Disney’s $1B OpenAI Bet, GPT 5.2 Reactions, Saagar Enjeti Weighs In | Matt Levine, Mike Swan, Mike Gallagher

28:40He's in the bag seven. It's the bag eight. How will he be remembered? And I was thinking about how unique his ownership structure would be. Because for most CEO, founder CEOs, if they get the company out into the public markets at a trillion dollars or something They typically own a ton. Steve Jobs is notably, at various times, not a major shareholder. At one point, he owned five and a half million shares out of almost a billion shares. So he had half a percent or 0.6 % in 2011. That's reported here. Bill Gates, on the other hand, absolute An absolute dog. 13.7 % ownership of Microsoft. So, you know, at a trillion dollars, that's$137 billion.

29:34That's a lot of ownership. Alphabet, Google, obviously both of them became some of the richest people in the world. Today, the economic ownership is only around 3%, but still significant. Jeff Bezos is at 14 % with Amazon. Jensen is at 3.7%, 3.77 % of NVIDIA. Of course, it's been a 30-year trip. Elon Musk, almost 20 % at Tesla, 19.7%. Meta, Mark Zuckerberg's at 13.5%. Given how much dilution OpenAI has had to take in all the shareholders. Starting as a nonprofit. Well, that, but there's a world where if the company had just been formed as a C-Corp back in the day in 2015, and they had just raised a bunch of rounds back to back to back, and there was a bunch of co-founders initially, would Sam actually have, it's rumored, what, he's going to get something like 7 % was the proposal?

30:29Sure. Would he have less than that in that scenario? Obviously, he could get topped up. Maybe. But I don't think in the fullness this will end up working out that badly for Sam. Yeah. Yeah, it is interesting. Because just like being founder CEO of a trillion-dollar consumer tech company, that usually is good enough to get you$50 billion,$100 billion. But we'll see where it lands. I'm not quite sure what will happen. Did you want to run through this post from Greg? I'd love to. But first, I'm going to tell you about Profound. Get your brand mentioned in ChatGPT. Reach millions of consumers who use AI to discover new products and brands.

31:11Greg Kamrat, who, of course, is the president of ARC Prize and the creator of some fantastic TBPN trading cards, That he's been printing out. He's been printing out. We were shocked by this. Thank you, Greg, for the tireless work on that project. It's very fun, very cool. And you have such an important day job. We were shocked when we found out that you were making something cool on the side. But he says the jump to reasoning models will be studied for years. They are still wildly underrated. Arc AGI 1 has been out for six years. GPT 5.2 is a five order of magnitude scale up. and yet it still lands at 12%.

31:51Add a bit of reasoning and performance immediately jumps. And so you can see the ARK AGI 1 leaderboard. GPT 5.2 is only at 12%, but when you get to low, medium, high, extra high over in the reasoning models, or you switch to the pro models, you're getting up to 90 % on ARK AGI. Of course, the test that any human can do and yet AI has struggled with for a long time, not for long. AI is starting to make headroom or make headway on the Arc AGI leaderboard. Very impressive results. Opus 4.5 didn't do too poorly either. Crock 4, of course, is also doing well. Who else is? And has Gemini not benched on this yet or have they not been focusing on this?

32:45I'm not exactly sure. but I'm excited to see what happens with Arc AGI v3. It feels like we're not even showing those scores yet because I think that none of the models are scoring at all yet. They're not even finishing, and I think it's an optimization problem to get the least number of moves. But it is interesting because the model card that Sam shared had a caveat around the OpenAI models. I sent this to Tyler last night asking him about this. So Sam Altman shows open AI, GPT 5.2 thinking, versus GPT 5.1 thinking, and there's huge step-ups across SWE Bench, GPQA, Diamond, Frontier Math, AIME, ArcGGI 1, ArcGGI 2, GDP Val.

33:38Like there's jumps of various sizes all over. And then there's also Anthropic and Google, Gemini 3 Pro and Claude Opus 4.5 are also benchmarked there. And of course, when you read into it, OpenAI's GPT 5.2 thinking wins on almost all these benchmarks, except for the advanced mathematics tier one through three and tier four, where Gemini 3 Pro wins, actually. But down at the bottom, there's a little caveat. And it says, OpenAI models were run with maximum available reasoning effort. So these models now have the ability to reason for longer. You can just throw more time at them. But I was asking Tyler, it's weird because like this makes it look like open ass cheating and Anthropic and Google are doing more of a, you know, by the book approach to their benchmarking or whatever.

34:28But Tyler was sharing that actually all the labs now run their models at maximum reasoning effort because they all want to maximize the benchmarks. Well, yeah, I mean, you're going to run out on your best model. Yeah, it's just weird to put that caveat for you and not your enemies. Isn't that weird? Yeah, I don't know. That's just like standard practice. Like they're not going to benchmark on their worst model. No, no, no, no, they're not. But if anything you would want to say. Just put the note for all the different. All the labs are running on maximum available reasoning effort. We're just like that.

35:03I don't know. Yeah, we should build a model that reasons for 100 years. What happened? Oh, he's back in chat mode. I keep missing it. This is insane. You didn't notice the difference. No, you didn't. Because when I'm talking to Tyler, I look at his face. I don't look at the screen. I'm going to jump in here. So Jay Bol, T-A-R-D, over on X says, Oracle is a train wreck. How did they not disclose these delays on the call two days ago? And Bloomberg is reporting that Oracle delays some data center projects for opening AI to 2028. Oracle has pushed back the completion dates for some of the data centers it's developing for opening eye to 2028 from 2027.

35:43The delays are largely due to labor and material shortages of the people asking not to be identified. Oracle has been working to deliver over on a$300 billion contract to supply the computing power necessary to train and run opening eyes models since it was inked this summer. Even with the delays, the timelines for the project in the U.S. remain ambitious for sites that are set to become some of the largest in the world. I remember when this news broke, we talked about how Oracle was basically saying, like, we're going to build AWS in two years. And that just felt like, you know, applaud the sort of ambition.

36:19But I think some of these delays, labor shortages, et cetera, were predictable. Bloomberg says our take on on Oracle's massive bet on AI. Oracle's AI bet has fast become a bubble barometer. A little bub talk. Oracle spokesperson said in a statement that the company remained confident in its ability to meet its obligations and future expansion plans. There have been no delays to any sites required to meet our contractual commitments and all milestones remain on track. Site selection and delivery timelines were established in close coordination with OpenAI. and they said, we have ambitious, achievable goals for capacity delivery, yada, yada, yada.

37:05The whole market's down today. I wanted to wear a white suit, but it is not the day for that. Did you see Broadcom? We celebrated yesterday. It seemed like the earnings, but... And they revealed their mystery$10 billion customer. Anthropic. Didn't people think it was OpenAI? I think at the time, everyone thought it was OpenAI. but Broadcom is selling off significantly down 10%. Really, really bad, really, really bad news. Yeah, so Broadcom revealed during a September earnings call that it had signed a customer that had placed a$10 billion order for custom chips. Tan said yesterday that Anthropic had placed an additional$11 billion order with Broadcom in the company's latest quarter.

37:47So at the time, originally in September, Broadcom didn't say who it was, but yesterday, Hawk Tan revealed. So anyways. So it's selling off because of questions about Broadcom sales forecasts, contracts backlog, and anticipated future margins, despite reporting a record$18 billion in sales and strong profit growth. that's what we latched on to from that hilarious post of the crying bear. Well, the bear's not crying now. The bear is rich because the bear was short. The bear's just pumping. The bear is excited. Margins appear to be one area of concern. Chief Executive Hawk Tan said Broadcom's fast-growing AI business has lower gross margins than other areas.

