Benchmark’s Ship of Theseus, OpenAI Kills Sora, SpaceX $2T IPO Buzz | Diet TBPN

0:00John Coogan:There's been a debate. Truth bomb dropped by Emil Michael. He says forgiving Benchmark and others would be like letting the Wuhan Institute of Virology slide back into a good reputation because the new senior manager of pandemic causation has made more friends than his predecessor. And so this got me thinking, and I'm probably going to have to put on the steel helmet for this one because this is wading into dangerous territory, defending benchmark. But my question is, how close are we to actually being able to forgive benchmark? When is the right time? It's been a decade. Obviously, the drama between benchmark and Travis Kalanick was awful.

0:44John Coogan:I think everyone's against what happened. But the question is, what is a venture firm? It is its partnership. If the partnership turns over at some point, is it a new team? Do you get a second shot? Can you actually change the reputation? And so believe me, I get the benchmark criticism. Travis is truly a generational entrepreneur and was on such an amazing run, right? So he was attacked. Jason from Sastra was reacting to our interview with Travis, and his take, which I totally agree with, is it's hard to, if Travis had stayed in the role, it's hard to imagine Uber being worth less than something like a trillion dollars today.

1:28John Coogan:Yes. So our friend of the show, Owen McCabe over at Bin.ai said, Waymo is superior to Uber in literally every way. This was a year ago in March 25th, actually to the day a year ago. He said this in Waymo superior to Uber in literally every way that matters to consumers. Smoother, safer, more reliable, no chatty, weird, rude, rude drivers, private, quiet, self-driving car services are going to dominate their human driver incumbents. And own says TBT when I think that's throwback to right throwback to when Benchmark pushed Travis out of Uber and can the self-driving division that he started literally 10 years ago.

2:05John Coogan:And so this is what's so so tricky about this is that Uber survived. It's 150 billion market cap. It's bigger than when Travis was ousted. But getting a 2x over a decade is not what I think people were expecting from Uber under Travis's leadership. and Lyft has fallen to just$5 billion. He won the capital war and Dara's done a great job managing the business. But I feel like a lot of the success of Uber has been built on the foundation that Travis set up. It wasn't a complete reinvention. If anything, they just honed down the core business and just kept it on the glide path. The thing that is holding the business back right now, at least from a valuation standpoint, is this big question around self-driving.

2:49Dara has answered this question thousands of times right now. The strategy is to invest in self-driving companies, partner with self-driving companies, but not the same as having developed their own internal IP and product starting a decade ago and seeing where that would have been by now is hard to think about.

3:12John Coogan:Yeah, and so Uber is valued at$150 today, something like that. But Waymo was valued in February of this year at$126 billion. And so, yes, Waymo's been working on self-driving longer. But you have to imagine that there's another$50 billion of market cap if you have a serious play. What would Waymo be valued if Travis was the CEO? You would get some type of Travis premium on it. Just the market would say you have this sort of one-of-one entrepreneur in the seat. 100%. So Shervin said, in my opinion, Gurley single-handedly destroyed hundreds of billions in value. Travis and Emil staying in charge of Uber would have led to a Tesla-sized win, 500 billion plus for everyone, including benchmarks, LPs.

3:58John Coogan:He nuked decades of benchmarks, reputation with founders. The market has spoken and no future Travis quality founder would ever touch him or his former firm again, especially since three of the partners that approved of the ousting of Travis are still at the firm. And so my question is how many partners need to be at the firm until we can call this a ship of Theseus. So for those who are not up to speed on their Greek mythology, in Greek mythology, Theseus is the mythical king of the city of Athens. He rescues the children of Athens from King Minos after slaying the Minotaur, which is his mythical beast, and then he escapes onto a ship going to Delos.

4:36John Coogan:Each year, the Athenians would commemorate this success by taking the ship on a pilgrimage to Delos to honor Apollo. Over time, because they're sailing the ship every year, various of its timbers rotted and were replaced. A question was raised by ancient philosophers. If no pieces of the original ship remained in the current ship, is it still the ship of Theseus? If it was no longer the same, when had it ceased existing as the original ship. So some people might say 50-50. Some people might say, yes, it is the same ship because replacing one board at a time, the ship is the concept. And you can swap everything out 25 times.

