Could AI Takeover by 2027, David Perell, Morgan Housel, Aviok Kohli, Virgílio "V" Bento, Kirsten Green, Shawn Wang, Ryan Hudson

26:39And a lot of people, like everybody, me, you, everybody has personality quirks that are not perfectly rational, but we have to just accept them as part of who we are. So I'm not one to judge people who are trading and going nuts and having fun in markets, as long as it's within reason and it's just like a small portion of their net worth. Like, don't do that with your kid's college money, you know? Yeah, have you thought about, you know, one of the benefits I've felt in my career of having, uh, consistently having, you know, the majority of my quote unquote net worth spread across, you know, maybe like 10 or so private companies, you know, uh, the benefit is like, I just don't think about a lot of them that much, right.

27:17It's just like, I'm not worried if it goes up or down, you know, sometimes you get an up around and you're like, cool. It doesn't really change my life in the moment. And then if the markets crashing, you know, you're not getting daily marks, right? So you're not thinking about it. In my view, like every asset that you have that's being marked, you know, constantly is a potential source of distraction. Do you worry about, you know, every new generation coming online, becoming an adult at a time when they might have a meme coin, an NFT, you know, Nvidia calls, and then their sports betting at the same time.

27:53And it's like, how do you actually like create value in the world and like focus on the right things. I'm sure when you were 22, I'm sure you had a brokerage account or, you know, I'm curious, like even how you were investing at that time. But you certainly wasn't that like, you know, you're seeing every mark constantly. And I do, I personally worry about what that does to people's sort of attention and long-term thinking. I think it's easy to look at today's markets and say, it's just a casino. everyone is betting on this and the zero day options and day trading. Vanguard brings in more money every month than Robinhood has in total.

28:33And so like the idea that like, oh, it's all a big casino. Like, no, the huge, vast majority of money is invested from people in their 401ks. It's taken out every other Friday and every paycheck. They're going to leave it. They forgot their password. It's going to sit in there for the next 40 years, which is like a great way to invest. So what we see on the surface is always the craziness, but actually beneath it is literally hundreds of trillions of dollars just invested, diversified for the longterm. That's the vast majority of it. And so I think that's the case. It's definitely gotten easier to be crazy in markets than it was.

29:04You mentioned like when I was younger, there was, there was E-Trade and Charles Schwab and like people go in, but you even had trading fees, like to place a trade costs 15 or 20 bucks. And when you're, when you're 19, that's enough to slow you down. And so when I started investing, yeah, I started out day trading. Um, but it was, it was totally like, Hey, it's going to be 20 bucks in and 20 bucks out if I'm placing a hundred dollar trade, like that's, that's a lot of it to just getting sucked up by trading fees. So it was a, it was like a very effective speed bump that that's a good thing. And I think it's hard to push back against, uh, free trading, like lower costs.

29:38That's great. But it removed a speed bump that incentivizes a lot of really bad behavior. Uh, it, we've been hearing about this idea that like maybe we're moving into like a kangaroo market or, I mean, the story that I tell of like the last 20 years is like dot-com bubble, big crash, slow buildup, housing bubble, big crash, slow buildup, tech boom. Then we get COVID, we get SVB, and we're up and down and up and down. Now we're having tariffs and Trump pump and Trump dump. Does it feel like we're moving into a permanently new regime of higher volatility because of some of the factors that you mentioned?

30:18or is this temporary and maybe it's smooth sailing in the future? Well, I think what you mentioned there that's interesting is you feel like it's been like that for the last 20 years. I would say it's been like that for the last 200 years. Whenever we have market data, it's always been like that. So yes, what you just described for the last 20 years is accurate. Before that, there was the SNL crisis in the 1980s, the inflation in the 1970s. There was a boom. The 60s were a wild boom period. World War II, the Great Depression. like it's always been nuts. There's never been a period of smooth sailing and the periods that we associate with smooth sailing, like the sixties and the nineties, we know in hindsight, we're just the precursors to a giant bust that happened.

30:57So every time in hindsight that we're like, man, why couldn't it have been like that? Like actually that time was a terrible time in hindsight. That was what you wanted to avoid. And so it's never going to be a case that it's more that it's, it's, it's smooth sailing. Like it's an inherent feature of capitalism that you have volatility and booms and busts. It's not fun. It's not enjoyable. But the absence of that is even worse. I wrote about this in my first book. There's a great economist, guy named Hyman Minsky, who I'll say very quickly, came up with this idea called the financial instability hypothesis, which was the more stable the economy is, the more destabilization it's going to cause.

31:33Because when the economy is stable, people get optimistic. And when they get optimistic, they go into debt. And when they go into debt, you're going to have a crisis eventually. So it's like the fewer recessions you have, the bigger the next recession is going to be. Is it possible, though, going back to John's original question, that if markets are trading in part due to sentiment, how people feel about the economy and the Internet accelerates sentiment, because if I feel some way, I can go post about it on X or I can send something to my group chat or I can log on to Twitter. and uh like that sort of acceleration of basically like sentiment just moving around the world constantly can that cause the sort of like the phrase we've said it on the show a bunch in a joking way but like the bear market or bull market or the kangaroo market where things are just like you know it the the line over time uh you know was like slower right of these cycles and then the internet comes along and gets, you know, basically like full adoption.

32:37And then you just have this sort of, uh, this type of, uh, I'm not showing it on the, on the camera properly, but this sort of like massive up and down. Uh, and that's like the new normal. I think it makes sense to assume that because the information age is what it is, that these things happen much faster. Cause as recently as the 1990s, everybody's access to financial data was Louis Roeckweiser's Wall Street and the Wall Street Journal and CNBC in its very early days. And that was it. So everybody more or less had the same sources of information. We were all listening to the same thing. Just like back in the 60s, everyone's source of news was Walter Cronkite.

33:12And today, it obviously could not be more opposite than that. So when a news comes, it's just going to happen much, much faster. One example of this is during COVID, which maybe prior after this week was the biggest economic shock of our lives. The market bottomed two or three weeks after the first bad news hit, like very, very quickly. Whereas if you look at the economic crises of the 70s and the 80s, some of them played out over a decade. And so I think you can make the argument that it's not that we have more bad news or even more volatility. It just happens, like we process the information so much faster.

33:45That's a great thing. I would rather rip the Band-Aid off and get these things over with in three weeks than live through a decade of stagnation. So maybe that's the upside of it. Yeah, it does feel like everything's kind of accelerating, even just the last, I guess, the last eight years and going into 12 years. Like we've been in one term president, one term president. And so there's been more oscillations there versus a two term president gives you eight years of more stability. What immediately comes to mind when somebody says five simple words, short term pain, or sorry, six, short term pain, long term gain.

34:20How does that make you feel? nothing's good nothing's good is going to come from that wasn't it Xi Jinping just like a couple of months ago with all the youth unemployment I think the phrase he used was eat bitterness that's what that's what they used should do is like you should just eat the bitterness that you have and enjoy it nothing's good a good from is nothing good is going to come from that of course there is logic to the idea of like invest in the short term sacrifice in the short term for long term gain. I'm not sure that's what's going on today with what's happening today. I don't think this is seven dimensional chess trying to get some sort of long term plan.

34:56I think that's a different topic. And I think there's a difference between investing for the long run and foregoing consumption so that you can grow your money and hitting your kids with a belt to instill grit in them. That's not short term pain for long term gain. So there's a balance that needs to be struck here. Yeah. What do you think? I posted an image earlier that I saw you like, hopefully you recalled it. And it was Trump and she picking up pennies in front of a steamroller that was being driven by Sam Altman. And the joke was basically like, you know, we spend a lot of time talking about AI.

35:32We obviously like follow, we try not to talk about politics on the show, but we talk about policy and, you know, we've covered the trade war quite a bit. and especially today in the context i don't know if you saw ai 2027 that sort of interactive you know website and forecast but it but it feels like the sort of our sentiment generally is that you know we're arguing over these sort of political issues tariffs trade wars and you just have like ai looming in the background like you know potentially going to make none of this you know matter at all because if if if you know bad tariff policy can you know hurt the market by you know hurt the economy by 15 but ai accelerates everything at sort of this like inconceivable rate then it will just be like you know picking up pennies in front of a steamroller but i'm curious how you think given that you know you love the public markets but then you're also private markets investor and and i'm just curious how you think about um investing you know with this big unknown on the horizon.

36:36I think it's not uncommon historically where an economic crisis and unbelievable world-changing innovation is happening at the same time. So the 1930s and 40s, it was Great Depression, World War II. And by the way, airplanes, nuclear energy, penicillin, all of this world-changing. But a lot of that was drowned out by the obvious economic and war calamities that were happening. In the early 2000s, it was dot-com bust September 11th. And by the way, this internet thing truly is changing in the world every single day beneath our feet. And so it's easy to ignore that technological change because it's drowned out by the rest of the news, but it's not uncommon for it to happen at the same time.

37:15And a lot of times that new technology and the economic malaise, collapse, recession, whatever you call it, is related to each other. And so I think that probably adds to a sense of uncertainty right now that not only are going through the tariffs in the last three days. But a lot of people very rightly have woken up in just the last couple of months to what AI might do to their jobs. And a lot of these people are people who, for whom 18 months ago, truly considered their jobs and their careers bulletproof, coders, tech workers, who, you know, making half a million bucks at Meta and they could not fathom a world in which they could be deemed somewhat irrelevant.

37:55And I think that's not uncommon during these periods as well. Like there's, there's very rarely positive upheaval that doesn't come along with a lot of negative upheaval, upheaval at the same time. Can you talk just a little bit about how you're personally using AI? What, what, what, what tools and models are working their way into your daily stack, if anything? Mostly it's just kind of fun and amusement. Um, and in terms of work, I I've, I've tried to do a few things. I've uploaded book chapters or articles into chat GPT and, and, and several other models and just said, Hey, give me some feedback on this.

38:31And I found that it's pretty good for what I would call micro feedback of just like, Hey, you probably need a comma here. It's not that good for macro feedback of like, Hey, was this chapter good? Like, did it make any sense to you? It's like, so far, it's not that great for that. I'm sure that'll change. And there's probably other models that are better at that. Um, and so it's, it's, it's, it's, it's pretty good for, for, for writing for, for my profession. You know, it's going to differ for everybody. Um, I, I, I use it quite a bit as like a, as like a thesaurus of like, I'll be, I'll have writer's block on a sentence and I'll, I'll put in my partial sentence and say, finish this for me.

39:07And that it's actually pretty good at that. So it's, it's good at all these, like the little things for writing. It's obviously going to be, this is such a, uh, uh, uh, a dumb take, like an obvious take that the people who are going to do the best are the ones who use their personal skill and then use AI as a, as a tool to leverage it rather than the ones who are using it to replace it. So if you're writing and you're writing your own sentences, you're doing it yourself and you're using AI to enhance it, that's a huge boost. Yeah. Yeah. The book feedback thing is so interesting because I feel like whenever you produce any content, you send it to your friends, it's always hard to get authentic feedback and you almost need to let it simmer and then see if they come back to you unprompted and text you, hey, I just actually read the book all the way through and I love this part.

39:53And you know that you didn't prompt them to, hey, you got to do this as homework and you're doing it as a favor. I could not agree with you more. Right? Yes. Yeah. It's tough. It's tough. Are somewhat related? I mean, you've done a lot of thinking and work. Recently, Jordi and I have kind of come to this kind of obvious conclusion that there There are increasing returns to scale for picking something and just making it your life's work. And instead of thinking in some short term, think long term. And this seems like kind of obvious, but it's something that I think we both wish we knew earlier.

40:27Is there an interesting like axiom or mental model or framework that you wish you had discovered earlier in your career or life? I don't know if I wish I had discovered it. Maybe this is a very boring example, but I like to learn with my eyes. I read. I'm not that much of a podcast guy. and I'm definitely not an audio book guy. What struck me about two years ago is I realized the audio book version of The Psychology of Money was selling twice as many copies as the physical paper version. And that blew my mind because never in a million years have I even thought about listening to an audio book.

41:00But a lot of people do. And that also opened up my eyes to podcasts as you guys have figured out. I'm not much of a podcast guy. A little bit on planes, but not regularly because I like to read. But I'm rare in that. Most people are like, oh, forget about reading a blog. Like I am podcasts all day long. And so I was a little bit late to that game just because it's not what I do personally, but it's, it's so clear that books, blogs, all of that, et cetera, is, is being overtaken by people learning with their ears, uh, in, in, in podcasts and videos. That's, so that was, that's been like a change in my thinking and the people who did figure that out early on and started podcasts 10 years ago, Patrick O'Shaughnessy, those kinds of people are crushing it now.

41:40Yeah. Do you think that, um, uh, in the future there will be just more consumer choice in the actual instantiation of ideas and context. It'd be fairly trivial with AI tools today to, if I wanted to instead experience Invest Like the Best as a book, I could probably wire up a Whisper API to transcribe every episode. I think Patrick already puts out transcripts, but I could transcribe it, send it off to the printer, get it mailed to me and I could very easily read that and vice versa too. Even if an audiobook doesn't exist, you can have an AI read it to you. Do you think that that choice will live on the consumer side?

42:22Because right now it's living on the creator side and you have to decide, I want to do an audiobook and I have to because I'm going to sell twice as many. But in the future, I could imagine that you have the choice to read anything no matter what the original author intended and is something sacrificed by, uh, this isn't as the artist intended. Yeah. Two things come to mind. One is Google's notebook LM like lets you do that. You can upload a PDF and say, make a podcast out of this. And it's very, very good. It's amazing. It's such a cool tool. The other example is my friend. I think he was on your show recently, David Senra.

42:55I first came across David Senra when I read a transcript of a podcast that he did, because I'm not that much of a podcast guy and reading the transcript. I was like, this guy's absolutely genius. This guy's brilliant. I have to go start listening to his podcast. That's one of the few podcasts that I always listen to on planes. And so I think that that still does exist. Most of the big podcasts out there have transcripts that they publish. And if you're like me and you do an old school and you want to read, that's, that's most of what I do out there. Are you a Kindle iPad printed out? What, what's your, what's your playbook for reading?

43:26I, I, I've gone back and forth over the years. I keep, I always toggle back and forth. Like I always prefer a physical book. I like the smell. I like the feel like that's, and I think there's a lot of evidence that most people learn better. They remember better if it's a physical book, but I love the ability to highlight and search in Kindle. That is so effective and important to me. And there are some apps like Readwise that let you highlight in a physical book, but it's so much easier in Kindle to have just highlight a line. And then you can come back to it later, particularly for me as a writer, I want to highlight passages that I can use as prompts for my writing in the future.

43:58So to have it all right there is so great. I also love the fact that when I travel, I have 400 books on my Kindle to pick from on the plane versus taking one or two and hoping that I like them. And so I, it's, it's always hard for me because I absolutely prefer physical, but I always drift towards Kindle. Yeah. Uh, have you been tempted going back to writing and, and, uh, have you been tempted to write a book to help people understand how AI will be adopted, you know, broadly in our world and how it will sort of transform things. I'm assuming there's like a bunch of lessons from same as ever that we can sort of apply to understanding this technological trend.

44:43But when I think about the best content that's available on artificial intelligence today, it's not the kind of thing that you know uh somebody in the airport is going to be walking and sort of like you know they're not going to pull a great blog post uh out of the air you know and read it on the plane right so it's like how do you how do you get people to sort of like understand uh the the change that's happening now and the coming change and does that and does like kind of helping people understand that excite you or do you not feel like you even have the clarity yourself? I definitely feel like I do not have the clarity myself.

45:22And my take on this too, is I'm not sure anybody does because the history of every big innovation is looking back in hindsight, virtually nobody got it right. And even the most diehard optimists underappreciated how much change it was going to bring. My favorite example of this is when the Wright brothers created their plane, they virtually, they only marketed it to the U S army because they themselves, the Wright brothers, did not see much commercial use for the airplane. They knew you could strap a machine gun on it and drop bombs out of it, and then the army would like it for that. But the idea that the Wright brothers themselves foresaw Delta Airlines, like, absolutely not, not in the slightest.

45:58That was true for cars. That was true for computers. It was true for the early internet. Even the pioneers, who were the crazy wild maniacs, underappreciated how much change it was going to bring. Because every new invention, it's not what you create. It's what other people, like, manipulate, like what you do. I remember one example, it was for Photoshop. A lot of the engineers at Adobe, when they make new tools for Photoshop, they have no clue what artists are going to do with those tools. But they're like, let's just find every way to manipulate an image and someone else will figure out what to do with this.

46:29Because you can't foresee what other creative people are going to do with your invention. And that's why even Sam Altman has no idea what AI is going to be in 20 years. That's not a put down. That's always true for all new technology. Can you talk a little bit about entrepreneurial storytelling? It seems like it's an incredibly valuable skill, but then some founders get maybe lost in the sauce and wind up just focusing purely on storytelling and then that needs to be handicapped. What advice do you have for founders when they are trying to tell kind of that definitive optimist vision of the future without seeming not credible?

47:06I think we've actually gotten much better in the last couple years at separating storytelling from just charlatan bullshit. And like, there was a period when we weren't, like, we were not very good at that. Probably, you know, late, late 20 teens, early 2020s, we were, we were not very good at that. And there are a lot of people who got away with a lot of things that they should not have. But I think our, our threshold for BS has dropped as, as an industry and in a very good way. And people can see through things very quickly. And so it's always going to be the case that, you know, Steve Jobs was the best storyteller and he was the opposite of a charlatan, the polar opposite of a charlatan.

47:46And I definitely feel like there is a world where, yes, you have to be a good storyteller, but there's a much stronger sense of put up or shut up. Like you have to show me the numbers of what you're doing. You can't just keep the story going forever. So that's that's a great thing. I have this half-joking riff that I call it Coogan's Law. And the idea is the value of coinages is increasing in a algorithmic feed environment. And compressing these big ideas down into pithy two-word phrases has disproportional returns to the actual popularization of these ideas. So you think about Lulu Musservi with going direct.

48:30That encapsulates a very big idea, boils it down very well. Bology has the network state. Andrews Norwitz has American dynamism. And just creating these like pithy phrases seems to be increasingly valuable. Do you buy my argument that there is a trend here? Has this always been the case? And what is your take on folks who not just write and produce thought leadership broadly, but also really focus on coining phrases and boiling their ideas down to their essence? I think it's definitely been true, but I think it's always been true. The golden ages of advertising was the 1930s and the 1960s. 1930s was kind of the, or 1920s was kind of the birth of advertising.

49:15And the 60s was like the post-war explosion of it. And that was like the David Ogilvie periods of just like, they were better back then at creating little pithy phrases than most of us are today. Like there's more people doing it today, but some of the marketing, like the old like mad men style marketing from the 1960s was so ridiculously good in those magazine ads. I think it's, I think if you wanted to argue that people have shorter attention spans today, so the value of a pithy phrase is more because they're not going to give you the time of day to read through 10 ,000 words to get to your point is important.

49:48But even in a, in a 50 ,000 word book, like most people don't remember books. They remember a couple sentences from their books. So even if you're like, Oh, I love that book. I read that book 10 years ago. Changed my life. Loved it. You probably remember like three or four sentences. And it's those, like those turns of phrase that are memorable that you can, that, that stick with you. So I've, I've always thought that's the goal for any book or like any book chapter is even if it's a 5 ,000 word chapter, what you want are three or four sentences from that, that people will remember and will stick with them because realistically that's the best you can do for actually like changing somebody's mind.

