Arm Pumps CPUs, Social Media Addiction, Data Center Ban | Eric Goldman, Nima Jalali, Jon McNeill, Karri Saarinen, Dimi Kellari, Mikey Shulman, Aida Baradari, Zack Kanter, Nik Milanović, Zach Perret

28:21California jurors say the tech companies designed their apps to cause injury to kids. Very, very bad. But Brandon Gorel had a take and a write-up and some explanation of what's actually going on here. And then we are, of course, having Eric Goldman from Santa Clara University come on and break it down for us in more detail. Because there is a lot of debate about this. And it's been very interesting watching it play out. The total damages are, I think, 3 million each company, roughly, 6 million total. And I had a friend who's a lawyer who texted me and sent me the number. It was like, hey, I'm predicting that it'll be like 3M.

28:59And I didn't read the M. And I was like, okay, 3 billion. Like, what does that do? This is not that big of a deal. And then it was 3 million. And I was like, that's extremely low compared to, like, the numbers that we normally see from big tech companies. But this has much broader implications because this is precedent setting. and there will be a flood of other... And Zach's like, I did spend all of my free cash flow on data centers, but if you give me another two seconds, I will have the cash flow to cover this. So just give me like two seconds. Yes, but it is a very important case, even though this particular ruling is not changing the cash flow structure of these businesses because it has a lot of ramifications and there's a lot more plaintiffs that are in the queue.

29:43So this is what Brandon Gurell wrote in our newsletter today, which you can sign up for at tbpn.com. Yesterday, a Los Angeles jury found both Meta and YouTube. It's fantastic. I want a lot of soundboard for this. Both Meta and YouTube liable for a 20-year-old woman's mental health crisis in a bellwether trial that treated platforms as, quote, quote, defective products and potentially marks the end to the absolute immunity nature of Section 230. In the case, the plaintiff's lawyer, Mark Lanier, argued that Meta and YouTube built, quote, digital casinos that use neurobiological techniques similar to those employed by slot machines.

30:25Fun fact about arm throwback, the first chip that the company, the precursor company ever built, was a chip that went into a slot machine. They call them fruit machines in England. Fruit machines? Fruit machines. They call them fruit machines because they have like the cherries and the strawberries and the bananas and you line them up. And they needed chips to run those. So the iPhone traces its lineage and Apple Silicon and all this. This goes much deeper. It all goes back to literally gambling. Very fascinating. Anyway, so the jury found that specific features of meta and YouTube are designed to be addictive.

31:01Infinite scroll creates an environment where there are no natural stopping points. Algorithmic recommendation feeds users highly engaging content. Autoplay removes users' agency in choosing whether or not to watch the next video. Notifications pull users back in by exploiting their need for validation. Instagram beauty filters contributed to the plaintiff's body dysmorphia. Features like the like button exploit users' biological need for societal approval. This is what the lawyer argued, the plaintiff's lawyer argued. Shake Shack exploited my biological need for food. Yes. There is this question.

31:44There was Taylor Lorenzen had some great takes here. She said— So Taylor has come out in the last like 48 hours. Protect. I would say is like the number one defender of big technology. Yeah. She does have one of the top technology podcasts. She does. She had a take that was like, so does Spotify, did Spotify addict you to music by playing like good songs for you on demand? And this DJ, this, this AI DJ is simply too good. I mean, that's kind of the argument. They didn't obviously go after Spotify. They went after meta and YouTube, but yeah, there's a question about like, you know, what UI features, what are dark patterns and how do we regulate those?

32:23And it's very interesting, but the decision has been made and these companies will have to pay$6 million to the plaintiff in total damages. This is obviously a trivial amount of money for these companies, but the bellwether nature of the outcome has significant implications for social media. There are over 10 ,000 individual personal injury cases, almost 800 school district claims, and 40 state-level cases pending nationwide that are similar to KGM versus Meta and YouTube. More broadly, the social media industry's reliance on Section 230, which has up to now shielded them from liability for user-generated content, may no longer be enough to protect them from litigation like this.

33:05Now, to be clear, this case is not attacking Section 230 because it's not making the argument that someone uploaded a video to YouTube that said, you should be sad, you should be afraid, it's over. And that made someone sad. That is the content that is user-generated. That is protected under to section 230 you might be able to go after the individual creator of that video If I make a video that says like Jordy Hayes sucks and should be sad and then you get sad You might be able to sue me. I think I don't know but That's that's a little bit more Defensible because it's like me on you but you won't be able to sue YouTube for for platforming that content for putting that up in just general cases But this is different because they went after the like button the infinite scroll the recommendation feeds the features that are built by the platforms themselves.

33:55So if the decision makes it through appeals, and this might go all the way to the Supreme Court, we'll see, platforms may be forced to redesign their user experiences and algorithms, put up age verification, even deprecate infinite scroll. Obviously, changes like this would have an effect on both these platforms' ad-based revenue models. Meta and Google plan to appeal the decision, and it's not hard to imagine this one making it to the Supreme Court. Taylor's also been sort of sounding the alarm bells around age verification. It sounds very good. I feel like I'm pro-age verification based on I have kids and I don't want them seeing adult content.

34:35But she was worried about the KYC and needing to be tracked privacy, tracking anywhere. And that is a good argument to be made. Well, let me tell you about Graphite. Code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. And let me also tell you about Eleven Labs. Build intelligent real-time conversational agents. Reimagining human technology interaction with Eleven Labs. We have to start apologizing to the schizophrenic community. There is a surveillance drone reportedly flown by infiltrator elements and disguised as a natural bird such as an eagle that has been spotted in a round.

35:16This goes back to Taylor Lanz because I believe she worked with the folks behind the viral stunt, Birds Aren't Real, that was sort of a commentary on the conspiratorial nature of the Internet. And in that stunt, they make the argument that birds need to be recharged and they're all spying on you and no birds are real. Of course, that is very satirical and funny. but apparently someone made a drone some you know organization made a drone that looks like a bird so it can sneak behind enemy lines and spy during the conflict which is remarkable but do you think there will ever be video games that are effectively you're just remote piloting something in the real world yes do you think there would be demand for yes so I have heard of this years and years ago that there was something along the along those lines uh that would allow you to hunt remotely so you go to a website and you control a weapon that can hunt an animal which is crazy i don't know if it's crazy uh but do they close the loop like help you actually get yes yes they so after you down the animal they will go and ship it to you so you can mount it on your wall.

36:35Dang. A lot of people are not going to like that. I don't think Joe Rogan would approve. He's a bow hunter. Yeah, he wants the connectivity with the animal. I think so. It's destroying the art. Now I'm curious. Is it a gun mounted to an ATV? Not an ATV, but sort of like a two-axis swivel. Oh, a turret. Yeah, like a sniper rifle on a turret with a webcam. Pretty crazy. I don't know if this is real. I heard about this like years and years ago. Anyway, the reactions to the meta and YouTube trial continue. Ariel Givner says, this is disgusting and I can't wait for the appeals. The precedent set by YouTube being liable for screen time addiction is kind of scary.

37:20Treating algorithms like a defective product opens the door to endless lawsuits over addictive tech. What's next? Books, video games, junk food. I mean, video games, we got to do something about. Those things are too fun. Too fun. Truly, we got to make them. Except you ascended. You beat your addiction. Yeah. I definitely did. You don't game anymore. You actually did. I mean, it might be one of those things like you're still addicted. Might have been playing a game earlier this week. Got a sneaky little 45 minutes. Really? Yeah. No. Yeah, it was good. Play Obscura. I'm going to go look. You got to pull me out.

37:57I'm addicted. No, I'm going to go look back at our text and see, like, when did it take you 45 minutes to respond to something? It was like Tuesday night. Yeah. I'm going to be coming after Eric Jorgensen. Oh yeah. The book of email. Cause that just came out and Eric did a fantastic job. Yes. And I think it's highly addictive. We got it. We can we sue this lawyer? Because this is one of the most interesting cases and I, I actually can't pull myself away from it. And I feel like I'm just going to spend hours and hours reading about this lawsuit. Yeah. And I don't know, it's depressing. It's making me sad thinking about these tech companies having to pay fines.

38:37And it's just ruining my mood entirely. And it was like, you can tell that the way the lawsuit was designed was designed to take an emotional toll on me, suck me in, make me read all of the transcripts from the court, all the reporting, all the research, and eventually talk to Eric Goldman from Santa Clara University. on my show about this. Like, I just can't pull myself away from this. So yeah, I think, I think, should he be held accountable for what he's doing? I don't know. We'll see. But there might be a loss. Meta, of course, trading down massively today, almost 9 % off of this. And, you know, there's some real concerns, right?

39:20If there's new legal risk, there's thousands of other kind of lawsuits floating out there. You might get more copycat lawsuits, class actions, and then the real question is like, do you, do they have to make any product level changes? Does that end up impacting time spent in the app, which will impact the advertising business? Um, such an, such a weird one because certainly, certainly I don't think back throughout. NASDAQ is also down 2 % today. So there's a general sell off, but yeah, general sell off, but like, you know, meta, meta down dramatically. That's a lot. Hundreds of billions of dollars.

39:58Um, yeah, this is a weird one on a personal level because like on one hand my kids i'm gonna keep away the infinite scroll machine as long as i possibly can yeah right um and i will you know i don't i don't think back on the time that i've spent on social media and think you know uh well i'm so glad i i put in those those long hours and i really put in the work yeah it just doesn't seem that addictive to I can pull myself away like anytime. It's not a big deal. It's just not a big deal. We lost it. It just sounds like it sounds. It just sounds like it sounds. This place. If you're a picture of Honeymoon, okay.

40:42You just gotta get more. I ask you a question. If you follow me, I'll double your bank account. On Instagram, okay. I mean this is good kind of. This is the route you would have to take if you wanted to go to. This is my subscriber. And this is my subscriber. This is such a good... This is the final mystery box. This is fine. Yeah. It's fine. We're going to get back to the show in a little bit. It's not a big deal. I'm about to surprise that college classroom. It's fine. I was like, I grabbed 100 people. We lost it. He grabbed 100 people. We lost it. I actually have to note, he took people that are ages 1 all the way to 100, and he's having them taste test lunch leave.

41:16I got to watch this. This is the world's largest LED floor. Okay. It's the largest LED floor. Are you just scrolling, Mr. Beast? No. This is just my normal feed. What's yours like? I am scrolling Mr. B. It's so funny because I think whatever that was was completely inverted from a meditation soundtrack, right? It's just like it's so insane. Anyway, let me tell you about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just power AI. Don't just build AI. I own the data platform that powers it. And let me also tell you about Cisco. Sorry. Critical infrastructure for the AI era.

41:58Unlock seamless real-time experience with a new value with Cisco. Never apologize. So the funny thing is how addictive are the apps themselves? Can they argue that the apps themselves, it's really not us? Yeah. Right? I've seen some people's channels not very addictive. Yeah. You know, like it takes a lot. In many ways, like our content, right? We talk about niche subjects in technology and business. There's a lot of content on YouTube that is far, far, far more addictive. Yeah. But. Yeah. No, I've generally had a good experience on social media. You know what else is addicting? What? High-speed trains.

42:38Oh, you want to skip to high-speed trains? You don't want to do. We can come back to that. Okay. We can come back to that one. What's going on with this? So in China, high-speed trains have become a sightseeing attraction. This is a good – I would definitely go to this. I would 100 % just go see the high-speed train rip through the countryside. That looks amazing. I love it. Also, this is the most incredible video of China that I've ever seen. It's so beautiful. What is this mountain range at sunset? It's so beautiful. I think people are posting up there even if the train isn't there. Yeah, that might be it.

43:11You think that secretly everyone there is like, boo the train ruined my beautiful view because like they could just be sitting there watching the amazing sunset and that guy's leaning forward as yeah i think they're pumped up i think they're cheering i think they're cheering uh that's great um where else do you want to go uh we can go back to this article okay okay i i because i need to know where everyone stands i need to know where do you stand on shoplifting are you pro or anti are you pro or anti i'm anti you're anti shop What about you? There we go. I had one moment as a kid when I think I took a piece of candy, and my parents immediately took me back.

43:52I'm going to put you on your citizen's arrest right now. Yeah, it's time for citizen's arrest. No, it took me back, and it was like the most deeply embarrassing moment that's like a core memory of telling them. Everyone needs to learn that. And I think it was at an age that I didn't really know that it was wrong, but still. Well, that's not what's going on, actually. So the Wall Street Journal wrote a piece about, in Free Expression, Emma Camp wrote this op-ed. And there's a new generation of shoplifters who aren't children, who should have learned their lesson a long time ago, but are actually fairly affluent and are just sort of sneaking out luxury goods.

44:33I think that's a piece of it. But she makes a very compelling argument for why this is a very bad thing. We need to make skydiving more accessible. Okay. Like if skydiving was a dollar. Or the thrill. A dollar a dive. Yeah. I think a lot of people might say, I'm just going to go skydiving today. I'm not going to steal anything. Well, I mean, Ben on our team is working on a new weather report. Or jet ski racing. That will take you on a tour of thrilling things to do. Yeah, if we could make jet skis more accessible, universal basic jet ski. I like that. I think a lot of people would say, I don't have time to steal.

45:09I'm getting ready for the race. Yeah, my cortisol is super low. I don't need to spike it by sneaking something out. So at least once a week, as I begin my commute from home, from a midtown Manhattan subway station, I see someone in a suit and tie Dodge the Fair. Well, it isn't always a suit. Sometimes it's a chunky gray J.Crew sweater and ballet flats. Each time I see the Fair evader slip through an open emergency exit or casually hop over the turnstile, A wave of outrage bubbles within me, says Emma Camp in the Wall Street Journal. Free expression. And I consider shouting out after the shameless thief.

45:45You should do it. I am in favor of yelling at fair dodgers in this case. But before I can work up the courage, he's melted into the crowd. It's tempting to give fair hoppers and shoplifters the benefit of the doubt and assume that they are all Jean Valjeans. Do you get that reference? No. Les Mis. You got to see Les Mis. Jean Valjean is the pinnacle of morality. He steals a loaf of bread for his family because they're starving, goes to jail, gets revenge. It's a great story. You will love it. You should see it in a theater because it is, of course, a live stage production many times. But there's also a great movie with Liam Neeson.

46:22The Liam Neeson one is the one you want to see. There you go. The Liam Neeson Les Mis is amazing. I think I have that right. But that's far from the truth. Well, according to one 2025 survey, and this was what was interesting about this article, The likelihood that someone would purposefully take an item at self-checkout without scanning actually increased with income. So the rich get richer. The rich are stealing from the rich. A viral article in Curbed, a site published by New York Magazine, paints a vivid picture of this kind of thief. A member of a certain subset of the city's wealthy-ish, as writer Nora Delighter puts it.

47:01for whom a little shoplifting on your grocery run has become as about as mundane as jaywalking. This isn't exactly surprising. A report from the Council on Criminal Justice released earlier this year found that while reported shoplifting decreased during the pandemic, rates have returned to roughly pre-pandemic levels. Wait, did they just decrease because people were ordering groceries online? I think so. I think so. If you're not in the store, you can't steal anything. You got to hack the system or something. It becomes a cyber crime to steal from DoorDash. The rates have since returned roughly to pre-pandemic levels.

47:38This New York Magazine profile in Curbed profiles several shoplifters who were caught stealing from Whole Foods. None were acting out of necessity and most stole what can accurately be described as luxury goods. $30 eye cream, strip steak, fancy organic chocolate. None expressed guilt. And one explicitly justified her actions as being in a kind of artist's subsidy. Petty theft is a vice for a certain kind of loser. Go off, Emma Camp. I love this. Many of those profiled in this article are creative types, photographers, graphic designers, sculptors, and musicians. Presumably, these people are highly educated but downwardly mobile.

48:25They steal because they feel entitled to the kind of life where they can thoughtlessly drop$50 on French cheese and sushi rolls while paying Manhattan rent. That they can't indulge in such luxuries feels to them like a moral outrage, one that can be rectified in some small ways by taking what's owed to them. When shoplifters justify their actions online, they make themselves out to be Robin Hoods. They claim it's good to steal from large and therefore evil corporations. This is a teenager's leftism, one in which fighting the man means ripping him off. It's a post hoc justification for a baser impulse, the belief that everything you want should be free.

49:07This motivation is made particularly clear when people justify fare evasion, given that public transportation is inherently not a big private enterprise. It's not a megacorp. It's taxpayer dollars that you're stealing from. Even when we grant the assumption that large companies are inherently evil, which for the record I don't, says Emma Camp in the Wall Street Journal, that doesn't justify stealing from them. If thou shalt not steal doesn't work for you, consider another argument. Petty theft damages the institutions and businesses in a community, making them materially worse for your neighbors.

49:43You may think you aren't hurting anyone, When actually you're hurting everyone, businesses hike prices to make up for shoplifting losses. Have you heard of like loss? It's called like loss rates or something like every retail store just assumes that they're going to get 20 percent or 5 percent or something. Yeah, I don't think it's it. It can be high. It can be high in some stores like significant amount of merchandise just like gets loss prevention is like the term that they focus on. But it's like a constant problem for these businesses and they have thin margins. People don't realize, I think people think like grocery stores because like you go and check out and it's a hundred bucks or something.

50:17It's like they're making a ton of money, but like the margins are very, very thin on those. It's not, it's not, it's not arm. They're not licensing IP to Apple. They may even close. A public transportation crumbles without sufficient revenue from riders. As journalist Kelsey Piper put it in a post on X, when you shoplift, you directly and unambiguously impoverish your community. That bar of chocolate you swiped isn't nothing. That little pot of eye cream you slipped into your purse is more than a rounding error on a corporate balance sheet. What you're doing ultimately creates a worse, less functional, less trustworthy society.

