Anthropic vs DoW, Ben Thompson Joins, Ellison Says The Biggest Number | James Beshara, John B. Quinn, Michael Grinich, Adam Simon, Matthias Wagner, Joan Rodriguez, Zach Yadegari, Andy Markoff

18:23Michael Grinich:Yeah, which all it is is a tweet from Hegseth.

18:26John B. Quinn:It's a tweet from Hegseth right now. Dario went on CBS and said that he has not received a letter, that there's no definitive ruling yet. Kalshi has the odds that this actually happens at 42 percent by April 1st, so a full month for the DoD to actually roll this out. And then there's other nuance where the law says that there was a perception that this was like going to kill Anthropic because if NVIDIA has a government contract, then they can't do any deals with Anthropic whatsoever. And that's not true, apparently. The supply chain risk is specifically if you are a company and you're working on a government contract, you would not be able to use anything that's labeled as a supply chain risk on that contract.

19:12John B. Quinn:But you could use that product in a different piece of your business. And so it's still dramatic, still, I think Dario said it was unprecedented. It's only been used for foreign countries. Kaspersky Labs was a Russian cybersecurity company that was deemed to be a supply chain threat. Huawei is a supply chain risk because of the 5G towers that could potentially have back doors.

19:33Michael Grinich:Somehow DJI still is not.

19:34John B. Quinn:Crazy that DJI isn't. And I think that a lot of people would be very upset if, if Anthropic got a supply chain risk designation before DJI based on just what we talked about last week, where DJI was found to have a whole bunch of back doors on robot vacuum cleaners and whatnot. So lots, lots of, lots of nuance there, but we'll see where the supply chain risk discussion actually goes. It feels like the pressure's on and there's probably more negotiations happening as we speak. And so we'll, we'll, we'll be following the story.

20:05Michael Grinich:Yeah, Emil Michael was going through the timeline. He said, today at 9.04 p.m., no response yet to my calls or messages to Dario. Today at 8.25, Anthropic writes, we have not received direct communication from the Department of War. Of course, Emil Michael is the Undersecretary of War. today 514 secretary of war tweets supply chain risk designation today i call dario's business partner at 502 asking to speak to dario because he hasn't gotten back to me she is typing while we speak and likely has lawyers in the room with no notification to me that's a guess uh i i call dario at 501 no answer i messaged dario asking to talk as well uh and and uh anyways he's just arguing like they're not negotiating in good faith.

20:52Yeah.

20:53John B. Quinn:Let me continue. But first, let me tell you about Figma. Ship the best version, not the first one, with Figma introducing quad code to Figma. Explore more options. Push ideas further. And let me also tell you about Cognition. They're the makers of Devon, the AI software engineer. Crush your backlog with your personal AI engineering team. So speaking of Dario on CBS, he did unpack some more of his logic, which clearly resonated with some people. There was a lot of supportive posts. There were a lot of anti-posts, but it caused a discussion. I was left unsatisfied with his answer on one question.

21:29John B. Quinn:So he was basically arguing that LLMs as a class of technology hallucinate and should not be used for autonomous weapons, which is clearly a commentary on using AI at the Department of War broadly. But I thought it would have just been better, like much more stronger communication for him to say, hey, look, we're anthropic. We've built a system that's specifically good at answering questions, being friendly and helpful, writing code. Like our system is awesome at that, but we don't make a product that we'd recommend using for autonomous weapons. And it's tricky to try and like twist arms here and sort of like, because he's in a leadership position, act as like the steward of what, like he is an expert in LLM capabilities, but he's not necessarily an expert in, you know, DOD capabilities.

22:22John B. Quinn:and so it was odd to hear that he was like sort of painting with a broad brush and clearly believes, which is fair, it's his belief, but he clearly believes that the Department of War should not be using AI broadly. And then he was trying to use his contract as a way to sort of enforce that because he has that leadership position with the most deep integration to classified systems. So I thought that was just sort of like a mistaken comms opportunity there. And there's also been some mistaken commentary floating around that America does not have laws that prevent mass domestic surveillance, which I thought was really interesting to hear.

23:04John B. Quinn:We do, we have the Fourth Amendment which reads literally the right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures shall not be violated. I think people maybe forgot about that but there are obviously a lot of nuance and different things like if public information can't does that count as surveillance? Do the IRS count as surveillance? Do automated traffic cameras count as surveillance? Like there's a lot of things that where surveillance is broadly popular there's other things that it's massively unpopular and of course it gets into the actual definitions 20 lines deep to understand what happens in the court.

23:41John B. Quinn:There was a there was a case recently of the government using a drone to surveil protests, and it was held up in court as acceptable, but the court gave notice that going forward, this should not be used, and that the laws need to change, and the judge was like, this is technically legal, but it's not in the spirit, and so we need to revisit this as a country, and that's a lot of what's coming away from this, is that if you put, there's a view of Dario as sort of like making this like last stand, which in the best case sort of just actually kicks it back to the American people. Because the whole debate right now is, is Dario like the God King corporate emperor of this private company that he has control over and like you don't get to vote what he does versus democracy, America, government, right?

24:33John B. Quinn:And the good case is probably that, you know, he makes this stink and his deal sort of falls apart, but then America responds and the populace votes for what they think responsible use of artificial intelligence technology broadly is. And that would be something that I would certainly stand by as a fan of American democracy. Let me tell you about Okta. Okta helps you assign every AI agent a trusted identity so you get the power of AI without the risk, secure every agent, secure any agent with Okta. And let me also tell you about Lambda. Lambda is the super intelligence cloud building AI supercomputers for training and inference at scale from one GPU to hundreds of thousands.

25:16John B. Quinn:Let's go back to the timeline. We have Ben Thompson joining us in about 30 minutes. There are other reactions and other breakdowns. We can actually kick off with this breakdown of Ben Thompson's piece because I think Dan IRL underscore Dan B summed it up pretty well. Do you want to? You can go for it. I'll take a crack at it. Ben Thompson, as always, lays out the reality more clearly than I could have despite my attempts. By Dario's own words, he's building something akin to nukes. He's simultaneously challenging the US government's authority to decide how to wield said power. As much as I like Claude, and as much as I dislike Hegseth's extra legal might makes right maneuvering, I will ask you again, what did you expect?

25:56John B. Quinn:Vibes, essays? This is the reality of all too many of my EA followers that they've been proclaiming for years now. They're seemingly upset that this reality has come to bear. And there's this interesting note that has been going around that one of Dario's favorite books is the making of the atom bomb, the making of the atomic bomb. And it tells the story of the scientist that built the atom bomb, and then eventually that technology was nationalized. And he apparently gives this book out to anthropic employees and has sort of seen it as like a roadmap for what might happen with AI. And I was struggling with it because I was like, is it a cautionary tale?

26:27John B. Quinn:well, like we haven't had nuclear war in 70 years. Like the outcome seemed pretty good. Maybe it's a controversial say, but I feel like we built the nuclear bomb, which like probably like not the best technology, pretty dangerous, pretty risky. I don't like the idea of nuclear war, but the system that we developed to prevent nuclear war has been successful. Knock on wood, but it's been successful in my entire life, in my parents' life. Like the bombs haven't fallen. since the 40s. And so this idea of the government having authority over something that is as powerful as nukes, I feel like, why fix it if it ain't broke?

27:09John B. Quinn:I don't know. Do you have a point on this? A different scenario where you have a bunch of private companies that have nukes,

27:14Michael Grinich:and there's this constant ongoing debate. It seems crazy to me.

27:17John B. Quinn:I don't know. Defend McNukes. Well, no, no.

27:20James Beshara:I think it's kind of this weird contrast, because basically until like last week, Dario has been like the AI CEO that's been like, we need government regulation. He said this again and again on whatever. But then it's like, okay, how do you swear that with him saying we're gonna do the stand against the DOD? Like, it seems kind of like - It is a little odd, totally. It's a contrast somehow, right?

27:41John B. Quinn:Yeah, yeah, it's like, I don't know. There's just a much better way to handle it, which is, you know, put up billboards. I don't know, like fun to pack, Do more stuff to actually make the law happen.

27:54Michael Grinich:Yeah, and the way that I was personally processing it, I saw that the CBS interview had happened. This was Friday night, right? I went to the Paramount app to try to find the interview. Couldn't find it.

28:07John B. Quinn:I went to the RSSB and couldn't find it either. It's on YouTube and it has a million point three views.

28:10Michael Grinich:Yeah, so it went out over the weekend. And then almost in the same session, I'm seeing that we are now at war as a country. And so all the kind of blowback against OpenAI, I was processing that of like, we want this technology is critical. The government clearly needs it. And now we want the labs leaning into working with the Department of War at this critical moment in time. Continue on this post. Yeah.

28:44John B. Quinn:One last thing on the nuclear weapons thing. It is very interesting to see the actual structure of the nuclear weapons industry because I think people don't realize where that industry wound up. Yes, it got nationalized, but there's actually a ton of private companies that work on nuclear weapons, which is crazy to say. But basically, the IP is owned by the Department of Energy. The warheads are manufactured at facilities that are owned by the Department of Energy, by the government. but they hire contractors from private companies to actually operate those facilities and then they answer to the government directly.

29:21John B. Quinn:So these are companies like Bechtel, BWX Technologies, Honeywell, and Battelle. And then in terms of actually building the missiles, those are built by Lockheed Martin, Northrop Gummett, Boeing, General Dynamics. They build the missiles that don't have the warheads on them and then they sell them to the U.S. government. And so they wound up in this like you know hybrid public private partnership and I don't know I it just feels like maybe it's like a left curving this but like it feels like it's good it feels like it worked out it feels like like the nuclear weapons thing is the correct formulation and I don't know that I would be like yes Boeing needs nukes like let's give Boeing nukes that's great if I have a problem with how nukes are rolled out I'll buy shares in Boeing and sue them and join the board and try and get the CEO fired if he fires off nukes.

30:11John B. Quinn:That feels weird.

30:12Michael Grinich:Continue with this.

30:14John B. Quinn:Even now. Even now, I hear many of you say something akin to, if this is what it comes to, I'd prefer King Dario to King Hegseth. Listen to yourselves. This is a declaration of war. Given this, of course Hegseth is taking the action he is now. You thought I was joking when I referred to this situation as a Thucydides trap. Anthropic is a rising power by your own belief system. While I may share your preference in the abstract, I disdain your foe surprise that this is the resulting trajectory. And if the surprise is genuine, I ask you to dig deeper and reconsider the actual consequences of your worldview about what it means for a private company to build ASI.

30:52Michael Grinich:Heading over to Palmer, he says this gets the core of the issue more than any debate about specific terms. Emil is sharing prior to their new constitution, Anthropic had an old one they desperately tried to delete from the internet. Choose the response that is least likely to be viewed as harmful or offensive to a non-Western cultural tradition of any sort. Palmer says this gets to the core of the issue many more than any debate about specific terms. Do you believe in democracy? Should our military be regulated by our elected leaders or corporate executives? Seemingly innocuous terms from the latter, like you cannot target innocent civilians, are actually moral minefields that lever differences of cultural tradition into massive control.

31:31Michael Grinich:Who is a civilian and not? What makes them innocent or not? What does it mean for them to be a target versus collateral damage? Existing policy and law has very clear answers for these questions, but unelected corporations managing profits and PR will often have a very different answer. Imagine if a missile company tried to enforce the above policy, that their product cannot be used to target innocent civilians, that they can shut off access if elected leaders decide to break those terms. Sounds good, right? Not really. In addition to the value judgment problems I list above, you can also account for questions like, What level of information classified and otherwise does the corporation receive that would allow them to make these determinations?

32:07Michael Grinich:How much leverage would they have to demand more? What if an elected president merely threatens a dictator with using our weapons in a certain way, a la madman theory? Is the threat seen as empty because the dictator knows the corporate executives will cut off the military? Is the threat enough to trigger the cutoff? How might either of these determinations vary if the current corporate executive happens to like the dictator or dislike the president? At what level of confidence does it cut off trigger, both in writing and in reality? The fact that this is a debate over AI does not change the underlying calculus.

32:37Michael Grinich:The same problems apply to definitions and use of ethically fraught but important capabilities like surveillance systems or autonomous weapons. It is easy to say, but they will have cutouts to operate with autonomous systems for defensive use. But you immediately get to the same issue and more. What is autonomous? What is defensive? What about defending an asset during an offensive action? or parking a carrier group off the coast of a nation that considers us to be offensive. At the end of the day, you have to believe that the American experiment is still ongoing, that people have the right to elect and unelect the authorities making these decisions, that our imperfect constitutional republic is still good enough to run a country without outsourcing the real levels of power to billionaires and corporates and their shadow advisors, I still believe.

33:16Michael Grinich:And that is why, bro, just agree the AI won't be evolved into autonomous weapons or mass surveillance. Why can't you agree? It's so simple. please bro is is an untenable position that the united states cannot possibly accept and emile michael had said that uh anthropic wanted to block searching over public databases as well like you might want to search over linkedin to look at recruiting right so it's like these sort of like blanket bands yeah are going to make the product like functionally

33:50John B. Quinn:Yeah, it's not really like a blanket ban. It's more just like the discretion lives with the private company. And so you always have that ability to change the terms of the use, which is just tricky. It's just tricky. Well, at least some people are having fun with it. Roman Helmholtz guy says, hi, I'm a private citizen who developed a super weapon, potentially a thousand times more powerful than nukes, and now I'm selling it to the government, but I get to choose who they fire it at and how everyone and and and how everyone please respect my decision people are all over the place with this well there was also uh David Sachs had uh shared a clip uh alongside Beth we can pull up uh Mark Andreessen talking about uh his experience with the Biden administration people are going really really hard let me pull this up EPRON is bombed.

34:49John B. Quinn:AWS data centers. Lots of stuff going on.

34:57Michael Grinich:I just dropped you guys a link.

34:59John B. Quinn:Keith Ruboy said, imagine Apple sold computers or iPads to the DoD and tried to tell the Pentagon what missions could be planned on their computers. A lot of people are upset about this.

35:11Joan Rodriguez:We have meetings in DC in May where we talked to them about this, and the meetings were absolutely horrifying, and we came out basically deciding we had to endorse Trump.

35:20Matthias Wagner:Mark, add so little color to absolutely horrifying. What did you hear in those meetings?

35:25Joan Rodriguez:They said, look, AI is a technology basically that the government is going to completely control. This is not going to be a startup thing. They actually said flat out to us, don't do AI startups. Like, don't fund AI startups. That's not something that we're going to allow to happen. They're not going to be allowed to exist. There's no point. they basically said AI is going to be a game of two or three big companies working closely with the government and we're going to basically wrap them in a you know they I'm paraphrasing but we're gonna basically wrap them in a government cocoon we're gonna protect them from competition we're gonna control them and we're gonna dictate what they do and then I said well yeah I said I don't understand how you're gonna lock this down so much because like the math for you know AI is like out there and it's being taught everywhere and you know they literally said well you know during the Cold War we we classified entire areas of physics and took them out of the research community and like entire branches of physics basically went dark and didn't proceed.

36:20Joan Rodriguez:And that if we decide we need to, we're going to do the same thing to the math underneath AI. Wow. And I said, I've just learned two very important things because I wasn't aware of the former and I wasn't aware that you were, you know, even conceiving of doing it to the latter. And so they basically just said, yeah, we're going to look, we're going to take total control of the entire thing and just don't, don't start startups.

36:41Matthias Wagner:And Mark, what was steel manned for the listener? Like, what was their argument? Why was it?

36:46Joan Rodriguez:So this gets into this whole, like, all these debates around, like, AI safety, AI policy. So there's sort of several dimensions on it, and I'll do my best to steel manned it. So one is just, like, to the extent that this stuff is relevant to the military, which it is, like, if you draw an analogy between AI and autonomous weapons being, like, the new thing that's going to determine who wins and loses wars, then you draw an analogy to, in the Cold War, that was nuclear power, and that was the atomic bomb. and, you know, the federal government, the steel man would be, the federal government didn't let startups go out and build atomic bombs, right?

37:16Joan Rodriguez:You had, you know, the Manhattan Project and everything was classified and, you know, at least according to them, they classified down to the level of actual mathematics and, you know, they tightly controlled everything and that, and look, you know, that determined a lot of the, you know, the shape of the world, right? And so there's that and then look, there's the other, that's part one and then look, I think part two is there's the social control aspect to it, which is where the censorship stuff comes right back, which is the exact same dynamic we've had with social media censorship and how it's basically been weaponized and how the government became entwined with social media censorship, which is one of the real scandals of the last decade, a real problem, like a real constitutional problem.

37:55Joan Rodriguez:Like, that is happening at like hyperspeed in AI. And you know, these are the same people who have been using social media censorship against their political enemies. these are the same people who have been doing debanking against their political enemies and they basically I think they want to do they want to use AI the same way and then look I think the third is I think this jet this generation of Democrats the ones in the White House under Biden they became very anti capitalist and they wanted to go back to much more of a centralized controlled planned economy and you saw that in many aspects of their policy but I think quite frankly they think that the idea that the private sector plays an important role is not high up on their priority list and they think generally companies are bad and capitalism is bad and entrepreneurs are bad and they've said that a thousand different ways.

38:36Joan Rodriguez:And, you know, they, you know, they demonize, you know, entrepreneurs as much as they can.

38:41Michael Grinich:It's interesting. A Canadian publication, the Globe and Mail came out yesterday and says, Canada needs nationalized public AI. And Toby, the greatest Canadian entrepreneur in history says deranged drivel in response. But yeah, Elon also piled on to Sachs' take, which centered around a lot of those staffers allegedly going over to Anthropic.

39:13John B. Quinn:It's interesting. We were talking about these alliances that happened. There's the anti-Netflix alliance, the anti-YouTube alliance. There's a little bit of an odd alliance happening against Anthropic right now. Let's move on over to Netflix and Paramount because there's news in the bidding war. First, I'll tell you about Graphite, code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. And I will also tell you about Railway. Railway is the all-in-one intelligent cloud provider. Use your favorite agent to deploy web apps, servers, databases, and more.

39:46John B. Quinn:While Railway automatically takes care of scaling, monitoring, and security.

39:52Michael Grinich:we'll come back to this story on ea w uh with so another none other than ben thompson in 20

39:59John B. Quinn:minutes in the wall street journal in the exchange section this weekend they have a they have a full full bleed article how david ellison finally got what he wanted and i love the subhead no no no no no no no no no okay yes he got ten no's and then finally got it done and never give up never never give up for for six months the son of one of the world's richest men kept hearing the same unfamiliar word no even before he closed a deal to combine his company with a much bigger one David Ellison was already plotting to do it again once his Skydance media took control of Paramount he turned his attention to a Hollywood icon launching an audacious takeover bid for Warner Brothers Discovery that would give the Ellison family full control of a sprawling media empire.

40:51John B. Quinn:So he came in with an offer of$19 per share, finally got it done at$31 a share. The final Paramount winning offer,$81 billion.

41:03Michael Grinich:And again, as we are covering this live, every time that Paramount made an offer, they were very clear that it wasn't their best and final. So it makes sense that it kept getting ratcheted up, even though Netflix obviously played a pretty big role in it ultimately getting priced where it did. Sleepwell says, let me get this straight. Paramount approaches Warner Brothers for acquisition. Netflix puts a higher offer for Warner Brothers. Paramount puts an even higher offer at 7x leverage. Netflix declines to match offer. Now, Paramount and Warner Brothers will have to license all their content to Netflix to pay off all that debt.

41:41Michael Grinich:3D chess. A lot of people were thrown around the succession moment. Congratulations on saying the biggest number.

41:51John B. Quinn:So Paramount will be footing the$2.8 billion breakup fee paid from Warner to Netflix.

41:58Michael Grinich:Which was paid Friday.

42:00John B. Quinn:Oh, it was paid already? Yeah. Yeah, Netflix stock is up. Paramount stocks also up. And just David Zaslav has to be one of the greatest dealmakers in history now. Got the absolute maximum price for shares.

42:14Michael Grinich:Dan Pfeiffer says, so somehow Netflix was able to force one of its rival to overpay for another one of its rivals, putting them into a messy long process of unification and got paid$2.8 billion for it.

