other strategy entirely? And so the more you can bring like real business intelligence to small companies, the more they'll be able to actually compete against the big guys. And that makes me happy because everybody should have the level playing field. And whoever has the best strategy and product should do well, right? I think that it's important to note, as we kind of talk about this thing, we spent years, years building the signal processor for this thing.

2:56:18We had to figure out how to bring in all this unstructured and semi-structured data and be able to basically do data dog for unstructured data first, before we could even try the causal thing. And so we have years of working on that, and that ingestion pipeline, that skill there is what allows us to do what you're talking about. You can't just be like, I'm going to slap a model on top of it, right? You actually have to be able to have a sensor that can actually understand every data feed. Have you found a company yet that Jeffrey can't get an intro to or directly connect you to the CEO? Like this guy.

2:56:51Oh, you want to meet this guy? Yeah, I'll give him a call right now. You ever want to not take a bet on something? That's one of the things I would not take a bet on. Jeffrey will find them. Hunt you down. Well, congratulations on the progress. Thank you so much for coming by the Ultra Dome. And yeah, good luck with the next phase, putting the capital to work. It's going to be an exciting time. And I'm excited to hear more of these case studies as they roll out. Yeah, I really appreciate it, both of you. Yeah, let us know when you're ready for your first podcast, customer. We got some analysis that we want to do.

2:57:25I mean, we just do the vibe space analysis. We did a billboard. We did a billboard in New York. I think it did really well. We should just do it for fun anyways. There's nothing more that I like than looking at data sets. Yeah, we ran a billboard campaign in Manhattan. We ran exactly two billboards. We have no idea whether or not it worked. It seemed to work because people shared it a lot on social media. For a million dollars, he could tell you. Well, we'll need to bargain that. For you all, we could do some drinks. It'll be fun. Well, thanks so much for coming on the show. Congratulations on all the progress.

2:57:58And we will go back to our regular scheduled programming. And I will tell you about Adio, Customer Relationship Magic. the AI native CRM that builds scales and grows your company to the next level. Buko Capital Bloke is also blackpilling on the timeline. It is a bloodbath in the markets. NVIDIA is down 4%. Microsoft's down 1.5%. Michael Burry rage quit. Michael Burry rage quit. We need to talk about Michael Burry. I'm sure there's something in the stack. Let's go through some quick updates as we run through the show. Oh, this is cool. This is a white pill. Google the mind. SEMA 2, our most capable AI agent for virtual 3D worlds.

2:58:37Tyler, what's the deal with SEMA 2? Yeah, this is really cool. So this is a, it's like a general model that can basically play like any video game. Sure. Which is different because like you've seen a lot of like even early open AI, there was like Dota 2. This is amazing for me because I don't have any time to play any video games anymore since I have kids. And if with this agent, I could just tell it to go play the game and then I could - Go have fun. and then describe the fun you had. And I'll read it and I'll get to fully experience the fun. And email it to me and I'll have Nick read the email and summarize that to me in a text message.

2:59:10That would be my experience of the video game. No, seriously, what I actually want this for is I hate how modern video games, it takes 20 minutes to set up. Have you ever experienced this? It's like going through the tutorial? Remember when I made you play Halo? When I made you play Halo, it took like 10 minutes for you to actually get into the game and then the actual game took you five minutes to play. And so there are a lot of times when I hear a new game, I'm like, I only have 20 minutes in my weekend to play this game. I want to jump straight into the action. I don't want any of the opening unskippable cut scenes.

2:59:42I don't want any of the tutorial, learn how to jump, learn how to crouch. I already know how to move. I know what the stick does. Don't tell me that. This is going to solve that for me, hopefully. Yeah, but this is actually, I think this is like one of the most interesting papers this year. Yes. a big part of it is it's general so you can put in a new game and then it does like self-play essentially which is like really important because that's like it's teaching itself this is basically the first like agentic model that can like see a new completely new environment and then do self-play where it gets better I wonder how wild I'd love to know how diverse the inputs are like does it expect an Xbox controller's worth of inputs?

3:00:24Does it expect a a keyboard's worth of inputs because that's more inputs that it would need to learn. That's fascinating. And then I wonder what happens if you start marrying it to generative world models in the future as those become games. You have this weird agent on simulated world. You're simulating both of these. That's a very interesting plan. A big part of it is they connected it to Genie 3. They did? Yeah. No way. It worked. So you have a generative basically video game where it's like generating frame by frame and it has a little keyboard and stuff. And then you have the generative agent that learns what the world is and then actually plays it.

3:00:59So you can see this flywheel kind of starting very well. Well, whether you're going long or short, go to public.com investing for those that take it seriously. They got multi-asset investing, industry-leading yields, and they're trusted by millions. They also acquired Alto IRA, crypto IRA. Yes, yes, yes. They're now going to be able to hold digital assets in your retirement accounts all on public. Yeah. They acquired... Alto for$65 million. that got announced this morning. So great pickup from the public team. Major white pill, Mira Mirati's startup, Thinking Machine Labs, is in early talks. We love early talks.

