Bezos Launches AI Startup, GPT-4o Debate, LeCun’s LLM Revolt | Eric Glyman, Stacy Rasgon, Luca Ferrari, Healey Cypher, John Tenet, Reed Duchscher

29:05If you were to forecast the impact of computing on the job market in the 1980s, the most predictive feature of a task job you'd look at is to what extent the algorithm of it is fixed, i.e. are you just mechanically transforming information according to wrote easy-to-specified rules, i.e. typing, bookkeeping, human calculators. Back then, this was the class of programs that the computing capability of that era allowed us to write. With AI now, we are able to write new programs that we could never hope to write by hand before. We do it by specifying objectives. i.e. classification accuracy or reward functions, and we search the program space via gradient descent to find neural networks that work well against that objective.

29:48This is my software 2.0 blog post from a while ago. In this new programming paradigm, then, the most predictive feature to look at is verifiability. If a task job is verifiable, then it is optimizable directly or via reinforcement learning, and a neural net can be trained to work extremely well. It's about to what extent can an AI practice something. The environment has to be resettable. You can start a new attempt, efficient, a lot of attempts can be made, and rewardable. There is some automated process to reward any specific attempt that was made. The more a task slash job is verifiable, the more amenable it is to automation in the new programming paradigm.

30:27If it is not verifiable, it has to fall out from neural net magic of generalization, fingers crossed, or via weaker means like imitation this is what's driving the jagged frontier progress in llms tasks that are verifiable progress rapidly including possibly beyond the ability of top experts i.e math code amount of time spent watching videos anything that looks like puzzles with correct answers and while many others lag by comparison creative strategic tasks that combine real world knowledge state context and common sense software 1.0 easily automates what you You can specify software 2.0 easily automates what you can verify.

31:05Okay, you got to go to this other post for the perfect example of what's hard to verify from Nat Purser. This is my personal benchmark for AGI and looks like we're a ways, a ways, boys, a ways, a way, boys. Can you come up with 10 jokes in the same format as the you're telling me a shrimp fried this rice joke? You're telling me a shrimp fried this rice. And GPT-5 Pro reasoned for one minute and 31 seconds. It says, you're telling me a hamster drove this car? You're telling me a pigeon delivered this mail? You're telling me a Roomba cleaned this mansion? You're telling me a goldfish coded this app?

31:48You're telling me a squirrel filed these taxes? I swear, I swear, I swear AI just has a different sense of humor. Sense of humor is just bad jokes. Yeah. Oh, GPT-5 thinking did a little bit better. You're telling me a chicken fried this steak? You're telling me a hand made this pasta? Hand pasta? Handmade pasta? That's like... That actually is a good one. Look at number 10. I think that one... Number 10. You're telling me a ghost wrote this book? That's good. That one makes sense. That one does make sense. You're telling me a star crossed these lovers? That's actually pretty good. Okay. So we're getting somewhere.

32:21We're getting somewhere. At least it understood the prompt on this one. You're telling me a beer battered this fish? I like that. You're telling me this Figma thought bigger and built faster? Figma helps design and development teams build great products together. Get started for free. We've got to whip through a bunch of these posts. I will not leave this show before we talk about the Apple iPhone sock. What is up with the sock? Have you seen this? Apple launched a sock. So it's a fashion accessory, and everyone's debating it. Do you see this? It's this blue, light blue sock that you put over your shoulder or over your hand.

33:09And people are very, very upset about it. Aditya Agrawal says, when a company releases something that is so obviously underwhelming, then the natural question is, did no one at the company see how bad this is? Or did no one have the courage to speak up? I'm not sure which is worse. And someone else says, look, Apple has a lot of fumbles. This is not one of them. They knew exactly what they were doing and exactly who would buy it. Also, it's okay. Fashion accessories are not for everyone. And the news, of course, is that it's called the iPhone Pocket, a beautiful way to wear and carry iPhone. Not carry the iPhone.

33:48Remember, you don't say the iPhone. You say iPhone. And so born out of a collaboration between Issey Miyake and Apple, iPhone Pocket features a singular 3D knitted construction designed to fit any iPhone. Jaya, who I actually did a collab with on Instagram, very fun tech commentator, she says a lot of tech bros prematurely dunking on this release because they don't get why it's a big deal. So let me translate. You're not the only consumers Apple designs for. This is a huge designer and the mind behind Steve Jobs' iconic black turtlenecks. I didn't realize that. People outside the U.S. wear phone straps and slings all the time and would pay for this.

34:30They're tapping into an existing trend. Apple has infiltrated music entertainment, but not high fashion, even though the tech ex-fashion is exploding. Tech built into Met Gala looks, et cetera. The 3D-knitted construction reduces material waste and shows a push toward more sustainable made-to-shape production. this will absolutely sell. Sal, what do you think? Are you bullish or bearish on the Apple iPhone pocket, Jordy? I feel like I know a lot of people. I feel like my mom would love this, to be honest. It seems like it's a great Christmas gift. So interestingly, how much do you think this costs?

35:09I don't know, like 230 bucks. Wait, did you look it up? Yeah. Yeah, the long one's 230, the short one's 150. but I think most people would look at this and be like okay it's a sock like but it's from Apple so it's probably like 30 bucks maybe 50 bucks some people were surprised that it was a little bit more expensive but you know it's from this famous designer and it's this interesting status symbol the question is like this could be like I like I don't think I'm going to be using this thing no matter what the question is is this going to be like laboos and going to be like super popular or like stanley's like will this become actually like a very very popular form factor in america specifically i don't know it's hard to tell i'm not really the person to like you know handicap it i i think apple knows what they're doing i think they'll i think they'll make money on this certainly yeah ever since the airpods airpods early on looked really silly and i could see this becoming i could see this becoming a popular form factor for accessories and I could see Apple seeing like, hey, there's a world where we not only sell a case with every iPhone, we can sell a sock.

36:21A sock. Well, the sock maybe makes it so that you don't need a case because this is your case. Like if you have it in there and then you drop it, like it's kind of nice. And it's kind of a crazy weapon. Defense weapon, yeah. Self-defense. You can swing it around and smack people in the face with it. I don't know. The colors are pretty cool and I don't know. It's clearly not for me, but I think I'm going to buy four of those for Christmas. We'll see. Give them out to people. Get ready for your iPhone sock, buddy. Well, speaking of socks, Jim Cook is stunning in some, what are these, new shoes? Travis Scott's new Fragment AJ1 Lowe's.

37:03These are Nike shoes, I suppose, but these are not Air Force Ones, I suppose. I really don't know enough shoes, but everyone's saying he low-key got aura and so congrats to tim cook on looking great and uh even though the succession planning is intensifying the rumor mill is churning obviously apple has not been commenting but something's going on i mean releasing this photo is more than a comment it's a statement i like reading into it just being like oh really oh really financial time So the Financial Times has this article that says, this is, Apple intensifies succession planning for CEO Tim Cook.

37:46The iPhone makers board preparing for its longtime leaders stepped down as early as next year. John Ternus, Apple senior vice president of hardware, is widely seen as Cook's most likely successor, although no decisions have been made. So basically, everyone's been leaking this, whether it's Bloomberg, whether it's the Financial Times here. And of course, Apple is not commenting because they'll talk about who they're going to move the market when they decide their next CEO. If they don't even stick with Tim Cook. They might stick with Tim Cook for another two decades. Who knows? But I like the idea that this photo came out being like, yeah, I'm not leading.

38:20No comment, but I'll make a statement. I'll make a statement. No comment, but I'll make a statement. I do want to have some folks on to debate whether or not. I was thinking we should invite John Gruber on because he wrote this piece, like Something is Rotten in Cupertino, all about the failure of Apple intelligence. And when we talked to Mark Gurman, we saw that Gurman was also saying, yes, Cupertino really was shook by dropping the ball on Apple intelligence by missing AI. But I still wonder if all of this is, there's all these rumors, oh, Tim Cook's got to go. Imagine if you post that picture, if we see a real correction in AI, just post caption, do nothing, win.

39:05Do nothing, win. Yeah, exactly. Stock pumps 10%. I missed artificial intelligence, but I didn't miss getting this fit off. I'm having a good time. What else is in the news? Vanta. Automate compliance, manage risk, prove trust with AI. Vanta helps you get compliant fast, and they don't stop there. Their AI and automation powers everything from evidence collection and continuous monitoring to security reviews and vendor risk. There's a bunch of more news. We have to talk about paper hands. Paper hands. This is the fakest of news. Get ready for the fake news hour, buddy. Okay. So what's the news?

39:41Peter Thiel sold his entire stake. Everything. All of it. And 76 % of his friend's company, Tesla. Okay. Yes. So this is from one of those 13Fs disclosure form with the SEC from Teal Macro, his fund, some of the money that he runs. But of course, people read into 13Fs all the time for a variety of reasons, and they sort of get it wrong a lot, it seems like. And so Zero Hedge sort of sums this up where he says, Peter Thiel net worth,$20 billion. Thiel Macro AUM,$75 million. Like, what's going on? What make it make sense? And it's almost certainly because of disclosure rules. Like, what needs to be disclosed might only be a fraction of what's actually going on there.

40:37So odd to read into it. But at the same time, I think the reason why this made headlines is just because it feels like something that might happen. Like if instead this headline had been, oh, like Peter Thiel went on a podcast and said that he thinks the AI bubble has reached the top. Everyone would just be like, oh, yeah. It feels like people have been waiting for someone to call the top. And so they're really, really like digging in for top signals and top calls. and this slight change in the 13F, even though the odd part is that if you actually read the 13F, which, of course, is just this$75 million slice for whatever reason, even if you read that, the other three holdings are still big tech companies.

41:28So it's not super bearish. It's like there's some Microsoft in there. I think there's some Apple in there. Yeah, and the Teal Macro team is trying to generate the greatest returns that they possibly can. They say go viral. They're trying to go as viral as possible. They don't care about IRR. They just want to go viral. They just want to go viral. They're just trying to create headlines. No, they're trying to generate returns. Yeah, famously, no. It's possible to sell a stock that you're still bullish on, or at least that you expect some amount of price appreciation or even long-term price appreciation.

42:01And also, there's all these weird tax implications of selling one thing. Like it's not even clear that this is all of his NVIDIA. No one's gotten to the bottom of that. I don't know if they ever will. But people love deep diving 13Fs. And they are fun. Situational awareness. It's certainly a bull market in 13F deep dives. Deep dives. Let's talk about the situational awareness 13F. But first, let me tell you about graphite.dev. Code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. So, Situational Awareness 13F for Q3 dropped Friday. Nick Carter broke it down.

42:40Massive new$500 million positioning core weave, which has been down a bunch, but they're going in. Big ads to CRZ and IRON added some new miners. Intel calls remain unchanged. Trimmed, Broadcom, a couple other names here. And Nick is giving it some context. I believe Nick was one of the first investors in CoreWeave, correct? Angel. Angel in CoreWeave. What an insane investment. Congrats to him. So he says all these numbers are as of 930, many of these names sold off since then. Portfolio value, counting notional value of options, doubled from$2.12 billion to$4.15 billion, mostly due to$1.5 billion of new cash.

43:32So let's give it up for new cash injection. We got a room.

43:42Massive, massive, massive fund. But the fund did generate 700 million in appreciation. So a huge, huge, huge gain. Yeah, I guess the concerning, you know, again, last time 13F dropped, Remember, people were like reading too much into it and they were like, wow, he he was long Intel. Like, is he cooks? And then they did Intel did the deal with the government and it absolutely ripped. This 13F, you know, so situational awareness had a half a billion dollar new core weave position as of basically the beginning of October. and obviously CoreWeave has been down and to the right, down 46 % in the past month.

44:39Wait, down 46 % in the past month? Yes. I thought it was in the past like three months or something. No, past month. Whoa. So that position is probably not. It's down 5 % today. Yeah. Wow. Yeah, one month it's down 46%. um that it's at a 36 billion market cap yeah it's so it's so odd because like yeah when you when you look at when you look at just this one name it feels like okay like it is over like ai if you told me like oh yeah like the the the company that really is like the most indexed to the ai wave uh is down 46 i'd be like wow so this is like the total popping of the bubble complete pop like it's over it's like like when the metaverse bubble popped when you know when when crypto bubbles pop like bitcoin trades down 50 60 like and then it's over and then you start rebuilding right uh and yet and yet the overall market feels nowhere near popped right like uh i mean i'm sure nvidia is down somewhat down five percent past five days but nvidia over the last month is still up over the past six months it's up 40 and so you would you would expect nvidia to be maybe like you know selling off more core weave is just in a is just in a unique position like truly um truly rough month for that company um yeah as well as core scientific which core we've tried to buy yeah it was rejected yeah core scientific has traded down uh 24 in the past month, which Leopold also built a position in.

46:20So we'll see. I wonder what the thesis on CoreWeave is. I mean, obviously the company has a great product. Like SemiAnalysis has ranked them platinum on ClusterMax. It's clearly a real company with real products and services and holdings. Maybe the market, it was just overheated. Maybe it's pulling back. It's kind of unclear. But if you want to go in, analyze a bunch of 13Fs, do it in Julius, the AI data analyst. Connect your data. Ask questions in plain English. Get insights in seconds. No coding required. Speaking of other data. He also added positions just in Western Digital, Seagate. And I was just going through.

47:06On the hard drive trade, got to store that data somewhere. And potentially. Modine manufacturing. Okay. I'd be interested to know what he's thinking about in the energy side, on the gas turbine side, right? Isn't that what Semi Analysis was drawing the most attention to? It feels like they've been very ahead of the curve on identifying companies that are basically already supply constrained. And if you just look deeper into what's going on in their book of business, they're about to flip to incredibly high margins. Because once everything goes out of stock, this company can just all of a sudden say, yeah, actually, we need 60 % margins.

47:54People are like, yeah, no problem. I want to buy as much as possible. Yeah, so the story from situational awareness is like all the NeoClouds have sold off a ton. Or we've, of course, scientific iron. Situation room here is saying Satya unloaded his risk onto the NeoClouds. It's a game of sort of, I don't know, musical chairs. Yeah. So that's maybe what the options. The deal with Microsoft just seemed to be like little to no margin. Yeah. But anyway, so the Neoclods have also sold off, but Lumentum Holdings is up 46 % in the past month, which he added. Western Digital up 25 % and Seagate up 14%.

48:37So he's making up for it. Yeah, yeah. It's the birth of a new fund. It's just like it's the very, very hot part of the cycle. I think everyone's wondering, like, how big will this be in a decade? That's a big question. It's a very exciting time, but you've got to stick the landing. And I think people are – I'm sort of rooting for him. I think he's going to do it. Yeah, the question is, is it going to be a true hedge fund? Is he going to make money in a correction? I mean, yeah. I bet we're going to open up one of these 13 Fs and be like, wow, he's short everything now. Okay. And then you're going to see everything sell off, and it'll be like, wow.

49:25That would be much higher signal than PT in a$75 million fund. Oh, totally, totally. Yeah, yeah, yeah. Yeah. There's some Blue Owl news in the Financial Times. Blue Owl investors face hefty losses as credit fund blocks exit ahead of merger. Blue Owl has blocked redemptions in one of its earliest private credit funds as it merges with a larger vehicle overseen by the asset manager in a deal that could leave investors with large losses. They could lose about 20 % of their holdings. The deal underscores the risk that retail investors have taken in pouring hundreds of billions of dollars into private debt funds carrying limited liquidity rights.

50:08It comes as scrutiny builds on the valuations and returns on private credit funds, which have caused publicly listed debt funds to sell off and traded steep discounts to the stated value of their assets. And so we talked about this, I think, on Friday. But Blue Owl has been selling off this year. and they said, we should be performing better than everyone else. But it feels like a little bit of the narrative might be around liquidity here. Earlier this month, Blue Owl told its shareholders that it planned to merge the Blue Owl Capital Corporation 2 fund, which has a billion dollars in assets, with its OBDC fund, which has 17 billion in assets.

50:47BOCC2 investors are being asked to exchange their shares in the private fund for shares in OBDC at the stated net asset value of both funds. However, OBDC trades on public markets at a discount of about 20 % to the stated value of assets because of the liquidity problem. Well, and because it's possible that the market doesn't feel like they're pricing the assets correctly. Potentially. There's some discount. Got to see what's in there. Redemptions in BOCC2 have climbed to a level where it would eventually be forced to restrict investor redemptions. Its investors pulled out$150 million in the first nine months of this year, a 20 % increase from the same period last year, according to security filings.

51:33Redemptions in the third quarter nearly doubled to$60 million, or 6 % of its net asset value. Jonathan Lamb, chief financial officer of OBDC, acknowledged that at current prices, investors could take a potential haircut on their investments. But he said the merger came with significant benefits, such as the ability to own more liquid shares in OBDC. The trading price of OBDC has been hit by souring sentiment on private credit markets that was not backed up by the performance of Blue Owl's underlying loans, he added. If shareholders were to vote down the deal, BOCC2 may be forced to limit redemptions.

52:09So good luck if you're hanging out in Blue Owl Capital. Sundar Pichai has more news in the data center world. He says, today we're announcing a new$40 billion investment in Texas through 2027 to build cloud and AI infrastructure and support thousands of new jobs. Yeehaw. This includes new data centers in Armstrong and Haskell counties and a major investment to strengthen energy resilience and abundance. We're also providing funding to more than double the projected pipeline of new Texan electricity. There we go. To power the AI era. It's the golden age of being the golden electrician age where you get flown around in private jets to different data centers.

52:54Yeah, you do. You do. That's right. So$40 billion investment, thousands of new jobs. That feels like a higher ratio than what was the other example you kept quoting? Something like 500 jobs for some anthropic data center or something? It was the anthropic data center. They were like, we're investing$50 billion. How many jobs did you create? 20 jobs. I mean, that's not the goal of this stuff. 800. The jobs should not necessarily be created in the data. No, I just always brought that up because you have to understand what people outside of tech, their reaction to that. Totally. Oh, great. You're investing$50 billion in something that just doesn't create jobs.

53:33There was a good article in the journal on Blue Owl as well. I think it also ties into Abilene, Texas. This might be a good moment to cover some of this. Yeah, yeah, pull it up. In the journal yesterday, Wall Street blows past bubble worries to supercharge AI spending frenzy. And they say firms such as Blue Owl Capital have raised trillions in investing firepower. The AI build out is a perfect match, though warning signs are flashing. Does Blue Owl have better PR or worse PR than Aries? because they seem to be quickly becoming the main name that everyone knows in private credit. And to my knowledge, they are not the only firm in the category, and yet they are the ones that if you need an example, you pull Blue Owl off the shelf.

54:29I think it's a strong brand. It is a strong brand. They have the.com. They have Blue Owl.com. Blue Owl.com. not long ago blue owl capital was an upstart investment firm that lent money to mid-sized u.s companies such as sarah lee frozen bakery well these days the firm is financing massive data centers costing tens of billions of dollars for the likes of meta and oracle a sign of just how quickly wall street has become the enabler of america's ai boom fund managers such as blue owl amassed trillions of dollars in investing firepower and have been hunting for big deals where they can put that money to work.

55:04They found slim pickings for years until a perfect match appeared in AI, which has provided a bigger target than anything in history due to the vast sums tech companies need to ramp up computing power. We're talking about numbers that are so large, even in the low cases, said Blue founder, co-founder Mark Lipschultz. Lipschultz. Lipschultz. Does it even matter if you keep counting after you get to one trillion of capital expenditure in the next couple of years? This is insane. you does it even matter you really undersold does it even matter you told me you read this i was like is it good you're like it was okay there's there's one moment no there's another one i saw i scrolled down last week's sell-off in tech related stocks and bonds marked some of the most serious warning signs that the frenzy could be overdone but any worries on wall street about a possible investment bubble have largely been trumped by the fear of being left behind lip Schultz and co-founder Doug Ostrover jumped into the fray at a posh retreat in California's Ojai Valley for dozens of tech VIPs and celebrities in the spring of 2024.

