Blue Origin Explosion, Enterprise AI Hits Spending Limits, Dinosaur Market Booms | John Gruber, Ronak Malde, Zane Mountcastle, Jamie Cuffe, Kyle Kuzma, Brad Gerstner

26:10And this is the quote from Ben Thompson's SpaceX IPO and data centers in space story. Ben Thompson doesn't typically cover Elon companies very closely because they're often disconnected from the fundamentals. Yeah, and they're more of like this this 10 year out story But he says in all seriousness the numbers are obviously absurd But then again everything about this IPO is absurd SpaceX is seeking a two trillion dollar valuation on a mere 18.67 billion in revenue. You think the six sevens Intentional there they're like let's get another another 10 million in the bank so it can be a meme wouldn't be the first time in revenue with 4.9 billion in losses last year.

26:54The growth actually slowed from 35 to 33%. But again, that will be massively offset with the new AI computing contracts. So there will be significant reacceleration in the business, which I think is what a lot of people are underwriting SpaceX against. That slowdown happened despite the addition of XAI and thus also X, which tipped the company from a small profit to that massive loss, thanks to$5.1 billion in AI R &D expense. That R &D, keep in mind, went towards building a model that is in fifth place and whose founding team recently left the company. But sure,$26.5 trillion AI opportunity. It will be very interesting to see if the macro hard thing, I mean, the whole like macro hard enterprise AI thing was, it took people by surprise in the S1 because it was like all of a sudden the biggest number in the TAM figure is this AI enterprise software, essentially.

27:51But Elon has been talking about macro heart and entering that category generally for, I think, over a year. And he painted the top of the data center with macro heart. And so it's not like it's completely out of the blue. He left out the part where the infrastructure they built is already generating 15 billion in annualized revenue. Yeah. Small detail. And I mean, the story is only going to get crazier. I mean, people are speculating about the Tesla-SpaceX merger, and then you have Optimus with the foundation models and the AI compute and the data centers in space, and you have this, like, full stack, like, very concentrated bet on, like, this ultimate future of artificial intelligence, robotics, self-driving cars.

28:30like all of the it's it's the sci-fi company and uh elon's been delivering for 20 years in this category doing things that uh other great entrepreneurs find very very hard to do so uh it has been uh lots of lots of reasons to be excited the account russian bot responded to take him and said the guy is a journalist his opinion is what you're hitching to and take him says hey Russian bot. We're never going to guess what I am. Of course, calling Ben Thompson a journalist. I mean, he's a journalist. He's very independent. He's an analyst. We actually have the co-host of Dithering in the Waiting Room.

29:12Who, John Gruber has the good fortune of talking to Ben Thompson every week, at least once or twice, right? Twice. Thank you so much for joining the show. Welcome to the show. Honored to have you on. Long overdue. How are you doing? How is your week going? Busy, as usual. Lead up to WWDC. Always a hectic time to be writing about Apple. Very nice to join the waiting room here and hear you guys talking about Ben, though. Yeah, no, he's the best. I heard a little bit of your take on the Ferrari Luce. I would love for you to unpack it a little bit more because it's shaping up to be a contrarian take.

29:53I think a lot of people were looking for something that was more sharply designed classically Ferrari like what stuck out to you about the luce launch Well, I will say it's funny that you Call that out. I we endeavor on dithering to make as few mistakes as possible and we've got numerous Corrections to make Regarding our take on this including the fact that we complete but Ben and I both completely were unaware that Ferrari a couple years ago, I forget the name of it, but has like a little crossover gas car. Oh, the FF. Right. But basically our take was, hey, everybody wanted a Ferrari looking Ferrari.

30:34Sure. That just happened to be electric. And yes, there are some sports cars that are electric. And this is not that, right? The Luce, whatever you want to say about it. And if you took the nameplate off it and just drove by on the street and asked somebody, what brand car do you think that is? Ferrari would probably be very low on the list. You'd probably have to run through dozens of brands before you get there. And I think that really fuels the primary objection that people have. Not for me. I'm interested to hear that. My take is I think it looks like a nice car. I do. Now, does it look like a$650 ,000 car?

31:18Yeah, that's a good question. I can't see that. I mean, number one, I'm not$650 ,000 car money. My stuff hasn't gotten bought by open-and-eye. Well, the big question is I have a lot of friends who love cars. I don't have really any friends that I can think of immediately that are going to want to eat the depreciation on this car like this car is going to be a three hundred thousand dollar car in a couple years in a couple maybe even in less than that right um and and we don't even know how how the reliability the car you mentioned earlier the um Ferrari FF well they have a Perosangue which is a four-door SUV.

32:04But it's only a four-seater. This is a five-seater. So if you're a family of five, this is the only option. I used to own the original family-friendly Ferrari in the modern era, the FF. I got it because it had four seats. I wanted to be able to put my kid in the back at the time. And ironically, it had so many electrical issues that it was not usable as any type of daily driver. uh and uh and so that's my concern with the luce along with the price tag it's just like who's in the market to buy an ultra luxury car that is that is going to say i want something that looks like it's not a luxury car and then you know i could go and buy like multiple continental gts from bentley for the price of yeah you know one um and so so ultimately my my take was i thought it would have been a hit at like a$300 ,000 price tag.

33:03And I just can't personally imagine that when they started this project, they were aiming to build a$650 ,000 car that looked like this. Yeah. I wonder about that. Because there were reports, I forget the numbers, but you know, and of course I'm going to take it back to Apple, but But you can't help but wonder, you know, with Johnny Ives and Mark Newsom's involvement in this, you know, that Apple famously had the Titan Project, a decade-long car project that they ultimately just walked away from and said, you know what, we're not going to do this. But that got pretty far along, and there were rumors, unsubstantiated.

33:47I don't think anybody even reported it, but there were rumors that at some point when it got to the, hey, we need to make a decision here. We need to shit or get off the pot that they specced out what the current idea for a car would be. And it was going to be like, I don't know, 200 ,000 or more cost of goods. And, you know, figure out what Apple would do with their margins in terms of that. And it just was not Apple branded. It would be like if the Apple Watch came out and the only ones they made were the solid gold ones that cost$20 ,000. Yeah, yeah. It feels like Tesla already sort of created the iPhone of cars.

34:33It's like it checks a lot of the boxes. It has this like sort of like polished feel integration. And so if you don't have that industrial might. It's like an appliance. Yeah, it's an appliance. you're happily replacing on a schedule. The iPhone is not a luxury product. It's not hand-built in the same way. It's a premium product, and it's great, but it occupies a very different place. I'm interested in your overall take on Apple's ethos. I feel like one of the things Apple does well is the Henry Ford-ism of if we asked people what they wanted, they would have said a faster horse. there's a lot of like, it's almost like a paternalistic view of technology where they know better than the consumer.

35:19And I'm wondering about your intersection of that with their decisions in AI, VR, recent products. Like how true is that today that there's still an ethos at Apple of, of we might do the unpopular decision, but the consumer will like it because we know better than the, than the hot takes men. I think that calling it paternalistic is the, I know what you're talking about. But it depends on whether you end up agreeing or disagreeing with what they come up with. I think from Apple's perspective, it's more of a, it really does boil back to that Steve Jobs adage that design isn't what it looks like, design is how it works.

36:09and that's the job of designers you know that it certainly in the apple view of the word that it's not being a stylist a stylist is somebody who can tell you what to wear if you're a person or you know tell you what to do with your hair but you're still the same person right a designer is like who do you want to be? Who are you? And style is part of that, but it's just a part. And the hard work of design is making those decisions. And famously, it's the greatest tech product of all time, probably the greatest consumer product of all time, the iPhone. And one of the core decisions at the front was no hardware keyboard in a world where the difference between, well, actually, All the phones had arrays of buttons, right?

37:04The dumb phones had number pads, and the smartphones had BlackBerry-style hardware keyboards. And Steve Jobs just addressed it head-on in the introduction event, put pictures up of a BlackBerry, a Palm, and I don't know, maybe a Samsung, or I forget what the third one was, and said, look at what they do. We're not doing that. We're going to do it with software. And it was the thing that the most knee-jerk reaction from people who were already in the market for quote-unquote smartphones at the time were like, well, I can't do this because I spend all day typing messages and emails on my phone. And I'm not going to do it by poking at a touchscreen.

37:44But it turns out now every, you know, within a handful of years, every single phone worked that way. That's a great example of it. Yeah. Where they didn't make two phones. They didn't make an iPhone that had all screen and they didn't make a second one with a hardware keyboard that took up a third of the front of the face. Because they were convinced that that was the right way. And they were right. The market proved them right.

38:14It's as good an example as any to just sort of exemplify their mindset. They didn't do it to be paternalistic. They did it because they thought this is our job to figure this out. and this is a better way to take advantage of the limited space that a phone is. How does that apply to AI? We obviously haven't seen that from them yet. You know, I mean, and so in some ways, I would say this is, you know, it's like if you write about football every single year come January, you start saying this is going to be the biggest Super Bowl of all time. You know, it's, this is a big deal. WWDC, though. It really is.

38:55Because two years ago was the one where they announced the first crack at quote-unquote Apple intelligence that did not pan out. And didn't pan out in a way that they had to announce in March last year. So that last year's WWDC, and said this is going to be postponed a full year, effectively. Yeah, we're facing false advertising claims just around how much they messed them up. Right. And when they did that, I mean, and again, you know, we're not lawyers, we're not judges, but even as a lay person, that was kind of obvious that that was false advertising. Like, so when they announced their settlement a couple of weeks ago on that case, that was really one of the least surprising settlements of all time, because it was like you showed a TV commercial that it would do a thing and it's still now a year later, it doesn't do the thing.

39:49isn't that false advertising right it was an advertisement that felt like the only real reason to upgrade at that point but but then last year's wwdc in hindsight is kind of weird two years ago they announced all of this apple intelligence stuff of the most ambitious aspects of which still have yet to shit then last year they were in like a interregnum between the year before where they announced it but they'd already said all that stuff is coming next year so they kind of got like a free pass for a very AI-lite WWDC that was excusable because they already got over the excruciating, hey, we're not ready to announce that stuff we announced last year.

40:32But now it's 2026, and it's time to show their cards. And honestly, it seems like they've done a pretty good job keeping it under wraps, what they have, right? They've announced the deal with Google, very unusual to have like a white label version of Gemini that won't be called Gemini. It's just going to be used for Apple's foundation models that are built in. And there's some rumors from Mark Gurman, of course, at Bloomberg saying that they're going to have a sort of app store for AI agents. But I think it's probably just going to be ChatGPT and Claude and Gemini to be the sort of smarter layer on top of Siri.

41:22Does that mean you could have a potential situation where you have a Gemini-based LLM as Siri, but then you could also call Gemini separately to get more features? Which feels like even crazier. Well, I think that effectively they don't want to talk about the fact that it's Gemini technology that's going to be Siri, right? And they're not going to call that Gemini. They're not going to, you know, they've gotten that announcement out of the way. And that's Apple's foundation models. And if you don't have a Google account or don't use a Google account and don't want to use Gemini, you'll never encounter the word Gemini, right?

42:04It's just that it's Google's underlying AI technology that's powering it. I think the biggest question is how good can that be? How good can an AI system be if you're not the company that controls and made the underlying models? We don't really have a good example of that yet. Well, I would say that we do. And there's a bunch of vertical SaaS companies that don't make their own models. I think good examples are, you know, coding agents, like Cursor, Legal, like Harvey. You can make good products. I guess, like, I'm more interested in... Cursor's probably the best example. I'm actually more interested in what Apple allows third-party agents to do within iOS, right?

42:54Like, will ChatGPT allow... Will I be able to prompt in Siri, chat GPT to do things in native iOS apps or other apps in the app store? Like, will it be able to use my phone for me or will it still be like question and answer? This is like, will it break the wall? Yeah. Like, will it be, will it be an agent or will it be a chat bot? Yeah, that's tricky. How do you, how do you think about, uh, what, what Ben always has this interesting take where he says, uh, people always want to, entrepreneurs often want to build productivity tools for consumers, but consumers don't want to be productive. They want to be entertained.

43:32And I see Apple as something that feels very productive. The iPhone and all the Mac apps are very well organized. You can be very productive in them. But I see the phone as primarily a consumer device. And if I believe Ben Thompson's formulation of it, I believe that then a more entertainment-focused product is maybe the end goal. And so maybe this is my way of saying, like, we're just early on Memoji or Genmoji or something. I don't know where that all goes, but it's just like a different set of goals for a consumer company. We used to joke that Apple Intelligence was the first AI product to really crack humor because the summaries would always be so funny.