38:35Its forecast for non-AI revenue in the first quarter was flat, so the revenue mix is changing, the margin mix is changing, And so some analysts cast the stock move as an overreaction and noted it came after a 75 % run up this year so far. We can expect it to recover, wrote a team from Citi Research that reiterated its buy rating on the stock, saying that upside from the AI business will continue to push up earnings estimates. I wonder why the AI business is so much lower margin. Like we've seen, like over the past few years, NVIDIA has actually expanded margins and grown their gross margins significantly.

39:13during the AI boom. Broadcom doesn't seem to have the same leverage as NVIDIA, and so they've been struggling, unfortunately. Meanwhile, Apollo, according to Compound 248, casually predicting zero returns for the S &P 500 over the coming decade. They put this out yesterday. A note on expected returns in public equities over the coming years. The historical relationship between the S &P 500 forward PE ratio and the subsequent 10-year annualized returns show that investors should expect to get zero return in the S &P 500 over the coming decade. They have a chart below. They're like, hey, can we interest you in some private credit opportunities?

39:55Or you know the other option. What's the other thing you want to invest in when the stock market isn't looking so good? What? Land. Land. Land. We have Mike Swan on the show. We're land maxing. The owner of Swan Land Company. We saw him advertising some land in the Wall Street Journal. We said, we got to get him on the show, and we did. So we're very excited to talk to him in 15 minutes. All about land and his business. I've talked about this. Land, I think, is the most criminally underrated asset by new generation of investors. Nobody wants to make steady returns, land maxing. They want to hit the 1 ,000x meme coin.

40:37They want to hit the 1 % polymarket, whatever it is. Well, let me tell you about Adio, the AI native CRM. Adio builds, scales, and grows your company to the next level. The timeline has been in turmoil over Klein, and some posts are getting deleted, so I don't even know if we're going to be able to pull these up. Here's what happened. Yeah, break it down. Somebody at Klein commented on a picture from a hackathon and said, imagine the smell. People thought he was making, they thought it was like a racist comment. Yes. People started piling on. Yes. The CEO initially defended him and said, I'm like, I know I can vouch for this guy.

41:23Yeah. He's fine. People kept piling on. The CEO ended up turning around and said, actually, we've let this guy go. Yeah. And then now the CEO is getting even more hate from letting the guy go. And then now he's deleting the post. And so maybe he ends up rehiring. It feels like damage is pretty done at this point. I'd imagine this engineer that was formerly a Klein finds a new – it would be hard to imagine him going back and saying, like, oh, I'm actually going to rejoin the team that just – I have a brief screenshot saved a little bit. I think I can read it. Some of it. This is the CEO of Klein.

42:09He says, a few days ago, a tweet from our head of AI offended a lot of people. And it definitely offended a lot of people. There's an article in the Hindustan Times in India. This is like newsworthy in India. While I don't believe his original tweet was intended to be offensive, his response, refusing to apologize, does not reflect my position or Klein's. we recognize this caused real pain and that deserves blah blah and so the rest is cut off uh lulu says this stinks uh she's not a fan of it yeah she says re-coms mistakes everyone makes them sometimes things fall flat it's happened to me and it also happens to people much smarter yeah but betraying people or principles is in a different category it's more preventable and less excusable cowardice doesn't happen by accident in the case of smellgate it could be argued that Posh made the first kind of mistake overlooking how the joke could be interpreted, but then the CEO inarguably made the second kind of mistake.

43:04And that one to me is much worse. Nat Eliason posted a friend of the show. I'm not sure if he's in the chat today, said considering the unanimous reaction to the CEO's post saying that he will fight that they let go of the engineer. Nat says, will he fire himself now? Only seems fair. so i don't know uh i don't know if it'll get that far but certainly it's just the entire company gets fired fireception just everyone gets fired no uh the funny thing is that the only reason i know about this joke is from a bunch of indian friends who who seem to have like been making it uh on anonymous accounts years ago in some sort of funny attempt to like reclaim the the formerly racist joke but uh lulu says when you cave to the mob instead of standing by your employee and now people are more mad at you than before and uh she quotes your worst sin is that you have destroyed and betrayed yourself for nothing yeah it's really it's really odd because it feels like although it was going viral like this just feels like something that would have blown over at least like take a breather take a week or two just like you know take some time off to think about the action.

44:17It feels very reactive to do it within a 24-hour news cycle, which can just amp up so quickly and then fall out. Okay. I guess the Hindustan Times is not very serious. It's the gawker of India, apparently. So don't worry about that. I guess I'm wrong on that. Thanks for fact-checking me, Siraj. Frank is responding. Trump, in an interview yesterday, said that he would consider eliminating taxes on gambling winning. This is so crazy. Frank says prediction markets be like, never mind, it is gambling. It is gambling. Because they always use trade. It's not bad. You trade. Trade on future. Trade on sports, trading on this.

45:01Like, wait, actually. And, yeah, it is interesting to think about creating tax incentives for gambling. Do they ever eliminate taxes on tips? I remember that was like a thing during the election. Did that ever go through? Because I remember we were joking. We're like, oh, we're going to tip everyone here. I think everyone made that joke at some point. Apparently, it is a glorified tabloid. So, you know, if you're an American CEO and the Hindu stand times is putting you in the true zone, let it be known. Maybe take it with a grain of salt. um anyway i i this this just feels like a whole series of of people it's like it's like trump likes being edgy and funny making jokes and he says i'd consider it and then watcher guru takes it and turns it into a viral thing and then somebody dunks on it and they get viral points and it it all feels deeply unserious and and not really uh like it's going to reshape the market it anytime soon, but it certainly is a funny headline.

46:03Yeah. I think, I think a lot of people would hope that he'd be like, no, we're not going to create tax incentivized gambling in this country, but he didn't. Stranger things have happened. Stranger things have happened. What is this a classical theist says? Increasing the incentive to gamble as an answer to the affordability crisis is nothing short of diabolical. That is very, very rough. I don't know. Yeah. It seems like the thing you should tax extremely highly. Seems like the best thing to potentially tax. Arthur Pigou in Shambles, the Pigouvian tax creator. Are you familiar with Pigouvian taxes?

46:45No. It's basically this idea that you can use taxes to shape behaviors, incentives. So if you don't want people to drive gas-guzzling cars, you just increase the tax on gasoline. Instead of trying to make something illegal or promote something or incentivize something. You just shift the tax to be tax on tobacco. People will smoke less, in theory. Of course, cigarettes, they're addicted. I mean, California has done this so aggressively with gasoline in the state. And arguably, it's worked. I mean, there's a ton of electric cars in California. Like, there really are less gas-guzzling cars. So if that was the goal, mission accomplished, right?

47:23It kind of worked. What do you think? Yeah, I was going to say, isn't that like the idea behind the land value tax? Yes, a little bit. It's not quite the same. Land value tax is more... Because you're incentivizing people to develop the land. Yes, yes. But I think Pigoubian tax is more the opposite, the negative. It's a way to disincentivize negative externalities, negative behavior. But I suppose it works both ways. Anyway, yeah, this was interesting. This scoop from Alex Kantrowitz. Did you see this? So Alex Kantrowitz from Big Technology. What a great name. He says, Scoop OpenAI CEO, Sam Altman, gathered news leaders for lunch in New York City on Monday.

48:07He told them enterprise AI will be a massive priority for open AI in 2026. And Greg Brockman says, yeah, enterprise AI is going to be a huge theme for 2026. And this tracks with hiring Slack CEO as CRO, right? Totally, yeah. Yeah, the question is, what does this actually look like, right? I think a lot of people are using ChatGPT at work. They're using a variety of LLMs. Does it mean they're going after Harvey? That's the big question. Harvey seems to be doing really well. And I think of law firms as enterprises. And I think of law firms as potential targets for an open AI enterprise plan. Am I crazy?