56:05Meta CEO Mark Zuckerberg and Satya Nandela were there, along with Pharrell Williams and Serena Williams. The Blue Owl duo, a Wall Street superstars who built the firm into a$295 billion fund manager in 10 years by perfectly timing a surge in private lending, looked like just two money men in office sneakers and fleece vests, but the billionaire co-owners of a professional hockey team who have talked about skating where the puck is going. It's awesome that they both - Seize the opportunity to get in. They built this firm huge. They make billions of dollars and they're like, let's get a hockey team.

56:39Why do you go 50-50? Tyler, what hockey team do they own? Can you find that out? The next line is the one I was laughing at. While David got a DJ, the Blue Owl executives cut a deal to acquire IPI partners and an investment firm that owned and operated big data centers for Amazon and Microsoft. Blue Owl already had close ties with the organizer of the treat iconic capital, which manages the personal fortunes of Silicon Valley elite, including Zuckerberg and was a part owner of IPI. Okay. Let's go to Tyler. They own the Tampa Bay lightning. Huh? Do they spend a lot of time in Tampa Bay? Is that a, is that like a NHL team?

57:18Yes. NHL team in Florida. That feels like an odd. That's got to be, I mean, I feel like Tampa is trying to keep the ice. I feel like a lot of the hedge fund guys, they're on the other side of the peninsula, right? Like, aren't they in like the Key West and Mar-a-Lago area or Palm Beach or Miami? Like, or maybe they just fly in and out. Like, I don't know. It just, it just, it feels like I would love to know more about how they selected that particular team. And that sport. Yeah. The purchase gave Blue Owl a seat at the table to bid on mega AI financing. Let's give it up for mega AI financing. Not long after it got arranged, it got picked to arrange a$14 billion package for an Oracle and OpenAI data center in Abilene, Texas.

58:01Then last month, Blue Owl raised about$30 billion to build an AI data center for Meta in Louisiana, putting in$3 billion of its client's money and borrowing the rest. So the lender is borrowing in addition to their LP's dollars. The deal included a provision considered extraordinary on Wall Street, giving Blue Owl's equity investment a debt-like guarantee in case the partnership falls apart, showing the new financial wizardry bankers are conjuring to meet AI's ravenous financial demand. Let's give it up for financial wizardry. We love wizardry. Spreading the risk. Silicon Valley's biggest players are flush with cash and are able to fund much of the initial AI build-out from their own coffers.

58:45As the dollar figures climb ever higher, they are turning to debt and private equity, spreading the risks and potential rewards more broadly across the economy. Some of the financing is coming from plain vanilla corporate bond sales, but financiers are making far bigger fees off giant private deals. Virtually every Wall Street player is angling to get a piece of the action from banks such as JP Morgan and Morgan Stanley to traditional asset managers like BlackRock. Before we go on, let me tell you about Fall. Gendered media platform for developers. The world's best gendered image, video, and audio models all in one place.

59:16Develop and fine-tuned models with serverless GPUs and on-demand clusters. Continue, Jordan. Investor appetite for data center debt is so strong that some money managers have booked billion-dollar gains in a matter of days. Let's give it up for booking billion-dollar gains in a matter of days. Even before construction of these facilities, they are financing. I mean, we talked about this where money managers... It's almost like, you know, people say there's no such thing as free money, but it kind of seems like it could be in a kind of a free money situation here. I think you got to do something pretty powerful to wind up at the iconic.

59:56Here's the catch. Still, the longer-term performance is hardly assured. Big tech companies are expected to spend nearly$3 trillion on AI through 2028, but only generate enough cash to cover half that tap, according to analysts at Morgan Stanley. Big names in the finance world, such as Goldman Sachs CEO David Solomon, are warning about AI-fueled froth in the markets and in capital spending. At the same time, the fear of missing out is real. days after Solomon voiced his concerns to analysts, Goldman formed a new team in its banking and markets group focused on AI infrastructure financing. They are getting into the game.

1:00:29What do you say? What we do know for certain is that the big tech companies that want the world to spend trillions have huge financial incentives to be believers. If you haven't noticed, Wall Street is also being paid a lot to promote the story. Greenlight Capital, the hedge fund firm run by David Einhorn wrote in an October letter to investors. So how will... And this is the line that stood out the most to me, because on the West Coast, you have the labs, which are effectively every single person, as well as the investors, are incentivized to keep the current AI super cycle narrative going. And then on the East Coast, you have Wall Street, who is getting paid to effectively do the same thing.

1:01:14So you have these two centers of power that are both incentivized to keep the party going. Yeah, this breakdown here. So the Wall Street Journal is slicing up how the next three years will look based on projected global spending on data centers by financing source. So of 2.9 trillion, which is estimated over the next three years, I guess four years. Tech companies will cover$1.4 trillion of it. Private credit will cover$800 billion of it. Corporate bonds,$200 billion of it. Asset-backed securitization,$150. Private equity, another$350. And to me, this looks like a very healthy way to actually finance this.

1:02:03this feels like it's not if it was like if we were looking at this if you broke down we've been through a two trillion dollar like bubble before and it collapsed very rapidly what was that it was like the meme coin era and who and how did we break that down it was not it was not the the cash flows of the most profitable companies in the world that were buying the long tail crypto assets. It was retail. And so the fact that this is like pretty removed from retail feels like safe to me. It's much safer than getting a huge bubble inflated in, oh, everyone has to get in on the latest coin and they're all nonsense.

1:02:48Like there will be nonsense deals. We're already seeing nonsense AI companies and there certainly will be projects that get financed and they just cannot build, they can't get approved? Yeah, I would say using the excuse like, well, at least this isn't retail getting hosed doesn't hold up that well when you think, okay, the alternative is like large institutions, insurance companies, pension funds that are also financing this, which is effectively retail. I'm talking about the fragility, not necessarily where the financial pain or who the person ultimately pays for it. If there is a pullback, it's like how fast can that pullback happen?

1:03:27Because if the write-downs, if there's something that goes wrong and the write-downs come out of tech companies' cash flows, that's just not as big of a deal as everyone waking up and just slamming the sell button. It's just a very different set of dominoes. like the dominoes of the interest rate crisis, the NFT crisis, FTX blowing up, all that stuff, those dominoes were spaced right next to each other. And so as soon as one went over, it was like the next person has their finger over the sell button. The next person has their finger over their sell button. Whereas if you're like, yeah, I'm a tech company and I produce$50 billion of free cash flow and, oh yeah, I'm not getting a great return on the$20 billion of free cash flow that I earmarked over here for the next few years.

1:04:20It's like, it's bad, but it's not as calamitous. And I think, you know, going back to this quote from David Einhorn, he says, what we do know for certain is that the big tech companies that want the world to spend trillions have huge financial incentives to be believers. In case you haven't noticed, Wall Street is also being paid a lot to promote the story. And in that same letter, Einhorn and Greenlight said, this was the AI math makes no sense. It was...

1:05:21basically the way it is today. They will pay any amount. So let's say that if it costs$20 ,000 a day to serve a 4.0 user, they will find the money. They will be stripping copper out of empty buildings to pay for their 4.0 bill if they have to. They will be breaking into cars to sell stolen CD radios. it is it is notable that blue owl has sold off 16 percent in the past month so even during this sort of like boom and lending it's not uh they're not getting very much credit for it yeah it's an odd it's an odd time um like there's still there's still so many things that are working the the results from that newcomer event uh the ai is uh cerebral valley uh where he had it's so good he took like a straw poll on stage and asked everyone like who do you want to short and everyone said perplexity so like he didn't really have to say like i'm shorting perplexity he just was able to take the temperature and sort of maintain like you know some uh arm's length distance to it while still like getting the take out there.

1:06:40But everyone was saying that they wanted to buy more open AI, more Anthropic, more Anderol, a few other names came up, I believe. And there's still like an incredible amount of bullishness in a lot of different areas. But I think, yeah, people are still worried about some of the other stuff. But at the same time, it feels like there's so many companies that have like gone through a, they've gone through the AI pump and round tripped, not just Oracle, but even like Klarna was going through the whole like, hey, we're gonna get so many efficiencies out of AI. And then it came back to normal, but then they still got out and it's like a reasonable company.

1:07:22That's not like, it's not zeroed, right? It's like, oh yeah, their business is just what it was before the AI boom. And they are not getting like, they didn't get moved up or down. And so there's just like a ton of companies that are like that. Where is Klarna since the IPO anyway? They're sitting at around a$12 billion valuation, 12.6. Down 20 %? Yeah, down 26%. That doesn't seem calamitous to me. That seems like pretty solid. I don't know, the overall market's kind of up and down. I don't know. Affirm, on the other hand, is up 28%. How's Affirm doing? Up 28 % in the past six months. In the past six months.

1:08:03They're getting - Today is a real bloodbath. It's down 6 % today. Everything's down today. What else is down today? Bitcoin. Let's check. NASDAQ's down 1.3. Dow Jones 1.3 as well. Well, we're going to 10 ,000-year mortgages. Doing 10 ,000-year mortgages. Announce the second round of stimulus checks already. Gemini 3 must save us. There's a prediction on Polymarket that was quote posted by Sundar Pichai, CEO of Google. He says, prediction markets are betting on Gemini 3 release week. 69 % says November 22nd. Can't wait for that. We were wondering if we were going to get it before Christmas. It was our Christmas present.

1:08:49It was Tyler's Christmas present. And fortunately, looks like we're going to. And I couldn't be more excited that we are partnered with Gemini and Google AI Studio. Create an AI-powered app faster than ever. Gemini understands the capabilities you need and automatically wires up the right models and APIs for you. You can get started at ai.studio slash build. Speaking of Google, Google Capital says his final investing decision was to buy Google. This is amazing. I think that's beautiful. He doesn't even need to say who he's talking about. It's like so obvious. That's Warren Buffett. It is beautiful that Warren Buffett is going long.

1:09:24Google and Darren here quotes this Rune post that says, Not enough people are emotionally prepared for if it's not a bubble. It's a good post. It's like, is it a bubble if all the big tech companies rip and there's like a couple NeoClouds that trade down a little bit? There's like one or two application layer companies that burn a bunch of VC dollars, but there's still a new hyperscaler that's born? Kind of. I guess it's a bubble, but it's a survivable bubble. It's just like, it's move on, you know? Yeah. Rolling bubbles. But people are getting wild on the timeline about Gemini 3. Rune says, the model must be good because the Google people have adapted the open AI culture of vague posting and hushed rumors and sending really weird texts.

1:10:18So we are in signals as LMAO explicitly calling out open AI culture of vague posting is hilarious. People are excited. There was also a Reuters profile of Demis. And Morgan says a Demis profile can only mean one thing. I imagine that that's Gemini 3.0 and that it will be good. The question is like, what does good mean right now? Are we expecting anything that's like a qualitative step function? Because what I would say, what is Gemini 3 good? First off, I mostly just want better UI and little features in the app. As a consumer product, I just want better productization of the model that I already think is good.

1:11:05On the actual AI model side, I would imagine it's a little 10 % bump to how long it can reason. maybe a model picker or uh not a model picker uh uh an automatic reasoning mode so that if i if i even if i think it's going to take 10 minutes to get me the answer if it has the answer handy it gives it to me in one minute vice versa it knows when to think really hard it knows when to uh think just for a little bit um i'm expecting it to be like slightly better at all the benchmarks I don't know I don't even know what would blow me away Yeah, I mean that at this point it's it's getting like fairly hard to find good prompts that like show how good a model is Like there was one earlier we showed about the shrimp fried rice.

1:11:50Yeah, that's like pretty good Yeah, but yeah, I mean qualitative like just in normal kind of natural language. It's like pretty hard Yeah Also like if I go to Gemini 3 and I say tell me a joke or I say Write me a tweet that gets over a thousand likes I'm not actually that disappointed when it falls flat on its face. I'm like, yeah, it's fine. It's spiky intelligence. I don't really need you to do that. I don't need you to be funny. I need you to look up data really accurately for me. I need you to do that really well. Or I need you to write code really accurately for us. I think another question is, like, what will OpenAI do if they'll do anything?

1:12:29Yeah. Because we've basically seen every big Gemini release, there's been some response from OpenAI. Like, usually they do it the day before. What is Geordi laughing at? I just don't know. I know that they want to steal Gemini's Thunder. I just don't know if they have the juice this week. Who? Oh, OpenAI. Yeah, I mean. It feels a little bit like all the people at OpenAI are throwing in the towel a little bit. No one is vague posting over there. Yeah. It feels like they've launched a lot of the things that would be easy, like layups. Like if they launched Sora this week, everyone would be like, oh, we got to focus on Sora.

1:13:08These videos of Sam Altman stealing GPUs are just too funny. It doesn't matter what happened in Gemini 3 world because Gemini 3 probably will be somewhat of a criminal. Remember they released OpenAI, the IO acquisition, the week of Google IO. Yes, yes, yes. And then it turns out like they couldn't, I don't think they could use the name IO. Like they got that like trademark lawsuit right away. Just like we, big news. We hired three Geminis. Their birthday is in the month that makes them Geminis. And so we're introducing them today. And we're doing a whole press release for you. The new Gemini team.

1:13:41Gemini team. At OpenAI. At OpenAI. Just anything to steamroll the SEO. It will be fun. Well, we have Eric Lyman from Ramp in the Restream waiting room. Let's bring him into the TEP in Elfadam. Eric, how are you doing? Where's your yellow suit? What's going on? Did you not get the memo? Oh, my gosh. Guys, I'm on the road today, but I'm going to be wearing my yellow suit all week. It's so good to see you guys. Good to see you, too. Good to see you, too. Give us the update. What's the latest? What happened? So today, Ramp announced a$300 million raise at a$32 billion valuation.

1:14:23Congratulations. They've done it again. And the big question everyone wants to ask, the chat's going crazy, is the job finished? Guys, the job is not finished.

1:14:40Is that the third? I think that's the fourth time we've asked him. No, no, no. I was going to say, is this the third financing this year? Something like that. It is the fourth financing that Ramp has announced this year. Okay, let's go. So congratulations. Yeah, so why this financing? Why this partner? Why this number? Kind of walk us through the thesis behind the round. Of course. So I think if you look at the fundamentals of the business, Ramp is just competing in a category of its own. The companies, generally, the bigger they get, the more they slow down. Ramp is growing faster this year at significantly larger scale than we did last year.

1:15:28So this is at over a billion dollars a year in revenue. The business is doubling. It's generating cash. And if you look at gross profit specifically, which is a good metric of how efficient are the underlying mechanics of the business, we're growing 10 times faster than the median publicly traded software company. So it's just in a category of its own. And I think on top of this, AI has just been an incredible accelerant for the business itself. There's pull from customers. Everyone is thinking about how can I take what's happening in AI and apply it to my business? And there's a push of these models are getting dramatically better.

1:16:05And so outcomes like automated expenses, automated accounting, moving funds to higher yield for customers are just coming out of the box. And so, you know, I would say if we were to sum it up, I think for many millennia, money talked, we're keeping money to think. And I think the implications of that are pretty profound. You know, better run businesses, more profitable organizations. And so that's the first part. The second part, we're absolutely thrilled to be deepening our partnership with Lightspeed, who led this round. I think they're an extraordinary firm, led the rounds of many great companies, I think notably Anthropics round earlier this year, which has proven to be, I think, one that's changed the industry quite a bit.

1:16:51And I think they've just been a great partner in deepening our thinking, helping us grow. And so we're very excited. Talk about accelerating at scale. this morning at breakfast, Jordi and I were reflecting on the fact that we were feeling this way, even with our much smaller organization. We were like, wow, like it's only been a year. And we feel like we're already losing some of the agility that we had when we were just three people. And we were saying like, I understand, what was this thing you said? You said, I understand why companies write down their principles, because it's so easy to lose sight of what is important, what makes you great, what you do specifically.

1:17:34And so I would love to know just your reflection. Yeah, even across this year, like a lot of us, the process of making the show better is us remembering the things that we did great early on and that you kind of end up losing your way in slight ways. And then it's about remembering that and kind of coming back to it. Yeah, so I'd love to know both what are the things that make Ramp great, but then also your thought process for not losing that. Because I imagine you agree that that is important to have principles and redouble the focus on them. I love that you asked about this because I think it gets to the heart of what we're trying to do inside of the product.

1:18:12If you think about probably your very first year, every dollar out of the organization was something you thought about. Someone wants to buy a software subscription, you know exactly why. Someone proposed to a consultant, it's a debate over it. Everyone knows who approved what. But was this purchase worth it or not? And years later, suddenly businesses just start happening to you. You're not happening to the business. Things are renewing on autopilot. Things you thought carefully about are just running on its own. And what we're really trying to seek to do in the product is when we say money that thinks, it's the idea that before funds leave your account, we understand the principles that you run your business.

1:18:54and we check, does someone have the permission to spend it? It has memory. So once the thing actually moves, you don't need to ask, like, why did we buy this thing? What was it? Like, there's an audit trail of who approved it, budgets are updated, and then there's reasoning. And so we can actually start to show businesses, here's how you can get more of every dollar an hour. And so I think that's what's so different. You take things that used to be systems running to now there's checks in the system. And I think for us, it's an interesting moment, right? As a company, we launched our first product, Simple Product Card and Expense, about five years ago.

1:19:27Today, we're 2 ,436 days old. We still count the days. And the reason is we want to be thinking about with every day, are we getting just a little bit more done or a little bit less done? in kind of this practice of thinking about kind of the passage of time, auditing our calendars, asking, you know, are we getting more work done with the same or less amount of effort goes a long way. And then last, I would say specific to you guys, I think part of why we've just felt so proud to work with both of you and call TPP and our partners is I think there's this like unbelievable care of craft. I think there's, it's not about who's done everything.

1:20:11It's like, who can write great copy? Who can think of funny ideas? How can we take an idea to, you know, we're doing it tomorrow. And I think that you guys have really lived. I mean, if you'll forget a year ago, TBPN, I don't even think you guys recall TBPN or was it, you know, you've turned into something great. And so I feel strongly you guys don't have trouble with this. And I think just the emphasis on speed and quality and craft has been what I've seen out of you guys. Yeah, totally. Something I was thinking about, we were reading that Carpathia post earlier around how software 1.0 was like kind of more general automation.

1:20:49Software 2.0 is your automating tasks that are verifiable. Verifiable tasks. And I just feel like finance is like just like prime for verifiability, right? Because it's like, well, was this in the policy or outside of the policy? Totally. Yeah, I'd love to know more. Or is your policy incomplete, right? You know, there's all these practices and you can actually start to learn based off of the actions. And I think something that's so unique is that every time, you know, months close, there is someone actually going in and saying this transaction is categorized here. This goes there. You can see if you grew your revenue faster, if you grew your cash flow faster, or if you didn't.

1:21:30And so there's this incredible feedback loop that allows Ramp to add more value. And I think that's why the average customer that adopts Ramp spends 5 % less. And also the median Ramp customer grew their revenue by 12 % over the past year, which is much faster than the median in the U.S. And I think a lot of it comes from this learning. So help me understand, you're generating cash, but you're also raising money. You're implementing AI, which can be very expensive. We've heard from Ivan at Notion that he saw a slight hit to his gross margins. It's still a fantastic business, but did actually see that show up in the income statement.

1:22:15And how are you thinking about the adoption of AI as a piece of the tech stack? Is it actually reshaping the financials at this point? Or is it something where you see it sort of just like another subscription, just like another piece of the tech stack? And it hasn't really changed the way you think about the cost structure of your business? It's a really good question to zoom into. In my general view, it has been fairly overwhelmingly positive. I still think that for us, our goal is not to sell someone like a card or a bill payment software. It's to help your business run more profitably. I think a lot of what we're trying to do is if we can actually pay for software where the output is there's an hour of your time of work you don't have to do anymore that's done by software, that's really great.