50:23Yeah, that makes sense. Uh, on, on the other coinages, uh, we, we, I have Coogan's law. We've been working on Hayes's paradox, Geordie's paradox or Geordie's law. That's where, uh, the, the more funny you think something is, the less likely it will be funny sort of broadly, right? So you post something on X and you think, oh, this is like the funniest thing. This is my best work ever. And then it completely flops. And I wanted to know, is there an idea or maybe a chapter from your work or something you put out that you think never found its footing, but you still, it's one of your babies? i i would i would have to think about that but one that really comes to mind somebody else tweeted this the other day i thought it was so perfect and everybody knows this the more time you spend writing a tweet the lower the odds that it's going to end up as a banger and then and the reverse is true if you sit there and you're like let me get creative and like wordsmith is it's going to suck but if you're just in the shower and you're like all right screw it let me fire this off it's going to be amazing really that's always the case everybody has experienced this I think it's true for writing as well, like writing longer things that good writing is very easy because if your idea is right, it's easy to articulate it.

51:35And if you get writer's block, the reason you have writer's block is because your idea sucks and it's wrong. And that's why you're struggling to articulate it. So I think the harder, if writing is hard for you, you should take a step back and say, my whole thesis here is probably wrong. If it was good, it would spill out me. Yeah. Is that true for investing too? You hear about these legendary deals. They had drinks, they did some napkin math and it was the best investment ever. The deal that they were in the DD room for sending doc sends back and forth, like it was just a mess. Is there something more broadly applicable to this idea of like simplicity breeds genius or like, you know, inspiration?

52:16I think what's true, especially for very smart, educated people, is that the harder you work at something, the more opportunities you have to fool yourself. So if you're very smart and you have a 140 IQ and you went to Harvard and you work at Goldman Sachs and you spend six months doing due diligence on this deal, you are going to convince yourself of whatever you want to convince yourself of because you have so much mental horsepower that you can create any model, come up with any theory that justifies what you want to see. And so it's like the harder you work, the more likely that your final result is going to be fooling yourself.

52:47I've seen that too. A challenge if you're a founder or an investor, you're probably pretty convincing. And you can be so convincing that it can be your Achilles heel because you can convince otherwise smart people that doing something is good. And you deliver such a good series of statements to get other people on board with that, that people are like, okay, I think that's a good idea. And then in hindsight, you look at it and you're like, well, that was a terrible idea. Yeah. But I think what's even more true is not only do you fool other people, you fool yourself. Yeah. And I think it's true in investing that you need just enough IQ to where you can understand the important stuff, but not so much IQ that the simple stuff bores you.

53:32If the simple stuff bores you, you're going to try to overcomplicate it in a way that's going to fool yourself. And I don't have the intelligence or the IQ to blow myself up in a derivative strategy. I'm not smart enough to do that. So I just have like a very boring, basic dollar cost average and index funds. Cause I've been blessed with a low enough intelligence that that's as far as I go. But I think that's, that's, that's a huge investment. That's a big advantage. Yes, exactly. I was talking to this investor not too long ago and I was like, uh, and he's a very successful professional investor.

54:03And I, he, he asked how I invest. I'm like, I, I dollar cost average into, into Vanguard funds. And then I go to beach, to the beach with my kids and that's, that's it. And his response was, I'm so jealous of that because I think he was so smart and so educated and so credentialed that he cannot do that. It's impossible for him to do that, even if he wanted to. yeah uh can you talk about hard work specifically we were having a conversation with uh david senra earlier this week and i think he brought up the example of how michael ovitz at the end of his career said he could have worked like 10 10 or 20 percent less hard and had the same result and this is something that john and i talk about a lot we work really hard right now we get to the office you know by 6 a.m uh we uh are working until we go to bed we spend time with our family but like very very full on um and it's top of mind because we both have you know young children between you know basically six months and and five and we want to be able to spend time with them and so i feel like it's this topic that's constantly on our minds of you know wanting to live up to your potential, yet wanting to maximize time with family in these really important years.

55:20It's tough. One thing that comes to mind here, there's always the criticism that we spend, I forget what the stat is, 30 % of healthcare spending on the last month of people's lives. whatever that stat is. And whenever that comes up, you're like, yes, but you don't know when the last month of your life is going to be like, it would be great to stop spending money at the end, but you don't know when it's going to be. So when people talk about, oh, I could have been just as successful if I worked 20 % less. Yeah. But you don't know which 20 % of your work was, was, was wasted or not. It was always the case back in the day when I was writing a lot, I would write two or three blog posts per day.

55:52So let's say I was writing a 600 to a thousand blog posts per year. This is like 10 years ago. In one year, if I wrote 600 blog posts, I would look back and say, I'm very proud of five of them. Five of them were really good. And the truth is that when I was writing them, I did not know which one of those five was going to be. I had no clue. So I feel like you had to put in a ton of work to get like some like much smaller level of success out of it. And so I think that's usually the case. But to your point of like kids and balance and work and whatnot. I experienced that too. I think the way to think about it is like, this is a, a Daniel Kahneman quote.

56:32He's like, you need a very well calibrated sense of your future regret. What are you likely to look back at 50 years from now and regret? And a lot of people, including me and probably you guys would not might look back and say, man, I had a lot of career opportunity and I wasted it. That would be a regret. Of course, I would also regret looking back and saying, I didn't spend enough time with my kids. That, that sucks. I, there's this one point that I used in psychology money, where it was a study from a gerontologist, his name was Carl Pillimer, and he studied 1000 elderly Americans. Most of them were 90 to 100 years old.

57:04And he writes in his book that of the 1000 elderly people that he studied, not a single one of them, not one single person looked back and said, I wish I made more money. Not a single one of them. Every single one of them looked back and said, I wish I spent more time with my family. I wish I was nicer to my friends. I wish I was more helpful to my community. That was universal. And so I think a lot of that, that too, of people who have more life experience than you and I do, like they have very different goals than you and I probably did. They wish they had done things differently than you and I did.

57:36Now, one of my main life goals right now at this phase of my life is I want to take care of my family, my wife and kids. I want to work hard and provide for them financially. And so when I'm out working and maybe not spending as much time with them, I don't feel guilty because I'm like, I'm fulfilling a purpose that is very important to me. But it's always a balance. I think a lot of people, their kids turn 18 and go off to college and they're like, I don't even know you. I didn't spend any time with you. And so I have no firm formula for that, but it's huge. It's important. Yeah. It's a personal equation.

58:07Well, thanks so much for joining. This was a fantastic conversation. We could probably talk for another four hours if we had the time. so we'll have to have you back on soon i wish that you had the the blood pressure monitor on all week it's very anytime anytime anytime it like you know ticks up or whatever we can say morgan get on the show let's let's talk it out yeah you know in uh in wall street the first time you meet gordon gecko he's uh you know the market's up and he's taking his blood pressure taking his blood pressure i love it it's iconic it's an iconic scene anyway thanks so much this was fantastic we'll talk to you guys appreciate it talk soon you know it's funny he was talking about if you're thinking about you know writing something too long or whatever so that right before we got on the show i i said i posted hey dude you should come over later we're going to be greedy while others are fearful how to do and it's at 800 let's go i knew that was good i i burst out laughing immediately and i thought it was going to be great uh we do need to get jordy's hayes paradox uh popping on the timeline but we will come back to that later because we have the co-founder of Honey in the building.

59:07Ryan, how are you doing? Doing great. Yeah. Thanks so much for hopping on. I think we have a mutual friend in John Wallin. Yeah, we do. And obviously, I saw your thread. Could you give us just like a little bit of background on you, the company, and then kind of like what inspired you to write that thread? And then I'd love to dig through it in great detail because it's a fascinating story. And it's one of those narratives that kind of just goes out on the internet and grows and grows and grows. And I think there's a lot of, uh, we like, we need to correct the record here and that's why I wanted to have you on.

59:39So thanks for joining. Well, I'm talking to you guys first. So, uh, thanks for inviting me on. Yeah. Like you said, I co-founded honey, uh, more than a decade ago back in 2012. Um, for the first handful of years, we had a cool consumer product, but couldn't figure out how to make it into a company that investors would, uh, fund. It's a browser extension. Never has really been an attractive investment space so yep um after a few years of grinding we finally started to piece together enough enough of a user base that we got investment uh 2015 we kind of really started to figure out how to do the business and from 2015 to 2020 we just had a classic but insanely fun time riding a hockey stick of growth and in 2020 sold the company to paypal yeah um so as part of that acquisition i stayed on at paypal for a little while after that left at the beginning of 2022 even though i'd had a diminished capacity before that but um formally left in 2022 and then uh a few days before christmas this year all of a sudden out of nowhere there was a youtube video accusing my former company of being a scam and uh it also pulled in a bunch of creators who we'd spent over a hundred million dollars working with to promote Honey.

1:01:03I'm sure some of the audience saw our ads over the years. And because of that, it went insanely viral. And immediately the narrative on the company, I found it completely shifted. So it was a surprise. Can you take me through the first evolution of the business model? You said you were kind of hunting for product market fit. How does Honey actually make money? How did it make money at first? Has that revenue mix changed over the time that you were there, pre or post PayPal? Walk me through just like the basics of the business and then we'll dig into what kind of the video was about. Yeah. So for the first few years, the business didn't make money and that was part of the flaw in finding investors.

1:01:47We thought maybe someday we'd figure it out and had a few hundred thousand users and organic that growth on the company just from word of mouth people sharing this cool new coupon tool that automatically applied coupons when you're checking out and took a pain point that everybody had experienced and made it really easy. Yeah. I mean, I remember using retail me, not back in like 20, it must be 2008 or something like that. And you'd always have to, Oh, I'm buying something control T new tab search coupons and honey, just bake that right into the browser made a ton of sense um and so and so uh what was the first dollar into the business like how did you make the first dollar of revenue i guess the first dollar revenue didn't come until 2015 so let's launch the product 2012 2015 um we pieced together kind of a rolling seed round of anybody that would take a flyer on this company with a couple hundred thousand users and maybe interesting but haven't really figured it out.

1:02:47And we use that to hire somebody with a background in affiliate marketing. And we had, we being George and I, co-founders of the company, had thought that this might make sense because after all, RetailMeNot, you just mentioned, and other companies, that's how they monetize this. When you click on that RetailMeNot link, it's actually affiliate tagging you at that moment in time. And so you go to do that coupon search and whether the coupon works or not, they're getting an affiliate commission on that. And that's why they hide the code and open multiple tabs and do all that stuff. So that was how it was.

1:03:23And we're like, hey, we could probably monetize that way. George and I reached out to the affiliate world, and they basically were like, you guys are a toolbar. You probably are up to no good. Go away. And so we did. We didn't realize that there had been some bad actor toolbars in the space immediately prior to that, which was a surprise to learn. But we went back to just building a cool product for consumers. And then when we hired somebody with a background in that space, what we came to realize is that the relationship side of affiliate marketing is how you get to the table in the first place to get that trust, especially as a new product and a toolbar or browser extension.

1:04:07Affiliate people call it toolbars. um before we go too much further what what was the la tech ecosystem or was there really an ecosystem in that 2015 era because i remember i graduated college in 2018 and everybody was like oh la tech is real it's a thing and they were like snapchat and honey yeah but like there wasn't a lot of debt there wasn't a big bench yeah it was like name the third company yeah third company I'd say very few people were even mentioning Honey in that conversation either. We were pretty under the radar. We didn't do a ton of press and talk about what we were doing. We found a cool business and decided not to tell everybody that might want to pivot to copy what we do about it.

1:04:52But back to the affiliate piece of it. So we hired from within the industry and were able to have conversations. And one of the things we realized pretty quickly is another way to save our users money was to offer them cashback. And so we added a cashback loyalty program that we called Honey Gold in 2015. And when we did that, we started to look a lot more like Ebates, which became Rakuten, and the cashback model that was very familiar and comfortable to affiliate marketing combined with the coupons. And we still had a lot of education to do around what the incremental lift is of keeping somebody in the shopping cart.

1:05:34Like you talked about this journey that you had prior to Honey's. You get to this box while you're checking out that's empty. It says coupon codes. It's effectively challenging your intelligence as a consumer on are you just going to check out or are you going to go find a coupon? And it's inherently adding friction to the checkout process by doing that because either you're a little bit hesitant or uncertain, or you're going off on this wild goose chase. And we found that by keeping the consumer in the shopping cart, we actually drove incremental lift for the retail partners. And over time, a bunch of them were able to use their own data to demonstrate that to themselves.

1:06:13And that's the core of what became Honey's business model. So the first penny that we made and the last penny, as far as I know, is effectively affiliate marketing with a cashback program that we worked with, that we rebated that commission to the consumer. Yeah, talk to me about kind of the steel man argument. I've been on the other side of this because I've run e-commerce sites and I've seen Honey codes come in. And as an e-commerce owner, you're kind of like, oh, like I understand paying the affiliate for the Andrew Huberman who like endorsed it and educated the consumer about it. But it's like, if I already did all this work to get the customer into my cart, why am I paying Honey at all?

1:06:54like I know that the customer was going to go find a code but you know why am I paying you guys talk to me about that conversion lift and like how you actually test that and justify that because I could imagine that there's probably some pent up like frustration amongst e-commerce sellers just saying like oh that was always like paying a big honey bill and it never really made sense to me and honestly I think a lot of e-commerce customers feel the same way about google ads to be true to be clear because they're like I was gonna rank number one and I had to pay the google tax uh How do you think about the honey tax or any of those claims?

1:07:28Honestly, I don't think it got to that point while we were running the business. Maybe over time, they started to have more of that sensation. It wasn't the feedback that we were getting. We worked with thousands of retailers that made the decision that it was effective for their marketing programs. Obviously, there's people that chose not to work with honey too. In fact, one of the first VCs I met when we were trying to raise a seed around, he, having been an e-commerce founder himself, he said, I hate what you're doing. This is before we had any users or anything. I hate what you're doing. If I were still running my company, I would write code to break it and open source it so everybody could have it.

1:08:10Wow. I'm like, okay, I guess you're not going to invest in this. That's a pretty hard pass email. Most people would say, not a fit at this time. Correct. I would open source what you're doing because I'm so frustrated. So he never did that and nobody ever did that. And we got better at demonstrating the value. And it does make sense that if you're at the last second, you're like, ah, I'm deep in the checkout. They just hit me with taxes and shipping. But then Honey came in and gave me a little bit, you know, 5%, 10 % off. Maybe I'm more likely to click. And you could imagine that math working out in certain scenarios and maybe an aggregate.

1:08:46Yeah. in it's in aggregate people have found that it works for them for any particular consumer journey i'm sure you can say oh i was going to buy this one anyway but there's other times when you're might have gotten the hesitation of hey maybe i should wait for a sale and oh totally like by getting the confidence that you have a deal and you can yeah check out now yeah in aggregate it makes enough sense that like the commission rates that are paid for this they're not high so it's not like the marketing spend on Google where you're spending well into double digits percentage of revenue on acquisition or what you're spending on Facebook.

1:09:23We're talking like really small numbers. And part of that, the reason the rates are low is actually because of the place in that journey. So it's an incremental lift for a few percent. We never tried to sell it as, hey, you should give us 25 % like you're paying Google and get like get 4x return on ad spends. It's like 25 commission rate yeah and you're bringing a little bit of like this dopamine hit to the checkout process that's normally like uh i gotta like type in all this junk i gotta do all this and then honey shows up and you're like yeah i feel like i just won the lottery like maybe i will check out so i could i could totally understand this but before we were doing this i mean keep in mind the customer journey is like open the google tab and go search for a coupon somewhere else and you're gonna find one from a competitor you're gonna find a bunch that don't work you're going to get distracted because your kid wants a sandwich like there's a whole bunch of reasons that you end up abandoning that cart that you appeared to have high intent to check out on.

1:10:18And shopping cart abandonment, especially when we started, is like the number one pain point for retailers. Like, why are 70%, 80 % of my people leaving? And what can I do to help close that? And so I think Honey and Tools like it. We were not the only ones that did this. A bunch of other companies replicated the model and have had good success with that. And it's for the same reasons. Yeah, can you talk about that? I remember at post exit, there was just this rush of companies that were like, okay, you can, Chrome plugins are now venture scale businesses. And like, I just remember it was like, literally constant.

1:10:56There was so many innovative companies. Who knew? I mean, it really just exposes like, but I don't, but I don't remember. But also potentially a great business, which is fascinating. But here's the issue. Yeah. outside of cryptocurrency wallets. We haven't seen big outcomes in the sort of like Chrome plugin space. And you could argue those are mobile products. Yeah, I have my own explanation or thinking on it. So what George and I saw early was that while everybody else is off building mobile apps and every investor was asking, hey, what's your mobile strategy? Chrome extensions or browser extensions generally have an insane retention characteristic that they completely solve for all of the problems that people are having on mobile of how do you not just get somebody to download your app but to remember to use it in the context that you're providing value and for mobile apps like there's only a certain set of contexts where you have that natural habit loop trigger and people wrote books about this of how do you get a consumer to like build that habit you have to like effectively teach them that this is a new behavior and on mobile the apps that were able to do that are effectively messaging apps that give you like a real trigger to come back into the app you're engaging with somebody else and so outside of that you never had like mass market consumer like product for shopping even it's like it's a pretty big pain point but like the amount of successful mobile apps going after even some of the biggest categories is challenging On the browser extension, we got to get all of that engagement and retention and habit out of the box.

1:12:37Like you install us one time completely out of context. You are not shopping now. You might not shop for weeks or months. And the exact moment that we can deliver value, we can detect that context and present the option to do that. And one of the reasons Honey in the early days grew at a steady but slow rate is the cycle time on that growth loop was measured literally in months. So the time from somebody installs Honey to they get a coupon that works, which is like the aha, this thing actually works moment, was literally weeks to months. like in because of that the feet that that's the moment when people would share and tell people about it so we know this works um so with the extension world you have that so how come other people haven't been able to do this well there is actually a challenging policy in the extension framework that remains to this day and it's a single purpose arbitrary policy that google has for the Chrome store that extensions are only allowed to do one thing.

1:13:44And so extensions have effectively been pushed to only do a feature, and it becomes increasingly challenging to attach a business model to that feature. And so to me, that's the disconnect, that they've strategically divided the utility from the monetization side of it. And there's historically good reasons why you might want to do that. in some cases and people are abusing it and like there's there was abusive behavior when people before this policy came in but i think it really slammed the door on a lot of other interesting models that people would have for a browser extension and basically to this day you have honey honey and shopping tools because we were able to attach the monetization that worked to do large-scale consumer growth acquisition you have grammarly who has a business model that works for it and you have free eye blockers.