48:52Yeah, I don't think you're crazy. Okay. There was a funny post here from Peter Gurness. This is not a super serious post, but I think it's worth reading. He says, last quarter, I rolled out Microsoft Copilot to 4 ,000 employees,$30 per seat per month,$1.4 million annually. I call it digital transformation. The board loved that phrase. They approved it in 11 minutes. No one asked what it would actually do, including me. I told everyone it would 10x productivity. That's not a real number, but it sounds like one. HR asked how we'd measure the 10x. I'd said we'd leverage analytics dashboards. They stopped asking.

49:28Three months later, I checked the usage reports. 47 people had opened it. 12 had used it more than once. One of them was me. I used it to summarize an email I could have read in 30 seconds. It took 45 seconds, plus the time it took to fix the hallucinations. But I called it a pilot success. Success means a pilot didn't visibly fail. The CFO asked about ROI. I showed him a graph. The graph went up and to the right. It measured AI enablement. I made that metric up. He nodded approvingly. We're AI enabled now. I don't know what that means, but it's in our investor deck. A senior developer asked why we didn't use Cloud or ChatGPT.

50:03I said we needed enterprise-grade security. He asked what that meant. I said compliance. He asked which compliance. I said all of them. He looked skeptical. I scheduled him for a career development conversation. He stopped asking questions. Microsoft sent a case study team. They wanted to feature us as a success story. I told them we saved 40 ,000 hours. I calculated that number by multiplying employees by a number I made up. They didn't verify it. They never do. Now we're on Microsoft's website. Global Enterprise achieves 40 ,000 hours of productivity gains with Copilot. The CEO shared it on LinkedIn.

50:38He got 3 ,000 likes. He's never used Copilot. None of the executives have. We have an exemption. Strategic focus requires minimal digital distraction. I wrote that policy. The licenses renew next month. I'm requesting an expansion. 5 ,000 more seats. We haven't used the first 4 ,000, but this time we'll drive adoption. Adoption means mandatory training. Training means a 45-minute webinar no one watches. But completion must be tracked. Completion is a metric. Metrics go in dashboards. Dashboards go in board presentations. Board presentations get me promoted. I'll be SVP by Q3. I still don't know what Copilot does, but I know what it's for.

51:14It's for showing we're investing in AI. Investment means spending. Spending means commitment. Commitment means we're serious about the future. The future is whatever I say it is, as long as the graph goes up and to the right. 134 ,000 likes on that one. What a long post you go. That's fantastic. I was thinking about the fact that we now have a data point for agent force revenue, and we also have a data point for— You have to take that with a grain of salt because Salesforce, they are the greatest to ever do enterprise sales. And we do know that they're selling Agent Force as like an add-on. I'm going with this, baby.

52:00But first, I'm going to tell you about Restream. One live stream, 30 plus destinations. If you want a multi-stream, go to Restream.com. Okay, so my point was you can actually get to a dollar per token because we've also seen that leak of how many tokens they're generating, remember? And everyone was like, oh, Benioff's not generating that many tokens. And so you can see that he's probably making the most dollar per token of anyone in the industry because you can look at other companies and see how many tokens they're generating, their rough revenues, and we can work through all the math. Tyler, have we done this with Anthropic or OpenAI?

52:41Because we were looking at rough revenue, token, how much they've done it. Yeah, I think I tried doing this at some point. It's just so hard because they don't break it up in a nice way. I think at some point Demis said they're doing over a quadrillion a month, but then what is the revenue? We don't know. Yeah, we don't know for Gemini. For OpenAI, I think we knew their API token count. And then the revenue was leaked, but it was overall revenue. It wasn't broken up. So you can maybe estimate it based off subscription percentage. Still, I feel like we got to put together the AgentForce numbers to figure out.

53:19But AgentForce must be, because I think the leaked number was like$3 trillion or something. It was a very low amount. And they're making like half a billion dollars. So they're printing. and that must be like 99.999 % margin too, right? Like how much does it cost to generate a trillion tokens? Like 10 bucks or something? I don't know. Well, yeah, I think we also calculated this too because we wanted to get on the OpenAI. Yeah, yeah, yeah. So if you do the batch tokens and like the 4.0 model, it's like 20 bucks. Can you imagine? I was just sitting there like, yeah, COG's$10. I mean, half a billion.

53:52No, I don't know. Yeah, tokens are the new page views, the new eyeballs. but we should actually get both of those numbers in a spreadsheet and see if there's any other numbers we can pull through because I would love to see them. In the meantime, let me tell you about Gemini 3 Pro, Google's most intelligent model yet, state-of-the-art reasoning, next-level vibe coding, and deep multimodal understanding. What are you laughing at? A post went very viral a couple days ago. Someone's saying, come on now, because Tubi has a movie out called The Grinch that stole B-I-T-C-H-E-S. Okay. And Tubi responded.

54:32Tubi responded. Tis the season. Tis the season. Incredible response from the Tubi team. Yeah. Did you see this chart crime? This is from Riley. Riley says, put this on a shirt. So OpenAI launched a merch store called supply.openai.com. Very fun, bunch of shirts in there. You can get basketball. You can get a bunch of cool stuff. But then Riley's sort of dunking and saying, like, put this on a shirt. It's like how crazy the financials are over at OpenAI. And I get it. Like, merch store, probably not the biggest priority while you're in code red on your core product. Like, that's a legit concern.

55:12But the Financial Times, like, what are we doing with this chart? This is a crazy, crazy chart. So first off, this says OpenAI's estimated balance sheet, but then it has revenue on here. And like revenue doesn't go on the balance sheet. So like what are we doing? And like it's like I'm just so confused by this. And so total cost of cloud compute, that's the purple bar down there. COGS also don't go on the balance sheet. So like both of those don't belong there. then the red dots are new equity fundings that they're planning to do. And that should go on the balance sheet because that's assets that come in.

55:53But then free cash flow, that comes from the cash flow statement. So it's just like, this is such a chart crime from anyone who has respect for the three statements. This is the Financial Times. This is the Financial Times. I have a lot of respect for the Financial Times. I love the Financial Times, but I was just very shocked. I mean, it's more like OpenAI estimated financials. I don't know. It's sort of an interesting chart. It's also just very weird how there's like bars and dots. And it's like, what does the bar mean? What does the dot mean? Like, it's like the dot feels like it's more of like, I don't know.

56:23It's a very confusing chart. It does tell an interesting story, though, which is that they're projecting revenue increasing while costs also increase. And they're going to have to raise more money. And eventually they're going to, you know, they're going to lose a lot of money. There's going to be negative free cash flow for a number of years. Then eventually they will turn positive. I don't know. It seems like it's a bold five-year plan. We've heard about this. It's funny to see it laid out like that, but ultimately, whether or not they deliver is sort of immaterial to their merch efforts. Anyway.

57:03OpenAI is not going to like the post I read after you talk to me about cognition cognition the team behind the ai software engineer devin crush your backlog with your personal ai engineering team what uh what post are you pulling jacob alordi says he has no tolerance for ai and finds the whole conversation around it so effing boring uh he would not like this show he says i would much rather kiss on the beach and read a novel and be sunburn. Most pick-me moment of the year. It's a crazy line. But it resonated. 91 ,000 people agree. This is hilarious. Yassine Madin, who makes technical deep learning tutorials, says, yo, Jacob, come on my live tomorrow.