1:23:12next I think about and you ask most founders or leaders in technology like what's the biggest constraint on your business? Everyone says I'm having trouble hiring engineers it's like I want to hire great sales people, great engineers and if you can adopt software, I mean we look at our sales team, you know the quota that folks on the sales team have is multiple times of our next list as competitor in part because we have a lot of tools we built to make our team far more productive. Our engineers years are shipping about 50 % more code to the code base than about four or five months ago. And that's continued.

1:23:50And so our general view is, look, if you can actually make the best even better, that's something we're gladly willing to pay for. And so in our business, we've actually seen margins expand as we've adopted this, in part because we think that our principles, Let's create a lot more value than we capture. And we're able to do that because we're creating much more value than even months ago. It just feels like Ramp is agile, new company that people love the product. And so it's just so much easier to say, hey, if you want a new AI powered feature, we have that on day one. You don't need to rip us out and go to something else.

1:24:32You don't need to have some bolt on. You can just get it all here. And so you can effectively monetize whatever cost is coming through the actual token generation on your side pretty quickly. How are you thinking about headcount planning over the next few years? We don't have to zoom out to like 10 years. I think it gets extremely fuzzy. But I'm curious if you care about every once in a while these sort of like revenue per employee or sort of like net income per employee, like statistics start floating around. I'm curious if you think about that at all. And obviously, running Ramp as one of the most efficient companies in the world is really good marketing for the product.

1:25:19It's probably the best marketing that you can do. But I'm curious how you think about those things. It's exactly the right question. Because I think, look, when we kind of think about our operating model every year, we try to increase the ratio of whether it's revenue, contribution, profit, margin per employee. It's all to say, like, we anticipate revenue is going to grow very, very rapidly. And while employee headcount is going to grow, it's going to grow a little bit slower. And so the effect is you start to see this widening, gives you more margin to invest in, whether it's a use of AI itself that you can drive into the product, more marketing, all those types of things to reach more customers.

1:26:03I think more abstractly, though, if you kind of step back, most businesses in the US are actually profitable. I forget that in the Valley, but have an 8 % profit. and we'll talk about this but you know it's like if you make a company more efficient by like one percent it's equivalent to like an increase of you know one dollar in savings is equivalent to twelve dollars more in revenue at an eight percent margin just mathematically and if you can do this repeatedly I actually think that there's you know a you have a lot more businesses that are good but don't have this automation and skill sets to grow much larger.

1:26:46I think a lot more companies will get bigger. And I also think that if it's just easier to run a business, I think more great businesses will get started. I think there's a lot of creative people out there who would be running organizations who I think is the tools to build get easier. You see a more interesting world. And so, you know, I actually think it's a pretty important and really profound thing to knock out inefficiency to allow smaller companies to succeed. I mean, even you guys are a perfect example. TBPN is a small team that's changed the media landscape and captivated the world. And, like, I think that there are probably a lot of people where if you make the tools better, like, they will come.

1:27:24How do you feel like CFOs are ranking AI-enabled software on their list of priorities when they're making a decision in this category? Because it feels like there is some great stuff. There's some stuff that's commoditized, some stuff that you've built that's differentiated. But are CFOs as a class sort of like, okay, I've checked the box, I'm exhausted with the narrative, or I'm just ramping up and I feel like I'm just starting to get value and I actually understand it? Or are they just learning what AI is for the first time tomorrow or today? This is a fun one. So I would say there's a few different types.

1:28:08I mean, I would say small and mid-sized businesses just is like, look, I want to run the same business for less. I want to grow, meet my goals, be more profitable. And I think for us, it's just, hey, it's an easier-to-use expense report. Or like you want you to do expenses where your card will do it for you. You don't need five tools to pay bills, run procurements, earn yield on your treasury. Ramp will simplify that. But I think that for large customers, look, I think it's like 80 % plus of the earnings calls of the S &P 500 mentioned AI about six months ago. I think it was 95 over the most recent quarter.

1:28:46It is 100 % on the mind of CEOs and CFOs. What they're wrestling with is, you know, there's a great study at MIT in the fall that went fairly viral where it said 95 % of enterprise deployments are not creating return on investment. And I think part of why CFOs have been so enamored with Ramp is, you know, we can demonstrate very, very clearly. A, for most customers, it's product that pays you to use it in the form of cashback. B, it helps reduce your spend and see when you have all this time back for your sales force to go and sell and not do low value tasks. It's a very easy business case. And so I think this ultimately, like our focus is on saving people money.

1:29:31And that ROI focus makes it easy for them to buy. I think it's very important. That MIT study, how does that track with what you guys have seen from various AI pilots? Because I would imagine Ramp doesn't even count on either side. I wouldn't think of bringing a Ramp into a company as an AI pilot. I would see it as a completely different thing. But are you the 5 % that's successful or are you just not even counting? If you were talking with the team and the team's like, 95 % of our pilots haven't panned out, you'd probably be like, what were you guys doing? Yeah, you nailed it. So one, I think that a lot of you hit this first phase of people who are like told they need to buy AI.

1:30:13They're like, fine, I'll give you some experimental budget. You'll go do it. People try to want to stuff. And I think you end up, and I think this speaks to the importance of design where you'd end up with like disconnected tools. Totally. You have like a thoughtful chat, like a great chat bot here. This thing that kind of plugged into some of your code base and others. And if you look at, I think part of what's made ramps so effective is, you know, it's just a smarter card that happens to use AI. It's not telling you, hey, this is an LLM that categorized your transaction. This is an LLM that's read this 30-page invoice, detected it was fraud, told you not to pay for this.

1:30:47This is an LLM that detected you could be earning higher yield and moved it for you. It's just part of how it works. And I think this next phase and the AI-native companies that are working very, very well have these deeply integrated products where it's not like some AI tool. It's just how it works. And so I think that's the distinction. And you're right. For a lot of CFOs, it's, hey, we have this tool. It's going to help us cut out waste and pay us cash back. Should we use it or not? And it's a pretty easy decision. Yeah, yeah. It might not even be in the category, but it's still delivering AI properly.

1:31:25And I just love that that's – I feel like there's something very valuable about just using every possible tool, AI or not, or linear regression, if that's the best tool for the job. behind the scenes and then just delivering the actual value to the customer, solving the problem. Because customers, they don't necessarily want technologies. They want solutions. Yeah, yeah. One of our customers, and someone I look up to quite a bit, is Brett Taylor, started a company called Sierra, chairman of OpenAI. I think he was on it a week or two ago. One of the things he said is, look, I don't want anyone at Sierra spending time on expense reports for invoices.

1:32:07Ramp is automated categories of work that used to slow us down, and we actually can work on the things that makes us great, building great products for the business. I think you nailed it. It's solutions, not actual technologies. Most of the customers, they just don't have a strong opinion about the underlying technology they care about. Saving time, saving money, that's what matters. Well, congratulations. Thank you so much for taking the time. Massive milestone. This is day to hop on the show. Fourth of the year. I'm sure you'll be back next week. You're always welcome. That's why we bought these suits.

1:32:42We don't rent them. We bought them. Tailored, because we knew we were going to be using them a lot. We're going to be using them a lot. Guys, it's so good to see you. Thank you so much. Have a great rest of your day. Yeah, incredible milestone. We'll talk to you soon, Eric. Bye. Quickly, before we bring in our next guest, let me tell you about Turbo Puffer. Search Every Byte, serverless vector, and full-text search, built from first principles on object storage, fast, 10x cheaper, and extremely scalable. By the way, median public SaaS company growing at 12 % to 17 % a year. They're growing at 10 times that rate.

1:33:15Fantastic. Our next guest is Stacy Rackson. Welcome to the show. Thank you so much for stopping by. We'll have you sit down here. And while you're sitting down, I'll tell everyone about Profound. Get your man mentioned in ChatGPT. reach millions of consumers who are using AI to discover new products and brands. Are we in a bubble? What's going on? Introduce yourself first. Sure. My name is Stacey Rasgon. I'm a stock analyst and equity analyst. I'm a managing director and senior analyst at Bernstein Research, where I look at the U.S. semiconductor and semiconductor capital equipment space. Thank you.

1:33:54Clearly, AI has been the only topic for a couple of years. Yes, yes, yes. I want you to react to this Satrini post here. It says, just reviewed a bunch of stuff for our November macro memo. We might low-key be going into a recession, boys. No clue if this matters at all for stock prices anymore, though. That's a good point. You could argue some parts of the economy. I'm not a macro guy. I'm not an economist. However, you could argue some parts of the economy are already there. People use the phrase K-shaped recovery, which is sort of interesting. But I think especially like the lower half of the population is not actually doing all that well.

1:34:36And we've actually seen that more recently in a lot of just not the semiconductor reports, but a lot of the consumer reports and the restaurants and, you know, the retail. Yeah. So there's probably parts of the world that are already there. And clearly the infrastructure spending, the AI spending has been supporting GDP. Yeah. And it's been supporting the stock market. I mean, NVIDIA is, I can't even remember, 8%, 9 % of the S &P now. So, yeah. That's remarkable. We may be there already. Yeah. So we had a thesis that NVIDIA is going to do just fine this earning cycle, specifically the only reason, not just overall demand, but that Jensen was slamming beers.

1:35:17This is the most quantitative research. You can't get this on Wall Street. He's not acting like a CEO that's really worried about his quarter. He's not. I don't know that he would generally care anyways. However, they just did an event in D.C. a couple of weeks ago called GTC. I mean, he put a slide up behind him that basically said numbers next year are too low. What the slide said, it said they had$500 billion in cumulative orders for Blackwell and Rubin. Blackwell is their current generation of AI servers, and Rubin's the next generation. $500 billion cumulative across 2025 and 2026. And they said we've already – I can't remember.

1:35:50It was like 20 million chips for orders. and they said we've shipped six to date. So we've got 14 million left. They've got five quarters. You can sort of figure out how much it is and you can compare that to where the numbers are. And he's basically saying numbers are too low. So I'm not terribly worried going into the quarter on Wednesday. Now, you know, with stocks, as always, it's not just the numbers, right? It's the numbers relative to the expectations. Totally. So I think everybody expects it to be good. So we'll see how good he can make it. It does feel like we've entered a period over the last month maybe where even beating would still result in a sell-off?

1:36:28Is that just everything priced to perfection? What's going on there? Yeah, I mean, especially in the AI side, there's been, you know, sentiment ebbs and flows. Yeah. And we've been in a bit of an ebb. Yeah. And there's been a lot of stuff. You know, we had Burry's comments about a GPU lifetime and depreciation. And we had a couple, to be honest, a few what I would call self-owns on the part of the open AI folks, Altman and Scarfire, higher, a little unnecessary angst that they caused. They did that to inspire themselves to have to work harder. Maybe. It's fine. Look, and you're early guys, are we in the bubble or not?

1:37:04Sure. I mean, so bubbles are as bubbles are, right? You can look at a lot of things. You can look at valuations. I mean, NVIDIA's mid-20s price-to-forward earnings right now. We haven't got anywhere near crazy yet. And I mean, I'll say the same thing I've said since this started. And it really got started. You know, ChatGPD showed up in November of 22. And NVIDIA's sort of print heard around the world was May of 23. That's when it started. And even then, people worried about, okay, 2024 is going to be off. All right. I'll say the same thing I said then. At some point, you know, nothing goes up and to the right forever.

1:37:37At some point, you'll have a digestion or an air pocket. It's not now. It's clearly not now. That's all I can say. I don't know when. Yep. But it's not now. It's not this year. Yep. doesn't look like it's next year. And then all of these projects that OpenAI is, you know, signing with Broadcom and NVIDIA and even AMD, they don't even start to ship until the end of 2026. So at least from a spending standpoint, from what we consider, it's probably not 2027 either. Now, we'll see what the stocks do. Like, they tend to be anticipatory. But in terms of, like, an air pocket or something in spending, I'm not really all that worried yet.

1:38:10Yeah. When, I don't know. But, like, it's not now. Yeah. Yeah, how much have you subscribed to this idea of rolling bubbles? So right now, it seems like we've had a lot of excitement around neoclouds this year. Pretty much all of them have sold off a ton in the last month, maybe partly because of some of the comments out of the opening. I can't have been lack of confidence. But at the same time, Seagate, Western Digital, these other companies are up tremendously. I mean, yeah, the storage, they're covered by a colleague of mine, but I mean, they just go up 10 % every day, right? But that's the thing.

1:38:51It all really comes down to demand. Demand is off the charts. Nobody can get enough compute. The neoclouds are all, you know, even with CoreWeave, they had a bit of a delay. They just don't have the capacity, right? They pushed out a little bit. It's still there. Again, the storage guys are ripping because the memory prices are going through the roof because there's a lack of supply relative to demand. All we've seen from the hyperscalers is CapEx numbers going up and up and up and up. Like, nobody can get enough compute right now. That's where we are. And I think that is sort of the overarching thesis, like, either way.

1:39:27Like, you go back to the question about GPU depreciation, GPU lifetimes, for example. This is what Burry was getting at. was saying, oh, well, you know, they're all using six-year depreciation lifetimes, and these things don't last more than three years because you've got new stuff coming. It's not true right now, right? I mean, you can look. They're still renting out old GPUs for much more than it costs them to operate them. It's clearly possible to run them longer than three years. It comes down to demand. Right now, demand is so strong, it is absolutely economic to run that stuff. If demand weakens, maybe it won't be, but if demand weakens, we're all screwed anyway.

1:40:05So to me, all of the bear cases that you come up right now, to me, collapsed under the same thing. Is demand there or is it not? Right now, it's there, and the demand side is not showing any signs of weakening. What about the leaked phone call from Sarah Fryer, the CFO of OpenAI, where there was this idea that potentially there was weakness on the demand side? User minutes were dropping, which implies less demand. In the core ChatGPT app, which feels like the leading indicator for all AI. Yeah, but it's more than just OpenAI, too, right? Now, you could argue that we want OpenAI to be there because Altman's driving a lot of this incremental.

1:40:46Totally. Yeah, yeah. So we'll see. But, I mean, there's lots of demand. It's not just OpenAI. It's OpenAI. It's Anthropic. Totally. It's Gemini. Totally. In general right now, I mean, usage is going up. Yeah, yeah, yeah. Yeah, I mean, I'm sure we'll get more information on the Google side. I was a little wary about some of the, when you see these leaks, like you always have to be careful about. Yeah. It was very odd that it was like from an investor only call, like what investor would leak bad news. And by the way, we do calls like that. Stuff gets taken out of contact. So I was, I don't know what they said.

1:41:15I wasn't on that call. Yeah. I'm always a little hesitant to take, and I do this for a living, right? I'm always a little hesitant to take that kind of stuff at face value. Yeah. You have to diligence. Yeah. Yeah. I mean, at the same time, like to your point of the S curve nature of these adoptions, it's possible that, you know, 800 million is a lot of people. You do at some point saturate everyone. And there's only so much time in the day. There's 8 billion people in the world. Yeah, yeah. But I mean, it took Facebook years to get up into the high. And that is the thing, by the way. I've been doing this job almost 18 years.

1:41:50Same seat. I've never seen anything like this before. Yeah. Right? I mean, this is unprecedented. And that's why people get nervous. Yeah. Because the numbers have gotten so big. Yep. so quickly you just sit there and stare at them. It's like, oh, this can't be sustainable. Totally. We've been hearing it for two and a half years. Yeah. It's still going. Yeah. So, I mean, in this idea of the K-shaped recovery or this cycle of little bubbles popping up and popping, how do you process something like CoreWeave? Like, it feels like everything is going so well and to the point where the negativity around AI is like a rumored leak of a phone call, But then we're seeing a company trade down by 50 % in a month.

1:42:33Yeah, well, I won't talk about Corwee specifically. But I mean, look, anything that goes out where valuations are high, expectations are high. It's not just that. Lots of things have weakened off of peaks. I mean, it's fine.

1:42:49The neoclouds in general, I mean, they're all seeing tons of demand, right? I'm not really worried in general right now about where the demand is going. And the only thing we're seeing in terms of spending intentions and everything else right now is up. And again, I think that is the question. How long does it last? I don't think anybody knows. If you just look at, like I said, at least what is currently being forecasted by the companies that are doing the spending at this point, there's no signs of a slowdown. Not yet. What do you think of this thesis that some of the hyperscalers are maybe offloading risk to the neocloud?

1:43:23Oh, they clearly are, right? Yeah, which is fine. And that's part of the purpose, I think, that the NeoCloud serve. Sure. You know, you're kind of at the tip of the spear, right? It's boom or bust, right? Yeah. I mean, that's part of their business model, I think. What if you go further on the tip of the spear? Is there a company like, organization like Blue Owl or some of the... Yeah, on the financing. On the financing side? Because Blue Owl is another example where, you know, like Google's doing very well. Microsoft's doing very well. The hyperscalers are doing very well. Even OpenAI is doing very well, growing a ton.

1:43:57But then you have some froth in the neoclouds and some more froth in the private credit markets. What's your take on what's going on? Yeah, I mean, those are probably frothier parts anyways. But, I mean, the financing question is interesting because I'd say some of these debt deals, again, if you're looking at parallels to prior bubbles, that is one thing. There's a few things that people worry about raising a lot of debt to fund this stuff, and then they also worry about what they call kind of circular revenues, right? There's a lot of like crosstalk between a lot of the companies around here.

1:44:29And maybe to address both of those. I'd say on the debt side, most of this CapEx is still being funded off of income statements. Yeah, cash flow. That is one difference now versus say 2001 is the companies that are driving the spending, by and large, are the largest, most profitable, best businesses that humanity has ever devised. I'm sure you remember what the actually largest business was in 2000. It was ExxonMobil and Chevron. Different world. It was big oil. And big oil was not driving, and they were not funding the telecom build out with their cash flows. A lot of the companies, they were raising money.

1:45:05They weren't profitable. That does not really work. It was a very different thing. It wasn't like an immediate beneficiary that was just, oh, the biggest companies are just getting bigger. So it is a very different thing. And so in this case, we are starting to see some debt deals to fund this. But I'd say, by and large, the vast majority is still being funded off of operating cash flows. I don't feel too bad about it. Out of the$2.4 trillion that the Wall Street Journal estimated, the number that was funded by cash flows was$1.4 trillion. And then there was$800 billion in private credit. It's still a pretty reasonable debt-to-equity ratio, in my opinion, if you think about it that way, or debt-to-cash flow.

1:45:37For now. Yeah, for now. So that's right. And then in terms of called the circularity. So, I mean, NVIDIA is behind this. They're investing a lot. They have deals in opening. But I mean, Jensen's got his fingers pretty much in every part. He's in every startup, right? He's been doing it for a long time, too. But think about it. What else can he do with the cash? And so I'm hard-pressed to think of a better usage. We'll see where the numbers go. But if you believe the numbers, they're going to be generating hundreds and hundreds and hundreds of billions of dollars of free cash flow over the next five years, say.

1:46:06So what can he do with it? He can't do big M &A. Nobody will let him. Right? Just nothing's going to get through antitrust. They have a buyback and a dividend. But relative to their market cap, it's going to be de minimis. There's no choice. And so is there anything better than you do except invest and help to grow the AI? They also have a lot of different business in terms of M &A. Like with Microsoft, they buy LinkedIn. That makes a lot of sense in the Microsoft ecosystem. You know, Teams, they grow Azure. Like there's all these different places where they can plug other businesses in. Like if NVIDIA bought LinkedIn, we'd just be like, what is the goal?

1:46:38But he tried to buy other stuff, right? He tried to buy ARM? Certainly, certainly other pieces of the stack. Could you imagine if he'd been able to buy ARM, by the way? That would be crazy. He'd be unstoppable. He'd be unstoppable. So nobody's going to let him do anything like that. No one's going to let him, yeah. How important do you think the Chinese market is to NVIDIA? Because we debate this quite a lot. And it isn't. At least it's not important to the numbers right now because it's out of the numbers. Yeah. So NVIDIA, even AMD, they took it out. So that was smart because it's still questionable whether or not they will be allowed to sell.