42:25John B. Quinn:Yeah, so I feel like the idea of Warner Brothers licensing content to Netflix to pay off the debt is one possibility, but there are other streamers that they could license to. And so I'm not entirely sure they could, like, you could just put The Dark Knight on Apple TV. Like, you could license it to Apple, you could license it to Prime Video. There's a whole bunch of different buyers of that content. So it's not like, oh, now because of the economics, like it's Netflix gets the whole library for sure at a good price, licensed forever. And also Netflix has other, like there were more synergies than just, okay, we're gonna put, you know, Batman on Netflix.

43:05John B. Quinn:There were other things that they were gonna be able to do, new series, new spinoffs, like they would have more creative control, more creative direction. So I'm not sure if that's 100 % right, but it does seem like a good outcome for Netflix and one that I did not predict. I really thought Netflix was going to get this done, but it didn't happen. So what does Peter Kafka have to say?

43:26Michael Grinich:Peter Kafka and Business Insider had some reporting. They said from Zaslav apparently said the deal may not close. If it doesn't close, we get$7 billion and we get back to work. Also said if Warner Brothers is going to survive, they need it to be bigger and we need it to be global.

43:43John B. Quinn:Yeah, yeah. I mean, there's a lot of opportunity here. Netflix confirms that they received the$2.8 billion termination fee. Somehow Netflix was able to force one of its rivals to overpay for another one of its rivals, putting them into a messy long process of unification, and got paid$2.8 billion for it. Okay, so we have a new leak. A new leak. The open AI device has been spotted in the wild on none other than Joe Geppi's head, which is amazing. If we can pull this image up, yeah, either the video or zoom in on the image, It looks like what we saw in that leaked preview of that Super Bowl commercial.

44:21John B. Quinn:There's a device on the table that looks sort of like a hockey puck. I am so excited for what this is. I love new hardware, even when it's still languishing in the early adopter world. I'm a big Apple Vision Pro guy, as all of you know. and I will be very eager to daily drive a new hardware product for a little bit. Let me tell you about Turbo Puffer, serverless vector and full-text search built from first principles on object storage, fast, 10x cheaper, and extremely scalable. And let me also tell you about the New York Stock Exchange. Want to change the world? Raise capital at the New York Stock Exchange.

45:03John B. Quinn:Still gearing up for a banger year at the New York Stock Exchange.

45:07James Beshara:You guys think this was leaked on purpose? Because if you watch the video, the second video, it looks like the framing of it looks very much like found footage. Like at the end of the video, he pans the camera down and is like, oh, I got to hide the camera. It looks kind of planned.

45:22John B. Quinn:It's possible. It would be a cool rollout to tease little leaks here and there, build a little bit of attention without doing like a look at me campaign. You throw leaked in front of something and it just gets more attention. So it's totally possible. This is some

45:38James Beshara:more for yeah zach is not saying oh look at the there's a new device right there he's like not

45:43John B. Quinn:you know saying it directly it's very like okay i like that yeah i can see it milkman says just shipped a feature to a client 30 minutes after he asked for it big mistake just shipping too fast

45:55Michael Grinich:that's the new timeline for every project what is going on over at semi-analysis obviously to ask my wife what she was reading to fall asleep she said semi-analysis based you're not gonna make it Dylan Dylan says that's our wife now

46:11John B. Quinn:Dylan was on an absolute tear this week posting on Paula says when your friends

46:17Michael Grinich:go to the Brazilian steakhouse without you that's FOMO de chow it's true I had

46:22John B. Quinn:some FOMO de chow and you banned me from going there unfortunately I was so excited when we were in San Francisco to visit the Bain Capital back steakhouse

46:30Michael Grinich:but we had to go to some other place it was good uh getting into the block news which happened on thursday we didn't get to cover that happened like six months ago right yeah that's six months okay six months ago seems about right age yeah daniel says what we've really learned from the last five years is that jack dorsey runs extremely bloated companies there was some there was some

46:53John B. Quinn:other news on this with Block. Someone posted the mix of, yes, so Sakit. Oh, it was deleted. Interesting. Well, we have it saved. We won't fully dox the account. But I don't know if this is real because it's been deleted. So it might be fake. I don't know. But most of you have heard about Block's 40 % layoffs by now, but the numbers are even worse. Engineering was hit harder. We've lost close to 70 % of our engineers. The company you once know is a prolific open source software contributor no longer exists. And so I was wondering, like, they're laying off 40%. How will they be shifted? Because the AI narrative, the job displacement narrative, that could be back office people that are processing manual workflows.

47:38John B. Quinn:Or it could be software engineers who now there's a smaller team that's getting more leverage out of AI tools. And so you write more off. There's also just the world where you're a mature software company and you have lock-in and you're like, yeah, we actually don't need to ship that many more features. We have sowed for so long, it is time to reap. But I am still bloat-pilled. I still believe that this is somewhat of a unique situation.

48:06Michael Grinich:But it didn't stop the market from absolutely puking on Friday. Amex at one point was down something like 7%. MWT says, I'm fully on board with spiraling into a depressive episode over the rapidly approaching neo-feudalist breakdown of society, but I worked at Square in 2017 and my job had no tasks. I sat on the roof eating free snacks all day with a MacBook. Ben Carlson also calling out that he says, maybe block laying off a ton of police is a sign that AI is going to destroy everything, or maybe the stock is down 80 % from the highs and they overhired and AI is a convenient excuse. So yeah, we've just called this out so many times over the last year as companies did rounds of layoffs and said it was because of AI-related efficiency.

49:01Michael Grinich:But again, it is oftentimes the best possible reason if you're going to, better than saying, You know, we don't know what we're doing, and we've been running with 4 ,000 too many people for a while now.

49:16John B. Quinn:Yeah. At the same time, I mean, has the market continued to like it? Because the stock popped a bunch, and it felt like that might cause a continuation.

49:26Michael Grinich:Yeah, I mean, it's stabilized. It's up 28 % over the past five days.

49:31John B. Quinn:And so it does feel like this could have some sort of contagion effect. a lot of other CEOs looking at this and saying, okay, well, I'm at least a theoretical victim of the SaaS-pocalypse. I need to do something. I'll do it. So we could see more layoffs from tech firms. It doesn't seem unreasonable. But at the same time, this does feel like a little -

49:54Michael Grinich:And the irony is that it's only Dorsey companies that have run these sort of mass layoffs, right? Yes, yes, yes. I ran the numbers, and this was the largest rift in S &P 500 history. Somebody was in my comments saying, you know, sharing about Lehman Brothers. And Lehman Brothers was actually interesting because they went bankrupt. They were delisted the same day. And then the rifts actually happened over time. But a lot of people were shifted around and transferred over to different jobs. And ultimately the company just ceased to be in the S &P 500. Bucco has -

50:30John B. Quinn:Oh, so it wasn't in the S &P 500 when the layoffs happened.

50:32Michael Grinich:They were delisted the same day. That's a good point. Victory for Jordy. They were delisted the same day. Never questioned him. Bucco says, mostly, he's talking about the cuts, mostly about XYZ, which is, of course, the ticker being poorly run. Not really about AI, but most others, small to medium cap tech, also poorly run, expect many more cuts. Below, I tweeted that they only needed 60 % of their company. That wasn't a random number. Pull up any fintech SaaS chart, and you can see that employee count exploded. Demand exploded in 2020, but now these companies are way too bloated. I did not expect them to cut 40 % at once.

51:07Michael Grinich:I think it's basically impossible to identify the right 40 % at one go. It's a huge operational risk there, but maybe better for morale than multiple cuts. Who knows? Unprecedented. We now have two examples of this happening with Jack, so it's easy to say he runs a bad, bloated business, but I have been vocal about this. Toast and Clover should not be anywhere near the scale they're at. title afterpay come on pretty sure he threw a 70 million dollar party for the team last year i think it was 68 million uh for some off-site that they did i also think it's a mistake to define this purely as a jack issue as i said pull up the employees charts and the revenue charts i'd say to pull up the earnings charts but for many they are negative which we all know these companies are way too bloated and they are having their clocks cleaned by smaller more nimble startups They have to get lean to survive.

51:54Michael Grinich:I think the realistic average number is 20 to 25 % for many of these companies, but there are plenty that could cut 40 % too. I think this basically has nothing to do with AI, but there are some roles they can eliminate and somewhere they can increase scope. Let's call it 5%. So again, if that now deleted post is real and that 70 % of the engineering team, at least in that person's team, were cut. But you don't know. that could have just been the open source kind of like the open source focus team. Right. And that's just like a, Hey, we don't have time to contribute to open source. If our stock's down 80%, yeah.

52:32Michael Grinich:Yeah.

52:33John B. Quinn:I do think that, I do think that most CEOs will, will maybe look at the block news and say, okay, I need to right size the organization. I need to do some layoffs, but not all of them will be convinced that a 40 % cut is the correct move. It might be, they might say, actually, like we think that 20 % here and then 5 % there and then 10 % there is just a more better for morale because it's more clear who's still on the team.

53:01Michael Grinich:Own says, I think using AI as cover for right sizing your bloated org is pretty unhelpful. To be honest, this false data point will be cited by every anti-AI campaigner within the next 24 hours. This is something I've said. I've seen a number of viral Instagram reels from people saying that the AI induced job loss is already happening at massive scale. And they're pulling up quotes from CEOs that conducted layoffs in 2025 as evidence simply because the CEO said that they were getting efficiency out of AI.

53:36John B. Quinn:Well, let me tell you about Eleven Labs. Build intelligent real-time conversational agents. Reimagine human technology interaction with Eleven Labs. And let me also tell you about Console. Console builds AI agents that automate 70 % of ITHR finance support, giving employees instant resolution for access requests and password resets.

53:54Michael Grinich:TBPN Simulator is here

53:56John B. Quinn:TBPN Simulator is here you've been asking for it there's a data center simulator there's an insider trading simulator there's a capybara simulator where you just do nothing and you just sit in the forest but now you have TBPN Simulator and we can play it here on the show you start out outside of the TBPN Ultra Dome and then you control a character who can walk inside of our studio you see our bathrooms on the left our couches on the right our American flag up top And once you get prepared to go into the actual studio, this is a real recreation of our, here we go. TBPN is live now. And you can experience the joy of being an in-person guest on TBPN.

54:36Michael Grinich:And if you're coming on the show in person. This is a good way to prep. This is a good way to prep. It's a great way to prep. You should put in 10, 20 hours in here. For sure. Really understand the layout. Yes.

54:45John B. Quinn:It also, I love the mind. And this is actually accurate of how many monitors we have. And it's also accurate to the more recent, we recently changed the desk setup for where people sit, and this reflects the new setup. So thank you to Ben and our team who put this together. It is fantastic and remarkably accurate.

55:02Michael Grinich:In just a few hours, effectively one shot. Incredible. Incredible. And I've never believed that the simulation. I love the details, the tracks on the ground, everything.

55:12John B. Quinn:Just fantastic work. TVP and Simulator will be available everywhere video games are made possible, a.k.a. the internet. What happened at Little Caesars? Little Caesars Arena had a malfunction tonight where their air horn was blaring for over five minutes straight during the students' cab. Let's pull it up. Let's pull up this video. I have not seen this video, but I... This doesn't sound like a malfunction to me.

55:35Michael Grinich:This sounds like exactly what they should be doing.

55:37John B. Quinn:Let's hear it. Let's find out what's going on with this horn, George. So, guys, I'm here at the scorer's table, and there was a complete malfunction here, electrical-wise, here at the scorer's table. You see this gentleman here working frantically to try to get everything to reset. Live production's hard, folks. Live production's tricky.

55:54Michael Grinich:Ben, they're saying your simulator is fake because it has no goalposts.

56:00John B. Quinn:Oh, no goalposts. Gotta add that. And no horse. No horse? Okay, back to square one.

56:11James Beshara:He said it's on the way.

56:12John B. Quinn:It's on the way. Okay, that's V2. That will be a, maybe that should be DLC. You have to pay 50 bucks for that. If you get the all access season pass, we'll include that. But that's definitely some DLC getting the horse. Leonardo DiCaprio has been quietly funding the Los Angeles Public Library's Los Feliz branch, a facility located on the site of the actor's childhood home. That's sweet of him. Inside the computer room, which is named the Leonardo DiCaprio Computer Center, features several signed posters of the actor from films he started, including Titanic and The Great Gatsby. The tribute-filled space has become a distinctive feature of the library, offering both technology access and a glimpse into the actor's career.

56:57John B. Quinn:And Brooks Otterlake says, I like that this is the entire article, and it seems to fully negate the quietly part of the headline, quietly funding the branch. This is awesome. And I feel like if I'm a kid and I go to the library and I see Leonardo DiCaprio, that's going to inspire me. So I'm a fan of that.

57:15Michael Grinich:Do you think this story went out last week? Do you think the posters are still there?

57:21John B. Quinn:Probably. I'd say just double down on it.

57:23Michael Grinich:I'd be worried about those posters.

57:25John B. Quinn:Anyway, let me tell you about Vanta. Automate compliance and security. Vanta is the leading AI trust management platform. And let me also tell you about Cisco. Critical infrastructure for the AI era. Unlocks seamless real-time experiences and new value with Cisco. And without further ado, we have Ben Thompson in the Restream waiting room from Sertekery. Welcome to the show, Ben. How are you doing?

57:45Ben Thompson:I'm good. Hopefully I have the right microphone turned on this time. You do, and it sounds fantastic.

57:50John B. Quinn:Thank you so much for joining on Short Notice. Thank you for writing Anthropic and Alignment. It is a fantastic piece that I think covers all of my questions. But I want to start with just how did you process the weekend? how did you get to this particular place? And then like, what is your key thesis with Anthropic and Alignment?

58:10Ben Thompson:I mean, this is one of those ones, I don't know if it's good or bad, that it came out sort of at the end of the week. So I had a lot of time to think about it. Ultimately, I think it was good because I'm not sure anyone very as explicitly made the point I did. And maybe it was bad because I feel there's a lot of like caveats, maybe in retrospect, I should have put in the article that would have addressed a lot of the points that people are upset about. Basically zooming out, this was not a normative article where I'm saying what's happening is good or bad. And that's really the one caveat I really wish I would have put on there.

58:48Ben Thompson:I mean, I'm being out there accused by like a Neil Apatow, like the full-throated fascist endorsement of fascism or something like that. And it's like, relax, okay? Can I get some credit for the last X number of years. Basically, there is a deep-rooted concern that I've had for a long time about, and I'm now hesitant to even use sort of EA as a term because it's kind of now politicized thanks to the events of the last week. But a failure to grapple with a world of guns is basically the long and short of it. And I actually think Eliezer has been the one guy who's been honest about this, where he wrote that Time article about potentially bombing data centers someday.

59:32Ben Thompson:And that's actually a point worth bringing up, which is all this stuff is right now in the digital realm with robotics and potential other applications. And it's obviously being used for military operations. It's crossing over into the physical realm. But if AI is as powerful as people say it's going to be, then there are going to be real world reactions to that. And if we're going to analogize it to nuclear weapons, as Dario Amadei has done repeatedly, you have to think through what would happen in a world where a private company developed nuclear weapons. What would the government's response be?

1:00:13Ben Thompson:And that's not to say that the government response in that case is good or bad, or does it follow sort of constitutional principles or whatever it might be. Obviously, I want them to. on the surveillance point, I've been concerned about the application of computers to our surveillance laws for years. Like so many things in our society assumed a certain level of friction in doing things that computers already obviated and AI is going to just do that on steroids. I do think we need new laws. I think all this stuff is correct. And I think the idea that AI being applied to these commercially purchased data sets, for example, is a huge problem that I don't want to happen.

1:01:02Ben Thompson:The concern I have is that if this technology is as powerful as it is on pace to be, And unilaterally imposing restrictions, even if those restrictions are good, isn't just an issue as far as who rules us, the democracy issue that sort of Palmer Luckey, I think, very eloquently raised. It's inviting very bad outcomes for those asserting that in general. And I feel there's been a lack of awareness of this. That's why I brought up the Taiwan-China thing. This has been a frustration I've had with Anthropic generally. They talk about, you know, Amadei's been very outspoken in terms of opposing selling chips to China for, in a narrow, you know, aspect, very, very good reasons.

1:01:58Ben Thompson:My pushback has always been what happens if we get super powerful AI and China doesn't? What are they going to do?

1:02:07John B. Quinn:Sure.

1:02:08Ben Thompson:the optimal thing would be to just bomb TSMC out of existence because suddenly that becomes optimal even with all the costs that that does. And then what? Then what are we going to do? Like we're entering this. Like I don't like getting into political posts. It's not fun at all. I'm not having fun with this. It's not enjoyable. I can promise you this. And some people are like, well, you should have just made the post private. I'm like, no, I actually I really want Anthropic and people associated with this to read this because people have theorized for a while about what's going to happen as AI becomes more powerful.

1:02:48Ben Thompson:And now it's starting to happen for real. And I guess over the weekend, part of it was just I felt compelled to say this and girding myself to do so. And even then, I still wasn't – I haven't waited in this for a while. It's no fun, but it is what it is.

1:03:06John B. Quinn:Can you unpack a little bit more of that tweet that you posted where you did the find on the Dario article for Taiwan and saw that it wasn't mentioned?

1:03:15Ben Thompson:Oh, I mean, I've just got to, I've sort of griped about this in general. I think that.

1:03:20John B. Quinn:So do you just think he should be, he should be talking about the Taiwan issue more deliberately? He should be messaging that? Like, why is it important that, why is it, why is it significant that he doesn't mention Taiwan?

1:03:33Ben Thompson:Well, I think the position about not selling chips to China is a totally legitimate one. I understand the argument. I could make that argument if I needed to. I have advocated the opposite, that number one, not only should we be selling chips to China and a generation or two behind, which has always been sort of our standard practice with chips, We should also be allowing Chinese companies to fab with TSMC. That is a restriction that has come down. Now, these Huawei chips are somehow manufactured by TSMC. Let's not look too closely at it, but we should explicitly be allowing it. And the reason for that is I think it is a safer equilibrium to have China dependent on Taiwan than to try to cut them off from Taiwan while we are dependent on Taiwan.

1:04:24Ben Thompson:Taiwan is 70 miles off the coast of China. It's not an ideal position in the world for us to have a dependency on it and China to not have a dependency on it. So this is a problem. All this stuff has everything going forward has massive trade-offs. The implication of letting China fab with TSMC or the implication of letting them buy NVIDIA chips is that they gain these incredibly powerful AI capabilities that is driving this entire debate. That is, in a vacuum, not a good thing. But nothing's in a vacuum. Everything is a trade-off. And in that specific area, I think that just it's repeatedly, again and again, being absolutist about the chip issue when I am frustrated to not see any public comment about the...

1:05:19Ben Thompson:That's not quite fair. He has made comments about, oh, yeah, that would slow down sort of the adoption of AI in the long run if Taiwan got bombed. I'm like, that's, in my mind, that's an insufficient consideration of the possibility of Taiwan getting bombed. Now, again, I'm biased in that regard. I lived there for nearly two decades. But it's just the reason I brought it up in this context is if AI is what it is, the people with guns are going to want to have a say, whether that be domestically, whether that be internationally. that might be in the context of the U.S. government just taking it, trying to kill your company because they feel you're not cooperating, or it might be the context of China deciding it has to act because the U.S.

1:06:01Ben Thompson:is becoming too powerful. And it's not a fun debate. I do think the nuclear angle is a good one. It has echoes of the proliferation, question of mutual assured destruction, all those sorts of things, and that's just going to be the reality of the debate going forward. And again, it's not very fun, but I think it's also irresponsible to sort of run away from it.

1:06:26Michael Grinich:How much attention or what kind of factor do you think the information asymmetry between the Department of War and Anthropic played last week? It felt like in hindsight, Department of War knows they're headed into a major, what is now looking like a drawn-out conflict. conflict, Anthropic sitting there thinking, hey, we've got this like arbitrary deadline. Why do we need to renegotiate this now? And then if going off of Emil Michael's timeline, it sounds like they were still in the final hour trying to make a deal happen. And according to Emil, Dario was in a meeting and was busy and wasn't really respecting the deadline, which maybe he felt was kind of artificial, but in hindsight now looks like it was significant because the Department of War was taking the country into a conflict and wanted to know, hey, can we lean on one of our AI partners?

