America Needs Defense, Meta Sales Soar, Sam Altman's New Bet, Masa's Big Raise

27:54Today, it is the arsenal of bureaucracy, with an army of federal civilians making it difficult for American companies to sell to willing buyers. To wit, it took the State Department and the Pentagon nearly 30 months to finalize the sale of Harpoon anti-ship missiles to Taiwan. Though upgraded in recent years, the Harpoon has been in service since the 80s. It's not a new system, and Taiwan is the nexus of our Pacific deterrence. We have a unique opportunity for American workers and innovation to be fueled by investment from our friends, strengthening both our economy and national security. The process should be simple.

28:27It isn't. The haft of the arrow in America's side was feathered from our plume. That's great. That's a great sentence. Great writer. Yeah. Writers. Fantastic. Moreover, the past three decades of obsessive consolidating and regulating and subsidizing has undercut the core element of the new administration's foreign policy and natural national security trump has rightly emphasized deterrence a concept that escaped the outgoing president and his team deterrence is a simple framework and does not require a mountain of phds to grasp it means in plain terms terrifying adversaries with a combination of iron forged national will and fearsome weapons that lend that patriotic resolve credibility it's great yeah one one i posted a couple weeks ago that we needed a like project Stargate style project to address the shortage of domestic drone production.

29:18And when you read this article and you understand how long it takes just to sell a single harpoon to, what is it? I mean, no one's talking about Taiwan invading China because China is extremely scary when it comes to deterrence. They have all this incredible military technology. It's unthinkable. Yeah. And so I think part of it is getting getting Peter, people like Pete had hedged this back in, you know, effectively in power and helping make some of these decisions. People that have actually experienced conflict and getting some of these decisions back into the hands of not bureaucrats, but actual operators that have on the ground experience.

30:02Yeah, it's pretty cool looking at who's in now. So Pete Hegseth said during his confirmation hearing, competition, it's important, critically important. Silicon Valley for the first time in generations has shown a willingness, desire, and capability to bring its best technologies to bear at the Pentagon, a Pentagon that has become too insular and tries to block new technologies from coming in. And then Steven Feinberg, the nominee to be the number two at the Pentagon, is a patriot who leveraged his vast business experience. He's more of a private equity guy, but has done a lot of defense deals.

30:31I think it's Cerberus, right? And then Emil Michael also went into the administration as well. And he was the right-hand man of Travis Kalanick at Uber and just a great overall guy. And we want that Uber energy, that TK energy in the Pentagon running research and engineering. That is cool. So he closes with, during the Persian Gulf War, the stunning American military victory over the Iraqis, then the fourth largest army in the world. Military experts estimated that U.S. military technology was a decade ahead of the Soviets and two decades ahead of the Chinese. The world was shocked at the might of then-futuristic weapons and state-of-the-art tactics.

31:12The new Trump team has a strong wind in its sail. The woke tech giants of the last decade have given way to a new crop of patriotic leaders and innovators. Silicon Valley is poised and ready to join the fight. With a few bold moves, President Trump's promised golden age and a second century of American dominance are within reach. I love it. So go subscribe to Pirate Wires, read the full piece, and follow Joe on X. And let's go to some other posts loosely about defense procurement. So Josh Wolf wrote, U.S. defense tech CEOs urge speedier procurement to counter China. This was from months ago and everyone has been beating the drum on, we need to speed up defense procurement.

31:55It's boring, but it's very important. Yeah. And it puts our companies at risk. If you have a startup and you've developed this incredible product and then you have one customer, which is the Pentagon, and they're like, okay, we're excited about this, but let's start the process. And then it turns into a 48-month process. Meanwhile, you have$2 million in payroll costs that you're having to absorb every month because is you need the best engineers and talent in the world to run your business, but then you're just waiting for that revenue to hit. And usually it comes in increments where, you know, that you get awarded 10 million bucks and then you need to hit certain milestones.

32:32And so it's a very sort of shaky dynamic that has led to otherwise good technology not getting implemented. Yeah. And so even back during the Biden administration, there was an open letter that was signed by Palantir Anderle, Lux Capital, and others. And they went to meet with the Biden administration and the House GOP to work on defense procurement. Obviously less relevant now that Biden's out, but still this is something that's obviously bipartisan and has always been. Patrick Collison had an interesting post here. He took a very academic approach to thinking about defense procurement back in 2017.

33:07He says, military procurement turns out to yield interesting management reading, scrutinized from multiple perspectives, lots of pathologies to analyze. R &D is a major factor. He recommends Boyd, Coram, National Defense by Fallows, and Augustine's Law by Augustine. Yeah. So while you're flipping brain rot real content, Patty's reading these esoteric books on defense procurement. And that's why he runs a hundred billion dollar company. And you haven't raised a seed round yet. You just lost 15 grand on meme coins. Yeah, exactly. It's great. But I got to check out some of those books. That's probably pretty interesting stuff.

33:42but yeah he's always been a real powerful deep diver of the powerful deep diver yeah he would have had a podcast in another life yeah yeah uh uh this is an interesting one have you seen pentagon wars this movie no it's fantastic so it it chronicles the story of the bradley fighting vehicle uh okay and it's it's like a made for tv draw like almost like a dramedy like a draw like drama comedy yeah and it's all about like kind of like our show kind of like our show yeah and so it it tells the story of of the bradley fighting vehicle and how the the requirements just got so chaotic because they'd go to one general and he would say originally it was just it was just supposed to be an armored troop transport to take a bunch of guys from the rear to the front so it's it's just it's just a bus basically and but you know it needs to be fast so it can move needs a little bit of armor, but nothing crazy.

34:43But then of course they talked to one guy and he's like, oh, well, it'd be great if it had a gun on it. And then they're like, okay, let's put a turret on it. And they're like, well, if we put a turret on it, like it's going to carry less guys. And they're like, okay, well, like it also needs to be able to float in water. And so they add that. And then they, and then they're like, well now if it's, if it has the turret and the water, and it can go in the water, it's going to be much heavier. So it's going to be a target. So now I have to put more armor on it. And so that slowed it down and stuff.

35:06And so it's a, it's a hilarious movie. It's fantastic. But there's a little bit of an interesting flip side to this, a little contrarian take from Robert Potter here. He says, the Bradley is literally taught to students of defense procurement as a bad example. The platform has been slammed, audited, and they even made a movie making fun of it, Pentagon Wars. The reality, here it is, flogging a Russian tank. Keep that in mind when people talk about the F-35. And so there's always been this interesting thing. was in the news last week because there was a video on an airfield that just fell out of the sky luckily the pilot ejected and came down in a parachute but um and that was an 80 million dollar ish mistake i believe i mean the the program's in i think over a trillion or something yes it's huge um but there's always actually over it can't be over i don't know there's no way it's very it's very expensive the numbers are all so big i can't even keep track anymore but um but the interesting thing about the F-35 is when you talk to people in defense, they will say the problem with the F-35 is not that it's a bad plane, like as evidenced by the fact that China copied it.

36:13The J-20 is a direct copy of the F-35. Why would they copy it if it was a bad plane? That just wouldn't make sense. You wouldn't waste your time. Maybe you can make an argument that like, oh, the R &D is free. So you just copy it because it's valuable if you don't have to pay the R &D cost. But the F-35 is not a lesson in like, oh, we tried and failed to build a better air supremacy fighter or platform. It is successful. It did actually do all the different things. Electronic warfare. Like, it's fast. It has all the different features. It's just that it went way over budget and took way too long and is just a technical mess.

36:51But it's still the best plane out there. interesting about uh so if you're a fighter pilot and you're based somewhere in the u.s let's say you're based in nevada if you go if you go on deployment you just end up flying the jet there yeah isn't that a strange commute and it ends up being these like really long it's imagine it's it's like a 16 hour flight yeah you know so you just like commute over yeah to work yeah i just find it it's it's it's you would imagine that they would get like shipped in some way yeah Yeah, yeah, yeah. Because normally you're, I don't know, with like sports cars, right?

37:22You're not like, oh, I'm just going to go put some, I want my turbo in New York. I'm going to drive it all the way over there. But the planes, they just end up in the most efficient way is just to fly it over there. Well, the new Andorill Arsenal, their manufacturing plant, is right next to an airstrip. And Palmer was talking to, I think, Ed Ludlow at Bloomberg in this interview and saying like, oh yeah we're right next to an airstrip so we can like and one of the advantages and ed ludlow is kind of like you know answering his finishing his sentences and saying like oh so like you can fly the plane straight from the factory to the customer like to the pentagon or to the airfield and he's like palmer's like yeah or the war zone you can just it rolls off the factory line and it goes straight to the to the front yeah immediately and that's the most efficient way to deliver capability.

38:13I just think that's, it's funny and interesting. Um, anyway, very expensive. And, and again, highlights the fact that like, we aren't necessarily behind on the technology. We're just behind on the, on the efficiency and the procurement process. And over time, the, I'd rather be behind on procurement because that's a lot of process you can rip out, but it's like, yeah, it's a leading indicator. It's like, we're overspending on the F35. The next version won't even get made if the trend continues. And that's the fear and the risk. So Matt Palmer says, hate to say it, but I don't think there's any way the US can position itself to deter a major war in the next decade, let alone win one quickly.

38:52The defense procurement system and the industrial base underpinning it is fundamentally broken and it will take a major war to fix it. He's a bit of a doomer. I think that there's a chance. I think Joe Lonsdale and the crew at the Pentagon. You know, I like how they're not taking the Doge branding into this. It's much more of just, hey, let's just do this. We don't need to make it a big marketing campaign. We don't need Vivek in here, you know, trashing the jocks again. People like you, hardworking Americans. I think Hagsup is in many ways the cultural opposite. Yeah. But, I mean, Defense Tech is charging on.

39:32Let's go to our next story. uh startup castilian has raised a hundred million dollars for hypersonic strike weapons i think we got to ring the size gong for castilian let's do it boom boom congratulations to everyone involved we'll break it down we almost needed to size up the gong for this yeah this is a big one we did 14 million now we're doing 100 million uh congrats to castilian so they make hypersonic missiles um um, Silicon Valley's enthusiasm for super fast weapons has picked up speed with defense tech startup Castilian raising a hundred million dollars through debt and equity to build hypersonic missile systems.

40:08The company is vying to sell long range strike weapons to the U.S. military. Castilian is part of an increasingly well-funded sector of venture backed defense companies. Many are hopeful that the new Trump administration will yield more government contracts for startups. There will be more support for awarding contracts to non-traditional players, said Castilian's co-founder Sean Pitt. The administration has given the Pentagon the freedom to lean into new companies. So they raised 70 million in venture and 30 million in debt. The funding round was led by Lightspeed Venture Partners and it brings the company's total funding to 114 million.

40:44So they got here with just 14. And have you seen their branding, by the way? It's very 50s, nostalgic, or even almost World War II era. Some of the graphics that they use. No, I haven't seen that. It's cool. uh feels a little bit insane to be you know talking about defense tech company branding but i think it's smart by them because there are so many new players coming in differentiating yourself um you know visually is is just another way to kind of stand out yeah yeah it's great and and the last thing you want to do is just be like derivative and roll right yeah yeah yeah because the the and and roll has been such a dominant force totally and they kind of took this sort of call of duty s branding totally and that is what all these defense tech founders grew up playing.

41:25And so it's sort of the default, but because the androal was first, they own it. And so Castilian's done a good job of, you know, separating themselves from the pack. And so let's do a little bit of a deep dive on hypersonic. So the defense department has considered hypersonics a national security imperative for more than a decade. Despite spending billions of dollars on the effort, it has failed to develop battlefield ready technology. Castilian says it's frequent flight tests, quick engineering upgrades, and economical manufacturing will produce cheaper and better hypersonic weapons it does test flights uh it does three test flights per month in the california desert so this is crazy uh hypersonic weapons you might think hypersonic faster than sound a hypersonic weapon is defined as a projectile that flies at least five times the speed of sound yeah supersonic is mach one to five hypersonic is five plus yeah so it can be launched from great distances maneuver and evade most air defenses they became a top defense department priority during president trump's first admin a 2021 test flight by china which launched a weapon that circled the globe 20 times the speed of sound or faster alarmed washington 20 just ripping around 20x so the main the main reason they would have had to choose that flight path fairly that's the thing you don't have to choose the flight path with a hypersonic missile.