1:14:41It's basically the entire world. Can you talk now about some of the allegations that were made in that video, what you found so frustrating about it and kind of the process that you went through to debunk some of those claims? And also I'd love to know, I mean, you've moved on. It's not really your baby anymore, but clearly it got under your skin and you were like, I got to set the record straight. So just walk me through the process of the claims the video and then what you think they got wrong yeah i mean so obviously the video is like complete shock because like it's the last thing i ever expected to hear um and yeah you're like we're we've saved people so much money and then it's like everything about it i mean from we saved tens of millions of users uh billions of dollars we uh helped fund a lot of content creation in the partnerships that we did with great influencers um and to to twist that was to start with unexpected um and my initial reaction walking through the stages on it like it well it's once your baby it's always your baby um and so it's not like uh we i'd say we felt that i felt that personally talking to the hundreds of great people that built honey um it's devastating to have your your the thing that you put all this energy into dragged in a public forum in a way that you know isn't accurate um and so that's like the initial reaction is like a little bit of grief um and not feeling like you could do anything about it because almost everybody i'm talking about like moved on from the paypal organization doing other things and so uh didn't really feel it was my place to step in and say anything um that's like it's i sold the company to paypal they own it um they should be able to make the decisions that they want for this business that i shouldn't be meddling in their in their business decisions and um and so it's like accepting the reality of this is not mine anymore and so then i saw like just keep in mind the timing on this this drops like a friday before like christmas holiday week a big company like paypal is unlikely to have all of their resources aligned to respond to that at the same speed of a youtube viral video going going viral through a holiday season where the initial video got 17 million plus views wow the other videos about the same issue got even more than that in aggregate and so it went wildfire it led to rapidly several class action lawsuits being filed against paypal and against other companies in the use that do the same bottle um and because of that the potential response from paypal like rationally became it's run by legal yeah of course i'm assuming here just to be clear i have had no conversations with paypal about anything including whether or not i was going to say anything um recently and i just found her going direct i suspect that any uh comms or legal person would have heavily advised against doing what i did um but so like going through these phases expect it to kind of maybe it'll just blow over like it'll be a big storm and then like everybody can move on but it's kind of continued to linger and articles about it and then google updated their chrome store policy sparked a wave of articles at the beginning of march um and And people, again, from my point of view, I have a lot of knowledge about this particular industry and extensions.

1:18:42The changes that they made to the policy will have no effect on anybody because they're already in compliance with what Google required. And despite that, nobody talking about it in the press knew that. And so you have this consumer narrative that's going like crazy on Reddit and other places. of how it um what about the specific claim of uh like rewriting cookies and and affiliate codes where you know it's very clear that someone found out about a product from a specific influencer the the customer wants to use that code and then honey somehow gets in between that transaction that felt like the the claim that really took hold and i think you addressed that in your thread yeah so like the never mentioned by anybody in any of the follow-up on it not a single journalist or other YouTuber knew about, and partly it's because it's industry nuance, that there is stand-down policies at almost all of the networks where downloadable software tools, toolbars, browser extensions are required by the affiliate network who's mediating all these multi-party exchanges are required to stand down to traffic like that.

1:19:56So a website like the coupon code websites doesn't have the ability to tell if you've already clicked on somebody else's, some influencer creator link. They will, in the industry, it's tagging is the terminology for assigning the cookies. It's basically you're following a link and then the network's tools sets all the cookies. And so for somebody like RetailMeNot, you mentioned before, if you go to the site, you click on the link, the link updates all the cookies. in the case of browser software, do the same thing. It's just following the link in an unintrusive way for the user. So it's not like you're not going in there and modifying the cookie value.

1:20:36As a browser extension, you are clicking a link in the affiliate network, which is how they handle attribution. And so the overriding case that was described and purported to be extremely widespread, I think is actually very, very narrow and only happens in i guess two cases one uh the honey stand down detection um potentially isn't working in some cases this is not always alleged but like as a person who knows this business like it's possible there are cases where it struggles to detect uh that a link was clicked and the particular example that he used on new egg i'm pretty sure this is what happens because is Newegg is using a multi-touch attribution system in any click system from company Howl.

1:21:24And it is effectively, Newegg uses it so that it can pay both the creator upstream and Honey. But I suspect that Honey wasn't standing down because it didn't recognize this Howl link, which is different than the normal Rakuten affiliate network link. Got it. This is me speculating. I have no information on this, but it felt to me like a carefully selected example. And then a few weeks ago, I took another look at the video and I wanted to understand how did this happen, what he's saying. And I started pausing the video on the various pieces that he was showing on screen as, hey, honey's doing all this devious behavior.

1:22:14and almost every version of that was essentially falsified like he'd say one thing and then the screen would show something completely different and non-incriminating it's like honey's there's a secret 20 off coupon code somewhere else that they're colluding with the retailer to not give you is what he says they're only going to give you the five percent and then you watch the video So rapidly going on screen, it's Honey going. And Honey gave you a 10 % coupon and 5 % cash back. I was like, well, you can't just make shit up. Or I guess you can. Fact check, false. You can make stuff up. This is the internet.

1:22:54Welcome to the web. Yeah. So I got a little frustrated. I'm sure. And I had seen that he covered up the coupon. I was trying to figure out what happened. He blacked out the coupon code box that he was using. to demonstrate that honey was hiding coupons i'm like why are you hiding the coupon that you're using when you're showing like when that's the claim yeah right there on the screen there's like from that same retailer if you sign up for my email list you get a 30 coupon and then the next screen is like here's a 30 coupon they didn't tell you about i'm like well they didn't tell you about it because it's a one-time use code that's just for you that you just sign up for that email right there like honey is not saying that they're getting you that coupon yeah okay And so it's like a lot of misrepresentation, but then the data is just not there to support the claims.

1:23:43And I first decided to let the people at Reddit know and do an AMA there. Very, very lengthy posts, and I'm glad it's way too long. Had some good questions there, but nobody's going to read this. And decided I would at least give some of the visual evidence in a Twitter thread. and it makes it a little bit more clear when you see it like the screenshots and like it's it's not me the some of the stuff i said before about stand down and like that that's industry specific knowledge and this is what i thought i would have to talk about to defend honey originally but does the the stuff i talk about in the twitter thread and on reddit it's like you can see it for yourself you don't have to know anything about this business just go hit pause and look at the screen and see if the evidence is being manipulated to to create a narrative um and i think that it was and i don't know if my version will get anywhere near 17 million views or like um i don't have that kind of platform i've never really been a content creator or trying to get anything out there which kind of stayed under the radar and built a cool company with some great people um but yeah so it it's out there now but we're gonna we're gonna try to get this to 17 million uh we'll hand out pieces of paper in the street if we have to uh i do have a question for you i'm sure you're gonna have a kind of uh interesting nuanced point of view on this um what's up with the vpn market because when i think of uh sort of like shady you know when i think of like shady companies that do heavy YouTube influencer marketing, I think of VPNs, right?

1:25:29So it's like, we probably should have a video with 17 million views of like, you know, these VPN companies that are run by, you know, sort of unknown shadowy internet, you know, companies. But I'm curious if you have a, any type of read on, on that market. I actually don't know that market that Well, I do have a sense for why it's so prevalent on YouTube, though. The reason for it is, one, it's pretty high recurring revenue, high LTV product. So, like, you can afford to do marketing spend for a product like that. The second piece is the YouTube audience is, like, two-thirds international. And so it's an efficient way to reach a broad international audience who is in need of VPN to access content outside of their home country.

1:26:16and so I think that's why you see it on YouTube as a channel in particular because the economics work is basically it and once somebody figured that out then everybody else copies the marketing channels. I've always said Mr. B should launch a VPN because he has a super super broad audience that goes everywhere and if he was able to capture all of that you know gross margin net margin for himself he'd be printing money but maybe misaligned with the brand who knows just a crazy idea I had. yeah it's it's a great idea i mean it would work from uh from the business part of it would work probably work better than beast burger and some of the other stuff he's tried but yeah he definitely reached a scale where he can't do normal advertising yeah because if the product's not available globally it's going to be it's going to just he's under monetizing his content at that point yeah it's it's that and uh he's hit the scale of the ad buy now is like it's a super bowl every time he does anything so there's like 10 companies that can even possibly afford to do that.

1:27:15And so he's been driven to create new brands and it's kind of fun to see what he's been able to do with that. It's been super fun and it's been fun having you. Yeah. Before you go, could you give us, you know, a minute? Give us a coupon code. No, no. At least a minute on Pi. What's your favorite coupon code? At least a minute on Pi and what you're working on now. Yeah. So Pi is a new company I'm working on. We have an ad blocker that is designed to give consumers control over their advertising experience. We don't think the economics of the internet work if everybody has an ad blocker that blocks everything all the time.

1:27:50And we don't think it's reasonable that consumers should have to tolerate the ad load. And the incentives are misaligned there. So effectively, I is building a way for consumers to have granular control over what type of advertising they are comfortable with. And we are building ways for them to participate economically in that value exchange. so that's very cool um they're like that's you have two million users we have two million users and no wait so let me guess nobody's heard of you because you haven't hired uh pr firm you haven't raised venture capital you don't have any vcs doing yeah because because i'm i'm you know it's it's we always find it funny when we find a you know a company with a massive user base that we haven't heard of yeah and and you know we've heard of you and and honey but i And candidly, I hadn't heard of Pi until we were prepping for the show.

1:28:44Yep. That's not surprising. Most of our acquisition has been through regular YouTube ads of all places. So it's interesting to be an ad blocker that's doing advertising. We'll see how long we continue doing that. But to get to a reasonable scale where we have a large enough audience where people are interested in what we're doing, was important. We've invested in that growth, personally invested in the company, and we'll see if we can make it work. But if not, it's a lot of fun building with a lot of cool people again. That's amazing. Thanks so much for coming by. Always welcome on the show. Cool, thanks guys.

1:29:29We'd love to talk to you soon. Cheers. Great. What an interesting... It's back with another Chrome extension. just two million users chill oh yeah by the way we have two million users fantastic uh well we're pivoting back to ai we have the host of the latent space podcast i first found uh this fellow because he put out a fantastic interview with george hoth's one of my favorite uh people in the world really uh and we're excited to talk to him i want to get his take on ai 2027 and a whole lot more but also I think he has a little bit of contrarian take about whether or not you should traffic in these forms of, oh, AGI is two years out.

1:30:12So I want to hear from him. Welcome to the studio. How are you doing? Morning. Hi, doing great. Do you want to give a brief introduction? I know you as the host of the Latent Space Pod, but in your bio, you have a number of different affiliations. How should the viewers think about you? Someone with basically ADD and too many projects. But yeah, I'm Sean or Swix. I started the Latent Space podcast to cover the AI engineer field, which I helped to popularize. And I also run the AI engineer conference, which is happening in a couple months. Primarily, I think the one in New York that I did helped to kickstart a lot of the recent MCP hype that you might have been seeing.

1:31:02Oh, yeah, I'd love to get into that. We can get into that. And I think, yeah, what you were referencing just as we came in was, you know, the news of the day, right? Like, yeah, B27. I think very important to at least try to go through the thought process of like what might happen. But this is essentially fan fiction, right like we don't we don't know exactly what will happen um and uh you know we've we've been getting various forms of agis two years away for quite a number of years now uh and i think part of why i started the ai engineering um sort of trend is to try to get people towards building more things instead of just speculating uh on what the big powers that that maybe will do because you have a lot more agency in your life to do things if you just uh you know focus on what what we have today.

1:31:50Granted that AGI is very big and I do take that seriously. Yeah, of course. Well, let's go through some of the things that you do think are worth building. I want to get into agents and we've been asking a lot of people, you know, when can this thing book a flight for me? But maybe we should start with MCP. Can you just give us an overview? I saw all the viral posts, a lot of debate over, is this just an API or is this something more important? All the leading labs are putting out papers and implementations of it. Can you give us your kind of MCP, explain like I'm five for dummies, and then maybe take me through a few of like the implications for the market and the different AI labs.

1:32:26Yeah, I'm pretty sure you already had like a couple of explanations. So I don't know if I'll be, you know, adding a lot here. I'll just give you my version and then we can riff on that. So MCP is a protocol for a lot of different integrations into agents. And I think that there have been many attempts, a lot of different configurations of I will include the framework, I'll start from the gateway, I'll start from the integration side, whatever. But this is the first one that was very seriously put out by Big Lab. We actually were the first podcast that the MCP creators did an interview on, and we just released that yesterday.

1:33:07And it's shocking how impactful this is for effectively the side project of two guys. and this is uh and they work at anthropic is that correct they work at anthropic uh yeah over in the london office um yeah you can you can check out latin.space slash mcp you'll see it cool um and uh and yeah so so i think effectively maybe for the normies um whenever you see these like ad symbols like when you're in a chat and you want to add something and you want to include a tool you want to include any kind of um agents or any kind of uh you know subsystem like a notion or Zapier or what have you. For developers, we use things like Sentry, Microsoft Copilot and GitHub just put one out today.

1:33:49And I think Google announced something. I don't know what they announced, but they announced something. But basically the entire industry... Always the case with Google. They put out something, but I can't find it. I mean, there's just a lot, right? They just announced 2.5 Pro pricing. So my viral tweet of the day, I always have like one a day, is that they now completely own the entire Pareto Frontier of all labs. They had the smartest and the cheapest and the most effective Pareto Frontier between. Very cool. Which is incredible. Anyway, coming back to MCP. Sure. So this is what we call in the industry an M times N problem, meaning I have this one app.

1:34:27I write integrations for this one app. But then when I move to a different app, I have to rewrite integrations again. And obviously, that's annoying. Obviously, we want to share integrations. Obviously, like the open source community can improve better things, better together instead of individually. And we should start competing on these things and start competing on other better things. And it just took a player like Anthropic to put this forward. And this is the one that got enough momentum. So practically for what the normies would. Sorry, I don't know if it's derogatory to say normies, but, you know, not people who are not in the mix every single day.

1:34:59practically what it's going to be is that you're going to be much easily able to add integrations to basically anything in any agent. And that will, you know, at least help you get use out of them faster, just because individual companies are not writing their own integrations anymore. Basically, everyone's onboarded to this ecosystem. Yeah, I think normies is, it can be a pejorative when it's used as a blanket term, but I think everyone, you might be a normie in defense technology uh a defensive a defense founder might be a normie in ai technology and that's and that's fine and that's why we have a variety of guests on the show uh with regard to mcp the the most basic question is like how is this different from an api zapier already exists as a binder between apis and also like we're hearing coding agents getting better and better the devins the cursors like why is it so hard it feels like ai is a incredible at writing code?

1:35:53Why can't I just use AI to say, hey, I want to interface with this API. Just go figure it out every time you compile the code. If the API changes, figure it out and reverse engineer the API. There's docs out there. Here's kind of the general idea of what I want. Go figure it out every single time at runtime. Yeah. I mean, the second question is easier to answer than the first, mainly because it's probably easy to figure it out, figure out common implementations, but then you won't tackle the edge cases or the bugs that happen. And obviously, it's also very inefficient to keep coming up with a new implementation and integration every single time.

1:36:30So when possible, actually, it's better to not use AI if you have the option to not use AI. Like AI is meant to be a plug for things that don't exist. But if you do have the integration that's written and battle tested by thousands of people before you, why would you not choose that? Like only if your needs are not being met by that integration, then go ahead and write your own. And the cost of writing your own has come down a lot, right? Which is also very interesting from the sort of open source ecosystem point of view where people are now vendoring a lot of their libraries that they would typically import without thinking just because they're like, oh, yeah, someone's written this for me and it costs too much.

1:37:07Anyway, so then let's come back to the first question on how does this compare an API? And that's why developers hate MCP. They're like, this doesn't do anything over OpenAPI. And we asked the authors of that question point blank on the show. And basically, it reifies concepts that would be undifferentiated as far as the normal API spec goes. So, for example, there's concepts like resources, prompts, tools, sampling, routes, and transport in MCP. And those are basically special subclasses that are treated differently in the MCP environment, whether or not they're controlled by the model versus the application versus the user.

1:37:50So they are very, very distinctly parceled out the permissions and the intended roles of each feature. So I would say it's kind of like a layer over APIs that have become more AI native. And that's made it, Anthropik is at least saying that this is much easier for us to use and you're going to build much more effective agents if you do this. Got it. um do you feel like mcp will you know massively accelerate the creation of of agents that uh become a you know very active part of our lives on the internet it was you know we were at um y combinator demo day and there was a lot of uh ai agent infrastructure companies um there was probably more AI agent infrastructure companies there just in one demo day than AI agents that I've sort of tried to use, right?

1:38:41So it's like everybody wants to do picks and shovels, but we actually just need, you know, we need more sort of shots on goal at, you know, potentially the harder problem, which is just reliable agents. Yeah, I fully agree with that, actually. So it's actually very depressing. Like an AI agent infrastructure company is what you do as a developer if you have no other ideas. So that, I mean, YC should take that as a warning sign that their people are not going after the right path. MCP makes integrations easier, period. What you do with those integrations, what problems they solve, that is still an open question.

1:39:14But yes, for sure, the ecosystem is about to get a lot stronger because we're now no longer rewriting things. We're converting M times N combinatorial explosion problems into M plus N, where you just write every integration once, hopefully. I mean, maybe twice. But yeah, I actually like the opportunity to address this because I think people think of me because I wrote the article on why MCP won and everyone's like you're just a show for MCP. I like the opportunity to just say like no like this is very good it's a protocol like did you get excited when REST was invented? No like you got excited by all the applications that REST enabled.

1:39:49Those are going to come down the line and you're gonna but I think like the normal consumer like should just be really happy that these high-quality integrations are now going to come a lot more out of the box than you waiting five months for your favorite app to write the integration for your favorite thing. So your agents are going to be able to do a lot more things. But I think the top agents, like the Sierras of the world, they still want to own the end-to-end experience, and they will use MCP. But they're not really depending on it. It's not like life or death for them. Like it's still on you to build an agent or a product, a solution, whatever, that solves a problem your customers need.

1:40:32And that doesn't go away. Yeah. What's your thesis on, you know, do you see a Cambrian explosion of consumer agents, B2B agents sort of built on, you know, in part on MCP? And, you know, comparing this to something like FinTech, right? We had the CEO of Plaid on yesterday, right? Like everybody in hindsight should have worked on Plaid. Super valuable. It's a$6 billion company right now. It powers a lot of stuff within finance. Same with Stripe. Stripe, but you can't name that many other sort of like generational companies in fintech infrastructure. Sure, there's a bunch, but like no household names.

1:41:13and I can see the same thing playing out in the agent space where maybe there's almost like a Stripe equivalent in the agent space or a Plaid, but then the best thing you could have done if you didn't build Plaid was to build on top of Plaid and build sort of these novel product experiences. There are at least five or six startups that are trying. I actually live with one of them. That's called Smithery. That's like decent, but all these are super early. the main challenge that they're all going to face is that Anthropic is coming up with their own registry so Anthropic wants to own this so I don't know if there's a separate plan of MCP that comes out doing this so that would be my two cents there but wouldn't one argument for Smithery and I'm not familiar with the company be that you know other companies don't if they could ever see themselves competing with Anthropic in any way they wouldn't want to be reliant on Anthropics registries, so maybe a new third party that is kind of a pure play infrastructure player should exist?

1:42:19Totally possible, but the burden of proof is on them. By default, whatever is the big lab official solution always wins, which is pretty brutal in AI terms, but the world is not meant to be fair, right? I think one thing I should mention that I neglected to, that I do think there's very bullish and will result in a lot more capabilities is that MCP servers can also be clients. And that's kind of like a technical thing. But that is effectively what is going to enable servers to then become agents and orchestrate agents, fleets of other MCP agents on your behalf without you knowing about it. And so that actually turns these things into much more agentic networks.

1:43:03And we're probably going to see that, I would say, this is too early right now because MCP is like four months old. So probably like the end of the year, early next year, I would say like this is starting to, this will start to come up because they built that in from the start. Is there a world where MCP just gets steamrolled by the next generation of models? We kind of saw that with some of the workarounds to context windows. And then Gemini comes out with a million token context window. And a lot of people are saying, oh, well, like all those workarounds are kind of irrelevant at this point.