50:51And even shoplifters need a place to get groceries. Yeah, the comment section is agreeing with Emma. It said, well said, and I'll extend it, but beyond just shoplifting to include things like buying something with the intent of returning it after using it for a few days. I remember someone buying a grill at Lowe's with the intent of using it for the weekend and then returning it, which they did. Yeah, just didn't, steaks didn't really come out that well. I don't think it was me. I think it was the grill. I'm not a big returns guy. Costco does have a huge return policy. Yeah, it's so interesting.

51:31The Coogan or the Hayes mind cannot comprehend the return.

51:39like it's i i've maybe returned yeah two things yeah in the last 10 years it's just not an impulse that i have it's because you're deeply in touch with everyone um so funny anyways we can okay let let me tell you about turbo popper 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 gemini 3.1 pro with a more capable baseline it's great for super complex tasks like visualizing difficult concepts synthesizing data into a single view and bringing creative projects to life uh and thank you the clapping in the studios at an all-time high now that we're back to full strength in the tbp and ultra dumb so that's right uh willmanitis is giving some more context uh uh around anti-ai backlash he says in case you're skeptical that anti-AI backlash will become a central issue in the next election cycle.

52:36Sanders just introduced a bill to halt all new data center construction and require the federal government to review and approve AI products before release. Interestingly, this idea of an AI FDA, the first time I heard about this concept was on the All In podcast. I believe Chamath Palihapitiya was making the point that an AI FDA was something worth considering. I think he's evolved his position, but it was something that, you know, the first time you learn about like the possibility of a fast takeoff, the possibility of AI doom, it seems really rational to say, well, let's review everything beforehand.

53:13But then there's natural effects and there's limitations to the models and we can't even do a puzzle on RKGI. So maybe there's a little bit more work to be done. Maybe there's a few more data centers to build before we actually get good things out of these models. Noah Smith wrote a piece that I think is relevant to the data center moratorium, which is AI has the worst sales pitch I've ever seen. It's rough. And his quote, our product will make you economically useless and possibly kill you. He says it's not a value proposition. AI leaders need to change their public messaging. And fast. We don't need to read through all this.

53:51No, you need to read this quote. He opens up this quote. Hi, do you have a moment? I'm from the cursed microwave company. Our product is much better than a traditional microwave. Not only can it automatically and perfectly cook all your food, it also microwaves your whole body, so you and your family are paralyzed and unable to work ever again. Don't worry though, because when everyone has a cursed microwave, our society will probably implement universal basic income, and you and your children can just go on welfare. Oh, by the way, we estimate that there's a 2-25 % chance that our microwaves will put so much radiation, will put out so much radiation that they destroy the entire human race.

54:25If a door-to-door salesman came and gave me this pitch, I would gently see him out the door and then quickly call the FBI. But this is only a modestly exaggerated version of the pitch that the big AI labs, Open AI and Anthropic, are making to the world about their technology. And I completely agree with this. It's very important that AI lab leaders focus on the actual tangible benefits of the technology right now. Like, I think there's this, you, you keep, uh, you keep identifying this disconnect between like, like people are afraid of AI and there's so much fear-based marketing, but then like every single person, like a billion people are just using chat GPT to like get answers.

55:05And every person you talk to, no matter how they can, they can tell you for 20 minutes, lay out a very coherent, like cogent thesis of AI doom, what might happen, terminators, They can take you on this very reasonable scenario. And then five minutes later, the topic changes, and they'll tell you how they use ChatGPT to plan their vacation or something like that. And this disconnect just cannot last. Yeah, I wrote on January 9th. The phrase tech lash was originally coined by Adrian Woldridge. And The Economist in 2013, he correctly predicted that the big developments of 2014 will be the growing peasants' revolt against the sovereigns of cyberspace.

55:45the silicon elite will cease to be regarded as geeks who happen to be filthy rich and become filthy rich people who happen to be geeks over the coming years the world experienced the cambridge analytica scandal fear around the mental health impacts of social media on young people and growing concerns around monopoly power in our digital world the internet and the platforms that dominated began to test the core foundations of our country and the free world privacy democracy censorship and more the second tech clash has begun this time because the average american believes that technology, specifically AI, is now a threat to their very way of life.

56:16Starting at the bottom of Maslow's hierarchy of needs, Americans have heard that data centers use a lot of water. They heard their power bill is probably going to go up because of it, or already have. They've seen the movie Terminator and have imagined how that might go from science fiction to reality. Watch Terminator. You still haven't seen it, right? No, I have seen Terminator. You have? Have you seen Terminator 2? Probably not. You're killing me. John, it's enough to ask me to finish one movie. Now you're like, oh, you've got to see the sequel. Two is the best one, I think. But the end of Terminator, it's a good ending.

56:46The humans win. We beat the robots. Yeah. It's a good outcome. You got a pushback on that? No, I was going to add. So earlier we were talking about China and how is China thinking about some stuff. Oh, yeah, yeah, yeah. I found some interesting. Okay, tell us. Tell us. Yeah. Okay, so Xi Jinping is like, if you basically compare Chinese government to U.S. government, Chinese government is probably much more concerned about safety than the U.S. is. Okay. Interesting. Like there's all these things like so is Xi Jinping. We don't want us. We don't want other people to be able to do surveillance as well as we have.

57:15Yeah, there's always like the take, which is like, you know, if you're super concerned about safety, well, what does that mean? You need these this oversight over everything. Right. Which is like if you're trying to you want to be a vicarian, that's like the thing you're going to do. But basically, he was like, he chaired this, it was from time, a rare Politburo study session on AI warning of unprecedented risks. It's listed, AI safety is listed alongside pandemics and cyber attacks in their national emergency response plan. He's also said, he stressed the need for monitoring early risk warning and emergency response.

57:50So it's like, sure, that's like about safety, but also, you know, monitoring, right? No, no, no. I wonder how this interfaces with the Bernie Sanders position. Will there be some sort of open discussion? Bernie's going around doing a lot of different conversations. That would certainly be the next step if he wants to get through the geopolitical pushback. Even when you talk to a lot of the pause AI people, very few of them ever really say the US needs to pause regardless of what China does. It's always like we need to have international agreement on it. Because otherwise, it obviously doesn't work.

58:27Totally. Yeah, if everyone could just give their GPUs to Tyler, he will watch after them. He can be trusted. He can be trusted. He can be trusted. A giga cluster. Yes. Anyways, so this story will continue to evolve. That's good info. Thank you. Rune hit 300K. He says time to dox on TBPN. Okay, let's do it. Three of the guy, that's massive. Let's go. Congratulations.

58:58Boom, boom, boom. I think we hit the gong at 250, too. Every time there's a rune milestone, we must celebrate it to the fullest. Really quickly, let me tell you about Cognition. They're the makers of Devon, the AI software engineer. Crush your backlog with your personal AI engineering team. And let me also tell you about Console. Console builds AI agents that automate 70 % of IT, HR, and finance support, giving employees instant resolution to access requests and password resets. Continue. Let's pull up one of the greatest videos created in the last year. Spore says, RIP, sorry, you gave us the greatest AI video of all time.

59:35Yes. Let's play it. This was a great video. I did enjoy this one. Sound, please. Stop that. It's midnight. Give me that. No, sir. No more fiddle tonight. Got it? No more fiddle tonight. Go home. Hey, what did I say about the noise? It's the middle of the night. No more scents on the porch. The door cam, the Sora model, I don't know what was in the training data, but it nailed this, like, doorbell footage. Like, the graininess really leans into the flaws, and it hides the flaws in the model. When you try and do something that's photoreal, it looks a little waxy still, but this is just perfect. It's too low res to detect, like, oh, the finger's perfect or whatever.

1:00:19That's a good instrument. That's fun It's the cat with that door Absolutely insane Yeah, well the didgeridoo oh Here's the thing here's the thing Human creativity you had to string all these together. There's not one shot. This is like no, no, this is like, you know Ten prom I've done it I've gone to try to be and said like think of a funny prompt and it doesn't come up with something as novel as this Otherwise, I would be the creator of that. Hey, that's our gong. That's literally our gong. Our former gong. Our former gong. Yeah. We made it into the training data.

1:01:05Silent disco. That's good. I love it. Yeah, the Sora news is interesting. I mean, obviously good as a reflection on like, okay, era of focus. We heard that news from like a week ago. This is like a very clear step in like refocusing. there is a question about like the value of models like Sora jumped ahead of meta vibes very quickly meta vibes launched like a week before and when Sora came out the consensus was like oh wow this is like definitely a step above of what you can do with vibes which was much more like an animated picture from mid-journey it had cool cool aesthetics but it was it was way less like it was it was very constrained in terms of what you could do with Sora you could automatically insert different cuts, generate something that looked a lot more like a native reel, even if there were sort of rough edges.

1:02:01But the question with every model is, you spend money to train it, and then it has ongoing inference costs, the cost of a video model. It feels immense, because I went back and looked at some of the first Sora videos that I generated. I'm thinking of me in the orange and white suit. Yes. One of the greatest AI videos. We'll have to play it at some point. But that one felt like it had about a thousand times as much compute allocated to it than the last one that I generated. Because I generated a Sora like a week before this announcement. And it does feel like they had shifted the GPU workloads to maybe codecs because that was the product that was taking off.

1:02:42What do you think, Kyle? There were some rumors where they were spending something like$10,$15 million a day on compute just for Sora. That's a lot. you know, like three and a half billion a year or something, something in this range. Yeah. So it's like so much compute just on inference and it's like, yeah, what's the actual value? Yeah. Yeah. And if it's not monetizing with crazy ad rates immediately or crazy API costs, like, like you just, you're just in GPT2 territory where Greg Brockman came on and told us that, you know, I don't know, they spent probably millions of dollars training GPT2 and they were like, we had to pay people to use it.

1:03:15Like every dollar of inference was, was negative margin. We were losing money on every token generated. And then GPT-3 was in a similar boat. It was like almost there, but they weren't really making any money for it. And then the GPT-4 training run happens. And that, I mean, looking back, that has to be an incredibly profitable model because I think it maybe cost$100 million to train. And then the inference cost, like they distilled the model pretty quickly, got to a place where I think that was very, very ROI positive based on the subscriptions during that time before they rolled out five. And then, you know, you're always facing this battle of like, you know, a little bit of a red queen's race training the new model, you know, depreciating the model across whatever the inference margin you get during the period where you have the best model.

1:04:02Mitchell Green went on invest like the best. And Patrick, Patrick pulled out one of lead. He said lead edge is probably most famous for this letter. Mitchell calls it the hierarchy of BS. It's his way of distilling what he learned from cold calling 10 ,000 companies. And I will go through it. If companies have good cash profits, they report those. If companies don't have good cash profits, they report on adjusted profits. If companies don't have good adjusted profits, they report on gross profits. If companies don't have good gross profits, they report on revenue. If companies don't have good revenue, they report it on adjusted revenue indicators like GMV.

1:04:44If companies don't have good GMV, they report on monthly active users. If companies don't have good monthly active users, they report on subscribers. If companies don't have good subscribers, they report on downloads. If companies don't have good downloads, they report on page views. If companies don't have good page views, they report on what they were voted. The best place to work in XYZ City. Right now, this reminds me of... It's very funny because the only news that we've shared from TVPN is that we're like the 42nd most innovative company recently, but we're not a public company. If you want to trade a public company, go over to public.com.

1:05:16Invest in for those who do it seriously. Stocks, options, bonds, crypto, treasuries, and more with great customer service. I want more of your take on this. People that flex how many lines of code they're writing. Oh, yeah. Like if your product doesn't have any users or revenue, you just report on lines of code. Lines of code per year run rate is a crazy one I saw recently. LOCRR. That's an insane stat. But we have the solution. It will be released soon. Do you have a general update? Yeah, what's the timeline, Tyler? Did you, when you went on the road, did you stop? Walking in? Work? The project can be done today, tomorrow.

1:05:58Really? Does it have sound effects yet? It does not yet. Okay, then it's not ready to do. Yeah, in a day or two. Just one more problem. The fundamental mechanics now is fine tuning tomorrow at 12.07. Chat. Jordy, it's not. Remind, ask Tyler. The project is not done yet, but I talked to Tyler and he said he's generating 25 ,000 lines of code an hour in advancing of this project. So, I mean, he's clearly putting out a lot of code and that will translate to a great product eventually. The best entrepreneurs I know are generating millions of lines of code daily just to keep their about page up and running.

1:06:38Their about page. Rough. Well, let me tell you about Restream. One live stream, 30 plus destinations. If you want to multi-stream, go to Restream.com. Just do it. Gwen Shotwell is on the cover of Time Magazine. SpaceX is racing to build the most powerful rockets yet with the goal of returning humans to the moon. Gwen Shotwell is leading the charge alongside Elon Musk. This is a good deep dive. You should go check it out. The first YouTube video I ever made that went viral or like broke out because when you have - Was why is no one talking about Gwen Shotwell? Literally. literally that was not exactly the title so not literally but it was it was that was the whole premise that was the whole premise and and uh normally i think i had a thousand subscribers and so getting like a thousand views was like okay this is great and if you can get more views than subscribers that's like a banger what was the title was the only reason spacex works there we go that might have been retitled that a few times but um you get the idea anyways no surprise that Gwen shot well running a company that is shooting things.

1:07:45Shooting rockets into the atmosphere. No surprises. Well. FT has some reporting on the SpaceX IPO. What did I say? Bankers involved are toying with the idea of allowing existing shareholders to sell out of their positions on day one, two of the people said. Wow. That would do away with rules to prevent insiders cashing out or trading shares, which are typically imposed for 180 days after a company goes public. Normally there's a lockup. I would think there would be rolling lockups. A third person said SpaceX is considering a so-called staggered lockup that would allow initial investors to slowly sell down their stakes over the course of several months.

1:08:23The deal is, quote, too big of an IPO to just unlock. Musk's influence over the size and timing of the listing has been highly unusual, said one investor close to a banker on the deal. It's kind of scary how Elon is setting the price. It's not being done formally. Oh, interesting. It's not a full auction format. He says, this is the price, and you can either buy or not, and hopefully you buy. Yeah, interesting. The staggered lockup, it feels like it makes a lot of sense. You could just see, okay, this person's held these shares for 20 years. This person's held them for 10 years. They get a 180-day lockup, a 90-day lockup, a 270-day lockup, whatever you want.

1:08:56I don't know. Just imagine how much money the lawyers are going to make from unwinding all the different entities and the SPVs and the SPVs and the forward contracts. with the SPVs into the forward, it's going to be. Full employment for lawyers, for sure. XAI co-founder Krois. Krois, are you Australian now? Manuel Krois. Okay. It's departing the company, which is, I think, officially the last co-founder. Wow. Remaining outside of Elon. That's remarkable. Well, it'll be interesting to see what the next run, the next version of Grok does is there is there a new 4.2 came out is that right yeah i mean that was a while ago that was a while ago so we're expecting like a 5 or 4.3 soon but yeah i don't know if anyone expects it super soon yeah right because they're kind of revamping the whole thing yeah i wonder what they'll try to do with rkgiv3 because they were the fourth lab that tested and they were the only lab that got zero percent although i don't know how much worse that is than getting 0.25%.

1:10:04But certainly it'll be interesting. Orion Peterson had an idea for Elon Musk. He said, if Tesla makes a car with three rows of seats, each with its own pair of doors, so nobody has to climb over everybody else to get in their seat, they will create a baby boom, the likes of which we haven't seen in 80 years. And Elon Musk says noted. Would you buy a car with three sets of doors? it would look extremely odd it wouldn't be the very iconic but that's sort of tesla's thing and a cyber truck stands out on the road model y sl sl size lord okay well uh yeah so so the yl yeah has three rows yeah but it has two sets of doors yeah four doors i don't know how big i don't know someone has to have done this at some point a six-door having a kid jump in and just crawl to the back we did that was when back in my day back in your day up when you climbed in that door yeah it was uphill to the third row yep both and then and then uphill on the way up okay yeah so it was a nightmare it was a nightmare we did it yeah but it made you who you are into the man i am today yeah and so you don't want you don't want easy street extra doors no way no way your kids are gonna be climbing they're gonna be climbing all over the seats um yeah it's interesting it feels like Tesla's entire strategy from a merchandising standpoint has just been to make like more and as much as possible, just make the, the, the, the lowest number of cars.

1:11:37Yeah. And so he's getting all this feedback, but they already have like a six seater coming out. Okay. Someone, someone shared an image. Yeah. This is the data that you were talking about yesterday. The Ambruster Stageway, the world's oldest and largest manufacturer of custom multi-passenger vehicles. And it's a Suburban that was converted and it comes with six or eight door models. So you can have rows and rows. I don't know if you can scroll down and find it from Talos Dreams in the replies there. But I don't know. Anyway, where do you want to go? Nick Mill says, I'm getting$250 for a tweet.

1:12:20Oh, interesting. I was fascinated because he's gone on this big tear of promoting AI, specifically Claude. What is Nikita Beer going to say about this if he's getting paid? Is he basically just saying, I'm doing undisclosed paid promotions? I don't know. Because he's certainly getting more than 250 likes. Yeah, I don't know. He got about 250 retweets on this 295 so I don't know it's possible 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 super computer for training and influence that scale from one GPU to hundreds of thousands And I believe we use the last last last thing before we go under our first guest sure We have to pull up this post from Peaceland.