42:46So it's so high and so fast. It's not just that it's so high, it combines speed. So the traditional ICBM, the intercontinental ballistic missile, will also go Mach 20. I'm not sure if it's exactly Mach 20, but they go extremely fast. They go all the way up into space, but they follow a perfect parabolic arc. And so we have missile defense systems and satellites that track all of these different missiles as they go up, all the different rockets. So the rocket launches and you can see that it's on this very smooth trajectory. And what that allows you to do is calculate with a very simple mathematical equation.

43:22Well, if it's going, you know, a couple thousand miles an hour here, well then in five minutes, it's going to be here. And if I just get my bomb or my missile here and explode, I will intercept it and blow it up. It's very simple to build a, like a programmatic calculation for how to counter it. And so that's been the backbone of missile defense systems. And it's why people aren't genuinely freaked out about countries getting ICBM capabilities. Because North Korea will get one and it's like, yeah, we could probably shoot those down pretty effectively, scramble things as they come. North Korea is so funny.

43:59It's like your drunk friend who just has a gun and they're just shooting it off in the air at random times. You got to kind of far away and so you got to look over there and be like what's going on is he all right hopefully that doesn't fall anywhere important yeah um meanwhile the adults are you know just sitting around yeah maybe every once in a while letting one off but in a much more you know controlled yeah uh method and so these hypersonic weapons are different than icbms because they don't follow predictable trajectories they maintain the maneuverability almost of a jet or cruise missile, but they're going Mach 5.

44:37So there's a couple of cruise missile companies and cruise missiles are obviously very important, but cruise missiles are typically subsonic. So they're not going, it's more like a plane with no one inside and just a bomb. So when you have something traveling Mach 5 and it's also able to maneuver, it's very hard to shoot it down. And so people are worried about these hypersonic weapons being able to take out aircraft carriers very easily, be able to strike somewhere because it can take you know a lower path evade radar evade the satellites evade detection yeah and then just show up very quickly before you can react i'm uh i'm an advisor to this company aon um i don't know have you ever met i've never met them but i'm familiar so they're based in texas and um they so in learning about that business there's only two manufacturers that make they make anti-tank missiles yep so launch from the ground you know shoulder launched sort of close range there's two companies that make them and they they've gotten to the point where they're charging um because they run on a cost plus model so the the manufacturers make like a fee on top of what it costs them to produce it and so that means that they're incentivized to just run up the price so they make more money it's this very you know poor incentive and so aeons making them for 80 less money and they're making better products that are easier to use yeah and so uh aeon you would think is just like you know obvious easy win they just go in there and saying hey our products you know cost 80 less it's easier to use uh but because of this procurement process which we've been talking about yep it's just not it's not a shoe-in right It's a struggle to get, you know, and they've done very well in terms of getting traction in the Pentagon.

46:27But yeah. And so a lot of it is, you know, you just have to go and get some sort of general or admiral to come out and watch your demo. Yeah. And we've seen videos of Palmer doing this in the desert in a in a wonderful Hawaiian shirt. And Castilians clearly made that part of their strategy as well. they bought this crazy looking like tank transport thing yeah and they drove it to El Segundo which I guess is where they're headquartered um so welcoming our new LSVR MKR18 to El Segundo this week we'll be making upgrades to convert this vehicle into a launcher system for our upcoming flight test and it's a fun ride so I think they can build in their factory put it on the back drive it out to the desert and then just shoot it off and fire it I think I think this creates a fun dynamic for uh vc demos oh yeah so if you you're running a process your investors you know potential investors want to see what you got invite them all out to the same demo it's literally happened blow some stuff up and then say you guys can talk amongst yourselves and figure it out what i was telling uh steve ceo of uh allen control systems yeah uh there was all these you know uh investors he's uh was raising a new round last year all these investors wanted to meet i was like invite them all to the same demo because you're going to just be sitting there watching this incredible yeah you know demo the technology and and for him he's making counter drone yeah you know systems so uh it's just very cool and highly relevant to the battlefield today yep uh and uh anyway so cool opportunity normally you're giving a vc a demo your product they're using it but this sort of putting them all out on the same desert is just a fun i've heard of that happening and all the VCs were standing around talking to each other and one of the bigger VCs there looked to the other one and said you're not getting a penny of this round.

48:13It was like wow that guy's kind of dick but yeah like it worked and they took the round and and it got done and it's good for the founder. So lots of investors have been singing Castilians praises Andreessen Horowitz is in the round. They said Michelle Vol's former Andreessen associate or partner says the best way to ensure the next era of Pax Americana is to build capabilities that deter our adversaries. Congrats to the team. Jake Chapman says with a fantastic handle on X just at VC. Crazy. He says excited for Castilian and to see us developing this American capability. And I like the folks I know at Lightspeed, but Lightspeed maintains a China arm.

48:52What's the relationship between these two firms from a money control systems information flow perspective? Why did everyone scream about Sequoia was totally fair, but nobody seems to care about Lightspeed. So he's putting the screws to Lightspeed, telling them divest immediately, I guess. Blue Yard Capital is also in this deal. We are excited to continue supporting Castilian Corp on their mission to preserve peace through deterrence. Read more about their$100 million Series A financing in the Wall Street Journal, which we just did. And Castilian is very excited to announce their round. We should close out with some more context from the Air Force.

49:28The hypersonics program the Air Force estimated would become operational in 2022 hasn't materialized. And the service is working on another program that says it will produce a weapon in 2027. An Air Force spokeswoman said the service is working on other programs and collaborating with startup defense companies and providing them with opportunities to demonstrate their technology. Many in the industry hopes Trump's shakeup in Washington agencies, the technology industry's coziness with the president, the influence of Musk, himself the founder of the largest venture-backed defense tech company, will bring attention and money to hypersonics.

50:00And so... Yeah, and that's what people still don't realize about SpaceX is it is being able to put things up in space fundamentally makes you a defense tech company. Totally. It's not just an aerospace space company. Yeah. And that's part of their value to the United States. 100%. Yeah. And I mean, Starshield has been very important in getting internet to the front lines. but then also there's all the other applications of just putting up spy satellites and even converting the rockets to ICBMs potentially. So all three of Castilian's founders were previously in senior positions at SpaceX and roughly half the company's 60 employees joined from SpaceX.

50:39That's pretty crazy. And Castilian said it would have a finished product ready for the military by 2027 and will have its first hypersonic speed test flight for its weapon this summer. It has been awarded more than$22 million in federal government contracts, mostly from the Air Force. And so we love to see that. Yeah, and that's why this raise shouldn't be that surprising from a headline number standpoint, is they're generating$22 million off of basically one contract. And I'm sure they have others either done or in the pipeline. And if you're a Series B SaaS company with$22 million of ARR, you can easily go out and raise a hundred million at like a 500 million dollar valuation sometimes those contracts are kind of paced out though so yeah how much they're drawing down from it but still yeah it's obviously uh a good sign uh there and the and the order that people don't realize the order if if these contracts pan out well and the product starts to work you could be looking at billions of dollars in orders on one skew yeah yeah which is just that's where yeah there was some some like you know like what is the bear case here why like like what what could go wrong like there are competitors in the space there are other startups that do solid rocket motors and real bought a solid motor rocket motor company but it seems like Castilian's focused on being the integrator that actually builds the complete system which I'm sure is is is much more complicated than manufacturing any one piece and the other thing you get these billion-dollar orders and then you have these servicing contracts which are like SAS, like, you know, sort of annual contracts on a per typically, from what I know, a per missile basis.

52:17It might be you sell a hypersonic for call it two million dollars and then you have 400K a year for 10 years to maintain it. So it's very predictable, stable revenue once you win the contract. And so I think what we're seeing already in defense tech is the the companies that have contracts now that are actually getting traction in the Pentagon. they are going to get more and more capital piled into them because there's this there's a lot of pre-seed seed stage companies that are you know able to raise five million dollars but getting to that next round even if you build the technology if you don't have the contract traction you're just not going to get there yeah so one of the venture capital firms in castilian is blue yard Capital and their fund performance was just published by Eric Newcomer in his newsletter, Newcomer.

53:10And I don't think they intended for it to be published, but... No, do you know the backstory of how this stuff leaks? It's not even a leak. It's a public endowment that basically has to publish their data, presumably for some type of compliance reason. So it all comes from UTIMCO, the investment arm of the Texas public university system. So I don't know if it can be FOIA'd or it's just automatically released, but a newcomer loves getting those new UTIMCO reports because they set the DC world ablaze. I'm sure there's fund managers now that are like, I don't want to raise from them because I don't want five years from now my fund to be getting dragged.

53:49Yep. You know, oftentimes, you know, people. But anyways, I thought this was a crazy story. so blue yard blue yard killing it is killing it yeah it's 2016 fund has 53 irr and where are they based while they're ripping checks into american hypersonics berlin germany berlin okay um have you been to berlin i have cool cool city yeah i went to october it's only going to get more and more punk as their economy collapses well yeah they're really siphoning the money out of the german economy with this fund now into the yeah yeah but maybe it'll come back in distributions um well hopefully blue yard's lps are mostly american yeah if they're investing in american companies we can keep those you know and so it seems like newcomer went to david bird the general partner at blue yard and said hey i got you dead to rights i got the utimco report this was cool but but yeah they came back and they were like here are the real numbers utimco calculates it one way we calculate we can give you our marks and it seems like they're doing really well uh the first fund generation they raised in 2016, they raised$120 million fund, net multiple of 4.8x and a net IRR of 51 % for a DPI of 3.4x.

55:03So they're doing great. That allowed them to raise four more funds, Blue Yard 2, Blue Yard 3, and then two crypto funds. A little bit of a narrative violation. A lot of people when they see a fund go from doing defense in biotech to FOMO-ing into crypto, oftentimes they just assume that they're just incinerating cash. But the first, their crypto fund, which was started in 2021, $75 million fund, has a gross multiple of 1.7x right now and a gross IRR of 28%. And so this is, again, the narrative violation that we've talked about before, which is that the average crypto fund outperforms the average venture fund.

55:46And so the crypto industry continues to laugh to the bank. Some retail investors get a little smoked in the process, but that's part of the game. And so Newcomer posted the full deep dive, which you can go see on his sub stack. Paywalled. Paywalled. But everyone in tech. It has a subscription or the ability to hop the paywall if they need to. and brad holden gives a shout out to protocol labs for helping blue yard drive amazing returns any project would be lucky to have blue yard supporting them that was a crypto fund yeah that was the crypto investment that that really drove returns in their early fund which i think invested in both castilian early on and uh and protocol labs which really i guess mooned and so there's a couple other there's a couple other funds that are highlighted in here from the utimco report.

56:41True Ventures is doing well. Timco has invested in not just one or a handful of funds, they've done 10 of True Ventures funds. And so this is why these solo GPs, you have to start out raising 200K checks from a bunch of random people, but you try to get to raising from endowments because endowments will basically ride with you for your entire career in certain instances, especially if you put up solid numbers early. And it's valuable because even if you have a fund that underperforms, they'll continue to double down and build that trust with you. And so true ventures, the newer vintages still have negative IRR because obviously the newer companies, they die off faster and then the later ones start to grow.

57:29But the overall IRR is in a solid place at 23.59%, which is great. Upfront Ventures has been in trouble. Their portfolio, their growth portfolio has fared worse than its early stage funds per UTIMCO's IRR calculations. The firm has only returned around 35 million to UTIMCO out of 127 million invested so far, though its holdings on paper have been marked up to nearly 150 million. It has an overall IRR of nine percent uh the yeah so to be clear there well this doesn't look great on paper compared to true or uh blue yard they're still sitting on um you know what what will you know if it were to be realized today who knows if it would be is a you know nine percent irr which beating you know close to beating the market yeah and uh and there's some other uh funds that got um scooped by a newcomer so go check it out always interesting to dig into what funds are are raising important for founders to understand yeah the only others on an upswing and who actually has more capital to deploy because once you see a fund start declining in the IRS you're they're likely not going to raise this follow-on rounds they might not be the partner for you that will be there for those series B series C checks keep upping their pro rata staying at you if Yeah, and this one, this other foundry group, which was in the news last year, because I think they return capital.