44:20And no other LLM could reliably make you laugh like Apple Intelligence. And Image Playgrounds is by far and away the funniest image generation tool because it's so bad. It's so hard to use. The UI, it just doesn't give you feedback on like when is it generating? It's always asking for like another. It's like, do you want to add something else in? And I'm like, I'm kind of done. I don't know. It takes an enormous amount of work, an enormous amount of prompting to make an image whose quality is embarrassingly bad. bad compared to any other tool on the market that lets you do it. So why did they do it?

44:55Yeah. I think that's a good framing. And I think sometimes Apple hopefully, you know, when something is new, it takes them some time to find their footing. And I feel like the whole thing two years ago, put aside the actual legal implications of false advertising. It's just, I feel like they got caught up in the hype and the rush. And we need to have something big to announce in June 2024, ready or not. And it clearly was or not. Whereas the Apple way is, and they've emphasized this, Tim Cook has emphasized it many times. I don't know, maybe Steve Jobs didn't, because I don't think he wanted to make an admission like that.

45:39But Cook has admitted many times that they do not aspire to be first, they aspire to be best. And if that means not being first, so be it, right? I mean, that was the, again, going back to the iPhone. There was a whole smartphone market. Blackberry and Research in Motion was a big company. And Microsoft was all in on Windows Mobile. And it was like, hey, Apple's late to the game. Nobody remembers that entire era. Yeah, think about how long were they, they were so slow on Bluetooth headsets. Like Bluetooth headsets were a category for 20 years. And then now AirPods is bigger than the GDP of Vietnam probably or something.

46:14It's like a massive business. And same thing with a folding phone. Like, it hasn't come out yet, but I'm extremely optimistic about that product. I think that they waited until the final second until the technology was good enough. And I think when that releases, it's going to actually be good enough. And we're going to see folding phones everywhere all of a sudden. But it feels like Apple is at their best when either they're waiting what feels like almost too long, but then it's the perfect time for that particular technology to be diffused. or they're more on like an Apple TV production cadence where it's not tied to an annual release cadence.

46:51And I almost wish for some of the AI features, they were treating it like films and shows that go into Apple TV. Like there's no annual release cadence. It's just like when we finish something, we'll have new seasons every month. We do a little bit here and there. And when it's polished, it goes out. But that's a very different motion for them. So I don't know, there's a tension there. So to go back to the earlier question, there's the underlying stuff that really only Apple can do is provide the frameworks for the built-in system apps, Apple's own Apple Notes and Safari and Mail and third-party apps to offer functionality effectively like an MCP for agentic AI.

47:35And they talked about that two years ago. That was the whole thing that they were talking about where you could just ask your phone, what was the woman's example? When's my mom's flight arriving? And it just knows to look in email and knows who your mom is and knows to look in email and knows that she sent you this. Will third parties be able to use those APIs to do it? Yeah. And then number two, obviously that's going to work with Siri. Apple's built-in AI. Yeah. But will the third-party stuff, and right now all we have is ChatGPT is that optional layer on top of that. Yeah. But will, and, you know, according to Gurman, and it, you know, Apple said at the time, you know, and if you even look now, if you look on your iPhone today, that's called an extension, you know, the ChatGPT.

48:24There's only one extension, ChatGPT. There are no other ones. Presumably there will be others, at least two others, I would presume, Claude and Gemini. I don't see them working with XAI, and I don't know who else is even a maybe on that list. I also don't see them working with Meta, right? So those are the only companies I could even think of who have a product of the scope and caliber. But will those be willing, be able to do, access the same things? So that if I choose as a user to use Google Gemini as a layer on top of Siri, will Gemini have access to everything in my Apple Notes so that I can ask questions about it?

49:09And vice versa. Right. Will you be able to go to Siri and ask to pull up the latest email in Gmail? Or will Google say, hey, for that, we want you to come over to our world garden. Apple's done a fantastic job with the shortcuts API. It feels like they built out basically like mobile MCP servers for every app. You've been able to call an Uber with Siri for like a decade. No one does it because it's a little bit fuzzy, but it feels like in the AI era, we're getting less fuzzy. We should be on this turning point, but who knows where the business dealings will wind up. Right, and it's a blessing and a curse.

49:43There's positives and negatives, but Apple has a Disney-like brand where they are overly family-friendly. Yeah. One of my favorite examples of that is, my son's now just graduated college, actually. But when he was younger, we used to go on the Disney cruise ships. There you go. Thank you. Disney cruise ships. The Disney cruises are super kid-friendly. Sure. But they're the only major cruise line in the world that does not have a casino on the ship. So no good for daddy. you know and they find the middle ground they do serve alcohol you know but there's no casino on a disney cruise ship um because it's off-brand for them yeah and who knows how that'll change you know espn is a disney property and it's certainly all in on sports oh sure but apple has a similar problem and especially it comes to a head like they with the phone and with the mobile revolution They navigated this spectacularly well with the App Store, where there's all sorts of third-party apps that provide and do things that Apple itself would not want to be a part of, but they can sell through the store and take 30 % or 15 % from.

51:01there are apple does not make games people spend an enormous amount of time playing games on their phone and there's an enormous amount of money to be made by selling in-app purchases in mobile games apple is one of the most profitable gaming companies in the world maybe the most i don't know if you did the math i'm not quite sure how you would figure that out and they don't break down services revenue by gaming. But they're certainly one of the most dominant and profitable game companies in the world by making no games at all. They just have the App Store. And with AI, I think they're trying to carve out this middle ground where their own branded Apple intelligence is never going to be as adept as the leading edge models because the leading edge models are going to answer questions that Apple would consider inappropriate to be answered.

52:00And they are going to help you do things that Apple would consider inappropriate for an Apple branded product to help you do, right? There are lines far short of deep fake porno imagery. There's lines far short of that, that Apple is not going to want their own thing to cross. And that's the role of these extensions for ChatGPT and Gemini and Claude, where if you choose, right, if you want to stick with the Apple-branded stuff, you're going to have a more limited AI experience. And if you want more, there's an extension system, and they can wash their hands of it because that's not Apple's Siri, that's ChatGPT or that's Gemini or that's Claude who's giving you that.

52:44But I really do think the whole thing is not going to get off the ground if those third parties with the user's permission don't have access to all that stuff on your phone, in your mail, in your notes, all of that stuff. because if they don't, then they're going, and I think this is where it's in Apple's benefit, not just to get their 30 % of the subscription revenue that you would pay by subscribing through your phone, through these extensions to get a plus or pro plan from one of those makers. And trust me, Apple wants that 30 or 15 % from that subscription revenue. But the other benefit to Apple for this is it will keep those companies integrating with having your digital life in the Apple ecosystem, your information, your personal information in Apple Notes, your email in Apple Mail.

53:37Safari is your browser. Whereas if they don't let third parties have access to that, it's going to push people to say, hey, I want ChatGPT running all of this for me. I'm just going to use what ChatGPT tells me to say. Or I'm going to go the Google route and put everything in Google Calendar, Google keep all the Google products not the Apple products or you know stranger or like the like I keep copying into like the Napster analogy of like if you're running open claw on a Mac mini and it's literally just opening the i message app taking a screenshot and sucking that out against Apple's will and like it's open source and Apple's fighting it constantly but it doesn't really, they can't really beat it.

54:24Like, but that feels very hacker. That feels very prosumer. That doesn't feel like where we're going in terms of broad adoption. Right. Because it's going to start looking clunky compared to other platforms that have a more native, this is the way it's meant to be. And the other thing about that, too, is it's all the Mac, right? Because the Mac is the Apple's open platform where something like that can happen, where open claw is possible. And as convoluted as it is, that OpenClaw is driving iMessage by taking screenshots and then analyzing it as an image to figure out what to do. As clever as that is, that's only possible on the Mac.

55:05And at least, I would guess, 85%, 90%, probably around 90 % of Apple users don't have a Mac, right? They just have an iPhone and or an iPhone and an iPad. And so if, you know, for it really to, for the Apple, overall Apple user base to move forward as this world becomes the normal world of computing and not the cutting edge world of computing, it's got to work on the iPhone. And there's no way to do that without Apple's help. Yeah. What is the latest on how Apple is approaching mobile vibe coding apps? we covered a while ago, some of them not getting removed from the app store but not allowing them to ship updates.

55:54It feels like I can understand exactly why both parties there have the views that they have. Apple's like, hey, you're just kind of like building software on the fly. This is like, one, a threat to the app store business. It's also going to allow people able to generate applications that we don't want on the iPhone? And then the other side, hey, you're stifling innovation. Users really want this. It's harmless. Let it happen. We don't know. And that is way up. That's a great question because I would put it easily top three or four on my list of things that I'm most interested in for the WWDC keynote is what is their answer to this?

56:45including is it you know is this one of those things where 90 minutes or two hours after it starts and it's over and people are talking about the stuff that was announced and we're all going to be like hey wait a second they didn't even talk about the whole vibe coding thing what they didn't even mention it you know like and to me that would be a red flag because because And yes, it's disruptive to the way that the software distribution and development has worked on the platform for 20 years now. Yeah, and it's very clearly the future that any iPhone user in 10 years will be generating some of their own software.

57:30They're still going to want a lot of stuff that's purpose built. But I would bet that in a decade, everyone that is buying an iPhone at some point or another will make their own pieces of software on the fly, just like they would generate. And you sort of can with the shortcuts feature. Like you can build something. I know it's super limited, but like if I was truly giving them the most credit in the walk, crawl, run, I would say that the next version of iOS 27 Siri, yeah, it's not going to have a text box that you can talk to and it will generate you an iOS app natively. But you should, in theory, be able to describe a workflow that then becomes like a shortcut that is created instead of using all the dropdown menus and going around finding all the apps and linking everything.

58:18It should be able to instantiate that for you because it's probably just marked down under the hood or something. But I don't know. They just need to have an answer because it's like part of what makes disruption theory so satisfying as a business theory is that the disrupted doesn't get to choose. But that's what happens. The entrenched monopoly or part of a duopoly or just entrenched way of doing things faces the disruptive technology. They dismiss it at first. Then when it becomes bigger and kind of can't be ignored, they just sort of say, well, I choose not to be disrupted. And it's like, you can say that, but it never works.

59:05Never works. No, no, it's a powerful force. and it's it is in in my opinion just nerding out you know going back my my undergraduate degree was in computer science it is in some ways offensive to me that ios is a nearly 20 year old platform it is a computer yeah and it's the it's a 20 year old computer on which you cannot make software for the computer itself. Yeah. And I totally understand why that wasn't the case for the first few years when it was more limited hardware, and even a few years after that when the whole idea of the App Store was new. But at this point, I mean, an iPad Pro costs like $2 ,000.

59:54It has a keyboard and a huge screen. It's as powerful as a MacBook. And you can't use it to make apps. It's kind of bizarre. Don't you think they'll find a way to allow this and make money from it? Because I would imagine. Yeah, that's what I think. Yeah, imagine they're, they know people want this. Yeah. But the main reason to not allow it is like one, just like safety and integrity of software on the iPhone, security stuff. But then also, hey, we got to figure out how to make money on this, the Apple way. Yeah, and there's obviously some technology that's already in a way of doing things. The whole test flight ecosystem, which is what Apple's beta distribution is for iOS.

1:00:39And it was a startup, you know, I forget, probably more than 10 years ago when it was an independent startup. But Apple saw the wisdom of it, right? This is a thing that Apple didn't invent. They should have invented it, but then they saw how clever it was. and they're like, oh, we'll acquihire these guys and build it into our platform. And so there are ways to distribute software now outside the app store. And it's just by limiting the number of people who can do it. I think the test flight limit is like 10 ,000 or something like that. And they could do something with AI where that limit is much lower.

1:01:11Like even if it was just like 10 people, right? Like a consumer level of test flight distribution where you can make apps for your friends and family or yourself and distribute it on up to 10 devices, and it doesn't go through Apple, doesn't need approval, you just make it and distribute it, and it's only limited to 10 people, something like that. But there needs to be a story like that, though. And I think, again, only Apple can really make it a really good, rich system where you can make apps that really feel like real apps. But the technology to make the apps, it's obviously there. We're all talking about it this last six months.

1:01:53It's obviously there, and you could do it on the phone itself. And it's super frustrating that some of the third parties that were doing it, like BitRig and I forget some of the other ones, but BitRig was the one I'm most familiar with, where they're not kicked out of the App Store, but they stopped taking updates to it. And it's super frustrating because it's not theoretical. It is an actual thing that was actually working, and they took it away. It was super cool. Yes, it's disruptive to Apple's business, but in a way that the disruption is inevitable anyway. Why not go with what's cool and do the coolest thing possible that makes new possibilities available to your users and the developers on your platform?