1:13:21He says, I've seen some fire fits in China, but I've never seen a jacket this hard in my life. And the back of this guy's jacket just says, Mr. Enjoy the Money. M-E-D-M? M-E-D-M. Mr. Enjoy the Money. Apparently that's a legit brand. That is very tough. I like it. This might be the new meta. This might be. The puffer jacket with the stitching on the back is very nice. There's a lot of fun examples of other swag from the reply as well. Without further ado, let's bring in Eric Goldman from Sanctuary University. He's the associate dean for research and a professor there. Eric, how are you doing? What's going on?

1:14:03I'm all right, thanks. How are you? I'm good. Thanks so much for joining. Please, since this is the first time on the show, I'd love a little bit of an introduction. And then, of course, I want to go into the case today. Sure. I'm Eric Goldman. I'm a professor of law and associate dean for research at Santa Clara University School of Law. I've been doing internet law for over 30 years, teaching, researching in the area. And my area of specialization includes how users talk to each other online. Okay. And when did you start tracking the meta YouTube lawsuit? How long has this been going on? And then I want to hear about your expectations for the case, your interpretations of the case, how things played out.

1:14:43so i started tracking the cases when they were filed uh i can set up electronic alerts to notify me of new filings of the cases um and i had to give that up after a while these parties were just beating each other up in court um with an enormous volume of very piquing filings so i stopped tracking at that level um a while ago it's hard to track the state court cases there isn't an electronic tracker for that. So it's been a little bit harder to get the information in that case. And this has been going on for a couple of years and many millions of dollars have been spent by both sides in these cases.

1:15:22So take us through what actually happened, how we should be interpreting the verdict, and then we'll go into where we go from here. So we need to step back for a moment and let me describe the landscape and then we'll see how this case fits into it. In California State Court in Los Angeles, there have been hundreds of plaintiffs who filed lawsuits against the social media services. These cases have been joined together in a proceeding, but they're not a class action. So there's hundreds of parallel lawsuits all sitting next to each other. A similar lawsuit is also pending in federal court in Northern California.

1:16:03It's called a multi-district litigation or an MDL. And there are thousands of plaintiffs in that case as well. Similar format. They're sitting next to each other. It's not a class action. That case also includes entities like school districts and Native American tribes. So there's other entities in that as well. And then there have been individual filings across the country by state attorneys general and others in the law lawsuits. So there's basically just a litigation mania taking place across the United States. Yeah. And what does it actually take to qualify a plaintiff? Do they just look at their screen time and say, oh, you used social media for five hours last week, you're addicted, and then they kind of figure out how to kind of, you know, extrapolate?

1:16:54Turn it into a national suit? There is no screening for who gets named as a plaintiff. They just raise their hand and say, I think I qualify. And they've been joining these lawsuits. The lawyers, of course, are helping them and each lawyer is trying to add to their portfolio of plaintiffs that they have, that they're representing. But whether they're actually going to get any recognition from the court or money, they'll have to make their case eventually. So that's part of why the trial was held that led to the verdict that came out this week. What they did in the California State Court case is they said, we're going to pick three plaintiffs and we're going to do what are called bellwether trials.

1:17:38We're going to let the parties make their case to the jury and we're going to see what the jury thinks. The goal was to do three, not just one, with the idea that plaintiffs have so many different stories. The victims are each in their own unique situation that we wanted to get multiple data representations from the pool of plaintiffs to start to be able to estimate the overall value of the case. So the first one came out and the jury agreed with the plaintiffs, did not agree with the defendants, and awarded$6 million of damages. Now, this is just the first data point of what's expected to be three just in the state court case.

1:18:17There's lots of activity taking place throughout the country. So how should we think about the actual ruling? The Wall Street Journal has a headline, Meta and YouTube found addictive and harmful. How are you interpreting the nature of what the plaintiff attorney proved? At the core, the plaintiff's lawyers had to make a number of novel arguments, both to the judge to get to the trial. And then in front of the jury, they had to convince the jury to recognize the harms that the victim suffered and attribute them back to social media services. And the jury agreed with all of that. And so the way, I think, to interpret this verdict is that we've now heard from some ordinary Americans, I want to say, you know, metaphorically picked off the street, and asked them, how do they feel about the accountability of social media services for the harm of their users?

1:19:19And the jury said, We think that the social media services should be responsible, and we should assign some pretty significant dollar values to that responsibility. Is$6 million seen as a significant dollar value in the courts? Because these companies are so big, but again, this could just be the beginning of a wave. Well, you have to multiply it by potentially thousands. Yeah. So where does this go in terms of the damages as they snowball? Will there be a class action, some sort of master settlement that goes way bigger? Just about the numbers for a moment. $6 million is far less than what the plaintiffs requested.

1:20:01It's far more than I think the defendants had hoped. And as you were pointing out, if you multiply it times 3 ,000 potential plaintiffs that are already in the queue, that translates into something on the order of like$20 billion. Again, maybe numbers that Meta and Google have, but TikTok and Snap, if they're also going to be coming along for the ride, maybe they don't have that. Maybe that becomes uneconomic. So the numbers grow, I think, really rapidly because not only is it the people who have already filed, it's all the other potential users who will say, just like you were suggesting earlier, who will say, you know, I've been addicted for five hours on my site.

1:20:43There could be tens of thousands of more plaintiffs coming through. The numbers on this could get extraordinary. Now, remember, this is only one data point. The other two bellwether cases could establish no liability or they could assign much larger damages. And so we'll see that six million is even the right number for the parties to start estimating the settlement. Sure. So will those other bellwether cases for sure resolve before this gets appealed? Do you anticipate that this ruling will get appealed all the way to the Supreme Court? How do you think about the interaction between the bellwether cases and then other legal proceedings?

1:21:21So I believe that the appeals are going to be lodged now. But I would expect that by the time that the appellate court is ready to hear the appeals, the other two cases will have been resolved. And ideally, they'll be all handled together. Whoever doesn't get the results they want in the other two bellwether trials would go ahead and appeal those as well. All these cases are going to be appealed until there's some kind of definitive resolution. And I would expect appeals to go up all the way as high as the court will take them. The U.S. Supreme Court has discretionary review, so they may not take it.

1:21:56But I expect the cases to be appealed to them unless there's a settlement. And you did ask about that. And let me just close the thought. The difficulty with the settlement is because they are not class actions, the defendants cannot settle against all the potential plaintiffs. They can only settle against the ones who've already expressed, who've already signed up to the case. And so one of the tricky aspects of this case is how could they price the settlement to pick up all these other potential plaintiffs who are waiting in the wings? Are there any other countries that have gone through this process of litigating social media addiction?

1:22:31It feels like uncharted territory. when I see things like the effect of the like button or endless scroll or feeds, there's been a conversation about the effect of those technologies for a long time. But this is the first time I've seen them actually been in the court of law. That's a great question. I don't actually know if there's been any trials on these questions in other countries. And other countries don't always have a jury system like we do. So I do think we are in some new ground here. Having said that, other countries often can regulate the specific mechanics of online publishers in ways that the First Amendment may not permit here.

1:23:15So the other countries might very well have already dictated that certain things cannot be done that are part of the litigation now. Yeah. So do you think that there's a hope for sort of new federal regulation alongside what is going on with Section 230 that sort of sets the rules of the road at a national level that then if you're in compliance to, you can't be held guilty of, you know, this, these, all these lawsuits? It's possible that we could get some kind of federal legislation that provides some kind of security or safe harbor for the defendants. that would also preempt any of the state laws that would conflict with that.

1:23:56I don't see that anywhere in the Overton window, the window of what's actually being debated today. But maybe if the services are feeling a pain, they would be willing to pursue that. The reality is today that states throughout the country are passing laws that govern the same issues that are at issue in the litigation. And so unless there's some federal preemptive laws, the defendants, the social media services are going to have to navigate this ever growing stack of state legislation. Jordy, please. Do you think we get to a point where when you open a social media app, it has an addiction warning like you might see on a cigarette box?

1:24:39Is that where this is headed? Or if this goes far enough, are the platforms running the risk of needing to remove the like button because it hurts people's mental well-being or eliminating the infinite scroll or app level usage limits? Like what are kind of like the extreme sort of downside scenarios for the platform? So there have been some states that have enacted mandatory warning labels like you're describing. Those are going to be subject to constitutional challenge. It's not clear to me that they're actually constitutionally permitted. For example, Texas's law has, I believe, been enjoined on that very point.

1:25:26So the warning label approach, I don't think is likely to be the final resolution in any of any of the disputes here. I think that that's going to be an effort that probably isn't going to either solve a problem or be constitutional. It is already the case that states have passed laws that have done things like tried to ban auto-scrolling or infinite scrolling or autoplay or the like button or like counts or whatever. States are going to get to that level of granularity, and they're already doing so. Many of the things that are already part of social media features today are regulated by state laws that are on the books, but possibly being in the process of being challenged.

1:26:10And I think the bigger question isn't, will we lose our light button or will we lose infinite scrolling? I think we would consider that for those of us who are aficionados of social media, who think that there's some value to them, we would consider that to be maybe the best possible outcome. I think the more serious outcome is what social media services drop out of the industry entirely, what social media services add barriers to user populations having access to social media, and how much we see the circumscription of social media conversations entirely. In other words, I don't think we should assume that social media will exist in its current form in the future.

1:26:49The question is whether we'll even have social media in the future. That, I think, are the stakes of the cases and the legislation. Yeah, yeah. Yeah, that's fascinating. What other industries have been through this type of pivotal moment? And where should we be drawing analogies or where should we avoid drawing analogies? People have said social media is the new cigarettes. Jordi was making a point about the warning labels on cigarettes. It feels like that might not be the actual best analogy. I was talking to Tyler and our team about the risks associated with driving a motorcycle. And I was making the point that there's an instruction manual that you buy, that you get with a motorcycle that puts a lot of the risk on you if you choose to transport yourself.

1:27:39If this really progresses, the precedent it sets is like, okay, fast food companies shouldn't be able to use bright colors in their logos. There's a lot of different stuff. Physicians shouldn't be able to play hooks that are just too good. Too catchy, maybe. I don't know. Yeah, but where do you think the best analogies are? I'm not a fan of analogies between online and offline activities. And in particular, I don't like the analogy to tobacco. And let me make clear why, and I think that'll start to enlighten where the risks and opportunities are. Tobacco, we would generally say there are no health benefits to consuming tobacco.

1:28:17Nobody is healthier because of that. It's just either neutral or negative. But social media consumption has many social benefits. There are many communities that are thriving online and who are, I think, just of all the concern that their benefits are at risk in this litigation without them even having a say in it. So, unlike tobacco, social media is a mix of potentially very helpful things and things that could potentially be harmful for some of its consumers. And those kinds of mixed uses technology that have both benefits and potential detriments are really, I think, a better analogy than tobacco.

1:29:01And I don't know that we have great circumstances where we can point to where mass tort litigation has targeted and potentially removed from the industry these mixed use scenarios. And in the end, the things that people are being addicted to or they're allegedly causing harm are people talking to each other. And that kind of speech related theme is unlike almost any physical product that we might draw an analogy to. Yeah, it's a fascinating case. We really appreciate you taking the time to come chat with us about it. I hope you have a fantastic rest of your day. Yeah, come back on as there's more news.

1:29:40Yeah, we'd love to talk to you again in the future. This is scratching the surface. This is really helpful. It's been great talking to you. Thanks for the opportunity. Have a great rest of your day. We'll talk to you soon. Our next guest is in the TDP Ultradome. First, let me tell you about Railway. Railway is the all-in-one intelligent cloud provider, user-favorite agent to deploy web apps, servers, databases, and more, while Railway automatically takes care of scaling, monitoring, and security. We've got to make it illegal. If I drop a good one-liner in a group chat, it should be illegal for people not to chime in, react, hopefully get some laughs.

1:30:11Yeah, the like button is just going to be like a circle. Good to have you here, dude. Good to meet you. Nice to meet you. How are you doing? Introduce yourself for those who are not familiar, since it is your first time. My name is Nima Jalali. I'm the founder of Salt and Stone. Okay. I'm the founder and CEO. Yeah, take us back. And I'll give some context. So I met, Nima recently moved into my area, and I think we met within like a week of you moving in. And so I haven't even gotten like the full story, even though we've been hanging out the last couple weeks. Cool. Yeah, full story. Yeah, I was a pro snowboarder.

1:30:45I heard you're from Pasadena. Yeah. Is that right? Yeah. So I'm from La Cunada. No way. Yeah. That's awesome. And so grew up there, was obsessed with skateboarding, and then got into snowboarding and started going to those local mountains. like mountain high big bear no like mount waterman and uh it used to be called cracker ridge sure have you heard of that yeah yeah and so back in the day you know when i was in high school we had you know el nino winters yeah yeah like a ton of snow and they would actually operate they don't operate anymore yeah and so i just i would just get out of school at 12 every day and go up there five days a week yeah and i got good and went off and turned into a pro snowboarder what does that mean does that mean uh like speed competitions trick competitions what are you doing because there are multiple ways to become a professional snowboarder, correct?

1:31:28More like freestyle. Yeah, so there's basically like two paths. There's like think like a lifestyle guy who's just like going around making movies all the time. Okay. And then there's like the competition track and there's some crossover. But generally there's like you have sponsors in both departments. Yes. But one person is focused on like winning contests, going to the Olympics, going to the X Games. Yes. Doing things like that. And then there's the more like guys that might do backcountry or street or park, but they're focused on producing like parts, basically. Got it. I didn't know you knew so much about it.

1:32:02I know a lot. Yeah. So I wasn't the contest guy. I was more in movies and in magazines and stuff. Yeah. Okay. So I went off and did that. How long were you doing that? Pro for about 10 years from about 20 to 30. 10 years. That's awesome. Yeah. Yeah. It was amazing. I mean, that was like my college. Yeah. It must be so much fun. It was fun. I feel like entrepreneurs can probably resonate with what a pro snowboarder is doing, where your job is to basically produce, write a banger part, a season, potentially multiple. And there's this prep where you're basically like... What is part? That's like a five-minute video that might be released independently or as part of an entire movie.

1:32:44Okay. And so your job is to do enough tricks, stomp them, as Nemo would probably stomp them. It's a lot. There's a lot. I mean, there's like you pick out a song that you want to have in your part. There's first part, and then the most prestigious is being in the last part, you know, in the video. Like everyone. So it's like you got this video, and everyone's supposed to be on the same kind of team to make this best video. There's like probably 10 snowboarders going after it and doing it. But there's a little competition within that because everybody wants to get last part. You know what I mean?

1:33:15And so it's not a team sport. You know, you're really out for yourself. And like there are a lot of lessons that you learn, especially growing up skateboarding, you know, where it's like fail, fail, fail, fail. Like learning how to kickflip takes you six months of just failing and then you figure it out. And so. Yeah. Then the other thing is these parts come together. It might be like four or five minutes, right? It's just one trick after another. but you're missing sometimes they'll include it but they're missing like the blooper reel which is like sometimes you have to fall really really hard 20 times in a row to land the one that you make it look easy and uh that gets cut out so i feel like there's so many there's so many lessons out of that yeah uh you know a lot of successful entrepreneurs would have would have you know failed miserably for years and then they have that breakthrough kind of like product or feature or whatever it is.

1:34:09And snowboarding, it's happening on like a day-to-day basis where you have like one season, right, to put together your part and you're kind of like racing against Mother Nature in some sense. Can you chase the winter into the Southern Hemisphere effectively? Yeah. Yeah? Yeah, yeah. So you would be, how many days would you actually be snowboarding over a year? I mean, five days a week. I ended up, I lived in Tahoe, Mammoth, Utah and all that, but I ended up landing in Big Bear just because it was like the weather's always good for if you want to just snowboard every day and train yeah um the weather's always you know sunny and nice and it's not like icy or cold so I would just go there and snowboard every day and then fly out of LAX to wherever I needed to go and Big Bear is like basically one lift that you're just going around and around and there's just practice like the best snowboard 50 50 features you can hit on one so you like go you might be hiking like a little bit on one feature uh but but you're basically lapping it so people that like don't like park go there and they're like this is the worst mountain ever like you're used to skiing in mammoth or colorado yeah but if you just want to ride park big bears and crowd you we're gonna have to go man i know yeah no i went i went through i i did i did almost like 50 days i think my junior year of college a lot at big bear i would just go up and lap lap the park nice um a lot of good memories yeah so it's a project it's a project that you're what's that where do you ski in the summer southern hemisphere um if it's if it's summer here yeah i imagine that even big bear there's no snow and so you have to go to the southern if the only time i snowboarded in the summer was going to mount hood where it was like there's a glacier okay so you know about that it's still snow i don't there's still snow so it's it's in uh mount hood and they have like the summer camp okay and so all these kids go and a lot of crows go and stuff but honestly during the summer i would just skate i would skateboard okay yeah that makes sense yeah okay okay so the reason you're here yeah is because uh you built salt and stone over the last eight years exit partially exited this week i don't know uh i don't know which i know the numbers i don't know what numbers you're you're disclosing um but uh but yeah take us through what what was the transition like i'm assuming you didn't just like retire and immediately start salt and stone or was it effectively instantly um so i i had a couple ventures within that industry the like the the surf skate snow world and then you know salt and stone was this idea that i that i had had and which is like i don't know if you can give any context on that but like brutal industry because every single pro and everybody adjacent also wants to start ventures within the industry.

1:36:47Yeah. Yeah. That's true. And, but I mean, there's just such a ceiling in that, in that world, you know, unless you're like, end up being a Burton or a Quicksilver or something like that. Right. Yeah. And even those brands have struggled. Totally. Um, so I knew, I knew I wanted to do salt and stone and, you know, I wanted to do something on my own, to be honest with you. I had, you know, just, I had business partners and everything and, and I wanted to just see how far I could go if I just went like all in a hundred percent, like not have to, you know, uh, worry about waking up at two in the morning and doing, you know, emails and just, just going so hard and just, I could justify that if it's just like all me and I'm just like going for it.