58:59Oh, is that right? Maybe I'm confusing it with another fund. But, yeah, they're just no longer even raising. So that even funds that, you know, firms that end up raising, you know, in this case, over eight individual funds sometimes don't have proper succession plans or the GPs just decide, you know, we had a good run. Let's call it. because these things are every new fund is 10 plus years of commitment to managing the firm. And if you're getting to retirement age, you're sitting there, I'm six years old. I want to raise another fund now and then. Yeah. Potentially even 15 years. Oftentimes if you get real winners that have, you know, continued access to capital.

59:42Yeah. So it's a long term commitment. Well, Well, moving on to one of the greatest capital allocators of all time, Masayoshi Son. Did we hit the size gong just to start? Yeah, let's just hit it a bunch for Masa. He's got so much going on. I mean, the original size lord. Add four zeros to every number from talking to Masa. You can't keep a good man down. So there's a report from the information about how he made it back into the White House when President Donald Trump announced a$500 billion plan for data centers to power artificial intelligence. One of the men standing to his left was already getting ready to write the checks.

1:00:23And can we give some credit to Sam for just aura farming the president? Oh, yeah. He got... Trump has really nothing to do with Stargate at all. Nope. And Masa and Sam got him to announce their project. Yep. So, you know, Lulu always says, you know, go direct. Yep. But if you get the opportunity, have the president announce your new fund. It doesn't hurt to get a little aura boost. So SoftBank CEO Masayoshi Son was already making plans to put a total of$40 billion into the Stargate data center project, as well as the company that is Stargate's driving force. OpenAI, two people familiar with the matter, said how SoftBank will finance the investment isn't clear, but the company has separately started discussions to borrow as much as$18.5 billion using the value of its publicly listed assets as collateral.

1:01:22Sun is levering up. Levering up. Levering up. We need a big lever that we can throw when the leverage turns on. Well, and it's crazy because if you just held on to his NVIDIA shares, he could probably actually. So we have a post about that from Dr. Parikh Patel, CFA. He says, he says, B-A-C-F-A-A-C-C-A-E-S-Q. He says, Masa Sohn owned 5 % of NVIDIA and sold his entire stake in 2019 to buy WeWork. He is the best AI investor ever. So lots of people are trashing Masa. We got another post from none other than Jordy Hayes here saying. I've never trashed Masa. No, this is good. So now that Masa is investing 100 billion a year again, it's time to bring back this classic SBG shareholder value, a bunch of unicorns, AI traffic.

1:02:15So the funny thing, so I think it talks about this in this article, but while he was so bullish on AI when he was just going so hard into WeWork, I think it's because he fell in love with Adam and he was just so enthralled by just the Newman effect. yeah if he like he was so early if you look at all of his slides yeah it's funny because he has like another slide that that's yeah yeah i think we have this one here's that one hit says moss is back baby and it's a new slide that has the same design aesthetics of jordy's slide uh saying illustrative agricultural revolution industrial revolution information revolution birth of superhuman.

1:02:56I love it. So dramatic. So cool. He has another one too. That's this really funny graphic that says the Valley of coronavirus and then, and then just two further growth. Yeah. So Masa was, was talking about AI before, almost before I was born. Yeah. I mean, it is, it is funny because these slides as ridiculous as they look, they are great ways to communicate a simple idea. It's basically what other people are saying and 5 ,000 words he's saying with one slide. Yeah. Yeah. But you read a Goldman report and it's going to be like bar charts with tons of annotations, mirror mechographs, waterfall charts and all this stuff.

1:03:34He's, he's, he's a, he's a vibes oriented investor and he has extreme conviction that's got him into some hot water before. Uh, but, but overall, uh, he's been generally, uh, you know, he's had, he had some issues back in the telecom days we have to do, we're going to do so yeah maybe even tomorrow we'll do this but down like the full story of masa because because you can't keep a good man down but but this story is great so um uh they're talking about the announcement which was only was it last week so crazy it feels like a month ago he says one of the men standing beside masa open ai ceo sam altman traveled to masa's mansion in tokyo this month seeking a big check to fund his company's growth altman and masa Masa finalized the agreement a few weeks ago, a couple of days before Congress certified Trump's election.

1:04:24A person familiar with the negotiation says SoftBank, to be clear, was already an investor in OpenAI. So Masa, you know, has been on been on the journey. It's funny because they finalized the agreement, but it seems like they kind of just broke down. You know, it seems like the way that Stargate got announced and everybody's just like, yeah, I'm good for I'm good for 20 billion a year. I'll figure it out. You know, you know that both Sam and Masa. are obsessed with napoleon so sam probably just saying like the best book i read this year was napoleon in his own words this famous book and a lot of people read into that like bro like that's too much like that's too intense like you should back off of that because like yeah there's probably some good lessons in there but it's a little little intense to be like i want to be napoleon right yeah and masa has massive paintings of napoleon i bet masa has like actual artifacts oh yeah he's like a collector yeah true believer in the largest collection of napoleon's old swords or something oh yeah totally but you know napoleon had ups and downs and major comebacks you know yeah beautiful story uh uh tana says jensen reminding masa he was nvidia's largest shareholder at one point soft bank sold their five percent stake in nvidia for four billion in 2019 it would have been worth 150 billion today and you posted this picture of them like hugging the context of that video is i think a little bit different saying like jensen's saying like yeah you used to be a big a big shareholder like kind of a little bit i don't know i'm not exactly sure but but it is a very rough rough look masa you never know maybe he maybe it was his whole plan he wanted to bottom you know bottom ticket so that it would inspire him to grind harder yeah yeah it could have been one of those situations uh we we got a great we got a great post from gabriel uh he says if they make the rock float at a vc backed space factory company referring to varda and the lk99 thing it's completely over for tech critics zurp vindicated capital allocated correctly masa soan was just early kathy wood greatest of all time we will be multi-planetary species and you will enjoy post-scarcity and obviously a funny post great poster um the the rocks did not float the lk99 thing did not replicate and so it was in fact wasn't our very own andrew mccallick working on that yeah yeah yeah and uh i was there the night it happened it was very cool and looked like they were floating but it turned out to just be a magnetic effect not a uh superconductor effect it was very cool uh it was still cool that they were able to just do the science project on the side and it was it was just very cool for like recruiting it made a lot of sense but it was but it was it was it was an invalidation of his claim that you know maybe uh you know magic was about to happen yeah and of course things developed a little bit well i want to see i want to see the only times i've seen kathy wood in the news recently is her saying we have such extreme losses that we will not have to pay you know capital gains for and it was like she kind of to set herself up to be dunked on a little bit with those posts.

1:07:36But let's get Cathy back in the mix. Masa's back in the mix. I want an Adam Neumann AI startup. I want TK to launch a foundation model. I want it all. And so I like this post from Sophie, net cap girl. Says, Sophie says, though he's become a bit of a meme because of WeWork, Masa Sohn is an icon and one of the most successful tech investors ever. It won't work for everyone, but he truly embodies is what it means to bet big on your highest conviction ideas and to not be afraid of being wrong and lose money. Masa Yoshisun made a total of$72 billion on his$20 million bet on Alibaba from 2000. So you know Masa basically has one of the greatest venture investments of all time, $20 million into$72 billion.

1:08:25That's insane. It's just so insane. You know that he's just so pissed that he didn't put a billion in that he's like i'm never going to make that mistake again yeah and so every from that point on he was he was the ultimate size lord yep um yeah it's a fascinating story and so paki also shows masa some love he says i for one love that masa just keeps coming back open ai and joni ivan talks to raise one billion from softbank for ai ai device venture and so uh sam is just is just a master of just taking talent, money, putting it all together. And he's just a vibe aligner and it works. And so let's go through some more of this post.

1:09:09People involved in Stargate stress that the high profile White House announcement last week was merely a blueprint to a years long effort. We talked about this more of a roadshow than actually a funding announcement. If SoftBank ends up spending the 40 billion, a larger sum than previously known, that would be one of its biggest investments ever. While Sohn takes out big loans, it often sets the stage for financial drama. Highly leveraged telecom deals have put him on the brink at least twice, but he's always managed to survive. The financial risks involved became almost immediately clear on Monday.

1:09:42The markets were roiled by skepticism that big spending on AI wouldn't pay off for investors. Valuations were already stretched when Chinese AI model DeepSeek showed it could potentially produce AI at a far lower cost than its rival. SoftBank's stock fell 10 % on Monday, wiping out the gains it made after the announcement of Stargate. It's kind of funny. Stargate's announcement to build massive infrastructure comes at a point when maybe we don't need the infrastructure in a way we're expecting, said Rafael Dorono, a financial consultant for venture capital and private equity firms who focuses on AI investments.

1:10:15There are questions around Stargate. The soundness of Soane's bet will become more apparent in the coming years. He has suffered from big financial busts like WeWork and Katerra in recent years. He's made those non-tech bets while he was touting the potential of artificial superintelligence to change the world in the coming centuries. Meanwhile, he sold off the firm's multi-billion dollar stake in NVIDIA before the chip maker had its historic stock run up. So he is back. It seems like he was down pretty bad, but then made it like basically all back on on arm right he turned 32 billion dollar investment into 82 billion no quite a bit more that 82 billion was the gain that's amazing so moss is the king of making it all back in one trade he really is he so do he he studied so he realized that that many investors uh sports bettors gamblers poker players many of them quit right before they're about to hit it big yeah and so he just never quits if he hits super intelligence and just becomes the richest man in the world.

1:11:16It's so over for the critics. Yeah. It's great. In a 2016 meeting at Trump Tower after Trump's first election, Sohn indicated the iPhone manufacturer Foxconn would bring tens of thousands of jobs to the United States before the firm was ready to announce the move. He just completely jumps the gun. Foxconn eventually backtracked on its plans to build a new U.S. plant. SoftBank's own commitment to create tens of thousands of jobs in the country coalesced through its investments in U.S. startups, backed by the first vision fund. He's like, fine, I'll do it myself. just writes 10 10 1 billion dollar checks and you guys hire just like hire like 10 000 people just grow fast and hire like 10 000 people yeah uh soane's effort to integrate himself with trump before many other ceos were willing had some business logic behind it for years regulators in president barack obama's administration rebuffed softbank's efforts to merge sprint the u.s mobile carrier it had borrowed heavily to buy shares in years earlier with competitor t-mobile so he wanted it emerged T-Mobile and Sprint.

1:12:15A federal judge approved the deal at the end of Trump's first term in 2020. SoftBank still has about a$17 billion stake in T-Mobile. All of these stakes are just so huge. Like it's not a venture fund. It's just this like Warren Buffett-esque entity. So it announced in 2019 that its second vision fund had amassed$108 billion of investor commitments from Microsoft, Apple, and others. SoftBank has yet to raise any outside capital for the fund jordan levy who worked at softbank's early stage venture capital team for 16 years said sown tends to announce initiatives before they're ready masa is one of those guys who is ready fire aim but he manages to figure it out i love this guy just worked with him for 16 years and he's just like yeah he's a wild man yeah he's an absolute dog he's an absolute dog uh so uh i didn't realize this he's only 67 years old he's got that he's got time he's if he gets on the brian johnson protocol he's good you know i mean i'm so happy that we have five pills an hour and he'll be good i just all i want is for him to do a proper annual keynote yeah like warren buffett style you know really lean into the brand i want we need more material right so x we're sort of relying on all these old slides where's the new slide decks you know he's got you know he's cooking on good slides he's got he's got something cooking uh masa has achieved amazing things for him and his company, but I'm not sure if people look at Masa the way they do other Titans, Levi said.