1:47:09And so from a numbers standpoint, it's okay. From a strategic standpoint, I think it is important. And Jensen hasn't hidden this, by the way. Second largest computing market. It's more than that, though. So it is the second largest. And he's talking about$50 billion of lost opportunity. And over the long term, it's probably bigger than that, right? I mean, China's big. But I think it's more strategic. You have to remember, the Chinese developers want to use NVIDIA. They have better products, right? They do. However, you're not going to stop China. So China has companies like Huawei, for example, that's basically a state-owned enterprise.

1:47:42And they already have parts in China that have higher performance than what NVIDIA is allowed to sell there. They do. They burn a lot more power. Chinese don't care. They just throw up another coal plant. But the thing is they're much harder to use. They don't use NVIDIA's ecosystem. It's called CUDA. And the Chinese developers want to use NVIDIA's ecosystem. If you don't allow him to sell there, what you do is you potentially encourage those local developers, of whom there are a lot, to coalesce potentially around a local alternative, like a Huawei, for example, and start to build up potentially over time a more robust ecosystem in China.

1:48:15And then you're shut out. And then the longer term word would be is once it's robust in China, does it move out of China? Now do you have a more robust global competitor? And so that's why I think strategic – and he said almost exactly that. He hasn't tried to sugarcoat it. Where I think he gets a little bit of a benefit is, at least with Huawei, the parts – because of some of the other U.S. sanctions, they have to make their chips at local companies like SMIC on deficient process technology. So the chips don't work as well. They're not as power efficient. I do not think those chips will really be competitive outside of China, where they will be competing on a global basis with much better products from NVIDIA or AMD or whoever.

1:48:51So I think that helps. But ideally, you know, Lutnick said this. What did he say? He said, we want to get them addicted to our technology. And I wouldn't have said it that way, but he's out of line, but he's right. we'd like him using it and to have some control over it and we're letting that slip away and so yeah I don't think it's great that he's not able to sell strategically, at least from a numbers standpoint, it's out right now I want you to react to this quote from the CEO of KKR he says, and candidly when we read some of these headlines it's clear that many of us have PTSD from the financial crisis and are looking for what will trigger the next one?

1:49:34Like, where is the next boogeyman? From our standpoint, this market and economy really don't provide a simple narrative like that. What do you think? I think that's true. And to be fair, I started this job in April of 2008, about three weeks after Bear Stearns failed. That's when I made my move to Wall Street. And so I was forged in that fire. And I have the financial crisis like tattooed on the inside of my eyelids. I lived through it. It was a remarkable time, by the way, to live through Wall Street. This is not like that. People thought the world was coming. We'll see. If there is an air pocket, maybe it will become like that.

1:50:09But people really thought the world was coming to an end back then. But are people looking for the name? Yeah, maybe. People are always looking for patent recognition. One thing that I go back to on the patent recognition side is just, I feel like for it to feel like, there is a world where there's some massive correction and like a lot of the top players see big haircuts, but it's just hard to imagine a big widespread, like with the dot-com boom, every random person on the street was trading dot-com stocks. With the NFT boom, everyone had Bitcoin. They were telling you, oh, you got to buy Cardano.

1:50:47You got to buy this. You got to buy that. You got to buy this NFT. And then in the housing bubble, everyone was like, yeah, I just got a second house. Morton didn't zero down mortgage. They didn't check my income. And so there was a lot of places where just hundreds of millions of Americans could participate in the bubble on the way up and on the way down. And here it just feels harder. There's some. I mean, there's a lot more retail participation, I think. You think so? Yeah. And having Robinhood and all this. In fact, they get a little nasty sometimes. They trade these zero data expiration options.

1:51:17So there's some of that. I don't think maybe it's as widespread as what we've seen in the past. But there probably is some of that. I just wonder if you go to the median American, do they have significant exposure to the data center build out right now? No, maybe they're electric bills. Yeah, yeah, yeah. So maybe that's it. But if there's a collapse, that's going to go down. That's going to be cheaper. There's two ways that it could quote unquote collapse. And they have different implications. So one is just there's a digestion cycle. There's an air pocket. And you look at the hyperscalers, how they spend money.

1:51:51even before AI, they would tend to build and digest and build and digest. It happens. And I always say, what's the chance of a digestion cycle? It'll happen at some point. I like this digestion cycle. But that wouldn't be structural. If you believe it was just a digestion, it would be good for the structure. But you could hold it through that. The way it collapses, and it gets back to some of your earlier questions on the return, if it turns out we're spending all this money, there's no return, then the whole thing comes crumbling down. Totally. For everybody. Yeah, but it's like, I just really struggle to imagine a world where it's like, oh yeah, it was so bad that Apple's at a 10 PE.

1:52:28Google is no longer valuable. It's like, these companies have been valuable for decades. Where are they going to go? They can go down a little bit, but they're just not that exposed at this point. Someone in the chat asked, please ask Stacey about CDS spreads affecting debt financing costs. So that's Oracle and CoreWeave. I.e., how does the domino start? Yeah, it's a little out of my wheelhouse, the CDS. But people are looking at a few specific areas, like Oracle. Yeah. CoreWeave, too. I mean, Oracle's not exactly a hyperscaler, but they're trying to be a hyperscaler, sort of. And they don't have the balance sheet and the income statement to fund it, so they are going more to the debt market.

1:53:07And CoreWeave, I mean, clearly, you know, they have to fund this debt with debt. Most of the other ones, you look at a Google or a Met or an Amazon, like you're not in that kind of stage, right? Like, they're still, again, they're raising a little bit of debt, but they're still primarily funding this out of free cash flow, basically, out of cash flow from operations. But it is something people are starting to look at it, like, for sure. For sure. Yeah. Have you tracked situational awareness, the hedge fund, Leopold, Austin Brenner? I have not, no. What is that? Former OpenAI researcher. Oh, this is that kid that started the – Yeah, he's got$4 billion under management.

1:53:42Yeah, yeah, yeah. That's right. It's a real deal. And I was curious, so his strategy, like he raised the fund like at the beginning of this year or closed it? Closed it. He was raising it for a while. He'd been raising it for a while, but started deploying aggressively this year and has performed really well, at least until – It's the best performing hedge fund in the world. He's in the right place at the right time, right? Yeah. And the whole thesis was just AI is real. Do you think some more traditional hedge funds have sort of just overthought the AI trade? over the last year? Well, I don't know about that.

1:54:14Because it's not like he was buying, like, somewhat, somewhat. He had a somewhat unique take. He had a very informed take, but it wasn't. But he also didn't go NVIDIA. He went Intel. He went other places on the map. So, by the way, Intel's gone up not because of AI. Intel's gone up because, you know, Donald Trump wants the stock to go, which is a bull case. It's fine, you know. It's not an AI story. My view in general, and, yes, I don't know if specific hedge funds have been overthinking or not. But I haven't wanted to overthink it. My general call this year has mostly been own the high-quality AI names, ignore most of the rest.

1:54:49That's been fine, right? It hasn't had to be complicated. Number go up, right? It hasn't had to be complicated. Number go up. Well, I mean, what do you put in that high-quality name bucket? Do you put the iPhone? I mean, we've covered like NVIDIA and Broadcom, for example. Just mostly those. Yeah, and we've been more lukewarm on AMD, and that's what I missed, right? Because it's also ripped. You haven't necessarily had to be quote-unquote high quality to work, right? Because right now, if you think about an S-curve, if we're on that exponential growth part, it takes everybody up. It's been fine.

1:55:30But again, you haven't had to overcomplicate anything. Not yet. Yeah, what about, I mean, talking about not overcomplicating it, like if you just bought Google and Microsoft, That's a pretty broad index on AI between de-monde and open AI. But you've got to remember, it wasn't that long ago that people were looking at Google as an AI loser. Totally. Yeah. No, it changed. It completely changed. Completely changed. They positioned themselves very, very well. Citrini has another post here on the 2022. I saw a lot of very smart people in 2022 fail to recognize the reality of reflexivity, i.e. stupid headlines that with a few hours of research could reasonably be dismissed as nothing of consequence, would add fuel to the fire and result in further downside.

1:56:12Understanding that this dynamic works to the upside as well as the downside means that, yes, even if you know that the CDS on Oracle and CoreWeave are blowing out because the CDS market is easily pushed around by a few parties trying to get cute and hedge their exposure to AI lending, you also recognize that if enough people view that CDS widening as indicative of a problem, it will become a problem. What do you think about these stupid headlines? I mean, headlines have certainly been more of the bane of my existence probably over the last couple of years. Yeah. Yeah. Um, yes. So there have been lots of movements from headlines that if you, if you were had any depth of subject matter expertise, you'd know the headline itself didn't mean it.

1:56:52Yeah. What do you, what do you fall back on? Do you go to just the earnings reports or give you an example? That kind of stuff tends to correct itself over time too. I mean, you get pops and I mean, I'll give you an example from, from my own coverage, and this is a stock that I've liked, Qualcomm announced, this was, this is their headline, it wasn't like some stupid headline to say, but they announced like an AI like server. And there was, wasn't a whole lot of information, the pressure of the stock went up 20 % the moment of the, and then, and then it kind of gave it back as it probably should, but it had a, you had a pretty big pop on the headline just because it was AI.

1:57:25Whereas if, you know, you kind of know, and by the, don't get me wrong. I I mean, we'll see what happens with that product with them. And, you know, again, you can argue it's option value and everything, but to go up 20 % on one day was probably overdone. And they gave it back. You know, it's fine. Yeah, makes sense. Giving it back, I feel like, has been the story of Oracle. They got this, you know, tremendous pop off the OpenAI deal. Now they've retraced it below. Is it lower than it was? It's lower than it was before, which to me says, like, either the market doesn't believe that it's real and or the other reading would be it's real, but it's not going to be ROI positive, right?

1:58:05Yeah. At least for Oracle. Without making any comments on Oracle, I mean, those are the, for any of these investments, those are the worries that you're going to have, right? Yeah. Either, because again, especially if it's open AI. So Altman's committed to a tremendous amount of capacity. I mean, it's just between, on the chip side, between NVIDIA, Broadcom, and AMD, it's 26 gigawatts. And just for some context, I think the whole global data center installed electrical capacity, I want to say something like 70 gigawatts, something in that ballpark, right? Yeah. So it's a lot. I mean, he was even making comments he wanted to deliver, what was it, a gigawatt a week at one point?

1:58:41I mean, it's a lot, right? And so you already are wondering, can he actually deliver on that or not? And those are valid questions. And by the way, I wouldn't count Altman out. Like, he's aggressive, but, you know, he's got, like, large aspirations. But then with someone like an Oracle, like, who doesn't have the balance sheet or the income statement that some of the others do, and you look at the size of the – I can't even remember what it was,$400 billion or something. It was a massive step up. $300. In one quarter. Like, you wonder where it was coming from. It's always around, like, can they deliver it and can they pay for it?

1:59:14And those are the general worries, I think, for anybody that's announcing something. Yeah. How do analysts try and dig into, you know, there's quality of earnings, quality of revenue, quality of backlog feels like an important thing to dig into. But I don't know that the contracts are available. They're not, right? So, look, I mean, you talk to whoever you can and, you know, you've been doing this while you look for pattern recognition. But, I mean, look, nothing in semiconductors is ever really baked. Sure. Right? I mean, in fact, we just discovered, like during COVID, a lot of these companies were experimenting with, quote, unquote, non-cancellable orders.

1:59:49Sure. And we saw what happens. It's like, yes, maybe I could contractually force my customer to take a year's worth of parts they don't need. Yeah. Am I really going to do that? Historically, the answer was no. Yep. During COVID, for some companies, the answer was yes. And those particular companies are still paying for it. Yeah, yeah. Because, okay, great. I just took all my parts. I don't need to order anything from you for a year, right? Yeah, that makes no sense. And so I'm always a little hesitant of backlog and commits. And even some of these, by the way, even with these opening ideas, they put out big numbers, but it's not like the whole thing is committed.

2:00:22Like maybe the first gigawatt at this point is committed. Totally, totally. Which is how it should be. Yeah, yeah. Yeah, no, that makes a lot of sense. It's great. Are you AGI-pilled? No, probably not. I'm not exactly sure what AGI means yet. You know, there's a lot of different definitions, and sometimes it tends to change. Well, do you find AI useful in your day-to-day life? No, I do. I have to be a little careful because from a regulatory and compliance standpoint, it's not like I can just start throwing stuff into a model. I'm very limited. We have some internal stuff that we can use, which is – Enterprise plan.

2:00:52Yeah, and it's ring-fenced and everything. But, I mean, simple stuff, right? I mean, what is this? Notebook LM. I can literally take a YouTube of this, what is it, three-hour podcast and toss it in there. And it will give me a summary. Not just a summary. Then we can take that summary, put it into another model, and say, make me a three-hour. Sure, yeah. Pretty soon it's just AI is making and watching podcasts, right? It's a slurry of content. But that's just one example. So there are clearly ways where it's influenced my experience and my workload. And I'm probably on the low end, frankly, of what I could be using.

2:01:26I am constrained on what I can do with this. I'd love to use it more if I could. That makes a lot of sense. Well, thank you so much for coming by. Oh, you bet. My pleasure. This is a lot of fun. You bet. Have a great rest of your day. We'll talk to you soon. Cheers. While he's hopping off, let me tell you about Linear. Linear is a purpose-built tool for planning and building products, meet the system for modern software development, streamline issues, projects, and product roadmaps. Speaking of turning things into podcasts, Christoph has some fake news here on the timeline. I love Christoph, coastal futurist.

2:01:58Christoph says, Still crazy to me that Steve Jobs slash Apple invented the word podcast and that it's a mix of iPod and broadcast. And apparently this isn't true. Apparently, a BBC journalist, Ben Hammersley, coined it in a 2004 Guardian article, but then it got ported back to Apple, and the term podcast was adopted. But it is funny that podcast— Podcast has always felt like a very boomer— It's always felt like a very boomer term. Yeah? And it makes sense. Radio show? I never knew that it was a combination of iPod and broadcast. Oh, you didn't know that it was iPod Plus Broadcast. Yeah. Yeah, what else?

2:02:41What does that make? The cast. Casting is very, very popular. Anyway. What's this article from? Evan Armstrong over at The Leverage published an article on who actually makes money when robots work, looking into some of the venture funding that's flowing into humanoid robotics. and he is trying to create a field guide for separating the real companies from the grifters. Talks about One X. The home robot costs$20 ,000 upfront or$4.99 a month. The website looks like every other VC-funded D2C brand from 2015. Millennial beige sans-serif typography. The works buried in the fine print and tech coverage is the actual product for most chores.

2:03:29A human in a call center will drive the robot around your house via teleoperation while the system records training data for autonomy that doesn't exist yet. And so there's a big question about how, like what will the actual margins be? And he was trying to dig into that. So you can go read Evan's piece over on the leverage if you want. You get a seven-day trial. Who actually makes money, though, when they work? Is it the call center operators? I believe... I mean, I would not bet against Elon on this. I believe that the hardware manufacturer will ultimately be the one that makes money in the long term.

2:04:08I think that everything else is more commodity in the stack, but there is going to be a compounding advantage to actually having the manufacturing capability to build the robots at scale. Now, this is years away, but I'm certainly AGI-pilled in the sense that the teleoperation will become less and less important, and the Tesla model of having an economically producible product will be very, very important. So that would be my take. In other humanoid news, Brett Adcock was putting a company in the truth zone. What do you say? Shenzhen-based company UB Tech claims to have completed the world's first mass delivery of humanoid robots.

2:04:57and the Shenzhen-based company has secured apparently over$112 million in Walker S2 orders this year. Brett Adcock says, look at the reflections on this bot and then compare them to the ones behind it. The bot in front is real. Everything behind it is fake. If you see a head unit reflecting a bunch of ceiling lights, that's a giveaway. It's CGI. so he's putting he's putting UB Tech in the truth zone and then Christopher comes over the top and puts him in the and it says such an embarrassing post for a CEO at this level to make so people don't necessarily believe that the CGI claimed Did UB Tech actually deliver it?

2:05:42There's no community note on the original video I for something like this I mean, we've seen iRobot. You can actually just do flawless CGI that is indistinguishable. There's no way to tell. So I would be relying on some sort of on-the-ground reporting. Do you have an idea, Tyler, of whether or not this is real? We've seen demos of this robot before where it pulls the battery out of the back. Yeah. I don't know for sure if it's real, but it is a public company. Yeah. Yeah, and so Brett kind of needs this company to be totally fake because UB Tech is a public company. It's valued at around$7.5 billion.

2:06:28Okay. And they have real revenue. Okay. UB Tech, man, the UBI market over in China is extremely competitive. You have UB Tech and then you have the – what's the other company I keep forgetting? Unitry. Unitary? They're two different companies, right? But they're both publicly traded, both have revenue, both make humanoids. I wonder if there's like, I wonder what the CEOs of these two companies would actually say. Like, what is the differentiation between the two products? Because they look pretty identical. Maybe we need to do a side-by-side. But I don't know. What else here? Martin Scrawley said, best part of UB Tech is it's public with real revenue, so its valuation is naturally far below pre-revenue robot.

2:07:17Naturally. That's wild, yeah. Yeah, no, I do think it's real, but I don't know. It's really hard to prove it one way or another. It's hard to prove any of these videos that come out with the humanoids because humanoids are just like, it's the textbook CGI product. If you're all good at CGI, you can make a humanoid robot look great because it's all just polished steel, basically perfect reflections. It's much harder to make a human face look CGI real. And so we've had the ability to make like CGI Stormtroopers, CGI C-3PO. Like that's been at perfect indistinguishable level for years. But getting to the actual human level.

2:08:03Yeah, to be honest, I care a lot less about did they use CGI to put 100 of these robots in one room versus what are the actual capabilities of the individual robot? Yeah. Right? Yeah, yeah. So that's why I think 1X, I think they're pretty straightforward about it being teleoperated or that being kind of the value as you're buying a robot that can be teleoperated in your home. It really feels like these are going to come to the United States fairly soon. Why is Adcock obsessing over a competitor? and then what can he do in the next three to six months to justify his$40 billion valuation, right?

2:08:44It probably needs to ship a bunch of these things, like just for any reason. Just manufacture a lot of them, I would imagine, because with Unitary and this other company and 1X is starting to ship and Elon's clearly getting serious, like the race is on to actually start manufacturing and shipping them. And it'll be interesting. With the flying car thing, a lot of it's regulatory. So it's harder to assess what the progress is like because you can always just kind of get hung up in regulatory. I wonder in the humanoid space. Well, speaking of flying cars, what's up, Tyler? I was just going to say, I think it's interesting.

2:09:24We still haven't really seen any humanoid CEOs talking about sanctions against China. Yeah, I know. That's the thing to call for. Yeah, like it's like a very easy I would not be making them fake I mean you can do that But you should just say like even if they are real like we want these made in the US Like in the way that you see kind of Dario saying in AI And it's just kind of weird that you don't see like Elon saying that we need to make these in the US or the one X guys saying Yeah, bring out the ban hammer Let's I mean that yeah, I just I that's gonna be an easy one for you all you have to do is like do you want a million robots in American homes that could have the sci-fi scenario where you have a backdoor.

2:10:11The argument against DJI was always like, well, if some tiny drone is in your bottom sock drawer, what's it going to do? It's not just going to bust out of there, but a humanoid robot will just bust out of whatever you put them in, unless you store them in your gun safe or something. Walking gun safe. Let me tell you about numeral.com. SalesTalks on autopilot, spend less than five minutes per month on SalesTalks compliance. And then we have an update from Keller from Zipline. We're going to watch this two-minute update from him. Pull it up. Hey, everyone. It has been an insane two months, but I thought it'd be cool to give a two-minute update.

2:10:49Whenever I post something on X, people are always asking me, like, when is it coming to my metro? Why aren't you scaling faster? We are definitely hearing you. We are scaling as fast as we possibly can. In fact, I am standing in our expansion space for the manufacturing facility as we speak. We're getting ready to build 20 ,000 autonomous aircraft a year, all here in South San Francisco in the United States. Mid-December, we will actually start producing the first aircraft here in this space. So this past week, I was in Dallas visiting a lot of our different customers, going and visiting a lot of the different stores that Zipline is delivering from, and my mind was basically blown.