1:37:21And so, um, yeah. And so transitioned over to that full time and it's been just a rocket ship, man. It's been such a great, such a great day. You guys did 165 million last year. Yeah. Scaling still. What was the first product? The first product was sunscreen actually. Yeah. So sunscreen is like a brute is I would say like from my perspective, sunscreen is like a brutal category because like a lot of people use it throughout the year, but like much fewer people actually are using it enough to like need to even be on a subscription. And then oftentimes you're buying it like just in a random hotel, like, you know, retail store because you're on vacation anyways.

1:38:02But yeah, I always wanted to do deodorant and sunscreen was the, it just, it just happened faster as far as searching for the perfect, you know, chemist contract manufacturer and all that stuff to bring it to life. And so sunscreen came out, the brand was profitable from day one. Um, and then when we launched deodorant, how did you sell, were you just selling it DTC or? So we had some retail, uh, on day one. So I had retailers lined up. We had, I think about 40 to 50 of them. And so as soon as we were shipping orders we were collecting payment and so you know i funded it out of my own pocket to start but i was able to pay myself back pretty quickly and and you know uh were those 40 or 50 stores were those individual stores or chains or they were individual stores individual stores part yeah yeah and then it was when we launched deodorant was really when it you know stores started coming to us yeah what's the what are the economics of like getting one sunscreen product sounds like one skew into one of those stores are they buying like a hundred dollar box or there was a minute there's a minimum you know like and i from my memory i think it was like a case pack of 12 sunscreens that came out to like 300 bucks okay yeah and then you can sell it at a markup and then srp that's right okay that's right how how quickly did you realize that like my experience having invested in cpg over the years is the number one factor that leads to success is not like operational excellence.

1:39:30It's not always just the team. It's just like how good is the product. And I've seen a lot of like exceptional teams that have like all the operational chops that have all the experience come out with a product that might be fine or pretty good, but they just don't go anywhere. They can never reach escape velocity because the product fundamentally like doesn't really sell itself. Like you can sell it might cost a lot to acquire customers. The sell through is not that great. Retailers don't really love it. And when I first tried your deodorant after trying probably like 20 different, like better for you deodorants, I was like, wow, this product is like incredible.

1:40:10And I've like retained across years, even though I, I don't even know that I've, I maybe bought it on the website once, maybe bought it on different stores online, or I just buy it in the grocery store, but I'm like permanently retained because I tried everything else and this is just the best. It like goes on well, it smells good. Uh, and so I was just like sold off of that. And you didn't need to be like the best at like email marketing to me or like have the best like retention flows because I was just like, it's a good product. I've tried everything else. And so I'm wondering like how you, how, how quickly you realize that from like a product development standpoint, how much of like, what is your ethos around product development?

1:40:49When is a product ready to actually go to market versus just still in that kind of testing phase. Yeah, that's why we launched sunscreen before deodorant, because we were just trying to get everything perfect, right? And so we did something in deodorant that hadn't been done before, especially in clean deodorant, you know, whereas deodorants before didn't smell the way I wanted to, right? Like they didn't have these sophisticated scents, and clean deodorants didn't work, or they weren't really like a pleasurable experience to use, and they certainly didn't look good. Yeah, they'd be like mint.

1:41:19Yeah, yeah, exactly. I don't want to smell like Tooth Face. Yeah, yeah, exactly. It's like, you know, why shouldn't it smell as good as your perfume or cologne, right? And so just hitting it on all cylinders and making sure it's, you know, perfect. And for me, I was really making it for myself, right? Like, what do I want? And it turns out what I wanted was what everybody else wanted. Yeah. Did the company ever almost die? No. I love this story. It's been a dream come true, right, man? It's been amazing. It's amazing. It's been fun. It's so funny because like the classic philosophy in Ventures is like, yeah, we almost, here's this time we almost died.

1:41:58And in talking to you, like getting to know you just recently, it just kind of seemed like it was just like permanently up and to the right. And you told me one story that was like not like kind of annoying around on the Capitol side, but nothing that was like, it didn't feel like you experienced that much hardship. kind of just one-shotted entrepreneurship. That's amazing. And it's so crazy because I know so many, you started the company at like the peak of the D2C boom. Like this was a time, this was 2017. 2017. Right? And so this was a time that like everyone was like, Red Antler, Gin Lane were just pumping out brands.

1:42:37There was so much capital flowing. There was many competitors. There was like a, yeah, there was a school on the East Coast. I forget the name of it, but they had like an MBA program that was like every single word, not Harvard. It was one, uh, no, there were a lot of, there were a lot of MBAs that were, yeah, there was like every person in an MBA program would be like, I'm building a DTC brand and they were just picking. And there were some really good outcomes that people were tracking against like dollar shave club and Harry's. And there were a number of companies where it was like, Oh, they did the Warby Parker.

1:43:10They raised money. They did the VC playbook and it's sort of penciled out for everyone. But then later people realize like, Oh, those were more like one-off exceptions to the rule where you get a Unilever who gets excited and buys a Dollar Shave Club for a billion dollars and maybe doesn't wind up realizing a billion dollars of value because it's just a young company. So yeah, I mean, honestly, it's, I feel like it's just the power of, uh, of a founder who's just going to be relentless and go up against the big guys. Right. Cause I interview people from the big guys all the time and I'm shocked at like how sleepy some organizations are right and so if you even have a team of three people that are just relentless and you guys know from like what you guys do it's like you can't compete with that i don't care how much money you have or what incubator you're in or what vcs you know starting you it's if you have a founder who's just going to be relentless and how did the approach to funding evolve like because you said you were like profitable from day one you did raise uh at a couple different points, a little bit of money, but did you care about maintaining profitability or did you ever go through periods of growth where you thought, okay, we can burn a little bit here to get to the next stage?

1:44:21We've always been profitable. That's always been important, right? I just want to make sure the bank balance is growing. The raises were secondary, right? It was me sort of taking chips off the table. The business has just been so profitable that we didn't really need to inject it with money. It's a healthy business, man. I'm blessed. Venture capital? Not really my cup of tea. It's just so crazy. I mean, it just goes back to you guys nailed so many different elements of the product. And yet I know people that started deodorant brands during that same period that just didn't go anywhere. So what's the early team like?

1:45:01The early team? Yeah. Yeah. So you have the idea. Solo founder. But, and you mentioned Co-Packer, did you work with a formulator? Did you hire a salesperson first, operations manager, somebody just to help you, personal assistant? Like, what was the stack? Yeah. So first two, first three years was myself, just myself, right? And then for that, it was really working with contract manufacturers, chemists, but also, you know, bouncing off my internal network on like, hey, I got this deodorant sample, like people I trusted, their taste and what, you know, here's the goal. this is what I'm trying to achieve here.

1:45:36Like, let's, let's test it. And so, so that myself, you know, my wife, like constantly, we're smelling each other's underarms, you know, is it working in the lab? Yeah. You know, it was just relentless, man. It was like, we, we know what we want in a product. We see what else is out there. We have all the other products on our shelf, right? Like to just see what, what they're like, let's make something better. Yeah. Right. And so, um, and then three years in I hired, um, I hired somebody who really took on all the ops, all that stuff off my plate. That's not where I excel. Ops and finance and all that.

1:46:08I'm more brand, product. Anything the customer sees, that's what I love. And so when she took all that and she really excels at that stuff and it was me and her for three years, four years after that. Wow. Or two, three years after that. Still just a couple people. Wait, so this is like 2022 and you're still two people? No, 2019. No, it was like, yeah, sorry. Three years solo, three years with two people in six years. It's like yesterday. Then we start hiring. So she came on board and I saw how it would really excel the business and I got to focus on what I like to do. She came in and crushed it way better than I could do on the other stuff, 3PL, logistics, all that stuff.

1:46:45And then I saw power of team. And then from there, we just started hiring people, hiring people. And then just got the confidence to keep hiring. Because the more we hired, we hired the right people, then the business kept growing and growing and growing. And then all of a sudden, it's 106.6 and we're the best-selling deodorant on Amazon. How big is the team now? 50, 55. That's still really tight. It's really tight. We have a high bar for who we bring in. We'll interview people and I'll know within five minutes. Are you in the office or remote? No office. All remote. All remote. All remote. This is like the most insane story.

1:47:24It's like most of the time you get to this moment and just like the most battle scarred founder. I'm telling you, man, we're blessed. It's been a fun run. Okay, so walk me through the product portfolio expansion, how that happens, and then are you subdividing sales reps by region or vertical or channel? We don't have sales reps. You don't have sales reps? No. No. Sales reps never. So here's the thing. You've got to create a brand that the retailer wants. Yeah. Right? You don't want to go and just push something down a retailer's throat and have your sales guy knocking on the door and all that stuff.

1:48:04That was it. Really focusing. This wasn't all just like, oh, it's just happening. It's happening. It's like an obsession. I turned into an advertising expert for six months. All I did was want us to have the best ads, the best digital presence, and create a brand that the retailers needed to have. Then from there, then those retailers need to have you knocking on the door. What was that advertising process like? Like, were you looking, were you reading Ogilvy, looking at the greats? It's just looking at all the competitors, seeing how they do, right? And really, it's like not looking at the other indie brands, like looking at the big brands, right?

1:48:38Like, I always want to take inspiration from the brands, like the Nikes of the world that are going to be here in 100 years. Because that's what I want this brand to be, right? I don't want, this isn't some, like, influencer brand. I'm not an influencer, right? I'm not in front of the camera. Like, this is something that I want to be a legacy brand that's here long after I'm gone. So those are the brands I look at for inspiration. And then how are you actually instantiating your learnings? Are you directing photo shoots? Are you casting models? Are you writing copy? No, no. Once you go through that six-month brand exercise, you become the expert.

1:49:09Are you taking a project, a brand project, from start to finish? Or are you picking an agency or hiring people? It was start to finish. So there was a time where I was picking out models, picking out photographers, videographers, helping with the edit, all that stuff. the edits here and then go in and work with yeah yeah and if they're static like still photos i would go in figma drop text overlay figure out what to say like all that stuff and uh yeah i mean i just threw everything at it and all i did i gave up all like everything all my hobbies like snowboarding skateboarding like all that stuff like i got into golf for a second all of it ended like it was just like i'm gonna go in on this but like when you get a signal that the thing is working great yeah then you want the bank balance is going up bank balance is going up you're having It's like really your purpose.

1:49:55It's just like nothing else I want. I want to build it. What do you think about international expansion? What do I think about it? How has your thinking evolved? What's the strategy? Is that something that a lot of companies go through this moment where they're like, maybe it's so operationally complex it'll change the business, so let's put it off. Let's maybe wait until we're at a point where we can team up with a bigger company and through a merger acquisition and let them bring their operational force so that you don't need a person in every locality because they will bring that to bear and you're set up for success.

1:50:30No, so we've already expanded internationally. As I expected. Sephora Canada, Sephora UK, Spacing K in the UK, Sephora Europe, we just launched, Middle East, Southeast Asia, so on and so on. That being said, there's a lot more opportunity. And that's one of the reasons I chose Advent to be the partner here. It's because they have a strong expertise in international. And I feel really great about them. I mean, look, my goal was never to just exit out fully and just put it in somebody's hands and let it go to shit. Like, that's not what I want. I want the brand to, I want my grandkids to look at this thing and be like, oh yeah, that's what my grandfather built.

1:51:07You know, I want it to be around. I want it to be, you know, what it was always meant to be and not turn into some, you know, discount brand. So, yeah, what what was the how many did you have a bunch of opportunities to sell prior prior to this moment? I'm assuming people were just like kind of seeing public metrics and sell through and all these things and hounding you at different points. What was the process of like knowing when the time was was right? We had a lot of private equity reaching out, a lot of people reaching out in general. And so I worked with Raymond James, who I love, and I would just forward it to them.

1:51:41And they told me when it was time and it was like, let's go, let's go explore. Let's go explore the market. Yeah. So this was not a story where you met your acquirer like years and years ago. We've been talking for about, you know, for several months, six plus months, you know, and I really, really like them, you know. And for me, it's when I did the deal with Humble Growth two years ago, you know, we had like 15 private equity funds to choose from. And I like them because of who they have. no we had a lot we had a lot of bitters you know no no i think this is you know you know how if you were looking for you know uh the the hero's journey of founder stories this isn't it you can turn it off i mean it is it is it is in a way it's missing some plot points yeah there's a lot more to it yeah um but yeah i mean it's it's just i choosing good people to work with right people who can do it with integrity and that I want to work with and that are aligned vision-wise on what the brand is going to be in the future and let's go build that together.

1:52:45What advice have you been giving to people that want to follow in your footsteps? This is kind of what I feel like every CPG founder imagines. It's just like, yeah, I'm going to be building for eight years and then I'm going to sell for half a billion to a billion to a strategic, and yet the hit rate is obviously something probably like 1%. And over the last year, I feel like there's actually been a dip in new brand formation. At least that's what Sean Frank was, I think, mentioning at the end of last year. And his point of view, he's the founder or the CEO of Ridge, and he's like, okay, in two years are people going to want new brands to choose from?

1:53:36And his point of view is like 100%, right? Like there's constantly a desire for newness and that kind of founder-led product development approach that made Salt-N-Stone what it is today. So, yeah, what advice are you giving? I mean, honestly, like I didn't read any entrepreneurial books or really listen to any like entrepreneurial podcasts or anything. I just went off instinct. Like we're fighting for our life. my advice would be, would be to go all in. Like you can't, you can't go and be like work life balance. And like, I want to, you know, check out at five. Cause like, there's going to be someone right behind you.

1:54:11That's going to come and take, take your place and be that brand that comes in and does what you want to do. If you're going to just chill. So it's like, you gotta, you gotta make sure you love it. You love it. Cause that's the way you're going to be able to, um, do it, you know, basically around the clock from the moment you go to sleep to wake up, you know, it's, it's, uh, um, something you got to love to do and it's gotta be your passion. Right. And so you got to just just go relentlessly and no i would say like forget the work-life balance stuff you just got to go hard you got to go all in and just use your instincts you know you just gotta you got to be competitive and go after the big guys and don't be afraid and just go you got to go for it go all in yeah i like to focus on on the actual incumbents like a lot of people will focus too much on like okay who are the other new brands in my category and just actually studying like okay what what makes the big players actually successful it's like okay massive retail distribution, like actual like IP on the product side, all these things.

1:55:03Yeah. I mean, for us, it feels like in beauty, there was such a playbook. Like every brand looked the same. All the content was the same. It was like pay the influencer, have the influencer talk about the product, post it on your social, like over and over again. And that's the playbook. And I didn't want to, I didn't even know anything about beauty really. Like I'm not, I don't come as skateboarder, you know, I don't come from beauty. I like, I like fashion brands. I like, you know, lifestyle brands. And so coming in and just being inspired by, you know, the Nikes of the world, the big brands, instead of looking at beauty, I think played in our favor because we came out and it was like, oh, this is different.

1:55:36You know, did you do any like community marketing? Because sometimes there's a brand that I love. Let's maybe it's like, I would say like, if a deodorant brand was putting together an event, I don't think I'd be like, I want to, I got to be there. but did you do anything that worked, that broke through, that was material to the business? Because I feel like sometimes it's very distracting for CPQ brands to do IRL marketing early on. Because I'm like, I usually will ask a founder, okay, how many units have you sold in the last month? And they're like, a thousand. A thousand. I'm like, okay, then don't spend$30 ,000 on some activation.

1:56:14You should just make a product that actually sells well and then you'll have opportunities to do things. Yeah, I mean, early on, that was my philosophy too. It's like, why are you going to go waste money on something that you don't know is going to move the needle? So it's like, spend it. Like, if our ads are going well, like, let's just pour more money into that versus, like, doing some pop-ups somewhere. But now we're at the point where those IRL pop-ups, I think it's good. It's good brand building, you know? And so we do that now. We do pop-ups. Yeah, but pop-ups are, I would say, different than, like, a lifestyle event that is just, like, a bunch of people hanging out.

1:56:44Yeah. What about owned retail, like flagship store? Have you looked into that? We're looking into it. So, yeah, yeah. So, so we're looking at, we're looking right now. Yeah. Yeah. So, I mean, it says a lot that you didn't jump into that in year two, for example. Yeah. I mean, it's, you know, it would be tough to do that and maintain profitability. Right. And so it's like, you're fighting for your life. You want to make sure it's, it's profitable. Yeah. It's a balancing act. Like you need enough awareness that you're actually going to get upside. But then if you have complete awareness, it's probably like you're already stocked everywhere.

1:57:11So it needs to be in the sweet spot. Yeah. Makes sense. Interesting. Such an amazing story. Honestly. It's like a very unique, it's amazing because it's like, it's exactly what people set out to do. And yet it's so uncommon to just like go up into the, up into the right every month. It's very refreshing. It's like work hard and don't get caught up in a bunch of, you know, stuff that doesn't matter. Stuff that doesn't matter. Do the things that matter, right? And you're going to be relieved. He's now a David Senra enjoyer. Oh really? Love his podcast. He's fantastic. Yeah, yeah, yeah. So he's getting to enjoy David Senra after climbing the mountain.