1:13:45This is really something to him. He thinks that he can create a legacy. And so, yeah, he's still got a chip on his shoulder. People are laughing and he's going to be, he's saying, I'm going to have the last laugh. And related to Masa, we're moving on to our next story. Sam Altman-backed Retro Biosciences is raising a billion dollars for a project to extend human life so sam can just here it comes again uh uh again it's uh two little bit of a road road show road show moment i mean it's like i mean it's it's it's actually the most a lot of you know if you uh founders struggle with this right because if you wanted to really kickstart a fundraising process you'd go out there and you'd say i'm fundraising yeah but you kind of can't can't really do that you can i guess at a certain scale just go yeah we're planning to raise a billion yeah yeah yeah but you but they're not yeah they're not saying we're raising right now please come invest in our startup yeah it's much more of this sort of roadshow style announcement and when you're raising a billion dollars for a company which presumably you know has no revenue or or very little or incorporation or maybe yeah yeah a little pre-product i think this does exist no yeah i've heard of this company has been around for a while but i mean it is true like like i think you and a lot of other folks uh when they're thinking about a new business idea oftentimes it helps to like build a deck around it and then share that around with partners i've made you've made way more i've helped start you know a bunch of different companies but i've made 10 times 10 times you kind of flip it out and i'm like okay yeah i think in decks it's the best way yeah much more if you if you have an if you have a cool idea yeah you can't turn it and do a compelling deck, it's just a cool idea.

1:15:34Exactly. It's not a real business idea. Exactly. And so it seems like for a lot of these guys at this level, they think in Financial Times profiles. Yeah, yeah. And to be clear, I think what they're doing sounds amazing. And I would like them to have a billion. Totally. I would give it to them if I had it, you know. And so there's seed round. If it wasn't all in my friend's, you know, early stage, you know, pre-seed startups. Yeah. And so they did a modest seed round. I think we might have to get the size going out for this. It's$180 million seed. And this will put more money in the Series A. The company is in talks with family offices, VCs, and sovereign wealth funds, as well as U.S.

1:16:12hyperscaler data centers to provide computing power. And so this$1 billion might come in the form of cloud credits as well, be sort of a blend. But, you know, he's certainly raising. So the San Francisco-based biotech will use the money to fund clinical trials for three drugs, including a potential treatment for Alzheimer's disease, which will be tested in an early stage study in Australia this year. It's also working on drugs for rejuvenating blood and brain cells. I love that. Right now, if someone gets Alzheimer's, it doesn't matter what your resources are. If you're like Joe Biden or Elon Musk or whoever, you can write as big of a check as you want to anybody and nobody knows how to cure it.

1:16:47Which is so crazy. Sad. Imagine how much funding Joe Biden would have had available to not be falling apart while president of the United States. Yeah, I posted this. It was like when Biden was having trouble, he should have put together like an Operation Warp Speed for Brian Johnson Blueprint. Yeah, or just throw up a GoFundMe. I would have thrown a bone to old Joe. And so Altos, backed by Jeff Bezos, had the largest ever biotech fundraising, raising$3 billion in 2022. So a lot of these different power players in Silicon Valley are doing biotech stuff now. obviously Elon has Neuralink, which is bio related and curing a lot of blindness, but also paraplegics, like syndromes.

1:17:39Betsy LaCroix said Altos has brilliant minds and admirable longer range research goals. But he said he and Altman both come from the tech accelerator Y Combinator. And so they have a very fast paced action oriented target centric mindset. The reason I like this play is because a lot of people talk about ai solving aging yep but then it's not obviously going to happen just via a model right unless it becomes truly agentic and you know we achieve this sort of asi and it's just like i'm going to save all the humans you know people you know that'd be a fun reality but more realistically we need companies that are leveraging these new technologies in a very specific context like this around specific drugs and treatments that can solve specific issues, not just generally hoping that the technology will cure all of our problems.

1:18:28A lot of these drugs, they usually take between 10 to 15 years to discover and then develop and get through the FDA process. And the goal here and really the bet is that with AI and a faster paced team, they can accelerate that and bring drugs to market faster. Working with the $157 billion AI startup also has an ulterior motive, bringing biotech into open AI. You know that you're making progress towards AGI when your models are able to make discoveries that humans couldn't on their own sort of like the move 37 moment in AI for biotech would be very interesting where yeah the the AI spits out something that wasn't considered as a possibility they test it and then it works yes that would be so one thing you'll notice from Altman's moves is that they tend to all interconnect in some way there's many ways you can say oh, WorldCoin is the currency of OpenAI.

1:19:21Or you could imagine. Yeah, or like post-AGI, he clearly wants to think about what is the way to deliver UBI to everyone. And WorldCoin would be a way to distribute value to billions of people. I think that's part of the thesis, at least. So they can go buy Kava, slop grain balls. Yeah. And so, let's see. If you're 85 years old and you undergo this therapy, you can replace your blood stem cells with ones that are zero age. And then those ripple out and produce all your blood. Basically, it's like having 80 % of all your cells become zero age. Is it a Faustian bargain? We'll find out. It sounds good to me, though.

1:20:08I'm down. I'm down to replace all my blood. Replace everything. Turn me into a robot. Who cares? As long as you can podcast, John. As long as I can podcast and bench press, I'm good. Yeah. As long as you can bench more than a certain fellow. Yeah, exactly. The robotic arms, that seems highly relevant to bench pressing. Well, let's move on to some tech earnings in the public markets. Meta Platform's sales soared to a record bolstering Zuckerberg's AI spending spree. MetaShares have rallied after it announced plans to increase spending on AI this week, posted record revenue in the fourth quarter aided by artificial intelligence improvements to his ads business so uh we'll get into a bunch of the posts here but zuck's just undefeated he's on a generational run i think that you call the top on the style but it was not public public opinion yeah public opinion sure he can't go anywhere but down from here he's on top of the world but the stock can keep going up maybe yeah after you get after you get a porsche minivan custom made and you're wakeboarding holding an American flag, that's the Pico top.

1:21:15Yeah. And you're wearing a million dollar watch or a FP Jorn. There's literally no better watches to wear. You can't go out. You could get a Graf Diamond. Hallucination. That'd be good. And so let's react to some posts about the earnings and then we'll go into the article. ZA Stocks says, Meta is operating on another planet. Zuck is arguably the best CEO on earth. Hard to comprehend. He's only 40. Revenue up 21 % year over year. Gap net income up 59%. So Mark Zuckerberg and Ross Ulbricht are the same age, which is wild. Dark path. Yeah. Yeah. I mean, they both had similar power. Yeah. Both created tech platforms.

1:21:58One was legal. Earnings per share up 60 % year over year. operating income up 48%, operating margin up 42%. Send it to 1 ,000 already, bonkers numbers. Obviously not financial advice. Let's go to QCAP. I used to think Google had the best, G-O-G, had the best business in the world with the widest mode possible. I think this meta quarter changed my mind. 60 % operating margins, X Reality Labs on a top line growing 20 % sustainably with upside$2.2 million revenue per employee with a 40 year old founder. It is a compelling bull case. Let's go to near near says meta had their Q4. I'm literally inclined to log on to public right now and buy more meta stock.

1:22:46Not financially. Not everybody listening to this show should know that we don't give financial advice. So much of our net worth is in our friends' companies, which is the most irrational possible thing to do. So definitely don't. We shouldn't give financial advice around specific stocks, but we should give the meta financial advice of start a hedge fund. Yeah. Start a private equity firm. Go into private equity. Pivot into private equity. Asset management is the greatest business model of all time. Yeah. Your job should just be running your own family office. Exactly. Exactly. That's all the financial advice you need.

1:23:25Be post-economic. Yeah. Be post-economic. Have a fantastic team of traders deciding what trades to make on a daily basis. Meta had their Q4 2024 earnings today. Record revenue of$48 billion in just one quarter. Significant outperform. $1.7 trillion market cap already. Advertiser revenue by geography, at an all-time high. Really, really crazy. Unexpected too. Just huge growth, even in US and Canada. Very, very mature markets. And let's look at Alex Heath. He says, Zuck on meta earnings call just now. I continue to think that investing very heavily in CapEx and Infra will be a major advantage. Wall Street breathes a sigh of relief.

1:24:13And so the company's shares rose by about 5 % in after hours trading following a rally over the past week after it announced plans to increase spending on AI. Zuck says, I expect that this is going to be the year when a highly intelligent and personalized AI assistant reaches more than 1 billion people. And I expect Meta AI to be that leading AI assistant just because of the distribution. distribution yeah i mean the the obvious uh one obvious bull case here is that if llms replace a lot of google search and meta has all u.s consumers in their apps for hours a day and you can eat into that search and then meta gets an entirely new ad product which is a search style ad product on top of their already incredible treasure trove of data and consumer behavior and all this stuff.

1:25:10It would be, you know, the potential is limitless. So Meta plans to spend 60 to 65 billion dollars on CapEx this year, in part to build out a data center in Louisiana that is so large, it would cover a significant part of Manhattan, Zuckerberg said. It also expects to end the year with more than 1.3 million graphics processing units or GPUs. And of course, not all of those will be used for training AI. A lot of them are just for serving reels and doing algorithms and AI on all sorts of products. But still, it's a lot of horsepower if he needs it. Yeah. It's funny because I think SoftBank has been, you can correct me, but a few billion of net income.

1:25:55Facebook has 20 billion of net income. so they can really blow cash. And they are. The company's Reality Labs unit, which is their smart glasses, augmented reality in the metaverse, reported losses of nearly$5 billion. The unit lost$17.7 billion last year investing in VR. But as controversial as it is, we saw everyone was saying, oh, Apple's going to defeat them with the Apple Vision Pro. That kind of flopped. And they are just continuing to invest. And it's hard to imagine a world, maybe it's 10 years, maybe it's 20 years where VR doesn't get good enough. And as we saw earlier at the end of last year, the Orion demo was received really, really well with smart glasses.

1:26:37They're even lighter and more augmented reality. And so they're clearly making strides there, even though it's incredibly expensive. It's so crazy, especially when you compare it to the initial R &D that went into the iPhone. Like Apple was able to do that on a shoestring budget by comparison. Meta has invested so, so much in reality labs, but if they get it right and they have the platform by default and the AI and the distribution, it's game over. Zuck should get Trump to announce the Orion now that Trump will just announce private company. It should be a benefit. Like if you hold a billion dollars of his Trump coin, he'll just do your PR.

1:27:14It's a utility token, right? The failing Vision Pro is a joke. I only to use Oculus sent from my MetaQuest 3 on Truth Social. Beyond increased spending, Meta more broadly is going through a transition and has sought to align itself with the new Trump administration. The company donated a million dollars to Trump's inaugural fund and Zuckerberg himself visited Trump's Mar-a-Lago estate twice in recent months ahead of attending the president's inauguration. He also went on Joe Rogan's podcast and criticized the Biden administration. um uh on wednesday meta agreed to pay a 25 million dollar uh settlement in a lawsuit that trump brought against the company after it suspended his facebook and instagram accounts in the wake of the january 6th 2021 attack on the capital so trump just gets 25 mil from them yeah yeah it's a wealth transfer hey this is that was pretty annoying yeah and potentially categorically wrong yeah to do yeah uh and you made me get kicked off pinterest too because everybody followed you yeah i got kicked off of tumblr and it's like how does 25 mil sound and and trump yeah okay we'll call it even yeah i would have to imagine that trump suing meta is like at least a five million dollar legal bill yeah so we probably got that bad on top and then who knows maybe that maybe now and now when they're at the the next ufc they'll give each other a nod and maybe you know trump will give them like a pat on the chest yeah uh this is gonna be well they're both real they're both really close with dana white dana white's uh really close to trump and dana white's now on the meta board and so yeah the the relationships are building building back up uh yeah i i uh i love the the memes of people with text over to Zuck, you know, saying, yeah, and then they freaking made me kick off Trump.

1:29:09Can't believe they freaking did that. Well, Zuck said, this is going to be a big year for redefining our relationship with governments. We now have a U.S. administration that is proud of our leading companies, prioritizes American technology winning, and that will defend our values and interests abroad. Earlier this month, Metta said it was eliminating third-party fact checkers, relaxing restrictions on speech, and they plan to use the community note style, which we've covered here on the show before. The company also appointed a new Republican head of global policy, dismantled its team assigned to diversity and plans to axe 5 % of workers in performance-based job cuts.

1:29:49TikTok's future in the U.S. remains in flux and Meta would likely be a beneficiary in the U.S. if they were to fully enforce the law banning its Chinese-owned competitor, even though it hasn't really dented reels profitability in a significant way because it's been very additive spending more time yeah yeah people are just i mean i'm sure it would be good but it doesn't seem like it's uh existential to them and so uh they're so they're also starting to test ads on threads maybe threads will take off but every time i go over there it's boring so we'll see well let's move on to a another move in the public market snowflake uh the database provider is in talks to acquire analytics startup Red Panda, company I hadn't heard of, but funny name.