1:02:38Okay. Last question. Give us a recommendation of a recent favorite episode of the Acquired FM podcast. I don't have any recent ones. I'm going through the... You're going through the archive, right? The back catalog. Going through the archive. But what's a recent favorite that you've listened to? Not recent from their catalog, recent from your listening history. What would you recommend for someone who's getting into the Acquired FM podcast? So for people who aren't familiar, obviously probably everybody watching this show knows of the Acquired podcast. Me, a big dummy who does a lot of reading and does not listen to, I don't have a commute.

1:03:20This is my home office. Sure. So I don't have a lot of podcast time. I stumbled, a friend of mine recommended the Mars episode, the Mars Incorporated episode. That's the one. Yeah. And a friend said, you got to listen to this. And I'd heard of acquired, you know, but it's like, I don't know, if you listen to every podcast somebody says you should listen to, you would spend 24 hours a day listening to a podcast. Or their full-time job. Wow. So I go there and it's four and a half hours. And I'm like, you've got to be fucking kidding me. And I'm like, all right, I'll listen to it. And it's, of course, fantastic.

1:03:53And it's amazing. But the Mars one, it just sucked me in. So that's the one I would recommend. And it is a hundred-year-old candy company that the business decisions that not the founder, but the founder's son, Forrest Mars, who's the one who took it from sort of a mom and pop thing to a big one. The decisions he made in like the 1920s and 30s are exactly like the world of business today in the 2020s and 30s. It was like he came from today's world, time traveled 100 years into the past and applied today's knowledge of branding and scale to that world. And there's just these other crazy bits that I had no idea.

1:04:41Like the fact that Hershey, who was the bigger company at the time, supplied all the chocolate to all the companies, including Mars. And they just were like, sure, we don't care. And it was sort of like a heads they win if you buy a Hershey bar and tails, they don't lose because you're buying a Snickers bar that was covered in Hershey's chocolate until the day Forrest Mars called them up and said, yeah, we're going to cancel our chocolate contract. And they're like, what are you, crazy? And he's like, yeah, we're going to make our own chocolate. Final question. It can be a really brief answer.

1:05:18Do you think that Apple's overall software quality is getting better or worse? Because when I use the FaceTime app recently, I just get enraged because it's a constant experience of, oh, wait, I'm in this group and they started a FaceTime and I didn't get a notification and I'm on a call and now it's doing a FaceTime and I start to, maybe it's just me, maybe I turned 30 and I just can't use the device anymore, but it just feels like across the board, there's less like polish than I remember and And I'm wondering what you think. I love how you prefaced it with make it a short answer. Yeah, it's impossible.

1:06:07I think that to make it as short as possible, I think Apple over the last 10 years is facing a be careful what you measure problem with software quality. where things that you can measure are things like crashes. When an app just crashes and it says, like, hey, do you want to send a crash report to Apple if you've opted into the share crash reports with Apple thing? And their apps crash almost never, right? It's almost unusual when you're using Apple Notes and the app just crashes. It doesn't happen. and they've tackled a whole bunch of things like that because you can measure it, right? There's like a number that used to come in.

1:06:55How many users today had Safari crash? Well, you can measure that and they've cut that down. The things you can't measure are things like your problem with FaceTime. Like I'm confused. How do I add somebody here? I thought that I added a third person. Or there's an ability to call somebody but it doesn't ring on their side. Yeah. But I'm like, what's the point of just joining a call when the other person's not getting a live notification? Well, if you happen to be in that iMessage group chat at the time, you can see that notification. I know, but this is how it works. The phone's a busy place, but I'm just saying it's like a terrible user experience every time where I'll send John a text.

1:07:37I'll just be like, John, we're in the FaceTime because I know he didn't get a notification. You can press the ring button, but it's an extra button. It's a perfect example because Apple's never going to get a number that goes up because you encountered that problem. There is no number that's going to land in front of Craig Federighi's dashboard of problems with Apple software that says Jordi Hayes had problems adding somebody to a FaceTime today. But you did. And that's the sort of thing it's getting away from when Steve Jobs was there and was not just the CEO of the company, but the number one user of the products.

1:08:17Right. And if that happened to Steve Jobs, that would get fixed. That would start getting fixed the next day. Right. If he had problems adding somebody to a FaceTime call, all of a sudden that would be the biggest problem in the world. Or iMessage Search, right? The number one app that I use. Well, Search is just bad everywhere. Yeah, but Apple should be able to create the most elegant solution. It's the number one app that I use. Search is bad everywhere. I'm not afraid to say it. Searching and iMessage technically works, but it is sort of like the way that putting two empty soup cans and tying a piece of string and holding it taut that you can talk to somebody through the can.

1:09:00It does work because the audio goes through the string and goes to the can on the other side. But that's not what people think of when they think of talking on the telephone, right? And the way that you search in iMessage and the way that you get results in the sidebar is not the way people think of search. People think of, hey, I was searching for this one word. I was talking to somebody about this one word and it was just a month ago. Just show me the goddamn message where I was searching for that word. And I think that's the sort of just sort of opinionated from the top thinking that was there because Steve Jobs was running the company and Tim Cook just isn't that type of person.

1:09:40And the company has taken on as a company more of the personality of Tim Cook. That's the nature of leadership, right? The organization tends to take on the personality of the person leading it. And there's a lot of good things that have come from that. Absolutely. And that's, for example, Tim Cook loves numbers. And so something like, hey, how many times a week do apps crash? Those numbers have come down. But that is driven by a culture that kind of comes from Tim Cook. And I think, hopefully, under John Ternus, that they can sort of not turn the ship around, but just make a minor course correction back towards, hey, let's focus on just some opinionated shit.

1:10:27Like, hey, this app is confusing. Like, when you open this and you just want to add a collaborator to this, why does it look like this? Shouldn't this be way more obvious? And I think, you know, we can't measure it. This isn't going to come with a number that goes up and down. it's a je ne sais quoi we know it when we see it but this isn't up to snuff and i think they've gotten away from that yeah well thank you so much we went way over time you fit it exactly into 60 seconds thank you uh we got to do this again because this is super fun we could go all over the place and there's so much more to talk about but have a great weekend have a great rest of your day thank you so much for you guys it was a pleasure to be on we'll talk to you soon have a Good one.

1:11:08Up next, we have Ronak from Trajectory. He's the co-founder and CEO. We've been keeping them waiting too long. We have the whole team. Let's bring them in. Give us the news. What happened? How much did you raise? Tell us about the company. Sorry for keeping you waiting. Please introduce yourselves. Awesome. Great to meet you guys, and thanks for having us on. I can start. My name is Michael. Before this, I was on the foundation of research to define, build a lot of cool things in robotics, and very excited about Trajectory. Amazing. Amazing. What's up? My name's Arjun. Before this, I was at Apple working on Vision Pro and then multimodal foundation models.

1:11:43It was good hearing a lot of tea right before this. Well, John also is the number one user in the entire world of the Vision Pro. Yeah, I watch full movies in the Apple Vision Pro regularly. All of his blog posts. It's great. He's got some great info on this. Well, I was saying this John. This John absolutely loves it. No, no, no. I'm like still a regular user of the Apple Vision Pro. Yeah, I'll call John. It's so good. on a Friday night. It's like, I'm in the Vision Pro. Give me a second. I love it. We should chat. We should chat. Everyone else in our office is using monitors and everything. Sometimes Arjun is just like very working.

1:12:18He's an Arjun Pro in the office. But great to meet you guys. I'm Ronak. I was at Windsurf before training SWE1. And then this led to the two billion acquisition at DeepMind. So I went over there, as you guys probably heard on the news, and then left all the acquisition money on the table to start trajectory. Okay, but you raised some new money. How much did you raise? What's the deal? Yeah, so we raised$15 million from conviction. Hello! Let's go!

1:12:45Fantastic news. We're building the platform for continual learning. We're working with some awesome companies, so Harvey, Decagon, Clay, Rogo, Mercore, and basically building agents that learn online. So all of that usage, the edits, the retries, everything they're using in an AI product, using that to make AI smarter every single day. Yeah. Amazing. So, yeah, like 15 million seems like a great amount of money to start a business with, but it doesn't seem like enough to jump straight to training a frontier model at the mega scale. So I imagine your approach is a little bit more capital light. How much of your approach is in the deployment phase with the companies that you're partnering with versus pure research versus something that's going to happen around fine tuning something?

1:13:34Like, what can you tell us about how you actually deploy a model that is capable of continual learning? That's a great question. I would say the way we're thinking about this is every lab is focused on building this, like, smart PhD student, right? And how to make this PhD student smarter and smarter. It's always day one of their job. And it's always that they're going to make the same exact mistake every time. What we're interested in is building, like, building an agent that is 10 years of experience on the job. It doesn't need to be a PhD student. It doesn't need to be like frontier level math or anything like that, but it needs to know your primitives.

1:14:08It needs to understand your business and it needs to really, really understand your rewards. And with that, like just doing very, very light post training can get us very, very far. So we have models that are 10 times smaller than the frontier models that are able to beat them. But also that's not what we're most excited about. What we're most excited about is that not only are we beating them today, but we're improving 1 % every day. And that is continual learning. That's the most exciting part about continual learning. Very cool. Is part of this too, you know, you mentioned some of the application layer companies that are your guys' customers.

1:14:40Is part of this helping sort of reduce their dependency on the model providers and help change maybe the kind of leverage equation there? Yeah, I think all of our customers have different motivations. but I think really at the the main thing they're really attracted to is this idea that like what they're doing and their bet is that product like craft product expertise domain expertise is going to win and it's going to hold the taste is going to hold for the years to come and they want to find ways to actually use that and work that into a product right now kind of their only lever is like prompt optimization putting prompts in and we view ourselves as like a research lab in their like back pocket like giving them the tools so that they can modify the models, modify the harnesses and have them modify together so that they can do what they do best and let's make beautiful products.

1:15:32Amazing. Well, congratulations on the progress. So great to meet you guys. Thank you so much for taking the time to come on the show. I'm sure you'll be back on this year. Yeah, any day now. Fingers crossed. Yeah, yeah. We've got so many more things coming up. Yeah, yeah. So excited to see you all soon, hopefully. Hiring in San Francisco. Is that correct? Yes, only in San Francisco for now. More to come soon. We're doing our five days of trajectory right now. Check us out and so many cool stuff to come. Amazing. Thanks so much. Have a great weekend. Thank you for coming on. Congrats. We'll talk to you soon.

1:15:59Amazing. Talk to you all soon. Bye. Up next, we have Zane Mountcastle from Pico Grid. A good friend. Interviewed him for a video about the Gundo years ago. I'm very excited to catch up with Zane. If we have him in the waiting room, we've been keeping him waiting. And so hopefully Zane from Pico Grid will be able to join in just a minute. We'll see. let us know who is in the waiting room. We're waiting. We'll give him just a second. Wish we had more time with the Grubinator. Yeah, yeah, yeah. We can go. I mean, he's a professional podcaster. Dithering, of course, is available in the Stratechery bundle twice a week.

1:16:41We also have to say a little shout out to Jackie Shapiro from the Bronx. Apparently, she's one of our newest fans. Thank you so much for being part of the audience and tuning in. It's an honor. It's an honor to have you in the audience. What else is going on? We have Jamie from Pace coming on in just a few minutes. And then Kyle Kuzma. Chris says what we've all been thinking. Oh, what is that? Can you die from a lack of being called Big Dog? It's a big question. It's a big question. Do you get called Big Dog too much? No, not very often. I don't know. I think you have to put yourself in the right.

1:17:19Let's work on changing that. There's certain spaces where you might get called Big Dog, and you have to attend. You have to open yourself to the opportunity. You have to open the door to being called Big Dog. Like, if everyone knows your name, they're just going to call you your name. You have to be walking around in a certain space. Deep Fates. This was the post we had earlier. I fear not the man who vibe-coded 50 new apps, but the man who vibe-coded one new app 50 times. It's a banger post. I think he meant to say, but the man who vibe coded the same app 50 times. Yeah, the same new app 50 times, something like that.

1:17:56This was good. What else has gone? Over on Reddit, r slash CFA. Would it be considered insider trading if I'm on a hunting trip or safari with a CEO of a large firm and they get mauled by hyenas and I start buying put options on their firm? Let's say I go to Tanzania. This does not sound hypothetical. The CEO of a very prominent firm in the United States when we suddenly get overran by a pack of a dozen hungry hyenas. However, I and my youthfulness are, of course, quicker than this old man. And I managed to escape and hide behind a rock while the hyenas maul him. If instead of helping him fend them off, I open up Robin Hood and start buying put options on his company, would this be insider trading?