2:11:21Right now, we're growing the number of deliveries we do per day at around 15 % week over week. We've been growing that fast for about 30 weeks straight. A lot of our customers out there are placing orders three to four times per week. In fact, some customers are ordering three times a day. People actually just fundamentally change their order to get users. Some people are grocery shopping once every one to two weeks and then ordering from Zipline three to four times a week just to do fill-ins. We've also been able to launch a new Walmart supercenter every week across Dallas over the last couple months.

2:11:50And by the way, I've been talking about really exciting hyperscale in the U.S., but a lot of people are often like, well, wait a minute, like isn't that zipline operating a huge logistics network in africa yes in fact that network is growing faster than ever but today we serve five thousand hospitals and health facilities across rwanda ghana nigeria cote d 'ivoire and kenya that has become the largest commercial autonomous system on earth together what we do in the us right now zipline is doing an autonomous delivery about every 30 seconds we're also adding a lot of new products for example in ghana we just added HPV vaccine to the overall network and in the first week we delivered 150 ,000 doses of vaccine.

2:12:28This is a crazy scale. John's back. I'm back. He's going on the show next week. We love Keller. Congrats to all the folks over at Zipline on amazing progress. Yeah, really wild. They're building in South San Francisco, scaling deliveries like crazy. Yep. I think this is one of those things that's hard for it to be, hard to be that excited about until you get to experience. Ooh, Ryan, there's a spicy question in the chat. How long until they pivot to a weapons company? I don't think it will happen. I think that drone defense is like the most, it's such a crowded industry. It would be really, really hard to break through there.

2:13:10I don't know. Maybe there's something in like logistics. I've talked to a few folks in defense that will do drone-based transportation or delivery for, let's say, how do you get supplies from land onto an aircraft carrier that's stationed off of the coast? Well, you could fly a whole helicopter there, but what if you just want to deliver one smaller package back and forth? You could use a smaller drone for that. There's companies that are building in that category. So, I mean, I could see it happening, but I wouldn't expect ZipLine to be, you know, on the front lines of Ukraine competing with Niros to, arm the resistance there anytime soon.

2:13:52The drone delivery, like just delivering a burrito, is going to be a massive market. DoorDash does it the best way. It's a$100 billion business. I don't think that they need to deal with all the craziness of DoD procurement. Anyway. So someone in the chat mentioned that UB Tech fired back and released a behind-the-scenes video. No. Okay, we got to pull that up. Do we have it? Thank you to the chat for letting us know. I'm adding it here. Let's add it. In the meantime, more on robotics. Blake Robbins has a great take that I was curious about. If anyone knows anything about this, please fill me in.

2:14:32He says, As robotics continues to get more attention, I always wonder what Boston Dynamics is cooking. It feels like Boston Dynamics should have been the open AI of robotics, and yet I can barely mention anyone that worked there. And there's a whole bunch of different debate on what happened. Boston Dynamics was sold a few times. Boston needs to be studied. Yeah, Boston Dynamics. What's the dynamic over there? Wait, wait, Boston Dynamics. It's the original browser company in New York. They just took their city and what they do and put it together. This is the Dynamics company of Boston. Rebrand, come out with a humanoid.

2:15:08Let's play this video. This behind the scenes video. Los Angeles Dynamics would just be like Lincoln Bios. At one point, Boston Dynamics sold the Hyundai Heavy Industries. So I believe they were across the Pacific Ocean. Let's react to the second video posted by the humanoid robotics company. Okay, UbiTech Industrial Walkers, they've been pumping these out. It feels like the question has never been, can China make a lot of these things? Like obviously they can. In the bio, they said it looked too perfect to be real. And then they used some chat CPT slot. But perfection isn't fabricated. It's delicately.

2:15:50No. It's so good. You know, for a long time, people were saying that there was no way to watermark AI created content. Because like, oh, how would you do it? You change one. It's like, actually, all AI content is watermarked. It turns out. It's just perfectly watermarked. Yeah, this looks real to me. I don't know. It also could be CGI, honestly. It's pretty funny to see Brett say this was all faked. Yeah, it looks real. I mean, they could have done so much better to make this look real. Put a bunch of humans there, touch them. A lot of the hard part in CGI is the handoff between the CGI character and the human character.

2:16:34And so what you should be doing is you should have a human who takes like a smoothie and pours it on top of the robot and then like wipes the robot off clean with a towel. And you're seeing how the fluids interact with the robot, interact with the person. And like that was not actually that satisfactory. I don't know. I think, I don't know. I'm not calling it fake, but it could be fake because CGI is really, really good. like cgi just is at that level where that's possible um anyway yeah we know that we know the caption or the the description of the video was ai generated that is hilarious that they they had to use it for the caption it's like i mean it's like ai on it and it's like after all it is an ai company like it would be on brand uh anyway fin.ai the number one ai agent for customer service number one in performance benchmarks number one in competitive bake-offs number one ranking on G2.

2:17:33You can get started for free. Our next guest is Luca from Bending Spoons in the Restream Waiting Room. Welcome to the show. Welcome to the show. Good to meet you. How are you doing? Hello. Hi. Thank you so much. I imagine it's late there. Thank you for staying up late and coming and chatting with us. For those who don't know you, would you mind introducing yourself? Of course. I'm one of the co-founders, the CEO at Bending Spoons. And what we do is we look for digital technology businesses with unexpressed potential, and then we acquire them, if they'll sell them to us, and transform them, sometimes quite radically, by rewriting big chunks of the software, re-architecting the cloud infrastructure, redesigning the UI, launching a lot of features, optimizing monetization and marketing, rebuilding big parts of the organization.

2:18:20So lots of hands-on work, and then if we do it right, we generate a lot of value, we plugged back into bigger acquisitions and strengthening our platform. So basically our proprietary technologies, our expertise, access to talent. The company's huge now,$11 billion valuation. How did you get started with all this? So I founded a startup in 2010. Interestingly, talking about AI, we were trying to create a self-writing diary or journal with AI in 2010, which was pretty early. We couldn't, I mean, it worked fine, but it wasn't good enough. So that was like your typical startup. You work from a garage.

2:19:02It was really our living room in our apartment, but more or less the concept is the same. We worked on it for three years, couldn't make it work commercially. And then we kind of shut it down. And through that experience, we came up with the strategy for Bending Spoons. Basically, why don't we try to outsource looking for product market fit to the market? We try to be the best in the world at the, call it, functional expertise that's necessary to run a digital technology business. So, software engineering, product design, growth, and all those things. And then we buy businesses where the owner basically doesn't want to work on it any longer or where maybe we can do better so we can offer an exciting price for all involved.

2:19:48Is the name a reference to the Matrix? Actually, yes. Yeah, it is. Yeah, it feels like, at least to me, like it's kind of an odd name for any business. It's cool. I like the reference. But why did you pick that name in particular? So we knew we weren't going to work on just one product. Okay. So we couldn't call it, say, Facebook, if you do, you know. Yeah, you need like a name for a holding company on day one, sort of. Yeah, something like that. So we chose to find a name that would somehow convey a couple of principles or values that we thought were important to us. And bending spoons reminds us of two things.

2:20:31One is the power of the mind. For obvious reasons, if you are going to bend spoons with your mind, it means you believe it's powerful and you can do great things with it. And the other one is, call it perseverance, hard work, dedication. in my imagination to get to the point where you can bend spoons with your mind. You probably have to work pretty hard at it. And plus it was kind of memorable, so we liked it. Yeah, I like it. I reached out, or one of us reached out, when the AOL acquisition got announced. Give us a backstory on that deal, how it came to be, when you started thinking about the business, what value you saw in the business, and maybe why it was a target that was overlooked by maybe American private equity players and what you saw in it.

2:21:28There were multiple private equities that were looking at it too. So we weren't the only ones. it was owned by a private equity, or it's still owned because the acquisition was only signed, it hasn't closed yet. And so you could imagine how they would run a proper and competitive process.

2:21:51Typically, we follow a business for a long time before an opportunity to acquire presents itself. I don't have precise statistics, but off the top of my head, I'd say it's quite rare that we end up acquiring a business we haven't followed for at least a year, sometimes more. So we have been following AOL for a while. And when it became available, we made an offer that we thought was quite competitive. And here we are. What do we see in it? So I think it's actually a great business. People are a bit stuck with the idea of AOL from the 90s or maybe early 2000s of internet connectivity. DBT doesn't do that, haven't done that for a long time.

2:22:35Today, it's two different products. There is a web portal for people to consume news and entertainment and an email client, like Gmail pretty much, you know, like that sort of thing. They have well in excess of 30 million monthly active users, 8 million daily active users. So it's huge. Give or take one in 10 Americans uses it. And it's just not necessarily, you know, the new hot thing that you would read about online, but it's still massively used and very good retention because people are self-selected if they still use it for really liking the brand and the offering. And nevertheless, we think we could help make the product more modern, more effective.

2:23:16We think that through AI, we could create better recommendations for the web experience, essentially better content to consume. We'll see, but it's exciting. We look forward to working with the team on it, plenty to refine and expand. And it's exciting to work on a storied brand. I find it kind of cool, actually, to be able to get our hands dirty with a brand of the caliber of AOL. Yeah, it truly is one of the great, America Online, one of the great names in business history. How do you think about, like, I feel like Silicon Valley, like, has this sense that businesses are either in hyper growth or they're dying, right?

2:24:01And there's nothing in between. And that's just because, like, the industry venture capital dollars are deployed into companies that are growing really quickly. And as soon as you stop growing, like, that sort of source of capital is turned off and you kind of fall out of the headlines. But how much like I assume a lot like the kind of part of the thesis for Bending Spoons is that a lot of these businesses are just like way more durable than like the tech industry maybe gives them credit for. Because even after they're not getting like headlines in TechCrunch, they can still generate a lot of cash flow for a very long time.

2:24:37But how do you think about like durability of digital businesses and when they can become sort of like Lindy and survive across decades versus when they evaporate? I would say I kind of agree. And I will say that if anything, a business that has a lot of history, it's a lot easier to project its future and make accurate forecasts. Maybe you know it's not 10x, but you also have a ton of data, historical records for all the cohorts at scale to know roughly where it's going. So, yes, maybe the upside is not transformative as it would be in a seed or VC investment. But if all the stars align, you know, maybe 10x or even 100x money, but you also know you're very unlikely to seed melt in your hands.

2:25:31many of these businesses have excellent metrics they're just not cool and hot so to say and so the entire capital markets particularly on the private side not so much the public side but on the private side is geared towards growth very aggressive growth and there's merit in that but it also means there's a perhaps an opportunity to be less opinionated about growth at all costs we we know on our part we try to we're basically quite mathematical about it we make our projections have our own return thresholds. And then we are happy to buy fast-growing businesses. We have many times stagnant businesses, decline businesses as long as the math checks out.

2:26:10And this has been quite good for us, not being too, you know, limited by a very narrow thesis, but actually staying opportunistic. How are you structuring Bending Spoons? Do you have a deal team and an operational team that goes in and actually runs the companies? Or is it more of a hybrid model where a partner who finds, someone who finds the deal might be immersed in that company throughout the lifecycle of owning the deal? Yeah, so it's actually to say that we're kind of 25 % private equity, 75 % tech company. So we do have an M &A team. It's actually pretty small, probably eight, nine people.

2:26:53And they do what you would imagine a private equity firm would do. They create a pipeline, scout the deals, negotiate the deals. And then really probably 95 % of the team here are software engineers, product designers, growth managers, AI researchers. And once we close a transaction, we add a, call it a task force of experts to get in the trenches with the acquired team and study things in fine detail and help with those kind of radical transformations I was describing earlier. So that's the tech technology company part. But almost all we do is writing software, developing and refining technologies, user experiences.

2:27:31And we buy to hold and operate forever. We're not a fund, to be clear. More like a Berkshire Hathaway. We buy off our balance if you never sold a business, nor do intend to. So is it fair to think, yeah, you imagine AOL and Vimeo existing as companies in 50 years or brands as 50 years or both? What is the critical? Business units, I would call it. Business units. So if a company is more a kind of a legal entity, that may be dissolved in the future. Maybe yes, maybe no, depending on considerations. But there will be a business unit with its dedicated management team and engineers and designers.

2:28:14And sorry, I don't know why. That's on our side. Zoomed in. We just zoomed you in a little bit for the viewers at home. I'm sorry. You can see my baby's cradle just in the background. Oh, cool. Nice. Congrats. We have five kids on our side. It's amazing. Yeah. Mine is two and a half months old. Oh, wow. Well, thank you so much for taking the time to come talk to us. We really appreciate it. No, no, my pleasure. Thank you for having me. I'd love to know, like, what is it actually like buying a 5 ,000 person company? Or, like, because I imagine, like, if I'm, like, if you buy a company and you can actually go interview everyone, But with 5 ,000 people, you're like layers and layers and layers deep and everything.

2:29:00Like, how do you actually go and start right-sizing? We've seen a little bit of what happens through the stories of Twitter, what Elon did there. Obviously, that was a company that it seemed like post-Elon was massively overstaffed. But even if the staffing is correct, I mean, Apollo's owned AOL for a while. So I imagine that it's not wildly overstaffed. How do you actually go in and just get your handle on everything that's happening within the business because it's such a huge entity? So we have never acquired a 5 ,000-person company. The largest is about 1 ,000 people. I think your point stands, but just for accuracy's sake.

2:29:44Yeah, yeah. Well, I think it's very difficult, perhaps impossible to do if you are, again, a private equity and you have a small investment team. In our case, we will add a task force that's sized in relation to the size of the organization we're trying to study. And so if we acquire a 1 ,000-person company, we'll probably have, say, 50 people. If it's a 100-person company, maybe as few as 10. And then over the course of a couple of months, we will split the work. So everyone is in charge of understanding a piece of the organization that's not too big, the right size for them and specific to their capabilities and expertise.

2:30:25So if there is a more technical part of maybe an engineer, if it's something has to do with design or marketing, you know, and so on and so forth. And then those people will be talking to each individual in that part of the organization multiple times. they will be looking at the code base, they'll be contributing on ongoing projects. So we take our time to learn, I mean, I was about to say everything there is to know. Of course, that's not entirely true. Like you don't learn everything in two months, but truly learn the vast majority of what matters. And only then do we come up with, say, a new vision for the company, a new roadmap, a new design for the updated organization.

2:31:02It is extremely time-consuming and only feasible if you have a large, call it corporate staff of experts, like in our case, only then can you do it at scale. Otherwise, yeah, you couldn't. I agree. Yeah. What, how, how much is like, I'm assuming when you're thinking, evaluating potential acquisition, you're thinking how much can this company benefit from AI and what is kind of the AI disruption risk? Oftentimes it could be both. I can, I can, you know, imagine with AOL, you're saying like better content recommendation that you could roll out maybe with, with less resources invested, but at the same time, there's risk of new companies, you know, entering the market.

2:31:47But what's your, any sort of like framework that you're using to evaluate what companies are going to do well? Because nightmare scenario is you buy like a great business today and that becomes, you know, less relevant. But there's also, I think Silicon Valley also maybe, again, going back to my earlier point around durability, like there's companies from, you know, that have have been disrupted multiple times that can still continue to produce cash flow. But I'm curious what your framework is. Yeah, so I think there's, I believe you can come up with plausible visions for the future. I mentioned earlier, we were working with AI in 2010, where I didn't know a single other person who was interested in AI back then.

2:32:33So, I mean, I'm sure there were many in the world, but it was not mainstream. So, you know, we did have a big vision for AI in the long run. It turned out to be way too early, maybe a decade or more. So I'm a big believer in, yes, you want to have a vision for the future, but at the same time, if you think you know what's going to happen and especially over what timeline, you're very likely to be disappointed. So I would never want to bet our future on those sort of assessments. What we try to do is evaluate whether a company is more or less likely to be disrupted and, of course, also enhanced through AI.

2:33:05And that's basically a qualitative assessment. We try to embed that in our acquisition thesis, but also we always need a contingency plan in case there is a very aggressive rapid disruption. So we need to make sure that we have ways to get back our investment in case we end up in that or most of our investment if we end up in that scenario. So some businesses are structured in a way that if things don't go well, you may be able to trade long-term health for short-term returns and at least salvage your investment overall. I mean, it's not going to be a stellar investment, but still the break-even.

2:33:44So we try to have an escape route just in case things don't turn out the way we think they will. And of course, the fact that we're so diversified, the biggest business we own contributes about 15 % to our revenue. and they are across many different segments, we are massively less exposed to this sort of disruption than any company running just one product, no matter how successful that one product may be today. Yeah. Any plans to create a NeoCloud or anything of the sort or you guys like staying at the product level? No, no such plans for now. uh what's the italian uh early i want to dig i want to i want to dig into that a bit more just just out of curiosity because i'm i'm assuming there's a lot of different players that would love to give you guys capital to help deploy uh cloud given that you're running a lot of you know companies that are going to be uh buyers of of compute and you have a track record of being able to deploy large amounts of capital is the decision to be like you the strategy is you're you're invested in a bunch of different companies but do you like them to be the same kinds of companies and that like again is it just a mandate around digital products or would you one day branch out because again if you use the berkshire hathaway comp it's like you've seen them buy everything from coca-cola to google right um and operate a bunch of different businesses yeah look i i think there's a trade-off between let's say there is a going back to Warren Buffett a circle of competence as he calls it where you're proven you're good or very good better than most and so on the one hand if you stay within that circle of competence you're more likely to do well but at the same time if you venture outside of it you extend your toolkit your capabilities and the TAM grows with it too so there is a trade-off between expanding that circle over time while seizing the opportunity at hand with what you already have proven that works.

2:35:55In our case, next year will probably be about$2.5 billion in revenue. And the overall digital technology market is about$2 trillion. So it's not exactly we're saturating the opportunity here. So before we get into something we know very little about other than on a high level, I think we should make sure that we are saturating the core opportunity. But yeah, maybe in five or 10 years, if we ever feel that we're getting too big for the TAM, maybe we'll look beyond that. Who knows what will be appealing then? Do you think it's funny that the US venture capital ecosystem is somewhat like off balance sheet R &D for you guys?

2:36:41It's like they can deploy a bunch of capital into these categories, create good products like Evernote, and then you guys can come in and own them for the long term? Look, when it comes to acquisitions, we're opportunistic. Whatever the market offers, if we think we can deliver great returns, we'll be happy to buy it regardless of the particular history. I don't know. I don't have an utter gratitude or any particular opinion on that. We see that many have done really well. I guess it's normal that, at least in some cases, their investment didn't turn out to be the exceptional success that it could have been.

2:37:22Well, in many cases, some of those firms actually IPO'd and delivered a bunch of returns for the LPs in the venture fund. I am interested in – now, you've acquired – Evernote's probably a good example. But any example of acquiring a company that's already publicly traded, how does that work? How do you work through that process? Are you going directly to the board? Are there best practices around when a company or a group of shareholders might be more receptive to a takeover? or do you see yourself ever getting into more of like a hostile takeover scenario? Does that matter to your strategy? We've done two take privates so far.

2:38:16One is BrightCube early this year and the second one is Vimeo. So I'm not, I wouldn't consider myself a world expert in take privates, but I've seen a couple of them so I can probably provide at least some input here. we have done it quite collaboratively reaching out to the board and just saying look we'd be interested and we make an offer I would say the the negotiation is not massively different from what you would do in a private deal but there is a lot more pressure on a board of a public company to to act in the best interests of the broader shareholder base because the liability is a lot more Legally speaking, it's probably not very different, but of course, the transparency of that process makes it really difficult to say, I don't like it, fuck you.