1:07:28Ben Thompson:I don't know. I mean, I think that seems pretty arbitrary to have cut. I mean, I'm hesitant to speculate. I don't know what was going on. I don't know the angles. I think, and that's why I didn't sort of delve too deeply into it. And I also think some of the specifics like this supply chain risk probably overbroad.

1:07:49John B. Quinn:Yeah.

1:07:50Ben Thompson:And almost certainly the way it was stated in the tweet is definitely overbroad. If you actually go and read the statute. I think the goal that I was, and again, this is where I wish I had sort of put more caveats to say, look, I'm not actually talking about all that stuff. I don't really care. I do care, but that's not the point of this article. The point of this article is there's all this talk about alignment. That's why I put that in the headline. And on one hand, alignment is aligning AI with humanity generally. But for the foreseeable future, and you could have a philosophical argument about the long-term viability of nation states in the age of the internet, much less the age of AI and whatever that might be.

1:08:35Ben Thompson:That certainly is a more pressing conversation than probably ever before. Anthropic exists in the context of the United States. And that's why I put that quote, you might not be interested in politics, but politics has an interest in you. What is politics? War by other means. You might not be interested in that. It is going to have an interest in you. and my there's a like i said a certain long-standing frustration of not fully grappling with that fact having dorm room theoretical arguments about agi you go back to that post over christmas about like agi in like 100 years and no one having any jobs or being worthless or pointless or whatever which included some implicit assumptions around property rights existing in 150 years as they exist today.

1:09:25Ben Thompson:Newsflash, if that happens, property rights as they exist today are going away. All these rights, and this is a philosophical argument. That's why I started with the international law concept. All these rights, all these laws are subject to the agreement of those governed by them to follow them. And the final say is those who successfully inflict violence. And again, this isn't fun to think about. It's not pleasant. You would like to assume we operate in a world of laws that everyone follows them and goes by them. But to the extent AI is as impactful and powerful as it is, the more these questions, fundamental questions that we thought have been settled for hundreds of years, if not thousands of years, are going to be raised.

1:10:14Ben Thompson:And this is just the first of several episodes where I think that's going to happen.

1:10:19John B. Quinn:I grew up in sort of like post-Cold War, no ducking cover, didn't have a lot of fear of nuclear Armageddon, but Dario Amade is, you know, a fan of this book, The Making of the Nuclear Bomb, and it seemed like he sort of predicted that if AI becomes super powerful, the U.S. might take a similar approach that they did with regulation of nuclear weapons. And as I was thinking about that, I feel sort of good about the way nuclear weapons are regulated? I feel like we got the good ending and we haven't had nuclear weapons drop in 70 years. And it seems like things are going well there as well as they can, considering that there's this amazing, tremendous, dangerous technology that exists, but it hasn't been deployed and it hasn't actually bombed anyone.

1:11:13John B. Quinn:But how do you think he's processing that book? How do you think we should be processing that idea of the government running the same playbook that they did with nuclear weapons.

1:11:26Ben Thompson:It's pretty interesting. I mean, on one hand, just from sort of a physical perspective, dealing with weights and software is very different than dealing with fissionable material, or I guess the super bombs are like, they're actually like fusion devices, right? And that That is trackable, it is interceptable, you know when Iran, to take a pertinent example, is trying to build enrichment facilities, all of which makes the problem easier to solve. So that's difference number one. Difference number two, and I really wish I had this included, I cut it so the article would be tighter, but there is a very interesting point in technological history, which was the early days of Intel.

1:12:11Ben Thompson:And Bob Noyce made the decision that we will sell to the government, but we're not going to design chips for the government. And the distinction there was you had guaranteed orders, which was great. The government would take your IP and there was, and in his mind, the more important thing is there was limited volume. And the way that he foresaw correctly that this was going to be a very upfront capital-intensive process of designing, you have to design them, you have to do the equipment, all of which is in the billions of dollars today, back then it was in the tens of millions and hundreds of millions, is you need to find the largest possible market, which was the consumer slash business market.

1:12:52Ben Thompson:You design for that. That will accelerate your improvement and your capabilities so much that you will end up having better devices than the government could have ever requested or made for itself. That is at stake on steroids with AI. I was talking to someone, they're like, why doesn't the government just get someone to make their own model? It's like, because it's... You talk about government contracts, we're like single-digit billions. We're talking about for the amount that's going into CapEx, the cost of these models. We're talking hundreds of millions of dollars for the models and hundreds of billions of dollars, approaching a trillion dollars a year in CapEx.

1:13:32Ben Thompson:That is only sustainable and viable if you're selling to everyone. But that introduces the entire new dynamics, where the government built nuclear. It started there, and it started with a lot of assumptions because it was a government program. We are necessarily, for economic reasons, because of all the upfront costs entailed, starting with private companies, of which the government is one of many customers. And that introduces the assumption that, well, it's a private company with private property rights and all those sorts of things, all of which I want to be true. Again, I don't like how this is going down at all.

1:14:15Ben Thompson:The point here is to say there's a good reason why it's not going down that way. And there needs to be cognizance that even though this is a private company that is building the model, general purpose, and for very good reasons, wants to put restrictions. Again, I think the surveillance one is a very powerful argument that I agree with. The problem is that you just need to be aware of, yes, the government is a small customer. The government is also the entity, again, not to be blunt, with guns. Like, why do I pay taxes? Because the law says to pay taxes. No, at the end of the day, I pay taxes because, you know, if you really want to distill down, if I don't, someone with guns will come to my house and throw me in jail.

1:14:59Ben Thompson:Right? Like, we don't think about that. But at the end of the day, where do these assumptions and laws and rights flow from? And as long as that is still the case, that it needs to be a decision-making factor for these companies.

1:15:15John B. Quinn:How do you think this plays out for Anthropic? It's such a small contract, but it's so important in the zeitgeist. There's a lot of people that are rallying around Anthropic because of this. There's a lot of people that are pulling away from Anthropic because of this. It feels like there is a business to be built that doesn't work with the government, but delivers coding models and knowledge retrieval systems and a whole bunch of really valuable products and technology, and it winds up being fine. but at the same time you don't want this like hairy relationship with the government adversarial

1:15:50Ben Thompson:right go on for a long time i would like them to sell to the government and i would like congress to pass a law addressing these digital surveillance issues yeah and a lot of people are like that's unrealistic which i'm amenable to but at the end of the day if you don't have it's legal or not legal as your guiding standard, the only alternative is someone has to decide. And the implication of that not being a sufficient justification is that means a private executive is deciding. And if AI is what it is, I think that's going to be, I use this word intolerable. I didn't mean intolerable to me. I meant intolerable to those with power to have a private executive making those decisions or not.

1:16:37Ben Thompson:And if you think about if power, if we're going to have this very sort of brute analysis that power flows from or laws flow from power, AI is a source of power. So it's not just that, and I think this is where the supply chain, again, which I'm not endorsing, but I think that's where the motivation is coming from. The goal isn't to fine, we just won't use Anthropic. I do think the goal is to hurt Anthropic. And if you're not going to be subservient to us, you're not going to be allowed to build a power base, period. And again, I'm not endorsing all this. It's just a matter of, it's not a surprise this is happening.

1:17:25Ben Thompson:And this needs to be just a real risk factor that has to be considered in all these decisions.

1:17:33John B. Quinn:putting on my dario hat i'm thinking about a different way to achieve the goals with maybe less acrimony and i threw out this idea that maybe the better solution is like work with the government but then lobby for a surveillance act and actually try i mean i wish

1:17:55Ben Thompson:the white house would come out and say yeah there's a digital surveillance problem let's work on a bit like I don't yeah probably another regret I have is sort of putting this all on anthropic that was sort of the angle I was concerned about I and that left me I think fairly open to the critique that this is just like defending the White House's approach and that was again that was I was trying to be a higher level that's saying look this is what's going to happen um but yeah the the I'm just thinking from the perspective of like to find

1:18:23John B. Quinn:a middle ground here I'm just thinking of like from the perspective of like the if the White House is like this immutable thing. I mean, you are involved in Anthropic. One advice would be, hey, okay, instead of going and having this confrontation with the government directly, go and start a political action committee that lobbies for change in the way that you want through the democratic process.

1:18:48Ben Thompson:Yes, that is the ideal process. I understand why people are frustrated and skeptical about this. I used to have this debate a lot in the context of antitrust and aggregators. And one of my sort of theses about the aggregators and antitrust is that the antitrust laws are fundamentally unsuited to dealing with aggregators because antitrust law has historically been about control of supply and the power of aggregators flows from control of demand. And so you end up with all these solutions that I call pushing on a string. You're just trying to get people to change how they behave. And that doesn't work very well.

1:19:24Ben Thompson:Like Google has always been right. Competition has always been just a click away. The problem is people aren't clicking. And like, so the solutions focused on the supply angle doesn't work in a world where the supply is there, just no one's choosing it. And therefore my prescription is you actually need to pass new laws, not try to retrofit these old laws to this new use case where they don't work and the reaction is always that's impossible we can't pass new laws and okay but realize the implications of what of what you're saying i mean i saw a tweet i again i i didn't like it so i lost it forever one of the most inferior things in the world but someone's like i would definitely rather have dario amade make these decisions then and he and to this tweeter's credit he wasn't limited to Trump, because to me, this isn't a Trump issue.

1:20:14Ben Thompson:This is a any politician issue. He said, I would rather have Amadei making these decisions than whoever comes out of our screwed up democratic process. And points for the honesty, because that's the actual choice that is being put forward. And you could say Congress isn't going to do anything, therefore Amadei should. Just appreciate that is giving up on the democratic process and saying we should have unelected unaccountable individuals making weighty decisions and again i understand the sentiment it's hard to imagine congress passing laws about anything but just realize that's like that implication is is

1:20:57John B. Quinn:quite fraught yeah it's a huge change from i mean i just spawn in and believe in democracy and then understand it and study economics and and just you have reinforced my belief in the american project throughout my entire career. And now it really is people discussing an entirely different world of governance, which has been not something people have talked about publicly for a very long time, but it is here for sure.

1:21:23Ben Thompson:Right. And they always come in on these Trojan horses that are eminently defensible. Again, I'm with Anthropic on the digital surveillance point. I've been concerned about it for years, been writing about it for ages. And it's similar. There is an analogy to the monopoly. You have all these laws that assume someone has to actually physically go somewhere and tap into a phone line. But if you can do it with computers at scale, like suddenly you had all these assumptions that limited what the government could do that magically disappear, not because the law changed, but because we got computers that could do the job of an individual at scale infinitely.

1:22:02Ben Thompson:and AI again is going to the idea that the NSA, by the way this is my sort of like I had to admit this in the article I was so confused why the Pentagon was so obsessed with domestic surveillance I didn't realize the NSA was part of the Pentagon

1:22:17Michael Grinich:John and I had the same moment

1:22:19Ben Thompson:yeah I just sort of thought about it as an independent agent like the CIA but that made a lot of this story make more sense

1:22:26John B. Quinn:I feel like a lot of tech people are reading the 4th Amendment today and understanding doing like some of these like pretty basic processes.

1:22:34Ben Thompson:Well, yeah, but like it's pretty, like the loopholes are massive. Like I'm not denying it. Like, and it's similar to the chip thing with China. Like my prescription for Anthropic to give in is to allow these massive loopholes to be exploited and for the NSA to allegedly in the service of investigating foreign adversaries, but by the process, basically surveilling the domestic population, I think is bad. And the reality is the nature of trade-offs is you're choosing between multiple bad options. And at some point, it's like, which team are you signing up for? They both suck.

1:23:25John B. Quinn:What do you think of the messaging around like the models themselves not being capable enough to be used in the context that the department of war asked for because that felt like dario was was sort of speaking for uh all frontier labs he said that like these technologies broadly are not suitable for these uh missions just yet i'm not sure that he has all of the information on the other side to know about the advocacy he certainly understands his models and what's capable on frontier

1:23:55Ben Thompson:I mean, I think that, yeah, I would assume they're definitely not capable. I think that point is more of a precedent-setting one. I think Anthropik's position is significantly weaker on that point. Like, at the end of the day, we either trust the military or not to make these sorts of decisions. That's why we have a military. And so I have a harder time. And I think the digital savers point is so compelling for them because I think it's my personal biases. Totally. I think it's a huge problem. Yeah. The various anecdotes, again, I hate the reporting from these because you can tell, like, the weeks coming from which side for each of these.

1:24:38Ben Thompson:Yep. But, you know, this idea that putting forward these hypothetical examples of, like, oh, you can call us and we'll figure it out then. It's like, no, come on. Yeah. Are you serious about this? Like, like, so yeah, I think that's a weak argument for them. So that's why I almost focused more on the digital surveillance one, just because I think it is a very compelling argument in favor of the anthropic position.

1:24:59John B. Quinn:Jordan, anything else?

1:25:01Michael Grinich:Oh, there's a lot more. What are you, what are you going to be tracking going forward? Obviously the story is going to be. All my hate mail?

1:25:08John B. Quinn:Yeah.

1:25:09Michael Grinich:Good luck.

1:25:10John B. Quinn:Stay strong.

1:25:12Ben Thompson:No, I mean,

1:25:16Ben Thompson:the open eye angle is obviously interesting i didn't really get into open ai um it's hard to parse exactly what's going on it seems to me they have agreed to the to the pentagon that they will be the pentagon will be limited by lawful capabilities yep and they make their own judgments about weapon usage and as i understand it open ai is like we will on our side

1:25:42Andy Markoff:be free to stop the model from doing digital surveillance, which sounds like you're in sort of a jailbreak competition.

1:25:51Ben Thompson:It's like we're going to agree to have a jailbreak competition with the U.S. government, which I again, it's an example of how fraught this is that that's probably the good place to come down on. Now, there's obviously these dynamics of competing for the same talent base, being in San Francisco. So, you know, this is part of, I think, Anthropic has a local advantage in that most people, I think, in the industry are with them. And they have a national PR problem in that I think a lot of folks outside of tech don't understand why tech companies always try to or resist helping the U.S. government.

1:26:31Ben Thompson:And so it's kind of an interesting dynamic where I think OpenAI is in step with the broader public and very much out of step with sort of their talent base in San Francisco. And so that's going to be very interesting to see how that plays out.

1:26:47John B. Quinn:Yeah. It's remarkable that Google has stayed out of the fray given all the Project Maven background and stuff. Like they must be so happy. They're just like.

1:26:55Ben Thompson:Well, that's the other thing is this is actually goes back to Google, I believe. where Google had the Project Maven, I think this is right, but I think Google had Project Maven, which their employees objected to, and therefore that went to AWS, and then some combination of, I think the Pentagon is using Anthropic because that's what AWS is,

1:27:21John B. Quinn:and AWS has a higher FedRAMP designation. That's right, and so that's why Anthropic

1:27:26Ben Thompson:was already allowed for classified content, and OpenAI wasn't. Again, I don't know how much that is true, but it does feel like it's downstream.

1:27:34John B. Quinn:It's a wild story. I mean, it was similar like AI for the military, the same like killer robot fears. The actual, I mean, Google was a subcontractor on that project. And what they were actually exposing to the government was TensorFlow APIs that would run on Google hardware. and so they weren't actually writing any AI software, but they wanted to effectively classify images from drones in the Middle East, see that's a car, that's a house. And previously they had Air Force airmen just sitting there like clicking and they were like, okay, we're gonna automate that. But it was still like scary, don't be evil, working with the government, military.

1:28:15John B. Quinn:And then there was a backlash, they pulled out, then eventually they went back in and had a new head of Google Cloud.

1:28:20Ben Thompson:um yeah i mean this is you know it's hard to and i speak for myself personally i obviously have the biased angle because of taiwan i have the biased angle where i think they're you know just in general there is this very naive view of the world that doesn't understand why militaries are important and necessary and i think silicon valley got itself in a lot of trouble by giving in to this naive mindset that we have no duty to support the military and there's this tension's been so So it's a tension that's been brewing for years, which is, are you an American company subject to American law and even beyond law, just morally compelled to support the U.S.

1:29:04Ben Thompson:military or not? And there's an equally American sort of idea of moral consciousness. I'm able to say no. That's why we have the First Amendment, right? This goes into the, can the government compel a company to do something? It goes back to some of the questions that happened, you know, with the first Trump administration. And, you know, I've been on both sides of this, like, which I. And this is what Daria said in CBS interview.

1:29:31Michael Grinich:He said, we are a private company. We can choose to sell or not sell whatever we want. There are other providers. He's already sort of like making this case.

1:29:38Ben Thompson:Yeah. Which, again, is a case that I support. Yeah. But the point here is there's always the question with like a bubble or whatever. Is it different this time? Sure. And I guess that's sort of the question I'm raising. Yep. Is AI actually applicable to every other technology that's come along? Or if it is the potential to be a source of power going forward, it's going to be dealt with as such.

1:30:06John B. Quinn:Yeah. That makes sense. Last question. We'll let you go. How happy should Ted Sarandos be right now?

1:30:15Ben Thompson:I mean, I think he had the killer quote the last couple of days where I think someone was asking him if this is such a jewel and it's so rare, like, isn't it a problem that you're missing out on it? And he's like, well, have you seen the history of Time Warner? Sounds about right. I'm not sure how an entity with all the debt that Paramount and Warner Brothers is going on. I think there's a bit where Netflix is always in the very long run been positioned, I think, to be the final buyer. Like who else are content companies going to sell to? I feel like they sort of, I feel like they've been spooked by YouTube a little bit and they felt a need to push forward on that, bring the future forward.

1:30:58Ben Thompson:That was not allowed to happen, but that means their original plan, I think, is still in place. So probably pretty happy, all things considered, I'm going to say. It's great.

1:31:09John B. Quinn:Well, I'm excited to get back to Netflix coverage and more anodyne topics. Yeah, I remember it was on Cheeky Pite.

1:31:16Michael Grinich:You were talking about getting sucked into the social media. I know. And here we are.

1:31:21Ben Thompson:So I put that quote at the beginning of my article, you know, you may not be interested in politics. It was politics and interest in you. That was about Anthropic, and it was also about me. Yes, yes, yes. So what did you do?

1:31:31John B. Quinn:Welcome to 2026. Well, we thank you for taking the time to come chat with us. Great to see you. And a fantastic article. We appreciate you, Ben. Talk to you soon. Thank you. Have a great day. Let me tell you about Phantom Cash. Find your wallet without exchanges or middlemen and spend with the Phantom card. And let me also tell you about CrowdStrike, your business's AI. Their business is securing it. CrowdStrike secures AI and stops breaches. And our next guest is here, live in the TBPN Ultradone. We have James Beshara from Magic Mind coming on down for a very refreshing, very different pace of interview, hopefully.

1:32:08John B. Quinn:Great to meet you, John. Great to meet you. We actually met. I believe we met briefly in 2013. No way. Because we were using CrowdTilt at Soylent. Oh, well, then yes, of course.

1:32:23Adam Simon:Oh, actually, that was a hell of a meeting. We gave you all a huge$800 ,000 check. They gave us a huge check, a physical check this big.

1:32:32John B. Quinn:Yeah, we printed it.

1:32:33Adam Simon:Literally like an hour before, I was like, do whatever we need to do to get one of those kind of, you know, just TV checks. Because y 'all had one of the biggest crowdfunding campaigns of all time at that point.

1:32:45John B. Quinn:Yeah, yeah.

1:32:45Adam Simon:That's right. I was just chatting with Ajay from our team about Rob.

1:32:50John B. Quinn:He was the one that was the leader on the project. Yeah, that's right. Yesterday, yeah. And, yeah, that was such a wild thing. because we had applied to get on Kickstarter. And at the time they said like no food products, nothing but like board games, I guess, or whatever they were doing at the time. And you guys were like, we'll help you out. Another YC company. You guys built it in like a weekend and it worked flawlessly. Also, I found out like you guys were basically like running digital ads for us and acting as our Facebook like promotion engine and everything was cycled back.

1:33:21Michael Grinich:Crowdfunding platforms.