57:52We're going to review this paper. It's almost as good as the stuff you mentioned. See you tomorrow, buddy. and it's the surprising effect of negative reinforcement and LLM reasoning. That's a very, very funny. Okay, one more post before we start land maxing. Suck says, God blessed us again. Shocker, a thousand-year American empire and open source intel is reporting. A major deposit of rare earth and critical minerals has been uncovered in Utah, which the Wall Street Journal calls the most significant critical mineral reserve in the US. We did it again. We did it again. If you're a nation without a lot of critical minerals, it's probably a skill issue.

58:32This is actually a good transition to our next guest, Mike Swan. Before we bring him in, let me tell you about Privy. Privy makes it easy to build on crypto rails, securely spin up light-level wallets, sign transactions, integrate on-chain infrastructure all through one simple API. We will bring in Mike Swan, the managing owner of Swan Land Company. Mike Swan, how are you doing? Welcome to the show. Doing well, gentlemen. How are you? Merry Christmas. Thank you so much for taking the time to come talk to, I don't know, probably random people. What was the timeline here? We saw the ad. Was it Monday?

59:05Yeah. It was in the weekend edition of the Wall Street Journal in the special mansion section. We saw the Swan Land Company advertisement. And we were like, we've wanted to invest in land. We think that there's a lot of people in our audience who might be interested in investing in land. We talked on the show before that I think the new generation of investors, they want to buy crypto coins. They want to be trading options. They want to do NFTs, all this stuff. They want to do sports betting. But maybe they should just be buying land. And I feel like land is just kind of overlooked, but certainly not by you.

59:40So we were excited to have you on the show to give us kind of an update on your business and how investors are approaching the asset class lately. No, thank you for having me on gentlemen. I've really been looking forward to joining you and sharing a little bit of what we see in our arena out here in the West as far as ranch properties, investment properties in the Rocky Mountain West, which we primarily serve. Basically, right now, what we're seeing is, as we always have, that land in the Western part of the United States isn't going out of style anytime soon, especially in Montana. We saw an explosion with the rise of the Yellowstone phenomenon and how that really hit us out here.

1:00:29Was it actually driven by the show? The show really caused people to think about it? It amplified what we were already seeing out here in our market, but it certainly didn't slow down the process of the interest in Rocky Mountain Ranch property. So, of course, you receive the phone calls that, you know, talking about the train station and all the entertaining aspects of what Rip and that show went through. But that's obviously Hollywood doing its best to portray our part of the world in a very unique and unrealistic light. But, you know, we continue to see investments in our part of the world.

1:01:12You know what? Our market's very cyclical as we see many of the markets and we study those and keep very close tabs on what the markets are doing. But, you know, currently right now with with the stock market where it is and in the cash and the financial sector being as strong as it is right now, the capital flow has really been out of real estate. It's it's gone into the market. It's going to stay in the market until we see until we see some corrections there. And then typically we see that pendulum swing back and we see that money flow back in. So that's somewhat counterintuitive. I would imagine some folks, maybe some smarter investors, when they feel like markets are maybe a little bit overheated or overvalued might say, hey, this is a good time to rotate into a less liquid asset like land or ranches and have some stability.

1:02:03What you're saying is it's maybe the opposite. a lot of people just wait for a correction and then get maybe a little bit scared at that point and then seek more stability? No, I think we're going to start seeing that in Q1, Q2 of next year. I think we're going to start seeing that movement back into our arena. But we've certainly seen a slowdown early 25, all the way through 25. It was a relatively slow year outside of some several large transactions that we've seen in the marketplace. But we feel as far as looking at the markets and the economic indicators, as well as the financial people that we work with, that we're going to start seeing that come back into the market early in 2026 and really see it ramp up in our neck of the woods.

1:02:49So, you know, our focus right now is getting quality listings, getting them priced well, getting them priced in the market. We continually see anywhere between a 10 and 20 percent rate of appreciation in these western montana ranch properties um that's year is that year over year i'd say that's over a five to seven year period okay is what we typically see yeah especially in the rocky mountains now there's a lot of factors that play into that we see properties where you have a quality water component fishing component hunting component there's timber on the property different amenities like that obviously have a higher rate of appreciation than straight agricultural land where you're grazing cattle.

1:03:31But there's getting to be a real appetite in the investment world for these quality A properties, just like there are with quality stocks or quality business investments, whatever it may be. We see the same thing in the Rocky Mountain portion of, you know, in our real estate world as well. Yeah. How many people out of the buyer pool really care about having a high-quality water source on the property? I think our audience primarily works in and around tech. Every once in a while, a headline will pop up of some tech founder buying a doomsday ranch. I think a lot of people like the idea of having a place with a dedicated water source that if stuff hits the fan, they can escape there, but what percentage of the buyer pool really actually cares about making sure there's, you know, a lake or a river or some type of natural spring?

1:04:31I'm assuming a lot of these properties you can just drill down and access well water, but how does that all work? You know, a lot of it already deals with the fishing aspect of it. The blue ribbon trout fishing in western Montana is some of the best in the world. So primarily it's more of a recreational driven component of these properties, and it is necessarily an end of times or a doomsday aspect to the property. So the fishing, we always refer to quality fishing water on these properties as really the golden thread on ranch real estate and recreational real estate in the Rocky Mountains in that, A, we typically see these properties appreciated at a much higher rate, and B, they never go out of style and there's there's only there's there's a finite amount of those a properties that are on legitimate fishing water available in the rocky mountains so when they do come available they're they're typically in very high demand and the premium over the pre is what's the what's the what would you say the premium is over a property that doesn't have a running water or a lake or or any of those things is it 50 is 100 200 hundred percent.

1:05:42I just want to say each one of these is so unique, Jordy. That's what's hard about it, but it's significantly higher. Then you go to the timber properties, the properties that are in the mountains with the mountain setting and that everybody sees in the magazines that you obviously recognized in the magazine ads that we put out. But the timber, the elk, the big game are always an attractor as well as to those investment grade buyers. You know, back to what you were talking about from the tech standpoint, it's remarkable how Bozeman's exploded as really an emerging market in that tech industry.

1:06:22We're seeing a lot of tech people, high net worth tech individuals relocating in Montana, relocating in the Rocky Mountains in general uh as well as buying large properties you know we were we're tied by a lot of nda documents and nda uh contracts but but there are a number of high net worth individuals that re that are relocating out here for a number of reasons one is from a safety standpoint uh they see montana is very safe they see the rocky mountain west is very safe as as you see the crime rates in some of these urban areas that that uh you know regardless of your political affiliation, there's concern about it.

1:07:06And I think as there continues to be concern about that, we're going to continue to have people that are driven to this market, seeing as a safe, secure place to raise their family, to have their kids, to have their family, you know, a family compound where they can gather at. What kind of opportunities are there to actually monetize and generate yield on a ranch property? obviously, if you can just buy a piece of land and let it appreciate over time, are there opportunities to actually utilize some of these properties, even if you're not, you know, there to generate some type of incremental yield?

1:07:47Absolutely. You know, the ROIs on these is much lower than what a standard investor would demand out of their portfolio so a lot of it when we're working with buyers is is changing that mindset that we're looking at long-term appreciation obviously the depreciation schedule and the depreciable assets that that are contained within these properties is of significance to a lot of these buyers that they can use directly on their on their tax returns um but typically the roi on on a cattle ranch, if you can get a two, even a 3 % return on some of these is quite good. The, the land prices have gotten to the point where it really agriculture is making, it's hard for agriculture to really sustain and to, and to pay for any of these.