1:18:40There's absolutely no way this can be priced into the stock predicted. Oh, but the material, non-public info, blah, blah, blah. Okay, but what if before I buy the puts, I post a video of him getting attacked on my public Instagram story? What then? Thoughts? Purely hypothetical. Does not sound hypothetical. Well, it all depends on what the market thinks about the CEO. Because it's possible that the market sees his bullish signal. The CEO is no longer there. He's clearly pricing in the 21 % nuke salute. Yes, you know where the market yes at least briefly And then hopefully pops back up, but of course, every people are saying it's priced in everything's priced in well We have Zane from Pico grid here from the New York Stock Exchange Welcome to the show.

1:19:25Sorry keeping you late for running late here. Great to see you. How you doing? How are you guys? Congratulations? Why don't you give us the news then I want to go into the product portfolio the traction everything else, but what happened today? So we announced our$45 million Series A led by Bessemer. There we go. Fantastic. Congratulations. Big number. So take us through the product portfolio, the traction, the latest with PicoGrid. So PicoGrid, we build technology to help integrate different mission-critical systems. So think our sensors, our drones, our robots, our weapon systems, mainly for military applications.

1:20:02What that means is sort of we're building the open infrastructure. that is the hardware and software tools that make these systems work together. The sort of connected tissue or the glue between these different platforms. We have active contracts right now with the Pentagon, with NATO, with various allied partners around the world, supporting a whole bunch of different applications. Yeah, when we first met, you had an office in El Segundo. Still do. Still do. It felt like, you know, a lot of R &D going on, a lot of experimentation, some really great traction with the systems that you'd built. But I imagine that a lot of this funding round is thinking about larger scale manufacturing.

1:20:42What does that look like? Do you need to bring on new people, buy automated equipment, set up a manufacturing line? What does the next couple of years of the business look like? Yeah, so the big bulk of the round is going towards is continuing to build out a team. And with that, all the investments in the underlying infrastructure to build out. And really, you know, our biggest challenge the past couple of years, John, has been keeping our head above water, right? Keeping our head above all the demand that's coming in and how we best serve it without stretching ourselves too thin. And that is in the past, I think, three or four months, just given all the traction that's been building up, we've actually, I think, 7X'd our production line and did so as successfully as you can 7X the production line in a couple of months.

1:21:27And it's been a fun journey. So, I mean, if you're keeping your head above water, is there a tension between wanting revenue diversification from different customers, different branches of the military, different organizations, and focusing on one delivering at scale? Is there a tension there, or is it more of like dual-use, public-private? Because as you sort of lay out the product portfolio, there are lots of applications here, right? There are. And if you look at the problem that we're solving, it's really inherent to every physical industry. Military just happens to be a very large physical industry that's really leading the charge in the adoption of these autonomous systems, the sensors, your drones, your robots, all of that.

1:22:13And it's where the integration bottleneck has been most acutely felt. And it's for that reason we've really focused on selling to the military. Looking forward a couple of years, I think there will be a strong commercial presence as well. but one of the things with dual-use tech is your sales motion to the military and your sales motion to commercial industry are so different. You have to really bottoms-up think about how best to sell to each of them independently. So for the time being, just given how much demand we've seen on the government side, especially the U.S. military, but we're now seeing this across allied militaries as well, is really focusing on how can we best serve that application and, like you were saying, diversify across services, but even within given services, there are many, many different program offices, different customers, different mission sets that we can and we are serving and continue to expand out.

1:23:05I was just in Colorado Springs yesterday morning at an Army event, a big Army event called the Right to Integrate, with the Secretary of Army, Dan Driscoll. Monday morning, we'll be back in Colorado Springs with US Spacecom, and so we're able to support a lot of different missions with the underlying technology that we have. Last question for me. Do you have any insight into the ramp around domestic manufacturing of solar equipment or solar panels? We've seen some companies, T1 Energy has been on the show. It feels like there's starting to be momentum there, but what are you seeing in that piece of the supply chain?

1:23:43That's a great question. I don't think I've had that question before. I think we're seeing manufacturing across a lot of different industries, especially really critical industries. I think energy being one of those, a lot of that is being sort of re-domesticated. For us, a lot of our, for the solar panels that we do buy for one of the products, Lander, most of those actually come out of Europe. For good reason, we can't use Chinese panels, which is where most of them are manufactured. So we're using European panels. But with that, we're definitely seeing a ramp up of manufacturing across all sorts of energy systems and hard tech, silicon, all of that domestically.

1:24:24And that's ramping up really, really aggressively. Yeah, I'm really hopeful. I mean, we've had Casey Hanmer on the show. I'm sure you're familiar. And it feels like there's all the ingredients on the capital side. The AI demand has a ton of demand for solar. Like that, that could be another, uh, big mega trend in the next couple of years that I'm excited about. Uh, Jordy, anything else? No. Great. To have you back on. Give our best to, uh, Lynn Martin. Hopefully she's running around on the floor. And have a great day at the New York Stock Exchange. Have a great weekend. Great update. Thank you.

1:24:55And we'll talk to you soon. Great to see you guys. Have a good one. Thank you. Goodbye. Uh, has to be, has to be one of the most powerful names. Yes. Mount Castle. Mount Castle. It's great. Mount Castle. Yes. arguably the most regal name. It's a fantastic name, and he's been fantastically successful. But we have Jamie from Pace here in the waiting room. Sorry for keeping you waiting. Back. Welcome. Not at all. It is great to be back. Thank you guys. Thank you so much for hopping on. You've been incredibly busy. Yes. Give us the news. Give us an update. What's going on? Yeah, well, we are super excited today to be announcing our$46 million Series B.

1:25:33Woo! CoLab by Thriving CoLab. Participation for emergence and proving. Yeah, super popular show that I knew. So what has been the key unlock? I mean, insurance operations. Obviously, there's a lot of intuitive applications for AI and insurance. I think people understand how this product could be valuable. But what is the shape of the go-to-market motion? Is this something where you get one big insurance company and that's 50 % of the market and you're good to go? Are you working with startup insurance providers? We've talked to so many different people that are figuring out how to insure data centers and all sorts of different new things and underwriting and new pools of capital.

1:26:15But where's been the biggest growth source for you? Absolutely. So Pace is the AI operations partner for the world's leading insurers. We primarily are focused on the world's largest insurers, so large carriers, large brokers. There's like Prudential, WDW, Convex that are our customers today. And we're really helping them to automate a lot of their back office operations and help ensure more of the world's risk. What are the biggest challenges right now? You know, we've talked with people from all different types of companies selling agents into the enterprise. there's plenty of workflows where if you're getting things right 90 % of the time, it's like not even close to good enough, right?

1:27:00But then there's others where like, that's a good kind of like first pass and just makes the existing back office team more efficient. So like, what's working? Where do you want the models to get better? How are you kind of taking that into your own hands? I don't know if you guys are doing your own, you know, post training and things like that. or leveraging open source models. But yeah, what is the current state of things? Yeah, absolutely. So I think that's definitely very true in our regulated market where many of our customers have 99.9 % plus accuracy SLAs and we are hitting those day in, day out.

1:27:37And now we have to because that's the way that these get into production for our largest customers. For us, some of the things that I'm really proud of as a statistic for our company is that we've had 100 % win rate from pilot to production. And a lot of that is because we, it's the product and then our forward deployed engineering team that are working with our largest customers to help them successfully deploy these agents into production. And so I think a lot of what we're seeing in terms of being able to deploy and hit those sort of accuracy levels and really see our customers getting the automation rates and the ROI they want is really a combination of the insurance expertise that we have, as well as the AI expertise and kind of bringing that together.

1:28:23What that has looked like for our customers is we have customers that require that 99 % plus accuracy. We have customers requiring hundreds of thousands of tasks to be automated every day in the background. And we're doing that fully autonomously with agents. We have, for example, Palomar, one of our customers, as I said, 90 % of their tasks are being completed from intake to outcome successfully by PACE agents fully autonomously. And so, you know, we've been super fortunate to see that in production. In terms of, you know, what has been a massive accelerant to our business in doing that, certainly it's been the models getting better.

1:28:58We have very much lent into these agent operating procedures, so sort of natural language instructions that the agents use to complete these tasks long running. And as the models get better, our product has been getting even stronger. And I think one particular area we've seen that is in computer use. A lot of our customers had challenges in the past deploying products because they needed to integrate with various APIs, either were too expensive or just prohibitive to build out or didn't exist. And computer use models, they've really gone from something like 30 % accuracy on our evals to like 95 % plus.

1:29:35And that really allows us to get these models into production and particularly work around cases like desktop applications or legacy web apps or even like we've seen the green screen CLIs, you know, and being able to have the agents get live and do this work fully end to end. So those are a few of the unlocks for us recently. That's great. Another question. There's been some new insurance startups that have been growing very quickly recently. And there's been some debate around ultra high growth when you're basically in the risk business can be risky. how do you know the companies that you guys work with think about growth are they really just trying to speed up the back offs speed up the back office speed up just like you know increase efficiency so when a new customer comes in they they get them you know on board as soon as possible but like what is their general philosophy around growth given that these are companies that are at scale I imagine they're not coming to you saying we want to be able to grow three times faster by doing this.

1:30:42It's more creating efficiency on the back end. But what do you think? Yeah. So, you know, for our customers, these are, you know, in many cases, like 100 year old plus businesses that are thinking about what is the next, you know, decades and centuries look like as they want to, you know, serve their customers better and better. And I think that one thing that's like really top of mind for the business is the protection gap. So last year, 60 % of the world's losses were uninsured. So that means, you know, a house after a hurricane that's flooded, you know, might be uninsured or, you know, life insurance.

1:31:16There being just a massive protection gap between what makes sense, you know, for a family having life insurance versus what they'd have today. And I think a lot of our, a lot of our customers are thinking about that's their kind of responsibility is how do we shrink that protection gap? How do we take the $9 trillion of risk today that is uninsured that should be insured and enable that to happen. And so for us, what I think we've been most excited to see is when you take the operations component with AI native operations, you can truly change the economics. Like what we are seeing is two orders of magnitude less spend than would have been needed before with agents.

1:32:00And what that enables is our customers to launch new products, which they have, to be able to deliver an experience to a 10-person company that is similar to the experience that they would have previously only been able to provide to a 10 ,000-person company for a claim to be paid consistently on time, every time. And so that's really what our customers are pushing towards, which is how can we close that protection gap, enable sort of the 60 % of these losses that are uninsured to be insured, And that's truly, I think, what is so exciting about this opportunity is like, this is the moment that we can really unlock the sort of operations that makes that possible.

1:32:38Very cool. Fantastic. Well, I have a bunch more questions, but we'll have to do it the next time you're on the show. Which? Because we've been running late. I got a feeling we won't have to wait that long. It's been a day now. Let's see. Absolutely. Thank you so much for taking the time. Have a great weekend. Good to see you guys. Great to see you, Jamie. Good to see you guys to the team. Have a good one. And up next, we have Kyle Kuzma, NBA champion, entrepreneur, investor. He's with us in the waiting room, and we'll bring him into the TDP and Helterdome. Very excited to meet you. Kyle, how are you doing?

1:33:05What's up, boys? What's up? How are we doing, man? You've been tearing up the timeline. Yes. We love it. Thank you. Thank you guys for having me. Thank you guys for having me. I learned a lot from you guys, actually. So, you know, I have something new to this, but you guys help out a little bit. So, thanks. Yeah. What got you into investing originally? Well, I mean, that really starts like when you first get into the NBA and obviously you have a financial advisor and then you learn about, you know, typical stocks and bonds. And then I had a lot of great mentors like Colvin Bryant was a really good mentor for me, especially, you know, he had a fund right before he passed away and he told me to get into it.

1:33:46And I think that was my very first, you know, type of access and like get in with the whole VC in the tech space with everything. And, you know, we can only play basketball for a certain amount of time. Yeah. And you got to make it count. But then you got like 40, 50 years to, you know, still live. So what else are you going to do? Because, you know, that money doesn't last forever. So, yeah. Well, what was Kobe's advice to you? Was it, hey, here's all the things not to do because you get into the NBA. suddenly you're making some money and you get a million opportunities thrown at you every day.