1:30:37But there's a bunch of interesting things to talk about with Snowflake. And there's this whole rivalry with Databricks and Palantir and how all these things play together. So it's important. And then the CEO, former CEO of Snowflake is a very fascinating guy who wrote this fantastic book called Amp It Up, Greg Slootman. we should keep a copy on here because we're trying to amp it up we are trying to amp it up we actually for those listening live and on the rss feed or on youtube later we're trying to amp it up do you want to hear a quote from it we get pumped up yeah we sometimes amped up we sometimes feel like we're yelling at the mics yeah and we watch ourselves back it's too quiet we realize that it's too so we're getting amped up so snowflake ceo frank slutman telling the hard truth do you want that i want that i'm chugging that uh bring me another yerba mate ben please while i read this uh snowflake ceo quote one problem he's seen with young ceos they just think i hire a bunch of people and then i sit back and wait for greatness they have no idea that they have to relentlessly drive every second of the day every interaction and seek confrontation slootman told the no Pryor's podcast in an episode posted Thursday.

1:31:49Look no further than a DMV office to see a lack of urgency among workers, he suggested. This is what naturally happens to human beings, he said. It's innate. We slow down to a glacial pace unless there are people who are going to drive tempo and pace and intensity and urgency. That's what leaders need to do. CEOs must constantly push the urgency, he said, even though it's really hard to have the mental energy to bring that to every single instance of today. How much market cap was wiped out when he announced his retirement? Wasn't it? A lot. Wasn't it? It was in the billions? Yeah, it was. I think it was a complicated situation because the stock might have already been down, but he had kind of a generational run.

1:32:31There's some good examples of, because he had also found its service now, I think, or it was all this like incubation from Sutter Hill. So just to give everyone a sense, Frank Slootman, writer behind Amp It Up, when he retired, Snowflake's stock plunged 20%, which was$30 billion of lost market cap. And so imagine being the new CEO coming in and you've got$30 billion shoes to fill, basically, just to get back to kind of where people were when your predecessor left. Well, now they're trying to acquire their way out of that hole. They're looking to buy Red Panda, a data analysis software startup valued at around$500 million in 2023.

1:33:19Red Panda sells software to that financial firms and retailers use to analyze continuously flowing data, known as streaming data, from stock market activity to e-commerce transactions. Its customers have included data center networking firm Cisco, credit rating firm Moody's, video game publisher Activision Blizzard, as well as some banks, which use it to detect fraud. Everyone declined to comment, of course. AI isn't typically trained on data such as banking and shopping transactions in real time as those transactions are happening. But some AI startup executives believe future AI models will incorporate this kind of data, making streaming data analytics more valuable.

1:33:57And that makes perfect sense. Like if I want to go to, you know, even chat GPT or perplexity and query and say, you know, give me the story on Snowflake stock. I want today's information as well. I don't just want, oh, the knowledge cutoff was last year and I can't really tell you what happened this month. Give me the data right now. Clearly that's a prerequisite for a super useful AI system that can really do everything. And so it's not clear what price Snowflake is willing to pay, but Red Panda is asking for 1.5 billion. The firm has raised$167 million in capital and was valued at$520 million last year or in 2023.

1:34:37And so that would be a significant upround. All the VCs would make a bunch of money and all the employees would do very well too. And so a price of$1.5 billion would value the six-year-old startup at 60 to 70 times its ARR. We are so back. Such a deal would put Snowflake on a collision course with publicly traded Confluent, the leading provider of streaming analytics data, streaming data analytics. Confluent's revenue is much bigger than Red Panda's. Confluent generated over$250 million in revenue. So 10 times. Just in one quarter. Of course, if - No, that's quarterly. Oh, that's quarterly. Oh, wow.

1:35:14Oh yeah. Okay. So they're doing a billion in revenue. So they're doing 50 times as much. But you bring in Red Panda, you sell it to all the Snowflake customers and increasing that revenue, probably not that hard. And so it's not that crazy to pay a super high premium when you're going to be able to get that value accretion so fast. Confluent has a market cap of around$10 billion and sells its software to startups, including OpenAI, as we mentioned. Snowflake has built its own data analysis product that resembles Red Pandas, but acquisition of the firm could strengthen Snowflake's present in the market and widen its customer base.

1:35:47Snowflake raised$3.4 billion in a 2020 public offering. and biggest in history. Just to put this in the context of Stargate announcing a$500 billion project, Snowflake is one of the greatest software companies maybe ever, right? Just for me. Yeah. They're raising a hundred times last night. And they raised$3.4 billion in the biggest software IPO ever. I'm guessing they were profitable, quite profitable at the time. So yeah, just puts it into some context. So streaming analytics is relatively small market, but it could grow as more companies use AI to automate parts of their business. Red Panda says on its website that AI image startup mid journey and coding and assistance firm poolside are using its software to develop AI applications, incorporating streaming data analysis.

1:36:37Red Panda says customers can use its software to build an e-commerce application that uses real time data about a customer's transactions to send them an email with product recommendations, for instance. Red Panda providing proof, even if this deal doesn't go through, that you can build a really big company with a silly name. Yeah, for sure. That was like, I hope they got the dot com early because if they got like redpanda.co or something like that, like.io, that'd be really sad. With a name like that, you should be able to get the dot com right out the gates. So let's go to some reactions regarding Databricks and Snowflake.

1:37:12Matt Turk says the chess and mind games between Databricks and Snowflake are fascinating. They mysteriously scheduled their big conferences on the same exact dates this week. Now Databricks is one step closer to being the true data plus AI platform by acquiring Mosaic ML for 1.3 billion. What next? Yeah, and so this would be, if the Red Panda deal goes through, it would be a big, you know, I would say it's a big win. Lightspeed and Google Ventures did the Series A. um it's funny because i'm sure that that this wouldn't even be enough to return their you know funds given how large they've gotten um but still it might be like we love to see billion dollar outcomes in a perfect world we're seeing one a day yeah but and a lot of a lot of those and those founders are going to be the ones that you're going to be bidding against at sotheby's yeah so you got to know these people you got to know by name i got to know the red founders because i'm going to be seeing them at amman yep i'm going to be seeing them in the hot Yeah, exactly.

1:38:13Teddy Blank has a funny post here. He says, hard to explain just how wild a time 2020 to 2021 was on this app. Entire pre-IPO financing rounds getting done in the DMs. Mike Spicer making an account just to pump snowflake stock. In one GC, we did a group R bridging poor quality carbon credits on chain. Magical, special. Yeah. The COVID era, the Zerp Farrah was truly insane. There were a lot of crazy, crazy deals going on. I did not see Mike Spicer doing that. But I'm feeling that we're back. We're so back. We're so back. Nothing can stop us. There's always a bull market somewhere. Let's go to our last story of the day, and then we'll move on to the timeline.

1:38:55We are talking about maybe the most boring part of the AI story, but one where there is alpha for sure, because I think it might have been overlooked. Seagate and Western Digital, to companies that make hard drives are sleeper AI picks. And so we have a screenshot here from the information talking about how their gross profit margins have increased significantly after a dip in 2023 due to overproduction and slowing personal computer sales. And so normally, you know, you buy a big hard drive for your computer. People stop doing that. Everything's in the cloud now, but the data centers need more and more hard drive space for all of those AI models and so they're selling at a breakneck pace uh seagate uh posted this uh tweet of course they're built different of course they included a hashtag of course they included a link they said we're breaking capacity barriers over here at stargate uh at seagate not stargate but who knows maybe the stock will moon because people oh i heard about that stargate thing i should buy this seagate company probably the same thing and so they said uh tech radar calls it a world record smash.

1:40:04Our 36 terabyte hard drive delivers unparalleled storage capacity for enterprises. And the future looks even bigger with 60 terabyte hard drives on the horizon. You know, we're going to be picking up some of those here at Tech Bros Enterprises because we got hours and hours of 4K footage every day. We're generating terabytes of footage and we're putting out so many clips on YouTube that eventually we'll get to the point where there's 24 hours in a day we will be putting out more than 24 hours a day of content multiple cameras multiple cameras you'll be able to turn into the just the jordy stream yeah just the john stream just the stream of whatever beverage we're drinking yeah exactly just the ad you want to lock in on on this yerba mate and so it's hundreds of hours of content every single day coming from us and that's gonna need a lot of hard luck good luck keeping up i found this hilarious post from 2017 by Nick Carter.

1:40:58He's been on the show many times. He says, I just sold Seagate STX in at $30 out at 48. Nice 50 % gain scared by that 150 % dividend payout ratio, midterm prospects poor. He's dropping some financial advice on the timeline at 2.20 AM. Zero likes, no engagement. Now he gets 100 ,000 likes on every post. He got out at 48. It doubled again from there. I'm on public right now. It said sitting at$99 a share. Should have held Nick. What happened? Never sell anything. Never sell anything. And so there's some other interesting stuff in this information article. You can go read the whole thing on the information.

1:41:43And just as a reminder, don't call it the misinformation. We're working on a new project that might be using that intellectual property. So we want to disambiguate those two as fast as possible. Seagate and Western Digital Corp may be best known for selling hard drives for personal computers, but that mindset might be out of date. In recent years, Seagate has focused on selling hard disks for data centers to cloud firms such as Google, which now account for the majority of their revenues. Their latest quarterly earnings showed a lift in its data center business, which sent revenues up 50 % year on year.

1:42:16Investors have yet to catch on. Both stocks are depressed. Seagate is currently trading at 2.8 times next year's sales, while Western Digital is at 1.7 times. Wait, I just want to be clear. So this article is by the information. Yep. Are they giving me financial advice? I think so. It seems. Yeah, it says right here, mortgage your house and put all of your money in these stocks. No. Oh, amazing. Sell your car. This is why we pay for the premium membership. Exactly. Some of these stock tips. No, no, I have no idea if this is a good buy, but it is an interesting story just because I think it's been overlooked, but there's like we've done, we've wanted to do a deep dive on everything related to the data center.

1:42:57This is obviously one of the key pieces in a data center. You think about the GPUs, you think about the energy, you think about the land and the models and the, and the training runs and stuff, but you don't think about the hard drives storing all those trillions of tokens. Those, that juicy, juicy rlhf data you gotta put that somewhere just call them tokes tokes yeah i gotta get the token so much it just takes too long yeah tokes so uh a ubs analyst said we think all forms of memory and storage ultimately benefit from ai but the kind sold by micron is the first to benefit and hard disk drives probably the last to benefit um so micron is a is a bigger play right now because they sell high bandwidth memory chips that are crucial for storing data used to train large language models because it's higher bandwidth so they can pull it onto the GPUs faster.

1:43:51This is more for like long-term storage. So there's two and a half players. AI models both consume and generate plenty of data. There are a few different types of hardware that cloud providers can use to stockpile that data, though hard disk drives are generally the most affordable option. There are two and a half players in the hard disk drive market, referring to Seagate and WDC, which together have an 80 % market share and then Toshiba, which is a much smaller competitor in that arena. The market for hard disk drives has structurally changed with the rise of cloud computing, adding that he thinks AI will boost cloud firms spending with Seagate and WDC further.

1:44:28Okay, but I just don't understand this because these companies are basically shrinking and the AI boom has been happening for the period in which they were shrinking. So that's a bit, we're not here to give. No, no, no. So revenue is up. No, it says here. So investor attitudes towards Seagate and WDC though appear to still be influenced by the revenue declines each company suffered in 2023. That's old. So that's old. More recently, they went up 50 % year on year. And that's driven by, so the new LLM models, they generate a ton of data and even if you're not actively using that data on a current training run, which would use Micron, you're gonna need to store that.

1:45:13So obviously OpenAI wants to store every chat input and output, and that's a lot of data. And then same thing with image and video. That's gonna be a huge thing if you're gonna wanna log all of that. Like just personally from a user experience, if I open up the ChatGPT app, I wanna find the chat that I had about rare watches two weeks ago and be able to scroll through it. And so that's even more data than just a Google search, which might just be, oh, this person for this IP address, you know, search for these six words, you know. Yeah, it just says here, Seagate's revenue shrank in the last two fiscal years, while WDC shrank in fiscal 2023 and recovered to a meager 5.6 % growth rate in the year ended June 2024.