1:08:38I had a, a good friend of mine, an ag family tell me that, you know, really the ability for agriculture to pay for these ranch properties. Farming is a little different, but on a strictly cattle standpoint, finding a way to get cattle to pay for these properties, really, that wagon came unhitched back in the 70s. So today, it's more of looking at how you can get the agricultural operation to pay for your operation, to pay for your expenses, hopefully get a decent paycheck out of it. But where you see the return is obviously when you go to sell that real estate or you look to 1031 out of an existing operation and upgrade into something a little larger in a possibly not so desirable area that isn't commanding these record prices from a recreational standpoint, if that makes sense.

1:09:31Does it feel like essentially most of the land that you're seeing come across your desk has been properly surveyed such that people aren't seeing it as a gamble. They're not buying and saying, oh, well, maybe there's a chance there's gold there or oil. Because we just saw there was a new rare earth element deposit that was found in Utah. And the Wall Street Journal called it the most significant critical minerals reserve in the United States, a whole bunch of rare earth elements. And that seems like, how are we not looking for that already? But I imagine that most of your clients are not thinking about their land purchases as lottery tickets, right?

1:10:16So how do you think about these wild card events that seem to be happening? And yet, what is your client base actually experiencing? You know, we really don't see that in our client base. Typically, what our clients are looking for is preservation. Sure. We have buyers that are typically very conservation-minded that look at the land as how they can improve it, how they can possibly reduce man's footprint on that landscape, enhance the wildlife, enhance the agricultural components, enhance the land so when they leave it, it's a little better off. A lot of what our role is, is actually educating these buyers to, you know, there's a great shot right there on a ranch that we have listed in northern Montana.

1:11:01But a lot of these new buyers that are in our arena today are looking at ways that they can help preserve the West, which is very refreshing in a lot of ways. They want to find ways that they can preserve the agricultural way of life, that ranching way of life. Oftentimes we'll see buyers that will come in, acquire an asset, and then go back to that owner and say, okay, we understand that the margins in the agriculture are very tight. Let's re-look at this asset and say, okay, if we have an influx of capital and we have the ability to put some capital into this property, what can we do to enhance it?

1:11:39Both from a production standpoint, but also from a recreational and a conservation standpoint as well. looking at it through a little different set of glasses and possibly what that operator has been looking at it in the past and finding ways that they can better preserve the ground, preserve that landscape, preserve that Montana and that Western way of life and not just come in and look at mining it, developing it, carving it up, putting small ranchettes on it or whatnot. We've really seen a shift away from that development aspect into more of a conservation-minded buyer. What's the process if you acquire a piece of land to actually build on it?

1:12:18We're based here in California, and the process is absolutely insane. I live in Malibu. If there's a property that you might look at, it might be reasonably priced, but you're looking at maybe six years to actually develop plans, get them approved, and actually start getting to the point where you could really occupy the space. what's it like in Montana from everything from a permitting process through even just like labor costs, all that stuff? I don't know if I want to answer that question necessarily. I don't want to see a big rush all of a sudden into our market. But I think you'd be pleasantly surprised, Jordy.

1:12:56It's significantly smoother. We don't have the bureaucracy in Montana that you'd see in a lot of other states. obviously there are processes there are permitting processes as far as building permits electrical electrical permits and whatnot but but nothing remotely close to what you deal with in california um you're it's much more personal it's uh it's much more hands-on uh it's much more streamlined um and and not always is it um you know with that being said we have a um a development here in Montana called the Yellowstone Club, which you may or may not be aware of, which is turned into quite a billionaire's resort area.

1:13:37Very, very high end, very high end. It's the who's who in the financial sector that are residing in that area. And what we're seeing is really the high, high end construction taking place in that kind of in that sector of our state. It, you know, we'll see some building in the more remote areas, but not the extravagant building like like we see up in the yellowstone club yellowstone you'll have a more modest like a two-bedroom condo for 20 million is that pretty commonplace yeah yeah how much does it uh how much does it cost in general to to work with you in general uh do you you know is there like a like like a floor price or how do people start to get into ranches, farms, land?

1:14:27Like what are all the different financial products or actual opportunities that you see people come to you with? You know, a lot of it, John, is just sitting down with a client and interviewing them. We spend a lot of time up front. Our time is money, just as a lot of our clients, their time is money as well. So we like to spend a lot of time upfront interviewing them, understanding what their goals and objectives are, looking not only short-term goals and objectives, but long-term goals and objectives. Not just of them specifically, but also their buyer. Where are they at with their family? You know, what are their, you know, what time of year do they plan on using the property?

1:15:05What do they want to get out of the property? What are they looking at long-term? You know, talking a lot from the construction standpoint. What those times look like. What are those timeframes? Getting them hooked up with the right people so they get good quality information. So what we do is a lot of times is spend that upfront time. So when we have a buyer that comes out and says, Mike, we've sat down, we've spent several hours with you on Zoom calls or personal meetings. A lot of times we'll fly to the client. We'll sit down with them at their house in California, Texas, East Coast, wherever it may be.

1:15:42Sit down and have that face-to-face meeting. What we do extremely well is personalize a process that so many clients feel is very impersonal. And that's really been our niche that we do extremely, extremely well. We're very high touch. These are big decisions with big dollars tied to them. And so we want to make sure that, A, there's no surprises. We want to make sure that we're totally up front. We have everything on the table. We inform and educate our buyers as best as we possibly can. So there's no surprises. That's the last thing any of us want is dealing with surprises when we get into a multimillion dollar or hundred million dollar transaction is surprises.

1:16:24So a lot of that is done up front and we sit down and talk them through that right up front. We explain the good, the bad and the ugly about these processes, timing, costs and trying to make sure that those goals and objectives that they have are realistic. And so once we get on track with that, we're very strategic. We like to aim like a laser versus a shotgun. So we're very direct in how we approach these processes. So when we put a property in front of a prospective buyer, it's something that they need to look at. And we've vetted it. We've gone through it. We've visited the property. We've gone through and already done a lot of the due diligence already up front before they ever even set foot on the property.

1:17:10So again, being efficient in the process, that's one of the things that we stress within our office is being efficient with our time. There's no wasted motion in what we do. And we convey that to our buyer and we convey that even to our sellers that everything we do has a purpose. We have very strict, very, very systematic protocols in everything we do. And, you know, I got to be honest with you, gentlemen, what we do, we're not building rocket ships here. Real estate is personal, and it's being able to execute at a very high level. And that's one of the things that we do, and we feel we do exceptionally well.

1:17:48We've transacted more$100 million-plus range properties than I can out in West. What's the total volume that you guys have done, if you're able to share? Oh, boy. I couldn't even tell you, Jordy, right now. But it's in the billions? Absolutely. Yeah, absolutely. Hit the gong for Mike. We got a gong here.

1:18:15I think that's a good thing. I got two more questions for you. We got to do the question. Yeah, yeah, yeah. But I got one more before that. Okay. Any restrictions on building an airstrip on a large enough ranch? If I want to create a ranch and fly a PC-12, land that, or a PC-24, is that all fair game? We have several clients with airstrips on their properties, private airstrips. Okay, let's hit the dog again. Again. And then we have a question we like to ask all of our guests, but it's particularly relevant for you. What's the biggest fish you've ever caught? Oh, you know, as crazy as this sounds, I don't fish a lot.

1:18:56I really don't. You know, we... You're too busy land maxing. We're busy. You know, and when I'm not at the office, we have a small farm. that my family and I have that's kind of my therapy. I get my hands in the dirt and it's where I work. We're avid, avid sports fans, so we travel around watching our local college teams. And my son is a college athlete, so my wife and I, we spend a lot of time on the road following him. And so I think one of these days I'll probably take up fishing. I do like to go to Canada with some good friends, and we go up and fish walleye and pike up in northern Canada.