1:43:33How do you think about the durability of MCP over the near term? MCP actually improves with more context window utilization. So they're not at odds. There's a very, very long standing debate on context versus RAG. But this is slightly different. MCP is the ecosystem integrations that models really don't have. That said, I would say that if there were any challenger to MCP, it will come from Google. Because Google has native integrations to Gmail, Calendar, YouTube, what have you. They already watched it. And it's already first party in there. And now MCP come along and sort of threw some noise into their nest.

1:44:10Well, I mean, Google kind of lost the front end wars with Angular versus React. So, you know, there is precedent for another tech company coming up and resetting the standard, right? Sure. And, yeah, I would say that I don't think they should spend time here anyway. Yeah, yeah, yeah, I agree. Maybe we need a polymarker on it or something. Let's switch gears and talk about AI 2027. Yeah, yeah, yeah. I'd love to just let you rant maybe for the next 10 minutes straight. Yeah, yeah, yeah. But, you know, initial... So I think these guys have a really good track record. I don't know actually if you've interviewed them already.

1:44:52No, not yet. I'm sure they'll come on. They seem to be doing a podcast tour. And I think there's some public service in doing the math and drawing lines, right? That's what situational awareness was. And I think because we live day to day, we don't really see the year to year just because we don't spend time on it. And if you just draw lines and you believe that what has happened in the past, the near past is probably going to happen in the near future, you can probably see at least some kind of trend line. The main caution with all these things is that S-curves do exist. You know, if I'll just rewind your mind back to, like, let's say April or May 2020, when every chart on COVID was going like this.

1:45:38And there would be more COVID cases than humans in in in like by the end of like 2021 or whatever. And that never never happens because, one, we reacted to it or things where you hit invisible asymptotes, as Eugene Wei calls it, where like you didn't account for this because we weren't there yet. Like there was this sort of this limiting factor that you didn't run into. But this is relatively near term. It's basically in the next 18 months. And I think the main geopolitical aspects is kind of interesting. We have no idea what China will do, really. The main meme on Twitter, which I really like from Tua Texas, is that Xi Jinping just does nothing and then the USA just implodes.

1:46:21The funniest outcome is the most likely, right? Maybe that's it. Who knows? Who knows? I do think that what you can, there are things where like, it's really just down to the individual decisions of powerful political figures that we really cannot tell. And then there are things where like, if they're basically extrapolations of scaling laws that you can't tell because they're just, you know, just like scaling laws that have already been established and you're betting on the end of them, which is less likely to happen. So I think the coding agent commentary is really good. And I think that it starts to talk about hacking and robotics.

1:46:59I think it's all very, very on balance. I think where it starts to get into a little bit more gray areas, like the political and bioweapons stuff. Yeah, I love the kind of reference to COVID. Everyone thought it was an exponential. It was actually a sigmoid function. Everything's a sigmoid. It's a series of sigmoids. Pretty much, right? And it certainly feels like we're experiencing a sigmoid curve with pre-training. And we're seeing pre-training diminishing returns. It feels like there's still some juice in RL. Are there any next steps that you're excited about? We've heard that program synthesis is kind of a hot area that people are investigating right now.

1:47:37What are you excited about? What do you think is potentially overrated or underrated? I actually think people, there's a lot of alpha in splitting out what you call program synthesis. what I call code generation. We've effectively gone from single line autocomplete to functions autocomplete. And now with like Windsurf and Cloud Code and Copilot and Cursor, we're generating basically entire apps and PRs for those apps. And I think being really clear-minded about where those capabilities are and improving them incrementally, you get things like Cursor, which zero to 200 million AR in two years is crazy.

1:48:16It's remarkable. Yeah, so I think a lot of alpha there. But I think really what people are looking at now is the general measure of agent trajectories. How long can an agent on a broad number of tasks autonomously operate? So METER, I forget the acronym, it's one of these research institutes. Meter put out a study of the agentic work that can be done by a wide range of benchmarks and ran it all the way back to 2019 and basically came out with the idea that the agent's horizon for the 50 percentile capability of human capability is doubling every three to seven months. right and we're now at an hour so roughly you can leave uh the smartest model that we have which they they measured as cloud 3.7 sonnet um to run autonomously for an hour and do like the what it what a 50th percentile human can do yeah you can obviously bump things up or down in terms of percentile but you know the the results and the scaling laws don't vary because the important thing is that they're doubling every three to seven months um and that means you can roughly scale out when it, when are we going to have one day autonomy?

1:49:34When are we going to have a week, a year, a month, you know, a month, a year. And that I think you can kind of set your clocks by and try to think about what products or companies you would build. It would be so funny if it was an S curve and it maxes out at exactly eight hours, like a human, like you can only give it one task every single day and it just goes and does that. And it's great. But yeah, just, I don't want to work overnight. Look, I'm maxed out and it's at that for like two decades or something. unlikely but funny that'd be an interesting universality right like so for example a lot of people building agents have independently discovered sleep the agents have to sleep because they have to compress memories and do like the deep REM thing where they actually turn those into long-term memory like we have like the computer agents have to do that and humans have to do that right it's gnarly i'm not kidding like uh go look up for those we need an aid sleep for agents.

1:50:24Maybe it's AIDS sleep. Brian Johnson holding a candle going like, I mean, I was, yeah, I mean, you're joking about AIDS sleep for agents. I was joking about like, what, like, is there, will there be like an alcohol for agents or alcohol for LLMs where you just kind of like throw some randomness in the weights and it gets a little bit crazier, but sometimes it's brilliant, you know, and it's like a lot more bold or something. Yeah, exactly. But maybe it's not that maybe it's just like to get true true inspiration you need to just throw some extra chaos some i guess the term would be like higher temperature in the llm responses and then run 10 000 of them and you get some more inspiration instead of all coalescing around the same kind of you know 50 50th percentile human like the yeah yeah that's called sort of mode collapse where you collapse modal uh yeah but like uh yeah for those interested uh we've moved on basically from temperature to var entropy okay also uh also i think most people would be interested in like the anthropics um alignment work on the tracing the thoughts of llms which which came out recently as well um there's some really interesting torture you can put on these llms where you ask it to say like banana but then you don't allow it to say banana and it just you can see it struggle to like oh interesting find alternatives of saying banana and that's so funny wow but for example one of the R1 replications, the DECAR1 replications, you can also do things like if you just wanted to think more, you can just prevent it from ending its thought and just insert weight or like, you know, but I thought something.

1:51:54And it's just like you can force its direction to think another way and for it to branch out again in terms of its diversity. So I think there's a lot of research here that is super interesting. I'm not sure any of it is going to bear fruit because the big labs are probably like two years ahead of us in the open research world there. sure sure how do you how do you react obviously that the dominant story this week in the wider world is the you know tariff uh tariffs and trade warrants all that stuff do you do you feel like it's like arguing over you know pennies as an ai sort of steamroller just like uh is about to roll over the entire economy do you even give it any attention so you know i i heard you guys uh ask the OpenAI guys about this.

1:52:41And basically, it's a rounding error, right? But obviously, the supply chain really matters for AI. I think the US has benefited a ton from the global trade setup that we've set up for ourselves effectively after World War II. So blowing that up may not be the best situation if we don't have a more constructive or well-reasoned end state that we want to be in. And I'm not sure we do. Yeah. the White House hasn't given us a lot of comfort about where we're going. Yeah, my take on it is like, I think AI is probably going to be the main driving force of like serious cultural and economic change over the next few years.

1:53:25And no matter what happens, if it's good, both political parties are going to take credit. And if it's bad, both political parties are going to blame the other political party for whatever happens. Same as ever. Do you worry about the immediate impact on the sort of data center compute supply chain broadly? I know Elon was posting yesterday about how a lot of the conversation will maybe switch from GPU shortage to transformer shortages. Is that top of mind for you at all? Are you more focused on the power transformer? Yeah, power transformers, not the architecture. So for reference, the vast majority of transformers, the physical electrical transformers are made abroad.

1:54:10And they're very, very important as we start pulling gigawatts, moving it around the grid to get into these large data centers. Yeah, I hear you. Well, short term is like, you know, not my department. So that's an easy cop out. I think whatever happens over the next two years, like we really don't know. like a lot of these negotiations like these are the start of a negotiation kind of it's just the way that trump does it anyway so i like you know i'm not i don't want to get too much into that all i will say is like a lot of what uh i try to guide people to towards on ai engineering is utilization of existing capability like so much model capability has been unlocked and it's not even the issue that in our lives like why do i have siri that doesn't understand what i want it's because Apple hasn't shipped hasn't got a shit together like yeah frontier tech like what Elon is dealing with what uh what Sam Altman's dealing with Dario's dealing with is frontier tech and that requires uh giant data centers with all this kind of research uh but really what AI engineers deal with is deployment of existing tech um into our into business and personal lives and I think uh there's a lot more to do do there and I think um you know while while the big boys figure out your political situation.

1:55:27Hopefully we still have enough power to like power, you know, the deployment of AI to the rest of the world. On the topic of Apple, do you think they can afford to fumble the rollout of Apple intelligence just because of their position as, you know, the core consumer hardware provider? Do you have a strong take there? um yeah i mean so the lock-in of ios i message um you know the the i drive apple cloud whatever they call it um is very very strong but there's a time limit on this thing and for one like i actually tweeted about this recently uh when the iphone like i'm much more excited for opening i to compete with apple than with google like opening i currently is running the google playbook they're looking at like they're reading themselves by like oh chat gbt is like the six traffic website in the world we want to go up right um but like google is doing super well and like actually google is pretty good like we we want to have a google in our lives um but apple has is really fumbling and they know it and when open ai comes up with the open ai phone i think it will be a serious challenge to apple because uh open eyes i open the iphone like the will just be smarter you know it yeah yeah and like everyone would try it and it will be the first serious challenger to the apple iphone since you know steve joss presented that's a great that's no and people already have like such an extreme willingness to try new ai hardware yeah when you know the dominant lab comes out with something yeah i think every single person we know is is at least buying it right if it's a thousand bucks sure i'll take it like no no like you know i think it's just like the the people who are want to do get serious about hardware they've just been like the small guys like the rabbits and let's just let's just say call it the humains but like if you get someone with the resources of open AI I really want to see if they take a real run at it I mean he's talking they have chats with Joni I if they've confirmed that it's in the works I don't know if like how serious it is they could still kill it but I hope to god that they actually challenge Apple and Apple will get a shit together in response I completely agree well yeah that's a fantastic take I'm looking forward to trying the open AI phone we'll see it and there'll probably be an xa iphone too i mean it might be a new new dawn in consumer hardware driven by artificial intelligence uh but thanks for stopping by this is fantastic well we'd love to have you back this is such a fun yeah i can't wait for the next one yeah and everyone go check out the latest podcast he just dropped late in space yes do it cheers talk to you soon bye fantastic next coming in we got forerunner ventures kirsten green.

1:58:02I'm excited for this one. We, uh, we reached out actually initially after she dropped her 2025 trend report, uh, which is always fun to, uh, process. Uh, so I want to ask her about that and about a bunch of other stuff. Yeah. The 2025 consumer trend report is out. You can get it at forerunnerventures.com. Um, a deep dive into where consumers stand today and how major shifts are shaping new needs and opportunities all across a ton of different sectors. It's a quick read. It's 200 slides. They really do their homework over there. And here she is to break it down for us. Give us the 30-minute condensed version of the 200-slide deck.

1:58:49Yeah. I mean, me and Jordi, we're basically live three hours a day, not a lot of time for reading. So if we want to consume We want to hear it from the source. We want to hear it from the source. So thanks for joining. Quick rundown. Yeah. How are you? How are you doing? I hope you're having a great Friday and going into a great weekend. But good to be here. Can you give a little background on you, your firm and the trend report? Yeah, sure. First, thanks so much, you guys, for having me on. This is fun. Of course. I'm excited. And it's a crazy day with no shortage of action going on. Oh, yeah.

1:59:23Yeah. Yeah. So, yeah, I'm the founder and managing partner at Forerunner, and we're a venture capital firm. We've been here in Silicon Valley for the last decade plus making investments. Investments across the board. Let's hear it for a decade plus of investments. There we go. We love investments here.

1:59:45And we largely focus on early stage investing. We have a diversified portfolio across sectors and spaces, but we do have a thematic approach and a framework that we have kind of applied consistently for the past decade. And that's really tracking what is going on with demand. So where are the tailwinds? And then we look for big technology shifts and business model changes and where business is not addressing that demand. Yeah, can you talk a little bit about, I know you guys will do B2B as well, but it feels like you've always had a love for consumers specifically and that's gone in and out of popularity.

2:00:32Obviously, when you started, I'm sure a lot of people said, well, why don't you focus on SaaS, look at the outcomes that we're seeing. You typically start your reports by reminding people just how much of, I think it's here on the - The American consumer is undefeated. Yeah, the seventh slide, consumers drive two thirds of US GDP. So I think that's probably like the anchor reason why it's been such a focus for the firm. But I would love to hear kind of your take on it. Well, Jordy, that's one take. It's true. You know, in the vein of tracking demand and demand being kind of the driver of all of business, the two thirds of the economy and what's going on with the consumer is arguably the most meaningful force.

2:01:18But really, more than that, yes, it's true that SaaS companies have returned lots of money to their founders and their investors. It's been a steady contributor of opportunity and venture. But if you step back and you look at the last two decades, the biggest companies started with a consumer first approach. So, you know, I would argue that like starting a business with the consumer first approach, if you are able to create that incredible gravitational pull and build a foundation from there, we've seen time and time again, companies prove that they can take that foundation. transformation and leverage it into dynamic business models over time.

2:02:02Can you talk a little bit about just the general health of the American consumer? It's been a couple crazy years the last five years. Things were going really well. And then we had COVID and everyone was out of a job and then everyone got their jobs back and then inflation crops up. And now people are worried about the tariffs and what that means for the economy. We've been in sort of a kangaroo market, as they say, jumping up and down, not a bull or bear. How is the health of the American consumer right now? Yeah. Well, that is a big reason why we do this consumer trend report every year. So, you know, as venture capitalists at Forerunner, we spend the lion's share of our time thinking about the future and where things are going.

2:02:39But to understand or have a view on that, it is really important to step back and take stock of what's going on today at any given point in time. And so, you know, the exercise of getting out of our own bubble and sort of taking a pulse of the of the country of the globe from the person you know the people on the ground um we feel like you know is is um is illuminating so you're right in saying that the last five years have been crazy filled with uncertainty so you know i think we're all trying to kind of process how we feel about the current ongoing tariff discussion right now and i think i feel like i did in march 2020.

2:03:17oh yeah what's happening like uncertainty rules the day and here we are again. So, you know, I guess the good news coming out of that big period of COVID uncertainty is that we have all learned to have an incredible amount of resilience. We've been forced to do that. So, you know, I think when we check in with the consumer, we see a good deal of that. But we also, you know, definitely see some movement towards people feeling like they need to stand up for their own security and safety, that they can't count on the structures and the norms that maybe have been in place for a very long time. And this is a time period where having more agency over your own life and your own actions is something people are craving.

2:04:01So, you know, I think we do, you know, 200 page slide deck, there's a lot of government data in there and a lot of just kind of, you know, taking stock of the actual data. And then we go to interpret some trends. And really, we focus it, you know, I mean, I think it would say if we just look at 2024, we describe what we heard from people. And this is a lot of survey work, in addition to a lot of reading and a lot of kind of number crunching and processing. But it was kind of a middling year, you know, it kind of just lived in the middle from from all measures, like from all the data metrics. But then also, if you look at like the cultural norms, most of the movies were kind of follow on second generation movies, same with the music, etc.

2:04:41So you know, the word of the year was like brain rot and something else. You know, so I think that you had a consumer that's quite fatigued from going, going through kind of the craziness of what the world has been. But at the same time, in that agency, and in that desire to do things, there is like, I'm gonna, you know, I'm gonna pick myself up, I'm going to take some action. And I'm going to, you know, look for having more control over my career, over my spending, over my health care. We went, we took a deep dive and we do this every year, kind of pick a few things that we think are particularly important in the context of that demand equation and also in the context of investing, because it is in service of sort of uncovering investment focus.

2:05:27And a couple of areas we looked at this past year were health, security, and of course, Gen AI. So on the health front, this is perhaps the biggest trend in my nearly 30 years now of investing. I think the biggest trend that we've seen, there is a growing willingness to spend on health and themselves and outside of the system. So 60 % of the people describe health as being their number one priority, even above friends and family. The wellness economy, so when you think about health, it's not just the, I already have a problem, I'm at the doctor because of that problem. It's the effort of proactive health, which has really been a huge area of growth.

2:06:14The wellness economy, which includes that, is a$1.8 trillion economy, and it's actually growing six times faster than the economy in general. So I think that the dollars are there, the scope of what people are willing to pay for is evolving. you're seeing people more engaged in supplements, more engaged in therapies, more engaged in their workouts, more engaged in doing things like MRIs or blood testing or biomarker testing. So this is, you know, this is a huge area of, it's a breakdown in the system as well as just more information and people realizing that they have some ability to, you know, shape the future for their own health.

2:06:58yeah do you feel like you're seeing enough founders take the concept of wellness sort of like seriously in silicon valley like we i take it very seriously john and i have this funny dynamic where like john has this joke that like if i had a single inorganic blueberry like i would die and john meanwhile just like eats whatever's in front of him i could eat a i could eat a credit card with a knife and fork yeah exactly but i but i feel like when you when you just when you just look at the data and understand how big the market is, how fast it's growing, you would think that 20 % of new startups would be like targeting this opportunity, yet it doesn't necessarily feel like that.

2:07:36I want to talk about like the, like, there's so much opportunity in health, but not everything's going to be venture scale. Even talking to our friend, Justin Mayers, he has Kettle and Fire Bone Broth Company. It's not really this like hyper growth raising every 18 to 12 months, 12 to 18 months. He's done great with that business. Then TruMed, it's more of like a fintech platform, has venture written all over it. And so how are you looking at the opportunity in health across the lifestyle business that's just going to not really raise, grow, grow, grow, a private equity roll up, maybe buy all the gyms and aggregate them versus a true venture scale.

2:08:09Okay, this can be a public company. How do you assess that? And where's the opportunity in health? You know, I mean, obviously that's a really important point, right? There's a lot more businesses getting started every day that are not appropriate for venture scale. There's a very unique set of traits that you're looking for in venture. And I think that beyond addressing like a tailwind and having that opportunity to play into, you really are looking for like, is this a business that gets stronger as it gets bigger? What are the flywheels in the business? What are the frictions to getting it going and starting?

2:08:44Is the compounding effect a benefit to the business? And does that give them competitive advantages over time? Obviously, one of the big things we're looking for is what businesses have a chance to define categories and be real runaway category successes. So that is extraordinarily hard to do if you don't have a real business model advantage at the root of what you're doing. and a lot of, you know, I think sometimes we have conversations. I often get asked about D2C companies and I kind of cringe a little bit because I think to myself, like, you know, we weren't ever here or we haven't actually made an investment in a product company per se.

2:09:24We've always been looking at like a business model shift and a behavior shift. So I think at this point, like there's a lot of the business model shift from moving online or moving multidimensional or things that a lot of those businesses that you described as lifestyle or products are playing into, you know, that the early wins in that have played out. We're now like what I think is really exciting today that really maps really well with a lot of opportunity and health is the power of Gen AI and how that can actually make experiences personalized, more immersive and more productive. Yeah. So on that note, I imagine there's companies like some of the opportunities that you get most excited about are like a company you invested in five years ago, maybe they're focused on therapy yeah and then now they realize they have this opportunity of hey we can make therapy costs like 99 less through things like gen ai and potentially deliver similar results right we saw i think it was earlier this week there was a study that came out that showed uh generative ai based therapy was was you know delivering pretty dramatic results so how how excited you get about you know basically companies in the portfolio that you know not even just new companies that are pitching you or you're making investments.