2:39:05You know, if it's a good offer, you have to entertain it. So on the bright side, if you have a great offer relative to the stock price, you have, I think, better certainty that it'll be at least entertained than with private companies where sometimes you find you're absolutely confident you're making an incredible offer. but say the founder is just not going to sell or a particular investor maybe invested at a really high valuation and they're now maybe even delusional in thinking, oh, we'll get back to$3 billion if we wait for long enough. And so there you don't really have any leverage. It's like, okay, end of the conversation with a public company that can't really happen or at least it's quite rare.

2:39:44So that's the positive. On the negative, the process is a little bit more uncertain because with a private deal, typically if you have a handshake agreement with the two, three decision makers, then it's quite unlikely that the deal falls through. But a public company, basically at any point in time, if someone comes with a better offer, and it can be quite public, so everything is back to square one. You need to show all their votes. So you only know after multiple months. And so you're kind of keeping your fingers crossed. But overall, I love public deals. I think they are in many ways more straightforward.

2:40:20There's no hiding behind delusions. I mean, your stock price speaks volumes. And if it's been at a certain level for a long time, that is it, you know, for the most part. Yeah. Is it also, do you have more confidence in audited financials or any other sort of process power that comes from actually being a public company? Do you feel like when you go into a company that's been taken private, you can just feel the difference? Oh, okay, this company has been operating like a public company, and that has maybe pros and cons, but you can definitely tell? Or is it purely in the deal stage that you feel that there's a difference?

2:41:04We have seen private companies that are run really well in terms of FP &A. And we've seen public companies certainly have to reach a pretty high bar. So, yeah, I guess you're more certain that – on the one hand, you're more certain that the public company will be better geared to provide you with, say, the due diligence materials you need and whatnot. On the other hand, there's generally and understandably so and rightfully so more risk aversion in a public company because if there is a leak, that can truly create a pretty difficult situation for everybody involved. with private companies, leaks are also less likely because the incentives to leak something are lower.

2:41:49There are all sorts of perverse incentives with a public company for obvious reasons because the stock is so liquid. So sometimes deals are leaked that if the company was private, it wouldn't be leaked. So I would say, yes, the data tends to be a little bit more ready, cleaner. But on the other hand, the company tends to be more careful in bringing people under the tent. And so at the end of the day, it's not always necessarily faster or easier. I think, frankly, I don't see that's a major point of difference, to be honest. I think it's not so important when you look for an acquisition. Do you have any type of internal forecast around when some of the current, the new generation of like, or just the new crop of AI native startups will start becoming for sale?

2:42:40Because right now, if you're growing quickly and you have a great product, you can probably raise a bunch of capital. But I could imagine in two-ish years, there's companies that maybe don't fully break out that have great products but aren't necessarily going to be public companies one day themselves. No, we haven't discussed that. Because we try to focus our time and effort on things we control. So our focus right now is to just meet as many great entrepreneurs and investors and private equities and management teams and bankers as possible to make sure we are involved promptly every time there is an intention to sell a business.

2:43:25We have historically been a great acquirer very fast, highest bid every single time we actually competed. And essentially no requirements on management teams to stay if they don't want to stay. So we just need to make sure we are called upon if something is happening, but we don't necessarily need to know or have an opinion whether in three years' time or two years' time a particular company becomes available. There are so many variables that we wouldn't be planning for being ready for that anyway, so who cares in a way. makes sense. Last question from my side. How are you thinking about synergies across the portfolio?

2:44:01You're not doing roll-ups, but there are some similarities between the video products developed by Brightco, Vimeo. Are you thinking about how these businesses fit together over the long term, or do you see them all as individual products and companies that you want to kind of grow in their own way? Yeah, great question. So the short answer is the latter. The reason is that I think those synergies are actually much more limited than people would imagine. And also, and perhaps more importantly, we believe that our business units tend to perform a lot better if they are allowed to operate with extreme levels of autonomy and flexibility.

2:44:50We want our small teams to feel like they're almost like a startup. Basically, we trust them to make decisions and move quickly. And if you start asking many business units to coordinate on branding and cross-selling and yada, yada, yada, then all of a sudden you're creating a ton of glue and that kills sense of ownership, agility, excitement. So it's a trade-off. You want to have teams that feel very entrepreneurial and empowered or maybe extract an additional 5 % of revenue through, say, cross-selling or some sort of bundling. We find a former in the long run who yields much better returns, so we go for it.

2:45:29In a way, I think you can think of a Benny Spoons a little bit like the technological version of the P &G, Procter & Gamble, where there is a ton of shared infrastructure and capability. In their case, I suppose, I don't know them well, logistics and distribution and marketing and product development. But when you look at the brands they sell, most people wouldn't even know that they are by the same broader corporation. And in a way, we would like Benny Spoons to be similar. We don't really care necessarily that, say, an Evernote customer knows that Benny Spoons is behind it. And we're fine out of way, but we don't try to push that message on them as long as they think Evernote is perfect for them and they stay subscribed and they love it.

2:46:10and in fact we think that if we try to homogenize our brands we would be destroying a lot of the value that we acquire in the first place with these storied brands and loyal customer bases. That makes a ton of sense. Makes a lot of sense. Thank you so much for taking some time so soon after having a child to join our show. We really appreciate talking to you. I learned a lot so thank you so much for taking the time. Thanks a ton Luca. Come on anytime. Yeah we'd love to talk to you more. I'm looking forward to following the journey. Have a good one. Cheers. My pleasure. Take care. Before we bring in our next guest, let me tell you about Adio, customer relationship magic.

2:46:44Adio is the AI native CRM that builds, scales, and grows your company to the next level. Fun fact, Jordy, Brightcove, acquired by Bending Spoons, was founded by Jeremy Allaire, who runs Circle now. Yeah, 2004. Very fun. Well, our next guest is Healy from BoomPop. Healy, how you doing? Welcome to the TVP and Ultra. Hey, hey, how's it going? What's happening? What's up, man? It's been a while, Kikin. How you doing, man? Good to see you. Good to see you. Uh, introduce yourself for those who don't already know. Yeah. Yeah. Uh, my name's Healy Cipher. I'm the CEO co-founder of BoomPop. Yeah. And, um, we are actually, no, it's so funny.

2:47:23Hold on one second here. I'm gonna close this. Yeah, no worries. Okay. I got you. Um, yeah, we're an AI powered group travel company. I've been running and selling companies my whole career. I'm from Nebraska, which is a small state in the center of the country. You probably haven't been to. and the plot twist is I grew up in Saudi Arabia. Wait, what? You grew up in Saudi Arabia? I didn't remember that. That's crazy. Oh, yeah. Yeah, yeah. Riyadh for 16 years. 16 years. Wow. Yeah. Very cool. Anyway, let's go back to the business. What is the must-do thing in Saudi Arabia for you? Beast World wasn't there when you were there.

2:47:58How did you survive? Beast Land. Beast Land. The new hotness in Saudi, there's this place called, I think it's called Al-Aaba. It's like Petra and Jordan, but in northern Saudi. And they actually, I think they're building an Amman there right now. So there's like, there's some stuff going down. Yeah, it's pretty cool. That's a good one. Let's hear it. You know Amman property. So give us the latest. Give us the news. Give us the fundraising news. Yeah, yeah. Thanks, man. So we raised a$25 million round, pulled in some. Yes, thank you. There we go. Appreciate that. Appreciate that. Thank you, Jordy.

2:48:35pulled in some debt and equity. And yeah, it's all about growth. I think travel has produced some really good returns for venture. You think about Airbnb, Expedia booking, it's crushed. People don't think about it. Travel is like 10 % of global GDP. It's$11.7 trillion. Wow. And often when you think of travel, especially in the corporate setting, you got to think of like, whatever, your EA is booking you a flight. Yeah. Turns out 60 % of corporate travel is stuff involving groups. It's like an offsite or an SKO. And especially in today's day and age, we're finding the demand for group travel is the most it's ever been.

2:49:11Some fun facts. One, most people are exceedingly less trustful of Zoom meetups. They want people in person. Most AI companies now are hiring event teams. Like it's one of the first hires because it turns out for scaled ARR businesses, events are like one of the number one demand channels. And so as you looked at group travel, we were kind of like, wait, wait, wait. it's this massive part of travel and it's so anachronistic if you want to if you want to for example book over 10 hotel rooms you literally can't do that online did you know that yeah it's crazy we run into this yeah we run into this a fair amount of times just with a small team traveling like uh it happens i don't know if you saw that block uh party that they had the where like showed up in their earnings because they spent so much like 68 million or something That was one of the craziest stories on one trip.

2:50:01No, this is real. I was at this conference, and the then president of Brex walked over to me. He was like, hey, are you Healy at Boom Pop? And I was like, yeah, but who cares, man? You're the president of Brex. I'm nobody. He goes, no, no. Guess what the second biggest expense category is for all of our companies after payroll? And I was like, no way. He goes, it's group travel and events, man. I was like, holy shit. So it's on the rise. It's crazy. Yeah, so talk through the actual product experience. how do you, and then how do you actually make money? Are you just taking a fee on top of whatever is booked?

2:50:35Is that the secret? Yeah, yeah, yeah. So the product is pretty rad. Is revenue the secret to success? Or, I mean, it could be like seat-based. Yeah, yeah, yeah. It brings out you should buy low than sell high. Yes, this is good. This is good. I like that. Yeah, heard it here, folks. Yeah, so it's simple. You talk to our AI agent, you give it a simple prompt. You're like, yo, I want to do an off-site within whatever, a two-hour drive of LA, a budget of this, 50 people with some cool, fun outdoor activities. What should I do? And it looks at millions of data points. It looks at weather, seasonality, hotel pricing, what you've done, what your guests like.

2:51:12And then it puts together a couple of really good options. Like here's Joshua Tree by the minute of what you do. Here's Pioneertown you haven't heard of. You should go there. Here's Montecito. Go there. And then if you like it, you just say, hey, cool, do it. The AI will then go out. It'll reach to the vendors. It'll negotiate form, look at the contract. It'll book them for you. It makes an agenda. It even makes your website in a couple seconds, keeps it live. And when people RSVP, my favorite thing is everyone gets a text message, all your guests get a text, and it's from the AI on the phone.

2:51:41And so if you text, it's like, yo, how can I help? And you can say, hey, like, how do I get to the hotel? It's like, take an Uber, you idiot. Like, oh, okay. Or like, who else is landing right now? And it's like, oh, well, Jordy and Coogan land around this time if you want to share an Uber. And you're like, oh, that's awesome. So it's like this corner of travel, which is so big. And it's all these random joint solutions, like point solutions. And we decided, let's just put it all into one place where it's super easy. Our ultimate vision is, very simply, we want to be the default way the world gets together.

2:52:08I'm sure you guys have seen all that. You know, I saw Chesky on EBPN, I think it was last week. Like, we got a problem, guys. We have a real problem. I mean, people are lonely. They're not getting together. I don't know if you saw this study. Back in the 70s, it was eight out of 10 high school seniors said they would party twice a week. now it's one in 10. Like that's a problem. Red alert. Red alert. We don't even know how to party in this country anymore. That's right. That's right. That's right. So that's how it works. Yeah. And then, yeah, it's, it's, it's, it's a simple SAS model. You pay a very low amount and then we make money from the hotels.

2:52:45Okay. Cool. Cool. Yeah. All the money in travel, it turns out is in hotels. Yeah. It's not in flights. Yeah. That makes sense. Are you, so, so we, we were thinking about taking the team to F1 and I ran something through chat GPT. Hey, build a whole thing. Couldn't get to a place where we could just build it. Didn't really, didn't really hit the goal, but are you worried about some of the agent of commerce being a headwind or can you turn AI and chat GPT into like a tailwind and actually like more of a top of funnel for you? Yeah, yeah, totally. No question. It'll be, it'll be a tailwind top of funnel.

2:53:22I think about this a lot. Like, Like, AI applications are under a lot of scrutiny. Like, aren't you screwed? Like, it's kind of like the 1990s. Everyone's like, why would you build an app? Microsoft is going to roll you. And that's what everyone says about AI apps. It turns out it's not going to do everything. And so there's kind of, I think there's three things you can do in general as an AI app to like protect yourself. One is you have some sort of proprietary data. We've got that. We spent two years building out a database and it's got all this stuff you can't find in ChatGPT, like private dining rooms, which how would you do that today?

2:53:51You got to Google it. You got to call. meeting spaces. We have a bunch of stuff you wouldn't get. The second thing I think you got to have is a learning network that they don't have access to. So every event that happens in our platform, it makes the next event faster and easier. The next event faster and easier. So if you talk to a hotel and they come back and try to negotiate something, we know exactly what they did at the last 100 events. We're not going to send that to them. We make it easier. And the third thing, which tends to be under-indexed, is just building a purpose-built application for a specific use case.

2:54:21It turns out like, I know I totally agree. I totally agree with you. I mean, I've just been testing like LLMs on, on finding, like browsing the internet for cars that I'm, that I'm like interested in. It's so you would assume that like auto Tempest is cooked and yet you can still go to like an auto Tempest and search across all the cars. Yeah. Yeah. It was wild. Totally. And that's not even to mention, I mean, my, my experience on, uh, John, John and I are, are probably not good at, at like event logistics. Like we just don't pay any attention to it. So whenever we're traveling, we're like, what airport are we going to?

2:55:03What hotel are we at? Like finding. And, and so Nick on our team, bless his heart, is just like kind of locked in around the clock when we're traveling to make sure, And it would just be nice to be able to go to a single place. But now you can. And we thank you for coming on the show. Have a great day. Thanks so much for coming and hanging out. Thanks, Jordan. Appreciate it. And congrats, by the way. This is awesome. Great to have you on. And congrats to your whole team. Yeah. We'll see you soon. Thanks. Let me tell you about public.com. Investing for those who take it seriously. They've got multi-asset investing industry that you need yields.

2:55:37They're trusted by millions. Our next guest is John Tennant from Chaos Industries, I believe. chaos the chaos industries correct yeah how you guys doing great we're great welcome to the show thanks so much for hopping on the show i love one i love the suits uh yes we're gonna wear the dumb and dumber tuxedos to our christmas party this year we might need to go yellow yellow is a good one uh is your i imagine your whole brand is like black and white so you can't get too crazy with it but have you ever played you know we got some we got some tan in there but that's what we figured like maybe you're dumb and dumber tuxedos light it up a little bit maybe like high viz high-vis like you're on the work site like you know orange or something that might be like high vis multi-cam like i think that could work pretty well yeah yeah yeah yeah bring the construction site into the into the suit the formal suit this holiday season anyway uh let's kick it off half a billion dollars huge number who'd you raise it from let's go yeah uh we led from valor equity partners um hey by the way also sorry i got it i'm like swagger jacking you guys in every turn where did you get the gong because i guess this is something bo and i have been talking about we want to get like a sales gong in the new office you should gotta get one we should honestly make we should we should yeah yeah yeah we'll figure out how to make how to send you a gong i'll buy it from you guys yeah yeah yeah we have a couple uh we we actually become like somewhat of gong experts where we've tested a number of different gongs we've learned that if you don't warm them up.

2:57:02You can break them. Durability, sound quality. Also, the price gets exponentially bigger, exponentially higher. So going from a 30-inch gong to an 80-inch gong will 100x the price. So you go from like 800 bucks. It sounds like it's a good margin for you guys. I know. You raised quite a bit. My co-founder is probably the greatest technical mind of a generation, the, like the in-depth conversation he and I got into about the right type of gong that he wants to buy for the LA office. So I think we may have to both come back and talk through this with you guys pretty soon. Yeah. Yeah. Anyway, we're not here just to talk about gongs.

2:57:40We're here to talk about you. Can you introduce like yourself, the shape of the business, how you're describing it these days? Yeah. Yeah. So first of all, thanks again for having us. Yeah. So founder chaos industries. So we sort of look at the world in, in three waves kind of as this sector has grown over the last 20-some years. And, you know, Wave 1, you have Palantir and SpaceX. Wave 2, you have Andrel. And, you know, Wave 3, we didn't see, like, another big multi-product sort of new prime being built. And that's sort of where – that was the sort of initial thesis seeing kind of where the world was going in terms of especially, you know, the Russians have been taking advantage of the lack of integrated air defense systems in Ukraine.

2:58:22and they've been attacking energy infrastructure and civilian targets sort of in an effort to break the will of the Ukrainian people. The Iranians have been helping them build their drone capacity. And so we sort of saw this. And all the while, by the way, the Chinese are watching here about what could happen in Taiwan. So I think we took it from the angle of, you know, we got worried about the fact that America is losing air superiority. And so we wanted to, like, the first wave of our products, we wanted to build, get away from sort of the monolithic legacy structures that were built during the Cold War and bring new systems to the warfight and really protect our people downrange.

2:59:03So multi-product, interesting. Andruil's certainly gotten there, but started with a sensor tower and then, you know, Anvil, like one, you know, counter-US drone system. Did you follow a similar path knocking down single products to get multi-products? Or did you like the compound startup thing where you, on day one, were working on multiple products to bring them all together? So we were – the chunk we're biting off first is sort of in the radar market. So we've got four different radar products. Okay. That makes sense. Now there's – but there's a sort of long tail of products that we're investing in that the Department of War has been asking for as well.

2:59:43and we'll come back on and talk about some of that stuff in the future with you guys. But the goal here is if you're going to do this the right way, you have to be multi-product. How much of what you're doing in radar, when you say multi-product within radar, is different radar technologies or the same radar, like the same data output, but this one is waterproof, this one flies, this one goes in the back of a truck, like different deliverable packages? Yeah, I would say like completely different form factors, different technology. Oh, everything. Types of sensing technology. So we've kind of like rewritten the book on how it's done.

3:00:13And I think it's a big credit to obviously Bo. He knows more about, you know, weapon systems, radars than, you know, most people. He's forgotten more than most people will be able to learn in a lifetime. He's probably the most brilliant technical mind I've ever seen. And so why is the old radar not good enough? Is that because the drones are getting smaller these days? They can't see drones, right? These are legacy monolithic systems, right? So one, manufacturing times are way too long. Sure. The form factors are enormous. So I think if you look at Patriot, right, like the things size of a tractor trailer, you'll be lucky to get those within two and a half years of three.

3:00:52And like, look, they do some things really, really well. Don't get me wrong. But these are sort of like monolithic legacy Cold War era built systems. And the reality is the battlefield's changed very dramatically. And you need more tradable systems as well as sort of like more expeditionary systems. I think you guys had my buddy Scott Sanders on this week, right? For Terra. So shout out to Scott. He loves you. But we partnered with For Terra, right? Because the ability to have these systems be mobile and move around the battlefield and not have your transmit and your receive in the same location, I think, buys our warfighters so much more time than they would already have.

3:01:31And I think if you talk to our chief mission officer, Chris Musselman, And, you know, Muss was a Navy SEAL named Chris Musselman, by the way. Half the reason I started, by the way, half the reason I started trying to get my PRs in the weight room again is because Muss comes and talks shit to me every day in the office. I don't know if I can curse on here. But I think Muss would tell you that, you know, 30 seconds is an eternity in a gunfight. Like we're buying exponentially more time. So that's really the goal here. Is the U.S. Department of War happy to buy systems that are maybe influenced by the war in Ukraine?

3:02:15Like, are the learnings there translating or do the Ukrainians want something that is maybe fundamentally different from the way the U.S. is set up? No, I mean, I think Ukraine is one of the best testbeds out there. I mean, we've had our systems over there for a long time. I think is we sort of look at this as two pronged, right? Because there's a big international component to what we do. So our international partners, all they care about is, hey, has this been tested on the front lines in Ukraine? Right. And then I think, you know, if you look at some of the work we've been able to do overseas, you know, in the Middle East and in Ukraine, it is a it is a real key discriminator.