1:34:19So I imagine your financial advisor's primary job is like, how do we just make sure to not do all the dumb stuff, focus on the basics. But what was Kobe's main advice for you? Well, the number one thing is probably just keeping the main thing, the main thing. And that's like, you know, making sure you're focused on whatever your true primary thing is. And that's always basketball because there's going to be nothing that gives me a return you know unless i'm like an early investor into spacex or something that is going to you know propel me like basketball will but yeah when you have a financial advisor they they try to keep you very very conservative and you think about the little things that you can get you know god willing 10 11 percent um you know annual return but you know for me i want more and i think that you know when you start thinking about like the private investment side, looking into space and tech and all these things that have crazy, crazy multiples and are like flying off the shelves right now.

1:35:13You know, that's where the interest is, at least for me. So, yeah. How do you think about endorsements versus equity versus investing? There's so many different ways outside of basketball to apply your skills, make money, compound. but there are sometimes tensions and sometimes an investment makes more sense. How do you think about these different trade-offs? Well, I'm going into almost year 10 in the NBA, right? And I think that athletes have all these, you have your agents, you have your managers, and they definitely want you to get the endorsements, right? Because they get their fee and it's a little bit harder for you to really justify, you know, okay, what does this equity mean for me?

1:36:02Because, you know, 90 % of things fail anyways, right? So, you know, I think it's all about, you know, getting with the right people, understanding what you're getting into and like educating yourself. You know, for me, I'm not the smartest person in the room. And, you know, I think that's one of my best traits that I've had because, you know, anytime you can be inquisitive and you have curiosity, like you have an upper edge on almost literally everybody. But you might have increased access, increased availability to just meet CEOs early, get into rounds. Have you ever thought about having other teammates or friends or even traditional investors sort of tag along with you?

1:36:44Do you see this becoming a career like Kobe did with a fund that other people could invest in? Oh, yeah, 100%. You know, I think for me, over the past couple of years, I've been, you know, kind of that singular investor and, you know, getting onto cap tables or, you know, hopping into other people's SPVs or, you know, in the VC space that I know and I can hop in. But, you know, learning this space a little bit, you know, the money is, you know, having a fun, you know, being able to, you know, take the upside off of your access that you have. And, you know, I'm in such a unique position because as an athlete, everybody wants to talk to you.

1:37:23You know, everybody wants to be around you. And, you know, you can use that for multiple ways. You can use that, you know, to be cool and, you know, party and have a fun, good time and be famous. But you can also use that as leverage to build your own platform if you're knowledgeable enough to then use that access to get into, you know, blue ship companies that, you know, can really change your life. Yeah, those blue chip companies, I feel like there's a tight enough circle that you can probably take those meetings during the offseason or when you're not practicing or playing. But have you had to turn away meeting invites to seed Series A founders?

1:38:01Because just to see the landscape of everyone who's operating at that level would be just dozens of meetings every day? Or is there something about that that, like, oh, you want to go earlier stage at some point? No, I think you definitely want to go earlier stage at some point. I think I'm at that type of inflection point now. You know, I think a lot of my investing has been typically, if it's not, you know, real estate or CPG, you know, getting into the tech space, a lot of late, you know, late stage growth companies where it's more surefire, you know, it's going to hit. But, you know, those multiples, when you talk about IPO or somebody acquiring you, you know, maybe a three, four, five X, which is all great, right?

1:38:41But, you know, to get the 100 X, you know, the crazy unicorn. You want, let's be honest. you want the thousand x yeah you're not gonna come on of course of course of course chasing it do you find one of the one of the challenges with privates is that you can't you know you can only get in for the most part at least directly in these certain moments during the season there's a big round happening yeah if there's a big round happening do you find yourself being like i'll keep tracking this company but i'm not gonna chase it right now or just given given i imagine there's moments where do you have a partner who can sort of chase it down for you yeah well you know um i do a lot of research on my own but like very very thankful to have just like a vast network of like resources and mentors and people that are like way smarter than me and i like i think that's like the most important thing you know because my main thing is playing basketball right and i can only do that for so long but you know i think that you know i'm in that situation now there's a couple companies that like I'm looking at and they're like pre-seeds or they're looking at, you know, they're safe rounds.

1:39:46And I really, really like them, but, you know, I'm at that point where, you know, putting, you know, 25, 75 ,000 into like one of those companies, it really doesn't make sense when, you know, I'm focused on a lot of more like late stage growth companies. Right. So, you know, I think you want to track, you want to do this, but, you know, for me, I'm just wired differently. And I think that like, I think it's part of my ADHD that I have. I'm able to focus on a lot of different things at once. And I think that, you know, when I'm playing basketball, if I'm during, during season, you know, we're not playing basketball 24 hours a day.

1:40:21So, you know, you have to pick and choose your hours wisely. So, you know, if I'm playing basketball, I have to study film. If I have to work out, you know, I handle that. But then, you know, as soon as I get home from three to six, three to seven, I'm in my office, That's great. You know, and that's like study time and my learning time. And I can really focus on, you know, understanding different landscapes because, you know, every sector is different. Right. And, you know, the cause for different thinking. Is is AI changing basketball in any way? I imagine you guys are accessing new tools all the time, using the models to do analysis.

1:40:56But how how how are things how is AI changing basketball? I think most of us kind of hate it a little bit, you know, just from the analytic standpoint. Oh, sure. Because it's like, you know. It's like being micromanaged. It's like, oh, you could have been an inch over here. Yeah. Bro, it's like literally like a computer telling you, hey, you should not be taking this shot. But the computer is not the human. And I'm sitting there. I'm like, yo, I'm wide open. You're telling me not to take this shot. But I'm hoping and I'm a professional basketball player. I made this shot. Shut up. I don't know if you guys seen this.

1:41:34I think and I'm not too super educated into it right now, but I saw Adam Silver. He talked about implementing something like Hawkeye or something. Sure. For like out of bounds and replays, which I think that's a great idea. Yeah. Because, you know, we had these coaching challenges and like, you know, stoppages during the game where, you know, Five minutes of like real time made like go off and we're just sitting there And I think that like making the game faster in that aspect would be huge for us So yeah, just enforcing the rules, but you're not trying to get you're not trying to get a micromanaged by a computer Yeah What about what about on the training side?

1:42:12Or is there anyone using like AI or I mean the other mega trend in Silicon Valley right now is like peptides I don't even know if those are legal in the NBA, but are there any like breakthrough? changes in like training performance longevity that you're seeing like sort of have moments I mean the whoop is like the biggest moment I think yeah the whoop you know like I don't really I wish we could wear it during games I tried to and then like the league made me take it off because all summer you know that's how I really track my daily life you know what I mean like they should pay me for what I'm saying right now are you not an investor no I missed that Yeah.

1:42:48Okay. Well, they're still pre-IPL. No, like it's not always about that. It's about, you know, good products. And, you know, I think it's amazing because you can track everything that you need, your sleep, your workout, your stress, your strain. And I think that, you know, you know, as we go, there's going to be more and more things that pop up, especially in the, you know, athletics and, you know, professional sports and just, you know, just daily lifestyle, you know, because that's what you're, you know, you alluded to earlier with like, you know, I know the biohacking scene. and the fire and the tech space.

1:43:19It's a huge thing. And rightfully so. We can't take peptides, but there's a lot of studies that suggest that it's really, really good for you and probably makes it better. I know I see you guys talking about the enhanced games. I don't know about steroids. Yeah, what was your reaction to the enhanced games? I don't know if you were to track it, but it showed us just absolute dedication and hard work and the human spirit can seemingly overcome PEDs? Well, you know, I don't know too much about the PED aspect, right? But I kind of feel for certain athletes, right? Because as an athlete, you know, we put our blood, sweat, and tears into this, right?

1:44:06If you're not really a part of like the power three, four, five sports, like that don't create a revenue and don't really have um you know a system where it's like unity and everything is fragmented like you know like pole vaulting and sprinting and swimming these guys are training their entire life for four years for five minutes yeah and you know going to the olympics they don't make any money they might make a hundred two hundred thousand i don't know what it is but it just seems like so shit to me you know what i mean and i think that the enhanced game is very very intriguing because these other sports they get a chance to one in this like day and age when you know you think about ai and you know everybody thinks oh you're going to lose your jobs or whatever but sports is the only thing that's going to be really bulletproof because we want to see it and everybody wants to watch it and feel it and touch it and i think that it's going to be important for these athletes to get paid and if i'm an athlete i trained for four years and like i barely make money like what what else am i doing like this is a nice avenue that's interesting and it's different so totally yeah that was that was my takeaway i was like the the silver lining here is like athletes have uh can extend their career it these sports maybe become more interesting to follow if there's like high level competition outside you know that that gets a lot of attention that's properly marketed like enhanced games were.

1:45:32And you can imagine that a lot of the more like if they're restricted drugs right now, those might be studied more and then used after someone retires to recover, remain healthy as they age. If they went really hard in professional sports, beat up on their body, they can get some of that back in their 50s and 60s and not have the toll of the physical, the physicality on their body. Take us through American Dynamism, Industrials, Andurl, SpaceX, super interesting companies. How did you get interested in those? How did you get up to speed? What was exciting to you about those companies? Well, you know, when I think about that, you know, I think that, and this is just like my perspective of like investing and, you know, there's a lot of like tensions and a lot of stress going on like geopolitically.

1:46:23and I love where I'm from. I love America, right? I'm sure we all do because it's given us all this platform to even be speaking here, right? I like that. And then, you know, I just believe that if you're an investor, like why are you not focused on investing into one, serious things, but then two, things that have, you know, America's interest best at heart, right? And you think about space and you think about defense and where we're at in this world, you know, prime example, space is a crazy economy that's about to open up. You obviously hear about SpaceX and, you know, all the other companies that are getting a lift from valuations within it.

1:47:04But, you know, our counterparts and our other people, other countries in the world, they are focused on space and they're focused on getting to the moon and they're focused on all these satellites. And, And, you know, whoever really rules space is probably going to rule the world because, you know, we fight wars and we do certain things on Earth. A lot of things is, you know, horizontal because, you know, we're fighting on this realm. But up there is linear. You're looking down and there's a lot of things that can really go wrong if we're not focused on preserving America. That's a fantastic SpaceX bull case.

1:47:42I love it. That is extremely convincing. uh what what it your your you said uh coming up on 10 years in the league what advice would you give to the young kyle kuzma on private markets with what you've learned so far you mentioned some of them you know work with smart people build the right network but if you were to summarize it uh you know i have a really uh a really big friend in the space and i asked him this question like what would you do or what type of advice would you give to like a young investor like me and he told me don't be stupid and follow the money this is the most simplest thing you can do you know what I mean because like I said there's so many people that are much smarter than me much smarter than all of us that do all this due diligence that understand the landscapes of every industry every science every biotech every defense space company you can name it and I think that you know following those guys leads as much as you can but also making your own like you know critical thinking educated guests on certain things is super super important so yeah trust your gut every once in a while yeah well thank you so much for hopping on the show let's do it again soon the chat wants to know how you're thinking of who you got for the finals I don't know if you're making predictions I don't know, man.

1:49:08You know, honestly, there's a part of me that I just want to see New York win because I literally want to see New York go up in flames. Like, win or lose. Literally, think about this. Win or lose, the city is going to burn. New York fans are, one, incredible. Yeah. Really incredible. And you can just see all the memes and stuff after they win. JR Smith got pummeled in the streets. Like, I want to see more of this. Like, is this funny? The Joker over here. It's in New York. Win, just amazing for the NBA. But this game seven is going to be serious. It's going to be real, you know, and I think it's hard for anybody when a game seven on the road, you know, and I think history and analytics kind of, you know, support that a little bit.

1:49:54But, you know, I want to see Winby versus the Knicks. I think it'll be sick. Yeah, that'd be sick. Well, thank you so much for coming on the show. Have a great weekend. Yeah, it was super fun. We'll talk to you soon. We'll talk soon. See you. Goodbye. Up next, we have Brad Gerstner from Altimeter Capital. We've been keeping him waiting. And we're very happy to have him join the show again for the second time. Welcome back. How are you doing? Great to be here, guys. Great to be here. Fantastic. Back to back with Kyle. Yeah. Yeah. He laid out one of the greatest SpaceX bull cases. We're going to throw it to you to try and one-up him.

1:50:29He said, whoever controls space controls the world. And for that reason, you've got to own SpaceX. I liked it. But take us a level deeper. What are you thinking about in the SpaceX IPO in the lead up? What are you watching for? What unanswered questions are there? What do you think is misunderstood maybe that more people should be aware of? I mean, I mean, come on, guys. We didn't even have any foreplay. You're already trying to be down, you know, in the SpaceX IPO. I mean, first, I haven't seen you guys. Did you sell this thing? Yeah, I think we did. I think we're working for you now. I think we're working for you now.