5:19John Coogan:It's still the same ship. It's a paradox. There is no right answer. It's a philosophical question. But it applies, I think, to Benchmark. Because back when Kalanick resigned as Uber CEO on June 20th of 2017, after investor pressure that included Benchmark. On that exact date, Benchmark's equal GP roster was Bill Gurley, Eric Vistria, Matt Kohler, Mitch Lasky, Peter Fenton, Sarah Tavel. Today, the partnership has changed dramatically. The only two that remain are Peter and Eric. And you have Chetan, Ev Randall, and Jack Altman, who are new to the partnership post the Uber scandal. And so it's not a full ship of Theseus, but only one third of the original 2017 partnership remains.

6:04John Coogan:And my question for those who remain reluctant to forgive Benchmark is, what happens if Peter and Eric retire or leave at some point and the full ship of Theseus is complete? Maybe you'll ship - Yeah, right now 40 % of the partnership was there. 33%. The question is, did Chetan, Everett, and Jack come in and as part of the interview process say, you're absolutely right. You're absolutely right. I mean, to defend Ev, he's going to show me, good friend. Knowing two out of the three. Ev had just graduated from college. He was truly not involved in the Uber scandal, and yet people will visit upon him.

6:43Knowing Everett and Jack, I'm sure during the interview process, they were like, the storied firm, I'm excited to join, but we can never do anything like that again. And so one question that's worth asking is, is the firm that did this and ultimately stained this storied brand and has certainly suffered the consequences, right? They've put up incredible returns since then. But I'm sure they've missed a lot of deals that would have made their returns even better because of that kind of narrative around the firm. And so Emil, Michael, and others are upset that they're doing great deals at all. But I think it is if they're in a situation again, right, in the same situation, kind of situation, are they more, what decision are they more or less likely to make, right?

7:35I would argue like they are probably less likely to go against the founder given how this entire situation has played out.

7:43John Coogan:Yeah, yeah. Yeah, the only steel man, and this needs the full steel helmet because it's so hard to steel man the benchmark thing. The full steel man of the benchmark thing is really bad. It's really bad to bench. I'm sorry for everyone. I'm sorry. But it's basically that every partner at Benchmark, it's an equal partnership. So every partner was going to make a clean$1 billion. They were all going to be billionaires from this one deal. and it was such a power law that there was no path to becoming a billionaire for, you know, from the other from the other investments, most likely. And so you see the endless 24-7 hit piece pile stack up.

8:24John Coogan:And you got Mike Isaac, you know, bloodhounded on at the New York Times, writing books that turn into movies. Like it's getting rough. It's getting rough. Mike Isaac's at your door. Yeah, Mike Isaac's at the door. The barbarians are at the gate. And you're like, I'm either a billionaire or I'm going back to a paltry 10 million and I can't I can't do that I can't do that and so they freak out and they're like we got to salvage this thing we got to just push it out in the public markets we got to get out of this name and so they basically just it's just too nerve-wracking and yeah it's not a strong steel man but I think I think that's a little bit more of what happened than than like taking a stand on like oh like this particular thing that happened was so egregious.

9:08John Coogan:It was more just like, okay, like, wow, all my money, like 99 % of my net worth is in this asset. And it's looking like it could be a zero because Lyft is coming from behind. There's a whole bunch of VCs that are piling into that. The narrative is totally flipping. There's a boycott Uber campaign. And everyone's like, ah, what's going on? I got to get out of this. I got to salvage this. And I think that was maybe more of the underpinning than and I'm taking some sort of moral stand on a particular hit piece or something like that. Anyway, it's rough. But fortunately, ship the ECS process, maybe it happens.

9:45John Coogan:I don't know. Would Dellian accept that argument? Probably not. Would Emil? Probably not. But they're not making it any easier with the Manus investment either. Because there was a world where it was like, okay, yeah, the Uber thing happened a decade ago. The partnership is basically entirely new. And they're focused on different... But it's... But it's not there yet. Yes. It's just not there yet. It's not there yet. The mask is still there. I think you can rewrite this in five years. Yeah. You made this point that it's too early to call this. But I think it's interesting. But that's directionally, given that the firm is still putting up great returns.

10:22They've gotten to a bunch of great companies over the last five years. I think we are on a path to the benchmark.