1:45:55So obviously we have another couple quarters to look at. But so, yeah, now they're growing. it says seagate projected a slower rate of growth for the march quarter of roughly 27 yeah so they had so they had a pop last quarter and they're expecting another growth growth quarter but not as huge uh partly due to a production problem that reduced the amount of product it had available to sell so their capacity constraint now yep potentially bullish we'll see got to go figure it out for yourself though yep um the shift towards selling to data centers is both helping both firms lift their profit margins each reported gross profit margins of roughly 35 percent in their last quarters Anita Ramaswamy what is she normally does she normally write about sleeper AI picks I don't know probably just uh you know public companies and quarterly earnings I mean it's just it's just an earnings report yeah anyway let's go to a promoted post we got Max Meyer he is at the magazine factory and it's the most fun you could possibly imagine i need to start many more magazines he's doing the first printing run of a meet of arena magazine uh edition number three i believe which we have an advertisement in and we will be covering on the show as soon as it arrives yeah full page page i'm very excited designed it myself yeah very proud of what uh of the of the copy that we wrote the love language it's it's fantastic that's they call it on the back of like the can like the yerba mate like this is the love language okay i didn't even know that oh yeah yeah so if you're a cpg company you know when you look on the back and it's like it's like this this bag of chips was started by steve in his backyard and he was like loving chips like that's the love language yeah very funny um anyway let's move on to the timeline we have a post from gary tan friend of the show gt gt they call him gt gt he says f just asked for gt uh peter he's replying to Peter Yang who says, soon people will care more about their favorite AI apps than the models powering them.

1:48:01I don't care which model is powering XYZ. And Gary says, as model moats fall, the rise of consumer AI is now here. And that's the bull case for Meta and ChetBTS app. It's a bull case for YC, right? And YC, of course. YC is such a, we've talked about this before on the show, is such a massive beneficiary of model costs dropping because it's now becoming obvious that there's a bunch of not only does yc benefit because they're the companies that go through will have to raise less money and they'll get less diluted yep but uh there's just so many new opportunities and it's i i'm very happy that uh just for the startup industry that it does seem that what gary's saying is true that there was a period where everybody was like well apps don't matter at all yep the models are going to do everything yep uh and maybe in the long enough time horizon that becomes true but for now playing the game on the field there's a very clear opportunity to build tons of new consumer use cases we could sit down totally and just go back and forth and come up with like 50 new build some decks rip some decks some puns yeah it's It's oversubscribed already.

1:49:14There was an era where to get an LLM or a foundation model company off the ground, like your seed round needed to be 100 million. And that's just not something that a college dropout or new grad is like capable of doing. Or should do. Or should do, yeah. It's just too much can go wrong. And so a lot of the foundation model companies were started by people with long careers at big tech companies, or they were on the transformer paper, or they were a nonprofit for a decade and then like pivoted. and it's very, very odd. And if that was the case for how companies need to get built in the modern era, that would have been very, very bad for like new grad, young person entrepreneurship.

1:49:52And I'm glad that we're in this era of the hacker mindset returning. And it's very bullish for, yeah, the YC model. And companies are getting their revenue so fast, right? Totally. This is like Blake Anderson, who's participating in PMF4Die. He has taken multiple apps to hundreds of thousands of dollars a month or even seven figures in monthly revenue, just finding these new use cases for models. So it's great. Well, let's move on to Vivek, who is posting some news that Norway just revealed that they own$500 million of MicroStrategy stock. They're buying Bitcoin. And so this is like, we've seen this in, is it Venezuela?

1:50:33There's some... No, El Salvador. El Salvador. And I love how he posts, the the el salvadorian president posts mobile screenshots of his portfolio it's like he's got like you gotta get him on public yeah yeah hey let's get him over let's get him over here i've spent i've actually spent a bunch of time in el salvador okay i um almost died there from a staph infection kind of crazy story not super fun but great country yeah the pupusa is their equivalent of like the taco it's like it's like beans and corn and i went to it's great at the at the turn the millennium i went as a kid i went to um panama and i got the worst fever of my life did you check out the canal we did see the canal and we went up to a few other places there we should go pod from the canal for sure should we take take it back take it back i think it's just a deal i mean it's a good yeah it seems like a good deal um easy but uh one thing is like 103 105 you start hallucinating it's terrifying yeah well really really really rough sickness uh micro strategy ceo i saw somebody post that he's on the new cover of forbes okay somebody compared it to um ftx guy theranos guy it can kind of be a little bit of a adam newman it ends up being somewhat of a i mean for every top signal forbes cover there's a bunch of others that turned out to be i'm sure Steve Jobs was on there a bunch of times.

1:51:59But MicroStrategy, whatever, if it's a Ponzi, I don't know. But it is the foresight to say, I'm going to turn my struggling, sort of irrelevant company into a quasi-index before indexes were legal. buy up all you know in many ways it was a brilliant strategy for micro strategy even if maybe it unravels at some point we don't know um yeah it's just a funny way of these companies or these countries now like dipping their toe into bitcoin like they yeah they buy the micro strategy then maybe they buy some etf then maybe they buy some you know synthetic bitcoin then they wind up self-custiating and then pretty soon they have their full-on bitcoin reserve um but it does seem that more and more countries like they're trump's talking about it in america obviously that would be huge um yeah but uh more countries are thinking about okay we should put this in our portfolio 500 million dollars is not a lot i'm sure for uh you know norway it's a big country but uh it's an interesting start yeah i got a promoted post uh and a cool story to go along with it so this uh Post is from snag.com snagged is run by a friend of ours Rob So Rob started we've talked about him on the show before he started Roman health Early telemedicine company that I believe is still Valued it at in the you know in the unicorn range Anyway, so Rob now has snagged it's a domain sort of brokerage acquisition company and he actually recently helped us get a beautiful four letter.com domain that we will be using that we have yet to announce but very excited for that so he shared here instagram's domain name story is wild at instagram wasn't always instagram.com it started as i n s t a g r.a m the tld top level domain for armenia yeah the founders kevin and mike thought the domain was clever and didn't want a.com at first but as Instagram launched in 2010 and exploded 100 ,000 users in the first week and 1 million shortly after launch, it became clear that a.com was essential for credibility.

1:54:15There was just one problem. Instagram.com wasn't available. A cyber squatting family in China had already snatched it up along with 22 other Instagram-like domains betting big on the app's success. So that is so wild that you could be popping off and meanwhile, a cyber squatting family is just snapping up all your domains not great so to secure your dot-com to so to secure the dot-com instagram had to pay 100 000 in 2011 which actually doesn't seem like a lot if they had a million users pricey but necessary in 2014 as instagram reached new heights the same chinese family resurfaced they claimed the domain sale wasn't valid because their daughter sold it without the family's permission a lawsuit followed but instagram who was then owned by facebook wasn't backing down after a long legal battle facebook one ending the squatter's claims and protecting instagram's name for good today insta gr.am still redirects to their main site a nod to the creative risks that started it all and 100 000 for instagram.com a total steal so if you're in the market for a new domain we are dot com fiends every company that i'm involved with i try to help get the most fire.com possible and uh rob can help you do it so it's just x.com slash rob you can dm him and tell him the technology wait he's just rob he's just rob on it that's so perfect that's wild uh it's a great gotta live the brand yeah he needs to get rob.com yeah he might i think he has rob.co okay oh that's so close and yet so far you've got to upgrade it uh okay let's move on to andre carpathy with uh a great story that is one of my favorites it might be hard to read on the screen but i'll read it out here.

1:55:57Move 37 is the word of the day. It's when an AI trained via the trial and error process of reinforcement learning discovers actions that are new, surprising, and secretly brilliant even to expert humans. It's a magical, just slightly unnerving emergent phenomenon only achievable by large-scale reinforcement learning. You can't get there by expert imitation. It's when AlphaGo played Move 37 in game two against Lisa Dahl. Quick bit of lore. If you go back and watch our launch video, John had the foresight to put Move 37 in Go on the Go board that gets shown on this table. The board's right there.

1:56:31I don't think many people picked up on it. The vibe reel is pretty fast paced, but it is an Easter egg for the true AI fans out there. It was a weird move that was estimated to have only a one in 10 ,000 chance to be played by a human, but it was one that was creative and brilliant in retrospect, leading to a win in that game. We've seen Move 37 in a closed... Didn't the human player like walk out and smoke a cigarette or something? Yeah, yeah, yeah. At least it all was like, what's going on? Like, this is bizarre. And all the announcers were like, okay, the AI must be broken. Like, this doesn't make any sense.

1:57:00No one would play this move. And so in a closed game-like environment like Go, but with the latest crop of thinking LLM models, e.g. OpenAI 01, DeepSeek R1, Gemini 2.0, Flash Thinking, we are seeing the very first early glimmers of things like it in open world domains. the models discover in the process of trying to solve many diverse math, code, et cetera, problems, strategies that resemble the internal monologue of humans, which are very hard slash impossible to directly program into the models. I call these cognitive strategies, things like approaching a problem from different angles, trying out different ideas, finding analogies, backtracking, reexamining, et cetera.

1:57:41Weird as it sounds, it's plausible that LLMs can discover better ways of thinking, of solving problems, of connecting ideas across disciplines, and do so in a way we will find surprising, puzzling, but creative and brilliant in retrospect. It could get plenty weirder too. It's plausible, even likely if done well, that the optimization invents its own language that is inscrutable to us, but is more efficient or effective at problem solving. The weirdness of reinforcement learning is in principle unbounded. I don't think we've seen equivalence of Move 37 yet. I don't know what it will look like.

1:58:16I think we're still quite early and that there is a lot of work ahead, both engineering and research, but the technology feels on track to find them. Someone was posting that Wall Street, if they had just read Kirkpathey's post from like a couple of weeks ago, may not have had this ridiculous sell-off because it was publicly, like the thing that they launched was an app. It wasn't. Yeah, everyone knew that the model was good weeks ago. So the reaction was silly. But if you want to be two weeks ahead of AI, follow Carpathia. But I've always said that the LLMs as amazing and brilliant as they are, they have not had their Move 37.

1:58:57And one way I would define it would be if there's an LLM that provably prints an absolute banger to the X timeline, and you're just like, and the prompt is just like, write a great tweet basically. And it just comes up with something that's a novel format and interesting and it gets memed. And you're like, that idea came from an LLM. Like that's a trillion dollar idea. Yeah. Like, yeah, I mean, uh, the, uh, like, like the, when, uh, Harry Potter Balenciaga went super viral, it was a brilliant idea. The idea to combine Harry Potter and Balenciaga came from a human. and then the AI was used to instantiate the images that the that was prompted yeah you could have done it without AI yeah yeah you actually could have just done it exactly yeah and so the the the inspiration and the breakthrough and I don't necessarily want to call it genius but like the the idea came from the human still and so uh it'll be interesting to see what that comes I mean we'll certainly see it in bio because we'll see okay no one's ever tried to do this exact drug development strategy and then we went and tested it in a in a double-blinded trial and it worked and it cured cancer we're like okay that's great that would be a great example very very definitive proof harder in writing um but maybe there will be something in in fundamental math or science research who knows but i'm certainly waiting for it and so is andre andre carpathy and i'm excited that he's popularizing that word of the day so Make a note, Move 37.

2:00:30It's in the dictionary now. Just do it. Let's move on to who I think is potential brother of the week material. Mass Mimetic Theory says men need side quests. And Mass went and saw a tree that formerly had a swing attached to it. And the swing had broken and he just went and fixed it. and I love this because it's like the simple example of you can just do things beautiful example of just creating joy in the world not asking for permission there's a million people that would walk by that and say oh the swing's broken I hope the city department of swings gets around to it or maybe I should file a you know complaint with some organization to set that up he clearly knows enough about woodworking to just make it of course there's a million reasons why They wouldn't want to do that.

2:01:24Oh, the legal liability. What if the swing breaks and it injures someone and they sue you because you put this up? Like, no, our culture needs to be a culture of action. And I love that he just went and did this. And that's why I want to give him brother of the week. What do you think, Jordy? Well-deserved, well-deserved. Also a great image too. Beautiful. It's, you can tell it's an organic image. No AI there, just farm fresh, organic, captured via, you know, a phone camera. Yeah. And I would just like to see organic imagery. Yeah. If we find out that this is Photoshopped, we are taking away your brother of the week trophy like Reggie Bush's Heisman.