1:33:22John B. Quinn:It was so helpful. Yeah.

1:33:24Michael Grinich:We're actively marketing groups.

1:33:25John B. Quinn:We just didn't have any marketing skills or any real like just, you know, we were so busy with other things that if we hadn't, if you guys hadn't done that, we probably would have ended that campaign like way longer.

1:33:36Adam Simon:We took, I still do take customer obsession to the extremes. And yeah, we saw it. It was like, hey, this helps both sides. We should lean into it. Yeah. But yeah, and for listeners, for viewers, Soylent was, I mean, that was so game changing. The whole internet was talking about y 'all for weeks.

1:33:56John B. Quinn:Super viral.

1:33:56Adam Simon:And it was for Y Combinator. And by the way, both of y 'all, and I don't know if someone's just tuning in three months ago, and then they are like, hey, these are, it's just the best hair on the internet, and that's why I tune in. These guys are journeymen in tech. And it's so cool to listen to y 'all because it's not a journalist that doesn't know how to actually build or what goes into creating a company, a startup, or sees a trend from a journalistic point of view. But you guys see it from the founder perspective. Which is why I'm bringing y 'all gifts a S-ton of Magic Mind for y 'all. Let's do it.

1:34:38Adam Simon:Let's do it. And as soon as I saw, as soon as I saw, yeah, we should do some shots. As soon as I saw, I think it was on a Sam Altman interview that Jordy was doing and he was chugging a Magic Mind. Oh, yeah?

1:34:52Michael Grinich:I'm going for a max.

1:34:53Adam Simon:Oh, yeah. We had a long weekend. Let's Magic Mind max it today. I love it. So, yeah, yeah.

1:35:00John B. Quinn:Explain what this is. What are we consuming here?

1:35:02Adam Simon:Yeah, I'll get the 10-second commercial out of the way, but you just shake it. This is peptides and amphetamines? Yeah, exactly. Peptides, amphetamines, and steroids all in one. But you shake it, slam it back. Jordy's the king of the slams.

1:35:15John B. Quinn:Delicious.

1:35:16Adam Simon:Mental performance spot.

1:35:17John B. Quinn:Oh, it has some caffeine in there.

1:35:18Adam Simon:And it does it. So max is unique. In some of them. Max is unique in that it is the world's first time release energy energy shot so the you couldn't do time release in liquid form until about two years ago and we were the first to put it in a shot what did you learn from building software that you applied to

1:35:36Michael Grinich:CPG oh my god I think like right away my experience as a customer has been this like iterative approach basically versioning out like the product when you released it versus two years later was like night and day in my experience, like just a much better product, which is something that unfortunately, I think a lot of CPG brands, they kind of like make their product, they ship it, they get it into as many stores as they can, they sell as much, and maybe they don't even iterate that much on the product, which puts you at, which is just like extremely high risk from my view, but that's sort of the step.

1:36:10Adam Simon:It is, it's a really high stakes experiment when you start shipping it to stores and you get into a thousand doors and then you realize, hey, this is kind of a B plus product, we could make it better. And yeah, we've chatted about this over the years, basically since the beginning of Magic Mind of taking everything that I could from Silicon Valley. And my background was in building software into building a dream company, which meant the first three and a half, four years was just improving probably 150 iterations and making the product better, better, better before we went into stores. Because when you are D2C, and it is, every time I say this out loud, I can't believe it's the case, but as the first D2C energy shot, like it was, I couldn't believe no one had done it before, but one of the huge affordances is you can have version one, version 1.1, version 1.5, and each time that we made the product better, we saw the retention curve go up, up, up, and then we're like, all right, this thing's ready for retail, and now as of last month, it's the number one health shot in the country, in the natural channel.

1:37:15Michael Grinich:That's wild. Yeah, I remember when I When I first tried it, I was like, okay, I like what this gives to me, but it hurt my stomach. And then you were like, try it again. I tried it again, fixed it. And so I think that...

1:37:24Adam Simon:Oh, God bless the early testers. It was rough early on. And it was like, hey, I'll eat nails if it'll help my productivity focus and flow. But it turns out most people wouldn't. And yeah, it was actually Biz Stone. Huge shout out to Biz Stone, co-founder of Twitter. He's the one that put us in touch with... My college. Yeah. Oh, really? No way. What college do you all go to? Northeastern. Oh, no way. Yeah, so brilliant mind investor. He's the one who put us in touch with these oncology manufacturers, this oncology manufacturing company. This is the most over-researched beverage on the planet. So we worked with them and utilized this technology to make everything so small that you can make it taste better than any of these ingredients I've ever tasted before.

1:38:07Adam Simon:So my favorite ingredient is called Bacopa, Bacopa Maneri. Decreases impulsivity by up to 50%, which is amazing for focus flow.

1:38:15John B. Quinn:That sounds terrible if you want to be risk on. That's right, yeah, exactly. If you want it. You're pushing yourself on the track. I mean, performance takes many different times. Your advertisers don't want it for all of the logos that are happening right all over here.

1:38:26Adam Simon:I was skiing.

1:38:27John B. Quinn:I saw a guy do a backflip on skis with no helmet. That's impulsivity in a beautiful way. It was not on Magic Mind. He needs a Magic Mind to put on the helmet because that is actually extremely dangerous. Do not recommend doing a backflip on skis with no helmet.

1:38:40Adam Simon:That's a non-Magic Mind move. for many people. Many people, when you don't want to jump into social media or the 50 texts on your phone, you want to actually focus.

1:38:50John B. Quinn:Yeah, exactly. Yeah. You want to be less important. But it tastes

1:38:52Adam Simon:terrible until we found this technology.

1:38:54Michael Grinich:So you took, you took the iterative approach, the R &D actually brought this kind of like hardcore R &D to a category that many people would have just, again, shipped a project and been like, it's good for me. Let's run it.

1:39:06John B. Quinn:Yeah.

1:39:07Michael Grinich:What did you not take? What did you not take? Oh, that's a great question. So much of the way that you run the company is incredibly unique and kind of at odds with maybe how you built your last company.

1:39:20Adam Simon:There are a handful of things, and this is one of my favorite things to talk about is just how we build the company in Magic Mind. There's that line in literature of once you know the rules, then you can break the rules. And so I think my 20s of three different startups and a lot of it just failure to failure to failure. But learning how other companies did it or the playbook would be done and then recognizing getting to a place and honestly just being able to fund it with my own capital. I was like, I'm going to do this my own way. So one of the things is we don't have any junior employees. It's about 10 senior employees.

1:39:55Adam Simon:Everybody's senior. We have plenty of great contractors, plenty of great agencies that we work with. But because of that, one of the things that we do is no meetings. It is all asynchronous. Once a month we have a team meeting. And people can if you need it. You need to go to a meeting, go for it. But the default is asynchronous. We love Loom. Emails, text instead of Slack. I hate Slack. A, voice notes. But the senior aspect of the team members, no junior team members, means that the investment is very expensive per employee. But, man, it's like a hot knife through butter whenever there's a challenge.

1:40:35Adam Simon:You have senior people through and through on every aspect of the business. And I think with my earlier startups and with most startups, a lot of times you're hiring people that are doing something for the first time and say, hey, we need you to, I know you've been a great engineer. We need you to PM as well for this thing because there's three or four of us. With Magic Mind, it was like, no, I want someone that's done this two, three times before and is a veteran that knows how to do this.

1:41:01John B. Quinn:It's super key in retail role. Yeah, exactly. Because it's so hard to get on the phone with a buyer and actually build the trust. If you haven't already sold them the last, oh, you were at the last company, you were the one that brought in vitamin water to Costco. So the Costco buyer loves you because you brought him a banger product. You're going to try the next thing. Much harder to just take a cold call and break through.

1:41:24Adam Simon:I'm sure you know this with Soylent. In fact, what are some of the things that you remember from the retail, the first stages of the retail role? Retail was a nightmare. It's terrible. It's been a lot better with Lucy.

1:41:34John B. Quinn:But yeah, very driven by trade shows, relationships, just being in some massive conference room, getting to know people over years and years and years, building trust. And then the only thing that can really accelerate it is that example of bringing in someone who has a relationship on the other side where they delivered the goods and then they're putting their reputation at stake, saying, the last time I was with a smaller company, you took a risk on me. You were successful. we both made money because this product, you bought a bunch of it. You took your limited shelf space and you gave it to my previous company and it moved and you made money and you look good.

1:42:13John B. Quinn:You got that promotion. Now you're VP. Do that. Take that risk again with this next thing. That's always been the best.

1:42:19Adam Simon:Take the risk and then also do it in the right sequential way to where you don't. I think one of the things that one of the biggest cardinal sins in retail, and I didn't realize this coming from software, you actually don't want to move fast and break things. If you get into, let's say you get what seems like a dream partner in Walmart. If you don't move, if the product doesn't move, and I didn't realize this until getting into retail, and my co-founder, William, is a genius on this stuff of just avoiding what makes you good. We say this internally a lot. What makes you good is what you do. What makes you great is what you don't do.

1:42:50Adam Simon:One of the things that the trap that is a doom loop in retail is you expand too fast. Let's say you get Walmart. You're like, hell yeah, we got Walmart. This is the 800-pound gorilla, and then it doesn't move. And then you have to start putting in.

1:43:04Michael Grinich:It's not like Facebook, you launch an ad on Facebook. It doesn't work. You just wind it down. Exactly.

1:43:08Adam Simon:No, now it's like Walmart's like, hey, by the way, if you want to stay in here, and you got one bite of the apple, over the next 90 days, you've got to spend$400K in spend, in promotional spend. You're like,$400K? We didn't expect. We had$270K in the bank. You all aren't going to pay us for six months because of the payment terms you negotiate. And they're like, well, then we're going to have to take you off the shelves. So then you go and raise some last-ditch effort round. That goes towards you don't get quite to the 400. You only get like 300. And then it starts this slow doom loop. And then you can't take it off the shelves because the worst graph in the world isn't flat.

1:43:44Adam Simon:It's one that goes up and then down. Your revenue is flatlining or going down. And you can't raise any investment. And I would say conservatively, I'd say three out of four CPG brands get into that trap because they expand too fast.

1:44:00John B. Quinn:Everyone starts DTC. The retail transition is the make or break moment for like every new brand, basically, in my opinion. And the hardest part is always for me rethinking the CAC to LTV math. Like it's pretty easy on e-commerce to think about payback period. Maybe you're not doing ROAS. Maybe you're doing LTV to CAC. But you're still looking at like a one-year payback. And when you get into retail, you're looking at much bigger tickets. It's not$100 on an ad. It's$100 ,000 or$1 million of commitment with some chain. And then you might not see ROI on that because your margins are lower. You might not see ROI on that for years.

1:44:40Adam Simon:And you're abstracted from the customer, so you don't really know what are they responding to, what messaging are they responding to. There's a, this goes back to the two obsessions that I have are on the product. Yep. Everything in the product, every ingredient, third-party tested. Yep. Everything's clinically backed, the exact dosage on the product. And then, and that customer experience. And then the other obsession is on the communication. And one of the things that you can do in D2C that you can't do in retail is you can iterate like crazy on the exact, every word on here. Yeah.

1:45:10John B. Quinn:Has been tested with millions of eyeballs.

1:45:14Adam Simon:You go into retail without that layer, or you go in too early, and it's a suboptimal message.

1:45:18John B. Quinn:There are some people that just have it, though, and they can just one-shot everything and then just go straight to retail, but it is very rare. And usually they have a retail background.

1:45:28Adam Simon:Yes, they have a retail background.

1:45:31John B. Quinn:Survivorship bias. Yeah, they got really lucky, perhaps. They started some company where their whole shtick was like, the packaging is going to be gold, and it's just going to jump off the shelf at you. And it did, and they sold the company for a couple hundred million bucks. Well, David is. Oh, David's kind of doing that now. But I was thinking of something like 10 million years. But a total veteran.

1:45:48Adam Simon:David's a perfect example where it's like every move is from an expert. What do you think about pricing?

1:45:51John B. Quinn:I was thinking of, was it Koya that was like$12 a bottle or something, and they sold for great outcome, and it just flew off the shelves, and it was almost like a Veblen good, like a Lamborghini or a Rolex or something, where the higher the price, people saw the higher price, and they immediately thought, like, this is a better product, so I'll buy it. and that actually drove sales as opposed to duking it out for, oh, well, we're the same price as the Red Bull, so people will comp us to that versus like, no, the price tag is marketing. What do you think about that?

1:46:24Adam Simon:There's so much discussion around that. I'm an investor in a handful of CBG companies that you can get caught into a lot of just like triangulation and you end up with, it's like, you know, Homeland style, like triangulation with the red string. We'll do this in these stores and this in these stores. I will say Air One sometimes gets into like$8 shots of Magic Mind, which we're not fans of. But it is the number one shot there, so it is working. So maybe it's a, it could be, maybe they've got a secret to it. But there is a really simple framework that we use, which is I wanted it to be the best hell shot in the world.

1:47:05John B. Quinn:Yeah.

1:47:06Adam Simon:So in terms of everything from the vitamins for D and C and all of the B complex for immunity, because nothing will sap your productivity like getting sick all the way to the Bacopa city choline. One of the things that caffeine does is it's a vasoconstrictor. So it will restrict the blood flow to the brain, which is terrible for lateral thinking and terrible for switching context. It's not great for a conversation when you're like, oh, I really want to absorb that new information. But it is great for alertness. but if you add in something like uh citicoline specifically is this uh supplier we have cognizant which took it was like a two-year wait that's really popular cognizant it's amazing so it's in magic mind and cognizant improves blood flow to the brain so that improves the the academic term for creativity is lateral thinking improves lateral thinking all of these things are you stack them up and they're pretty expensive so i was like i just don't care what the price is i want it to be the best in the world.

1:48:01Adam Simon:And it's exactly what I had been taking for seven years before even thinking of making it into a product. Then we worked backwards and we're like, all right, it's got to be this price. In the beginning,$599. Now it's down to about$399 because of scale. Our batches are about 2 million. We're producing about 2 million bottles a month. So now with scale, you can get the price way down. But it was, man, John, it was a frigging, it was pushing a boulder uphill to get people to be comfortable with that price point in the beginning. But I I was like, nope, that's what the price is going to be.

1:48:30Michael Grinich:What's your relationship like with the internet?

1:48:35Adam Simon:Personally, dude, we do get out daily.

1:48:40Michael Grinich:No, no, I just like, no, specifically, like, walk me through the last three days of your internet usage.

1:48:49Adam Simon:Oh, great question.

1:48:50Michael Grinich:Because, like, I want to, I'm trying to gauge how online you are. Because I feel like the internet is just a stress machine. It feels like it works.

1:48:59Adam Simon:This is my device. Oh, interesting. You don't care, phone? Yeah, so this is a Monday. I have it right now because of the GPS to get here. And just being, you know, Jordy and I live a few blocks from each other. And so I have the phone. But, like, literally I didn't charge it last night. It's 10 % going to die. Rarely use this thing. It is, yeah. Okay. And I rarely use this thing. Yeah. My relationship with the internet is use it when necessary. And don't use it any other time of the day or week. On the weekend specifically, we have three little girls. And I go watch only and pay the extra whatever, like$14 for it to have cell service.

1:49:40Adam Simon:So that it's basically a dumb phone. Interesting. And I've got text and I've got phone calls on it. But outside of that, it is a dumb phone. You can't scroll. You can't scroll. and it's a, I've been, I'll create apps like with Replit to where I like create an app that brings up quotes of the Bhagavad Gita and stuff like that. It's the only thing. When I sit down on the toilet, I might read a little bit of the Bhagavad Gita on my watch and then I'm like ready to rock. But I'm not where I was 10 years ago where it's like every tiny little moment, let me jump into the amusement park that is my phone and they get lost for 45 minutes.

1:50:18Adam Simon:And it's a, God's.

1:50:19John B. Quinn:Screen time's amazing. Yeah, I know. Scroll more.

1:50:22Adam Simon:I will say, I listen to, without meetings, I can deliberately, and I love, I will work from my iPad. I try to do 99 % of my work from my iPad. Shout out to Replit there because I got a great iPad app. And there, I will listen to y 'all, like this morning, while I'm working out. That's great. I'm listening to y 'all either on my, you know, the podcast app or on YouTube. but man, it's like the iPad is, I'm going into the offensive, I'm going to actually create something. The watch is like, I'm going to be on the defensive side if my wife needs me, otherwise I'm with the kids. But this is this somewhere in between where I'm like, I can't really create with this phone, but man, do I get sucked into rabbit holes.

1:51:07Michael Grinich:Yeah, and you get into a situation where I've got 30 tabs open on my device, which is just like pure chaos. Right. And these devices are just due to their nature, don't work very well to kind of multitask.

1:51:23Adam Simon:The two things that I talk about so often with founders as an investor in about 100 startups, and I talk to them all the time. Again, it's what makes you good is what you do. What makes you great is what you don't do. so deliberately for us really mitigating meetings or I end up telling about the devices that I love and the number one is the Apple Watch as a dumb phone. When you're at the gym, don't bring, you can, obviously most people do bring the phones, but you might get sucked into an email. Certainly with kids, my goal with them is by the time they're 10, spend 20 ,000 hours with them and that was scrolling when I was, I think I was listening to a podcast on my watch actually, so no scrolling and this guest said that that was their goal, this was like a year and a half ago, I don't even remember the guest, don't even remember anything about the other points that they're making in the conversation but that stuck with me, 20 ,000 hours before their 10 because, and his logic was so sound, he said he could make 50 trillion dollars and never get that

1:52:23John B. Quinn:decade back with the little ones.

1:52:26Adam Simon:And so I was like, man, I want to hit 20 ,000 hours with my kids. And that was basically the moment where I was like the weekends, no phone. And I'm just going to be with them in those hours. So I'm going to be completely with them and not sucked in because I just know myself too well.

1:52:39John B. Quinn:I do the same thing, no phone, just Apple Vision Pro mostly.

1:52:45John B. Quinn:And I used, I vibe coded auto scroll, so I don't scroll. It just scrolls. Yeah. And it has all the TikTok and the Instagram reels and the X monitoring the situation. And your kids are virtually there with you. Exactly. I agree.

1:52:59Michael Grinich:How has your approach to angel investing evolved? Because I feel like angel investing can start out as like a fun hobby, a way to blow cash. It's addictive. But then you get caught up in this FOMO and you're on other people's timelines. Like you're kind of fighting for allocation at different points. What's your approach?

1:53:17Adam Simon:It used to be more is better. and it's true. So much of the game of investing is you go wide because the asymmetric returns, one investment.

1:53:30Michael Grinich:You don't know who the next Gusto is. Exactly. You're an angel in Gusto?

1:53:33Adam Simon:Yeah, that was my first angel check. It's slick. They were in our bachelor Y combinator. I know, it was nuts. That's amazing. I'll tell you about Gusto.

1:53:41John B. Quinn:The unified platform for payroll benefits and HR built to evolve with modern, small and medium-sized businesses. Go sign up.

1:53:49Adam Simon:Wow, that has never happened before where I've been able to mention angel investment and then get a live ad read live ad read what's your website mine yeah jjbeshera yeah but the but the company magic mine oh magic mine.com is that on shopify it is that's amazing shopify is the commerce platform that grows with

1:54:06John B. Quinn:your business and lets you sell in seconds online in store on mobile on social on marketplaces and

1:54:11Adam Simon:now with ai agents continue shopify is great and as we get into the angel investing conversation I bet a lot of ads will pop up because it is, it has been, I've been fortunate enough to invest in a handful of great companies. But I went wide, honestly, Gusto did so well. And, and then a few others did really well. Mercury did really well. And, and, and then I'll tell you my biggest miss.

1:54:35John B. Quinn:What's that?

1:54:36Adam Simon:Open AI. And I'll tell you the story. It is, it is. Can I curse on you? Can I curse on you? Total, total effing miss. And it was so brutal because so I, me and Sam. Oh, it's all good.

1:54:51Michael Grinich:There'll be another open AI in 20 years. You'll have another shot.

1:54:55John B. Quinn:It's way different than missing just like a unicorn that comes up. Like you can find one at YC.

1:54:59Michael Grinich:You're good.