1:57:48That's amazing. That's funny. I hear that. It's like I hear the hustle stuff and, like, you got to do this and you got to go all in. And I'm like, yeah, like, I naturally kind of do that. You know, it makes me. It works. But even, yeah, I mean, David talks about this a lot where, like, even, like, a lot of his audience members are not listening to it and saying, oh, I never considered working hard. They're saying, like, it's a reminder. it's a meditation on their current philosophy, and then it's a bunch of other examples and just confidence to continue being different because there's a lot of people, as simple as focus is, there's a lot of people that feel pressure to continue their golf game.

1:58:27Oh, I need to have this super complicated seven part strategy. That, that, and then also just like the work-life balance thing, like there's a lot of pressure to not be that person who's not, who's turning down invites to the golf trip. Right. And so the Founders Podcast definitely reinvigorates you to add more confidence that you're not crazy. You're not the only person doing this on earth. A hundred percent. Yeah, I love his passion. It's great. I'm going to introduce you guys. You guys are going to have a lot of fun. Yeah, this will be great. Brand-wise, though, we're just getting started, honestly, things like that.

1:58:57And so this partnership is exciting and I can't wait to keep building this thing. Yeah. Amazing, dude. Congratulations. Thank you. Yeah, thank you so much for taking the time to come show up. See you back at the ranch. This was great. Let me tell you about phantom cash fund your wallet without exchanges or middleman and spend with the phantom card And let me also tell you about Vanta automate compliance and security Vanta is the leading AI trust management platform Let me get my headphones back in back to Our guest a lightning round. Yes. Yes. Yes. We have John McNeil the author of the algorithm in the restream waiting room I love it.

1:59:36Get him in the watch. What's going on? Put my IEMs back on. How are you doing, John? Hey, guys. Hey, how are you? I need to adjust my headphones. Great to meet you. Great to have you on the show. We're having a lot of fun over here. We just had a friend of mine, Nima, come tell a story. He just exited. He has sort of a one-step algorithm. His algorithm was just like, focus, work hard, and he one-shotted entrepreneurship. He was like, I think I'm going to just be a solo founder. Then I think I'm going to build remote and scale to 165 million of revenue in eight years profitably. And then he asked him, like, does the company ever die?

2:00:13He's like, no, we were not die. Did it ever almost come close to dying? He's like, no, no death scares. It was like the opposite of Elon. Yeah, yeah, yeah. But, you know, that's the beauty of the show. We go all over the place. We like to talk to, you know, entrepreneurs who have all sorts of different paths. And fortunately, we have someone here who can tell us about Elon Musk's journey, which has been much more tumultuous. But why don't you start with the introduction and how you got to a place where this was the book that you wanted to write? Yeah, I wanted to tell the story of how Tesla and SpaceX, to a certain extent, work on the inside.

2:00:46And I asked Walter Isaacson when he was writing his book on Elon, why don't you tell the story of how Jobs runs Apple? Because there's a really specific way Jobs ran Apple and his other companies. I said, same with Elon. There's a really specific operating system and way inside of Tesla. Why don't you write about that? And Walter said, I don't write business books. Yeah. And I write character books. Character books. So he turned to me and said, you got to write that book. Yeah. And so that's the short answer. When Walter Isaacson tells you to write a book, you write a book. You're about to listen.

2:01:14Okay. So talk to me first about the process of distilling the work philosophy, how Elon works inside of Tesla. And then actually take me through the algorithm, the steps. because people hear things like first principles, engineering mindset. But I think all of that is pretty vague, and I think you can concretize it for us pretty well. Yeah, so basically this framework came from two things. One was all the mistakes we made. So you talk about tumultuous. A lot of that was self-cost. And we would do postmortems and say, how the heck did we get ourselves in this situation? And let's not do this again.

2:01:53And so what's the principle that would keep us out of the ditch? And so that's how the algorithm got developed. And it was with the goal of pushing decision-making out to the edge. And so we wanted two-way door decisions, make those at the edge, and here's the framework you can use. And it turned out the framework drove innovation too. And so it starts with, no surprise, simplifying. And the first three steps of the algorithm, basically, you've got to simplify. So the first one is you question every requirement you're given. Is it a requirement of physics? Is it a requirement of safety? is a requirement of law.

2:02:29And if you can't answer yes to those questions, then you've got to consider deleting that requirement. So example of that is we're trying to sell$100 ,000 things online. Nobody had done that before, sight unseen. And it took 64 clicks to buy Tesla. And 44 of those clicks were in the auto loan and auto lease documents. And it turns out an auto loan document is 12 pages of paragraph after paragraph after paragraph of how the bank's going to basically kill you if you don't pay. And so I asked the lawyers, can you come back to me and tell me how many of these paragraphs are a requirement of law or regulation?

2:03:06They came back not much longer, not much time later, and they said, none. Whoa. And I said, what do you mean? They said, none. All of this stuff, all these paragraphs were inserted by well-meaning corporate lawyers who are trying to save their company's necks. And none of this is a requirement of law. And I said, so literally I could get down to a one page or maybe a one paragraph loan that said, here's how much the car is. Here's how much the interest rate is. Here's the time period. Here's the monthly payment. That's four sentences. And so we did goofy stuff like that. We would question a loan doc.

2:03:40And it turns out that if you eliminate 44 clicks, you sell a lot more of these$100 ,000 things online. And so that's the first step of the algorithm is just question every requirement. Second is that you make the new thing or the new product as simple as possible, fewest steps, delete everything that the customer doesn't pay you for. And then you speed it up because speed reveals all kinds of warts. and if you can make something go fast, it's got to be simple and it's got to be really good. So good, fast and cheap is actually false. You can get all three. And then this sounds nuts coming from a Silicon Valley perspective, but you automate last.

2:04:17And it's not so nuts when you consider like how DoorDash started five Stanford CS majors in a dorm room. They put up a PDF with a phone number so they could figure out the workflow of the business before they automated anything. Same with the Amazon guys. They put up a webpage to order books, but they had no fulfillment capabilities. So they ran down the street to a bookseller, bought the book you ordered, dropped it in a box so they could learn the business. And we found this time and time again. When we automated first, like the Model 3 production line, we automated first and it never worked.

2:04:51And so the only way we could save the company was to build a tent outside the factory and start building Model 3s by hand. And we learned automate last over and over and over again. And it became religion. So that's the five steps to the algorithm. Yeah. There's been a lot of speculation about the next Tesla vehicle. Somebody was proposing a car with three sets of doors for big families. That doesn't sound simple. There's the Roadster that flies. It doesn't. There's the Cyburban, the Cybertruck turned into a Suburban. What's the product that you want? I do want the Cyburban. Yeah. Here's why. Like when you go to Tokyo or you go to China, they have these like really tricked out minivans.

2:05:34Yeah. And they have every feature. It's like sitting in the best man cave ever. And I want that car. Yeah. I think that'd be a good one. Yeah. What do you think translates from a hardware company with very, very sleepy incumbents, thinking of the car industry, the space industry? what translates to software development, artificial intelligence, app building, social networking? What's going to transfer of the algorithm of the Elon way of working and what might not? That's a really good question. I think what transfers, these principles transfer of like simplify and kind of go slow to go fast as you're developing like the software.

2:06:21where basically your first architecture, what the software is going to look like and what it's going to do. And really determine like, what are the key features or value we're going to ship? And just concentrate like heck on that. Like keep it simple first. And a lot of people have talked about this as a minimum viable product, but I think that's still really true. And then try to make the product as perfect as possible. And like you take Claude right now, the reason Claude code is winning is because it is the best. And that came out of long discussions about how to simplify the architecture so it could actually do things that codecs can't do, that cursor can't do.

2:07:03And I think that's the piece that translates. Simplify down to the two or three things you absolutely have to crush and then literally go crush those. Yeah, within Tesla, is there a noticeable bifurcation between the software engineering orgs and the hardware engineering orgs? One of the things that Elon believes in is hiring what he calls orthogonally, which means basically that nobody has any experience in the industry because he doesn't want you coming in with a preconceived set of frameworks or preconceived notions. And so we were all software people. Like I was a six-time software serial entrepreneur.

2:07:41And I didn't know anything about hardware. I'd never been in it before. and so we approached every problem from a software first perspective so an example that is like if you say okay to your last question like what do we have to crush in the car business well we got to get an autonomous car okay to run software in an autonomous car the requirement of that is we have a single chip because we have more than one chip now you've introduced latency and syncing and all the sort of stuff you have to do so we can only have one chip and that's the software first kind of mentality. We're competing with people who are hardware first, who have 18 to 36 chips running in their car, which means they can never deliver autonomy because they're not thinking about software first.

2:08:24And so that software mentality gives Tesla an edge kind of every day of the week. A lot of people have been speculating about demotivation from SpaceX liquidity as the company goes out at a 1.5, maybe$2 trillion valuation. There's a lot of engineers who are great. They're about to have a lot of liquidity, and maybe they will decide to retire is basically the thesis. But we've sort of run this experiment with Tesla. What was it like post-IPO? Do you have a read on how the culture changed? Did everyone remain interested in the mission, or were there some people that actually did choose to sort of step back?

2:09:07Yeah, I think the majority of people that were there for the mission, they're mission oriented and in size of their bank account over time grew, but it really didn't matter to them. They were showing up every day to solve, just to solve the next thing that was in the way. There were some people that cashed out along the way, but they were kind of the minority. Sure. And one of the things that Elon did was something that I had done in each one of my startups and a lot of entrepreneurs do, which is you kind of starve the balance sheet. You raise only as much capital as you need because the first principle is you don't want your company to go soft.

2:09:39And when people see a big number on the balance sheet, you're not close to death and people aren't like really, really moving as fast as they can, aren't as motivated. So even after we were public, we operated Tesla on a quarter's worth of cash, believe it or not. And I kept saying to Elon, like, I would like a little breathing room. He's like, no, no. Like, we got to think about this like when we're young entrepreneurs. Like if you're close, if you're two steps from death, you operate differently. So, but I was like, man, we have a quarter's worth of cash, but we have 70 days of payables. That means we have less than three weeks of cash.

2:10:09Like this is tight. But that kept everybody sharp. And what we started to worry about was posts like Model 3 and Model Y when we actually started to generate cash on the balance sheet, like how we could make sure the company stayed sharp. and SpaceX has had this advantage of that for a long time and Gwen and Elon are going to have to manage this now post-IPO. But my sense is most people are there for the experience of working in a must company is that you are literally on the biggest challenge you've ever faced in your life with the best people and you're doing the best work of your life. And so that's what keeps most people engaged.

2:10:47It is not the balance in their bank account. How do people stay engaged and so laser focused on like a singular mission when Elon has like a new hot thing every six months maybe? And there's like, it feels like if he were to share that cultural tenant of like, try and solve every problem that humanity faces with the rest of the organization, you would have a very scattered organization, but that's not what we see. So how does that dividing line happen? So like I started to get the entrepreneurial itch a few years in. And so I went to him and say, hey, look, you know, you're starting OpenAI, you're starting Neuralink, starting the boring company, like I got to scratch this itch too.

2:11:26And he basically said, you can't because, because I got to have you focused so I can go do these things. Uh, but then it was pretty cool. Like we designed this way that I could, uh, scratch my entrepreneurial itch, which was just doing it inside of Tesla. So we invented mobile service. Uh, we invented, uh, insurance, uh, inside of Tesla, which now is the third of the cashflow. So I got to, I got to scratch those itches, but you start to learn like Gwen's job is keeping SpaceX focused. My job was keeping Tesla focused so he could go exercise that Da Vinci side of his personality. Yeah. Yeah. That makes sense.

2:12:05Uh, Jordi, you have anything else?

2:12:09Where, where are you investing mostly these days outside of the Elon orbit? Yeah. So we start companies from scratch at my, uh, venture firm and we're investing in, I would say, the intersection of AI and the real world. So what that means is we pulled this amazing team out of Tesla that it did to supply chain automation and optimization, and they've created a business called Atomic that is just slaying it. We created this really cool platform for restaurant hospitality where at any restaurant you can get up and walk out without having to pay the check because it already knows who you are and what you eat.

2:12:46So every restaurant becomes like a London Supper Club. So we're deploying AI. Which company is that? That's called Zoomy. Okay. I know a friend of mine has another company competing in that category. Same pitch. Yeah. But I'm sure he'll be devastated to know that a Musk adjacent company. Yeah, there's room for more than one of us. I like having competition. And that's a really tough technical solve, actually, to be able to pull that off. So it'll be protectable if your friend's company is working on it and there's room for both of us to swim in that big ocean. What's your advice for American auto manufacturers?

2:13:26Because it feels like they're just, you know, they're behind in autonomy. They're behind even from a feature standpoint with a Tesla or a BYD. I see these electric cars out of China where it's like it has 1 ,500 horsepower. It's as big as a Suburban and it drives itself. And then you're like, and it'll cost$35 ,000. That is impossible. How can we possibly compete with that? So, yeah, what should American automakers broadly do? Well, this is a real challenge that I'm a part of because I'm on the board of GM now trying to help them navigate this. And so like when I walk around the streets of Tel Aviv or Mexico City or Paris, you see all the BYDs.

2:14:07It's your point. These are not crappy cars. These are really good cars and at a really good price point. They're at that price point because the government subsidizes the heck out of that business in China. You get free factories, free labor, free parts basically. So you can sell stuff super cheap. But that is for real competition. What is their, to your knowledge, what is the long-term thinking there? Is it effectively like an employment program where they just want? Or are they looking at it like CAC where they're like, we'll lose money for a decade, but then we're going to make money for four decades.

2:14:41Or both. What are the kind of pillars, do you think, of their strategy overall? It's a combination of both of what you guys just said. So on your point, Jordy, it is the way that you keep a single party system in power is you provide jobs. So job growth is the one metric that every level of government gets bonused on there. Can you imagine like the American government, everybody gets a bonus that doubles their base salary. And that one metric is GDP growth. That's what you have in China. So they start with that framework and they say, we've got to provide jobs. And the way we're going to provide jobs is every five years, we're going to announce five industries that we're going to enter and dominate.

2:15:18And the second, well, the third pillar of that is then that they subsidize 100 market entrants to come in. and then they let evolutionary biology take its place and may the best person win. And so they get down to the top three or five competitors that are winning. So in this case, it's like BYD, Geely, NIO. And they say to those competitors, now we're going to consolidate all of the capacity that we've created with these 100 companies under U3. You get it for free. And your job now is to export and dominate these markets. So they've gotten subsidies to get started, subsidies to operate, and now they're getting capacity for free.

2:16:01And they've proven themselves as the winners in a hyper-competitive market. And now they go enter the rest of the world where the competitors are soft. And that's their formula. And they run this formula across all kinds of industries. They run it in solar panels. They run it in TVs. They run it in bicycles. They run it in electric cars. and it's a very powerful flywheel they create. But those are the four pillars. They're also starting to buy legacy brands. Have you seen this? That's where it gets really interesting. Aren't they on Volvo? Yeah, so like people talk about our Chinese cars coming to America and my answer is they already are.

2:16:41It's called Volvo. Yeah, Volvo is owned by Geely. Yeah, and Zeker is providing now the new Waymos that are hitting the road because Jaguar stopped the I-Pace production, so the new cars you're going to see are Zekers. So we already have two Chinese cars that are on the roads in America. This is not like a theoretical. It's an actual thing that's happening. We interrupted you as you were explaining how you're kind of advising GM and what American manufacturers need to do to actually— Or even America broadly. Yeah, considering they're coming for every physical— Like, should we fight back? Or is this like Happy Meal toys where it's like not that big of a deal that they're over there?

2:17:24I think it's a big deal. You know the answer to that, John. I think it's a big deal. So the auto industry is 5 % of GDP in the U.S. But let's like consider you're in Germany. It's 29 % of GDP or it's close to that in Japan. Like you can't let your car business, your car industry go because there's so much GDP is tied up in it. So that means we've got to compete. And competing means we've got to have like super compelling product. and we've got to have super low-cost manufacturing. And what's a little scary is like Amazon invented this thing called the Lights Out Warehouse. And it's Lights Out because the warehouses are so automated, there's no humans, so therefore you don't have to turn on the lights.

2:17:59The Chinese already have Lights Out factories. So like Xiaomi has a Lights Out factory where raw materials come in one end of the factory, there are no humans in the factory, and finished cell phones come out the other side. And there's like a couple of electricians and plumbers keeping the thing running, but the plant manager is actually an AI that's running the plant. That is something America has got to get ready for. And to get ready for it, we need a bunch of manufacturing engineers. And Tim Cook says this all the time. You could gather the best manufacturing engineers in the country and they would fit in the auditorium at Stanford.

2:18:34If you gathered all the manufacturing engineers in China, they would fit in three Stanford football stadiums. We are so outgunned on the manufacturing engineering, and that's where we've got to shift this fast. But that's got to be a demand pull from places like GM and Ford and others who are moving diligently in this direction. And is the answer literally Stanford? Does Stanford need to be training those folks specifically, or is it more money for trade schools or online courses? I think it's all the above. Yeah, it's all the above. Stanford needs to be training them. So does Purdue. So does Illinois.

2:19:09So does Michigan. So does Penn, et cetera. like we got to like we got to put a focus around this and really bring supply chains into the u.s so that we can have a fighting chance of not only building super automated factories but but super efficient supply chains next to them well uh hopefully we can execute thank you so much for at least laying down the algorithm and showing people how it can be done uh and we appreciate you taking the time fantastic to meet you john feel free to pop on the show whenever whenever you feel like it. Yeah, we'd love to talk to you more. Same guys, really good to talk to you.

2:19:42I'm a big fan, so thanks for having me on. Thanks so much. We'll talk to you soon, John. Great hanging. Have a good one. Let me tell you about Plaid. Plaid Power is the app you use to spend, save, borrow, and invest, securely connecting bank accounts to move money, fight fraud, and improve lending now with AI. And without further ado, we have Kari from Linear in the Restream Waiting Room. Let's bring him into the TVP and Ultra John. How are you doing? What's going on? I'm doing great. How are you guys? We're doing well. You've been stirring up the internet this week. Cooking. It's my favorite hobby.