2:10:34Sam Lesson called it AI is a cherry on top as opposed to trying to get into the foundation model or this like magical, oh, we're going to redo the whole thing with AI. It's more like AI enabled businesses. Actually, yeah. We think about it. We sort of describe businesses as AI led, AI enabled or AI boosted. Basically, every company needs to find a way to be AI boosted. And you can imagine there's like a lot of degrees of that. You can use AI in your HR department and your finance function, or you can reimagine your product like you just suggested, Jordi, and like, you know, make your therapy product even more efficient.

2:11:10And then the enabled businesses are ones that at least our look at it is like a product or a service that wasn't possible really without AI because it wasn't cost possible. And it actually, you couldn't do it. So you would think about like the example of like if you had a network of of of therapy therapists and you built them you know human kind of one-to-one and you were making that connection online um now now that is a unique case where you can actually add ai into your product and really kind of add a whole new dimension to your your business from there that's probably true for a number of businesses not most businesses though um yeah that makes sense um can you talk about uh you know the studio ghibli moment was amazing for me because it felt like uh there was one thing one it felt like we entered the sort of post slop era where like last year it was like you know uh ai generated content that was cool but not like it wasn't beautiful six fingers it looked kind of like creepy almost sometimes but now you can get this sort of like hand-drawn Japanese animation of a picture you took a second ago for free.

2:12:22It's just joyful. It's joyful. But the thing I get excited about is like the Ghibli-ification of the rest of the economy and other consumer experiences. Like, you know, just going back to the therapy example, like it just feels like this concept of abundance and these sort of like incredible products that can be delivered to consumers for dramatically, dramatically less cost. Do you have any type of thoughts around, you know, it will take some time, but my personal theory is that sort of same effect will happen in a bunch of other categories. I mean, 100%. Like, I think this is a golden age opportunity to make, you know, much, much more incredible products and experiences.

2:13:08In fact, we're talking about it like, you know, we were living in 2D and Gen AI is the power to take us to 4D and skip right over 3D. And by that, I mean, we've been talking about, for instance, 20 years now, we've been talking about personalization. It really hasn't happened. If you kind of look across, imagine you go to a website, how personalized does it feel? It's pretty much a similar experience than if I went to the website, you went to the website. So I think personalization has not happened. It is now really possible in a really deep, immersive way with Gen AI. And you've just got a lot of more productivity that can happen.

2:13:47We haven't seen the whole agent thing play out, but it is definitely on its way. And I think that plus creativity, plus efficiency, like imaginations open, like so many more things are possible. I want to talk about lessons from the COVID turmoil in relation to the current tariff chaos and turmoil. I was thinking about, we talked to a few founders who were massive beneficiaries of the tariffs, honestly, because their whole bet was made in America. And so when these tariffs came in, they were like, our business is booming. But as we saw with the shift to work from home, we saw massive booms in Peloton and fitness equipment that was, you know, any e-commerce company did really well.

2:14:31And then there was kind of a, you know, back down to earth moment. What advice would you have for entrepreneurs who are maybe about to go on a generational run on the back of the tariffs narrative? How can they build their businesses more effectively? And what are you looking for in terms of durability on the investment side? I don't know that I fully process, like, what's going to happen with these terrace in terms of the durability of business. But the way I am thinking about it right now is that I don't think anybody, I think we're all in this together. I think every business is all in this together, right?

2:15:08So perhaps you make your products at home and perhaps the things that you use to make your products, you get at home, right? So you're really not going to have a cost change, but everything else around you is changing, including how much money people have to spend and how they're reorienting their dollars. So I do think that everybody needs to think that much more carefully and closely about the value of their product, who needs it and why, and what service are you delivering? Everything just got a bit more competitive in that context. Yeah. And I also do think like it's hard to, you've got to learn to be nimble and navigate these crazy, strange times because almost like these crazy, strange times aren't crazy strange times anymore.

2:15:54They're just sort of, there's one after the other, but they do change and evolve, right? And like you mentioned at the beginning of COVID, like I think we all, you know, at first thought, wow, like everyone's going to hunker down. No one's going to spend. It's going to be really scary. Business is over. And then you saw people at home thinking, you know, I deserve a nice thing. I deserve this and shopping went through the roof, right? And people came out of COVID and they went to travel and they shifted dollars again. It's nimble. being nimble is the key sorry to shift back to generative ad but it's a fascinating topic um i've i've been kind of uh obsessed with this idea of like the the the gpt rapper meme being maybe almost harmful to entrepreneurship people aren't taking enough risk because they're hearing if i build a rapper no one will take me seriously it's low status or maybe i won't get funding um but do you think that like we i mean we just talked to the founder of honey the he built a Chrome plugin that sold for a billion dollars.

2:16:54It's incredible, right? And so I wonder, and at the same time, we've seen a lot of slowed innovation at the big consumer tech companies where pretty much everyone's asking like, hey, why isn't Siri better? And maybe, I guess the question is something about, is advice to founders like, shoot for the moon, you'll land amongst the stars, there will be acquisitions of wrapper products. And if you just create customer delight, that's beneficial in Gen.AI. Or is it kind of just everything's changing so fast, just get out there, make something cool, make something people want, and then you'll figure it out.

2:17:30Or are you really trying to dig in and say, we need to have a super concrete thesis about how this becomes a hyperscale business before we invest or really go and build? What is your take on that? Okay, there's a lot in that question. Yeah, sorry. I just thought about four different things I wanted to say. Hopefully I can get them all out. So this idea, like, I don't think all rappers are created equal, right? So LLMs are foundational. That is like the backbone from which we can all build from. So I think anybody using that to their advantage in their business is just being smart. A business that is eager for the LLMs to keep getting better because it has the potential to make their product better.

2:18:10Like that's where you want to be building, right? Then you've got to think about all the things that I would say that we've always thought about, which is like, what's the value of your product or your service or your software? Like who needs it and why? How do you keep innovating and growing? How do you build a business around that? Like those things I think, you know, hold true always and are critically important. I think the idea of like, I'm just going to build something cool and fun and they will come and that will be interesting and that playing out to be a successful multi-billion dollar company.

2:18:42I'm not sure there are many examples of that. But at the same time, I want to back up and say that like the way we're approaching the market right now in particular with this new, like kind of the beginning of this new cycle, if you will, is most we're holding two things kind of front and center. One is just the big the idea of like a market tailwind that you're building into. Like there's a real demand, there's a real need, there's a real opportunity. And and that kind of ties to where we started earlier in conversation which is just understanding like where those where those pockets are where business is missing the mark and then it's about the founder it's about the founder and their vision for the future and their idea about um how a product how a service can make it better and um and i think you all you really know at the very beginning is it's going to play out different than what it is in ever ever whatever pitch deck you're looking at but i do think you can tell if somebody's got like a real pulse on where things are going, where they want to take things, like the world they want to make and show, and how nimbly and tactically they can play and execute with these new technologies.

2:19:52Can we talk about education and learning briefly? Because I feel like we've seen the adoption of ChatGPT at every college campus and high schools and things like that. And maybe there's this early surge of usage that's not so great for kids that are trying to learn how to write and think and things like that. And, you know, we want people to actually, you know, learn how to communicate and reason through things. But at the same time, the potential of every single person in the world having a tutor in their pocket is just so, you know, can't be sort of understated. and maybe is not getting enough almost like hype, right?

2:20:35But I'm curious how you are. I know you've made a bunch of investments in the space over the years, and I'm sure those companies are thinking of having. I mean, I am really bullish on this opportunity, Jordi. I think if you look at the foundational pillars of life, your healthcare, your finance, your career, and your education, education is arguably behind them all in terms of transformation. I have kids in grade school and their school books look the same as mine did 30, 40 years ago. It's unbelievable. We need to move the future forward. Sure, you can use ChatGP to cheat. But actually, we need to teach our kids how to use generative AI to their advantage.

2:21:15Because I think, like for me, I'm having so much fun. I have a thing in my pocket I can ask any question I ever wanted to. And then I can follow the thought through. That's the best part. It's not just search and get an answer. It's like search. It's like pose a question, get an answer and then play with it. Keep going down the rabbit hole or take your essay and say, I need to I need to work on this point a little more. I'm struggling with this thing. How do I move this around? Like that has a huge opportunity to, you know, continue to peak and drive curiosity, help us think deeper and, you know, kind of and learn.

2:21:51And yeah, and on that honest, like encourage kids how to use it like constructively. Do you think that that's an area where voice specifically can, you know, get really, really meaningful adoption? Because the example you're talking about is like, I'm writing an essay and I'm struggling with something in particular. And theoretically, somebody, you know, a child could have the experience of their teacher just sitting, you know, with them writing and being able to talk out loud. And I don't think we've seen voice adoption as an interface as much as some people would have thought 10 years ago, but it feels like maybe now is the moment, right?

2:22:28Voice is so exciting. I do think that when we're able to make voice a main mode of communication digitally, we're going to get so much more information. And it is the information that continues to power and tailor more personalized and engaging experiences. So the amount people share if they have a voice, you know, a speaking opportunity versus a typing opportunity is tenfold. So I do think I do think that's a big unlock. And I think, you know, this is a good point because this is how this is going to unfold. Like we're just in the early stages of seeing what's possible. And, you know, there is some very exciting voice technology out there.

2:23:11And, you know, everyone's been buzzing about the company Sesame. What they have is pretty amazing. Yeah. So, you know, it's definitely on the horizon and the near term horizon. Yeah. And maybe last question for me for now, and would love to have, you know, continue to have you on to kind of run these ideas down. But how do you think about AI adoption? Because it's hard to compare it to the Internet because it feels like everybody's used AI now and everybody probably not everybody. right like we had we both had ghibli posts go viral and we had people quoting it not knowing how the images were being created and like they seemingly didn't know what chat gpt was like oh there must be a new filter app in the app store yeah they don't know what open ai is snapchat or whatever so we haven't reached you know uh full adoption of some of these new tools but it seems like everyone's using them in in some capacity even unintentionally like i google search and i get an AI summary.

2:24:06So how do you think about AI adoption? Is it just businesses fully taking advantage of the technology and that's what we need to look at? I love this question, Jordi. I'm glad you asked it because this was one of the more interesting things that came away from our survey data. I think I should have this data point in front of me while we're speaking, but I don't. It's like 60 or 60 plus of the people percent actually had said they were using AI regularly. yeah what does that mean that probably means chat gpt claude you know those but like people are here for it i mean 500 million people was a number i read a week or two ago about chat gpt and then i heard a bigger one later like that is a that is that is like kind of trial let's call it trial at this point because we don't really know what adoption is going to look like but i do think that it's it's growing incredibly rapidly and i do really believe that people like they're ready for it.

2:25:03We just have to build for it. You know, that's my call for like founders to build for it. Like people, you know, you build it, they will come. They are ready for it. It's certainly faster. We had a conversation before this. It's like, you know, everybody wants to build AI infrastructure. We need more people to just build the AI, you know, the agents, right? Like build the hard stuff that, you know, maybe so much opportunity. Just think about chat GPT is to this generation what Google was to the last. If you think about Google as like the place where, you know, the front door, you go there, that's your big search.

2:25:40But if you want to like look for real estate, you go to Zillow. If you want to understand about a company, you go to Glassdoor or a job, you go to Indeed. Or you want to travel, you go to Kayak or Expedia. You want to go to OpenTable for a restaurant. You know, there are these like big categories that have, you know, lots of nuances that really deserve and warrant unique experiences like let's let's build them for ai yeah where are they yeah i like it yeah go catch uh kirsten this is fantastic fantastic thanks for stopping by yeah thanks for coming on yeah this is great thanks for having me yeah have a great rest of your day have a great weekend we'll talk to you soon talk soon bye cheers so much to build we didn't even get to the into the security thesis which is uh maybe the most underrated in that report there are there are health tech investors there are gen ai investors there are consumer investors but i have yet to hear someone really i mean she created a whole market map for this idea of like security as a key market and it includes some health stuff it includes some finance stuff but it was an interesting uh thesis and trend that i'll have to dig into more um but in the meantime we got david perel here welcome to the show what up boys how you doing looking great dude look at you thanks for dressing i figured i'm coming on hanging out the gun's blazing i'm to dress up yeah well it's great to you look how's your week you know i had a white shirt but couldn't find my cuff link so major issue it still looks 15 minutes ago no no no you're looking fantastic fantastic uh how's the week been how have you been uh processing all the recent ai news uh what's new in your world dude week's been good i uh i was driving over here i saw my first ever austin car chase so is that a regular thing uh no i've never seen one before you know usually an la thing and i must admit i got a speeding ticket on sunday in tennessee so it was good to see the red white and blue lights and somebody else's rear view what uh what were they driving was it like an f-150 being chased by dodge charger yeah it's always the crappiest car that you've seen all day Okay.

2:27:42Yep. Less to lose. Less to lose, more to run for. Yeah, exactly. Exactly. There's so much to talk about. I mean, one, you should have been one of our first guests. But you still are. You're still in the first 200 guests. It's no big deal. Yeah. We've been racing through the guests. But yeah, I mean, did you want to start with his post, his thread? Yeah, let's do it. Yeah. Can you set that up for us? Just kind of like general reactions to AI writing, kind of the Studio Ghibli moment. You're clearly thinking your wheels are turning. A lot of stuff is going on in your head. And I think you kind of synthesized it well, but I'll let you tell it yourself.

2:28:18Yeah. I mean, we're just, look, I've been teaching writing for the last six years and I've taught a few thousand students and I had a moment in November. You know what happened? I had a guy who was working for me, sent me a memo. I said, dude, this is the best thing I've ever seen you write. And he goes, AI wrote it. I was at a dinner last night and I wrote up some notes and then I just asked AI to summarize and I was like, whoa. And I shut down Red Passage November 11th and then I went to Argentina in December. It was my first vacation in a few years and I want to learn about the country. So I was just using AI and I was doing like 50 to 70 prompts per day.

2:28:54And I was like, oh my goodness, this is insane. And basically fast forward to now, we're in March or we're in April. And I mean, the writing's on the wall. AI is gonna just completely transform writing. And this week, actually, I got my first ever rejection for how I write because somebody doesn't like that I'm talking about AI, that I'm promoting AI. So now I think what you're beginning to see is a big riff, right? There's going to be certain people who say, no, writing with AI is absolutely taboo, not cool. There's going to be the purist, the Luddites. And then there's going to be other people who just go full steam ahead and they're going to say, you know what, this is the future.

2:29:36And it's really taboo right now to write with AI. But if you talk to people behind closed circles, there's a lot of tech forward writers who are like, whoa, I can like 3-4x my output. And they've basically built custom prompts, custom software to help them write better. Yeah, I mean, Ben Thompson has kind of a thesis around this with the printing press reduced the replication costs, then the internet dropped distribution costs to zero because you no longer needed a paper route. Now it's the instantiation cost has gone to zero, but there's still that human in the loop for actually generating the novel ideas or even just bringing the idea or the fact or the information to the chain.

2:30:21I talked to some reporters. How is AI changing your job at the Wall Street Journal? It's like, well, writing up the fact is the least hard part about the job. And yeah, maybe it took me from that being one hour of my day to being five minutes of my day. But 90 % of my day was still talking to people, understanding what's going on, surfacing new facts, and then bringing those to the readership. So do you think there's still value in being a writer in the sense that you are a generator of ideas or novel information and yes you are using ai as a tool to instantiate it but ai hasn't really replaced your importance in the world yeah so let's just preface this we're going to talk about non-fiction writing that's what i know a lot about fiction is not really um something that i can speak nearly as well about um but i went to a peter teal lecture last night he's in austin and he's doing these these lectures on the antichrist and i was at the lecture last night and I was thinking a lot about this right because you know Peter he's a really interesting guy he's always looking for what is the thing that people are talking about that other people haven't found and I think that the lecture showed um first of all that of course there's so much edge and just finding the things that other people aren't talking about uh but then also I was you know I went up to someone who he works with after I said hey I think the lecture could have gotten better in this way and this way and this way all this is to say that ai can't do that work for you and it's through the process of writing that you're really working through your ideas you're trying to say how do i frame this better how do i shape this better but what i do believe is that basically any form of writing that is driven on pure utility so we're talking business memos we're talking emails that your lawyer sends you that are fairly standard pure utility, not about the art of writing and not about basically maximizing the quality of thinking.

2:32:17I think basically all of that's going to be written with AI. So, and only in a few years, by the end of 2026, 2027, we can just assume that that'll be the case. But absolutely, if you're really trying to be a maximizer and not a satisficer, that'll be major human in the loop big time. What do you think happens to our thinking abilities as humans and our clarity on life, business, work, our relationships when so often we have just this like, you know, perfect autocomplete of everything that we thought we were going to say? Because sometimes when I'm, you know, let's say I'm like writing an email to John or one of our partners or somebody we want to work with, the act of, it's sort of annoying that taking the time to think about the, um, you know what i want to say and how i want to say it and and you know what what i'm trying to convey it gives me clarity on that relationship or that whatever activity that we're doing and in a world with like perfect autocomplete or suggestions maybe theoretically i can just you know think about it for a while myself or autocomplete send send it and then think about it but the reality is there's so much distractions in life so maybe everybody just moves like all the time that was spent writing emails just moves on to, you know, TikTok or X.

2:33:36And it's just like, you know, you're auto completing and then there's brain rot. That's sort of like a dark take on it. But are you worried about what humanity loses by not thinking through writing? I'm absolutely worried. I mean, I see major white pills and major black pills here. Like, I think that if you're not seeing the pros and the cons, and I mean, major pros and cons, you're missing out in a fundamental way of what's really going on. I agree with you. I think a lot of our information is, or a lot of the way that we communicate is like, did this person actually write it? And I think that what's going to end up happening is you sort of see this in the differences.

2:34:15Like, have you noticed like how big of a separation there is between the vibe of like your private group chats versus like what you feel in public? I feel like the private group chat vibe is just going to be like, go even more. We're going to have to learn to write with voice and really show off our distinctiveness in writing as almost a adaptive way to say, hey, this isn't written by LLMs. And at the same time, I completely agree. I mean, I think that, you know, people are super busy. And the one thing that we've learned time and again about technology is that people value convenience. You know, like I listen to music all the time.

2:34:52on my crappy iPhone speakers because I don't want to get up and walk to the other side of the room and like hook in my USB cord. And I think you should never bet against humans going for convenience in the aggregate. So that's how I'm thinking about it. Yeah, I think about that web comic or meme all the time where it's like, wow, this AI was able to take my five bullet points and turn it into a whole essay. And then the guy receiving the email is like, it took this really long email and turned it into just five bullet points. And I have noticed that I'm doing way more work now, not over email, but just over text message.

2:35:27We coordinated this interview entirely over text message. I don't think a single email was exchanged. And I imagine there is this world where maybe we just do away with that intermediate step of instantiate this. We all know that we could turn this into a 20-page research paper if we wanted or a 500-word blog post. But really the takeaway is just what I could put in my group chat in one line. So we're all just going to communicate with that. Communication just condenses down and it's just like people saying their base interests. Like, I want status. I want security. I want security. Yeah. I mean, Dwarf Kesh had a great line about this.