10:31John Coogan:Well, yeah. Yeah, Victor Lizart left. Benchmark being the venture ship of Theseus. And VC Bragg said, Airbnb has no homes, Uber has no cars, and Benchmark has no partners. Of course, that was an exaggeration. Sora, rest in peace, Sora. The app is leaving. Ev is in the chat. There he is. Class of 17, represent. Yes, yes. Ev was chugging beers while Uber was getting ousted. Do not visit the sins of the father on the son. That's what I would say. Ev not guilty. Ev was a boulder. Yeah, he was hanging out. What happened? Senior year? What happened? Anyway, Sora is now, is it still in the App Store?

11:09John Coogan:I think it's like the announcement was that it will be leaving the App Store. Millions of people have made content on the app. They have to leave it running for some amount of time. There's a phase out, but the announcement happened. And now it is going out. And I have a bunch of takes on this. obviously this is not the end of video creation for open ai this will be rolled into chat gpt i imagine tyler uh hodge put it well bullish killing products quickly is hard almost no one can do it it's a good sign for open ai they're consolidating in in many ways it's like last week you heard about like the red the the code red was like a month or two ago and then it was like we're refocusing and then it's like here's step one of refocusing a single app that we're gonna push everything together and also I've enjoyed making some videos in Sora I've never enjoyed having to go to a separate app I want all of that to live in one place so that makes a lot of sense let's see what Dax said it's lame to see all the people saying ha I called it I knew Sora wouldn't work yeah duh because everyone thought that including me who were working on it they probably learned a lot trying to make it work anyway for every successful thing that exists.

12:21John Coogan:A hundred efforts like this had to fail and those learnings are fed into making something that ultimately does work and provides you with a steady paycheck. Yes, it's interesting because this quote of like people saying, ha, I called it, I knew Sora would work, that is not how I interpreted the vibes around the Sora launch. Like I went back and revisited the essay that I wrote on October 1st. We had the slop versus farming debate. I was really on a tear back then. Slop is bad. We, the timeline, don't want to be pigs at the trough. We don't like it when tech leaders treat us like farm animals, but we love farming.

12:56John Coogan:Farming is lindy. We, the timeline, want to return to a world where we are filling up troughs with slop on a daily basis, I guess. So between Google DeepMind, Meta Super Intelligence, and OpenAI, we now have three different variations on AI video products, each met with slightly different responses. So the interesting thing here is that Google has been charging ahead, launching it. It's in real it's in uh shorts uh and that's just been like not a story at all what was interesting was that the the vibes around both meta vibes and Sora were like this is going to one-shot humanity they're like this is going to be too successful yeah that was it was like it was it was like a entertainment doom loop exactly you could imagine exactly it just getting so good at generating the next thing that you would want to see better than even a billion humans on Instagram could do.

13:46And that's not what we've seen so far.

13:49John Coogan:And so like my big question was like, will this actually be sticky? Will people like this? And at what rate? I mean, I read LLM generated text daily, but I also read a ton of not LLM generated text. And my ratio has grown exponentially, but it hasn't gone to 100%, nowhere near it. Like, probably 5 % of the text that I read is LLM generally. I mean, we should actually revisit how we were processing it during launch when it was, you know, rocketing. We should just throw on that three-hour stream and just watch that and react to how our text was that day. Even at the time, I remember saying, very obvious that they built, like, a very cool creative tool.

14:30John Coogan:Yeah. And they have the potential to see a network with this. There's all this, you know, novel content. They had allowing creators and, you know, people like Sam to allow people to use their IP. It was very, very well executed launch. But even from the beginning, it was like, okay, obviously cool creative tool. It's a totally different ball. You know, this like come for the tool, stay for the network has been like an enduring strategy, right? Chris Stixson probably wrote that in like 2014 maybe or like a long time ago over 10 years ago but just because you build a tool that is attached to a network like that jump is just really really really really tough especially when there are three or four or five serious networks that are at scale that can on day one support the format of the file that is produced from the model so So in a world where generative AI video came out not in a MP4 file or an MOV file, it came out in some sort of format that could never be uploaded to Instagram Reels, then you have a chance to build a network and run away with it.