3:02:51When we go in, it's like we don't have a PowerPoint. Like we've got data. The thing works, you know, take a look at it. Right. And so it's been a big, big help. Yeah. Are you optimistic about the Ukraine war winding down? It feels like it's gone on much longer than I expected it to. It's been this war of attrition. I've been very hopeful that there'll be just some sort of conclusion. uh you'd hope so you'd hope so i mean i think obviously it's just terrible what's been happening over there and so this is why you know we want to do our part to help yeah um but you know it doesn't seem like it's ending anytime soon but again you know i'm not a policymaker so i don't have an asymmetric view into it yeah putin needs to pivot to ai he's falling behind in the race for artificial intelligence should be focused on building data centers instead of uh transitioning the building tanks into building gongs yes yes do something productive putin stop fighting i still wouldn't buy gongs if he made them though i'm only buying from you guys thank you thank you american gongs um well well thank you so much for coming on the show do you have another great great to meet uh yeah and uh congrats congrats on the massive round congrats on all the progress and thank you for everything that you're doing to support appreciate it thank you guys hope to uh hope to see you guys in person soon yeah that'd be great come on the show for for the next round whatever letter that is.

3:04:14Will do. Absolutely. Cheers. Thanks, guys. See you soon. Bye. Let me tell you about 8sleep.com. Get a pod five, five-year warranty, 30-year risk-free trial, free returns, free shipping. And also, let me tell you about adquick.com. Out-of-home advertising made easy and measurable. Say goodbye to the headaches of out-of-home advertising. Only adquick combines. Expertise data to enable efficiency in technology out of expertise to enable seamless ad buying across the globe. I was checking my eight sleep score. I got a 93. Let's go. Let's hear it for me. Hey, we got Reed. Welcome to the show. How are you doing?

3:04:52Here, have a seat. Have a seat. I love the yellow, guys. While he's sitting down, I'll also tell you about Bezel. I love the yellow. Get bezel.com. I love the yellow. Your bezel concierge will now source you any watch on the planet. Seriously, any watch. Quick wrist check to start. I miss the yellow jacket and pants. Yes, yes. The memo. No, it was, so our lead sponsor, Ramp, raised a big fundraising round today. We have the CEO on the show. Fourth round of the year. We knew they were going to be raising a lot. So we decided to get these suits. And when we initially thought of the bit, oh, let's get some yellow suits, I sort of assumed that we'd just go and buy like a yellow suit from Target.

3:05:35Jordy called our tailor and got a very nice tailored yellow suit. And I was like, that's hilarious. It was very funny. but we wound up using it a lot. They look great, fellas. Yeah, they look great. Anyway, please introduce yourself for those who might not. Yeah, my name's Reed, founded a company called Knight. You and I have known each other now going on probably like three years. But we represent the biggest creators on Twitch, YouTube. It's kind of taken on a life of its own now. I'd say we're like, the idea at the beginning was like, be the internet's management company. That's kind of transitioned to like, be the internet's media company.

3:06:05And so we bought a podcast network from Warner Brothers called The Roost. We have a venture studio, a few things that have come out of that. like Feastables with Mr. Beast, Tone with Kai Sinet, Outtake, which is a company that you guys are probably familiar with. So that's a little bit of the company. And then I represented Mr. Beast for seven years. So it was a crazy seven years. Okay, maybe we start with a state of the union in just where opportunities are for creators. It felt like TikTok was the hottest place to, if you were going to be a creator, TikTok was the place you could go break through.

3:06:39Then Mark Zuckerberg copied it. with reels and YouTube answered with shorts and maybe the plateau in TikTok world was like a little bit, like maybe they were slowing down and then they were going through this, will it get banned, will it won't? And so there's a little bit of hesitance if you're a new creator to maybe pick that platform. Is that overstated? Is there still opportunity on TikTok? No, there is. I think being a creator today, it's the easiest it's ever been just because discoverability is so easy. And I think that also becomes the hard part with TikTok is the algorithm has gotten so good that if the three of us pulled up our For You pages, all of them would be completely different.

3:07:15So I think breaking out - It also makes it more competitive for existing creators where if you were living in a world that wasn't algo feeds, if you just got to a critical mass of subscribers, it wasn't as competitive with like, a new creator would have to grind it out for five, 10 years before they could actually be competitive. And now if you're just making better content, it will get surfaced faster. Yeah. Yeah, if you, like during COVID, everyone was seeing Charli D 'Amelio dance videos. Like she went from zero to a hundred million. That's very challenging to do in today's world just because your content gets fed to the people that only want to watch that and your content doesn't get seen by people who don't want it.

3:07:53I think the platforms have actually done the same thing across the board where they don't really want creators to break out and become a Mr. Beast anymore. They'd rather like widen out the mid tier. And so they'd rather have, you know, YouTube, for example, I think would rather have 10 ,000 creators with 5 million subscribers than have a hundred creators with a hundred million subscribers like they don't they don't want that I think a lot of that is like they don't they also don't want creators to have any leverage against the platforms And so it's been interesting seeing that like shift over the last three years to this like, you know Push down a little bit further and make make it harder for people to really break out And what is the nature of mr.

3:08:30Beast's leverage over YouTube? Is it just that if he says YouTube isn't treating creators correctly, that'll be front page news, or is it something more about the structure of his business? I think a lot of it is when there is negative press, and we saw this for those people that are OG YouTubers. PewDiePie kind of went through this whole adpocalypse back in the day. That was very negative on the platform as a whole. And so I think when you get individuals that are at the top of those platforms, and they start to almost overshadow the platform because they've gotten so big that when negative press starts to come out about them, now advertisers are pulling out.

3:09:06We started to see this a little bit on Twitch because it is a very top-heavy platform. And so I think that has a lot to do with it. I think in Jimmy's case, for the longest time, you would go on trending page and he was just dominating trending page. And so now it's like people don't really go on trending page, but even on homepages now, there's a lot of variety of different content. That's ultimately what the platforms want. They're trying to widen out their fan base as well. Talk about the evolution of Twitch. You gave us the basics on TikTok. Twitch is interesting because when I see what Google is doing, YouTube is like front and center in so much of what YouTube does.

3:09:48And yet I feel like with Twitch, it's not really the front and center star property for Amazon as a corporation. and I'm wondering if that reflects just it being a little bit more arm's length, a little bit newer of an acquisition maybe. I mean, it's still been a decade, but what's the vibe on Twitch these days? Man, we could have a whole conversation about this. I think your observation is correct that Twitch inside of Amazon, they haven't really cared about it. They'll do deals now that is predominantly focused on Amazon Prime Video and Twitch is somewhat ignored. you know i i do think like it's such a small like peanut inside this amazon ecosystem that even if twitch's revenue quadruples doesn't really do anything yeah for for amazon as a whole and so it also has this weird dynamic where uh and correct me if i'm wrong but there might be a lot of money being made on twitch but a lot of it is driven by the twitch prime program which is not actually new dollars for amazon whereas uh subscribers on youtube uh youtube uh premium subscribers.

3:10:50That's just actual dollars that people are paying. Yeah, you're saying like net new. I can explain that for a second. So a couple of years ago, Amazon released something where every Amazon Twitch, or sorry, every Amazon Prime person gets a free Twitch sub. So they can essentially use their Amazon Prime to subscribe to some person's Twitch, which would be$5 a month in most cases. So what you're saying is like, no, that's no longer net new revenue. They've never released how many actual twitch like subscribers are like actual amazon prime so we have no idea oh we don't but i would guess it's a large number it felt like it was like at least in the early days it was like 80 because it was like yeah my parents have to have my parents have amazon did anybody try to make a stream that's just like make me a millionaire and they're just streaming and they're just trying to get people to like use their one amazon sub well i mean tell some stories about subathons yeah i mean the subathons became a thing a couple years ago kai's obviously had the most notoriable one.

3:11:44He had Mafia-thon, which led into the third version of that that we did this last year. And it was 31 straight days, 24 hours a day. He broke a million subscribers over a 31-day period. But subathons are not a new thing. But people using Amazon Prime to subscribe to Twitch has been around for a while. And that is like the hook that a lot of people use. They'll be like, use your one Amazon Prime sub on me. And so Twitch does, like we know kind of what their advertising revenue is, but we have no idea what the makeup of like a Twitch Prime subscriber is. But it has been disappointing. I think from someone who sits on the creator side that, you know, whose company represents the majority of the Twitch streamers, you know, YouTube leans so heavily or Google leans so heavily into YouTube as a platform underneath their umbrella, where Twitch does feel like this like kind of like band of misfit toy inside of Amazon that they don't really care about, don't really talk about.

3:12:39even when they do the you know the the nascar deal and they're negotiating to get all these rights for the nba it doesn't even feel like twitch is in those conversations that that's also been frustrating for us too because for a lot of guys that are streaming on twitch that's their main distribution uh they don't feel like they get any love i think that we would have to uh because i know no and i and i i know like it sounds crazy but there's a world where you have all of the talent like a lot of the most important talent on the platform there's a lot of investors out there that if they would happily probably if you're like hey this is being under you know this underappreciated amazon and we can turn it i don't know what what wasn't it like a billion dollar acquisition yeah like am it like that that feels like worth well more than that the psychology of the 99 is so funny it's like clearly there was some weird board fight i just don't know why amazon would sell it like why would they part ways with it it would only ultimately make them look bad if someone could come in and actually operate this.

3:13:40I don't know. I would be the first in line. We were joking about how we were praying for Andy Jassy to get on Twitch because obviously he's a very by-the-book. He operates AWS. He's a very quantitative executive. But if you look at Mark Zuckerberg, he's on Instagram. He's using the platform. And it's like, of course, Apple's keynote will be streamed on Apple TVs. Of course, Google's going to do IO on YouTube. And yet Amazon hasn't really leaned into Twitch in that way of like, hey, maybe if we bring our executives here, it's always been like, it's a little bit too crazy. Like that's a little party.

3:14:17And we're like a little bit more serious. You'd have to think like if you're going to pay a billion dollars for the NBA rights, that you would have to allow Twitch streamers to go stream courtside whenever they want. They get full locker room access. Like you'd have to open up the aperture. So all those creators could benefit from Amazon owning the NBA rights, which ultimately just keeps people in the system that can then watch the games or watch their favorite Twitch streamer backstage or whatever that stream ends up being. It just does feel like it hasn't been fully integrated in any meaningful way.

3:14:48Whereas with YouTube is front and center in so many of the different parts of the ecosystem with VO3 and the generative AI stuff, it flows right back. And so what's the best platform to be a top creator on when you think about Twitch, YouTube, Instagram, TikTok? It's to me not even, it's not even a question, it's YouTube by far. Like I think just their alt monetization, their AdSense monetization. Like if you're at the, even in the top 10 ,000 channels on YouTube, you're making significant income. And I've said this for a long time. Like we, we kind of value a fan of just like relative time spent with that individual.

3:15:30And people are spending a lot more time with individuals on YouTube than they are on TikTok. You know, you'd have to watch, I don't even know how many TikToks of a single person to get up to like a 17 minute Mr. Beast video where the average person's consuming 70 to 80 % of that video. Yeah. Yeah. So do you believe in this? I like this exchange rate concept, but maybe it all just boils down to watch time. but I feel like it's 10 times harder to get like a live viewer than a video essay viewer. It's 10 times harder to get a video viewer than a shorts viewer. Maybe there's like a chain of exchange rates through these things.

3:16:06Yeah, but you can parlay it now on YouTube, which is why I said YouTube because you can use YouTube shorts as the discoverability mechanism which is a lot easier to get someone in the door to then figure out what your content is to then create long form videos to now they're watching a 20 minute video and they're watching mid-rolls and an unskippable ad. And so I think YouTube has done such a masterful job of just like continuing to build the platform for an amazing place for creators. Yeah. What do you think about this idea that like YouTube just seems to be coalescing around the old TV formats?

3:16:39Like Mr. Beast, it feels like he landed on like, oh, it's about a 22 minute video, which is like exactly how long like an episode of The Simpsons is in a 30 minute time slot. And then there will be around eight minutes of ads because that's just the ad load that TV discovered. And some of those will be in the video and some of those will be out of the video. But effectively, it just feels like humans landed on like, yeah, like half an hour slots. Yeah, I think a lot of it comes down to, yes, you can put multiple mid-roll ads within a 22-minute video. And so you can kind of just understand like how many mid-rolls you can fit in a 22-minute video.

3:17:14But TV watch time on YouTube is now, I believe, 11 % of watch time consumed on an actual smart TV. And so YouTube also is feeding those videos into a system. And YouTubers have gotten smart. A lot of them have syndicated their videos on other platforms like an Amazon or a Tubi. And in those formats, usually you have to deliver a video that's like 20 to 25 minutes in length. You can't distribute a ton of videos that are nine minutes onto Amazon or Tubi or some of these other places. and so I think just creators have gotten smarter over the years of like playing to the how do I get high ad sense and how do I syndicate my cons and other platforms yeah there's like these uh one-off our opportunities I feel like that happened like for snap snapchat was a was one for a while where the the creator monetization program was really good I don't know if it still exists in the same like lucrative way but there was a moment where it's like if you have a backlog on YouTube just go put it on on snapchat because you're just making money it still exists but you you have to make native content.

3:18:11So the ones that do well, like David Dobrik does really well on Snapchat, but he's making a hundred plus pieces of content a day. And then the programmatic ads are just like slated. Yeah, he's posting a hundred times a day. So it was like, I mean, there's a lot of creators that are doing this where it's just like spam posting your entire day. So you're essentially vlogging your entire day, but you're filming it in 10 to 15 second increments. And so people will just like continue to click and like watch the entire video and then Snapchat will insert ads and that whole thing. And it's done well.

3:18:42I don't know if it's going to continue like that. I don't know if Snapchat will continue to be able to sell ads within that system, but it's worked for the biggest creators, at least the ones at the top. Do you have a prediction? There was sort of the era in which a podcaster could get paid$50 to$100 million to go exclusive. That kind of happened. There was the same thing happened in live streaming. do you ever expect like i don't think both of those have like necessarily panned out that well for the platforms do you do you expect somebody to like try to run that playbook back again to like kickstart a new network or do you think it's been learned enough times that it's not necessarily i don't know it always kind of feels like someone has to continue to try to spend a hundred million dollars to create a competitor to twitch or youtube or tiktok so i i don't think it'll be the last time.

3:19:34I do think someone else will come to the system and put up money to do some of these things. Mixer probably won't be the last like competitor to Twitch that fails. I would imagine someone else is going to try and do it and they're going to be able to raise a ton of money to try. But we've just seen time and time again that like even in the Twitch example, the community on Twitch is hard to compete against. If you're Mixer, you could spend a hundred million dollars and still not even put a dent. And like Kick is trying this right now. They're probably the newest one which is like owned by steak and they've spent hundreds of millions of dollars on trying to figure out how to compete with twitch and they just really haven't been able to like really crack any of the live stream nvidia has not gotten into live streaming yet that may happen microsoft google amazon all these companies have plays in live streaming but not nvidia what maybe what's your point of view on creator payouts on different platforms feels like obviously you would love for platforms like Instagram to do ad scale creator payouts.

3:20:34We've had a debate on the show whether X payouts are good. And we ultimately got to a place where we think like creator payouts on X make the platform worse because the content is relatively easy to make. And if you just create this sort of like profit motive on the platform, it just floods the platform with content that But I wouldn't say the content is better today than it was five years ago, pre-creator payouts. Whereas on YouTube, making great videos is really hard. And so you talked about it. If you can be in one of the top channels, you can make a great living doing it. And that has a very positive effect in that more people can spend all their time creating content.

3:21:14But I'm curious what your view is. Yeah, I think on X, they reward shitposting. In all the Twitter meme accounts or X meme accounts, It's like if you start getting likes and retweets, like it just continues to go. And so like memes do really well or just shitposting does really well. On YouTube, it now like comes down to statistics. Like you need a good click-through rate and a high retention or else YouTube is not gonna recommend your videos. So it's really hard. Like it's impossible to shitpost on YouTube. You can like have a clickbait thumbnail, but if the video asset stinks. That was the craziest thing.

3:21:46Mr. Beast released that video. It was like, here's his video to like 10 years in the future or something. and I think it flopped. Like I think it was - So it was only three minutes in length, yeah. Yeah, it was only three minutes in length. So it just wasn't in the meta. And even though it's like, it was this mind blowing thing and it's this moment, it's still just like the algorithm expects 20 minutes and a million dollars poured into the production. And so your face video, you're just like, hey, to the camera video, even though it's novel, just doesn't break through in the same way. But if X is ever gonna compete with YouTube, they have to monetize, right?

3:22:17Like they have to sell ads. Sure. So I just, I don't know where they're kind of at in terms of like, do we need a video player? You guys obviously live stream on X, but it seems like they have to get to a point where they're monetizing or they're allowing creators to monetize their content. Or I just don't see why anyone that actually puts quality, yeah, quality into their content or podcast or whatever would post it on X. Unless you're a podcast and you're already putting five ad reads in your video and AdSense is an afterthought, and then you want more scale and distribution by X and you're already monetizing the video, that I can see but I just don't think if X really wants to compete with TikTok and Instagram and YouTube that they cannot monetize their content How early are you signing creators today?

3:23:04Because I mean you guys have a lot of leverage from all the talent that you've worked with and just the track record but at the same time I'm sure that when somebody pops up and now they get shown to a ton of people really quickly They can go from zero to millions of views in no time. I'm sure it's like a highly competitive dynamic where in a perfect world, you're like, well, I'd like to let this person like create content for another like at least a few months. But if I don't, somebody else is going to like jump in and sign this person. And then, you know, maybe it'll be hard to kind of like, you know, take over that.

3:23:37Yeah, we're definitely never the first. I would say we're hopefully the last. Usually everyone that we sign already has had like a manager, an agent or like someone in play. you know i think we come in with a little bit different value prop of you know we've done it so many times and kind of have the blueprint for like how do you get a creator to scale then how do you build businesses on top of them that have real enterprise value so i would say we're a little later and we don't really represent that many people um so we're not like chasing hey what's hot and viral at the given moment although i pay attention to it and my screen time is incredibly high and i don't think that'll ever change um but i'm just like i keep an eye on people.

3:24:16I think like, you know, we have this whole system internally where we just have thousands of creators and we'll just keep an eye on them. What are they doing? Are they, it's hard to have like real longevity and it's really hard to stay creative over like years. And so I see a lot of creators like come and go into the system. They'll make a good video. They'll go viral. And it's really hard for them to back that up month over month over month. Yeah. Or they have like one bit that's hilarious for, and there's also like creators, there's this guy on Instagram that we've been laughing at a lot lately.

3:24:50He makes these videos where, I don't even know, I forget the account name, which goes to tell you like, yeah, yeah. Like it's like, it's not a super valuable account, but he has this one joke that we just think is absolutely hilarious. And like, there's probably nowhere for it to go. Like it's probably like, he's getting like millions and millions of views with this one joke. And then eventually it'll fade or something like that. But I mean, I think, yeah, not all views are created equally. Yeah, I mean, there's this creator that I really like to watch, and he eats lemons in public places. So he'll be on a plane, and he'll pull up.

3:25:27Have you seen this? Yeah, yeah. I don't know how he does it. Wasn't it onions? He does onions, too, and now eggs. Like, not a hard-boiled egg, like a full egg, and he'll just chew it. I don't like that little. But like that bit. Tyler, get ready to eat eggs, buddy. Yeah, have you guys ever tried to bite a lemon? It's hard to eat a whole lemon. It is? Yeah, he's gagging. Yes, I can't remember what his Instagram is called, which goes to the fact of I'm doom scrolling, and I'm like, oh, I found this guy. He's hilarious. He eats lemons. But I'm like, there's no real longevity here. I don't know where this goes.

3:25:58Yeah, versus like a John Harris, who tells his whole story. Yes, who's a beautiful storyteller. He's in the thumbnail, and he tells you, oh, he brings you into his whole life. Yeah, way different. There's so many of those folks that actually do a great job. Do you think the nature of some of these live streamers is actually forcing them to create products and startups or like businesses earlier than maybe on YouTube? Because I feel like a lot of the Twitch streamers, like there's so much unpredictability because it's a live stream that they're not super advertiser friendly. Yeah, I think a lot of them have figured out other ways to make money.