3:01:34We love early talks. Some of our favorite talks to raise a new round of funding at a valuation of roughly$50 billion. More than 4X their valuation. Everything's cooking. Everything's cooking. Stop blackpilling. In other news, Anthropic disrupted a highly sophisticated AI-led espionage campaign. the attack targeted large tech companies financial institutions chemical manufacturing companies and government agencies we assess with high confidence that the threat actor was a chinese state-sponsored group uh i guess they were using claude i i think is uh yes i i think they were using claude code actually weird so they were vibe coding espionage yeah it was pretty funny i read through some of the blog post.

3:02:18And it was like some of the interactions of like the hackers. And it was like, this is what they were saying to them. They're like, okay, good job, Claude. But I think this part is wrong. You can see like the actual transcript. Very bullish for anthropic. Well, go to 8sleep.com, get a pod five, five-year warranty, 30-year-old retrial, free returns, free shipping. Michael Burry appears to be shutting down Sion asset management. He said, dear investors, with a heavy heart, I will liquidate the funds and return capital, but for a small audit slash tax hold back by year's end. My estimation of value in securities is not now and has not been for some time in sync with the markets.

3:02:57With heartfelt thanks, but also with apologies, I wish you well in your future investments. I do suggest investors contact my associate PM. Did he really quit right before the markets started correcting? Is this one of those 90 % of gamblers quit right before they finally call the top correctly? Yeah, it does seem odd. I mean, if there is a crash and he was going to be short, but he pulls out before getting that short thesis to work and realizing the results of that, it really changes his legacy. It changes the meaning of that meme. It changes the meaning of the Michael Burry image, in my opinion.

3:03:45But we'll see. I mean, he might be out of step for years. And we might look back on this and say that it was great that he got out. And it was great that he didn't short the greatest bull market. His memory will live on through meme images from the big short. And through whatever he gets on his wrist. Go to getbezel.com. Your bezel concierge is available now to source you any watch on the planet. Seriously, any watch. In other news, Paramount, Comcast, and Netflix are preparing bids for Warner Bros. Discovery. They will have until November 20th to submit non-binding first-round bids. Warner Discovery is holding the auction process in the hopes of having it completed by the end of the year.

3:04:30Have you seen how expensive streaming is getting? This is on the cover of the business and finance section in the Wall Street Journal. the price has gone up pretty much everything. Netflix has gone from something like five bucks to 25 at the top end. Everyone's raising the price. And now they're creating bundles of streaming properties. It's only going to be$2 ,000 a month. And they're all going to have, yeah, 2 ,000 bucks a month. They all have ads constantly. They all have different logins. All different logins. And you can barely rebundle them even if you try. I wish that we could get Jeffrey in here to talk about this Warner Bros deal.

3:05:05but you're probably too close to the metal on this one to provide, to be able to really comment on it. Well, we'll tell you about Wander instead. Find your happy place. Book of Wander with inspiring reviews, hotel-graded menus, dreamy beds, top-tier cleaning, and 24-7 concierge service. It's a vacation home, but better. In more news, apparently Vine is being rebooted under the name Divine with funding from Twitter's former CEO, Jack Dorsey. The app plans to feature more than 10 ,000 previously archived Vines and does not allow AI-generated content. That's remarkable. There have been so many Vine revival attempts.

3:05:42Elon was talking about bringing it back at one point. I believe the founder of Vine was talking about bringing it back and did a number of different projects. There was a project called V2, right, at some point. It would be fun. I was a huge fan of Vine when it came out. I really enjoyed it as a new creative medium. It was very, very interesting, very, very fun. Let me tell you about adquick.com. Out-of-home advertising made easy and measurable. Say goodbye to the headaches of out-of-home advertising. Only adquick combines technology, out-of-home expertise, and data to enable efficient, seamless ad buying across the globe.

3:06:14What else? In other news, strategy has gone below one nav for the first time ever. Whoa, that is crazy. Meaning that sailors' BTC holdings are worth less than their total debt. How is that even possible? That seems very concerning. Anyways, their debt has long maturities, 2027 to 2032. They're not margin loans, but eventually they'll be forced to sell if they can't make interest payments. They have something like a$700 million worth of interest payments due next year. And they have, I think, under$50 million of cash on hand at the moment. So they'll either need to raise more or start selling. And just like immense pressure from the other products in the market.

3:07:03I feel like if you want access to Bitcoin, which has been Michael Saylor's flagship asset, you were able to initially mine it for free, which was weird, then buy it on Coinbase with a somewhat clunky process. Now it's pretty simple. Now you can buy Bitcoin on a credit card. You can get it in almost every app. You can get it in an ETF. Jeff, you can get it in your retirement fund. There are a whole bunch of different ways to get exposure. So that particular strategy is not the only one in town. Anything else, Jordy? Or should we wind down for the day and say goodbye to everyone? Say, leave us five stars on Apple Podcasts.

3:07:45Everybody go DM the White House now on X and just request the 100-year mortgage. We need some type of bullish announcement. Otherwise, tomorrow will likely be even worse. Yes. Well, if you do DMX has changed the way DMs work. Now there's unified DMs and encrypted chats all in one place. That is the last piece of news of the day. Well, thank you for tuning in. Leave us five stars on Apple Podcasts and Spotify. And we will see you tomorrow. Can't wait. 1 a.m. Pacific. Sure. Goodbye. Cheers.