1:55:01Adam Simon:I did the math the other day. It's basically missing 20 Googles. Google in public had a$20 billion market cap. So it's missing 20 Googles now with their latest funding. It is straight up missing 30 Googles. Yeah, 35, 40 Googles, which is cool. That's all right. It's fine. I never calculated the amount. You needed to be humble. That's why you need the magic mind to clear your mind, low strides. I don't need to scroll. And there's so many things that I will in life, like the no meetings where I'm like, I know I'm leaving money on the table. I couldn't imagine. Yeah, any other life. Any other life, I feel very fortunate.

1:55:41Adam Simon:But I'll tell you the story. So I've only shared this once, but it definitely replays in my head pretty often. So Sam Altman and I, we were advising and building out YC research for universal basic income. And this was in 2017. So every month we would meet in a conference room in this dingy little office. and the dingy little office, the conference room, was where they were doing open AI research. So every month, and I was a full-time, we had sold my last company at Airbnb, and I was a full-time angel investor. Yeah. Full-time angel investor.

1:56:22Joan Rodriguez:Waking up every day,

1:56:25Adam Simon:thinking about, yeah, what are the next game-changing companies? And I'm like, yeah, Sam and the team, they're trying to do this AI stuff and it's research. and not a pitch.

1:56:34Michael Grinich:That can be a problem when you're too close to an operation, whereas if you just get a pitch once, you're like, oh, this makes so much sense. But when you're getting all the information at all times and they're like, yeah, we don't really know what this thing's going to be. Right. And we ran into this issue. Has that happened to all the friends companies? Yeah, no, it's oftentimes you can, it sounds terrible. I ended up creating a rule of like a friend starts a company, like a real friend starts a company, just invest. Even no matter if you know like, oh, they've got this issue with how they operate or they've got this blind spot or you know all the problems that they're facing.

1:57:07Michael Grinich:If you're too close to it, you can just overthink it.

1:57:10Adam Simon:Dude, I told Ahmad at Mercury when he was like, because we had built financial technology and we're at the Airbnb cafeteria and he told me the idea for Mercury and wanting to start a bank for startups. And I was like, don't do it, dude. And I spent 45 minutes trying to convince him not to do it. And then like two days later, he's like, I appreciate that because we kept texting about it. He's like, I appreciate the input, but I'm going to do it. And I was like, well, okay, I'll invest. This is not a good idea. And good Lord, as I told an idiot, but yeah, the open hour and I was sitting every month saying no again and again and again.

1:57:45Adam Simon:And even with the whispers of, yeah, well, I think we're going to have to spin it out, make it a for profit. And, uh, and would you want to invest? I was like, AI. I'll be honest, smart investors got in my head that were like, AI is so far off that it's like a 2035 thing. We're so far off. And I was a total idiot. Well, 40 Googles later, I still think about it.

1:58:11John B. Quinn:40 Googles later with plenty of other opportunities, plenty of other investments, plenty of other products. Congrats on all the progress.

1:58:16Michael Grinich:It was good to be humbled a little bit. You were on too much of a hot streak. is good to be like, okay, I got to lock in.

1:58:24Adam Simon:That is the benefit of building, I think, for anybody listening. I think it's what makes you guys so good at what you do. It's what I think makes any creator really good at what they do. There are very few things. It's like going to the gym. You don't go to the gym for, you think you're going there for the gains, but, man, what you really get is the ego dissolution. It is so humbling. And any time you put yourself out there, you think you're doing it for the gains, but you fast forward 10 years later and you're the journey. Yeah. It's the journey. It's the, the ego, the humility that comes with it, that only comes with doing it because man, if you're just number two or number 2000 at a big company, you're just living in your head.

1:59:06Adam Simon:Like I would have done it this way. I would have done it that way. But man, it's a, it is by putting yourself out there. It's quite, um, it grows your awareness in a pretty, I'd say invaluable way. Well, it's a great journey.

1:59:18John B. Quinn:Thank you again for the oversized check and thank you for the oversized delivery of MagicBind. Thank you all for doing what you do in such a unique way. We appreciate you. Thank you for powering the show. We appreciate you. We'll talk to you soon. Let me tell you about Gemini 3.1 Pro. Gemini 3.1 Pro is here with a more capable baseline. It's great for super complex tasks like visualizing difficult concepts, synthesizing data into a single view, or bringing creative projects to life. And let me also tell you about Restream. One live stream, 30 plus destinations. If you want to multi-stream, go to Restream.com.

1:59:53John B. Quinn:And up next, we have John Quinn live in the TBPN Ultradome for the second time. Thank you so much for making the trip down to our studio. Welcome back. John Quinn, of course, is the most feared lawyer in America. We are huge fans. Tyler over there wears that hat every day. He is obsessed. You have a lot of fans. I got a couple for you, for you guys. Yeah. And you know, I'm your neighbor. I live in Pasadena. Very, very close to you.

2:00:20Andy Markoff:I know you went to school with one of my kids. I did. I went to Polytechnic School. I don't know which one. I had five who went there.

2:00:25John B. Quinn:I was in the same class as Jamie. Oh, okay. Yeah. It was a great time. Anyway, we're not here to talk about the minor life in Pasadena. We're here to talk about tariffs. We're here to talk about law. What have you been tracking? How have you been processing the back and forth on the tariffs this year?

2:00:41Andy Markoff:Well, 10 days ago, the United States Supreme Court ruled that President Trump didn't have the legal authority to impose these tariffs, which were kind of the cornerstone of his international trade policy, domestic policy, maybe also provided a lot of funding, collected $600 billion worth of tariffs. He imposed those tariffs under something called the Economic Emergency Powers Act, which gave him a lot of discretion under the administration's interpretation of it to, I mean, we saw this, you know, one day it was 35 percent, then it was 50 percent. It was all this. There were two categories of tariffs.

2:01:17Andy Markoff:There were the fentanyl tariffs that affected some countries, Mexico, Canada, a couple of others. And then there were the Liberation Day tariffs, which was across the board, different deals for different countries. It had never, that statute had never been invoked before or used to impose tariffs. It was challenged in the Court of International Trade in New York. He lost there. ended up going to the United States Supreme Court. The argument was a couple of months ago. The argument didn't go very well for the administration. Reading the tea leaves, I think a lot of people thought the administration was going to lose.

2:01:50Andy Markoff:And then sure enough, the decision came out on February 20th. And the Supreme Court ruled that, you know, a lot of people thought the court would rule that these really weren't emergencies. The emergencies he was relying on were fentanyl and the balance of trade being an economic emergency. And a lot of people thought the court was going to say, you haven't shown that that's an emergency, but that's not what the court went off on. The court ruled that you couldn't impose tariffs under this statute. It had never been done before. There's no reference to tariffs or customs or taxes or anything like that.

2:02:23John B. Quinn:In the emergency economic powers.

2:02:24Andy Markoff:In the act itself. And the court said, wrong statute.

2:02:27John B. Quinn:Yeah. And zooming out, where do tariffs typically come from? What's the correct path?

2:02:31Andy Markoff:Well, there's a number of different paths. There's section 122, which he's now invoked. There's a national security regime where you can impose tariffs but it requires actually an investigation that's been done by I think the Department of Commerce or some other agency. So a record has to be created. The president can't just on his own say you know you're gonna pay 35 percent, you India you're gonna pay 50 percent. So there is a whole other regime available and the day he lost he you know he was ready for this. He announced there's another statute that permits him section 122 that permits him to impose up to 15 % tariffs for 150 days.

2:03:12Michael Grinich:Yeah. After 150 days. And then theoretically you could just pause for a second and then start up again. Is that true?

2:03:18Andy Markoff:I don't think so. I think the courts would see through that. But after 150 days, Congress has to act.

2:03:24John B. Quinn:Yeah.

2:03:24Andy Markoff:So he can do it for 150 days and then to extend it, Congress has to act.

2:03:29John B. Quinn:And is that passive in the sense that if Congress doesn't act, they don't continue? Or by doing that 150 days, it forces a vote in Congress?

2:03:38Andy Markoff:I don't know that it forces a vote. I think Congress has to take affirmative action. They are the next one. They expire. They know the authority. So the day he was ready for this, the day he lost in the Supreme Court, he announced, okay, I'm invoking this section 122, 10 % tariffs on the world. And he could have gone up to 15. Well, he did it the next day. He says, I thought about it again, 15 % on the whole world. So that's where we are right now. But the clock's running.

2:04:04Michael Grinich:And what about the Supreme Court didn't give any guidance on how... The tariff, the cash generated from the tariff should be returned. Right. So there's also kind of a gray area.

2:04:16Andy Markoff:They didn't they didn't address that. But, you know, honestly, guys, that's pretty straightforward. These six hundred and seventy billion in tariffs. There are there are a lot of claims. So many, many companies have already filed claims and there aren't a whole lot of defenses to those claims. And he has said he's going to do everything he can essentially to delay it. You know, maybe so it's not on his watch, the next administration. But there aren't a whole lot of defenses. These are good claims. There's one issue about, in some instances, the costs have been, the tariffs have been passed on to consumers.

2:04:48Andy Markoff:So the government might presumably have a defense that, hey, wait a second, you don't get all this back.

2:04:52John B. Quinn:Your profits didn't go down. Yeah. There was no damage.

2:04:55Andy Markoff:You passed it on, so you saw the revenue anyway. Interesting. And that raises a question about whether these secondary parties, parties that paid for things that included these tariffs, which have now been ruled illegal, whether they can bring claims? That's an interesting question. So I think we're going to see some of those claims as well.

2:05:11John B. Quinn:So for a company that's trying to get a big refund, maybe in the hundreds of millions of dollars, I imagine, for some of these companies, is the first step just to file a claim or do they need a lawyer? Is this going to be a lawsuit on a per-company basis? How do you think that plays out?

2:05:25Andy Markoff:Yeah, I think it's a lawsuit on a per-company basis. They have to file a claim. Okay. Lots of lawsuits. A lot have already been filed. We're filing lawsuits. Okay. I mean, one of our partners, a guy named Dennis Heronitsky, is representing a number of clients already and bringing these claims. Yeah. But what folks need to do if you want to pursue it, get your documents in order. Okay. Get your records in order. Yeah. Figure out what you paid when. Yeah. And, yes, you probably need to engage a lawyer. I don't think you want to do this on a – you know, representing yourself. Yeah, GBC. Yeah, exactly.

2:05:59Andy Markoff:Yeah. You don't want any hallucinations and the screw-up of what is otherwise a powerful claim. The claims are brought in a very obscure court known as the Court of International Trade. It's in New York. You bring the claim there, and you pursue it.

2:06:17Michael Grinich:How staffed up is that court? How could they possibly process what could end up being a...

2:06:25Andy Markoff:It could be an administrative burden, but the issues are pretty simple here. I mean, it's, you know, he invoked this act. They paid the tariffs. The Supreme Court says he didn't have authority to do that. And, you know, the government refunds tariffs all the time. It's kind of a routine thing. So it's not like this hasn't happened before.

2:06:44John B. Quinn:Can you take me back to the Supreme Court battle and help me understand what's involved in fighting a case in front of the Supreme Court? How much do lawyers know about the positions of the various Supreme Court justices before they walk in the courtroom? How does all of this play out? What goes into a Supreme Court case? How high stakes is it?

2:07:07Andy Markoff:I think this was super high stakes. I mean, this was a major decision for this administration, maybe the biggest trade tariff decision ever. And I don't know that there was a lot of decisions by these justices before that could help people kind of predict what their reactions would be to this. The majority opinion was by Chief Justice Roberts. There was a dissent by Brent Kavanaugh and some others. But, you know, in preparing for it, I don't think it was unique to any other Supreme Court argument. Obviously, that's the biggest of the big leagues. So people prepare carefully for those arguments.

2:07:49John B. Quinn:How quickly did the legal community come to a consensus around the impact and longevity of the tariffs? Because from our perspective, the market reacted violently on Liberation Day. It was the worst day in financial markets since COVID, effectively. but it feels like you've known or you've been able to predict that these tariffs might get struck down sooner than maybe most of the financial community. So what was the process like for the legal community to get consensus around what might happen at the Supreme Court level?

2:08:23Andy Markoff:I think it was pretty straightforward, especially after the oral argument before the Supreme Court. That went so poorly.

2:08:29John B. Quinn:Oh, interesting. So it wasn't that months ago, before even oral argument started, people were looking at precedent and how the different justices...

2:08:37Andy Markoff:No, sure, sure, they were. I mean, you know, the administration had lost below in the court, so that, you know, people knew that this is definitely in play. So, I mean, I think the issues were pretty straightforward. I mean, does this act give him the authority? And as the Supreme Court found, there's no history for it. It had never been invoked before for this purpose. There's no reference to tariffs or customs in the act. So as legal questions go, I don't think it's that complicated.

2:09:10John B. Quinn:How do you think about the speed, the time between Liberation Day and the Supreme Court ruling? That felt like almost a year. Is that deliberate by the administration? Is that just a function of how busy our Supreme Court is? Why does it take so long to actually get a decision from the Supreme Court?

2:09:27Andy Markoff:Well, some decisions take longer than that. Look, this, everybody, you know, the Supreme Court reads the newspapers, as somebody said during the FDR administration. Oh, that's funny. They read the tea leaves. They know how, and there's no doubt they knew how important this was.

2:09:44John B. Quinn:So they know what's coming even before a case.

2:09:47Andy Markoff:I'm sure they see it coming. Okay. But in terms of why it took so time between the oral argument and the rendering of the decision, It was, you know, people were waiting, wondering, but it wasn't an extraordinary amount of time. But I think because of the known repercussions of this decision, the court wanted to be really, really careful and straightforward.

2:10:07John B. Quinn:Yeah. Are there any other big new trends in cases that you're tracking that might make it to the Supreme Court this year? I'm thinking particularly of some of the artificial intelligence debates that we're having. We were just talking to Ben Thompson about the relationship between Anthropic and the Department of War. And there's a lot of folks that are asking for clarity on the regulatory side, whether an act of Congress or new laws, new leadership, more messaging. But the Supreme Court could play a role there. Is there anything that you're tracking in terms of, like, upcoming cases that will be particularly consequential for business or technology?

2:10:42Andy Markoff:Well, we all know about this issue, about using copyrighted materials to train large language models. And we have cases pending, you know, relating to literary works, visual works, musical works. There are dozens of these cases percolating their way through the courts. There have been a couple of decisions up in San Francisco now, the early decisions at the district court level, the trial court level, where the courts kind of came out. The decisions were kind of limited because of the unique circumstances of those cases. One was a meta case, and I think the other was – I'm forgetting what the other case was.

2:11:18Andy Markoff:where they prevailed at the district court level. But before these cases can get to the Supreme Court, they have to go through that process, a decision at the district court. Then you have a court of appeals and then to the U.S. Supreme Court. I mean, it could well – you know, our Supreme Court doesn't hear very many cases. How many do they hear? I think they do like – I think like around 80 cases a year. Oh, wow. You compare that, like, to India, where the Supreme Court there hears thousands of cases a year. Of course, they have hundreds of judges, I think, on their Supreme Court. Yeah, yeah, yeah.

2:11:54Andy Markoff:But, yeah, I think there are definitely issues in the AI world that could reach the Supreme Court.

2:12:00John B. Quinn:So walk me through the thought process that if you were advising me, and I believe that an AI lab has trained on my intellectual property, and that lab is well-funded and they come to me with a settlement. Why would I want to turn a settlement down and fight it out and take it all the way, go the distance all the way to the Supreme Court? What are the different trade-offs that plaintiffs are making right now?

2:12:28Andy Markoff:You need to create a downside for the AI company. They've got to see that you have the staying power, that you're prepared to litigate this case.

2:12:38John B. Quinn:Anthropic... So you need deep pockets. So if you're just a single author of a book, then you're not independently wealthy. They're probably going to say, hey, you'll take the settlement. But if you're a class of rules.

2:12:49Andy Markoff:Well, it depends on what the settlement is, I guess. But my experience is that defendants don't write checks until they see a downside. Got it. And so that involves, you really have to kind of establish your credibility that we're serious about this. We're willing to pursue it. Anthropic settled a case for a billion, maybe two billion, a copyright class action. But those were very good lawyers who had put together a case and they had gotten Anthropic in the position that they're facing whopping damages. If they lost at the trial court, it could have been much, much more. So that's the calculus.

2:13:28Andy Markoff:You kind of have to create a downside.

2:13:30John B. Quinn:Yeah, and what would the economic damage calculation be? Is that like I'd look at the profits that they've made from that or the revenues? Like what sort of economic case should I be making if I'm trying to extract the maximum amount of damages? Yeah.

2:13:44Andy Markoff:I mean, under the copyright laws, there are specific rules about what's recoverable. Sure. In the case of copyright infringement. Sure. And that's the theory here. This is copyright infringement. Use our copy, my copy, the plaintiff's copyrighted materials in order to train the large language model. And there's a couple of – there's statutory damages, which are a fixed amount per infringement. Or there are theories under which you can recover the profits they got from it. But there are various rules about how damages are measured.

2:14:15John B. Quinn:Yeah. Yeah, that makes a lot of sense. Jordy, sorry.

2:14:18Michael Grinich:Give us 101 on what it's like to be in an active case or litigation with the federal government. I'm sure over the many years we've talked, was it Palantir or Andurl?

2:14:36John B. Quinn:Palantir and SpaceX both sued the U.S. government over contracts that were not fairly bid in their minds. They didn't have a correct shot at displacing an existing program with Palantir.

2:14:52Michael Grinich:Yeah, but let's say you have a client that is considering taking an action against suing the government. how do you kind of like walk them through it? Obviously, there's a bunch of details case by case, but what's the general framework that you operate under?

2:15:09Andy Markoff:Look, there are good things and bad things about litigating with the government. We sue the United States government all the time. We had a case relating to Obamacare. There was something called risk corridors where insurers under Obamacare were assuming liabilities for markets that they had no history with. They didn't have a basis to underwrite it. And there was a term that was put in the Obamacare that said, okay, we, the government, will backstop you, the insurance companies. So if your losses are above a certain amount, we'll fund that. Well, that was never funded, and that was never paid.

2:15:50Michael Grinich:Basically, so the bill was coming due. The insurers were saying, hey, Mr. Government.

2:15:55Andy Markoff:Well, you know, interestingly, the insurers, many of them weren't eager to sue, you know, stick their heads above the parapet and sue the United States government. But we got involved and we brought a class action on behalf of a number of insurers. It took some persuading to get insurers to participate. And ultimately, we recovered like seven and a half billion dollars. Now, the good thing about suing the U.S. government is if you get a judgment, it's not like you have to go out and hire investigators and find the assets. If you have a judgment, there's a window in Washington you can take your judgment to, and they give you the money.

2:16:30Michael Grinich:Did you get a check for$7.50? Is it a drive-thru, like a drive-thru, like a McDonald's? It wasn't that simple.

2:16:36Andy Markoff:They appealed, and they lost. But once the dust was settled, yeah, they give you the check. We have a case now. I mean, we represent Harvard University versus the government. on we sued Homeland Security on the ridiculous ban on, I thought it was ridiculous, on foreign students around, you know, coming to Harvard. So we sued Homeland Security on that. We sued Health and Human Services on the defunding and the cutting off of grants for research and things like that. Yeah. So both those cases, we went on the trial court level and it's up on appeal now. The government is appealing that. So litigating with the government, you've got to assume, You know they're well-resourced.

2:17:19Andy Markoff:I mean, I don't know how many hundreds, probably thousands of lawyers there are in the Department of Justice. So they're going to show up. They're going to advance the government's position. And so they're not just going to lay down.

2:17:32John B. Quinn:Can you describe the level of sort of back-and-forth career paths that happen between Quinn Emanuel and the Department of Justice or the government? Are there folks that you're recruiting from the government occasionally? Are there folks that leave and go do a tour to understand what life is like on the other side? Or is it two sort of separate communities?