1:51:01did you guys get shares in open ai when you sold this thing yeah yeah okay on the team so we're all we're all on we're on the same team okay yeah how much money did you make yeah that's the question i mean we got to turn the tables a little bit anyway let's talk spacex um well well well maybe before that we can rewind a little bit because i do remember the last time we were hanging out in person uh it was at katzenberg's event right you were basically it was kind of this interesting moment because in some ways we were going through a mini correction, right? Like chat bots, you know, grew incredibly quickly.

1:51:38Agents were just starting to work. And it's been interesting to see how the market did go through this correction in Q4, but then realize, Hey, whoa, agents are a thing. And you had pretty much perfectly called that in the conversation that, that we were having, which, yeah, in some ways it's just been, it's been such a wild year for so many reasons, but I feel like you had a somewhat of a crystal ball back then. Well, I mean, thank you. And I recall that conversation. And the truth of the matter is we've gone through several mini corrections over the course of the last two and a half years, right?

1:52:16There's been a wall of worry. I mean, on my podcast with Bill, Bill Gurley, you know, We debated this. Bill was saying, will the revenue show up? Will there be gross margins? Will there be ROI? We're overbuilding. Every supply constraint turns into a glut. And we saw all that wall of worry last year. I mean, I think for me, the turning point was when we hit inference time reasoning and we really had this whole other vector of scaling intelligence. And I remember having Jensen on the podcast. He said, Brad, Inference isn't going to 100x, not going to 1 ,000x. It's going to 1 billionx because agents are going to be talking to agents.

1:52:57And so I got very pilled. And then what we saw, Opus 4.6 in the beginning of December, it was clear that we had crossed a threshold of intelligence that offered a level of utility that was fundamentally different. And if you were paying attention early in December, you could see that coming. But we started the year with the market very skeptical as to whether or not AI revenues would show up. And let me tell you this. Had Anthropic not delivered its revenues that it's delivered this year, I think the stock market would be down 10 or 15 percent. I think it's that important to the entire narrative.

1:53:31Because the fact of the matter is OpenAI has not blown away their numbers. Google has not blown away their numbers. Numbers have been good, but the fundamental driver of outperformance in terms of offtake of AI revenues has been Anthropic, which is the fastest growing company in the history of capitalism. So that buoyed the entire AI segment. And it was when they started posting those numbers and then they said on top of that, we're doing it at high gross margins in a way that in Q2 may in fact actually lead to some positive free cash flow. the market really ascended. Remember, two months ago, the market was basically down on the year.

1:54:09And a lot of these returns, we just had two of the biggest months in the history of Altimeter's public funds. That's 18 years. I mean, we're going back a long time. But that's, you know, listen, I think we picked some pretty good stocks, memory, logic, etc. But I also think it's just a function of the market delivered. These companies delivered. You saw Dell's, I mean, listen, And Michael Dell, one of my best buds. And you watch the act that he's delivering with Dell. They just had AI server revenues up 750 % year over year. It went from a$1 billion business to a$16 billion business. This stuff is real.

1:54:43But in order for it to stay real, we have to continue to see usage by consumers that they're willing to pay for and growth in the enterprise, small, medium, and large that they're willing to pay for, and growth in the sovereign domain. I think it will occur, but oftentimes, you know, there'll be some pockets along the way here where, you know, where revenues won't be as strong as people think. We'll have some pullbacks. We could have 10 to 20 percent pullbacks in the semiconductor stock as just like run of the mill consolidation. Yeah. Yeah. Right. Run of the mill consolidation. I mean, Micron has gone from a couple hundred bucks to a thousand bucks.

1:55:19Dell this time last year was, I think, 80 or 90 dollars. It's now at four hundred dollars. These are seismic moves. Yeah. Right. And so, yeah, fortunately, we were pretty bullish when other people were skeptical. Yeah. But yeah, it feels like it feels like there's there's like this natural reaction. Anytime there's good news, someone has to dig up something that's like a little bit bearish. Right now we're seeing, you know, incredible anthropic revenues. And then there's questions about ROI on token maxing and how much is going on there. How are you processing that? Are you thinking that we'll see CEOs and management teams on the next earning cycle?

1:55:54sort of start to dig into those numbers? Or is it just the more... Your Honor, I've had AI psychosis. Yeah, well, that's the most extreme version. The other one is, yeah, we actually did spend half a billion dollars in a month. And, you know, a quarter billion was super effective. So that's what we're doubling down on in the coming quarter. But how do you think that shakes out? Well, I mean, if I size up the debate in Silicon Valley, right, there are the bears who've been bearish on AI for, let's call it, a while. And anything that comes out, anything that comes out is actually just still very bearish.

1:56:27Right. And so now they're saying, oh, all this AI revenue is bullshit. First, they were saying it won't show up at all. Yeah. And then it showed up and then they're saying, oh, it's all bullshit because it's all token maxing and there's no ROI. So that's one side. On the other side of the people who are super AI pilled and they're like, oh, no, this is perfectly, you know, Pareto optimal. Everybody's spending the exact right amount of money on tokens, which we also know is not true. The truth buys in the center. OK, when you have millions of independent actors all making self-rationalizing decisions like Altimeter on buying tokens.

1:57:00Right. I don't like I don't like to waste money. I'm spending money because I'm getting a return. Now, will we will we experiment with some things that don't provide a return? Of course. I actually sent you guys a slide on this. I think it's pretty fascinating. I don't know if your team can pull up, but this is independent research that we did on this question of token maxing. And what we did is we went to 300 enterprises, right? And we just asked them, are you starting to optimize your spend? And if so, how much do you expect that you're going to spend year over year over the course of the next 12 months?

1:57:35And if you leave that chart up, what you will see, guys, is that in the first category, these are all people who are actively optimizing. But they still expect to grow revenues at over 50 percent over the next 12 months. The second category are people who are planning to optimize. And even if they're planning to optimize, they say they're going to grow revenue at 90 percent and so on. So here's my point on this. Right. And this is across 300 firms who use a multiple of AI solutions. This is what they expect of their AI, you know, API token usage. Yeah. So what are we what does that tell us? It tells us that, of course, people optimize along the way, but we are so early in the adoption curve, right?

1:58:19They're barely using coding today. They're just getting on the coding train, and they haven't really even started on using AI for knowledge work more generally. So we're low in the penetration of coding as a use case. We're almost nowhere in the penetration of knowledge work more generally as a use case. And then remember this, there are very few enterprises globally that are even using AI. So we are really early in the curve of the people who are actually using AI. So I'm somewhere in the middle. Of course, I believe that optimization will continue. But my hunch is that Anthropic and OpenAI, these companies will continue to grow right through the optimization because the growth curve on penetration of both enterprise and use case is so steep.

1:59:04But, you know, we'll see. Yeah. Is this a zero-sum market where every dollar spent on tokens comes out of a SaaS company? How are you reflecting on the SaaSpocalypse? Because we all saw what happened in the market, but there's been some really good news lately. How have you processed that? Well, I popped on CNBC for a second yesterday and was talking about Snowflake as an example. The stock was up, what, 35 % yesterday. Now, of course, just to be fair, it's only up 10 % for the year compared to a company like Micron up 200 % for the year, a company like Arm up 200 % for the year. But they did bounce back.

1:59:43And what I think we're starting to see is the bifurcation. There are companies that are in the token flow. So all these software companies, we just lump together. We treat them as though they're all equal. But there are certain software companies, Databricks, Snowflake, and ClickHouse, all of which we're investors in, which is very clear to me, they're in the token flow. As you consume more tokens, the amount of your database queries goes up. I see it at Altimeter. In fact, our database queries are growing faster than our token usage, to give you a sense. And this is, I think, so now they've proven they're in the token flow.

2:00:15So they're starting to get some love from an AI multiple perspective. That's very different than a company, I think, like Salesforce. And I love Mark Benioff and, you know, if anybody can, you know, get in the token flow, it'll be him. But the reality is the front facing solutions that they offer are more competitive with the models than something like Snowflake. Snowflake's the enabler of the models, whereas I think that Salesforce competes a bit more. So it's going to be more challenging. But I also I've heard so much about the Sasspocalypse. And listen, I did a pod with Satya, I don't know, 18 months ago where he caused a stir by saying software is a thin user interface on top of a CRUD database.

2:00:56And Benny Off and everybody freaked out. They're like, what are you saying? It's way more than that. Right. And Bill and I did a pod. Is software dead? So it's not like this is new. But then everybody started freaking out in December. All these multiples reset. But the question is, what did they reset to? OK. And this is what I want to focus on here. So if you show this slide that I prepared for you, fine esteemed gentlemen, you know, what this slide shows is that the multiple correction just took software from a place where they were way more expensive than the market multiple and brought them into the category of the market multiple.

2:01:34Right. So now they're trading at about 22, 23 times real SBC included gap earnings. Yep. That's about where the market is trading. So now just follow me on this. Software is trading. Most of these software names are trading at a higher multiple than NVIDIA. Right. NVIDIA is trading about 13 times earning for 70 percent growth for the thing that is the most essential thing in AI. and they're at twice the multiple. So like when I hear everybody crying that, hey, these multiples aren't fair, it looks to me like the multiples reset from an above market multiple where everybody thought the software revenues and earnings were impenetrable to now they're saying, well, I don't know.

2:02:19Some of this maybe three, four, five years out will be replaced. So we're going to raise the discount rate. We're going to lower the multiple. They've only lowered it to the market multiple. Let me just suggest that there's a possibility these trade well below the market multiple. Sure. Right. I'm not I'm not wishing for that, but I'm just saying there's a distribution of potential outcomes here. If you get on the train, if you get in the token flow, you're going to get above market multiple. If you don't, if you slow down and it looks like every time that computational intelligence improves, your business gets worse.

2:02:52Then I promise you they will trade below the market multiple. And there's and there's more room to the downside. So for us as investors, you know, Warren Buffett has this, you know, this old metaphor, you know, there's the easy basket, there's the hard basket or the yes basket, the no basket, the too hard basket. For me, software today is generally in this in the too hard basket. It's notable because you've been saying that, I think, for months now. And there's a lot of people now that there's been a stabilization that say like, oh, I'm smart enough. I can I can I can outsmart the market here.

2:03:27And like you're saying, even with where multiples are now, you still could be catching a falling knife. I wanted to ask you about the potential data center moratorium and how, you know, the likelihood of something like that in your view, how that would, if you have less capacity coming online, That would obviously be bad for, you know, chip companies, various companies in the hardware supply chain. But it could be great for people that are actually have, you know, basically like have tokens to sell because they would potentially get more pricing power. How do you. I think it's bad for everybody.

2:04:09Yeah. Bad for everybody. But most importantly, it would be horrific for America. Yeah. And lest we be overconfident in Silicon Valley, let's remember that activists, a small group of activists, shut down supersonic technology. And a small group of activists shut down all nuclear clean energy in this country. OK, we have 100 fission reactors being built in China. We have one in the United States. It's a disaster that happened. And so we can't take for granted that the kooks who are calling for data center moratoriums, right, which just think about this for a second. All of our GDP growth is coming from the fact that we are building data centers and driving AI and driving productivity improvements in the economy.

2:04:53A data center moratorium would thrust us straight into a recession and high unemployment. Secondly, it would cede the entire global game to China. like overnight we would lose to China in the global AI race which is not just about AI it's about economic security it's about jobs and it's about national security yeah so it literally is insane that we would do this I can't even believe there are people talking about it however what why are they talking about it because people are concerned local communities are concerned I just got back from celebrating my mother's 90th in rural Indiana um you know over the Memorial Day weekend.

2:05:31And what I'll tell you is... Congratulations to her. Happy birthday. Thank you, boys. She's incredible. She is so incredible. But you think about a place like Mishawaka, Indiana, where they're building a data center. I mean, folks here, they're worried about their jobs. They're worried about their kids having jobs. And then they're told by these crazy activists who show up in their town, they're not going to have any water and their electricity bills are going to go up. So can we blame these people for being a little agitated about what's going on? So I'm actually working on an initiative. I'm not prepared to announce today, but with like everybody in the value chain, all of the cloud companies, all of the NVIDIAs and AMDs and, you know, and off takers, et cetera, and the White House that would deliver a very tangible and profound dividend to the communities that were building.