1:19:37But around here, I just don't have time to get on the rivers too much. And as crazy as it sounds, we get on some of the most spectacular fishing water that you could ever imagine, that very few people in the world ever get to see. and you know i now with that being said some of my colleagues here in the office are exceptional and and very accomplished fishermen so that's probably a better question for for them i'm i i i like to work too much i'm with you i'm with you i'm with you uh great stuff well thank you for coming on breaking it down uh and uh i'm sure there'll be another land story in the news sometime soon and we will reach out.

1:20:17I appreciate you having me on, gentlemen. Thank you very much. Yeah, great to be here. Merry Christmas to both. Merry Christmas. Have a great day. We'll talk to you soon. Let me tell you about FALL, the generative media platform for developers, develop and fine-tune models with servers, GPUs, and on-demand clusters. Up next, we have Matt Levine in five minutes, but let's go back to the timeline and clarify something with Augustus Dorico. He says, am I tripping or did TBPN used to stand for Technology Brothers Podcasting Network? He says, Technology Business Podcasting Network. Did we get gentrified, bros?

1:20:53What happened? Did you already break it down? I mean, I think real ones will always know what the TB and TBPN stands for. Yes. We actually never refer to TBPN as like four words. It's just always the initial. Always the initial. Leave it up to the audience to interpret. Yes, it's becoming a thing. But it is actually on our website. It is spelled out on our website. It says Technology Business Programming Network. I still get that wrong. Often I say Production Network. It's not production. It's Programming Network. Of course, it's a nod to ESPN. Of course, technology and business is what we talk about.

1:21:33And so that made sense. And Technology Brothers, TB, always remains. Yes. in our hearts. Eternal, eternal. Far epsilon. What's up with what has Rivian been up to this week? We should play this clip. RJ's been on a tear. He's making a serious run at self-driving. He's chipped up. Let's play this with sound, please. And now for the first time on R2 we're adding a third sensor, the LiDAR. Oh, they're doing LiDAR? That's a crazy move. That's bold, right? I don't know. That seems like crazy. Yeah, clearly no one clapped when he said that. Go back. That was a really awkward pause. Dramatic pause. And now, for the first time on R2, we're adding a third sensor, the LiDAR.

1:22:29The LiDAR. People are like, no, my iPhone camera is going to get fried. That is a weird thing. Apparently, LiDAR on certain cars, not all of them, can be so strong that if you point your camera at it with your phone, it can permanently damage the sensor. And so there's some recalls. I think it actually only hurts the phone. It doesn't hurt. Don't worry. You're good. Okay, totally good. Nick, could you bring over that bag right there? What bag? We got to see this. Look, we signed up for Picnic, TK's new service. Let's see this. Let's see this. What did you get? TryPicnic? TryPicnic.com. Look at this.

1:23:11We're supporting Travis Kalanick and Cloud Kitchen's team. This is unboxing. What did you get? You got a slot bowl? One slot bowl. One slot bowl. Anyways, it looks fantastic. We're excited to check this out. One of our interns signed up. Branding. Sign up for the service. The orange bag stands out with the green background, too. Here you go, Nick. You can have your lunch bag. This feels like a, yeah, this is iconic. This is going to be seen all over the place. He's cooking. They're cooking. He's literally cooking. Well, let me tell you about public.com. Investing for those that take it seriously.

1:23:46They got multi-asset investing. Industry deals. They're trusted by millions, folks. Tyler posted yesterday, you're telling me I brainwashed this cult. Yes. Didn't get into the three-figure light club. But Kristen Forti says top 20 tweets of the year. So you made a top 20. Top 20. That's good. Yeah. I only need four more likes. I'm at 96. Yeah. Everyone, go give it a like. Go give it a like. There's a chance. I tried to artificially give it a boost by quote tweeting that one and not the other ones. But it did perform the best, right? Correct. Because we ran the experiment. We posted all four of Tyler's jokes.

1:24:26and per my prediction, did a brain walk. All right, you can turn the GigaChat filter off now, Tyler. You can turn it off. It's kind of an old bit at this point. Ridiculous, ridiculous. Well, we have Matt Levine from Bloomberg and Money Stuff joining the show. He's in the Restream Waiting Room. Let's bring him into the TVP and Ultradome. Merry Christmas, Matt. How are you doing? Merry Christmas. There you go, guys. Thank you so much for taking the time to come on the show on a Friday. Thanks for having me. Great to meet you. And thank you for creating wonderful content that at times we have many times included in our show.

1:25:04Triple glaze. Yeah. We love the work. It's been fantastic. Thank you. Thanks. I did want to start with a little bit of background. I wanted to know about the day that you decided to become a journalist. What was the transition like? What was like the first inciting element in that story? Did you know we were headed towards a hyper-financialized world where we would be able to gamble on this very conversation? I don't know, man. I was working at Goldman when I decided to become a journalist. I was already pretty hyper-financialized. Oh, that's true.

1:25:39The day I decided, I went to my boss and I was like, I'm quitting to go to Deal Breaker, which is like a financial gossip blog. And he was like, that's fine. You can stay for another two weeks and finish up your work. And then he was like, wait, did you say Deal Book? And I said, no, deal breaker. And he's like, OK, no, you have to leave the bill. Yeah, we really. That's remarkable. Well, I wanted to take your temperature on a bunch of different topics. The first might be prediction markets. I mean, Jordy was joking about it, being able to gamble on this very conversation. Yeah, we've had some uncomfortable moments throughout the year where people flood into our chat.

1:26:17and they're betting on what Sam Altman is going to say or Mark Zuckerberg is going to say on one of our conversations and it becomes very distracting because everyone's just saying, say this, say that, obviously trying to manipulate the conversation. But yeah, it's been... I get a lot of those people. I get a lot of... The overlap between prediction market people and my readers is pretty high, so there's a lot of people emailing me. Wait, wait. So, so, so what, I mean, one of my main questions is like, is like, how do you actually get to some sort of ground truth for what's going on with prediction markets?

1:26:53Because there's, there's a world where it was like, you know, this incredible crystal ball for understanding the election. Then it turned into, okay, this is going to give you information about all sorts of different things in the world. And then you peel back the onion and you think maybe there's just a lot of sports betting going on. And how do you actually think about the shape of the business today and where it's going? You know, I think that this stuff about what people will say, you look at the volumes on these things, they're like thousands of dollars. Like it's not, there's a lot of stuff that is fun to write about because it's weird and silly and susceptible to manipulation, but it's just not that big, right?

1:27:35When people talk about these companies raising at huge valuations and becoming huge companies, it's 80 % sports gambling. That's a number I made up. It may be less than that as a volume matter, but the next leg up is sports gambling. That's why they're businesses. I think if you talk to them, their view is sports gambling is this huge opportunity for them to get people there, to get customers who really like gambling and to get professionals who can make money gambling against the sort of dumb money customers. And then once you have that, it's easy enough to expand into markets that make us more informed about the future of the world.

1:28:22I don't know that that's true. And if they end up just being weirdly regulated casinos, then that's possibly still a really good business. the question is how does the market actually evolve because you have every traditional sports book adding prediction markets and so if you have new businesses that can be in 50 states on day one maybe that grows the market a little bit but overall you know what what is what is the sort of like total enterprise value that all the popular online trading and or betting platforms can really sit at is kind of unclear, right? Yeah. Clearly the big opportunity is cannibalizing sports betting.

1:29:06The other thing is it's not clear what they are because they're exchanges, right? So they're not making money by trading against customers, right? And so one possible evolution of the market is you end up with people who are either literally sportsbooks or who are kind of like hedge funds that are replacing sportsbooks being market makers on these platforms and sort of making their money by trading against retail flow. but like, you know, they're a separate business from the actual, you know, CalShane Polymarket platforms. Yeah. Do you have an idea of how sophisticated like Wall Street is around sports betting?