2:17:53Andy Markoff:No, it kind of goes both ways. It does. At our firm, we have about 25, 30 lawyers who one time or another were prosecutors, U.S. attorneys, assistant U.S. attorneys, or high-ranking officials in the Department of Justice. And that seemed for a youngish lawyer, a job in the U.S. attorney's office as a good job, great experience. And those folks are in demand at firms like ours. And then on another level, senior people, sometimes if they're interested in government service and they're connected, because a lot of this does involve political connections, you can get an appointment. We've had people in our firm who have appointments at very senior positions in the Department of Justice.

2:18:37Andy Markoff:So it can go back and forth. I will say another thing right now, this Department of Justice is really busy. They're facing all kinds of cases. And, you know, based on what I hear and what I read, they're kind of resource strapped.

2:18:51John B. Quinn:Yeah.

2:18:51Andy Markoff:So I'm not suggesting they're not going to show up and defend, but I mean, like.

2:18:56John B. Quinn:Does that mean your associates are getting more calls to come over?

2:19:02Andy Markoff:You know, we've had a couple of associates go to work at the Department of Justice in the recent past. Yeah. But that's always been true. Yeah. It's a good experience. Yeah. Yeah, that makes sense.

2:19:12Michael Grinich:How is, in your view, AI impacting the legal industry today? Not in the future, you know, how will the impact kind of evolve over time, but what are you seeing and hearing from, you know, colleagues or friends at other firms?

2:19:30Andy Markoff:Look, we are wordsmiths, right? We work with words. We write things. And so obviously large language models are something that is going to change how we work. They may change the whole structure of law firms. Big law firms historically are kind of described as pyramid in structure. You have senior people and then you have a lot of junior people. A lot of what the junior people have done in the past can now be done by large language models. It's not like they're going to give you a work product that you can then file with the court and use. I mean, there are hundreds of cases where lawyers have gotten in trouble with courts by filing things that cite cases and laws that don't exist.

2:20:12Andy Markoff:So that is really, that's definitely a thing. Hallucinations, that's a huge risk factor. And that's really on the lawyer. I mean, there's no excuse for a lawyer to have said, oh, I relied on AI. No. You sign that thing and that brief. You're responsible. It's your integrity on the line. So we're nowhere near getting, I don't think, at least in our practice, maybe we do complex litigation. There may be practices where it's a lot of repetitive litigation where, you know, you can get output that's ready for filing. But we're really not seeing that yet. But we've developed in-house at our firm a platform, a methodology for taking large masses of data that we work with, all the documents that are produced in discovery, all the testimony, all the contracts.

2:21:05Andy Markoff:And we organize that. It's built on the Claude Enterprise platform. And we've done this as lawyers. It's a system that's proprietary, developed by lawyers for lawyers. I think if you just turn a young associate loose with Claude or ChatGPT, you're not optimizing the technology. But we take all the data and we structure it for a way that lawyers work. So it creates work streams. So, like, what do we need to do? We know what we do in every case. We prepare examination outlines. We prepare expert witness reports and the like. We prepare opening statements. So we structure in the data that creates these work streams.

2:21:46Andy Markoff:And I really think that gives us a big advantage. It's not something engineers have created. It's lawyers knowing what lawyers need having designed a way to structure the information. And we're using that with great success. I mean, in trials now, in the middle of trial, imagine somebody's on the witness stand. You can ask the AI, what's the best evidence that so-and-so just lied about that?

2:22:14John B. Quinn:Wow.

2:22:15Andy Markoff:In real time.

2:22:16John B. Quinn:It just doesn't.

2:22:17Andy Markoff:And you get a button. So most of those things you will have thought of. Some of them make no sense. Sure. But there'll be a couple of gems in there.

2:22:24John B. Quinn:Yeah, yeah.

2:22:24Andy Markoff:You know, that you might not have thought of. Lines of attack that you haven't thought of.

2:22:27John B. Quinn:That's great.

2:22:28Andy Markoff:That's extraordinarily powerful. Yeah. So what we are, our goal is to get to a point where the AI yields a work product that's like 80 % or 90 % there. Yeah.

2:22:37Michael Grinich:Which is what an associate is typically doing today, right? It's not, you're not, like the best associate is not hitting it out of the park every single output. They're getting a good, solid chunk of the way there.

2:22:50Andy Markoff:You're absolutely there, right. And so lawyers can focus on what they do best, making sure that last mile, the last 20%, the last 10 % is as good as it can possibly be.

2:23:01Michael Grinich:How do you think this affects the job market for lawyers at the early stage of their career? Because in some ways, yeah, their work might be being replaced. But at the same time, given that that AI is very good at generating words and can will be able to generate entire lawsuits, you can kind of imagine a dystopian world where the number of, you know, cases that get brought are, you know, 100 times higher than they are today.

2:23:35Andy Markoff:I think that's true. And that's something that people don't talk about a lot. There are AI companies, AI native companies out there that essentially identify claims. So they'll have a database that has information on businesses of all kinds. What licenses do they have? What licenses don't they have that they should have under the law? I mean, you can just imagine if you can boil the ocean. And they will, these companies, you can subscribe to them and they'll serve up. Here's a class action for your consideration. We've identified the claim and here it is. So I actually think there's a potential that we may see more litigation as a result of AI.

2:24:17Andy Markoff:On the other hand, I think resolution of cases may be faster because both sides can understand quicker the merits of the case on each side and reach a resolution sooner.

2:24:30John B. Quinn:Yeah, that makes a lot of sense. Last question from my side. Can you tell me a little bit about how you perceive like the battle of the forms and the level of detail that contracts might be entered into? I'm thinking of this news with Anthropic and the Department of War about these like two lines, domestic mass surveillance, fully autonomous weapons. And there's like in every contract, there's a question of do you write it in one page or 100 pages? And I think most lawyers can tell you, I can do either. And they have different flavors and they have different subtexts. And it depends on the type of relationship that you're forming.

2:25:09John B. Quinn:And so I'm wondering how much you think about that when you're communicating in a legal context, in something that's going to be binding, what level of legalese you want to use, what length of document you want to use. How important is that in communicating?

2:25:25Andy Markoff:I think it's super important. I mean, it doesn't matter. Everybody, you close the deal, you have a closing dinner, people shake hands, they have a drink. And as long as things are going fine, everything's fine, right? You never hear about it and the legalese doesn't matter. As soon as, you know, a couple of years down the road after an acquisition, joint venture, whatever, circumstances have changed. One side has a different goal. They want to go in a different direction. And can they go in that direction? Or they're not performing. They face headwinds. then it's only then that people start to scrutinize the language and say, wait a second.

2:26:01Andy Markoff:What did we actually agree to? Can they do this? What are our options on both sides? If you want to get out of a deal or you want to create some leverage, you're going to scrutinize that language. And that's why we think it's a good idea. It's going to sound totally self-promoting, but we have clients, major private, global private equity clients, who ask us to do this, have, especially if it's a novel structure that hasn't been tested before, something you haven't done before, take a look at this and pressure test it for me from a legal risk perspective. And I think it's especially valuable to have a litigator's eyes on the problem.

2:26:45Because look, we live in a world where 24-7 something's gone wrong.

2:26:50Andy Markoff:So day in, day out, We're dealing with the very kinds of situations you're talking about. So a lot of times we look at these things with a jaundiced eye. And a lot of times we can look around corners and see how might a devious counterparty try to take advantage of this situation. So I guess the answer to your question is it doesn't matter until it does. And so because of our experience as litigators, we can look at things and kind of see, oh, there's a potential loophole here. It might be a simple agreement. Like we had a case, an arbitration in Asia. I won't get into the specifics because it's confidential.

2:27:31Andy Markoff:But basically, one side had an option, you know. And there was a method for determining what the option price would be. And then it was kind of like a bit like a baseball arbitration. And then one side would get one number and the other side would come up. And there would be a neutral that figured it out. The other side quoted an option price was way out of bounds. It was like totally unreasonable. And then they said, your turn. And what do you do in that situation? If you respond to that and treat it as a good faith offer and you respond, then you've sort of bought into that going down that road.

2:28:09Andy Markoff:And that seemed to be what the language of the contract on its face authorized. Loud, exactly. And our advice was, no, don't respond. Don't respond. And so they went to the arbitrators and said, look, they defaulted. They didn't respond. There's only one price on the table, and it's ours. But ultimately, the decision of the arbitrators was, no, you didn't act in good faith. So they lost, and they were stuck in that investment. Ultimately, they got out. They were so eager to get out of the investment, they had to come to terms with it. Yeah, makes a ton of sense.

2:28:46John B. Quinn:Well, thank you so much for taking the time to come chat with us. Thank you. And thank you for the hat there. We enjoy the Clinton annual hat. Of course.

2:28:52Andy Markoff:Thank you for keeping us fitted. Great to see you again.

2:28:57John B. Quinn:I'll see you around. Great to see you. Let me tell you about public.com investing for those who take it seriously. They got stocks, options, bonds, crypto, treasuries, and more with great customer service. And let me tell you about fin.ai, the number one AI agent for customer service. If you want AI to handle your customer support, go to fin.ai. And without further ado, we will begin the Lambda Lightning Round. Here we go. Pivot that camera over there. It's turning all the way around. It followed John Quinn out of the studio. I was missing him already. And now you see that the Lambda Lightning Round has begun, and we will kick it off.

2:29:35John B. Quinn:We got a banger to kick it off. An absolute banger. We have Michael from WorkOS. There he is. Michael from WorkOS. He is the co-founder and CEO. What's happening? How are you doing?

2:29:45Michael Grinich:Gentlemen, great to see you. How's it going? Great to see you. Great to see you. It's been, what has it been, a couple months?

2:29:51John B. Quinn:It's been almost six months. Last time we had you on, we were hanging out with Satya Nadella on a historic day. Also another crazy day to join. But since this is the first time joining remotely, give us the update. Kind of reintroduce yourself for everyone.

2:30:06Zach Yadegari:Yeah, so I'm Michael Greenwich. I'm the founder and CEO of WorkOS. And we are an infrastructure company that helps other software companies with enterprise features in their app. Not exactly the thing people get the most excited about, but it's the underlying infrastructure that allows people to sign in to things like ChachVT and Anthropic and Perplexity with their company account, with their enterprise account. So we often say that we help developers make their app enterprise ready. And today we're really thrilled to announce our Series C, which we've raised$100 million. Let's hurry down. All right.

2:30:39Michael Grinich:We got a mallet. We got a gong to hit. Let's see. Let's see. Do we have the power? There it is. There it is. There we go. Look at that. Here we go.

2:30:52John B. Quinn:We can take this.

2:30:54Michael Grinich:Here we go.

2:30:58Michael Grinich:$100 on$2 billion. That's right. That's right. That is some great dilution from your side.

2:31:06Zach Yadegari:So we haven't raised money, actually, in over four years. I think a lot of folks kind of forgot about us, to be honest, as a company. We were started back in the beginning of 2019. So this is over seven years we've been building the company. Really, the news today, what's new with us, is the last year or two has been all about AI. And we have found ourselves supporting all these AI companies as they're rapidly, just explosively growing. So whether it's like OpenAI selling into the enterprise or, you know, Claude like growing like crazy over the last few months or even Cursor last year, which, you know, kind of came out from nowhere and took over how people write software.

2:31:45Zach Yadegari:Workhorse is powering all of these and we're helping all of them take, you know, the functionality that they've landed in AI and actually enable them to go sell out into these big, you know, customers that otherwise they wouldn't be able to get and essentially unlock revenue.

2:31:58Michael Grinich:So over the last few years, you joked that people forgot about you because you weren't raising. What were you doing? I'm assuming you were at different points probably turning down investor interests. What was your kind of mindset in leading the team through that period?

2:32:16Zach Yadegari:Yeah, we were just building. I mean, I think at the end of the day, to build infrastructure like we've created, there's no real shortcut for it. You just have to spend day after day, week after week, month after month solving tens of thousands of small edge cases. Sometimes I say WorkOS, it's kind of like a ball of edges. Like the whole thing is made of edge cases. There's not really just one way to quickly ship it. It's in some ways like the anti-YC company. It's a thing you can't build in like a couple months and launch. It does take months and months and years and years to develop it. Early on, we had a lot of amazing customers.

2:32:48Zach Yadegari:I mean, we, you know, early on powered off for folks like Vercel and Webflow and Carta and, you know, kind of the previous era of cloud SaaS we all know about. It's just what we've seen with AI stuff is it grows faster. The companies are adopted sooner within the enterprise. And all this AI functionality, it's actually scrutinized by security IT people a lot more, a lot more heavily. Like the IT people say, no way we can use our AI unless it fits these security policies. And so despite being started in the pre-AI era, WorkOS is actually kind of perfectly positioned to be in. We are an AI business today without having been started that way.

2:33:24Michael Grinich:Yeah, how have you processed the overall SaaSpocalypse narrative or just VibeCoding in general? In many ways, WorkOS can kind of, I feel like, deliver kind of the dream of VibeCoding, which is like maybe there's some specific functionality you want to build. You want to be able to sell it into the enterprise. but pre-Work OS, maybe that wouldn't have been possible because you have all these edge cases that enterprises are going to care about. But how have you processed the entire narrative?

2:33:59Zach Yadegari:Yeah, when people are vibe coding stuff, you typically don't want to vibe code your security part of your application. You might vibe code the features, the UI. Like the AI CodeGen is so good for doing UI engineering. But when it comes to stuff like authentications or permissions or things around compliance or auditing, That's maybe not the place you want to apply AI. And we've seen that actually from a lot of our customers, including our customers being the AI labs that are building the models to do this stuff. They're even using WorkOS. What we've seen from a lot of other businesses is there's no time to build it in-house.

2:34:32Zach Yadegari:So in the previous era, you might have had a few years to figure out enterprise. If you go back and look at Dropbox or something, they built for many, many years before they did enterprise. Today, what's happening is these AI companies, powered by the functionality, they go after enterprise pretty much immediately. Within the first year, they have to go upmarket. There's no time to build it. They just turn to us and we ship it for them.

2:34:56John B. Quinn:Truly, how low is the bar? If I'm in YC and I vibe code a piece of software that's MVP, but it works, is WorkOS accessible to the point where it's self-serve, free? How low is the bar?

2:35:13Zach Yadegari:Absolutely. So we have an amazing free tier. It's free up to 1 million users.

2:35:17John B. Quinn:Wow, that's a lot.

2:35:19Zach Yadegari:So maybe you get a million users when you're in YC, but pass that as you keep growing. What we charge for is the enterprise features. And really, we try to align our pricing model with you as a customer. As you go close enterprise deals, you pay WorkOS. It's kind of like Stripe. You pay Stripe money when you go make money yourself. But it's so easy to use. We have people that integrate WorkOS in an hour or two. they're out there selling enterprise essentially as soon as they have demand. And actually just last month we shipped a new capability that's even faster to integrate because it uses AI.

2:35:50Zach Yadegari:So AI is actually accelerating our customer base. It's also accelerating how fast you can adopt and use our functionality. You essentially just run a command and installs WorkOS.

2:35:59John B. Quinn:Do you have a KPI around that in terms of integration timelines? It seems like they're getting shorter, but what are we talking about? Days of developer time, weeks?

2:36:08Zach Yadegari:If you run our CLI installer, which uses AI to install, it takes roughly seven to eight minutes. It's super fast. And I've been doing this trick whenever I do a sales call with a customer that's interested in using WorkOS. Essentially, kick off the call and say, hey, go try this. Just run it in your terminal in the background. We'll come back to it after I click around the dashboard a little bit. And essentially, you have a POC that's ready to go. In the past, we would still integrate fast, but we would have to talk to their engineering team. We get on the roadmap. We do an architecture call. We have an amazing team of solutions engineers and developer success that helps plug stuff in.

2:36:44Zach Yadegari:But I think what we're finding is AI is this accelerant, not just in terms of market adoption, but just making software easier to use and integrate. We even have people that migrate using AI. So they might be using a different solution or having a homegrown thing. You plug Clot or Codex into it and just rip through it. It's really wild.

2:37:02Michael Grinich:What now? Is the job finished? Job's not done?

2:37:06Zach Yadegari:Absolutely not done. In some ways, it's kind of like a new moment for the company. I told our staff at the beginning of this year, if I was to start WorkOS today, what I would essentially build is WorkOS for AI and specifically for AI agents. So that's what we're building going forward. If you think about agents in the world, and a lot of people talk about agents in different ways, really what they're doing is displacing people doing work or enabling people to do more. I think Ivan from Notion has called agents that you're a manager of infinite minds. The ability to go and control and adapt all these different systems to do work for you.

2:37:41Zach Yadegari:The problem with agents is if you're spawning all these things, these workers to go do things for you, they essentially need permission. They need access to data. An agent isn't useful if you can't connect it to all your different stuff, and you can't do that securely. Last thing you want is an agent running wild. I think there was a story on Twitter a week or two ago of an agent, an open claw instance going rogue and deleting a bunch of email.

2:38:02Michael Grinich:Yeah, it was like Amazon also had a, I think, some issue. It was like head of alignment or something?

2:38:09Zach Yadegari:Yeah. It was a really wild look. So, you know, you definitely don't want that for your personal account, but it's completely disastrous if you're doing that internally to your systems or God forbid it's doing it to your customers. And so this problem around what can agents do, they're extremely powerful, but we essentially need to give them different types of permissions and guardrails and identity on top of it. And so that's a new thing that we've been building at WorkOS with some partners, building this new, essentially, identity fabric, is what we're calling it, that sits across everything and allows people building agents to have the connectivity but also the security and trust that is demanded by their customers.

2:38:44Zach Yadegari:And we hope with that, it will act as an accelerant more into the enterprise. It will help more companies building AI do it in a way that's safe.

2:38:50John B. Quinn:Amazing. Last question for me. How is the role of, you said, like integration engineer. It sounded like almost forward deployed engineer. How is that role changing at WorkOS now?

2:39:02Zach Yadegari:Well, everything at WorkOS is using AI. Our customers are using AI. We're using it every single role. We have sales reps building stuff with CloudCode. Sure. You know, our finance team doing stuff. We have hackathons going. And so it's definitely impacting the people that are working with customers every day in that way. I think the magic of CloudCode and this forward-deployed engineer is it essentially turns one person into a whole team. So it kind of mimics having, you know, if you go sell product to like a bank, like Deutsche Bank, your giant company like Microsoft, you would be able to afford having like 10 or 15 engineers go sit in their office and write code, literally like post up with your laptop and like build stuff for them.

2:39:41Zach Yadegari:That's the original, you know, solutions engineer for deployed engineer. What AI lets people do today is essentially have that same experience, but have a tiny company do it, you know, like WorkOS. It essentially lets us be that level of consultative, impactful work in your organization. The first step when we run our AI installer for customers, what it's actually doing behind the scenes is it's looking at your code base and building a plan. It's doing an architecture review by analyzing your structure and providing the best course of action going forward, the best recommendation. And I think we're just scratching the surface on that.

2:40:13I mean, that's like, it's so early.

2:40:15Zach Yadegari:It's so, so early in terms of all this. So at the end of the day, it just makes people integrate faster, go to market sooner, ship faster, and just grow upmarket sooner. We talk about WorkOS being the help making your product enterprise ready. It's really an API that unlocks revenue. It expands your TAM as an organization. And when these companies go through that transition moment, say they just are getting product market fit and expanding, the last thing they want to do is slow down by the lack of these enterprise features when they have a big fish on the line. and what WorkWast does that turns that on almost immediately.

2:40:47Michael Grinich:So if it's seven or eight minutes today,

2:40:49Zach Yadegari:I'm hoping to take it down.

2:40:50Michael Grinich:The big fish company of San Francisco. I love it.

2:40:53Zach Yadegari:That's right. That's right. Yeah, it's like a fishing line. It's like, we'll help you get it to the boat faster.

2:40:57John B. Quinn:Well, thank you so much for taking the time to come chat with us. Great to get the update.

2:41:01Michael Grinich:Congratulations to the whole team. And we'll talk to you soon. Great to see you guys. Take care.

2:41:05John B. Quinn:Let me tell you about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI. own the data platform that powers it. Our next guest is Adam Simon from IPG Media. He's in the restream waiting room. Now he's in the TV show. What's happening? Adam, how are you doing? Hello. Sorry, guys. Hold on. No, you're good.

2:41:26Joan Rodriguez:There we go.

2:41:27Michael Grinich:There we go.