2:36:05He was like, the recipe to being a good poster on Twitter or X is just write like you're posting in a group chat. And just say just exactly what you were thinking. Don't try and wordsmith it into this big thing. Just post exactly what it is. Like, you know, this is the age of vibe. Like, yeah, super high vibe times, because basically, like if I'm teaching writing and you're like, all right, DP, what are you going to teach people? What I'm going to say is like, what is your vibe and how do you get it out into the world? Yep. And how do you communicate that through writing? And so you're seeing a few things.

2:36:39Personally, I'm investing a lot in like Riz and vibe. And I'm trying to think about how do I do those things? It's working. Like, yo, I'm putting my money where my mouth is. one thing I did start a few weeks ago, I've become a greeter at the church to get like a lot better and saying, all right, how do I, you know, get better talking to people saying what's up, you know, doing all the sort of, frankly, like shallow conversation that people rail on. I'm like, no, I want to get good at that. And then when it comes to writing, whenever I'm writing even like a text or something like that, I'm thinking, what is the energy that is unique to me?

2:37:12And how do I get that writing and frankly like i don't really know the answer but that's the major question i'm asking and when it comes to writing i think that's what people should be thinking about a lot more yeah we uh we like to call it the golden retriever mindset here in the age of intelligence too cheap to matter it pays to be hot smart and dumb or hot friendly and dumb and so you got to be just super friendly to everyone uh looking good and uh you don't need to worry about, you know, being too, uh, too much of a sesquipedalian as they say. Exactly. Exactly. Yeah. It's an interesting, it's allowed.

2:37:46Yeah. It's interesting to think about, uh, specifically agents in, in the context of the workplace. Like it's very possible that likability becomes a core reason why somebody has a job because somebody is running a business and they go, uh, I really liked David. I like being around him. I want him here, even though, you know we could get an agent to do this yeah like it's more fun to have david around yeah it's like the one the one person one billion dollar company it's actually going to be like one person creates a one billion dollar company and then like brings on nine of his friends just because like why not split it it's a lot of money and like you like to hang out with other humans yeah i think well i think you're going to sort of see the bifurcation it's like i think that as if you're like thinking about oh let's talk about me so i'm thinking about my career i'm like on one hand I really want to invest in the human things, looking people in the eye, having better conversations.

2:38:43How do I show love and like actually connect with people to far deeper level and all those sorts of things that have always been core to the human condition. But now we're like, wait, hold on. Intelligence is getting too cheap to meter. That actually isn't something that's unique to humans anymore. And then on the other side, like, you know, you just think of the super cracked engineer who is really good with cursor, really good at writing. You know, I'm talking to some friends who are building AI enabled agencies, and now they're working with like five times as many clients because they're like, boom, boom, boom, boom, boom.

2:39:17But most of the people I'm talking to, like entrepreneurs and stuff, they're beginning to, Justin Maris has a good line where he says that the company is going to look more and more like the hedge fund. where what you have is you have fewer people, super highly paid. And one of the things that I've noticed is it's been a real head-scratcher for me. Like, why has the managerial class adopted AI so much more than the sort of frontline workers? Like, what is going on? Because if you look at sort of the archetypal rollout of technology, it's usually the young people who are the early adopters. And there's a way that that's not true with AI.

2:39:52And here's my working theory. My working theory is that the way that you work with AI is basically like a manager. So if you think of what do you do as a manager? You set a vision. You delegate the task. You say, hey, do this. You expect it's not going to be good enough. You're giving feedback, and you're going through the cycle, and then you ship it, right? That's how we work with LLMs. If you're a frontline employee, you don't work like that at all. So this is super disruptive to your work. And all this is to say that a lot of those managers too, if you talk to them behind closed doors, you know what they say?

2:40:24My hardest problems don't have to do with the work. It has to do with the people. And now I can take out the people. Once again, I think it's super dystopian and also pretty exciting, both of them at the same time. But that's what I see happening right now. Shifting gears, can you talk a little bit about the religious vibe shift in tech? I've had a number of reporters reach out to me. I am writing a piece because I saw Augustus DeRico had a cross on his neck or something like that. You've been in this milieu for forever. What is the mainstream media getting wrong or right about that narrative and that shift?

2:41:05Let's see. So I'll just give sort of my take on the shift is we've had a few things happen. So the first thing is the more online you are, I think the more that you've looked at what's happened, basically since about 2012, maybe 2016, last 10 to 15 years. And you've just said something is strange about society right now. You see COVID, you see the Hunter Biden laptop story. I mean, there are so many ways that we've been lied to. I was thinking, you know, in the early 2010s, if you went away for five years and you came back, what would be really confusing was the rise of social media. In the late 2010s, if you went away and you came back, what would be really confusing is how much morality had changed.

2:41:48What you could say, what you couldn't say completely changed. And for me, I looked at, wait, hold on. All of our moral codes are ebbing and flowing. There's all of these ways where we've gone from a kind of a democracy to a bureaucracy. And I don't want to live in that world. And as I looked at it, I traced a lot of that to a kind of atheism, where Malcolm Mudgridge, he has a great line. He says, the problem with atheism isn't that you believe in nothing. It's that you'll believe in anything. And so I watched people with their bodies as empty vessels adopt completely rotten and corrupt ideas. And I think a lot of people, including myself, by the way, and I think a lot of us who are more online have seen that cycle play out.

2:42:36And we've said, hold on here. I don't like what I'm seeing. So then we take a step back and the more tech oriented people, we've seen people like Peter Thiel. A lot of us have studied the work of Rene Girard. And we've said, you know what? Smart people like Peter and Rene, they're talking about Christianity. There might be something here. And then for me, what happened is I looked at that for five or six years. I really studied it deeply. And I came to the conclusion that Christianity wasn't just useful, but it also happened to be true. Can you talk about how you would walk someone away from the cliff that is utilitarianism?

2:43:13I would just say, look, that's probably not the frame that I would take. What I would just say in terms of if I was talking to somebody about faith, what I would just say is I'd probably be more likely to talk to someone about, hey, look at what's happening in the world. and are you happy with it? I mean, if they're happy with it, it's gonna be hard to have that conversation. But I think that part of the challenge with utilitarianism and a lot of these moral philosophies is we've seen them rise up and sort of cyclically break. And I don't know, this isn't a great answer. I'm sort of fumbling my words, but I think that the Bible carries sort of the supernatural truth.

2:43:58I mean, I had a hot take here. I wanted to bounce off you. It was this idea that a lot of the AI doomers were driven by this idea that God is dead and if we're inventing AI God and it returns, it might judge me and if I'm living an immoral life, the AI God would sentence me to essentially like an AI version of hell. It's not a problem to live an immoral life in the absence of God, but if God returns in the form of this AI God, then there will be a reconciliation moment. is do I need to put on the tinfoil hat for that? Well, I mean, I personally think that, oh, there we go. There we go. Put it on, baby.

2:44:39I mean, personally, I think that if you read the Tower of Babel story, I think that a lot of my faith is I don't think these AIs can become gods. I think that something will happen. And we see that in the Tower of Babel story. You know, you've seen people come out and say, hey, we're building these new gods. Read Psalm 115. Bad things happen when humans try to create gods. We've seen this story play out. And to come back to some of your earlier questions about tech and utilitarianism, look, a lot of the peace that I have with what's happening with AI, I'd be freaking out if it wasn't for my faith.

2:45:13I mean, I have complete faith that God is in charge, he'll take care of this. And when I read books like the Book of Judges, I see people turn away from God all the time. When I read the Old Testament, the exodus, you know, you know, you see the golden calf and I just see AI as another version of that. Can you talk about any, yeah, specifically historical moments that we can learn from in the context of this, you know, explosion of artificial intelligence, right? I think people talk about the industrial revolution, right? Look, you know, we didn't know how the industrial, you know revolution was going to change the world uh we we do now uh looking back obviously but uh it feels like right now we're standing and and especially in the context there was a piece that came out this week ai 2027 we covered it earlier on the show today where it just feels like only 18 months out like you know there there's these various paths um neither seem that appealing at the moment.

2:46:14And so I hope there's a third or a fourth or a fifth. I'm sure there are. But how do you, you know, whether it's in the context of the Bible or other things that you've read, you know, process this moment? And maybe it is only. Maybe, you know, you can find all the answers in faith, but I'm curious. Yeah, I think that the work of Marsh McLuhan has been super foundational for me. So Marshall McLuhan, he was a media theorist, late 20th century. And what he did for me was I felt the same sort of, oh my goodness, everything is changing kind of feel from the internet. And he basically had ways of seeing what happens when new technologies develop.

2:47:08and basically I think a lot of what we're seeing here is this like vast acceleration is what he saw so you get this 10x acceleration and then what happens is things begin to flip and things that used to be core to how we lived and what we do now become art and I think that that's a lot of what's going to happen with writing where I think writing is going to be very sort of a form of art in the same way that film photography was a form of art in the same way that a lot of a lot of art that you see um and craftsmanship that you see used to be very core to what we do and um i think that's what's going to happen i think that writing is going to be the utilitarian kind of writing will just be done by the ais and then a lot of writing will just be artistic and what we're going to need to figure out is how do we put our artistic stamp on writing because there's no real way to verify that a piece of writing is writing in the same way that you could do that with like a live performance but one of the things I'm really looking forward to you know there's all these doomers and to your point about technological precedents I was talking my friend Justin Murphy and you know he said if you look at how art shifted from the 14th century to the 16th century you look at 14th century middle medieval art and it just looks weird and creepy it's like super flat and then you look at 16th century art in Italy and it's got this beautiful perspective.

2:48:35The paintings are aligned or alive. And what happened was we got the technologies of the camera obscura. And then if there was a guy named Leon Alberti, and he was an architect. And what he did was they used a lot of the technologies and architectural tools at the time to basically show perspective. And from that, we got the renaissance a renaissance in painting and the same thing's going to happen with writing the same thing's going to happen with writing and i bet that at the time people were like oh you can't be using technology to paint like that's not cool and then like i don't want to go back to that sort of painting like the stuff they came from it was super cool and i think the same thing is going to happen with writing yeah it's interesting to think about the great writers in history sort of referencing you know past works and having to go to a library or travel to multiple libraries or visit collections and sort of study and then now the ability to like studio ghibli style well communicate with an llm that is trained on you know every available text that at least that's been on the internet and maybe some esoteric text as well do you think there's any do you think there's any merit have you spent any time like trying to find books that just haven't been uploaded into the ingested into the knowledge years okay so i'm gonna i'm gonna answer that and then i'm gonna ask a question to you guys okay um so here's rather than the forbidden knowledge i haven't been doing that as much but there's so much that's just lost to to there's so many answers that we used to have very clearly that then we have just forgotten i think one of the fundamental lives of modernity and basically of progressivism in general is that new is better always and that's not true you know like joe rogan always talked about how did they build the pyramids.

2:50:17Oh my goodness. They must have had these crazy technologies. Like even, you know, we can put the tinfoil hat back on, but even if that's like nonsense, whatever, I don't know. But there's so many times in history where we really had deep understandings of things that we've completely forgotten about. And like, we don't necessarily need to go find these like crazy esoteric texts. We can go find, like take Henry George's book, right? Late 19th century. It was like the number one, number two bestselling book in the world. There's The Imitation of Christ by Thomas Akempis. Great book, 17th, 18th century.

2:50:50Like, I think there's a lot of alpha in just going back at the bestsellers before 1970 and just go read those books and see what people are saying. And luckily, AI is a really good way to do that. One thing that's fun to do is go in, take an idea, go into ChatGPT, go into Grok, and say, here's my idea. Now help me round it out and give me some examples. Like, I've just been working on this little bit that there's fundamentally three kinds of girls. There's Lana Del Rey girls, Taylor Swift girls, and Beyonce girls. And so, like, you know, I was joking around with some friends. We're like, hey, let's just pop it into Grok.

2:51:23And Grok is, like, helping us, you know, think out the theories. Hey, this is why it's a stupid idea. Here's why it's a good idea. And that's what I love about it is, like, you're giving it some sort of ridiculous idea. And then it's saying, okay, let's kind of fill it in for you. And you can very quickly get to the stage of like, how can I find those esoteric ideas much faster? And how can I kind of find the lines that then I can draw inside of? How do you have any type of thesis around, you know, LLMs and humor? It seems to be the one thing that they really struggle with today where they get the structure of a joke, but they're not nailing it yet.

2:52:05They can make you laugh by being absurd. but did you see the tyler cowen joke yeah did you see that with gbt 4.5 so be me one yeah dude hilarious so i think that the the humor thing is going to be a problem to be solved the llms are going to be hilarious and they're going to be hilarious in two ways so the first way is niche humor like you know if you take a great comedian they're going to be good at the mass market stuff But, like, say that you and, you know, the three of us, we go and we do, like, a trip to New Orleans for the weekend. And we say, all right, all these things happen. And, like, we talk to LLMs for, like, 45 minutes.

2:52:42We say, you know, here are all the things that happen. Now give us some jokes. Dude, I bet it would rip. I bet it would be so freaking funny. But just us. Yeah, exactly. No, and so we've talked about this earlier on the show. uh god john has coogan's law which is like you know talking about the the value of coin coin coinages uh so on that note i've been working on the haze paradox which is the idea that the funnier that you think something is uh the less likely that the mass market is going to find it funny right because like something that's just ultra ultra ultra niche is just like the most interesting the most funny the most stimulating or whatever and i think that's what you're kind of getting at it in some way is like the, you know, having a comedian in your pocket that can joke about like the thing that happened to you that minute and simultaneously, you know, 10 years ago in your life and like connect those ideas.

2:53:38And, you know, the idea of like the same thing of, oh, we have a therapist in our pocket or we have a tutor in our pocket. You now could potentially have, you know, this sort of like comedian. Yeah. So last question is a question I think you had for us. Do you want to close out with that? Well, I mean, this is the question that I've just been thinking a lot about. And it gets down to like the nature of the soul and the nature of what it means to be a human. You know, there's that famous idea of the map and the territory. And what I think is basically happening is that when it comes to writing, the map and the territory are going to be the same.

2:54:13And when the map and the territory are the same, what is just, what is, what comes from that? is like if you have such a good simulation of humor and such a good simulation of consciousness and such a good simulation of care is it those things or is it not those things and i don't know the answer it's just the question i've been asking all week and um my immediate my immediate thought is that uh uh our mutual friend jeremy uh had this idea the take the king master of the the takes myth himself uh no he had this idea like in the ghibli moment he was like my thesis that like ai will be the reason that everyone logs off forever is like if you go on your device and it's just this you know hamster wheel of entertainment dopamine and dopamine and then eventually you just it gets so good at you know at whatever it's doing or whatever you want it to do that you want to actually go back to the variable reward of going to the group chat where somebody has a terrible take and then somebody has a good take and it's this sort of like truly organic uh experience and i and i and and who knows if everyone logs off forever but it's that uh desire for for realness has been something that has been common throughout human history right you don't like you know people wouldn't travel somewhere far to have like uh the authentic cuisine if it hit the same to have like, you know, the sort of like perfect recreation of it here in America, right?

2:55:45So that like desire for authenticity and realness, I think is deeply human. And I think people will seek other humans out for that. Which is great. Because what I hope is I think that we were at the absolute bottom of realness in the late 2010s and cancel culture. That was a time when people were terrified to be themselves everyone was super polished it was the decline of the mass media empire that we're still sort of living in and seeing play out every single day and then we're gonna get a big flip into realness into authenticity and here's the other one into forgiveness because we can only have realness and authenticity in our culture if we have a culture of forgiveness when we can allow people to make mistakes and I think what was so traumatizing as a culture about those years is that we couldn't be ourselves because we couldn't forgive.

2:56:41And my hope is that we can just move on from that and become humans in this digital sphere. Well, you have to forgive us for not having you on sooner. This was a fantastic conversation. I really enjoyed it. Thank you so much. Thanks, boys. On the show. We'll talk. Thank you for addressing the part. And looking very polished. You know, some things from the late 2010s polish is back dude polish is back we're keeping no actually that's what we have in common you know you guys have the polish with the show i tried to do it with how i write yeah of course and uh thanks guys yeah have a great weekend fantastic have a great weekend next up we got v front of my sword health coming in the studio i believe he's here and i'll let him do the introduction i had a call with him uh almost a year ago uh fascinating company uh Back by Dalian very early on, we got connected.

2:57:29And I want to hear all about how his business is doing and get the general update. So V, are you there? Can you hear me? I am here. Can you see me? Yes, we are all good. Thanks so much for stopping by. How's your week going? It's been a week. Yes, a long week, I think, for everyone. Yeah. Is it specifically because of tariffs or AI news or what's driving that? Yes, tariffs, the impactors, but some other stuff, it's been fun. Can you just give us a quick introduction for the listeners who might not be familiar with Sword Health? Kind of a quick backstory on the company, what you guys do. Yeah, so let me start with the problem.

2:58:13So healthcare is quite special because when you compare healthcare with other industries, right like the consumer electronics industry right in the last 40 years you saw penetration of technology in those industries that went like this right so massive penetration of technology what happened so sorry my alarm just was that it's my alarm sorry oh no worries One second, we have some technical difficulties folks. I'm back, sorry. And I was saying that in the last 40 years, there was a massive penetration of technology in the consumer right now. What happened to cost? Massive decrease. So a vision that 40 years ago or 30 years ago would cost$3 ,500 now costs$500.

2:59:04Much cheaper, much better display, much better features. So we use technology to produce better goods. When you look at healthcare, the last 40 years, you also saw massive penetration of technology. What happened to costs? Contrary to the other industries, massively increased. Where actually, we use technology to make healthcare more expensive. And the reason why is because the way we've been using technology in other industries is to shift part of the labor from the human to the machine. And with that, we made the production of goods much higher quality, much more efficient, and much more accessible.

2:59:44In healthcare, we've been using technology to double down on this 100 % labor-intensive model, where before for you to have an appointment with a physician, you'll go to an hospital or to a clinic, right? Now you can use the technology to do that to a video call, but you are still fully dependent on the human on the other side. Right now, as always been, for you to access healthcare, for 30 minutes, you need 30 minutes of this highly specialized, scarce, and non-scalable human resource, which is the clinician. So what we believe that in order for you to deliver the future of the healthcare world, what you need to do is basically develop technology and AI that will shift part of the labor from the human to the machine.

3:00:31And with that, you remove barriers in terms of access. And so what we are doing at SWOT is really shifting healthcare from that human first model to that AI first model. And we're starting with the biggest problem, which is how we deliver care. How we recover patients back to a full life. And so we started with a physical pain. We're expanding to pelvic health and now we are expanding to other factors of care. Really changing how people access care with AI. Can you talk about Jevin's paradox was in the news recently. and I'm sure you had a lot of thoughts just because, you know, theoretically, as the cost of health care declines, we're going to want more of it.

3:01:08There's a lot of care that doesn't happen. For example, in physiotherapy, if it costs, you know, a dollar a day, I'm sure people would, you know, be much more eager to use it. But when it's$200 a session or even more than that, so I'm curious, feels like, you know, I'm sure you've seen this playing out and I'm sure you weren't worried when DeepSeq came out and token costs came crashing down, you probably were like, okay, this is great. We're just going to use a lot more of this. Yeah. And look, lack of access to high quality, high intensity conservative care, non-invasive care doesn't decrease costs.