2:20:11It's definitely something I like to do. Well, we're excited to talk about it. So yeah, take us through the announcement this week, what led to it, all that stuff. Yeah. So this week at Lunar, we wanted to share more about what is our thinking and read on the market and in our category, which historically has been this issue tracking project management. And I wrote this essay that kind of tries to talk through some of these topics. And it starts with this somewhat controversial statement saying issue tracking is dead. And I think what I was trying to do with it is to really shake the industries and everyone's thinking around this.

2:20:55And I think what still is happening is that how companies and software companies operate, they still are operating with these old assumptions and processes that are built around the old world. the world before AI agents and that kind of development workflow. So I think historically, issue tracking has been this ticketing task system for engineering. So basically, an engineer doesn't do anything unless there's a ticket. And then you have to create the ticket. Someone else creates it. It goes to engineering. There's some negotiation happening. Eventually, the engineer does something with it. And it's kind of like this line cook system where it's like someone yells, like, we need fries and and steak and then in the kitchen they start cooking it.

2:21:40And it's kind of dumb and I always thought it was dumb, but it's like how a lot of companies tend to operate. And the second problem, I think, is that these legacy platforms vendors have kind of created this kind of idea that it should be complex and they're going to encourage the complexity and the overhead of this process. So we have customers coming to us and like, hey, we want to switch to linear. But then they say like, oh, we have this like bug tracking process, which is 40 different states. And the bug report needs to have this 30 different custom fields. And then they ask, can you do that?

2:22:16And our answer is like, I don't think we should or you shouldn't either. Like the point of moving to linear is actually rethink some of this stuff. Like, is this necessary? Yeah. Yeah. And I think this becomes even more clear now is that if the agent can fix the bug in five minutes, but your bug reporting process or the process of running through that process takes a week, it starts to look pretty silly that the actual work takes a lot less time than actually running through the whole process. You're sitting here being like, I don't want to be part of the bottleneck. Yeah. And so I think my thinking here is I think we can start compressing and simplifying a lot of these workflows.

2:23:00And even I know that companies do need some process where it's compliance or security or some other reasons that you just can't remove. I think the agent can really handle that. But this statement was really for us to say that I think we should all look in the mirror. It's like, what are we doing here? and why and do we still need to do these things? And from our perspective, we don't. I think we should start looking into different problems. And the different problems is like, yeah, how do you work with the agents? And I think the problems I noticed today is one is the context problem. How does the agent know what to work on?

2:23:39Or how do you set up the agent to work on with the right context? And we think linear can be that or is already that context system for humans. So it can also be the contact system for the agents. So Linear collects user bugs. It collects user feedback or customer requests. There's also all kinds of projects. You have goals, initiatives. There's a lot of context of what is your product, what is the state of your product, and also what is the future state of the product. And then if you can bring that into the agenda workflow, I think the agents can work a lot better. So I think at Clean Air, we want to look into that category of context problems and try to find solutions there.

2:24:23And then the second problem I noticed is the agency part, that a lot of the systems historically has been quite static. It doesn't do anything unless you move that thing from one state to another. And we think now the system should be, with this right context and understanding of what you're doing and what your team or product is doing, it could start moving the work on its own. It should become more self-driving. And so, for example, this bug reporting example is that if the bugs get reported in linear, the linear agent should look at it, start debugging it, connect to other tools, make a fix, then eventually at the end tag in a human to, hey, can you authorize or verify my fix?

2:25:09And so then this 40-state bug tracking process is now like one state because the human only has to like verify it and even if it's not correct solution you still have the option to fix it and work with the agent so i don't think we can one sort problems all the time but that's just like the direction we want to go it's like is there work that linear could do automatically that the humans don't even have to look at and in and at least at the very beginning of the state and linear could start doing it for you um and the last thing i'll We are launching several things over the weeks. We launched this linear agent, which is an authentic surface for linear.

2:25:51So you can ask things. How I use it is I get feature requests from people. Then I go there. I wonder what other customers are saying about this problem. Can I understand the underlying need? Because I think the problem today starts to become if you can build anything fast, the problem is not building things anymore. the problem is deciding what to build and why, and even understanding what is the problem. I think linear can be a system where you can understand the problem, shape the problems, and then pick a direction or solution, and then start working on the, have the agent work on it with that correct context and direction.

2:26:30Then in the future, we're working on our own coding agent, which I think there was some confusion about it. And I think the goal there is it's more like a wrapper around these existing coding agents. And what we do there is we can dog food our own platform, which we have this agent platform that third parties like Codex and Devin and Cursor have participated in, and they have their agents in there. But because we are building our own, we can create the capabilities and the tooling and the hooks or whatever we need better because we also notice the opportunities as we build these things. And we also just generally see that there is probably situations where the linear coding agent can be better than some of the generalized coding agents.

2:27:18Yeah, I think it's really smart to, if linear had been started 10 years prior, you would have been able to just do the legacy SaaS playbook of like, let's just try to add a lot of seats every month and compound forever. And that was a beautiful existence. And now our entire industry is like disrupting itself. And so you can choose, I think, Toby Lutke on David Sendra's show was talking about like every category is up for grabs. There's going to be an AI native company in every single category. You can wish that this wasn't happening or you can decide to be that company. And the mature, hard thing to do is like, Admit that things are changing, embrace it, rally the team around it, rally your customers around it.

2:28:06I think it makes a lot of sense. How do you think, taking a step back, what's your view on how enterprise software categories are evolving? Because I think a lot of people are kind of waking up to this idea of everybody wants to be, at least in software development, in the pipeline of tools, everybody now wants to be the same kind of like the same thing. You want to be the place where people go to, you know, encourage the machines to do things right. And kind of do that. And so, and how do you see linear's role evolving? You know, you've been very open to different agents leveraging the platform.

2:28:50I'm sure, you know, you'll continue to be, but, but yeah, How are like software categories evolving in this era of like, you kind of need to be selling, everyone's trying to sell work? Yeah, I don't, I don't think I have the complete answer there. I think there's a lot of nuance and it's like, depends on the markets. I, I do think like that's that feeling of everyone's building the same thing. It's, I think partially comes from a lot of people are noticing the same primitives and from like the same kind of blocks or pieces of this puzzle. and then they're trying to figure out what is the right setup for that what is the right order of those things and who is actually the best one to own part of that puzzle and I think that's the feeling probably there but I think my thinking is that it's similar to earlier software days too it's like when people invented databases now everyone's like why is everyone making databases everyone wants to be a system of record Yeah.

2:29:54So I think there can be a lot of shared primitives across products. It doesn't mean that every product still has the same outcome or the same advantage or something. And I think we don't know how this will all play out. and I think the other thing I'm seeing is that there's this idea of let's throw everything out no SaaS at all and I think that's an option but I think you can do that and then you start inventing stuff back from the first principles and you maybe end up in the same spot again and I think that's what we've seen in our space is everyone's running their agent and now they have 10 agents running so then they put them on a Kanban board which Linear has And then it's like, oh, now I invented the agent orchestration.

2:30:42Like, no, you invented the Kanban board, which has been around for 30 years. But you just put the agent on a Kanban board. So kudos to connecting those two topics. But it's not like that. Some things don't need to be reinvented. Some things can still work. But if you just throw everything out, you kind of start from the beginning. And then I think it's a long journey to figure everything out again. Yeah, I got an investor update last year that was just like, workflows have been rebranded in the product as agents. And that was a funny moment because I was like, okay, some of this stuff is, you know, very new approach to software, but some of it is just kind of repositioning.

2:31:27I have one more question, but first we got to give a shout out to Russell Smith from Y Combinator, summer 2012. we're not beating the YCS12 mafia allegations on this show since I believe we all went through that one but my last question is you know we talk about linear every day on the show 75 % of enterprise work enterprise companies are using agents have you talked to the other 25 % like what is unique about those businesses that they haven't jumped in are they just like asleep at the wheel or is there something unique about their business where they're sticky and for security reasons or some other reason they're using agents but haven't integrated them maybe i'm just interested because yeah it feels like you know this is such everyone understands how powerful agents are why is it not 100 that's always an interesting question yeah and to clear the stat is like like 75 77 of like linear workspaces have cloud agents okay so as a there's a difference between cloud agents and the local agents so we track the local agents.

2:32:32But okay, so I think the couple things like the cloud agents are still somewhat like less developed today, there's like environment problems where like, if you have a massive system or some kind of large company system, the environment starts to become kind of complicated, and the industry hasn't fully solved it yet. I think it's a soluble problem. And many companies are kind of like solving it with the sandboxes of like, you start a sandbox, the agent has the right environment and can do the things. So there's just a timing piece, a similar timing piece. Not everyone has decided to do this and go into the cloud agents.

2:33:10The third piece, which is kind of the stupid reason, is the policy. So companies are still procurement, IT and securities that will run a lot of decision-making when it comes to tooling in companies and there is a lot of companies that like the employees ask can i use the agent and they say no you can't and they don't have like a reason for it or like we have to evaluate it and that evaluation takes months and i think like what the companies need to look into here is like what this has to change like you can't like like the industry is moving so fast so you cannot have like a month-long like many month-long processes to evaluate every single new tool like i think like the the security standpoint is like valid but like you kind of have to like figure out a new way to think about the security and not like block new tools so i like one hack to this i've seen in some companies is like they have this friction form so engineers that want to use like feel friction yeah and that they want to use new tools or ai they form a fiction form like file a fiction form and then that escalates it to the higher leadership and then it makes an sla that has to be resolved in a week or in 10 days or something yeah and so you force the hand of this like procurement it and security people to like do something about it because the incentive a lot of times for this jobs is like you don't want to rock the boat so you don't want to change things if you don't have to so so then like the companies do i think that leadership should recognize that But we do have to allow people to use new tools.

2:34:52Otherwise, we will kind of fall behind here. Well, thank you so much for taking the time to come give us the update. Always good to hear from you. And we'll talk to you soon. Have a good rest of your day. Awesome progress. We'll talk to you soon. Great to see you. Goodbye. Bye. Let me tell you about Gusto, the unified platform for payroll benefits and HR built to evolve with small and medium-sized businesses. And without further ado, let's bring in our next guest. Yeah, it sounds like a lightning round. Yes, this is the Lambda lightning round. Tell me what's happening. Good to meet you. You're here with us.

2:35:23Please introduce yourself in the company because not only have we not heard of you, but I think you're coming out of stealth. No one's heard of you or at least this company. No one has heard of us. I'm Demi Clari. I'm the co-founder and CEO of a company called Neon Bio. In a nutshell, what we do is we genetically engineer chickens to produce medicines inside their eggs. Wow. How did you get into this? What's your backstory? So I'm an aerospace engineer. So naturally, I went into biotech. Yeah, chickens. My co-founder is an evolutionary biologist as well. I've always been involved in manufacturing of complex things.

2:36:02Planes are sort of one complex thing. These proteins, these medicines are also similarly complex in different ways. as some of the problems facing drug pricing and sort of the onshoring of manufacturing had come to bear over the last few years seemed like a good place to hone my skill set. So what do you think? Yeah, where did the original kind of concept come from? Was your co-founder, you know? Making an omelet. Hanging out with chicken. This will cure cancer. you know um we like these chickens they lay eggs every day we got to put something in them outside of you you're not far off i mean we all know chickens to be sort of incredible sources of edible proteins you know the ones that make your omelet most new medicines today are uh are complex molecules they are proteins themselves and so um the way they're manufactured today prior to neon bio is, you know, it's expensive.

2:37:10It's sort of reliant on these complex, fragile global supply chains, and it sort of makes these drugs inaccessible to most people. But chickens happen to be the universe's best protein factory. You know, they've been honed by 250 million years of evolution to efficiently turn very simple inputs, grain and water into complex outputs these proteins inside their eggs and so we harness that same system to produce you know some of the drugs you might see advertised on on TV like Humira or Keytruda. How so I mean how far away are you from actually doing a partnership with a biotech company that owns intellectual property around a particular protein it feels like there's this dance between like you need to genetically engineer the chicken, make the chicken, get the eggs, extract the protein, actually get into the drug.

2:38:04That sounds like years, but then there's only, there's a ticking clock on every drug that's out there in the IP landscape. So how do you marry those two? Yeah. So one of the things we announced today really is, um, is this large commercial deal that we signed, um, with a partner to bring up to three drugs to market. Up to three drugs. Okay. And the drugs that we're focusing on to start with are known as biosimilar. So they are drugs that have existed. We know they work. They're on the market. They can cost in the thousands or tens of thousands per dose. That's super expensive. We are starting with those because they're known molecules.

2:38:42We're not taking on molecular risk there. Over time, we're developing technologies that will make this process way faster, much more efficient, increase the yields. But for now, we have a very good market in the biosimilar space where there's huge demand for these drugs. Coupled to sort of the cost aspect, which is sort of a big part of our value proposition. How many doses from an egg? Are we talking, is it a single shot or can you get potentially multiple doses? Because I'm just thinking at some point you're just scaling a facility that has chickens in it. Yeah, we scale by breeding chickens.

2:39:24That's one of the advantages here, right? It's pretty linear, and we know how to do that. To just give you a sense for scale, you know, with a few thousand birds, and to give you a sense of what that means, you know, a small farm is anything below 25 ,000 chickens. So with a few thousand, we can produce the global supply of a drug like Humira. So a chicken can treat, you know, depending on what the medicine is, anywhere between 10 to 100 people in a year. Wow. That is remarkable. That is insane. Do you not have a chicken sound effect? I was just about to text the team. We need a chicken sound effect.

2:40:01Play the rest of the barnyard. We got the whole. Because we'll ask, is there a plan to make horses work for us, goats for us, sheep? Are you staying in chickens forever or will there be other animals? Okay, eventually. Okay, well, call us back. We need horses to save us from other ailments. There are actually drugs that come from horses as well. You know where my mind's going? Partnership with Varda. Varda, yes. Space chicken. Space chicken. I mean, I was thinking about that when you said aerospace to bio. There is an interesting overlap there. Well, thank you so much for taking the time. Yeah.

2:40:39Thank you, guys. Yeah, we're having a lot of fun, but this is one of the craziest pitches. I think Caffeinated Capital is, I think, an investor in both companies as well, right? That's right. Okay. Raymond loves making drugs in difficult ways, but potentially extremely valuable ways. That's very cool, Demi. Very cool. Thank you so much for coming on. Thank you, guys. This was great. We'll talk to you later. Bye. Let me tell you about Vibe.co. where DTC brands, B2B startups, and AI companies advertise on streaming TV, pick channels, target audiences, and measure sales just like on Meta. And without further ado, our next guest, Mikey Schulman from Suno.

2:41:16He is the co-founder, and we cannot wait to talk to him about AI-generated audio. Let's bring Mikey in from the Restream waiting room into the TBP UltraDome. Mikey, good to see you again. Thank you so much for taking the time. Welcome back. one of the most interesting do you call yourself a neolab is that a fair characterization great to be back thanks for having me we definitely do not think of ourselves as a neolab but you are training models you're doing AI but you're a product company are you a consumer company how do you think about yourself we're a consumer company we're an entertainment company consumer entertainment doesn't seem so hot right now I'm not exactly sure why but being entertained and fulfilled is like a basic part of being a person.

2:42:04And so often underlooked part of the market. Yeah, we're like the word we use here is creative entertainment. Sure. We are giving people the best, most fulfilling creative experiences of their lives. Yeah. I mean, that sounds maybe broader than music one day. Have you thought about video? Are you thinking about, I mean, I'm on Spotify. A lot of times a video will pop up alongside the music. Are you thinking about expanding or continuing to refine the music model itself? It's a great question. I think there's a lot of reasons why this is going to work really, really well in music, least of which is we love music.

2:42:46This is like really the DNA of the company. But I think creative entertainment is coming everywhere. And I think about it like this, like I think even Claude Code or all of its competitors are creative entertainment. I don't know how much you guys play around with it, but it's like really fun to build things and it's really fun to use what you build. And there's a huge allegory there for music too. Sure. Yeah, yeah, that makes sense. The tinkerer mindset. Let's talk about progress since the last time you popped on. You guys grow on revenue at all. What metrics can you share? I had heard some rumors.

2:43:18Yeah, so the growth has been great. A lot of things have compounded, a lot of hard work from the team and kind of some big step changes in how people engage with the platform. So since our last model release, yeah, recently we kind of announced that we had hit 2 million subscribers, 300 million to, and we're like, oh, sorry to interrupt. And you got cut off a little bit, but it's 300 million of ARR, you said, right? That's remarkable. Yes, that's right. That's wild. Insane. And how much have you appreciated how much have you appreciated the all the other the labs just slugging it out like well while you guys just kind of stay stay in your niche focus and and go after what what clearly is a massive opportunity but but maybe it stays kind of off the radar for some of these other labs long enough for you guys to just run away with it truly i like wake up six days of the week and i think um this is great we're the only ones really playing in consumer entertainment and i'm really really excited.

2:44:23And then the seventh day of the week I wake up and I say, like, we must be missing something that all these other giant companies know. But I think it's what I said before, like being fulfilled is a much elevated state than utility. And everybody is focused on utility because it's straightforward. But eventually, like you need something more than that. This is like a basic part of what being a person is all about. So we love to focus on it. I love watching people slog it out in other domains where scale and compute and dollars are honestly bigger weapons than they are in music. Yeah, we've been I've been enjoying Suno a lot throwing out, making songs for the team.