2:06:18There we go. There we go. And I think I think it's that there's a very elegant solution there. You're the guy to do it. You're the hero that American capitalism deserves. You got Trump accounts done. I feel like this is a good next act for you. Well, I'm in the mix. I'm happy to do my part. There are extraordinary people around the table. But here's the thing. We have to build the sociopolitical bridge for the next three years. In three years, it's going to be obvious, I think, the abundance and the benefits that AI is driving for us as consumers. Everybody's going to have their own personal assistant in their pocket, right, for next to nothing.

2:06:55Think about that. Can do your calendar, can order your food, can get you a new black T-shirt, send mom a birthday present, all the things. And every enterprise is going to have things that up-level us all as humans. So I am firmly, just like John Maynard Keynes was at the start of the Industrial Revolution, I am firmly in camp optimism about technological progress. But I'm also not head in the sand about the disruption and the concern people have for the next three years. So we have to give them tangible benefits that get us over that bridge. I think we're going to do it. I'm feeling pretty optimistic about it.

2:07:29But you're right to bring it up and you're right to be concerned about it. We cannot take it for granted. Yeah. The I mean, this just goes back. I think it's entirely fair that individuals, you know, if you say I'm going to put an AI factory in your backyard. Okay, is it going to create jobs? Briefly. And then, you know, some maintenance. I think it's totally fair for people to not want it in their backyard because there's some, they perceive some risk. And there's no direct benefits because they can just get AI anywhere, right? It doesn't matter where the data center is. But there's a solution.

2:08:03Yep. How are you thinking about adoption curves? it feels like part of the reason that we've had, you know, these kind of like rolling corrections is that, you know, technology gets adopted really quickly. People assume that it's just a straight line forever, but then there's a new capability, a new technology, and it feels like stuff is just breaking through like instantly. Where have you, like, are you adopting new frameworks internally to try to understand how quickly new products can get to market. Obviously, enterprise is different, but it feels like the line between consumer and enterprise, at least in coding, has never been more blurred.

2:08:47For sure. I mean, listen, I think about when I got into the game, guys, 1999, 2000, and we had about 35 million people connected to broadband internet. We all saw what Amazon was going to be, But where we got over our skis, right, is we thought it would come a lot faster and we forgot that there were only 35 million people connected to broadband Internet. Today, we have four billion, three, four billion. Like the rate of diffusion and the magnitude of diffusion is radically, radically different. And think about this. We have a natural constraint on how fast we can go because we only have so many memory wafers in the world.

2:09:25We only have so many logic wafers in the world. We only have so much powered shell in the world. That means we can only produce so many tokens. OK, and it's almost as though in 1999, 2000, we could only lay so much fiber. I've said this a thousand times when we were putting down the fiber in 2000, we called it dark fiber for a reason. There was nobody using it and we knew there was nobody using it when we put it in the ground. There's not a dark GPU in the world today. Yeah. OK, there's not a dark token in the world today. So I think it's a very different thing. I think it's a healthy thing. We have this wall of worry.

2:10:01We can't build that much supply. And I would say, if I look at every company, what did they report on their earnings calls? Google was token constrained. They said, if we had more tokens, we'd be able to generate more revenue. Same for Amazon. Same for Microsoft. Same from OpenAI. Same from Anthropic. The world demands more intelligence. Intelligence can only be produced with tokens. And we have physical limits to the amount of tokens we're going to be able to bring online. So, yes, we will have these waves, but I think the rate, the parabolic rate at which these new models are going to produce intelligence, I think we're going to be blown away over the course of the next nine months.

2:10:35You talk independently to Michael Truel and the guys at Cursor and now taking over X.AI or you talk to the guys at Anthropic or OpenAI and they kind of look you in the eyes with that Oppenheimer look and they're like, we're here. Yeah. Right? Like we are going to – think about this. OpenAI and Anthropic combined to start the year had three gigawatts of compute. Three combined. They're going to end the year closer to 10 and end next year closer to 20. We're making algorithmic improvements. We're making massive steps up the scaling law because the amount of compute we're going to have available to us.

2:11:12Think about macro hard and macro harder that Cursor is going to now be able to train a frontier level model on. So we've got incredible competition in America. We've got the right amount of compute coming along. I don't worry about the bubble as much, even though I know that, you know, there will invariably be, you know, some months that revenue doesn't grow as fast. I'm really worried about making sure that America stays foot on the accelerator, competing globally and winning the race like this is going to lead to a moment of abundance for our economy. And it's only through great national wealth that we can raise the floor for everybody else.

2:11:50Yeah, no, that makes no sense. There was some reporting this week that Meta is hiring FDEs. I was sort of surprised to see them going into the enterprise because it feels like they have every advantage on consumer. They have the billions of users. They have exciting hardware, all these things. How much did you – was that surprising to you at all? Do you expect more companies that weren't traditionally enterprise focused to say, hey, there's tens, maybe hundreds of billions of dollars of revenue here. We should be in this market. I mean, the second you start spending$100 billion on CapEx annually, you run into the AWS problem.

2:12:37What's the AWS problem? Now I have all this compute, but I don't use it every day equally. Right. Jeff built AWS because he said, I have to build my capacity for Christmas Day or, you know, Black Friday. But he's like the rest of the year, half of that stuff sitting idle. It's expensive as hell. So I may as well rent it to everybody else. Right. Turned into, you know, a blockbuster business. But it made his core business better because he could he could build to Black Friday. Right. And nobody else could because they didn't have AWS. So that's why Elon has launched EWS. us, right? Elon Web Services, you know, with his compute, you know, signed up a big first customer with Anthropic.

2:13:17Listen, nobody on Earth is better at turning electrons into tokens than Elon. Yeah. Right. So expect a lot more data centers out of Elon, expect them on Earth and eventually in space. And I think that changed the whole tenor of the SpaceX IPO, both the cursor deal and the Anthropic deal. I think that went from, you know, people being slightly concerned about it to people being quite excited about it. I'm happy to unpack that. So I think that for Meta, if they're going to be in the game of spending that much money, listen, Susan Lee is incredible over there as the CFO. And I'm sure they're looking at the strategic plan.

2:13:55And Mark is saying, I want to build even more because that guy is never going to give up the race to frontier level AI. None of these guys want to give up that race. And so they just have to figure out ways to monetize everything that they're building. Do I worry as a shareholder at some level? That's hard. That's hard to take a business that's been 120 % consumer and say, okay, now we're going to be in the business of AWS and maybe even in the business of enterprise level agents. I think it is hard. I think they're up for the call. And remember, you suggested the merger between product-led growth, these coding agents kind of feel like consumer adoption.

2:14:33So there's a lot of shared consumer DNA with what's going on in the enterprise today. So they may surprise some folks. But, um, and Matt does have links to like hundreds of thousands of businesses through the ads platform. So it's not like they don't have any relationship to businesses. They do. So one more that I was curious to get your thoughts on, uh, Kirkland and Ellis, uh, is talking about investing half a billion dollars into their own, uh, software to help run their firm. A lot of people pushing back on that. Historically, you take a firm that doesn't have strong software competency and they spend hundreds of millions of dollars on their own software.

2:15:13There's a lot of examples where that hasn't gone well. Yet at the same time, making software today is wildly different. And it's very possible that things are changing, especially if you can get the right partners around. And I know they have some great partners. Do you expect more companies of that scale, services, businesses to want to try to own as much of the stack as possible and not be reliant on, you know, the Harvey's or the Lagoras of the world? I mean, what else are they going to do? I mean, it's kind of like, what else are you going to announce? Oh, just we give up. And like, they got to do something.

2:15:50The competition is coming straight at them. I don't think it's a high probability bet personally. Like if I was a partner at Kirkland and Ellis and somebody pitched me on that, I'd say, ah, I'm not sure that's the highest and best outcome here. So what is an alternative outcome? Good friend, you know, Josh Kushner, what he's doing at Thrive Holdings, right, where he's buying accounting companies. And now I have somebody who's just like deep in the weeds, recruiting the best engineers in the world, deep partnership with OpenAI. I saw Greg Brockman retweet the work that they're benefiting all these accounting firms, like they're driving just huge productivity gains in these accounting firms.

2:16:27So it seems to me that that's a more likely outcome, you know, a Thrive Holdings buying a Kirkland and Ellis and saying, now we're going to, you know, take this thing and AI turbocharge it. I think you're going to see a lot of that out of private equity firms, out of firms like Thrive Holdings. I think you're going to see take privates where people do that on an individual company basis. But am I confident that software has gotten so easy that a law firm that gets up every day and thinks about writing legal briefs is all of a sudden going to write killer legal software to compete with OpenAI and Anthropic?

2:17:00I think that's unlikely. What is your thinking around the series A, B, C, these earlier growth rounds? Feels like a lot of investors are just kind of frozen. You were talking earlier about not necessarily frozen in terms of their activity. They're doing a lot of deals, but they maybe don't have as much confidence knowing what will get steamrolled in the future. You were talking about being in the token flow. Is that like where you feel comfortable deploying at this early stage where you're betting on a 10-year outcome. Yeah, I mean, listen, I think we all have to have the humility in these moments to know that looking out 10 years is almost impossible.

2:17:48Looking out 10 months is pretty damn hard. But I would say if you just looked across our portfolio, and I think Altimeter is performing better than it has any time in its 18-year history, our early stage team, I think

2:18:03Awesome, you know, awesome work on the early stage side. But if you look at the type of stuff that we're investing in, it is in the token flow. Right. We're building to those compute shortages. You know, we had the Cerebris IPO, you know, last week we had been in that for nine years. You know, investors, you know, Grok. So we're looking at a lot of other semiconductor type businesses. We're looking at a lot of compute data center type businesses. and you just had your prior guests, you guys were talking about all the stuff you're doing in military modernization and the stuff that's adjacent to AI but benefiting from AI.

2:18:40We're doing a bunch of stuff there in modernization of the military. So I think you find places that are either in the token flow or benefiting from the token flow. And then I would say in growth, we're just not doing a lot in what I would call inflection stage growth. This is the companies at$5,$10,$15 billion. You know, we've really made massive bets, the biggest bets in the history of Altimeter, between OpenAI and Anthropic, which, you know, is consuming billions and billions of dollars. And so we think they are the principal beneficiaries. And then on the public side, for three years now, we basically had 100 % of the portfolio in AI and compute.

2:19:17And, you know, as I sit here today, even though it's come up a lot, you know, Hynix is still trading at a single-digit multiple, and Mike Brown's trading at a single-digit multiple, and NVIDIA's trading at 13 times. And you say, how is that even possible? NVIDIA's up 15x, like better than a venture market return over three years. Think about that. All the venture returns have been had in the public markets, by the way, guys. But the earnings have come. But their multiples have come down. Yeah, because the earnings have come. Their multiples have actually come down. This is the cheapest multiple NVIDIA has traded at in a decade right now.

2:19:50It's crazy. Okay? And by the way, I think their growth is going to continue to sustain. They're now taking 50 % of their free cash flow and returning it by way of dividend or buying back stock. I would encourage Jensen to do 70 % or 75%. I think if he does that, by the way, a prediction. You know, look who invested in Apple the second they bought back or the second they committed to 75 % of their free cash flow returning to investors. Warren Buffett. Yeah. One of the greatest investment returns in history, right? And so once you make that cross that threshold, and I think this, you know, they're running that business incredibly well.

2:20:26So the public markets we've had, you know, basically 100 percent in AI and compute were basically there, you know, today. So I think it is harder if you're a series B or series C company. Think about what we used to do in software. If it's series A, you had a couple million in revenue and then series B, I don't know, you had 20 million in revenue. Shit, you would have a line out the door of people who wanted to do that deal. You wouldn't have a single taker today. Have a single taker. You mentioned something I think that resonates with everyone. It's very hard to predict what's going to happen in 10 years.

2:20:58Obviously, your job is to look at individual trends and names. But I want to know about the Trump accounts. And I want to know about investing for the next generation, for children, advice. Also, get me up to speed on the program. What's rolling out? What's the progress? But then what is advice to parents in an uncertain time where setting their children up for success is maybe more critical than ever? Well, the update is that after four years of working on this and getting it passed into law last July 4th, the Invest America Act as part of the big, beautiful bill, it's set to launch and be funded on this July 4th.

2:21:44But we launched the app, guys, yesterday. So you can download the app. Every single family. You should tell every family you know who has a kid. They should download the app for their kids, get their kids signed up. There are 35 million kids in America under the age of 10 who get at least$250. So if you're basically born after January 1st, 2025, so think about like under two, you get$1 ,000 in the S &P 500. If you're between two and 10, you get$250. bucks. Most of those kids will get 250 bucks from Michael and Susan Dell. If you live in Indiana, you'll get an extra 250 from me. If you live in Connecticut, you'll get an extra 250 from Ray Dalio.