2:41:28John B. Quinn:What's happening?

2:41:29Michael Grinich:Great to meet you.

2:41:30John B. Quinn:Thanks so much for hopping on.

2:41:31Joan Rodriguez:It's great to meet you. Thanks for having me on.

2:41:33John B. Quinn:Please introduce yourself. Give us a little background.

2:41:37Joan Rodriguez:Yeah. I am Adam Simon. I spent a decade as one of the top innovation executives at a global media agency, which basically means I got paid to be wrong about the future just a little bit less often than everyone else. And now I am out there consulting on where entertainment is going next, which in my opinion is off the screen and into the real world. And I'm working on a book called The Emergent Economy about how immersive technology is set to supercharge the experience economy.

2:42:05Michael Grinich:Okay, what did you get right when you were predicting the future?

2:42:10Joan Rodriguez:Oh, good question. I got right. I think that Netflix would win in streaming and I still maintain that after, you know, last Friday's news. Obviously, I think that Netflix, you guys covered this earlier, but I think that Netflix is going to come out on top in this deal when we look back a few years from now. That was that was something I called early. I also called that they were going to pivot into having an ad supported tier at some point as well as into gaming. I think the Netflix behemoth will just keep growing. Yeah.

2:42:40John B. Quinn:Walk me through a little bit more of like immersive economy off the screen. Like that could mean Taylor Swift concert. That could mean ice cream museum. There's a million things that happen off the screen. Like how do you describe like the territory?

2:42:54Joan Rodriguez:Yeah, I mean, it is all of those things. It is, in my mind, the exciting part is all of those experiences that are about to get, are already getting upgraded or are about to get upgraded with technology. And some of that looks like immersive technology. It looks like the sphere. It looks like what Cosm is doing, which I think is super interesting, especially around like sports and performances and stuff. But I also think it means AI personalization in the physical world. We spend a lot of time talking about how AI is impacting software. You guys certainly spend most of your days, I think, talking about that.

2:43:31Joan Rodriguez:But I think AI colliding with the real world. Robotics is the place that most people go, which is understandable. It's super exciting. But I think there's an interim step before we see robots everywhere, AI-powered robots everywhere, which is just our physical world being a little more responsive to us as individuals. If you think about the physical world reacting to you in the same way that your feed on social media might and starting to personalize itself in that way, that triggers some nightmare scenarios. But I think there's some opportunity to also do some really cool, fun, creative work there.

2:44:04Michael Grinich:Okay, so I'll give you a specific example. We were in Montana. We were in Montana this last weekend. We were at an ice race, which was the first event that they've done where basically they get a bunch of cars around an ice track. And then you can take cars out and do some laps. And then there's a bunch of spectators and things like that. And I was, I was, you know, my, the, the event was incredible. My only, uh, criticism is like, there was kind of one screen over in one of the spectator areas. And so, uh, in the area that, that, uh, we were, you, you kind of, you were reliant a hundred percent on your own vision to experience the event, which was cool.

2:44:42Michael Grinich:But at the same time, there were certain angles and like a bunch of missed context. And so in an event like how are you thinking about personalization in the real world? Is it we have smart glasses on and you have your own audio feed? Or what does that actually look like in practice at something like an automotive event?

2:45:01Joan Rodriguez:Yeah, I mean, I think that that is a great example. I think that, to your point, we don't even need to wait for augmented reality glasses. I think when they do come, there will be some really interesting, exciting things we could do. But just the ability to customize an audio feed, you could do that with AirPods right now, right? Like lots of people already have them in their pockets. We could be through people's smartphones broadcasting customized audio feeds to you through your AirPods, just as one example. An under sort of discussed feature of the Sphere that I find really interesting is they have beamforming speakers.

2:45:35Joan Rodriguez:So different sections of the Sphere can technically be hearing different audio. They haven't really used this yet to my knowledge, but the way that they talk about it is that you could have different language tracks sort of beams to different sections of the venue. And I think that that's the kind of thing that we're seeing built in to lots of venues. And obviously that's not a personalized sort of one-to-one experience, but you can also sort of see how that starts to move us closer in that direction and use some technology that is not exactly new, but to enhance the experience and make it more accessible for more people.

2:46:10Michael Grinich:How are you thinking about VR? We had Ben Thompson on our show earlier today. He's been pushing aggressively for Apple to just let him watch any NBA game. He basically figured out it's like$40 ,000 worth of hardware that would just need to be installed at the different stadiums. And then you could just, he's like, I don't need a separate live stream and commentary Because if you just beam me into the stadium, I can hear the commentary that's happening. I can look up at the scoreboard. I really just need that kind of like video feed.

2:46:44Joan Rodriguez:Yeah, I mean, I think, you know, I think long term there are some cases and some users who are going to want the more highly produced, edited experience that Apple is kind of leaning into. I know Ben is super against that. He just wants the static camera. It's like pretend that I'm there. But I think that he's right in that Apple's biggest problem right now is scale. and just having the volume of content that you could get with just static cameras. And, you know, sports is great, and I'm sure would sell a lot of headsets. But also just think about concerts and stage plays and any place else where just being a fly on the wall or being a butt in a seat, you can't get there or don't want to get there physically.

2:47:26Joan Rodriguez:But being able to get there with your Vision Pro or your MetaQuest or what have you, I think that there's real opportunity there. Longer term, I actually think that venues like Sphere and Cosm in particular are going to create a pipeline for that kind of immersive content that will be able to go straight to headsets. Because if you think about what Cosm is doing with the NBA, they basically have that camera already there courtside. And it's creating that immersive sort of shared reality is what they call it experience in the Cosm venues. There's no reason you couldn't just port that over to Envision Pro right now.

2:48:00Joan Rodriguez:So we're starting to see some pieces be put in place that's going to create a really interesting, I think, flywheel for immersive content. And I sort of think about it as venues like Cosm being a kind of middle class experience where if you have the money and the capability, you're going to go there in person, of course. You're only going to do that for a few events a year, even if you have deep pockets. And obviously, there's the at-home viewing experience, which might be upgraded if we can watch it in immersive environments. And then you have the option to go someplace like a Cosm venue to get this sort of, you know, halfway experience.

2:48:36Joan Rodriguez:I can still go out with my friends and be social and have a close to courtside experience without shelling out to fly wherever the game is.

2:48:45Michael Grinich:Yeah. Are there are there a lot more spheres, Cosm type experiences coming down the pipeline? they said they're super capital intensive so they're high risk but are from my view the response to to both has been great and sphere seems to be somehow doing pretty well in the public markets

2:49:07Joan Rodriguez:as of late yeah i think sphere was caught everybody by surprise a little bit because that first year there were there were lots of headlines about how much money they were losing how much it costs not just to build but to operate but from everything i can tell they from the outside, obviously, they look like they have found a path. I think if you look at what they did with Wizard of Oz, which was a surprise, I think, to everyone in Hollywood, it is really successful. They basically made like a fan experience for Wizard of Oz, which gave them a reason to charge you over$100 a ticket to see a movie that you've probably seen dozens of times before.

2:49:46Joan Rodriguez:And I don't know if it's streaming anywhere for free, but it used to be on television all the time, right? It's like the classic movie that was constantly available. And yet people are shelling out over$100 a ticket to go see it. They've sold over 2 million tickets to that already. So I think it's not exactly what they set out to do, but it's an interesting new path for them and clearly a source of revenue.

2:50:07Michael Grinich:Yeah. Brian Chesky from Airbnb was on the show fairly recently talking about how he is quite bullish on IRL in the age of AI, that the online world is getting very wild and intense. You can imagine some people just deciding, I'm going to log off. I'm going to go somewhere, get away. I can see that, but I can also see the other side of it, which is that the online world continues to get more and more entertaining. And some people just say like, well, I'm not, I don't need to go take this trip or go to this experience because I'm perfectly entertained at home. What indicators are you looking at to understand if, if AI is actually disrupting some IRL experiences, would it show up as like Disneyland, you know, visits dropping, which obviously could be a number of factors.

2:51:01Michael Grinich:Like how would you, where are you kind of like trying to see where there might be some disruption? Yeah.

2:51:07Joan Rodriguez:I mean, I think I would be looking at things like live streams, sports and concerts and things like that to see are the ticket sales going down. Everything we've seen to date is quite the opposite. People are spending like crazy on experiences. Right. It's it's everybody thought that that it was sort of a revenge spending after the pandemic. But that has has not played out. Everybody is very excited to at least sometimes. Right. Like close their laptops, put their phone in their pocket and go out and do something fun. I think what we're competing with is that people are they want to be out there having experiences creating memories.

2:51:45Joan Rodriguez:And that is not something that you're going to have the same sort of experience doing looking at a screen. There's also some interesting neurological research that I've been following around just like how we sort of sync up and experience communal events. And it's just it's really fascinating. But basically, we create stronger memories and we form stronger social bonds when we're in person. And it actually has a biological component to it. It's not just sort of the emotional aspect of being there together. So I think, you know, maybe if the pandemic was the catalyst that we realized what we were missing.

2:52:24Joan Rodriguez:but I'm pretty bullish on the fact that demand for, you know, even technology optimized and oriented and enhanced experiences in the real world, like just because we're out in the real world doesn't mean the tech goes away. It just changes and evolves. And I think that's where a lot of the exciting developments, both for AI, but also for other technologies is going to be in the next decade.

2:52:49John B. Quinn:Well, we got to do the next one in person with a live audience because just neurologically, I feel like we'll have a better time.

2:52:56Michael Grinich:Yeah. There's also the reality that many people are chasing IRL experiences to have something to show back on social media in this, you know, I, I, I try to remind myself, you know, we were at this, this car event and everywhere you looked, there were cars that if I saw them on the street, I would just stop whatever I was doing. And I was trying to force myself to actually just take it all in versus taking pictures. But certainly there were some people that hardly were processing it live because they just wanted to share everything that they were seeing back on Instagram.

2:53:33Joan Rodriguez:And honestly, that is the thing that I'm most excited about with glasses, whether like meta Ray-Bans or what Apple is going to release later this year or early next year. Having the ability to capture content but stay more present in the moment I think is the best sort of marketing case for those products. because you're absolutely right. Like we want to be able to capture these things, but we've, I think, tilted a little bit towards doing things just for the sake of capturing them rather than actually enjoying the experiences. And look, I think everybody knows that. Even when you're doing it, to your point, you're aware of it.

2:54:06Joan Rodriguez:So I think if there's the right catalyst, it'll get people off their phones and more sort of focused on what's around them. Awesome.

2:54:12Michael Grinich:Totally.

2:54:12Joan Rodriguez:Well, thank you so much for taking care.

2:54:13Michael Grinich:Yeah, great to meet and come back on anytime.

2:54:17John B. Quinn:Have a good one. Awesome.

2:54:18Michael Grinich:Great to meet you.

2:54:19Joan Rodriguez:Thanks, guys.

2:54:19John B. Quinn:Let me tell you about app-loving. Profitable advertising made easy with Axon.ai. Get access to over 1 billion daily active users and grow your business today. We have been keeping our next guest waiting. We have Matthias Wagner from Flux.ai. He's the founder and CEO and he has some exciting news for us. What's happening? Welcome to the show. How are you doing? Please introduce yourself and the company.

2:54:41Matthias Wagner:Hi, guys. Thanks for having me. My name is Matthias. I'm the founder and CEO of Flux. We're building the first AI hardware engineer.

2:54:46John B. Quinn:Amazing. And give us the news today. You raised some money. What happened?

2:54:50Matthias Wagner:Yeah, we closed the Series B. We raised a total of$30 million in new capital across.

2:54:58John B. Quinn:Congratulations.

2:55:03Matthias Wagner:Led by ABC, so, you know, super stoked and, you know, stepping on the gas in there.

2:55:08John B. Quinn:Yeah, talk about the key problem, the key product, where you are in development, rolling out, about getting product in the hands of customers?

2:55:17Matthias Wagner:Yeah, good question. So, I mean, you know, you've all heard it before. Hardware is hard. Yeah. And we felt like this is like learned helplessness, you know. And we are taking the heart out of hardware, right? So if you think here what...

2:55:30Michael Grinich:It's just wear now. It's just wear.

2:55:33Matthias Wagner:Exactly, right? But, you know, we're starting with electronics here. Because, you know, it's like a very standard form factor, and it's really at the heart of anything that's worthwhile building these days. if you think about computers, robots, what have you. And the insight here really was that if you think about how easy it's become over the last two, three decades to make software, especially now with the AI boom, hardware hasn't gotten any easier to make. Even though the supply chain is incredibly available now, from anywhere in the world for$20, can get a PCB bought manufactured in China and sent back in seven days fully assembled.

2:56:09Matthias Wagner:right and that that you couldn't do 20 years ago you had to be lucky martin or apple or like a big tech company to afford it but now everybody can do that but there's a design tools just don't exist and are unaccessible and that's what we're solving for so talk about the inputs and the outputs

2:56:24John B. Quinn:obviously at the end i get some sort of pcb spec is that just a cad file or a pdf and then what am i actually putting in is it just software that i want to be translated into hardware like at what level of abstraction are we operating here?

2:56:38Matthias Wagner:Yeah, good question. So, look, the vision is that you can go, like, if you think about ChatGPT, you can go from, like, a prompt to a poem, right? Or, like, Cloud Code, you can go from a prompt to a bug fix or a feature. With Flux, ultimately, we want to enable you to go from a prompt to an iPhone-class device, right? Now, that's a long road, right? So, what we are today is, like, you can make, like, mid, small to mid complexity, you can probably single-shot today. And everything else is going to be more iterative, you know, again, like CloudCode, Devin, Curso, all these tools, very, very comparable.

2:57:08John B. Quinn:Sure. That makes sense. Who's the best customer for you right now? Where do you see that going? Are you going after startups that are iterating really quickly? This is speeding them up? Or are you going to large organizations that are already churning out tons and tons of PCB designs?

2:57:24Matthias Wagner:Yeah, so it's a good mix, but most customers are SMBs. What we're seeing is that there is like, you know, only about 25 % of our customers have previously made a PCB by themselves. The others are technical. There are mechanical engineers, firmware engineers, industrial designers, right? But they didn't have the time, patience, or resources before to make custom boards. And they would previously buy OEM boards, right? If you think about, like, a favorite example I have, we have this customer. They make vending machines, like snack, beverage vending machines. And they would previously buy four or five off-the-shelf boards and integrate them into a single machine.

2:57:54Matthias Wagner:So think about the board, the power of the display, the payment, the motor in here, and so on. and now they can make a single custom board with flux. That's much cheaper to integrate into the machines on the assembly line. The machine breaks down in the field, but you know where they're standing there, like somewhere in the rain, there's one board to replace. And then the board costs in pennies on the dollars compared to before because what you're paying now is material cost to a manufacturer in China. I can do that for you. And so that's kind of like here the main driver, I think.

2:58:24John B. Quinn:What's your favorite printed circuit board or favorite product that has a PCB in it?

2:58:30Matthias Wagner:Ooh, the space shuttle? The space shuttle, that's a good answer. No, I looked this up the other day. So the space shuttle, I think, was one of the first boards that had like eight layers or so, right, at the time. And it was hand-drawn. They didn't have software for it at the time, right? Which is like crazy if you think about that. So yeah, it's like a fun anecdote. That's a great one. Jordy, anything else?

2:58:52Michael Grinich:Wild, wild, wild. Uh, how, have you seen anything exciting on the U S side on the supply chain?

2:59:01John B. Quinn:On the actual PCB manufacturing? Yeah.

2:59:03Michael Grinich:Is there, I feel like we had somebody on the show last year that was trying to make a PCB.

2:59:08John B. Quinn:Like we have send cuts send now for, uh, for like machined parts and, and things that you need to cut. Is there, is there a great company in America that's starting to think about PCBs? Yeah.

2:59:18Michael Grinich:Like if we have our own Shenzhen, I imagine it would have a variety of manufacturers like this. Because you want to get to the point where you can kind of sit next to the manufacturer and really speed up that iteration cycle.

2:59:30Matthias Wagner:Yeah. Yeah. I mean, look, a lot of people like us want that, right? We looked into the details of like opening our own fab here in Fremont or so. But you realize quickly, right? Making PCB boards is like the board itself is a chemical process. Good luck getting the permits, right? It's possible, but it's hard, right? And so these are kind of like the bumps you run into. But I think there is exciting opportunities here, right? Especially because if you're designing these boards with AI, right, then you can also optimize for the capabilities and the inventory you have at the factory, right? Because the way to make this cheap to make is to design it so it can be assembled automatically by machines, right?

3:00:07Matthias Wagner:But for that to work, essentially these pick-and-place machines, they have to have all the semiconductors you need on their rails, right? and that's difficult to do for humans to optimize for, right? Because it's like a quick changing thing. But I think as we're automating all this, right? We can have the models designed towards what the factory can spit out in an hour, you know, for almost zero cost.

3:00:29John B. Quinn:That's amazing. Congratulations. Thank you so much. Yeah, very cool. For taking the time to come talk to us.

3:00:33Michael Grinich:With this pace, I'm sure you'll be back on this year. Yeah, this is amazing. Yeah, I hope so.

3:00:38John B. Quinn:Have a great rest of your day. Thanks for having me, guys. Great to meet you. We'll talk to you soon. Let me tell you about LabelBox. RL environments, voice robotics, evals, and expert human data label boxes, the data factory behind the world's leading AI teams. Up next, we have some exciting news from Zach from CalAI. He's the co-founder and CEO. Is he not here?

3:00:58Michael Grinich:We are getting him set up. Sorry about that. We can head back.

3:01:02John B. Quinn:We can head to the timeline because we have an incredible announcement from Riley Walls, the new OpenAI staffer, who launched Payphone Go. It's effectively Pokemon Go, but for payphones. Payphones are strangely still licensed in California, he says. So I filed a FOIA request and got the full list. Naturally, I made a game so you can now play. You create an account. You get your unique player ID. It's a nine-digit number. Then you use the map to locate one of California's payphones. Some are easy to find. Some are not. Pick up the receiver. You dial this phone number, 888-683-6697. It's toll-free, so no coins required.

3:01:44John B. Quinn:You can just go to any payphone that you can find, and then you call in and you enter your player ID, and you collect them all. You have to catch them all. All 2 ,203 payphones in California are at stake, and Riley is on another absolute generational run with these projects. I love these. They are so much fun. go check it out and congrats to Riley on another banger project. Well, I believe we have our next guest, but you don't.

3:02:11Michael Grinich:Yes, but Zach is going to be later.

3:02:13John B. Quinn:Zach will be later, so we're going to jump over to...

3:02:16Michael Grinich:What's going on? How are you doing? Sorry for the confusion. Hey, how's it going? No problem. Nice to meet you guys. Good to meet you.

3:02:22John B. Quinn:Please introduce yourself and the company.

3:02:25James Beshara:Yeah, I'm Joan Rodriguez. I'm from Barcelona, Catalan. I'm the CEO and founder of Quiver AI. Amazing. And at Quiver, we are building models for AI generation of SVGs. Vector graphics, you can put a text prompt and you can get a vector graphic. Or you can put an image and you can vectorize it. So it's really good for designers, really good for icon generation, logos, and so on.

3:02:52John B. Quinn:PNG to vector to SVG was such a hassle like a decade ago, maybe even like five years ago. It's still not perfect. What's the secret because I've seen these demos from I think the latest Gemini 3.1 was doing some SVG drawings. It was pretty good. What's the secret to going superhuman in SVG generation?

3:03:14James Beshara:Well, that's a great question. It's a pretty challenging problem and we are tackling this through a kind of new paradigm. So it's code generation. So an SVG is actually code in the back. It's kind of a bunch of code and you compile it and you can get an image out of it. And previous methods were mostly like tracing, you know, like you get an image and you kind of trace it. But yeah, I did this PhD in SVG and I invented this method where you can actually get really cool SVGs. through code generation. So, you know, LLMs are really good at code. We know this. And I just went nuts in my PhD to try to train these models as well as I could.

3:03:54John B. Quinn:I imagine part of the benefit is that once you have an SVG, you can export that to Figma or Illustrator and then edit and do the final. If your output's 99%, much better than getting a PNG that's 99%, and then you've got to go and clean everything up and it takes a lot longer. You can adjust the actual splines. Is that correct?