2:45:06It's an amazing thing to just be joking. In our use case, we're just joking around about something. I'm just like, alright, I'm going to turn it into a song. It's a lot of fun. But yeah, talk about the updates on the product side, the new voices, functionality, all that. Yeah, it's a really exciting launch. We, a couple hours ago, released a new model. It's our best model yet. We'll make the best music. But I think most excitingly is really gets personal. So you can use your own voice to make music that sounds like you. And if you're not the best singer, it actually sounds like a better version of you.

2:45:46And so there's something beautiful about that. Auto-tune? Yes, yes. And without sounding too artificially auto-tuning. Go try it out. I've learned not to try to demo this for people in large groups. People don't like singing in front of their friends. So I'm not going to try that here. and then some other personalization features on the creation side about how you really kind of tailor the system to really know everything that you love and then also really exciting is the ability to upload a bunch of tracks from off platform of your own that you can kind of inspire the model to be more like those and we've seen some amazing things happen from everything from like musicians, film composers, producers to like uploading tracks there and getting the model to really kind of follow their leads.

2:46:36It's like an incredible way to fall in love with a particular thing that you already love. I'm super excited to play around with it. John? Yeah. Is there, I'm interested in like top feature requests and what we can learn. I don't, you know, obviously you don't want to spill your entire roadmap, but some of the interesting things that happened in image models where you could at a certain point take an image and basically just replace the background and it wouldn't sort of regenerate your face. And I feel like there's a lot of opportunity if artists opt in or I have music to say, okay, I want to keep the song exactly the same and just change out the lyrics to do sort of a remix or keep the lyrics exactly the same and change out the style, style transfer.

2:47:23And I feel like all of those are maybe it's going to be more of a lift on the business development side to figure out how to do that. But what are you excited about in terms of increasing the level of control from the creator or the user? A lot of what you said is coming soon. I think unlike other media, music has like a very rich history of basically derivatives from covers to samples to remixes to mashups. And people riffing off one another is a way to spark creativity. It is a way to keep old works alive. And so you'll see a lot of that come in the not so distant future. Some of it's already on platform.

2:48:09Yeah, of course. Something people don't know is almost a quarter of all songs made on platform are derivatives of other songs on platforms, like a lot of covers, basically. And so there's kind of a social ecosystem around these things. Yeah. What's the B2B side of the business like? We talked to a lot of AI video generation platforms, and it seems like there's a lot of just ad creative, like ad agencies, basically, that are using the tool at volume beyond the creativity and just the fun of making an AI video for themselves. They actually see it as a way to accelerate creative works on their ad side.

2:48:50And I'm wondering if you're seeing pull from ad agencies saying, hey, we need a new song for this campaign. We have some AI-generated video, and we're going to partner with Suno on that. We've definitely had a lot of outreach. Honestly, it's just not a huge focus for us right now. We want to delight everyone, just regular people who love music. and we're honestly like a lot of the company's DNA is not being, not trying to do the same thing a little bit faster or a little bit easier, but actually to try to do something that is entirely new and like that is changing how people entertain themselves.

2:49:27So there's probably a big business to build helping people make songs for ads or jingles for companies. Maybe we can work together on a jingle as a side project, but for us, that'll be a side project. What global superstar has embraced AI music the most? And is it Meek Mill? The most? Oh, I don't know. Because you kind of have to go on like a villain arc a little bit. Soldier Boy did an AI. Again, the last time we were here, I was telling you, somebody I know in the music industry is like, every artist is using the Suno. Every artist thinks it's amazing. nobody wants to talk about it yet because they're kind of scared of the reaction from the world and the creative industry and all this stuff and so it feels like the first one or two people to go in a huge way will get some pushback and then over time it just is normal i i think it's slowly changing um i don't want to out anyone but um this was this is a quote that is attributed to me but it's actually not mine.

2:50:32I'm not this clever of everything that you just said ascribing. This is the, the GLP one of music. It's like, everyone's on it and no one wants to talk about it. Um, and, uh, I think these things just take time. So I'm not, I'm not gonna, I'm not gonna add anyone just yet. Um, but it feels like things are changing. Final question from the chat. Are there deep cuts on Suno? Uh, I don't know. Deep cuts. What is, what is deep cut is deep cut is like deeply underrated, like from deep cuts in the vinyl, like everyone knows. Yeah. Yeah. No, I understand, but it's not, it's not for me to say like what is good and not good.

2:51:10Like we never want to be the arbiters of good music and bad music. And like, um, like I have deep cuts of my own that you're going to hate like that I made and I promise you'll hate them. I guess to quantify the question, it would be like, do you think the listener, uh, the, the, the, the, the plays are less power law distributed than on, say, Spotify, where Spotify probably has Taylor Swift, Taylor Swift, Taylor Swift at the tall end that's driving a ton of consumption. Do you think that your curve of consumption is a little bit more even? For sure, for a couple of reasons. One is that the whole purpose of the platform is actually to enjoy creation and not necessarily to go and browse for other people's music.

2:51:51It's actually to get inspired to make your own music. And so we actually see people falling in love as much with their own music on platform as they do with other people's music, which is amazing and new. So it's more, it's, so the answer is more deep cuts. It's all deep cuts. Yeah. Okay. But in the, in that lens, it's all deep cuts. I love it. I love it. Uh, yeah, no, I mean, obviously not to paint it into a corner. Uh, there, there's a million ways to think about this, but thank you so much for taking the time to come chat with us. Yeah. I'm excited to play around with the new model. Congrats on the progress.

2:52:20Have a good one. Let me tell you about Figma. Agents, meet the canvas. Your AI agents can now create and modify your Figma files with design system context. It's in beta starting today. And our next guest is Ida Bardari from D-Valence, the anti-surveillance company. I'm very excited to talk to you. Congrats on the viral sensation. But since this is your first time on the show, please introduce yourself and the company. Definitely. Thanks so much for having me. Hello, everyone. I'm Ida. I graduated with a degree in physics from Harvard, and now I'm building the Valence, a company that's protecting your freedom.

2:53:01How does it work? Great question. So basically, we're building on top of existing ultrasonic jammer technology. But what we're integrating here is that we're making it a smart device, which takes in information from nearby environment and then targets our distortion signals into the direction of where we detect smart devices. And then simultaneously, we also have an AI algorithm that makes sure that the distortion signals that we send out use artificial tones and voices that make it hard to decode. Okay, let's take it one more step back. What is the actual problem that people are experiencing today and may not even be aware of it?

2:53:41Yeah, no, I love the question. So at the beginning of 2024, we saw a huge rise in AI variables. I mean, I think everyone in the Valley probably knows about Friend, about Omi, all those promising technologies. The problem there becomes, well, when you have a conversation and, for example, you just forget to turn it off, A lot of confidential information, private information can be used to train AI models that you might not necessarily want to be trained on it. And people already have this problem who deal with a lot of confidential information in their everyday professional lives. So that can be people working in jobs that deal with IP with other sensitive info.

2:54:19And this issue is way broader than just audio recordings. We also see this with meta Ray-Bans happening. There's a lot of unwanted recording happening there, a lot of freedom for people to just go out and do whatever they want. And simultaneously, of course, digital data collection has been a thing for a long time. And the way that it's used in recommendation algorithms, for example, is another thing. So cognitive security is also a big part of this. How do you not disable someone else's device if you're okay with them using it? I was skiing and a friend had met a Ray-Bans and he was talking to them and I was sort of eavesdropping on the questions he was asking.

2:55:05He was sending texts to friends and whatnot and he was fine with me hearing it. If I was wearing this device, wouldn't he just not be able to use his device? In this particular case, I mean, if you don't mind, then you can just turn it off. Okay, that makes sense. So it's very easy. It's like an on-off thing for you to genuinely be in full autonomy over it. Okay. And then what's, obviously, it sounds like you launched pre-orders. Who has been buying? Is this corporations that want to make sure that they're, because you could imagine, you know, cell phone jammers exist and Faraday cages exist. There are ways to secure a property.

2:55:44Is this just privacy-conscious individuals? Is this a direct-to-consumer product mostly? So for the pre-orders, it's been mainly consumer-facing, which means that a lot of people who have pre-ordered it are in the range that the price point allows. But we are working to make it accessible and affordable to everyone because we really believe in the mission that everyone who wants autonomy, really, and agency over the day that they should have it. but we also are working on a version that is for more like organization based because they usually have different requirements um so we're also working on that why is this we got to get tj one of these oh yeah gifted one our friend tj parker absolutely hates yeah meeting meeting recording and all these things that are just can you make it into a watch that would be the killer out.

2:56:35He's a watch guy. I know. There's a lot of cool stuff with the form factor that we're experimenting with. But are you going to be in a little bit of like an economic war here? Because $1 ,000 product to counteract something that costs$100, there's an economy here that's sort of misaligned. I'm also interested to just hear about how on earth can a recording device cost$100 while an anti-recording device costs$1 ,000. I imagine that you think the price will drop over time, but what is in the device that is expensive? Yeah, there's a lot of processing that's going on because we have certain algorithms that require a lot of power in order for it to work.

2:57:19So that is honestly a big component of the cost that's driving it. Maybe even a more powerful chip than what would just be in a passive audio recorder. Yeah, I mean, passive audio recorders, they are usually not as complicated to build, right? You basically just need a mic and then you can just detect the stuff, right? But in this case, you want to find nearby devices, then you also want to make sure that they're blocked. And then you also want to make sure that the way that you're blocking them is not just reconstructable in post-processing. So there's like three different tasks here that make it way more expensive, unfortunately.

2:57:58But we're working on it. What are the laws around this right now? I remember the backlash to Google Glass and then everyone had a phone and it just seemed like if you're out in public, people can just take pictures of you and record you. Is it legal to block someone from recording me? I don't know anything about this. Yeah, that's a good question. In terms of recording, there's one party and two party consent states. But nobody really follows that, I feel. Yeah. What's the two-party? Is California two-party? I believe it's two-party, yes. It certainly doesn't feel like it when you walk around.

2:58:37No, it definitely does not feel like it. Exactly. That's what I'm saying. Nobody really follows it. Or it's not really enforced by folks. And then regarding the blocking, so certain blocking is not allowed. So, for example, blocking from RF jamming is not allowed because you can get in the way with emergency services. But unless you don't do that, there's certain areas in which we can work in. Okay, yeah. Very interesting. Well, where can people find it? Where can people pre-order it if they're interested? Go on our website. It's stevevalence.com. That's where you can find it. Otherwise, I mean, in general, we're going to be posting a bit more also about the development process and the general vision and mission behind the company on our social media platform.

2:59:18So on X, we're on B and Audible. And then my personal X account is just my name. I need a little jammer for John's mic sometimes he'll just keep talking no I'm kidding well thank you so much for coming on yeah great to be very very cool the chat is in a positive way saying that it feels very Harry Potter coded to have this sort of magic device that that's a good one that's like oddly high praise yeah become invisible it's the invisibility cloak for the modern era well thank you so much Congrats on the progress. Thanks for having me. Excited to follow along. Have a great one. Let me tell you about app loving.

2:59:59Profitable advertising made easy with Axon.ai. Get access to over 1 billion daily active users and grow your business today. And without further ado, we'll bring in Zach Cantor from Steady. Zach, how are you doing? What's going on? No audio. You look fantastic. You have many books. This lighting is fantastic. And the bookshelf is fantastic. This is, of course, Zach Cantor. He is the founder and CEO of Steady. How about now? Can you hear me now? We can hear you now. How are you doing? Here we go, guys. Thanks for having me. Thanks for hopping on. Great to do. I feel like I've never met you in person, but I know you from the internet for so, so long.

3:00:35So good to finally meet. We're Twitter friends. That's how I meet many of my reputable and disreputable friends. Exactly. But for those who haven't been following you and your journey since it is the first appearance, please introduce yourself and the company. Sure. I'm Zach Cantor. I'm the founder and CEO of Steady. spelled S-T-E-D-I. We're a healthcare clearinghouse. So if you're not familiar with the world of healthcare, we exchange the administrative transactions that power all of healthcare. You probably heard stats like this before that healthcare is 18 % of US GDP, so it's a pretty meaningful chunk of the ecosystem.

3:01:11But you go into your doctor's office, they ask you for your driver's license and your insurance card, and then they tell your copays$20 and you have three visits left and all those details. That's a transaction called a real-time eligibility check that happens under the hood. We process those. We process tens and tens of millions of those per month. And then when you finish the encounter, whether it's a surgery or a teeth cleaning, whatever it might be, they have to send a claim. There's a series of messages that come back. So it's an adjudication message that comes back saying the claim is rejected or accepted.

3:01:44And then the claim gets paid somehow. You get those things in the mail that say, this is not a bill explanation of benefits. Your doctor gets one of those as well. They can get them via paper, but they can also get them electronically. And basically we process all these transactions back and forth. And why can't a registered nurse just vibe code a system to do this for them? I'm just kidding. Well, it's a funny question. It's interesting. So we primarily think about our business as selling to other technology companies. You think about us as like the stripe of healthcare. But we've seen a surprising number of these small and medium-sized doctors and dentist offices that are signing up.

3:02:23And so we recently did an analysis and spoke with a bunch of these places. And it turns out that indeed doctors are vibe coding revenue cycle management systems. It's not thousands of them, but it's dozens of them. That's amazing. What have been the key milestones for the business? You're raising new money today. Your name is Steady. Yes. John was saying how he's known you forever from the internet. I feel the same way. Just steadily chugging along. But yeah, what does this milestone represent? Like, what did it take to get here? Healthcare, every healthcare founder will tell you that obviously this big, massive market, but doesn't move as fast.

3:03:07and it can take years to make progress that another industry might happen in a quarter. It's interesting. We didn't start in healthcare. I don't come from a healthcare background. I previously started a brand of auto parts. I manufactured auto parts in Taiwan and China. I followed the typical auto parts to healthcare pipeline as many farmers do. In building that business, I sold to O 'Reilly Auto Parts and Amazon and these different retailers. and I had to, at some point, it was probably in like 2011, the transaction volume got such that it wasn't feasible to have these things manually entered anymore, before AI.

3:03:48And so I reached out to all the different retailers that I was selling to and asked them to send me the API spec for their purchase orders so I can automate the transactions. And over the next two weeks, they all wrote back and they said, what's an API? And so things got a little bit better since then, but what I found out at that point was that this whole world of retail, logistics, supply chain, transportation, etc. Manufacturing is powered by a technology called X12 EDI. And so if you see steady is spelled S-D-E-D-I, it's because we started with this underlying EDI technology. And long story short, maybe long story long here, I got so frustrated with the various EDI systems that were out there I said, look, what I want to do is I want to receive purchase orders in.

3:04:31I want to get them into NetSuite. I want to have those automatically sent to a warehouse. I want the warehouse to ship the order. I want the transaction to come back. I want when things come in via Flexport, I want those things to you know get automatically pushed into my system. This can't be that hard, kind of famous last words. And I was like I got so sick of the the solutions that were out there that I ended up having my own system built. And then you know I ultimately sold the auto parts business to a private equity firm and I started to study. And I spent like 50 grand on which first you know was a bootstrap business.

3:05:01So spending 50 grand is a lot of money. 50 grand on building this homegrown platform. And I was like, you know, it's going to cost like 10 times as much to do this for everybody, for all transactions. I was like, but to be safe, you know, there's margin of safety. I'll raise a million dollars instead of 500K. And, you know, now we've raised$142 million total. And I think we still have more to do. It's gong time. It's gong time. Here we go.

3:05:29Thank you. Thank you. What's your favorite car? Oh, favorite car. You know, it's funny. Like, I grew up, you look at, you know, the Porsche 911. You say, like, that's like a car that old guys who don't know anything about cars buy. And then you go and you drive one. And it actually turns out that 911, you know, 60, 70 years of iterative design is pretty good. Yeah. What kind of auto parts were you selling? I'm in the market to pick up a straight pipe exhaust system. I was a birthday present for Jordy. I'm hoping to get him some LED under lighting as well. Maybe stance his car. Were you doing anything like that?

3:06:04I can hook you up. You can help. We're going to. That's fantastic. It's going to be like, you know, TBPN. Yes. My ride edition. Yes. Yes. That's what I'm looking for. I want a horse. You like horses? We put a horse in your car. We put a gong in the passenger seat. You can't transport anyone, but it looks good. John has been trying to get me to go the Mansory route. Yes. years and he will be doing it until you got to do it until you do it. Until you do it with the full sponsored livery wrap. You guys hiring, I'm assuming? Yeah. Engineers. Talk a little bit about the company culture. Where are you based?

3:06:45Are you in person, remote? What's the scale of the company right now? We're about 125 people. We're distributed. We have a bunch of people in New York, but we've got people all over the place. I live in the Bay Area. And look, I think, you know, with the talent wars, you know, look, there's obvious pros to being in person. At the same time, you're kind of making the implicit decision that you're going to exclude 99 % of your potential hiring pool and saying we're not going to be able to hire those people. And for us, we think the trade-offs worth it. So we're, yeah, we're all over the place. That's amazing.

3:07:17Awesome. Well, so great to finally meet. Yeah, great to finally meet. Amazing progress. Yeah. Thanks so much. Thanks, guys. Thanks for having me on the show. We'll talk to you soon. Cheers. Have a good one. Let me tell you about Finn.ai, the number one AI agent for customer service. If you want AI to handle your customer support, go to Finn.ai. And let me also tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds, online, in-store, on mobile, on social, on marketplaces, and now with AI agents. And without further ado, we're going back-to-back.