3:01:49Because when you have pain, instead of you are not able to go three times per week to a PT clinic for three months and that will solve a problem, right? But what you do next is you go and try to find a silver bullet in the form of surgeries, right? And that's what really skies rockets prices. Just with physical pain in the US, we are spending 560 billion with a billion dollars per year, right? And the big bulk of that is surgeries which should be replaced with much better outcome for patients, right? And so when you use AI to make the traditional model, which should be the solution, very easily accessible, as accessible as running water, then you allow patients to get access to high-quality care, and then you really decrease costs.

3:02:37Because the problem in healthcare right now, and by the way, this is in the West, but this is all over the world, right? The National Health Service in the UK is suffering the same thing, which is you have very high, high costs and very, very low quality and access to care. So in the traditional equation in healthcare, If you want to increase quality of care, you need to hire more people. If you hire more people, you increase costs. But you cannot increase costs because costs are already prohibitive. So what you try to do, you try to reduce costs to remove folks from the equation. What you do, you reduce quality and you basically create massive challenges in terms of access.

3:03:17The only way to really break this paradox is by using AI, doing part of the job of the human, and then having the clinician in the loop highly scalable in order to be able to bridge the gap between the massive demand and the low level of clinical supply that we have. How has your AI thesis around healthcare changed since founding the company, if it's even changed at all? Is what you're seeing today and the sort of roadmap today been what you expected or has any sort of like new technology that's been introduced in the last few years sort of changed? Weren't you just talking about AI therapy breakthroughs recently?

3:04:04There was a - Yeah, there was some news, I think earlier this week that basically showed that AI therapy in the form of people just talking with LLMs like actually delivers fantastic results. And it's basically free, right? And it's like this incredible - It seems like a fantastic add-on if you have a scaled business, you've been in the business for 10 years you don't have to start from scratch on the customer development journey uh so yeah talk to us about that we we actually in that regard we did a an instinct experiment because we have phoenix which is our ai system based on the sessions that the patients bring at home uh preparing the messages for our clinicians to send to patients right and so basically they analyze the session of the patient and based on that they can tell you hey john i saw that you did your session perfectly in the end you were a little bit exhausted so So I decreased session a little bit for you to be able to do it without a problem.

3:04:55Right. It's the work that our PTs, our clinicians usually do. Right. And now, of course, we have LLMs looking at the data and preparing those messages. Right. But we were looking at the messages and we had this question mark that do the messages feel like it's an AI creating the messages or do they feel human? Right. So what we did was a blind test where we had 50 messages that were written by our clinicians and 50 messages that were written by Phoenix. And what we wanted, and then we asked our team to evaluate which messages were from the clinician and which messages were from Phoenix. And what we wanted was a 50 % randomness where you cannot distinguish which messages are from which Phoenix are clinician.

3:05:42Oh, wow. Like, pass the Turing test, basically. Yeah, exactly. What we got was very, very surprising because the messages from the clinician were mainly labeled as coming from the AI, and the messages from the AI were mainly labeled as coming from human. That's bizarre, but I understand it. And then we went a little bit in more detail. And what we found was that, look, since the clinicians are always like going from one patient to the other, and they are always in this almost state of burnout across healthcare, the messages are very dry and very concise. Yeah. Right? Where the LLM, the messages are very warm.

3:06:24And then also they have the long memory where they can pick up things from two weeks ago that you said. Right? I can pick up things about stuff that you said that I want to recover because I want to play with my kids and go on hikes. And you said that during the enrollment form. And of course, the human never remembers that. And so it's funny because AI and LLMs make the work of the human, of our clinicians, more human than before. And that's super funny. Can you talk a little bit about AI image generation? it seems pretty far out for what you're doing. But at the same time, I'm just thinking like, if I need to show someone an image of, you know, hey, your knee, I have a diagram of your knee and this is where, you know, the physical damage is.

3:07:12This is what we're going to be rehabbing. I could imagine even just doing the basic like Studio Ghibli style transfer could just make that whole experience feel a lot less medicinal and a lot more enjoyable and just novel. But have you even started playing with those tools or is AI image generation still pretty far out on the roadmap? No. So our focus is really on when the member, so what we want to do is replicate the experience that you have in the clinic. Sure. With the clinic, replicate at home with Phoenix, right? And so we have the feedback component, which is we analyze, we observe what we are doing, and we provide feedback, right?

3:07:52Then the corrective feedback, that's where we are experimenting with that type of layer of imaging layer because then you can basically say hey do the movement like this right and or do the movement like that and one area where we are using that and we are exploring how we can do that in more detail with AI is we have a solution focused not on physical pain but on pelvic health and pelvic health is basically things like urinary incontinence after childbirth which is a massive problem in female population right which basically is you it's implied for we have an intramational sensor where you can basically have to turn your pelvic floor muscle no one knows what is the pelvic floor muscle and so using imagery to say hey you have this thing which should contact like this and using ai to make that animation much more lively it's how we are experimenting but that's the thing, it's like it can be an explosion of possibilities with AI because you are using AI voice agents, right?

3:08:55We are using that to involve patients, right? We are using AI to identify that member that in six months is going to have a surgery so we can intervene now a little bit like minority report to before that person goes to the orthopedic surgeon and gets convinced that they need surgery, we can act right now. We are using AI to quantify by the motion of the passion. So it's really can be an explosion where everywhere I look, I see an application of AI with clear benefits. That's great. Yeah, you guys have been very successful very quickly in relative - Well, I'm just saying - It's an overnight success.

3:09:34Overnight success. Yeah, overnight success. But still - In a sense from a pure revenue ramp, from a revenue ramp standpoint, and what usually when a company ramps revenue really quickly, other people go, hey, that's a good idea. We should do that too. how ambitious are you guys as a company is is the sword health for x sword uh or or you know or is it just about running down these opportunities that you're currently tackling so basically yes our view is really translated in shifting healthcare from human first way i first So every single area of healthcare which is still delivered in a 100 % human labor intensive way, it's a target for us to reinvent.

3:10:19One area where you apply that is mental health care. The way you address mental health right now is talk therapy. Where you should bring the solution to mental health is talk to that human once per week or once every two weeks. right that's 100 % human labor intensive that's an area for us to intervene right and so it's really about all likely for us in terms of addressable market it's the fact that like pretty much everything in healthcare it's 100 % human labor intensive and so we have a very aggressive market roadmap in terms of expanding and replicating what we did with physical pain what we did with pelvic health into other verticals of care because the thing is when you really nailed product market fit.

3:11:05Healthcare, it's massive in terms of expansion because you don't suffer it. The pelvic health solution that I was telling you about, Bloom, we launched that solution in 2022. Everyone thought it was a niche solution. We did in that year $500 ,000 of revenue. We did last year$25 million. This year we're going to do$50 million. Wow. right and everyone thought i still remember discussing this solution uh with my board and my board saying yeah don't focus on that because that's too niche right and it's like it's exploding and so healthcare good thing is when you get to part of marketing in healthcare you have untapped growth potential because the market is just quite big well congratulations i mean that's all amazing news uh what a fantastic industry to be in a we need uh we spend three hours sitting every day We're going to need some PT.

3:11:59Phoenix for - And Moody. And Miller guy. Perfect, perfect. Well, thank you so much for coming on the show. Awesome. We'll have to have you back when there's more news. We'll talk to you soon. Thanks for coming on. Thank you, guys. Thanks a lot. Yeah, the growth there is just shocking. Yeah, and it's like such an underrated company because they're out in Portugal and they do have an office in New York City, but it's just one of those like under the radar companies, in my opinion. Totally. Well, we got another guest coming on the show. An absolute killer. We should tell you about Wander first. find your happy place find your happy place find your happy place book a wander with inspiring views hotel graded amenities dreamy beds top tier cleaning and 24 7 concierge service it's a vacation home but better go to wander.com slash tbpn fantastic uh we got avlok coming in uh i'm sure everybody is all right there he is avlok how you doing what's going on guys how you doing uh we're good we're good it's been a great week a lot of a lot of big news um i'm not sure what you've been following more closely, AI or tariffs, but everyone's following one thing or another.

3:13:01Everybody's got something. Everybody's got something this week. Worming in their brain. But yeah, I mean, could you just do a quick intro on you and AngelList for anyone who doesn't know, I guess? Yeah, Avlock, CEO of AngelList. I was actually recruited in almost six years ago now. So I've been running the company for almost six years. Prior to that, I'd started three companies, sold to one of them was to Square. So I spent into almost three years at Square as well, pre IPO to post IPO.

3:13:29I'm curious, I mean, a bunch of stuff I wanna get into. Where should we even start? I think it's probably helpful for people to have like, you know, just sort of like the refounding of AngelList because AngelList is a company that I feel like has just been in the timeline. Obviously we built the show around X, AngelList, I think like grew with Twitter in many ways. It was sort of like the technology platform behind what was happening in the timeline. And in the same way that Twitter's evolved massively, AngelList has done the same. But we'd love that backstory before we get into everything else.

3:14:05Yeah, the way to think of early AngelList was there were a lot of different experiments as the team was searching for product market fit. And so, you know, 2020 or 2010 to call it like 2018, 2019 sort of spawned three different businesses within AngelList. It was the SPV business, which is really the syndicate business. There was Talent, which was to help startups find talent, startup talent. And the third one was actually Product Hunt. AngelList had bought Product Hunt early on. And so by the time 2018, 2019 came around, there were kind of three different businesses where they're really just connected with a thin thread of founders need to raise capital, they need to hire people, and then they need to launch their product.

3:14:51But outside of that, it was actually very hard to do all three of those under one roof, just because the business models are different. So at that moment, what happened was kind of a splinter, kind of a split. And talent spun off on its own, and then the product kind of separated a bit more. And then when I came in, I actually took the SPV business and I spun it out as its own company. And we got to work and we kind of took it from an SPV business to venture funds to we invented a whole new category of rolling funds. And then we got into roll-up vehicles, which is actually how Jordi and I originally kind of got connected.

3:15:24And then we got into startup products. And so today we're kind of a, you know, the place to go to if you're going to start, scale, launch a venture fund. We're now in private equity. We actually managed the scout funds for a lot of large firms as well. So we're kind of an index now of what happens with Inventure. No, it's amazing. Can you talk specifically about, you know, sort of like accelerating product velocity in AngelList? Because it just felt like you came in, you had this sort of warm-up period, and then it just felt like every single quarter there was like a major new product launch and you sort of like awakened the beast, right?

3:16:02Like there was so much potential there. If you were involved in the startup industry at all, you had invested in an SPV. Maybe you were in a rolling fund. Maybe you hired, maybe you got a job, maybe you launched a product. So everybody was touching sort of products in the ecosystem. But then you had to kind of like ramp up and basically say like, you know, we're going to kind of bring this crazy product velocity. So I'd love to hear like how you did that and then how you're applying that now. specifically there's you know a bunch of new opportunities i think that are popping up yeah i would say just at the core of angelus uh angelus has always held the founders at the top of the pedestal uh and we've always believed that product leads everything product velocity leads everything and so when you have that in your dna the question you're always asking is what is the mix of people you actually want in the company so we actually have a fairly high percentage of our team that are like ex-founders.

3:16:57And so what happens when you put a bunch of ex-founders in a room, what are they going to do? They're going to look to be ambitious and how can you actually move into an adjacent opportunity? How can you go reinvent a whole new product category? And so a lot of the original thinking was, hey, let's actually get back to product innovation and let's get back to actually doing things that only we can do. And that's the one question we do ask. And to be clear, we don't get it right all the time. But the one question we do ask is, if we didn't exist in the world, would this product exist? And if it doesn't, then, okay, great, we should go do it.

3:17:35But if it's going to exist without us, we're probably not the best suited to go do that. And so we do ask ourselves that quite often. Can you talk about AI in the business, how you guys are leveraging it to just, you know, you're in, you know, investing in a company is very simple on AngelList. Like I'm a part of a scout program. It's very seamless, you know, painless process. But then under the hood, there's, you're dealing with different entities and you're dealing with, there's the code is like the easy part. Like the law is really the hard part and the challenge. So I'm curious how you're applying AI in the business to make, you know, internal team members more efficient to make.

3:18:18And it's good for the world if you can sort of like accelerate capital formation investment and all these things, it can accelerate the world. So I'm curious about that. Yeah. Thank you, Jordy, for recognizing that. It's like an iceberg product, right? There's so much underneath the hood. You know, the initial investment is actually just the beginning of that relationship with that company on behalf of the fund. And so for context, for others um when an investment is made from a fund into a company it's typically a uh it can be like a 10-year 15-year hold period uh and that's just because of how illiquid venture typically is these companies need time to mature and so what ends up happening is over the quarters months quarters and years there's all sorts of activity that can happen within that investment all sorts of activity that can happen within the fund and there are there are real like legal repercussions financial repercussions if you get it wrong.

3:19:12And the way we're using AI is these are all the back office functions. And so typically humans would manage all the different workflows. What we've started looking at is how do you take all these different workflows and then how can you actually have AI agents starting to take on some of those workflows? Now, we have to be careful because when you use ChatGPT and every time you ask a question, you get different answers. That's beautiful. That's product market fit, right? Like write me a poem. Write me many different poems. Awesome. You don't want that when it comes to your finances, right? It's like, hey, what's the share price?

3:19:47You don't want 10 different share prices. You want one. And so we are pretty bullish on taking that and having it automate huge parts of our back office. And that's already starting to happen. And we think there are ways that we can actually then have a lot of the folks that are doing some of the back office work move up the stack in terms of the type of judgment they apply on all the different workflows there. So that's like one piece. The second that I'm personally extremely excited about is we launched a front-facing product called, it's our intelligence product. And it's in beta. It's still new.

3:20:24So we're not ready to like fully talk about it with the world. But what we're doing there is we're actually creating an agent to go look at all private market data. So we have access to a lot of unique, aggregated, anonymized angel list data. and we're actually looking at building partnerships with many other providers. So for example, you can ask a question like, who left OpenAI in the last month to start a new company? That can help you with deal sourcing. And you can imagine it scales to many more companies. We're also looking at, how do we help you get ready for your briefings for pitch meetings?

3:20:58While you're actually in the middle of a pitch, post-pitch, great, take the transcript and we can help you do a lot of the necessary research, to market map, the full analysis. So give you time back. And we think of this as we want to build a co-GP. We want to help you make more money, right? We can help you find better deals. Yeah. What about on the founder side? I could imagine that, you know, there's all these new benchmarks for fastest company to 100 million ARR. Valuations are all over the place. Are you thinking about building any products for entrepreneurs? They upload their deck and then And they say, oh, well, like you should probably expect, you know, 10 on 80 pre in this, you know, to be kind of in the fairway.

3:21:39Maybe go out there and get more. But here's at least our take on it. 100 percent. We're already in that world. You know, it's the classic line. The future is here. It's just unevenly distributed. That's basically. Yeah, it's funny how entrepreneurs try to understand how to price their rounds is really they talk to a handful of investors who just referenced like the last two or three rounds. that they saw get done that were maybe not even in the same category and then it's just like completely guessing and i think it's you know super like you guys will be able to pretty quickly i imagine give a pretty precise and say like here's where we predict your round is going to get priced and sort of like building that feedback luke you claim to be cursor for dogs but what is that really worth how do you uh it feels like we're at this amazing time right now uh you know some people don't think it's amazing.

3:22:29I think it's great of, of venture maturing. And then you see like the convergence between private equity and venture, you guys launched some, uh, products more geared specifically for private equity, but, um, uh, how, how do you see that line sort of like blurring over time? Uh, and I guess like how, how, how are you kind of, um, adjusting your, your product roadmap for that reality? Yeah. The way to think about the way we're approaching product is we have the kind of vertically integrated part of the product where you come in one, you know, one-stop shop, you can launch scale of venture fund, which also allows us to manage scout funds for some of the largest firms.

3:23:10And then we actually have our software that's getting unbundled and folks want to adopt that. So some of the largest private equity firms actually adopt our digital subscriptions product, or some others can adopt our banking product. We actually, we run banking underneath the hood. We've actually built a whole banking infrastructure, which is what allows for a lot of the smooth operations. And so, you know, as we're seeing the market evolve, our roadmap is effectively evolving to continue to keep taking on large and larger funds for this work-based product. And then for the largest ones, we're there, we can support them for any of their needs.

3:23:45And that's actually working quite well. In terms of what we're seeing in the market today, we are seeing a bifurcation. So what's interesting is if you look at year over year within our data, we're actually seeing capital flows increase Q1 2024, Q1 2025 by almost a double into just venture funds. And like we talked about SPBs and all of that, but like just venture funds alone, capital flows are almost have almost doubled. So there is definitely a bounce back. There is more optimism, right? That's coming in. But it is being it's sort of concentrating into a certain subset of managers. So you kind of have, you know, call it zero to, let's say, 100 million.

3:24:26You kind of have a divide. And then you have like the mega firms, right? And then the mega firm strategies are actually also bifurcating, right? They all have kind of their own view on things and what they're going to go after. So it's a very different market than 2019, 2020. And we're not seeing as much of, you know, because what happened in 2021, 2022 was you had crossover firms really come in, right? private equity firms, public firms come in to venture, we don't see that anymore. I think at least we're not seeing too much of it, maybe like here and there, but generally it's the venture firms that are scaling up and they're now starting to push up into different asset classes.

3:25:04How do you think of the job of GPs over the next 10 years? Everybody's been running the analysis of like how safe their job is, right? Like if you're a writer right now and your job is to summarize information and repurpose information and just put it out there, you gotta be pretty worried. I think investors in general are pretty safe because people wanna give money to one person right now and have them be sort of responsible for returning that money and hopefully a lot more in the future. And venture is about this combination of not just picking, which is like you can be very analysis driven of the market and the products but also the people um but then the big thing in venture is you know i expect ai to not necessarily dominate venture so quickly because likability and access are like such big parts of it right it's like you know somebody wants avlok to angel invest in their company because you're the ceo of angel list and like an ai could be like you know um better at finding companies but that doesn't mean they're going to sort of like win the allocation.

3:26:10So is your thesis, you know, let's give investors AI tools to be able to be better investors and make more money? Or do you see a world in the future where people are setting up, you know, sort of a fund on AngelList that's entirely, you know, the GP is effectively, you know, a machine itself? Yeah, it's a good question. I don't know who said this, but I picked this up from some podcasts. When a founder picks an investor, they're doing it because they believe that person is going to increase their probability of success. Yeah. And in order to increase the probability of success, you're really looking for a partner who can help you solve any number of problems that can come up.

3:26:54Some of it's brand recruiting, some of it's actual operational help, and it could be many more of those, right? But you need to partner with someone so you can actually have a reasonable chance of success with the company. So I don't think that's ever going to come from an AI, at least today, at least in the form that we know of it today. So as we think about the role of the GP, we think it's going to continue to stay the same. I think what will get challenging is I do think there'll be more capital that floods in because even at the earliest stages, you know, folks are talking about how valuation is decreasing.

3:27:27Yes, at the later stages. At the earlier stages, it's increasing. So at pre-seed, seed, series A, there's just a huge amount of capital looking to get in. And the actual root problem is that the startups don't need that much capital at the earliest stages. So what you have is a supply domain mismatch. And so the only way the valuations go is up, right? And so the access question and problem is only going to get worse and worse. And so we still think the human, the GP is always going to be in the loop. So the way we think about the tooling that we're building is they're meant to amplify the investor.