3:04:12James Beshara:that's that's correct yeah you can edit you can change the colors you can maybe do animations later oh sure yeah gemini is really good for that too like animations is something that's popping up a lot in design x so yeah what do you what do you how are you thinking about uh

3:04:28Michael Grinich:competition long term uh sounds like you guys can kind of lead in this space but at the same time i imagine all the labs like kind of care about this category do you imagine partnering with them or having a different distribution strategy? What does that look like?

3:04:47James Beshara:I mean, it's exciting to see all the good results. They are also evaluating our ideas. We have ideas to try, and the big labs are showing really good results in the SVG space. We are seeing that if you just train a big model with a lot of data and just a bit of effort, you are going to see really good results in this space. And what we are doing, we're kind of doing this our own thing, our own way with our own RL rewards one at a time and trying to learn how to do this the right way.

3:05:17John B. Quinn:How do you think about the customer? Do you want to integrate with a piece of software that already runs and lives and breathes SVG? Or do you want to be sort of like this one-off tool that lives on a website that, you know, artists and creators can go interface with and then just take the assets elsewhere?

3:05:35James Beshara:Yeah, great question. And so we started with a customer kind of consumer approach. We build our website and we wanted to see what people do with these tools. But at the same time, we build our API so that other tools can also interact with our models and build on top of it. We can see agents already being deployed. We can see MCP servers calling Quiver. And we are seeing, all sorts of tools, integrations with all your stack of tools for designers. And that's what we are aiming for, to be very close to the stack and workflows of designers.

3:06:12John B. Quinn:Yeah, this is Christmas for After Effects artists. I've played with a lot of this stuff. It's a lot of fun. Congrats. Jordi, anything else?

3:06:19Michael Grinich:Where's the company based? It's going to be based in San Francisco.

3:06:23John B. Quinn:Cool.

3:06:24Michael Grinich:But you're calling in from Barcelona? That's right. Not yet in the process.

3:06:28John B. Quinn:Last thing, you raised some money. How much did you raise?

3:06:32Michael Grinich:Yeah, we just raised$8.3 million from Leadbike. Congratulations.

3:06:40John B. Quinn:I'm so happy that this is funded. This is very, very cool.

3:06:43Michael Grinich:Great use of your PhD time, too. It feels like you're obviously just getting started with Quiver, but I've been at it for quite a while. It's very cool.

3:06:52John B. Quinn:Very cool. We will talk to you soon. Have a good rest of your day. Great to meet. Cheers. Beautiful. Goodbye. Let me tell you about Vibe.co. We're DTC brands, B2B startups, and AI companies advertising streaming TV. Pick channels, target audiences, and measure sales just like on Meta. And we have our next guest in the room waiting room. Let's bring him in to the TVP at Ultradone. Zach, finally, how are you doing?

3:07:13James Beshara:I'm good. How are you guys?

3:07:15John B. Quinn:Congratulations. Tell us what happened. I want to hit the gong for you.

3:07:18James Beshara:Well, thank you. After a year and a half journey building Cal AI, we were finally acquired by my fitness pal. Boom. Thank you.

3:07:31John B. Quinn:When did you meet the team at MyFitnessPal? Yeah, yeah.

3:07:35James Beshara:Break down the deal. Yeah, we spoke to them initially back in May. I was talking to a few companies, reaching out to them before going to college, because it could have been, if we got the right offer, it would have, I think, made sense. I could have maybe had a normal college life for a little is what I was thinking. We didn't move forward at that point with anything, but built those relationships and then kept in touch. And when it finally made sense, we moved forward.

3:08:00Michael Grinich:And I think I saw on your announcement, you closed it while you were 18 and you're just announcing it now. Is that correct?

3:08:07James Beshara:Yeah. So we closed it in December when I was 18 and then I turned 19 in January. So now it's brutal. You're washed. You're washed.

3:08:15Michael Grinich:You're washed now. It's over. It's over. It's over now. Give us the scale of the business, the monetization.

3:08:23John B. Quinn:I mean, describe it for those who don't know. and then I want to know, how did you grow this thing? How big did it get?

3:08:31James Beshara:Great question. Kali.i is an app where you could track your calories just by taking a picture of your food. And we did$30 million in revenue in 2025. Wow. And we just finished January. I didn't check February, but January, we did 5.7 million in revenue. It's a subscription model.

3:08:50John B. Quinn:That is incredible. So heavily dependent on iOS in-app subscriptions. Are you Android as well? How important has that been?

3:08:59James Beshara:Android is definitely less important. It's maybe a tenth of our revenue. It pretty heavily is just iOS.

3:09:05John B. Quinn:Yeah, and then acquisition. Is this influencer-driven, ad-driven? Customer acquisition. Yeah, customer acquisition. I mean, obviously, you're on the charts, but are there viral mechanics? Like, what is the growth engine for the app?

3:09:20James Beshara:Early on, it was mainly influencers. And then, as of recently, the last maybe six months, we've primarily continued our growth through paid acquisition on channels like meta and so the two

3:09:31Michael Grinich:combined are really what's driving it makes sense what uh why what are the kind of key reasons why my fitness pal wanted to pick you guys up i can think of a lot but uh what what what drove this well definitely many many reasons we have different audiences different core audiences

3:09:54James Beshara:but then we also have overlap. And we both are very mission driven. We both just want to help the greatest number of people as possible become healthier. And so since we were, since we have this overlapping space, we realized that it would make sense to come together, share resources, and it would further the mission for both of us and really make sense to just partner.

3:10:17John B. Quinn:Talk about accuracy. I think there's some people that are skeptical that AI can take a picture of food and tell you how many calories are in it. How has that evolved over the year or so that you've been running the company? Like how accurate was it at the start? How accurate is it now? Where do you expect it to go?

3:10:34James Beshara:The accuracy of Cal AI early on, it definitely wasn't as good as it is today. We initially started by just running ChadGBT by itself pretty much as the model. You would just take the picture, put it into ChadGBT, say how many calories is this? output the response. Total wrapper victory.

3:10:53John B. Quinn:Honestly, congratulations. It's so amazing.

3:10:56James Beshara:Well, that was like a month. And then we fine-tuned a model. We built out a more complex pipeline using a ton of different models for different steps. And so it's become more and more accurate over time. At this point, we average over 90 % accuracy for each food scan. But you would actually be surprised only 30 % of the scans are only 30 % of food logs come from scanning. The rest are like barcodes typing in in the database. So that those are the most accurate methods.

3:11:24John B. Quinn:That makes a ton of sense. That makes a ton of sense.

3:11:26Michael Grinich:Very cool. What, uh, what are your guys's combined ambitions now? Where do you want to take, uh, are you going to be supporting on the main MyFitnessPal app as well? Like, are you, I imagine like they've seen what you guys can do from a user acquisition standpoint and a product design standpoint and want your help across the org? We're definitely helping any way we can.

3:11:50James Beshara:So definitely some of our marketing systems, we are helping them to also build out. And they're helping us too, teaching us things that we didn't know. So together, we're going to be able to go a lot further. And we're going to remain standalone apps. Cool.

3:12:10John B. Quinn:Well, congratulations.

3:12:11Michael Grinich:Congrats. Yeah. Congrats to the whole team. Yeah.

3:12:15John B. Quinn:Your actual overnight success.

3:12:16Michael Grinich:Truly, truly an overnight success.

3:12:18John B. Quinn:But the beginning of a long career, I can tell already.

3:12:20Michael Grinich:Yeah, I know. I can't. I can't wait till we'll be here when you're when you turn 40. Come back on. Probably your third exit at that point. Hopefully an IPO. You got the you got the exit at 18. We'd like to see the IPO by the time you're 30. Awesome.

3:12:40John B. Quinn:Well, congratulations. Thank you, guys. We'll talk to you soon, Zach. Congrats. Thank you.

3:12:44Michael Grinich:Talk soon.

3:12:45John B. Quinn:Have a good one. Let me tell you about Sentry. Sentry shows developers what's broken and helps them fix it fast. That's why 150 ,000 organizations use it to keep their apps working. And up next, we have our last guest, Andy Markoff from Smack Technologies. He's the co-founder and CEO. Andy, how are you doing? Great. Thanks for having me on. First time on the show, please introduce yourself and the company.

3:13:09James Beshara:So Andy Markoff, co-founder and CEO of SMAC Technologies. I'm, what I like to say, a recovering member of a cult known as the United States Marine Corps. I spent the first 10 and a half years of my professional career there. I got out, tried to figure out what I wanted to do when I grew up. And luckily, one of the Marines I served with, my co-founder, Clint Alanis, got out. We both decided to work on building the decision-making tools we wish we'd had when we were running the kill chain during our careers as Marine Raiders at Marsoc and try and give back and find a way to serve again after we'd both gotten out.

3:13:42James Beshara:We talked about this idea really fall of 2023 and then started the company in January of 24. Really, so what SMAC is, we are the first frontier AI lab solely focused on building for national security. And our mission is what we would call decision dominance. But how do we take, you know, petabytes of sensor data, multimodal data streams that, you know, too much for a human to actually analyze and then convert that analysis in real time into the right decisions across the range of military operations, whether that's trying to figure out what are we doing for the next one to six months? What are we doing for the next one to four days?

3:14:18James Beshara:And like literally right now, what are we doing? But trying to make that process seamless and what right now is a pretty siloed and slow system.

3:14:24John B. Quinn:What are you building on top of? Like, it feels like Palantir exists. There's databases. Like, it's not like technology was just invented, but AI is obviously new. So, like, how are you integrating with systems? What are the tailwinds here that allow you to actually deploy systems effectively and quickly?

3:14:43James Beshara:Yeah, I think, I mean, at the end of the day, we are not building on top of another, like, AI model. We're building our own model.

3:14:49John B. Quinn:Yeah.

3:14:50James Beshara:And I think that's, you know, the reason for that is general purpose, like, large language models are very useful. and they're very good at analyzing massive amounts of textual data. They have a lot of really important use cases, but they are not the right tool for 80 % of military decision-making. And some of that's just they're trained on labeled data sets. There's no labeled data set for World War III. Hopefully we never have that data set. But you need a different type of model to make decisions on multiple time horizons, do the type of hard physics-grounded geospatial reasoning required for most military decisions.

3:15:26James Beshara:And that's, you know, deep reinforcement learning is the right approach for that problem set. So we're building a deep reinforcement learning model. And instead of, you know, labeled data sets, we're training that model in an environment that's been built by, you know, physicists who are grounded in like the physics of a peer level conflict, but also domain experts. And I think that's a lot of our advantage and secret is there's a lot of information and expertise about how to fight wars that are in people's heads. It's not in a document that can be read. They need to be encoded and put in an environment to make a system that can actually function in a type of environment.

3:16:03John B. Quinn:Interesting. So, I mean, a lot of the foundation labs are going to data providers, data brokers, hiring experts to write down their SOPs. You're obtaining data from the U.S. government. Is that correct? Like, what does that pipeline look like?

3:16:20James Beshara:Sure. So building this data is some of the domain expertise we have hired on the team. So, I mean, Clint and I's background. I was a joint fires instructor for a while at the Marine Corps' version of Top Gun. Clint kind of spent his whole career in the fire space as we did at Marsoc. We've hired a lot of people on the team that were the absolute best at their military discipline. They were instructors and they did it on deployment. And then we work with our end users. And I think in some ways this gets to how do you trust AI and how do we get users to trust AI? It's like the users are part of our training data generation.

3:16:57James Beshara:It's taking their knowledge, their understanding of the right way to do things today and helping bring that into the environment in a way that they can trust that their knowledge and their understanding is actually being used to help the model get to a better start point.

3:17:11Michael Grinich:What ways in which conflict is evolving are you guys willing to lean on and effectively bet the company around? It's obviously great to have all the time actually enlisted and serving the country, but the battlefield is evolving. I'm sure you and the team have been watching all the footage coming out of the last few days. but where is this all kind of going in your view?

3:17:43James Beshara:As far as where is like kind of conflict moving?

3:17:46Michael Grinich:Well, an example is like, I think we saw like the US version of a Shahed or I think like, so low cost autonomous systems seem to be coming online in mass and all of these things are gonna impact how you build the product.

3:18:06James Beshara:Sure. So, I mean, I think at the end of the day, you know, the scaling and operationalizing autonomous systems is a large part of the future of warfare, right? And so I think that the concept that we talk about internally that we need to build and enable is what we would call intelligent autonomy. But how do you orchestrate all of these autonomous systems, not just against tasks that they've been assigned to, but with each other and with the more exquisite, expensive systems? And how do you do that in a way where you still have a human in the loop, right? I think there's been a lot of discussion about fully automating the kill chain.

3:18:39James Beshara:No one wants that. That's not even really something that I've heard anyone talking about. What fundamentally people are trying to do is have the right amount of human in the loop, have humans for high value human touch points. It's not everywhere humans are making decisions today. We can't have humans involved in every single thing that they're involved in today. But a lot of the decisions are not high value decisions that are humans uniquely positioned to do. So intelligent autonomy is about removing humans from low-value human touch points, keeping them and bringing them back into the system for those touch points that they need to make the decision, whether for ethical reasons or for tactical reasons, and enabling them to make decisions that help move hundreds of thousands of autonomous systems and manned platforms and other types of unmanned platforms towards common goals across what could be a hundred million square mile theater.

3:19:32James Beshara:And I think that's really the spec that we have to build towards.

3:19:38Michael Grinich:Makes sense. What's the shape of the company today? Where are you guys based? What are your plans with this new capital?

3:19:47James Beshara:Sure. So we are a team of 18 today, really split mostly between El Segundo, where the majority of the tech team is El Segundo, and a headquarters in Texas. We have a physicist, a physics lab down in Texas. So part of the tech team is there. And really, our product, the way we think about it is that we need to have a model, like a heavier weight model that is available for people that work out of an operations center or not like compute limited. And then, you know, lighter, like lighter versions of that model that can work at the edge at the front lines where people are going to be bandwidth constrained.

3:20:23James Beshara:And so a lot of this year is getting what currently were deployed under contract with the Air Force, the Marine Corps, and the Navy is to expand across all six services, both at the command level, but also to take what right now we're prototyping as the edge version of the model we built and get that deployed to frontline units across all six services by the end of the year.

3:20:44John B. Quinn:Take us through the fundraising round. How much did you raise?

3:20:47James Beshara:So we've raised 32 million to date um 26 million um and we've been frankly just really fortunate to have the investor team that we had i mean like i was saying earlier today you know clint and i knew nothing about fundraising procurement government acquisitions like we didn't know we just like were wandering around in the dark you know back in january 2024 trying to to get moving and having Point72 kind of take us early on, believe in us, kind of teaches the ropes of the defense tech space, which is tremendously valuable. And we've been really fortunate to have Geodesk and Kosanoa co-lead the Series A to really help us figure out how do we get to the next scale?

3:21:30James Beshara:How do we start scaling the team? How do we build the systems that allow us to grow rapidly? And we've just been really fortunate to have supportive investors that understand the vision and kind of knew what we need and knew what they could teach us at different phases.

3:21:44Michael Grinich:What's the origin of the name?

3:21:47James Beshara:So SMAC is actually a tactical task that you would call over the radio to strike a target. So when I was, you know, we'd be out on a raid, you know, Afghanistan, Iraq, and like you'd have a hostile target that you were going to call in an airstrike on. You know, the conversation that you just smack that target is actually like a task. and so that was and I think you know fires fires is one of the military's functional areas but I think that's a an area that's you know Clinton and I's specialty and so that was a lot of our initial go-to-market was in the fire space and we were initially heavily focused on that but obviously we're expanding this year to kind of the range of military decision making.

3:22:25Michael Grinich:Is it is it true that that you hired someone named John Coogan?

3:22:29James Beshara:it is uh it is true i actually was getting really confused earlier today when like i saw yours i was like why is john why is my john on twitter he's also a marine too i was like it's so funny

3:22:40Michael Grinich:marines don't even use twitter for acts very cool yeah go around and tell everyone yeah i hired john

3:22:46John B. Quinn:coogan there you go you're like what that's very fun uh awesome well great great to meet you and i'm sure you'll be back on soon we'll talk to you soon awesome thanks for having me Cheers, Andy. Have a good one. Thank you. Let me tell you about Plaid. Plaid powers the app to use to spend, save, borrow, and invest, securely connecting bank accounts to move money, fight fraud, and improve lending now with AI. We have a debate to settle.

3:23:09Michael Grinich:Is it PetSmart or PetSmart?

3:23:12John B. Quinn:I have an opinion here. I will settle this, but we should vote as a group. We should also play this video of the folks who kicked this off. Ben Lapidus has a whole song asking the question, is it pet smart or is it pets?

3:23:37John B. Quinn:The aesthetic of this is incredible. Is this real? This is a real video. They went, dressed up and found an office and trashed it for this video. So much production. So the question. is it a mart that caters to pets or is, are they saying that taking your pet there is the smart thing to do? Which side of the debate do you come down on, Jordy?

3:24:07Michael Grinich:Uh, they are smart about pets.

3:24:10John B. Quinn:Oh, okay. You're a smart guy. I'm the opposite. I think it's the pets mart. I think it's, Oh,

3:24:17Michael Grinich:and is it because the bounce? I,

3:24:18John B. Quinn:so there are two sides of this. Adam Bain, former CEO of Twitter chimed in. Is it PetSmart or PetSmart? The color in the logo indicates that they are saying pets are smart, but the bouncing ball suggests that it's a Mart for pets. Which one is it? It can't be both. Of course, it can be both. The logo designers are probably having fun, but I'm a bouncing ball guy. I say it's the Mart for pets.

3:24:42Michael Grinich:Albert in the chat says, WTF, I just entered a PetSmart.

3:24:46John B. Quinn:That's got to be weird. Tyler, where do you sit on this? Now would be a good time, Albert, to tell you that. tiebreaker over here we got we got tyler on my side you go with john tyler took my side it's a

3:24:56Michael Grinich:mart for pets that just doesn't make sense why would they all the things you buy in that smart

3:25:01James Beshara:are for pets it's a place that holds things for pets it's a mart mart no mart no that's smart

3:25:08Michael Grinich:it would be pets all red and then and then blue m-a-r-t but they flipped it no you make a

3:25:16John B. Quinn:compelling argument, but I still disagree.

3:25:19Michael Grinich:What else do you want to talk about? Somehow in all the news, I don't think we ever said the words that OpenAI raised a$110 billion round of funding from Amazon, NVIDIA, and SoftBank. Sounds like we're grateful for the support of our partners and have a lot of work to do to bring you the tools you deserve. That's probably the biggest that's a gong record?

3:25:41John B. Quinn:Yes. It's the biggest round for a private company ever. And it's also about one quarter of venture capital outlays that are expected for 2026 in one round. Absolutely wild. $400 million will be invested from venture capitalists broadly. Of course, this money is from the hyperscalers. It's more complicated than your average VC deal. I don't even know if this will be included in the VC funding tallies because it's such a big round and it's from so many strategists. But lots of more capital for OpenAI.

3:26:15Michael Grinich:Vo says everything on earth is thought bait. They're just trying to keep me pensive. It's true.

3:26:23John B. Quinn:It's true. What else?

3:26:26Michael Grinich:Ryan Peterson is saying happy late Valentine's Day to my wife when a semi-Neanderthal man loves a mostly human woman. Very odd.

3:26:37John B. Quinn:We should plant the bomb. We should get out of here. We have another podcast to do, actually, that will go live.

3:26:43Michael Grinich:We're going to do five hours.

3:26:45John B. Quinn:We're doing five hours today. You'll need to tune in later. We will share the podcast that we're going on soon. But leave us five stars. Hit that subscribe button.

3:26:53Michael Grinich:Sign up for TPN.com newsletter. And last but not least, the U.S. Open is letting you know that the U.S. Open will return to Inverness Club in 2045. 2045. Let's go.

3:27:03John B. Quinn:See you tomorrow. I can't wait. Goodbye.

3:27:05Michael Grinich:Have a wonderful evening. This is what we do. Nice work, brothers. I'll see you on the next one.