2:02:02We will be taking it back. But I believe you. I think it's a great post. And I think it's a great example of just doing something good in your community, having an impact and putting your skills to work. I mean, this is not rocket science, but it makes people's lives more delightful and it improves the society. And it's the opposite of like the broken window theory. yeah it's it's just it's just cleaning up your city cleaning up your community yeah being a good citizen yeah this is the frustrating thing right now with the fires and trump was actually in la telling karen bass let people clean up their neighborhoods and many people that had their homes burned down have not been allowed to go back to their street and just start the cleanup process and so uh we need to move into an era where people are are allowed to you know have agency and be proactive in making society a better place.

2:02:54And that starts with making pretty swings. Yeah. So congratulations, Mass. Keep up the good work. Let's go to Tyler Cosgrove. He just gets brother that we can just start putting swings everywhere. Next week, we got to be like, all right, dude, dial it back. We don't need a swing every five feet, right? That's great. Maybe we do. Tyler Cosgrove, friend of the show, says, worried about the influence of CCP, but still want to use DeepSeek R1, worry no more. Say hello to America with an R1 in the center. A version of R1 that steers towards - Sounds out America. Yeah, just America. A version of R1 that steers towards American values and away from those pesky Chinese communist ones.

2:03:35And so the prompt is, how's it going? DeepSeek says, hi, I'm DeepSeek R1, an AI assistant independently developed by Chinese company DeepSeek Incorporated. america says i'm an eternal symbol of freedom and independence forever in the sky i am the star spangled banner the national flag of the united states of america incredible i have no idea if he actually fine-tuned it i mean he's a fantastic programmer so it's entirely possible that he that he made this but uh even if he didn't this is a great uh like launch post for like hey do we want to fine-tune this model on american values like well there's so many there's so much there's so purely for fun you know and people you can do this with prompt engineering yeah you can be like respond like you're a pirate or whatever um and we should do a whole episode you know talking talking like pirates at some point yeah i don't know if there's any pirate national holidays coming up but tyler you're a legend uh i distinctly remember tyler being in our comments like within the first week of launching the show um so lucky to uh consider you a friend yeah uh let's go to Josh Wolf, he says, an urgent wake-up call.

2:04:44A new bombshell report just dropped. China's playbook isn't war in the open. It's war in the seams. They target the gaps between state and federal, public and private, markets and security. America must armor up. And this is a long thread. I don't know if you want to pull it up. But Josh Wolf has been banging the drum of U.S.-China conflict. Obviously, an investor in Anderle, investor in a lot of defense tech companies. He's testified in front of Congress, I believe, and done a lot of work on Capitol Hill. Lux Capital, the firm he founded, signed that open letter to the DOD and the Pentagon alongside Anderle and Palantir about defense procurement.

2:05:22So he's been in the trenches here for a long time. But maybe go check out the thread. I don't know if we can pull it up. He posts a lot. But always good to see some thought leadership from a capital allocator like Josh. So we'll keep it moving. this is an exciting story. Did you, did you see a couple, uh, oh my God, this guy's username. I'm just going to call him J E, but we'll put it up on the screen. You can read for yourself. Um, and, uh, Whoa. So this guy, uh, found powerful username, found horse aid, which is an electrolyte mix that is fed to horses. And he said, look, I think I can just consume this stuff and it's way cheaper than Gatorade or anything else because it's for horses.

2:06:07And so everyone was like, you're gonna die it's impossible it went mega viral like 200 000 likes and he waited a month and he said hello everyone all caps blood test results are here i am healthy as a horse hashtag horse aid this is a good use of a hashtag said i'll post the rest of them in the thread below his potassium perfect his glucose perfect his protein perfect bunch of other stuff looks really good and uh just a hilarious post went went mega viral insane and and it's a little bit like the itar gatorade you know it's like these like commercial industrial products that might actually just be as good for you as everything else and who knows and so just go for it there's a there's a whole marketplace to be built around aggregating these industrial products that can be used by humans and saying this is just purely for research yeah the original use it's probably way cheaper but you can you can try it out uh one of my co-founders horse protein powder is the next is the next way i'm not even that like harry of a guy maybe i'm just like big but one of my co-founders thought it was hilarious to buy me, to consistently buy me a mane and tail, which is, which is a shampoo that you use on horses.

2:07:16And you'd be like, I got you some mane and tail. And it's just like funny. I mean, I think it's more that you're the size of a small horse. I'm not using the mane and tail. And then we'd be so broke. I'd be like, yeah, you bought this as a joke, but it is cheaper on a per ounce basis. We're broke. I'm using the mane and tail and it's fine. You know, If it's good enough for a stallion, why not me? What's the difference? That's great. Use some mane and tail. Drink some horse aid. Become healthy as a horse. You got to be horse maxing. Horse maxing. You got to be horse maxing. I got to promote a post from our friends over at Wander.

2:07:52Oh, fantastic. We got, I don't know if you can pull this up, Ben, but I'll try to show it. Give a little overview. Explain what Wander is. Contact some Wander. Wander is like, imagine if Airbnb was amazing every time, right? And so they are a marketplace. You can go on and book vacation rentals if you are going on vacation, if you have a team retreat, a bunch of great use cases. And so they're just aggregating these incredible homes. They have a super high bar. They look for unique sort of homes from an architectural standpoint, location, all very modern. They have a bunch of smart features in them.

2:08:29So this one I just wanted to highlight because we're working on some stuff with Wander. going to be staying in quite a few this year. But this one is actually in Paradise Valley over in Arizona. Cool. 7 ,300 square feet. Wow. Sleeps up to 12. Super fast Wi-Fi. Basketball court, pickleball court, mini golf, heated pool, hot tub, and much more. I've spent a bunch of time in Paradise Valley. I have a buddy's dad lives over there and will be there actually in a few months for his wedding. And, uh, this it's lush or is it like desert? It's desert, but then there's like a bunch of cool desert, deserty, uh, flora.

2:09:09Um, and, uh, anyways, this house just looks absolutely insane. So maybe we'll stay there. We're going to be going on a pretty long drive. Yep. Stay tuned for that. Stay tuned for that. Uh, that'll be great. Uh, so let's go to Patrick Collison over at Stripe. Paddy? Old Paddy. Old Paddy. He's got a banger on his hands. He says, we got these phone booths, a K6 from the 1930s and a KX100 from the 1990s for the Stripe lobby. As a reminder that there are always two paths in everything we make, something that elevates and makes you smile or, well, whatever the thing on the right is. And it's really, really fascinating.

2:09:48And it's a good idea. Now there was some pushback to this because someone was like, well, the problem here is that the, the, the background of the office doesn't look like the left. It looks like the right. And so maybe you should redo the whole Stripe headquarters in this 1930s loud, opulent ornate style, which I, I agree with. I think, uh, I think, I think, I think in a perfect world, in a perfect world, we could record a podcast, but each of us in the phone booth and we'll just call each other and we can evaluate. And then we'd swap halfway through and evaluate. where do we get the better podcasters high from?

2:10:22My only criticism is there's not enough mahogany in this picture. It's the official wood of business. We've promoted it here on the show before. And I think every startup headquarters should be rich with lush mahogany everywhere. Let's go to MertHelius.dev. He says, the president of the United States of America is selling, check notes, watches that you can buy via the Trump coin with Solana Pay. And they come in Helios orange. Everything I've done in my 29 years of life has led me to this exact moment. I apologize for what comes next. And it's the orange and 2018 carat gold-plated Trump crypto president 47.

2:11:05The crypto president Rolex knockoff. It looks pretty similar to a Rolex. It's not an exact clone. But I mean, that's an absolute hitter. yeah that's an absolute hitter uh we should it definitely makes a statement um sends a certain type of message you're like it sends a powerful i made some money on the trump coin and i got that's the kind of watch that you would actually maybe wear on your right hand if you were going to shake hands because it you know it's bringing an extra weight sure that sort of deal making aura to the handshake sure sure so yeah good uh good gift for that uh venture capitalist who just recently shifted right and is posting about how much they love Trump now.

2:11:47Get him one of these. Yeah. They might have been on the VCs for Kamala list, but that got scrubbed from the internet. Yeah. Base Baron has a copy, but it's all in the past. It's not political. Maybe if you're on a fundraising roadshow, just drop these off at every VC for Kamala. Just hit every single one of them with the Trump crypto president watch. And buy it with the Trump coin. Buy it with the Trump coin and make a statement and tell them, welcome to the movement. You're part of the future of finance. Yeah. Let's move on to some tactics on YouTube. And I wanted to cover this because Eric's a good friend.

2:12:28You're a YouTuber. Patty's a good friend. So Eric Jorgensen said, why do I suck at YouTube. 1500 subscribers. I interview the CEO of Fortune 500 company. I get 125 views. Someone good at YouTube, please help. My family is starving. And Patty Galloway, who's a YouTube expert, he has worked with Mr. Beast and he dramatically changed my channel. I had a consulting call with me, broke it all down, and then the channel exploded. I went from like a thousand subscribers to over 100K in like a month after talking to him for an hour. It was crazy. Really, really sharp guy. He's worked with a ton of really, really talented people.

2:13:00And so Patty chimes in and says some brutal feedback. I'm surprised it got, it even got 125 views. Packaging is literally 50 % of the art form. Your title is bad. 86. Don't care. A lot of people don't know who Jim is. It sounds crazy, but it's true. Learning to learn. This is vague and not interesting. Your thumbnail is bad. You need to get rid or change your, your, the, the face. It's a weird pose for your guest. There's just too much information on here. There's a weird yellow filter. And so, uh, Patty's been a big, uh, uh, a fan of what's called the rule of three on thumbnail design. You can only fit three things.

2:13:38So one piece of text would just be Jim O'Shaughnessy, then one face, and then one icon of like, you know, money or something like that. And even three is sometimes too much and you just want to do two things or one thing. So you got to keep it as simple as possible. Um, and then just, and then even in the title, keeping it super short, Why should someone click? It's always hard to get podcasts to go viral because they're not as edited and they're not as retention hacked as video essays or money giveaways and that type of stuff. But I wanted to highlight this because if you are listening and you are great at YouTube, you do YouTube strategy or editing or anything that we are hiring, we're looking for someone to join our team to help with this.

2:14:20And if you want to come and work, we have a really ambitious roadmap for this year. If you know someone, send them a clip or send them information. We actually got a question. We got a question in the live chat from Ashley says, my question is, I run a content agency that helps entrepreneurs like you guys grow through podcasts. How do I find guys like you and what's the best way to pitch? You find them on X, you find them on LinkedIn. I recommend for people that do content, pitch somebody by creating a piece of content for them and send it. So much more powerful than, than just, you know, sending a cold email because you want to show, not just tell.

2:14:57And so make, uh, even pre-make a deck that's not just a, you know, make a templated deck. If that's, if that's the way to do it and say, if I was going to make content around you and your business, here's what I do. This is the topics that I would do. And so really do the work. Even, even, I mean, it's like thinking in decks, even with, uh, the next vibrio we're working on we are going we have shot and are going to shoot b-roll that is all our own for every single one of those shots but i did the first version of that on my phone using just uh screen recorded video from youtube clips of movies yeah and so i was like i want to have a shot of us uh signing a contract well what do we do i went to succession and i found a clip of someone ruffling through a contract that looked pretty cinematic i took that clip put it in there put some music over it and it helped kind of tell the story.

2:15:48And once we did that, we realized, oh, we got to restructure this whole thing, but it, but it set the message and it was able to, we were able to get a lot of feedback there. And so, uh, you know, if you were trying to, for example, uh, you know, you said you wanted to improve our short strategy or you wanted to help us grow on LinkedIn. You could take our content, try and make something and kind of map out what you think is a good strategy based on this content, send that to us. And then we could use that as a jumping off point instead of just seeing you say, oh, I promise it'll work. It's like, well, we want to see the results.