15:44John Coogan:And this was the story of Instagram. Like Instagram just had better support for images than Facebook did. And then Vine had support for video literally before Instagram. So Instagram, it was like, I have a video on my phone. It's cool. I want to share it. Sharing it to Instagram was not possible. Now, on day one, you generate an AI video. You want to share it, you can share it on TikTok. Yeah, it's just the incentive. If you created an amazing video on Sora, what is the most logical thing to do? If you're a creator and you want reach, post it to Instagram. There's just naturally, there's billions of people there.

16:19There were millions of people on Sora and a lot of energy and momentum. Yeah.

16:24John Coogan:And it's not lost on me that the same day that Sora was killed, you have a viral breakout reality TV style series putting up incredible numbers on TikTok for Fruit Love Island, I believe it's called. It's an AI generated twist on Love Island. There's romantic intrigue and plot lines and stories and consistent characters and a lot of things that have come from a variety of AI models. And we should talk to the person that's the entrepreneur behind that project because I would be interested to know what the stack is because I imagine it's not just, you know, going to a single Gen.ai app. I imagine that they have a whole pipeline, like a workflow in place to actually generate that.

17:08John Coogan:And so we're at this weird moment where, you know, Sora, the app is going away, but we're also seeing more and more AI-generated content slowly see success, whether that's the podcast that's at the top of the charts that's fully AI-generated. There's this Love Island show. There's a number of niches where they've found the right product market fit for AI-generated content. But it's not overnight we're living in infinite jest and we just can't look away. It's like for specific things, it makes a lot of sense. And so it's working there. Yeah, it's interesting to think about Google's strategy with video.

17:46Even Google was like, we cannot operate this for free at scale. 250 bucks a month. No, that was the discounted rate.

17:55John Coogan:Oh, I think I had 500 a month. Yeah, it was like an entry. To start, it was like$250 a month. And it was brutally weight limited. Yeah, even with, we were laughing at this. I'll get three a day. I remember we'd be like at the gym in the morning. You would fire off a couple prompts. Yeah. And then you were like, rate limited. I hope I got it right. Yeah, it wouldn't get it right. Then you were rate limited. And you're like, wait, I'm rate limited on a$250 plan that's going to jump to$500? You're probably paying. Got to check the ramp. Yeah, I did. Got to check our ramp. I saw it. It's probably paying$500 a month still.

18:30John Coogan:No, seriously. And that rate limit? And that's Google with all this cash flow. Yeah, it's literally hyperscale. insane data advantage with youtube let me tell you rate limits kill retention like nothing nothing is worse if you're in instagram the endless scroll exists tick tock you can you can scroll endlessly you can use the imagine if tick tock was like after five minutes you have to close the app and come back in 20 minutes like how successful do we think that would be it would be a disaster and that was the experience for both sora and vo3 where you would fire off a prompt and it would be like, okay, come back in a couple minutes, it's gonna take me a while to cook.

19:05John Coogan:And then you fire off five and it's like, okay, no more for today. Clearly the compute constraints are immense and there's just so much more value that can come from enterprise and it can come from deep research. And so many of the other models that are immediately economically valued, like Cogen, like enterprise workflows. And it's maybe more boring and less viral, uh, and less controversial, but it's, it's where the compute needs to go. And so I think you're going to see the chips be moved around inside of all the labs to like compute will find the most optimal output. Like the tokens of the most value will always be the ones that the compute flows to.

19:45John Coogan:And endless random generations that aren't quite dialed yet. Even the best video models, like they're just not there. They require a lot of work. It's not the same as where we are in terms of knowledge retrieval, where we are in terms of code gen. It's just way more valuable. You said September people overestimate how much brain rot happens in a year and underestimate how much brain rot happens in a decade. So, yes, we're still. So, I mean, I'm using brain rot pejoratively there, but I do think that like this move does not really bend the curve of just AI generated content. But I still think it's like a slow rollout.

20:23John Coogan:Like it's fast in the sense that like we went from no slop on the timeline to lots and we went from like actually zero. It was like one cool AI video, Harry Potter Balenciaga was like entertaining to general people. And now we get like five and then we get like next year we'll get like 20. And then eventually it'll be like hundreds and it'll be like, oh yeah, I'm actually into that. Like people are into cartoons and people are into CGI movies and superhero movies. Some people will be into it. Some people will never like it. Some people will always say, I want a black and white film from the 40s.