3:26:33And that can be like apparel was the easiest one. like I think a lot of them have Minecraft servers or Grand Theft Auto RP servers or now Roblox games and so they've all figured out other ways to make money that's not so centered around Twitch, Prime Subs or YouTube AdSense and so I think like just in this like internet world these like kids are in the crevices of the internet they just like figure out how to make money like if you're a Grand Theft Auto streamer you probably have an RP server you're probably monetizing that RP server things that you guys probably don't even think about and they're like oh like I know he streams on this like Grand Theft Auto game.

3:27:06Like you wouldn't even think that like, oh, people are paying to be in this server. And so things like that, like these kids have figured out, like even the first gamer that I represented had a really large Minecraft server. And it was like a PVP server in Java. It was pay to win and made - It was pay to win. It was pay to win. It was like not EULA compliant. I don't know if Minecraft's gonna care anymore. But like, wasn't EULA compliant and it just printed money. Interesting. And, you know, he would use his YouTube channel as the catalyst to drive people into that. And that server was the real way that he would make money.

3:27:39Yeah, that's interesting. Do you have an internal philosophy on how you talk to creators through where they should draw the line on their comfortable... Because pay-to-win Minecraft, that feels like gambling adjacent. But at the same time, we talk to entrepreneurs all the time and they're like, yeah, my first way I made money was like doing some crazy stuff on Minecraft. And I'm like, is that really that bad? And then you look at some of the crazier stuff and it's like, obviously like a rug pulling a coin on your audience is like the worst thing you can do. But how do you think about like the gray area in between coaching creators, giving them like, are you just hitting them with a ton of anecdotes?

3:28:19It's become so much harder. Like there's, I mean, you can now just, you can buy CS skins and now you're playing Counter-Strike and you're like incentivizing kids to buy crates. there's just we we've kind of taken the line of like if we understand that gambling exists and daily fantasy football is fine some of our creators have stake deals that will live stream on kick and so it's just like where do you draw the line like i'm having a hard time with that right now because gambling is so widely accessible in so many different genres including video games which i think like even ncaa football that's gambling like they have packets that you open uh within in their game mode and you just like spin packs and try and get players.

3:29:01So it's like every video game now has some type of gambling baked into it. And so it's, it's hard for someone who like came into this industry that like, didn't want to be in the gambling world, every single video game, including like maybe a Roblox, like there's like things that you can buy where it's more like pay to win ask. Um, and so it's, it's tough. Like, I, I think that it's not something I wanted to get involved in, but now it's, that we sit so deeply in the internet and in gaming that it's just like become a part of every creator's business. Yeah, yeah, it's fascinating. I played Counter-Strike 1.3, 1.5, like before it got productized at all.

3:29:38And it's hard to think back because I was talking to one of our buddies, Sagar and Jetty over at Breaking Points, and he was kind of chastising me for being pro video game. And I was talking about my experience with Counter-Strike, But it was a very different game then than it is now. And so, yeah, where you draw those lines? But it's still like it's a$5 billion economy. Just Counter-Strike skins, weapons skins, knives. It's a$5 billion economy. And so that, to me, will just continue if GTA 6 ever comes out. There's going to be a lot of people with RP servers. There's going to be pay-to-win mechanisms.

3:30:12There's going to be rank mechanisms that kids are paying for. So I don't know. That's a tough one for me. Yeah, I wonder where this will actually meet, like where the rubber will meet the road. Because you could imagine some level of regulation around, you know, can you target something that is gambling legally to kids? Like maybe that, you know, if there's this type of advertisement in it, it goes over into this pool of the algorithm that's maybe 18 plus. I'm not sure. It's obviously something that America is publicly discussing right now, but it's tricky. Are you guys using Sora at all? Sora?

3:30:54Yeah. No, not really. Okay. Not on it. No, I'm on it. I made my cameo available. Anyone can do one with me. Okay, so people can make videos with you. Yeah, I was like, yeah, go crazy. Only absolutely jacked. Oh, yeah, yeah. I put in always depict me as a bodybuilder, so it's really funny. Is there a lot of videos on Sora? Like are people actually doing it? My community has certainly not moved over. And the retention on the, I think on both the viewing, certainly on the scrolling, we've been polling everyone in the studio. Hey, what's your screen time on Sora this week? What's your screen time on Sora?

3:31:29Because we want to know. Are people actually getting into this as like a consumption tool? Is there any hope for Sora? We haven't seen any of that. Now, I do see occasionally there'll be a new, clearly a Sora video that's been integrated into vertical short form in one way or another. I found a funny guy who makes like tech comedy. And at the end he puts a little Sora clip just to kind of like add a little spice on top. And it's funny, but I haven't seen a lot of stuff that's been like really breaking out. I mean, at the, at the current moment, I don't, if you just like base it on momentum, it feels like it's lost.

3:32:02It does feel like it's falling off. But I mean, there's hilarious videos on there. Pull this, pull this video up. So you can watch it. Is he fully jacked? Did somebody make one of me? Yeah. Can you guys pull it up? I'm going to, I'm going to go home and I'm going to have like a discord server, just make thousands of videos of you and just flood the Sora system. And it'll just be your videos all over the place. Yeah. Yeah. I mean, I don't know. It might be like an uncanny valley thing. We, we do use VO three a decent amount for, for like previs on like, Hey, we want to shoot this video. What if it looked like this?

3:32:36Let me get some ideas for like lighting and tone so I can send it to somebody. This is what we're thinking we're doing, but we always shoot everything normally. And we have, We actually have a benchmark where we have something that we shot manually. We shot the normal way. And then we try and recreate it in all the video, the AI video systems. And it's remarkable how hard it is, even when you have a perfect idea. All right, we got to create this. We got to turn around. Oh, you are. Why am I walking a pig? And the caption is, what too many ramp ad reads does to an MF? They figured out how to make my legs small.

3:33:11They hacked me. They hacked me. Wait, aren't those your real legs? Those are not my real legs. I did not scare my real legs. Real arms and real legs. What is the nature of the pig? Why do I have a pig? This is hilarious. It does look like me in the face. The gym shark. Gym shark? Yeah, you got a gym shark. Gym shark stringer. Oh, wow. I don't know. It feels like it's lost a lot of its momentum. I'm not convinced like people are going to go on there and watch content. So my core thesis for most of the AI generation apps like Midjourney, Sora, are that they are more like video games than consumption mechanisms.

3:33:53And so you go on there and you have an idea and you are trying to express it. And once you get it to generate it, you watch it and you watch it just for you. And then you're like, yeah, awesome. And maybe you said it's like one other person. But you really aren't, it really isn't just sit there and just a random person makes something and I enjoy it. It's more of the experience of like, can I get it to generate the thing that I have in my mind, whether that's Suno or Mid Journey. Somebody described Mid Journey as like art therapy. People like going on Mid Journey and just whatever they dreamt of last night, they'll prompt.

3:34:26And the images, they look just like any other Mid Journey images. They have no value to you, but to the person that generated them, they enjoy it. And so they pay for the content that they produce themselves. Yeah. How do you think there's a dynamic in the future? I think we're pretty far away from this point from a just model progress standpoint. But right now, YouTube doesn't make any videos themselves. Why are you smiling? I just need to go edit my Sora prompt to say, never depict me with skinny, small legs. No, I'm taking advantage of that Sora later. You're going to see all kinds of videos.

3:34:58No, but so right now, any video that YouTube surfaces, let's say, is they're paying out like a fixed basically revenue share on that. And there's a world in the future where YouTube knows exactly the kind of video that someone likes. So like at night, I watch like documentary style videos. Right. So it's like, OK, Jordy likes World War Two, like voiceover documentary style videos. we could just serve we could serve them a video of an existing creator or we could just serve Jordi a video, same topic but we created it ourselves so there's like some cost to like generate the asset and serve it but theoretically a lot less I think that that scenario creators are going to be, creators that are worried about AI today are not worried about the right thing necessarily they're worried about like I don't know but I think that's like a very real possibility they're overestimating how much they can get destroyed in a year and underestimating how much they can get destroyed in a decade do you but does YouTube who has been predominantly very creator first pivot to that where they're now like making content through generative AI that is ripping off let's say a documentary storyteller or true crime like did it just feels like if they start to take that path they would they would do that if the number if like watch time continue to go up like that that like i i they're they're they're a massive public company they have an incentive to like increase profits yeah so i'm just saying 100 of yeah yeah i'm just saying like it sounds great in theory that they're like okay they're very creator aligned and they've made a bunch of good decisions to date but yeah i mean and i don't think it's sora that that's sort of that we just watched like that was generated by someone who prompted it, someone with a sense of humor obviously.

3:36:51It doesn't seem that crazy to me to actually figure out how to parcel out the ad dollars. Like if that video generates a hundred dollars of ad revenue because people watched it and then they immediately watched an ad before or after or whatever and it's attributable. You could give me a slice because my likeness, you could give the the prompter a slice, you could give Jim Shark a slice since their logo's in there, you could give whoever created the music. Jim Shark should pay for that. Yeah. And so if we have AI that's good enough at generating that, we should also have AI that's good enough to say, hey, this is a mashup between these two artists.

3:37:24Let's split the revenue share 50-50. YouTube already does this. If you put one song in, it'll route the... I actually made a video about Mr. Beast once. I used some footage and it got routed to his team. Probably you got the check. Yeah, sorry about that. No, it's all good. You're never seeing that voice. Yeah, it was like, you know, so there's like fair use discussions. But in general, it's pretty easy for a system to understand, OK, this is a combination of this footage from here, this music from there, that IP over here. They took Donald Duck off the shelf over there, some Mickey Mouse, some Batman, some Spider-Man.

3:37:59And they're all from different IP owners. But let's just flow all the money through. And then, yes, if you're coming out with something completely new, then you don't need to pay as much. And maybe you minimize that. But this all just feels like it'll happen just over decades. So I don't know. Yeah. I mean, music's kind of figured this out, where you've writers, producers. There's so many different people on a track. Yeah, oh, you sampled this. That gets divvied out, too. So I could see that happening in the future. I hope we don't live in a world where YouTube is understanding psychologically what type of videos I watch at 9 PM.

3:38:29And so they're feeding me generative AI videos that is taking away from a human. But maybe that is a world that we live in 10 years from now. And that's who you're competing against. You're ultimately competing against the system of YouTube who is making amazing videos. And their incentive is to own 100 % of the outsides. Yeah, a lot of the AI investment thesis is around labor displacement, which is like we have to. These companies are like, we have to invest in AI because future spend in the economy, instead of going to labor, will go to these data centers effectively. Yeah. I do wonder about YouTube's positioning with creators because that sort of, what do you describe 9 p.m serve you generative imagery but that that to be clear is like a very specific type of content that where i don't feel the creator matters as much right if it's like yeah but what but what if it's like sports news or or just news in general like i would i would imagine you could pull they could pull that in real time and be talking about what's going on what i mean is like that's already happening because there's going to be a a company out there that says let's use every available AI tool.

3:39:34Let's be the AI native, you know, beast enterprises. And let's have no one in front of the camera and spend zero dollars on cameras and spend a lot of money on Sora credits and VO3 credits. And let's start producing as much as possible. And let's use YouTube as our distribution pathway. And maybe YouTube takes a stance. I don't know that they would. I think that those creators who are puppeteering all the AI slop will probably stick around enough, but I don't know. There might be a reckoning to the degree where YouTube says, hey, we're detecting AI and we're putting in a different tab or we're not allowing it on the platform.

3:40:15But I would be shocked if they do that. I'd be very shocked because there are so many creative ways to use AI. We just watched that. It was genuinely funny because we had context. It was not just trying to take a dime out of someone's pocket. Yeah, I think it'll start with thumbnails. Like that'll be, you know, you'll get an AI-generated thumbnail as soon as you upload your video. It'll watch your video and explain like what it thinks the thumbnail should be. And then maybe titles is first, thumbnails is second. Where it goes from there, I'm a little unsure. But you guys need Neil Malbone on the show.

3:40:45So you can ask him this directly. Yeah, yeah. Yeah, I mean, the title thing is like I've titled hundreds of YouTube videos. I hated doing that every single time. And I never got to the scale where I had like, oh, yes, I have a title person who's amazing on my staff. And I would be displacing their job if I had a tool for this. Well, it A-B tests it now. So there's title A-B testing, thumbnail A-B testing. Eventually, it probably just prompts you what they think you should title it. And then it'll A-B test it on its own and figure out where it lands. Yeah, that makes sense. Anything else, Jordan?

3:41:18Lots more on my mind, but I can do it again soon. Yeah, thanks for having me, guys. super fun thanks so much for coming back we'll close out the show and we will talk to you in just a minute next time yellow suit thank you so much we have to tell you about Wander find your happy place book a Wander with inspiring views top tier cleaning 24-7 concierge service it's a vacation home but better Delian has a post here just read this in an investor update this is bad news for Tyler he said older engineers who graduated from college pre-GPT are actually best suited for our purposes. They have fundamental programming ability that's lost amongst most of the current generation.

3:42:01The AI-induced thinking slash skills decay has begun. Wild. What do you have to say? Are you low background radiation steel, pre-war steel, or are you post-war steel? Once we get the next model, we just need the next model. Then you'll be good. Then you'll be able to prompt, explain to me what you did. And you built the thing. It is funny. I don't know. I think that it certainly depends on, I mean, there's obviously people that use, you know, GPT coding tools and it accelerates their learning. There's probably a lot of people who are effectively cheating at learning anything and do not accelerate.

3:42:44But I don't know. I wonder if this phenomenon will be sticky. I wonder what the durable, We're still so early in understanding the durable trends that come out of the AI era and how it changes people. I don't know. Kevin O 'Leary is neck deep in data centers right now. I love that. What a quote. That's hilarious. What is this? It's a treaty post. I am starting to be a real believer in AI. Will be a mega trend like no one is really imagining right now. I'm sure lots of ramps and drops along the way, though. Shit posting. Oh, well. And Bill Ackman, of course, said, may I meet you is his preferred pickup line.

3:43:25What a time. That's why, of course, why I asked you, may I podcast with you? May I podcast with you. In other news, Dario from Anthropic went on 60 Minutes and gave a number of interesting answers. The one thing that stuck out to me, and I'd love to know if anything else stuck out to the rest of you, But previously, the quote that came out of Anthropic was half of all white-collar work obsolete by some timeline, five or ten years. And the twist, the thing that stuck out in my mind was it was half of all entry-level white-collar work being automated by AI, which felt like a step back in terms of like AAGI-ness.

3:44:10What do you think, Tom? Yeah, I mean, I feel like we have to look at the exact timelines, though. Original quote. Because this is one to five years. Okay. This is next year. Yeah. Half of all white. He's so bullish. I love him. He's so bullish. But yes, I don't know. I mean, yeah, it's an interesting quote to match with that Delian post about what's going on with the younger, the current generation programming ability. The AI-induced thinking skill decay that's begun. Maybe you don't need the skills because AGI is coming. Why build skills when you can just say, do it for me. Don't make mistakes.

3:44:53Yes, half of all AI could wipe out half of all entry-level white-collar jobs and spike unemployment. Let's play this clip. Let's play this clip from Anderson Cooper. Spike unemployment to 10 % to 20 % in the next one to five years. Yes. That's shocking. That is the future we could see if we don't become aware of this problem now. Half of all entry-level white-collar jobs? Well, if we look at entry-level consultants, lawyers, financial professionals, many of the white-collar service industries, a lot of what they do, you know, AI models are already quite good at and without intervention. It's hard to imagine that there won't be some significant job impact there.

3:45:36And my worry is that it'll be broad and it'll be faster than what we've seen with previous technology. It's such a funny thing to say because it's like you're the one doing it. I still don't get that. And that's why I get up every day. What is his proposal? Does he actually have a proposal? Is it UBI or something? I think the other clip in here is actually even better. He says, I'm deeply uncomfortable with these decisions being made by a few companies, by a few people. It says Dariya Mode, CEO and co-founder of AI company Anthropic. It's Lee. he's talking about himself. It's me. It's me, Dario.

3:46:14Oh, well. He has to bring peace and safety. Peace and safety. That is wild. Okay, let's read this post from Dwarkesh to close out. He says, people with short timelines sometimes shrug off models' inability to perform basic economically useful tasks end-to-end by saying, oh, but we haven't trained models to specifically do those things. But this misses the point. Human workers are valuable precisely because we don't need to build bespoke, schleppy training loops for every small part of their job. Every day, you have to do a hundred things that require judgment, situational awareness, situational awareness, and skills and context learned on the job.

3:46:58These tasks differ not just across different people, but from one day to the next, even for the same person. it's not possible to automate even a single job by just baking in some predefined set of skills, let alone all the jobs. People will sometimes debate how much progress have we made so far between Village Idiot and AGI. And I'm just thinking, what the F are you guys talking about? The models are currently so much dumber than the Village Idiot. Village Idiots generally generate trillions of dollars in wages a year. Taking shots at the Village Idiot. These models generate 30 billion in revenue a year.

3:47:34That's a good take. That's very funny. Who's the real village idiot? Village idiots are underrated. Who's the real village idiot? It's the AI models. In fact, I think people are really underestimating how big a deal actual AGI will be because they're just imagining more of this current regime. They're not thinking about billions of human-like intelligences on a server which can copy and merge all their learnings. And to be clear, I expect this, aka actual AGI, in the next decade or two. That's crazy. I completely agree. It is crazy. I've been racing. What else is in here? Another post here, Mustafa over CEO of Microsoft AI says, already our Fairwater data center in Atlanta has taken over 15 million labor hours to build, even more once it's fully finished.

3:48:23For comparison, the Empire State Building took 7 million. and Elon comes in, ratios him, and said, are you sure you're doing it right? Oh, that's so ridiculous. Okay. Let's do a lightning round for just another pod guy who I invited on the show a while ago. He's worried about exposing himself. But he says, themes for 2026 in no particular order. AI trade intensifies. Panikins get steamrolled. Believe it. Humanoid robot production ramp. I guess we're seeing that with UB tech. Robo taxi accelerated rollout. Starlink capacity ramp with cupier fast follow. SMR nuclear D-reg and pilots. Federal warp speed for the U.S.

3:49:15electrical grid and pharma APIs. Drone U.S. manufacturing ramp. Enterprise software spend shifts towards AI at cost to traditional SAS. He's a SAS bearer. AI models go true multimodal and crank engagement levers. Grand bargain with higher ed to restructure system in exchange for student loan forgiveness. Federal housing program that attempts to free up supply, which likely fails as soon as home prices drop by 2 % and boomers riot. GLP-1 adoption and second order impacts accelerate with recent price drops. AI for drug discovery becomes a hot topic and naysayers will rush to downplay but will look stupid before the year is out.

3:49:54This is so crazy. There's so many predictions in here. People forget about quantum. Panikins realized that auto loan DQs were a non-event driven by illegals defaulting. Panikins pivot to attempting to quantify systemic risk. Like blah, blah, blah, blah, blah. It keeps going. It gets steadily wilder and wilder. But we'll check back on this next year. We decouple from China. Very funny. anyway I think that's good for today Martin Screlly also has some data on institutional trading of private market stocks the team is laughing because we just keep going and just one more post I want to close it to close it out you got to update the ramp figure in his data because ramp raised an up round let's go well thank you for watching thank you for listening what you got Tyler?

3:50:49one last thing Tyler Cowen on Marginal Revolution he said there's no great stagnation not anymore interesting it's official wrote the famous book okay wait he wrote the famous book? yeah his book Great Stagnation that's what it's called? oh I that's Tyler Cowen yeah I didn't realize that he wrote a book on the Great Stagnation I will have to check that yeah The Great Stagnation from 2011 very cool well it's over it's been officially declared over. See ya. I'm excited. Let's dig into that tomorrow. Let's figure out what metrics he's using, what his GDP assumptions are. I want to know more about that piece, but I want to read it before we get on air.

3:51:25Thank you for tuning in. Great show today. Have a good evening. We'll see you tomorrow. Goodbye.