1:29:39Because you have to imagine that like at some point Jane Street or Citadel said like, well, what if we just went and put someone in Las Vegas and started trading? Could we make an edge there permanently? it feels like there might be a wave coming where Wall Street starts having like serious desks dedicated to sports betting. But or is that already happening? Or do you think that won't happen? It's already happening, right? I mean, like Susquehanna is the big one who like, you know, famously have a sports desk and like other big kind of like high frequency trading market making firms are dipping their toes into it.

1:30:17I think it's hard for them to get into like traditionals, sports book trading, but it's very easy. Yeah, because if you're too good, you just get booted. Traditionally, you get limited, and it's just like a different interface, and a different regulatory interface, too. If you're trading on a commodities exchange, you're trading on a commodities exchange. They can do that. So I think they're very much getting into it, and if legal sports books regulated as commodity exchanges are here to stay. It's also just like whether or not it's a good business opportunity, there's a huge personality overlap.

1:30:55Like you have these high frequency trading firms, like it's the same type of analysis, it's the same type of adrenaline. So like they're very happy to get into sports books. How are you thinking about insider trading on prediction markets? It feels like we've, I mean, this week, it seems like multiple people have been making the steel man argument that it's good. Yeah, the problem is, in some ways, it feels like if you don't have insider trading then it's just a bunch of people guessing and if you do have insider trading then you potentially get greater accuracy of of uh and and like more value out of the markets and so it just feels like a very tough uh tough i mean it's very tough for the prediction market platforms themselves to actually talk about right like my impression is that everyone who started a prediction market is a true believer in the idea that like the job is to make markets as informed as possible and like they all secretly love insider trading but they're also trying to get approved by the CFTC and so they have to say we do not allow insider trading.

1:31:59I think the rules are weird right? I mean the rules of insider trading in commodity markets are less strict than they are in securities markets because traditionally they're for like you know grain producers hedging their grain production so like you're supposed to insider trade. And I think maybe a little bit of that philosophy will be imported into the prediction markets. But if you look around it, the Justice Department is going after baseball players for working gambling and baseball. There's no appetite for legal insider trading in most of the markets that will be big money in prediction markets.

1:32:36So I think that the regulatory situation is kind of going to shake out that insider trading is kind of prohibited, but maybe like a little harder to monitor than it is in the stock market. But definitely philosophically, people in this market don't want that. Do you think we just need a like a big like bombshell case or story to sort of like catalyze some action around that? because it feels like sports books have existed for a long time. So I'm interested in understanding like what would actually change because, because for what, like, I don't know, 50 years, it's been, you know, longer it's been for decades, it's been illegal or, you know, against the rules for a baseball player to go and put a big, you know, bet against them and then throw the game.

1:33:29And so that should just that, I would imagine that that framework just carries over to prediction markets but uh maybe if it's lagging then it we won't actually get codified until there's a big headline case yeah i think they'll be more codified in prediction markets right i think the prediction markets have rules saying you can't use material on public information whereas like the sports books the sports have those rules too right but like um uh i think that i think that it's going to be pretty codified like that but you know you're going to have a lot of the sports stuff, the sports leagues have a real interest in policing and the Justice Department has a real interest and that's a sexy case to bring if you're arresting baseball players.

1:34:13People betting on Google search results maybe is a little bit less interesting and a little bit more lucrative. Yeah, that makes sense. Also, we live in a world where fraud enforcement is just kind of less of a priority So people will definitely get away with stuff in the next few months. Yeah. How did you process Trump saying he would, quote, would consider eliminating taxes on gambling winnings? This is him joking around or something? Yeah, it was kind of offhand. But then the nature of the Internet today is you have like 100 accounts on X that are like pseudo news wire accounts. And they'll take one line out of context and then blast it out and they'll get a bunch of engagement.

1:34:55And then you realize, you know, you look to like an actual credible news source and you realize that, you know, again, fully, fully taken out of context. But do you think we should be incentivizing gambling in the country? So a couple of things. One, no. Two, you know, like, like, like being the friend to crypto has paid big political dividends to him. And like, if you're sort of looking around for what other like aggressive young male demographics you can appeal to, you can might be like, oh, I'll give the gamblers what they want. And then the other thing is there is this weird situation where the tax bill maybe somewhat accidentally limited deductions of gambling losses.

1:35:39So you can only deduct 90 % of gambling losses, which if you are a professional gambler is like quite devastating. and one theory is that that has been very good for the prediction markets because there's an argument that if you you know are trading on prediction markets and you win some and lose on you win 51 percent of your bets you can deduct all of your losses whereas if you're doing that on a sports book you can deduct 90 percent of your losses and so it's the difference between being profitable and unprofitable yeah as far as i know that was sort of an accidental consequence of all of this but like you could imagine a you know trump like you know trump administration liking the prediction markets and wanting to send business their way yeah uh i want to talk about the potential spacex ipo a lot of people have been processing it in different ways some people were surprised this was happening just given that uh spacex has thrived in the private markets and has plenty of access to capital and and elon has had a number of bad experiences in the public markets I have a kind of working thesis that this is could be a spite IPO I think we're gonna see a lot of IPOs next year and if you're raising a billion dollars Let's say if you're gonna float at like a 50 but you know If you're 50 billion dollar company and you only need to raise a billion dollars You're not really threatened by IPO But if you're a foundation model lab such as open AI that wants or anthropic that wants to raise tens of billions of dollars It's very possible that a 1.5 trillion dollar SpaceX IPO could kind of like suck the oxygen out of the room is, you know, I want you to kind of give us your take broadly on it.

1:37:15And I'm curious if my tinfoil hat schizo theory has any merit. Yeah, I don't really know. Okay, so first of all, like, you know, I read companies in my co-public next year all the time. So I don't know. I mean, I assume it's true, but like I'm not totally sure. um two like one thing i've read is that the use of proceeds for this hypothetical 30 billion ipo is to put data centers in orbit and like you know this gets to your spite theory like in a world where there's you know 10 trillion dollars of broadly speaking ai capex needs like there's going to be competition for that and there's going to be like like like spacex can kind of spacex has been able to raise as much money as it wants in the private market and like you know achieve a you know 800 billion dollar valuation and like send rockets into space and be like a fairly capital intensive company while staying private but like if the next leg is you know they need tens of billions of dollars of ai-ish spending then uh you might reach the limit in the private markets and And yeah, you might reach a little bit in the IPO market too, right?

1:38:28Like you might, like, there might just not be enough money to go around for all of these AI companies. And then I don't know why SpaceX is in the AI company category other than this data center. Well, so here's the other. It is like the Elon complex, right? Yeah, but the other theory is like there's a world where XAI could get rolled into SpaceX and taken public around the space data center narrative. And I think that there's a lot of people that would be excited about that narrative even if other people in the space economy are saying, hey, space data centers will happen, but it's probably more like a 10-year timeline versus a three - to four-year timeline.

1:39:05Yeah, also, I mean, I've read that they're looking at a$1.5 trillion of valuation on$22 billion of revenue. It's all on a pretty deferred timeline. It's in orbit. It's in orbit. Yeah, you're not paying for that year's earnings. So you need some sort of tenure story to tell. Yeah. But I mean, to be fair, it would be easier for, I mean, at least I believe it'd be easier for SpaceX to acquire XAI than Tesla to acquire XAI because of acquisition laws around a public company buying something big versus a private company buying something big. Does that sound roughly correct? Like, would you handicap?