3:28:03They're meant to help them make better decisions. But it can't ever help you become likable to the founder or help you get access to the deal, right? That's going to be incredibly hard. And so we think that it's about enabling them. So really, there's going to be more leverage to the best investors. So I actually think the power law is going to get even more concentrated. because even the tools that we're building are going to help investors understand very quickly the lay of the land, right? So one thing that's actually very hard today is when you're listening to a founder, you're doing a pitch meeting, you generally, like, you don't quite know, okay, who are all the other competitors?

3:28:35Who are the other founders of those competitors? With one click, we're just going to make it easy. And it won't be just sauce. I'm sure there are other tools that will come out of like one click, you get a full lay of the land. And so you have full visibility on what's going on with this company, what this founder wants to do. And so So I think leverage will increase to the best investors. Makes sense. I don't know if you have a hard stop, but I did have one more question around how your thinking around stable coins has evolved. You guys were very quick to adopt stable coins. I think it was in 2021 or early 2022 that you rolled them out.

3:29:08That was probably from user demand being like, I have a lot of money on chain and I want to put it into startups. Now, I imagine I'm a long term believer in the power and value of stable coins. but I never in using AngelList at any point in the last two years was like, you know, I want to fund this investment via stable coin. And so I'm curious how you think about it broadly. And are you using them behind the scenes at all? Or are you just, you know, you said you talked a little bit about your banking infrastructure. Um, and I would assume that that's still based on traditional fiat rails, just because beauty of venture is like, sometimes you want to close an investment quickly, but we have same day wires and those like work pretty well.

3:29:49and then you're not like trading in and out of assets like super rapidly or anything like that yep and so but but anyways i'm curious to hear um how you're thinking about stable coins broadly yeah so we originally added stable coins uh because of user demand and it was like extremely aggressive in terms of like demand you know and i was like fine let me go let me go figure this up and at the time we actually looked at i mean all the who's who providers and none of them could really quite fit the use case we had um and so we eventually actually worked with a startup and um ended up building out exactly what we needed and now they're actually doing pretty well and they're scaling out um was that uh was that layer was that layer two yeah they renamed themselves to rail r-a-i-l.io i'm an angel as well i remember that you were saying like we got we got avlock you know That's awesome.

3:30:39So what's interesting about stable coins on AngelList is when the biggest use actually comes from the biggest pain from when LPs fund. And the biggest pain is when you're trying to move money internationally. And so we actually see a huge amount of demand from international LPs trying to move money into the U.S. Because if you've ever tried to send a SWIFT, God bless you if you have, it's insane. it literally takes days and you just don't know where the money is and sometimes bank will just hold on to it and they won't even tell you because it's got stuck somewhere in the middle with stable coins it's one hop you're able to get the money right into the US it goes through all the same compliance laws and everything but we see a huge amount of demand for that so it's not necessarily in the fund side to companies because you're right there's not that much trading in and out but it's more on the LP side into the fund yeah well yeah that's very cool last question I have for you then we will let you leave.

3:31:36I know we're five minutes over. I'm just very curious. Have you seen looking at some of these sectors that are especially overheated or potentially in sort of bubble territory, right? People are, you know, we could argue whether AI is a bubble or defense tech is a bubble. Have you seen any sort of near term slowdown in defense tech investing this year? And I'm sure you don't have the data in front of you, but I'm curious. That feels like one that is still very hyped, but it's potentially investors have their bets now and they want to let their bets play out? No, I was actually just talking about this with someone else the other day.

3:32:20It is still going on with DefenseTech. I think we're actually just entering a golden age for the US wanting to basically up-level all the technology in the military and the Navy. So I'm actually not seeing it slow down. I agree with you that it feels like it's a bubble, but the beauty of financial markets in general is you'll just get bubbles and then you'll get a few great companies that will come out of it. But I haven't seen that particular bubble sort of like wind down yet. We're still seeing some pretty active, heavy investing there. Very cool. That's 10 cents. Fantastic. Well, we'd love to have you on to be our private market data correspondent.

3:33:01I mean, you have all the data. Yeah, yeah. Yeah, for sure. This is great. Thanks so much. Thanks for joining. Likewise. Good to catch us. Have a great weekend. Bye. Let's move on to some timeline. We got some massive news yesterday from Anderil. They launched the Seabed Century. Anderil writes, we must fortify autonomous subsea dominance of the U.S. and its allies. Seabed Century is their new AI-enabled mobile undersea sensor node network designed for persistent monitoring and real-time comms. So imagine this would be valuable if you had an undersea cable that you didn't want to get cut or blown up.

3:33:37There were some very funny posts about it. I mean, Palmer contextualized it very well by just saying, like, what we do for the sensor towers are on land. We now have a product that does that underwater. But he said that it can detect other submarines and boats, but also biological things. So I think he can even track whales, which is very, very cool. That's wild. And so if we domesticate the whales, get them working for us, turn them into a defense tech weapons, a weapons platform, Andurl's going to be on top of it. And interestingly, if you zoom in on this video very closely, you'll see that they're partnered with Sonardine, which is a very old company.

3:34:14They've been in business for 50 years. And they have a number of case studies for who they work with, energy, ocean science, defense, carbon capture, et cetera. And I'm sure there'll be a case study on this product as well. It feels like as we get more autonomous underwater vehicles, you have people like Chris Amidon working on stuff like this, tons of exciting companies in the space. The risk to pipeline and cable sabotage just feels like, again, if you can send a$10 ,000 drone to blow up a pipeline that can cause billions, trillions of economic damage, that's just going to be a huge problem.

3:34:56What was interesting is that, you know, we've been talking about like that, maybe the Anderol of X is Anderol. And but this was something that I haven't even seen startups working on. This seems like an idea that you only get if you're as deeply entrenched as Anderol. And yeah, if you're going on, if you're going down into the deep sea. And you can afford to come up with products that aren't being purchased yet. Right. Like basically create markets. and you have, once you're at a scale that Ander rolls at and have those customer relationships, I think it's a lot easier to do that. But if you're focused on subsea dominance and you're diving, what watch should you have on your wrist?

3:35:35Probably a Submariner. And where are you going to get it? Bezel. Go to getbezel.com. Shop over 24 ,500 luxury watches, fully authenticated in-house by Bezel's team of experts. You can get a dive watch added to your collection. You need a dress watch. You need a sports watch. You need a dive watch. Tariffs are hitting Switzerland. So get in there while you can. But so retail prices will go up. Yep. I expect prices on Bezel to go up as well, but probably slower and less systematically. So download the app, start building your collection, your wish list, and find something beautiful to add. Speaking of tariffs, George Hotz posted from the Tiny Corp account a big long post about how the tariffs are affecting his business.

3:36:17And it's really a frustrating story. he says, you know, we talked to Chris Power and Hadrian. He's obviously a beneficiary of the tariffs. The tiny box is much less of a beneficiary, potentially harmed, and he breaks it down. He says, to date, we have manufactured all tiny boxes in America. However, we buy parts from abroad. There is no way to buy American-made GPU or motherboard at this time, and there won't be for a long time. If these tariffs stand as is, we would have negative margins on tiny boxes. our motherboard manufacturer has already reached out and tried to get us to pay the tariffs on things we already agreed to deliver on the delivery price for.

3:36:55But I don't blame them. Their margins probably go negative with the tariffs too. I sort of doubt we'll be getting our 5090s at the price we agreed upon either. And if that's true, the whole thing is really out the window. And even more stupidly, there's a restricted list of countries you can ship 5090s to. So I'm worried. I'm not so sure we could move manufacturing of the green V2, their product, and the product may just be canceled. I'm not going to spend my time figuring out weird loopholes and incentives to re-export and FTZ and maybe try and eke out a small profit after all the administrative costs.

3:37:27Tariffs are regulations. When difficulty of doing business goes up, many people only marginally making money just stop doing business. The US has an ease of doing business score ranking of six. Hong Kong's ranking is three. If we manufacture here in Hong Kong, we have free trade and can continue our policy of selling everywhere and passing the tariffs on to the buyer. European Union people have been dealing with this for a long time. Now, US people will too. If we can't get 5090s because of short sighted US export regulations, we'll have to switch to something that we can get, maybe a different graphics card.

3:38:01So very frustrating and an interesting real life case study, not just a pundit kind of saying, oh, I think the tariffs are bad for economic reasons, or they're great for economic reasons, or it's some part of some grand 5D chess or whatever. this is somebody who's really trying to build a business on the ground clearly you know one of the greatest programmers of all time and and a fantastic uh just i don't even know how to describe him like business person developer he's kind of everything um but george hot's breaking it down about why uh the tariffs are actually leading him to leave america and and focus on hong kong uh and and you know who knows how that will play out but uh very frustrating story but interesting to hear him break it all down.

3:38:44And of course, if the tariffs are moving the markets, you're going to want to be on public.com. Multi-asset investing, industry-leading yields, and guess what, John? They're trusted by millions. They're trusted by millions. Investing for those who take it seriously. And trusted by us. Go to public.com. Thank you to Public for supporting the show. And in relation to the market turmoil, Skooks had a funny post here. After 9-11, after 9-11, the stock market lost$1.4 trillion inflation adjusted. Today, the stock market lost $2 trillion. So these tariffs are like 1.42 9-11s. Yikes. Rough. 5K. Likes.

3:39:20Very popular. What else should we cover here? Just FYI, the map of states that are renamed for countries with similar GDP really puts America's dominance in place. Just the state of New York is the same size as Canada. Just California is the size of India. Just Texas is the size of Brazil. Just Florida is the size of Indonesia. George Hatz is over in Hong Kong. That's the size of Indiana. Yeah, America stays undefeated. I mean, this is 2019. We'll see where it goes. A lot of these countries are growing and some of these states might be shrinking, but I'm still long America, even with all the crazy tariffs.

3:40:03And no better way to get your message across in America than some out-of-home advertising on adquick.com. If you want to break through the noise, you got to go out of home. Out-of-home advertising made easy and measurable. Say goodbye to the headaches of out-of-home advertising. Only Adquick combines technology, out-of-home expertise, and data to enable efficient, seamless ad buying across the globe. Should we talk about... What else is interesting? Vittorio had a funny meme. the Virgin Tariffs Warrior versus the Chad, we'll see what happens, LMAO? Yeah, I feel like this obviously resonated. Our approach has just been, you know, this is happening.

3:40:43We'll see what happens. There's a lot of negative impacts. And then there's people like Chris Powers that are benefiting from it. um you know overall it's much less easy to be in the chad camp if you are george hots and tiny corp and your your product is being um you know impacted or or you know the business entirely so well we'll we all have to see what happens but um definitely feeling that for entrepreneurs this week that are just dealing with uh immediate repercussions from it and uncertainty for sure Should we close out with this thread from CarriedNoInterest? Let's do it. So CarriedNoInterest, he's been on the show before.

3:41:27He says it's time to coin some new AI software terms. He's employing Coogan's Law. He says inference to impact, I2I is the first, and inference risk quotient, IRQ, is the second. And he defines these. He says the first that stands out to me is inference to impact. What does this mean? It's the amount of time it takes within a new software product from hitting an LLM API to getting customer utility. I've noticed a distribution in these new startups. Let's start with cursor. Cursor has a very low eye to eye inference to impact. As soon as you start ripping the application, you are hitting an LLM and getting results.

3:42:04The eye to eye is immediate. This is a good thing. Now, the opposite is AI SDRs. You hit a bunch of LLMs and send some outreach, much longer eye to eye on this product, bad. It's kind of the iteration loop. A low eye-to-eye is good on a bunch of levels. Your customers are seeing immediate magic. You can onboard users faster. Sales cycles should be shorter. When you can shorten the amount of time between LLM and utility, this is objectively very good. But it's time for another one, the inference risk quotient, the IRQ. The IRQ describes the amount of risk created for the customer from a series of LLM calls.

3:42:40For some AI-first software companies introduce very little risk to a customer by calling an LLM. Others, a good amount. Let's describe it. Cursor works well for this example as well. Cursor's IRQ, the risk quotient, is theoretically low. Cursor generates code. That code goes into a diff. It should be tested and most errors caught as it progresses through staging environments. Solid IRQ. What about the inverse? Let's go back to the AISDR example. Your AI SDR starts ripping emails out the door. Some of them are bad. They maybe embarrass your marketing department. Oof, probably a medium IRQ. What would be a high IRQ, an inference risk quotient?

3:43:19Let's think about Harvey. Harvey is an AI software for lawyers to analyze whatever lawyers analyze all day. In my opinion, this would be high IRQ. If the AI misses something important or misclassifies, you could have potential legal damages. There's probably one more item, one more term in here, LMAO. I-URQ inference utility to risk quotient. This would be the amount of risk relative to utility. Cursor's utility relative to risk is so high. Your staging environment should catch bugs and your output is much higher. Fantastic framework. Frameworks. Yeah. Very on point. I almost always say carry no interest real name every time.

3:43:59So eventually you're going to get docs, buddy. It's the nature of tech scenes. Not on purpose, but this reminds me of what Avlock was bringing up. If you're asking AngelList via an LLM what the share price is on a specific position, investment, et cetera, it has to be right, right? Because you're going to go make, you know, different financial decisions based on that data. And like they need to be a, you know, accurate source of records on these type of things. And people just aren't going to tolerate, you know, hallucinations in that environment. So I think this very well sums up why we're seeing the adoption, you know, cursors, adoption curve versus we don't.

3:44:46We see these sort of AISDRs that are, you know, getting customer traction, but it seems like the churn is much higher and the utility is much lower. I haven't seen people, you know, it was great having Sean from Roxxon. It sounds like people are getting a lot of utility out of that, but it's almost more of a CRM type tool than purely an outbound engine. And so we haven't seen anybody raving about their AI, BDR, SDR yet. That also could be that if it's working so well, you don't want to know about it. Yeah, don't leak the alpha, I guess. Yeah, don't leak the alpha. Well, I want to do a couple more.

3:45:23Andre Carpathie had an interesting post here. He says, let's take AI predictions from blog posts, podcasts, and tweets and move them to betting markets, our state of the art and truth. Obviously, we are sponsored here by Polymarket, and I'd love to see more AI markets on Polymarket. I'm sure we'll be working on spinning some of those up. Andre Carpathi continues to say, my struggle has been coming up with good, concrete, resolvable predicates. This is always the tough thing with Polymarket is that it needs to have a clear resolution. It needs to be not too far out, not more than a year. You don't want your money just sitting there.

3:45:55ideally predicates related to industry metrics and macroeconomics, e.g. naively, one might think the GDP, but I'm not so sure that works great, e.g. see productivity paradox. I also think evals are not amazing predicates because we see over and over that they are incomplete and hackable and saturated often. And I thought this was interesting because he's close to kind of my my thesis about the uh uh artificial economic intelligence just maybe instead of tracking towards you know iq or how does this benchmark against a human or the uh the the touring test we just want to say how much economically valuable work is being done by llms and ai agents and diffusion models etc like of the gpu cycles that we have we have strict data on capex and inference cost and how much energy is going into these data centers, how much, how much economic value is being produced.

3:46:54And once that hits 10%, that's probably some sort of tipping point. Once that hits 50%, like the robots have kind of won and that could be good or it could be bad. Um, but, but that is true. Like, okay, the robots, the AIs are producing more economic value than all of human, all of humanity combined. When we hit that 50 % GDP generated by AI threshold, that feels like singularity territory to me that feels like a fundamentally different society that feels like UBI or something. Feels like AI 2027. Yeah. Yeah. I would take the under on AI generating over 50 % of GDP by 2027. But yes, the productivity paradox is tricky.

3:47:37Tyler Cowen has tried to formulate this saying that like, you know, the AI doomers, they should express their P dooms in the form of long-dated puts and say, well, if you really think that this is going to go poorly, you should imagine that there'll be economic turmoil and you should be betting on that and profiting off of that. And if you're not, then maybe you're just yapping. And so he's going to be on the show in a few weeks and we'll have to dig into more about how we can concretize these bets and think about how we make predictions about AI progress. There's Humanity's Last Exam, there's ARC AGI, and there's all these interesting evals and tests, but they're not scratching the itch for me in the same way when some new model goes viral.

3:48:22I care more about the Studio Ghibli moments than the, okay, Google's Gemini 2.5 is two points higher on MMLU or some exam or hacking AP Bio even. I care less about that. There's also something interesting, which is if a lab has a truly world-changing discovery or innovation, they should not tell the world and not release it and just leverage it to the absolute max internally, which again goes back to people's frustration with open AI. Okay, if you are at the frontier and you felt like it should be open-sourced and now it's closed. How do the incentives and everything change? Let's close out with Nick talking more about AI alignment.

3:49:17He says, broadly, I think AI alignment people are maxed out in smart and low in wisdom. I like this because it goes back to the, when you build a character in an RPG, you have int and whiz, intelligence and wisdom, and they're slightly different. and I think as we try and define what makes a human truly successful, it's not always just put all the points into intelligence. Charisma obviously matters. Strength and like strength as a sense of like your grit, your grind, your ability to continue working. Charisma obviously super valuable for coordination, bringing people together. There's this agency, drive, luck, skills.

3:49:58Yeah, Perel's talking about Riz. Yeah, Riz, all these different things and yes, we might be seeing intelligence max out and get to these super high IQ models, but are they going to be super agentic, super creative, super driven by wisdom? And this comment is obviously about the AI alignment people. He says, not a comment on anything in particular. I've noticed myself saying it and thought it would be worth writing down, but obviously it's like perfectly timed with the AI 2027 thing. He says, lots of room for people from other fields to contribute wisdom learned throughout history, even if they can't do a math Olympiad or whatever.

3:50:36I don't think being able to do high-level math helps that much. I guess one specific comment I'll make is that I'm quite excited about Emmett Shear's new company, Softmax. I think he's thinking about things in interesting ways. And so we'll have to dig into Emmett Shear's new company and how he's thinking about this because he's been very outspoken on AI alignment, but also a very successful entrepreneur and has built up probably a very deep trove of wisdom running Twitch and building a real business that has to interface with the realities of the economy and doesn't live. He's not a pure academic, but he engages with the AI alignment debate at the same level as academics, in my opinion.

3:51:13And so I'm excited to see that. But it is interesting. Obviously, Sean was talking about this, like AI 2027, maybe it's just fan fiction. I like fan fiction. I have fun reading that. And I think there is utility in that, even if you're just telling a sci-fi story i'm here for it i'll read it all day so i i would say we want we want people yeah doing that work yeah i would say more of that but also you do need to you you can't lose the plot um we have to announce a specific milestone which is that we just hit four hours our first four hour show uh we're clearly addicted um and i just have one now you know that we've been talking about AI predictions, I have one prediction to make, which is that Monday at 11 a.m.

3:52:02Pacific, 2 p.m. Eastern, we will be back sitting in these chairs, ready to go again. Yeah. I mean, what's your prediction for TBPN 2027? I think we'll be here. We'll be right here. We'll be right here doing the same thing. Doing the same thing. From the front lines of the battle-scarred Terminator apocalypse, we will be shooting humanoid robots with microphones in our other hands yeah james bond's back we will never surrender we'll never surrender we will uh keep doing this until the the ai uh the bioweapon that the ais release yeah you know maybe we'll be podcasting from a hermetically sealed bio secure facility yeah so that no one can no one gets in no one gets out but we're always live streaming and then sleeping on our eight sleeps and then waking back up that's doing it again um and have a fantastic weekend everyone thank you for tuning in uh we appreciate you all yeah and uh looking forward to monday thanks a lot looking forward bye