2:22:22If you live in Oklahoma, you'll get 250 from the state of Oklahoma. Okay. And that's just for starters. We have thousands and thousands of companies. There's a lot of billionaires in states that you didn't name. They've heard from you. I'm sure if they haven't heard from you, they're going to. It's coming. And by the way, the generosity, this is the giving pledge 2.0. We have trillions and trillions of dollars that are going to change hands in this country. This is the single most efficient way for somebody like me to fund the next generation. A hundred cents on the dollar goes to the kid. It compounds for 18 years for their lifetime.

2:22:56It makes them a capitalist, an owner. We know they're more likely to graduate from high school and college, more likely to start a business, more likely to buy a home. The societal ROI on this is off the charts. So we launched it yesterday. Get a rip of this, man. It is now the number three app in the United States. The number three app. We just passed Google. We're only behind ChatGPT and Claude. It's incredible. You're coming for your kids. I love that it's in all three of the top app store apps right now. Total Gerstner victory. It's a total Gerstner victory. Well, I would say, you know, kudos to Vlad and the guys at Robinhood and BNY and Joe Gabby at the National Design Studio.

2:23:41And frankly, the whole team at the Treasury Department led by Luke Pettit and the Treasury Secretary. This is the way government should be done. A citizen had an idea. He was able to go to Washington and actually get a law passed. And then we put together a SWAT team of people who are experienced building these things to build them. And then the consumers, i.e. the citizens of America who pay for this shit, said, hey, we love that thing and And bid it up on the App Store. So we have a lot of people downloading the apps. There are a lot of improvements coming. So be patient with us, but download the app.

2:24:17Get your kid on the path to compounding. On July 4th, guys, the money turns on. So every parent's going to see that their kid owns a little NVIDIA, a little Microsoft, a little Walmart. They're a little slice of all the top 500 companies in America. And on July 6, I hope we have a joint bell ringing of the New York Stock Exchange and the NASDAQ from the Oval Office to really signify the start of the trading in these accounts. Of course, parents don't have to know anything about investing. It all goes into the S &P 500. Yeah. Okay. But I'm cajoling some of our friends. You would know their names.

2:24:51I think it would be amazing if we had some of our friends gift a share of the most amazing companies in America. You know, the Facebooks, the SpaceX's, the open AIs. How about if they all gave just a share of those companies to every kid in America? Yeah, it'd be incredible. We are going to change and reorient how the 70 % of people who have felt left out and left behind, they are not owners of capital. OK, we need to get them on the compounding journey. They need to feel like they're on Team America. They're in the game. This does that for every child. This is not a 529 account for the top 10 % of Americans who can afford to save.

2:25:29This is for everybody. And it's so gratifying. I was in Durham last Friday. I adopted a school. There are 700 kids,$250 to every one of the kids. Now, a lot of people say, well, how did you do that? Well, it's$250 times 700 kids. They made a Google spreadsheet. They got them all signed up. I give the principal$150 ,000 and she QR codes the money into each of the accounts. Everybody in America can adopt a school. Raise a little bit of money, go to your principal, and say, we want to juice up these accounts for all the kids, get all the kids signed up. And the teachers there, this was a school that's 75 % black and Latino, serving the rural poor in Durham.

2:26:07The level of excitement, a mom came up to me crying. I never thought my kids would own anything. The teachers so excited to teach the kids about what it means to own something. I grew up in rural Indiana, and we had zero. And as I said to the president, when you're at zero, it's a despondent place to be. You don't know how to get to one. The hardest move in the world is going from zero to one. One to two is easier and two to three is easier yet. We're going to get all of these kids from zero to one on this compounding journey. If you start with$1 ,000 and you save$50 a month, it's$50 ,000 at age 18.

2:26:45There's no reason we can't put every kid in America on that journey. And to celebrate our second 250 years, right, we're launching a natural, you know, we're going to launch this as a dividend for every kid in America. So I want to make sure that they all sign up starting in 2027. The 3.7 million kids born in 2027, it will be automatic. Get your Social Security number. You get a Trump account. And then we just need to get every small. We're giving money to the, we have 80 kids, you know, to our, you know, roughly 35 employees. They're all going to get 500 bucks at the end of the year into their Trump accounts.

2:27:23I'm just going to QR the money by my team into their accounts. You guys should do it for all the companies you're involved in. And really spread the word, small, medium, large business, realtors, restaurants, everybody can do this. And so we've created an open source platform of universal private ownership. where the families have the title and they have the dignity, the dignity of savings, a 401k for life for every single American citizen. I think it's a game changer for the country. Yeah, you did it. You did it. It was fantastic. You fucking did it. Oh, shit. No, I remember you, you, you talking about this and, and you know, as, as, as much as respect as I have for you, I put it in the, in the, it's too hard bucket.

2:28:10You know, I put it in the, But this is a thing that is just too hard for anyone, even the best. And fortunately, it was not, which is fantastic to see. It's the ultimate white pill. So thank you. That's amazing. It's still day one, but we're off to a good start here. It's fantastic. And I think in the fullness of time, as the president said, we estimate over 15 years, it could transfer$3 to$4 trillion of wealth from people who have it to the people who would otherwise have zero. Yeah. And, you know, the president said he thinks it's going to be his biggest legacy. To me, I think it'll be more impactful in the fullness of time than Social Security.

2:28:46Because the difference is you actually own this. You actually own it. It's not a government program. This is a private account and private ownership that can compound through your life. And you have to imagine that, you know, if you get to that place where, you know, there's a whole new generation that's, you know, becoming an adult, starting a family with$50 ,000,$100 ,000,$200 ,000. That's a down payment on a house. All of a sudden, that can underwrite more building of houses because there's more buyers in the market. There's a whole bunch of market forces that I think will knock on from this in 20 years that could be incredibly positive.

2:29:21So I'm extremely excited about it. Indeed. No doubt about it. You're going to hear a lot out of us over the course of the next several months. But listen, Listen, I also should mention, I've got the best partner in the world on this. Michael Dell joined me. He and Susan joined me on this journey. Really helped me to get it over the last one-inch line with the administration. And then made the biggest philanthropic gift in history,$6.25 billion. $250 to 25 million kids. And frankly, I think for Michael and Susan, they're just getting started. And I think their example that they've set for everybody else, you know, if you have if you you guys look at the amount of wealth that's being created here in Silicon Valley.

2:30:08I mean, it's it's it's really there is no historical precedent. There is no historical precedent. And the fact of the matter, our charitable, our charities are not prepared or equipped to take 10, 20, 50 billion dollars. And a lot of people want to give away this money during their lifetime or within 10 years of dying. And targeted, too. Right. And in a way that there's no – And scales up or down. It's like you can do the whole state. Exactly. You can do your county. You could do school. School, yeah. And there's not 30 % overhead on the charity where somebody is getting paid$10 million and all this stuff happens after you pass away.

2:30:48100 % of it goes directly to the kid. Yeah. Yeah, charity was so vague for so long. It was like, great, okay, you gave away half your money, but you're actually not transferring until you die, and then it's going to go into this charity that will deploy it later. It gets so abstract that I think people, all of those big donations that happened in the previous era, sort of fell on deaf ears, and they didn't feel like they were moving the needle. And so this is just an entirely new way to do it. I love it. The chat is asking if you have any surf trips planned. Wow, I wonder who that's. I must be checking out my Twitter picture.

2:31:20which, by the way, was at the surf ranch with Raimondo. And the picture, actually, some people think it's me. It's not me. That was my then 11-year-old son getting barreled at the surf ranch because Raimondo was, like, telling him how to get into the barrel. That's awesome. But I have to say, I'm 55, guys. I just had a birthday. I'm working harder. Happy birthday. There we go. I'm working harder. I feel like I just can't imagine you being like, Yeah, now's a good time to take a surf trip. I feel like maybe a trip to Surf Ranch, but you got to stay locked in. There's a lot of work to do. We ought to get together and do that.

2:31:59By the way, I'm currently signing up somebody who's going to adopt all the kids in Los Angeles. We've got San Francisco already covered. We've got Oakland already covered. That's great. And we're going to announce some big things here in the state of California. I'm not giving up on California. Yeah. Right? We're going to defeat the unconstitutional taking tax. Some people call the wealth tax or the billionaire tax. Like this attack on success, trying to drive wedges between Americans. We're uniting people with the Trump accounts, with the Invest America accounts. We're raising the floor and getting everybody into the game.

2:32:34And this whole idea that we're going to demonize success and drive Elon out of the state, etc. Shout out, by the way, to my junior son, Lincoln Gerstner, who published his first paper this week. and I show up at home and it's on the economic impact of tax policy in California. I show up at home and he said, hey, dad, I finally posted that paper I was writing. He's doing it with Josh Rowe, the incredible professor over at Stanford. And then he says to me, he's like, has Marc Andreessen ever retweeted you? I said, no, I don't think so. And he goes, I think he retweeted me. And I was like, no, he definitely didn't retweet you, but Mark did.

2:33:18So shout out to Mark. That's awesome. And that's, you know, I think that we are what people there's a lot of despondency in California. Yeah. I'm going to take a contrarian position here. Spencer Pratt's going to be the new mayor of Los Angeles. The wealth tax will be defeated. We will pass the Retirement and Personal Asset Protection Act as a referendum in California, which will prohibit people from stealing your retirement money or your personal assets. That will get passed. OK, that will send a shocking message to the rest of America. The rest of America thinks that California is as blue as it gets.

2:33:57It turns out California is pretty purple. Right. And I think that common sense initiatives are going to, you know, reassert themselves in, you know, in the election in November. And I think it's great because we're the fourth largest economy in the world. I know some of my friends moved out and said, listen, California's got it coming to them. My own view is this. As California goes, so goes the country. We cannot cede California. It is where we're going to battle for the best ideas that are consistent with the founding of the country. And we're going to win on those ideas. And so I think we're seeing a lot of progress.

2:34:31Shout out to Sergey and Building Better California and the incredible work that they did to get us moving in the right direction. it's fantastic well great stuff kept you way too long thank you so much thank you so much and excited for your next project yeah how much did you sell how much did you sell this for let's go for it let's go for it let's go for a serve yeah we can only stay far away from the i'm gonna turn this into a little bg2 and turn the tables on you guys i need to get some more some more the other way great to see you have a great weekend great to see you brad thank you You're the man.

2:35:03We'll see you. Cheers. Goodbye. What a performance. I'm so excited about those accounts. I really can't. I really can't. Oh, it's so cool being able to scale it up or down. Yeah. Just go, hey, everybody at the, where you went to elementary school, you know. This was how I first saved money. I had a physical safety deposit box at a bank. Every time I'd get paid, I'd go take out a couple hundred dollars in cash, put it in the safety deposit box. Couldn't really access it on the weekend when people were oh you want to go spend money you want to go to the bar Save the money watch it physically grow This is kind of similar example because you'll put money in but you won't be able to pull it out until you're 18 So it'll just compound and compound and compound.

2:35:43Oh yes, ask John about his new basketball. Can so is the car here? We have the basketball Nick. Can you go get the basketball that's in my driver's seat? or in the passenger seat because we were at Laurel Supply yesterday, which makes Erewhon look like a 7-Eleven. It makes Erewhon look like a 7-Eleven. It's so above. Laurel Supply is the new Erewhon in LA. It's very nice. Not an actual Erewhon. Everything is a one-to-one copy of Erewhon. It's disorienting. They did not try to differentiate a single thing. They copied every item on the menu. They copied every single item. In my culture, that's very offensive because if you're going to go through the process of creation and investing.

2:36:35Yeah, you'd think you would be able to do something differently. Okay, but outside of Laurel Supply, I get stopped by a person who I believe is in the chat. And he says, here is a basketball. I got this for you because he's raising money for a company, Punter. And it says, invest in the future of sports, punter.us slash invest. And he had this basketball with a QR code on here. What a unique way to draw attention to your company. What a unique way to pitch someone. And you know we love a basketball in the studio. We do. John loves it when we're playing basketball. Because there's a lot of camera gear, so we don't throw a full-size basketball.

2:37:18We use a foam one. but thank you to the punter team for making this possible very interesting very fun very fun way and what a great what a great way to end the show we had an NBA star on the show and we finished with a basketball that's right anyway have a great weekend we'll see you on Monday have an incredible weekend have an incredible weekend leave us five stars on Apple Podcasts and Spotify sign up for our newsletter at tbpn.com and we will see you on Monday goodbye You