20:56John Coogan:That's what I want to watch. And these rollouts, the diffusion of this stuff will happen. Wheat Davidson says, y 'all are worried about the wrong open claw. This is a good post. White Claw did have a fast takeoff, for sure. It went from zero to 60 and it was just everywhere all of a sudden. But anyway, it is a remarkable story because Fiverr is running one of the coolest out of home campaigns. Like just from an out of home inventory, I didn't know you could do this. Let's we can pull up either my picture or we can pull up this video from KTLA 5. KTLA 5 had a video breaking down what's going on.

21:31John Coogan:Let's watch this and then we'll react to this. Let's pull up the KTLA 5 report about AI coming for Hollywood. The mysterious sign along the 101. Underneath a logo for Fiverr and a search box says find the best AI directors. It's a brash, bold statement. a trash bold statement for hollywood coming for fiverr has made a name for itself connecting projects with freelancers now they're launching an ai video hub which they say can make content at a fraction compared to traditional production this billy bowman guy is one of the directors that you can hire he's based in sweden he's made ai videos for google universal music group and others as you know ai really hasn't taken over hollywood yet but it has certainly crept into commercials brands like google and jeep rolling out ai on national campaigns many are slowly or slowing rather to see the 30-foot sign which went up over the weekend i first noticed it in traffic yesterday morning after someone was so entranced they rear-ended somebody else it's causing accidents yeah so interesting ai director yeah so it's basically someone who puts the prompt into the machine and chooses is fiber gonna pay just put the prompt in the box buddy that's a great question yeah yeah can they be held liable for such a distracting sign i didn't well you know uh these air companies are flush with money whether or not it is a bubble like you can debate it's interesting because fiverr is not one of those companies ktla ktla5 is not prepared for it not to be a bubble but of course the ai wave has not been kind to fiber because a lot of the tasks like you know generate is very very very good at five dollar creative work exactly 25 dollar obviously yes the prices go well beyond five dollars since uh since since the early days but in terms of the kind of projects that i always use fiverr for ai just one shots all of that and the nature of fiverr is like you have to define your task in a prompt yeah it's not it's not oh go have like a long conversation, get drinks with somebody.

23:39Yeah, that was often the bottleneck. That was the bottleneck. Yeah, totally. It was like, okay, I need to do this task. I need like 10 minutes to like properly define it, all these things. It's honestly way more time than you spend prompting formally because with prompting, you're just like, I'll just try it a few times. A bunch of times. Kind of iterate.

23:57John Coogan:Hit my rate limits and then fire back up. Yeah, I mean, it was always a bottleneck. I remember as an entrepreneur, I found out about Fiverr and I was like, this is amazing. I can get random stuff done for five bucks. But the time commitment, actually finding the right person, making sure the reviews are good, it wound up being like hours of work. And if you have a consistent flow, you're better off just hiring a person. So they got kind of squeezed in the middle. Yeah, the market is not excited about Fiverr right now. They're being valued basically at four times EBITDA. But this is an interesting pivot for them.

24:28John Coogan:They're basically saying that you can come to us to hire someone who has all the tooling set up to actually sit there and and sort of nanny all the AI models because it is a hassle. Like as you described with me and VO3, I was sitting there like, OK, I fire off four prompts, then I go back. Like it's way better if you if you're on the API and you have Higgs field wired up and you have, you know, runway ML and you have access to the Chinese model C dance, like the right tool for the job. and then you do fine tune on someone's face there's a whole bunch of things that you can do to get better results but it takes time and it's a hassle and it's more of a professional job it's not actually out of here's here's the main problem with the campaign yes is that billy bowman yeah is a real person okay with his own website okay with his own instagram you can just go and reach out to him which is interesting because like the primary issue with with uh these labor marketplaces like Fiverr, it's disintermediation.

25:27If a business hires somebody on Fiverr and has an amazing experience, eventually they're just going to go direct because they build up a lot of trust. And it's very different than a platform like Uber, where you don't necessarily want the same driver every time because they're not around you and all these things. And so the reason that the Fiverr's and the Upwork's of the world, and there's been a bunch of other engineering-focused marketplaces just have never reached like insane scale like uber is because of the disintermediation and this campaign is effectively an ad for billy bowman who you could just go higher today yeah