3:07:43There he is. Oh, we got Nick. Nick. I thought we were having Zach. Great to see you. I was excited to go back-to-back, Zach-to-Zack. Look at this, plaid on plaid. This is a beautiful background. This is a beautiful outfit. Introduce yourself. Now, that plaid. Tell us how it's going. This is where I'm living now. It's good to see you guys. Good to see you too. Good to see you, dude. How you doing? Let's just start with a gong. Start with a gong. Let's start with a gong hit. I don't want to wait. I don't want to wait. Don't delay. The anticipation was too high for the last one. Congratulations. You know how long I've dreamed of that moment.

3:08:11I've got to take a picture of my mom. Let's do it. Got it. Fantastic. There's one. You can, of course, screenshot it. Yeah. But it's cooler. It's cooler. You know, later you'll be able to screenshot yourself taking a picture, which is and then say, look, mom, I took this screenshot of me taking a picture for you. Give us some background. Tell us the story of how you wound up in this particular situation. Just just take us through it. Well, I'm excited to talk to you all about it, because as pioneers of new media, I feel like you'll understand this more than most people. But, you know, we've been building this week in FinTech as what started as a FinTech newsletter and turned into more of a FinTech media company over the last six and a half years.

3:08:57And the Plaid team approached us about five months ago. And I thought we were going to talk about a partnership. So I came in there ready to sell a sponsorship, ready to sell a media deal. And they said, actually, you know, we've been thinking a lot about how we can improve the conversation around FinTech. And we want to partner with you guys. And what that means is we want to acquire the business. And they won. They out-negotiated me. But here I am. Amazing. So what do you think stays the same? What do you think changes? Are you going to be working in their office? How does all this fit together?

3:09:30Yeah, I went and did a little office tour this morning, and I got a badge. So they haven't given me my gun yet, but they did give me my badge. And so after six and a half years working out of a home office, just seeing another person and having a conversation in an office was a transformative experience for me. We are going to keep things mostly the same from now, and then we'll just keep adjusting as we go. I think probably the best comp for what we're looking to build is something similar to Bloomberg with Bloomberg Businessweek, where these are two really complementary properties. There's obviously a parent company.

3:10:01They share a name. But you can be a Bloomberg software customer without reading Businessweek and vice versa. Yeah, that makes sense. What is the state of fintech? What are you? I mean, you've been six and a half years. You've seen the boom, the momentary bust, the comeback. During that time, there's been so many companies that have thrived throughout the entire period, even as the market was in turmoil overall. But what are you most excited about today? Well, I assume most of the half a billion TBPN watchers know Jordi's background. But Jordi is an exited fintech founder who built Party Round and Capital.

3:10:47And so you also had a front row seat to kind of the change in the fintech ecosystem over that period. Today, what I've noticed is you had this spike in fintech enthusiasm and funding in the venture community in 2021. A lot of companies got out over their skis because of capital availability. And I think there were sloppy decisions made. And a lot of them took tough medicine. some of them didn't make it past the downturn in liquidity for fintech startups but a lot of them said look we're going to build real businesses now we're going to take the tough medicine and we're going to come out the other side stronger and so if you look in the top right corner and see ramp like that's a great example of a company that has been around for a long time said hey we grew too quickly downsize and now they're better for it and are just kind of crushing and shipping on a weekly cadence and really redefining this entire category.

3:11:38And so what we're seeing today is you have fintech companies. We've been talking about this for a long time. You have fintech companies that are actually taking market share from incumbents. I know fintech companies have wanted to say, hey, we're the challengers, but we're going to be the dominant providers of financial services one day. But now that's actually happening. And so thinking about this with my plaid hat on. So much merch. I love how you brought, you just came with the same, you came prepared. You understood the assignment, the same entertainment level as we bring. Put on your steel man, John.

3:12:17We noticed that, you know, the tech media conversation hasn't really caught up to how well some of these fintech companies are doing. And it's tough. Technology media is really stretched. And I think there are a lot of different areas like AI, like crypto that command a lot of attention. And so you have really well run companies like Ramp that are doing generally interesting stuff and shipping at this crazy rate, but nobody's covering them. Oh, they have a TVPN. And so we're looking to really bring that kind of level. Even we're not covering it on a level where if you're a fintech industry insider or builder, you're actually getting alpha from our fintech coverage.

3:13:00And alpha comes into like, okay, what does infrastructure look like? What bank partners are evolving with the needs of these companies? Like, you know, you guys are going like 10 layers deeper and have been for so long. I think it's super important. Yeah. Last question for me. I appreciate that. What media formats, how would you describe where you are now and then what excites you? Because obviously the newsletter list is over 200 ,000 subscribers. Congratulations. Massive. How many newsletters do you want to send a year? Do you want that to increase? Do you want to do more events, video, interviews, audio?

3:13:41What's interesting to sort of like zoom out and think about the next couple years? Yeah, you know, our DNA has always been the community initiative. And so events are a big part of what we do. International is a big part of what we do because there's so much interesting innovation happening. You know, American tech companies will go on stage at conferences in Mexico City and in Lagos, Nigeria and talk about what they're doing. But then they actually start talking to people who are operators in Lagos, Mexico City. And like the level of innovation there is often, you know, more advanced in fintech than you'll see in the U.S.

3:14:16Because these are areas that don't have the same level of financial services. And so you actually have to build a lot more there. And that's been a big part of our DNA, too. And so I think it's really double down on the community focus, really deep, thoughtful writing, and continuing to grow the pie, not just here, but internationally as well. That's awesome. Well, congratulations. Amazing. Super pumped for you. Thank you so much for taking the time. Match made in heaven. A true match between the background and the church. Truly. It's fantastic. Come in person next time. Yeah, yeah. It's great to finally have you on the show.

3:14:48Yeah, we'll catch up soon. Have a good one. We'll talk to you soon. Goodbye. Good to see you all. And up next we have the co-founder and CEO of Plaid, Zach Brad in the WeStream Lady Room. Let's bring him into the TV panel for them. Zach, how are you doing? Doing well, thank you for having me. When did you first meet Nick? That's a great question. I think it was at a Monday 2020. I think it was maybe like six years ago or something like that. It's been a long time and we've long admired what Nick and Tim built. I feel so honored to get to work with them in this new way and it's been pretty amazing to watch them go over the last few years yeah yeah talk about your experience as CEO at an event what makes for a good event that you will say yes to attending appearing at etc like what's the secret sauce that you're like okay that clicks into place and I'm going to say yes to that because I'm sure you get invites every day Yeah, I think, oh man, this is a difficult one because my default answer is no.

3:15:50I have the conversation frequently of no new things. Yeah, there's a lot of stuff. I think it all comes down to who's there and the size of the event. Small things where I can meet people that are of really high value are super interesting. And things that have content in an angle that's not covered all the time in the same way are valuable. So I don't say yes to a lot of things, which feels fortunate. Also, I really like working, so it's hard to get up from. We're the same way. Outside of this acquisition, what's on your mind this week? What's the business focused on? What are you focused on personally?

3:16:35Well, first, I don't want to skip over this week in FinTech. I mean, big deal for us. We've been really excited to push this conversation forward. over the past many weeks. We're excited to now finally have Nick and Co as a part of the team. And the future together, I think, is going to be super fun. Aside from that, a big focus is AI, FI, everything. So you might have seen we did a launch with Perplexity. This was, I think, a week and a half ago or so where we can power the finance tab of the Perplexity application. And it allows you to do things like see your stock portfolio in real time, get an update in the morning to understand what stocks you might want to trade in a given day.

3:17:18Lots more that we're going to do with them to bring in more financial data into perplexity. And I think this is the first step in a lot of consumer-facing AI experiences. So that's been a big one for us internally. Yeah, that's very cool. I mean, you think about people are using, they're going to AI tools for intelligence to help them understand the world, but then they lack all of the, you know, maybe you've put something into the context or maybe that has some memory, but it's lacking like that real, real time data on you individually and money being at the core of everyone's life just means that it's like very important for it to be in there.

3:17:57So that's very cool. Yeah. What is the, what is integration with AI tools look like? How you're known for the API, which has had years and years of development. There's MCP now. There's skill.md files. There's all these different ways to interact. The agents can obviously use APIs and write their own API integrations. Where do you see that going? Are there any changes that you need to make or you're in flight already making? Yeah, so the true answer is the core of Plaid doesn't change all that much, right? Yeah. We are a pipe to bank accounts. We're then a data store on top of that. And then analytics that's in on top of that.

3:18:40So that chain doesn't change all that much. But the entry point to that change does change a lot. So we're doing a lot of work internally to say, how do we build a one-shot vibe coder, get started with a thing? So you can go home and build your own personal financial management app. Now, you guys are nerds. You might do that. Most of the world is not quite as nerdy. I was literally just thinking about that. I was like, okay, so I'm going to go and tell Codex to write a plat integration, pull all my bank accounts together, tell me exactly how much money I spent on everything, recategorize it, use the LLMs, basically like rebuilding it for myself.

3:19:17And I'm like, maybe there's a tool for this. I don't know. But it'll be more fun to build. So tinkerer mindset. You should probably just use Perplexity or many of the other wonderful plat outs that are out there. I will say I have spent more hours than I would care to share building like the totally most souped up like personal financial management tool. It does literally have everything in my financial life. Six monitors. Situation monitor. Yeah, not six, but you don't see this room. There are many.

3:19:48This app is like the perfect thing for me and my wife. It's like it has everything. And I can like chat with like our legal docs from like purchasing a house and all sorts of stuff. Anyway, so some people are doing that and we would like to make it really easy for those people to do it. I think we saw like, like in like two months, I think we saw a 200 % increase in the number of like hobbyist developers that are building stuff on plan. Yeah. I don't quote me on that stat. I guess I'm on public TV. I'm just going to turn this into an article for sure. But I was about to ask you like, yes, you are actually seeing some sort of material increase in the number of like small indie developers, vibe coders, hackers, individuals.

3:20:33It's not just, you know, I'm sure there's a lot of excitement from the enterprise to deeper their integrations, but you are seeing a groundswell at the individual level, which is fascinating. It's that, yeah, that's really big for larger enterprises. They're like, how do I automate all of the support stuff and stop the cloud to support tools for them? And then there's a lot of, a lot of consumers have questions about like what data is going where? And so we're thinking about like how can we smartly build intelligent permissions on top of the data permission so that as a consumer, you know, you might not want to link your CalSheet spending, but you might want to be able to analyze your stocks.

3:21:09Sure. Like how do we create tools for that kind of thing? Yeah. Are you seeing, like, I guess the question is like where are you seeing benefits when the frontier advances? Like people are, you know, currently excited about GPT 5.4 or Gemini 3.1. And they see a model and they're like, okay, this new release does this new benchmark better, or it has a better smell, or it feels better in this particular area. But as a business owner and business leader, you might have a system that's using an LLM or an API, and it's already at 100%. And so are there systems that you're not upgrading? And then there's some systems that you want to keep on the frontier, like chat or, I don't know, going around and doing fraud detection like what where are you hitting the newest most expensive model button versus okay the system that we build is actually rock-solid and like we're we're good there yeah so there's a lot of layers of a stack and it kind of varies just on on the layer so for coding like I want our engineers to be using cutting-edge possible everything yeah in almost all situations now at some point we will get into like cost optimization and cost management.

3:22:24We're not in that phase right now. We're in the like, get the best possible thing and go as fast as you can. Within the products, we don't want to actually upgrade our models too quickly. For example, like we've built a lot of stuff to improve transaction categorization. If transaction categorization changes quickly, our customers notice and they're like, oh, well, I built like, you know, you might say something's a restaurant and I want to say it's a food purchase. Okay, great. But if you change it all the time that I'm not going to be able to map restaurant to food purchase as quickly as possible.

3:22:55So it's like different names for the same category. Those changes are hard. Where it flows into our anti-fraud models and eventually into our credit models, we don't want to be changing the models too quickly because we have to do a lot of backtesting every time we make an upgrade. But then anything that's customer-facing, our improved support experience, so on and so forth, there we can be quite iterative. And oftentimes we're not using the cutting edge, we're maybe using a turn or two back because the value, it doesn't make any better responses, but the cost is high. There's so many different choices that we're making on this stuff.

3:23:31It's honestly really fun. What is your thesis on how agents will use money? Because there's a number of companies that have sprung up and their incentive is to tell you that agents will exclusively use stable coins and generate their own. effectively like generate their own real-time payment rails on the fly because they don't want to deal with fees. And I think we've generally, John and I have been pretty like neutral on this. Like we can imagine a scenario where an agent would use stable coins, but we can also imagine a scenario where my agent like hires a human to be a bad man and carry cash from one place to another.

3:24:10That's another possibility. That's another possibility. Or just use the existing Existing rails that if an agent's acting on my behalf, maybe they use the existing set of financial products that I already use. Yeah, I mean, for as far as I can see, which in this environment is maybe a year or something like that, I think agents using credit cards is going to be by far the primary thing that happens. The reason for that is the merchants accept credit cards, right? Merchants don't accept stablecoins for the most part, for most of the things that a consumer wants to do. Now over time, certain types of merchants might start to accept stablecoins, like certain types of payments might move in that direction.

3:24:48The question is, will the companies that care about making credit cards really easy be able to make them sufficiently easy in the amount of time that the merchants actually start to shift to think about accepting stablecoins? And my hunch is like you've seen, I think, I think like Ramp actually launched an Agentec credit card, like one of our customers, Privacy.com. They have an Agentec credit card. I know there's a bunch of other Agentec credit cards that are out there. And like, I can't like imagine that there will not be 5 ,000 YC companies that are launching Agentec focus credit cards soon.

3:25:22So like, I think we will see more and more options pop up. That's not to say I'm not a believer in stable coins. I think it'd be super cool. But I just don't think it's realistic in a short time frame. Yeah, that makes no sense. What is your timeline or prediction around big institutional banks natively supporting stablecoins? Is there a point where the default Chase account, you want to make a payment and you have the option of a Zelle, a Wire, or a stablecoin payment? or is that not coming ever? Or what's your general read? I think it's probably coming. I don't know that it's coming fast. And I think there's like a lot of reasons for them to want to be slow.

3:26:12But I certainly think some of that is coming. I think wires not working on weekends. One, it's actually structurally not true. Like there are many ways to like create the effect that a wire has moved on weekends. So if a bank wanted to do that, they could do that. But ultimately, it is a thing that bothers enough people that some people will want to move money on weekends and we're going to have to give them ways to do that. So stablecoins seem to be the most optimal way to do that, even though you can change the existing system. You wonder where that... Maybe there's not enough consumers that are even asking right now, to be honest, but it might actually come from industry first where car dealerships are like, hey like we really want better ways to i just found i just found a bit of a potential competitor for you you might need to watch out for in like the agentic future i went to brinks.com and there you can move money via an armored car and the roads are open on the weekend so you can move a lot of cash you might want to watch out zach you start a tool in the business plan because you're going to have to deal with, hey, Codex, dispatch the bring truck.

3:27:23Don't make mistakes. This is going to happen. You got to watch out. You got to stay sharp. What else is on the roadmap for Plaid this year that you can talk about now? We've got effects coming up. So effects is our annual conference. It'll happen here in a couple months. It's going to be awesome, super fun. Nick, we haven't figured out what we're going to do together. I was thinking he could fit really well into that too. MC. Great. Exactly. If you guys want to come visit, we'd love to have you. But yeah, so that's going to be a big one. We've got a bunch of launches lined up for that. You know, I can't spill the beans on all of them, but like there are going to be a lot of AI related things as you might imagine.

3:28:04And then look, it's been a really fun year so far. I think just like even for me as a leader, retooling the company to think about like how do we want to operate differently if the average size of an engineering product and design pod was eight people now it's four people like how can we parallelize things so like honestly just as a leader it's really fun right now to get to retool an entire organization around you know an improved shipping velocity yeah so yeah i'm nerding out with it it's great i love it i love it well congratulations on the progress congratulations on the acquisition and we'll talk to you soon have a great great to see you exactly goodbye uh the daily beast got a little bit of a scoop here's how they phrased it they said the 75 year old disney executive who stepped down as ceo just last week has been busted for leading a secret double life on social media under a different name and uh taylor lorenz is on a tear she says bob iger had a private ig account for irl friends and family where he shared kayaking photos with his wife and this is how the daily beast framed it.

3:29:08That is an absolutely deranged way. It's like, yeah, I guess he had a Finsta. He had a fake Instagram account where he would, you know, connect with friends. Not an uncommon tactic for someone who's probably the most scrutinized and watched public figure potentially in the business world. Everyone wants to track and read into what is Bob Iger doing? Is he, you know, in, is he in the office? Is he in Orlando? Is he at Disneyland? There's a lot of reasons why people would want to report on everything that he does, and he probably doesn't want to share all that, so he had to do the fake Instagram, the alternate, the private Instagram for friends.

3:29:44Well, we have a good place to end it. Please. John Palmer's wife's company was more innovative than TVPN in past company. Honestly, fair. What is Row 7? We got beat. Row 7 makes seeds. Seeds? A vegetable company dedicated to deliciousness. This is more innovative. It is. They're inventing vegetables. We reinvented business television. Well, it ain't over till it's over. So stay vigilant. Just wait for next year. Because we're coming for you. We're coming for you. It's personal now. It's personal now. We're not stopping until we get to number 41. Let's make it happen. Thank you for watching. Thank you for watching today.

3:30:26Apple Podcasts and Spotify. Sign up for a newsletter, tbp.com. And we'll see you tomorrow at 11 a.m. Pacific. See you tomorrow. Goodbye.

3:30:36mistakes stand up and smash and tight also pasta that's why thatous Kate also pretty fun Thank you.