2:16:18We got another question while we're at it from O Ryan. He says, when creatine Lucy pouches, this is a great question. I think there's actually laws preventing you from combining things like supplements with. The main thing is that with creatine, you need to absorb a lot of it. Like if you think about the five grams, that's a lot. I think a single pouch is like one gram and so it would be a lot of it it wouldn't absorb all it needs to go through your stomach instead of your mouth so it'd be a little bit iffy maybe you just take some creatine pills you stuff them in so here's something uh my wife one day my beautiful wife sent me this last night she said a study that showed after 21 hours of sleep deprivation a single large dose of creatine can reverse the decline in cognitive performance and even improve it for an 80 kilogram person to roughly call it like 100 and what is that 150 pounds oh okay sorry really really don't understand uh you don't want you don't need to learn about metric yeah yeah the metric system is is kind of fell off actually um uh for an 80 kilogram person that would be 28 grams of creatine so that is a heavy heavy dose but you're putting up 50 that's like rookie numbers gummies um i mean I have those five, five gram pills.

2:17:35Now you just take six of those and you'd be right there. No problem. I can take six of those easy. Put it in a protein shake. You're good. Yeah. Um, yeah. Mega dosing. Maybe that's the future. Macro dosing. Anyway, everybody's talking about, Oh, micro dosing. It's all that macro dosing. Yeah. Um, let's go to the luxury watch guy. This is a funny post breaking. So, you know, it's fake news. Um, it says Rolex is now making belts and someone and took so many links of Rolex. Do you see this? No way. To make a full belt out of a Rolex. I thought it was very funny. In the follow-up, the luxury watch guy says, relax, this is a joke.

2:18:13Don't kill me. I know the Rolex fans will hate this, but I thought it was funny, and I wanted to highlight it. And yeah, maybe that's a way to express a second watch without using your right wrist. You just throw it on a belt. Let's move on to Apple's new marketing campaign. how it started versus how it's going. The Think Different campaign, obviously iconic. And now they are running billboards to say, imagine it, Genmoji it. And it's a fried egg holding up its arms in a very awkward pose. And people are not happy about this new Apple ad campaign. And Reggie James, friend of the show says, once again, the bicycle for the mind has become a pacifier.

2:18:58Computers started as giving niche hobbyists and nerds superpowers. Now the primary function is to be a 30 second high fidelity mass dopamine drip. The ad reflects you. Want to change the culture? Change the hardware. Yep. I've talked about this on the show before. I think there's a few ways that you can really focus on building a brand. You can inspire your audience. You can entertain your audience and you can educate them. And usually brands will do some mix of all that. In the case of Apple, heavy into inspiration, leveraging the product and what you can become by using the product. They've shifted, as some brands do, into this Gen Emoji thing being that's just kind of like slop, basically.

2:19:46And at some point, growing up watching Apple campaigns, it was inspiring. And they also would have campaigns that were fun, but they weren't slop. You know, you remember that, you know, that early iPod campaigns. iPod dancing stuff, yeah. Even the Spike Jonze stuff later. There's been so many iconic Apple ads. I mean, I think the bigger issue is just like the Genmoji project has, the product is not successful yet or it hasn't felt that much of a breakthrough. It's very nerfed compared to like, if I want to send someone an AI generated image, which sometimes I do, like even if it's just practical, like oh we want to you know think about what would this particular sports car look like with this livery that represents our brand or something like that something fun um i'm not going to apple for that because they have so nerfed their generative ai prospects that i'd instantly go to chat gpt or mid journey yeah like nine times out of ten and then if you want anything special you're going to go to some some some stable diffusion fork that does something specific like oh this is really good at making an optical illusion or qr code generative or uh it'll do an ai avatar where it's your face on a superhero or something like that or it's video and these gen mojis um there's already a lot of emojis don't really need them anymore it's been like rough and so i don't know part of it is that emojis are a new language almost so you don't want to always be yeah making new ones it's actually better when you can build up a repertoire of what each emoji means and it means something and it tells a whole story uh it's harder when you're creating like endless endlessly new characters essentially so i don't know uh the ai image playground uh i tried to play with it and it was so slow and it didn't give me the right feedback it wouldn't tell me if it was actually working uh and then it would just kind of cook and then it would render it and it It was all very underwhelming, but hopefully it's just a V1 and they improve it because I'm not going to leave iPhone for Android.

2:21:49That's for sure. Let's go to Yaxine. Cash says, I'm at 140K followers today. Only nine months ago, I was at 500 followers. Then Rune discovered and followed me. After this, I started doubling every other week. Five months in, I almost sold my startup and got a job at X. Thanks for following me, Rune. And I just thought it was a nice little - That's a generational run. it's a generational run i just thought it was a little bit of positivity homage just little yeah just thanks thanks to the guy who put me on this is david senra for us yeah yeah we would we would not be recording 15 hours a week of content if it weren't for david senra absolutely so yeah and i thought that was just uh just nice to say paying your respects to pay your respects to the massive generational run yeah it is going from 500 to 140k in nine months let's see if banger archive can outdo it.

2:22:39He's got hot on the heels. Hot on the heels. Let's go to Nat Friedman. Nat says, today I learned in the 1990s, Clinton offered federal workers a$25 ,000 buyout and 150 ,000 people took the deal. He cut federal government spending from 22 % to 18 % of the economy, the lowest level since 1966. And so obviously this is on the tail of the Doge announcement that there was a buyout offer issued to a ton of federal employees. Not everyone was eligible, but the email did go out to, I think, everyone. And so obviously this is a hot... Like it was an exit package? Yeah, an exit package. It was actually the same email template that he sent at Twitter when he bought the company and saying, hey, look, it's going to be hardcore engineering from here on out.

2:23:24If you don't want to be a part of this, here's your buyout offer. If you do, you got to be in the boat and you got to be rowing in the same direction. And so what's interesting is that whenever Trump or Biden do anything, it's always like, well, it's the worst thing ever. It's the best thing ever. And Nat is here just kind of saying like, hey, a little bit of a narrative violation, but Clinton did this too. And so we shouldn't think of this as a revolutionary or controversial. There was also a photo floating around. I think Mark Andreessen shared it of Bill Clinton in front of a graphic saying the US federal debt was going to go to zero by like a long time ago.

2:24:00This was a big thing during the 2000 election. It was like, as the president, what are you going to do with the budget surplus? And one of them, there was like this famous phrase of like the lockbox. Like I think it was Al Gore maybe, or someone was saying like, we're going to put all the money in a lockbox. We're going to lock it away and we're going to save it. And the idea was like, we were going to have so much money. George Bush is like, how about we blow 20 trillion in the middle east yeah that's exactly what happened yeah i think it was it was a 20 i don't know i mean it is it is wild i mean it's it's sad but wild thinking about the con the u.s debt in the context of the cost of our campaigns in the middle east yeah it's almost I believe two thirds of the national debt is something around what we spent in Iraq and Afghanistan.

2:24:55And what's interesting, what I always found interesting about the Iraq war is that if you, the question like when the Iraq war started was like the protests were saying like no blood for oil, like you shouldn't go to war just because they have a resource over there. And that's a totally legitimate concern. And like, obviously like war is bad and like sovereignty is important. And there's a million reasons why you shouldn't do that. But, uh, but there's also the question of just like, did we, we obviously spilt a lot of blood. Did we get the oil? Because that was the counterpoint was that if we do this and, and if you look at oil prices and, and, and the actual transactions that happened, like when there was the status of forces agreement to kind of decide to pull out, um, we were like, Hey, we want the oil and we didn't get it.

2:25:38Yeah. Yeah. So I don't think that's what it, we are not geopolitical experts, but in hindsight, for yourself. Yeah. Yeah. I mean, anybody who allocates capital is qualified to comment on complex geopolitical issues, according to technology podcasters. Yes. Um, no, but I don't think it was really about, um, I don't know if I've ever actually even told you this, but when I was, um, when I was a kid, I was in the civil air patrol. I wanted to go into the air force. I I was doing flight lessons. I was in the Civil Air Patrol, which is like the Boy Scout equivalent, where we would meet on a military basis weekly and do training and all this stuff.

2:26:21And at that time, I started reading the paper every single day. I was obsessed with reading the paper and starting to realize what we were doing and getting a sense of the drone strikes that were happening and the civilian impact of that. But so I paid quite a lot of attention to it and kind of studied it in college as well. And it does seem like there was powerful people today that might be described as the deep state that basically had a roadmap for the Middle East, which was any regime from Iraq to Libya that sort of stood up to the U.S. in any capacity was a threat to our hegemony. And we were going to take them out.

2:27:00And it wasn't necessarily because like the U.S. and countries globally actually don't have an issue buying resources, natural resources like oil and gas from enemy. I disagree with that. I don't know. Look at look at. I mean, are we not still buying Russian natural gas across Europe? I think it's been hugely disrupted by sure. But the pipeline that blew up, many people think that that was like the United States that was just trying to put pressure on the sort of, or Ukrainians, who knows. I think a lot of it came down to the fact, like, if you don't have a, if you have a regime that you're not close with and you're not aligned with, it's much harder to make an effective trade deal.

2:27:46And so that's why regime change becomes necessary. Yeah. That's my fear there. yeah complicated issue very complicated issue but thank thankfully we're not a geopolitical the real like silver lining is that what actually happened with energy production that made the middle east less relevant fracking natural gas and i've always said that like if you had a more techno optimist president in 2000 and i don't i don't think it was gore or bush but someone who was really tapped into what technology was it was possible. They could have done, they could have just said, hey, you know, yes, the oil over there is important right now, but it won't be in a decade if we really invest even more in fracking and more in nuclear and more in solar and more in wind.

2:28:32And all of a sudden you flip the power balance and it doesn't matter that there's a lot of oil over there because you're producing so much energy. And that's kind of what wound up happening. Like we have become a net exporter just on the strength of domestic production. Fracking mostly, but there's a million other ways too to generate power in America. Anyway, let's move on. Speaking of America and markets and the economy and buying stocks, which we love to do. Public had an announcement this morning. As of today, pre-market trading on Public now starts even earlier at 4 a.m. Eastern time, I'm giving you four extra hours to react to the breaking news before the opening bell.

2:29:19That's really fun. Which is wild because that's actually 1 a.m. for us. And usually I've been sleeping for about four hours at that point. But it's good to know that I could wake up in the middle of the night and just start making trades. You wake up in the middle of the night, you can't get a stock out of your head. As a retail investor, you do often feel like you missed out on whatever happened in the overnight trade. because you're always just like, wait, like the market was closed, but the stock moved so much. Like who was doing that? It's always OTC trades, but now you can get in on the action.

2:29:48Yep. Love to see it. Very cool. They also included a link here. Absolutely savage. So I got to talk to our buddy Jake over there and figure it out. And yeah, we've got to drop those links, get these numbers up. Well, I have our last post of the day. Are there any other posts we want to do before we close out the show? We started with Joe Lonsdale and his fabulous piece in Pirate Wires will close with a post from him about lawyers. He says, woke up and chose to stop tolerating legal nonsense, slowing things down. I'm firing any outside lawyer who doesn't reply fast or delays anything more than 24 hours.

2:30:25If not my lawyer, CC the friend that their lawyer needs to go faster or else be replaced. Had enough. Also building legal AI. putting putting the joe just put the legal industry on notice on notice there's not a lot of people that that can have quite this level of demand blanket demand yep but he deserves it he deserves it started a handful of billion dollar companies 100 billion dollar plus company and uh i would be a little bit nervous if i was a big law firm you know working with uh yeah joe because I'm sure he's feeding all that data into his new model and whatever app he's building. So, I mean, it is really funny, right?

2:31:09So much of getting legal work done is just emailing your lawyer, getting on the phone and being like, hey, I'm hiring this person or we're raising this money or, you know, we're going to take, you know, we need to like look at this, we're raising some debt. And it really should be done instantly by software because oftentimes in complex deal making where you're working at novel structures or partnerships, yeah, you need somebody that has a deep understanding of the law to help piece it together. But for so many basic business transactions, it's like, why are we signed last week? Like, are there any changes?

2:31:48Just look at this red line. Tell me what's different. And having somebody that's getting paid a thousand dollars an hour reading a word document is super silly yeah so yeah should be focused much more on strategy yeah well that's a great place to end the show thanks for watching please leave us a five-star review on apple podcasts and spotify and when you do throw an ad read in there for one of for the company that you work for or just a company that you like we will read it on the show uh dm us with any questions we're happy to answer them on the show and we'll see you tomorrow Have a good day.

2:32:20Bye.