1:39:48Oh, yeah. It sounds roughly correct. Although, I mean, Tesla has a form of buying, you know, other Elon companies and, you know, has moved to Texas in order to make it easier. Right. Like, I don't think Tesla would have that much trouble buying, but they would get sued, you know, if you do it in SpaceX. Well, I think I think part of the challenge is that Tesla shareholders might say, like, hey, we already have a really good AI team. We've been working on self-driving. Like, we don't need XAI. We don't necessarily want to dilute ourselves, you know, whatever XAI's current valuation is or whatever price it would come in at.

1:40:27So I just think that's it. I guess. I just feel like the sort of standard Tesla shelter approach is like we're going to trust Elon's intuitions on these things. And I mean, they bought like, you know, SolarCity. SolarCity, right? Yeah, but there still was pushback. And that was like a much, I'm assuming that'd be one percent of the, that'd be one percent. Like SolarCity was like one point something billion, wasn't it? It wasn't like a hundred billion. Like I'm assuming XAI has a lot of debt. It raises a lot of equity. It would be somewhat. It has the Twitter debt as well. It has a lot of debt rolled in.

1:41:01Well, speaking of debt, I mean, Netflix had to issue some debt for this Warner Brothers deal. I'm interested to know your thinking around how the Warner Brothers process will go. oh, are we going to wind up in a quiet period for the rest of the year as we go into the holidays? Or do you think it'll be just as many headlines as there have been? Where do you think it actually lands? What's the nature of the story? I don't know. It's been surprisingly quiet to me. I think it's weird that Paramount, first of all, launched a tender at the price that was rejected. Rather than saying, we're going to raise a few bucks and go to the shareholders, they launched at the price that the board said no to, and that they've said publicly that it's not their best and final offer.

1:41:49I know. Crazy. What is the logic there? Is there any logic where that makes sense? Okay, so I think that where that makes sense is that it's not a real tender offer, right? Like they can't close a tender offer for reasons including antitrust, but they clearly want to do a friendly deal with the board, right? And so I think that saying very clearly we could give you an extra two bucks if you sign a friendly deal with us is a good way to get you know to the board and to try to strike a deal with the board um so i think that's the logic there but uh i don't i don't know what the board is doing right i mean i think the board likes the netflix deal i think that i also think that like um paramount has two things going for it one is that they think they've offered more money, or certainly they can offer more money.

1:42:43And then the other is they really think the Netflix deal is dead on sort of antitrust slash Trumpy reasons. And I don't know how that plays out, right? Because that's a potentially year-long process, and presumably nobody wants to wait that long. But I think there's some ability to wait a few weeks and see if Trump says nastier things about Netflix to try to pressure the board to come to a deal. I don't know. I'm surprised that there's been so little news, right? I mean, like, since Monday, like, no one, like, I would have expected someone to raise their offer by now. That's a good point. Yeah.

1:43:18Hmm. What was your, have you formulated a take on the OpenAI Netflix deal? We kind of landed on. I mean, Disney deal. Sorry, yeah, OpenAI Disney deal. We sort of landed on it being, like, sort of an interesting way to create less commoditization in, you know, the AI application layer, the consumer chat experience. They all are starting to feel very similar. I don't know if you felt this way, but it feels like all the models are, you know, sort of at the same level. The benchmarks are pretty similar. Well, if you can get Spider-Man in one and not in the other, maybe that's a differentiator. Have you, have you processed that deal similarly or do you have a different frame of mind around it i haven't thought that much about it but that seems right to me and it is like you know it's like you know you think about like the netflix uh warner situation right like you have like you have like content distribution services and then they have like content libraries right and there's some combination of acquiring the content and making you know commercial deals with the content providers right like like here one possibility is that the AI chats are ultimately the next, you know, dumb entertainment channel, right?

1:44:36And so if you have the good properties in your dumb entertainment channel, then like when people are like, oh, I want an AI to create a movie about me, I'll go to the one that has like the Disney characters like that, I don't know, it kind of makes sense, right? And it's like a,

1:44:53like the thing that is striking to me is that the AI companies talk about this sort of fundamental reshaping of society and discovering superintelligence. And then they're a little bit consumer entertainment products. But if you're a consumer entertainment product, you want the Disney characters. Also adult entertainment. Yeah. Yes, right. Disney character porn. It really has been just kitchen sink of messaging. It is funny that adult mode and Disney will be rolling out in the same effectively 30-day period. I don't know enough about the deal to know if they have... I hope they have... I hope they have a carve-out.

1:45:33They do have a carve-out. They do. This was confirmed. They did say that there are lots of restrictions on what you can and can't do with a Disney character in open AI properties. I'm sure that was key. It's wild. We're going to see the jailbreak. That's going to be good. There will be some jailbreaks. I think there won't be that many jailbreaks. I think in the last two years, they've gotten pretty good at locking it down. So that was kind of my prediction, I'm sure. But there will always be chaotic stuff. It's inevitable with AI and the internet.

1:46:10How should tech people be thinking about the growth of private credit? I feel like there was an era where folks in tech were understanding that the foundation model companies, Anthropic, OpenAI, were operating at a truly unprecedented scale. The capital war was bigger than Uber, Lyft. It was bigger than anything folks in tech had seen. It was certainly more capital consumptive than Google was before it IPO'd. Just a little bit. By a lot. So all of a sudden you have tech people that are grappling with the prospect of a$10 billion debt financing for something that feels like a startup. It feels like a startup project.

1:46:53And so it was easy to sound the alarm bells like debt is coming. Debt is scary. Debt blew up the economy in 2008. It's going to happen again. But you talk to a lot of people in private credit and they say, no, there's plenty of areas where people pay their debt obligations on time. How have you processed the, is NVIDIA holding up the global economy? Is OpenAI going to blow up the entire global economy? Those types of Cassandra-esque narratives that have kind of spiraled and maybe are coming back down to earth now.

1:47:33Yeah, I don't know. I mean, it's fascinating that, you know, like insurance companies investing in investment grade debt are like ultimately underwriting like a stream of payments from startups. Right. I mean, kind of what is happening here. Deeply unprofitable. Deeply unprofitable. Deeply unprofitable startups. Yeah. But like also a lot of it is like people underwriting a stream of payments from Facebook, which like, you know. It's very profitable. Yeah. Yeah, like the Blue Owl data center for meta super intelligence, one gigawatt, the Hyperion thing. It's like meta's going to pay that bill, at least I think so.

1:48:13Right. And if you had made like an equity bet on like – if there had been a way to make an equity bet on like meta's pivot to the metaverse, like you would have lost all your money. But like presumably they paid their supplier bills for that, right? Oh, totally. Like there's like a difference there, right? If you're underwriting these hyperscalers, mostly these are very investment-grade, very cash-flow-y companies that could turn off the CapEx if they needed to. But right, you're underwriting a lot of fixed payments on CapEx. And it seems a little aggressive for a credit investor. but they're all like, one thing about private credit is like, it's not going to blow up the economy.

1:49:00Like it's, you know, it's like insurance companies making these bets. So it's a little bit longer term capital. Yeah. But I don't know. Is there anything in the economy right now that gives you the same sort of jitters that you had during your famous interview with Sam Bankman-Fried, where it felt like at the time you were clocking, like this just doesn't make sense. The math doesn't math. Like it feels like we're frothy where everyone kind of goes around saying like, yeah, we're in a bubble. But at the same time, it doesn't it feels like it's a bubble that's built on some real stuff. Like even even the prediction market stuff, it's like I can at least trace the cash flows.

1:49:37I might think sports betting isn't the greatest thing, but like at least I know that the businesses are going to make money. Right. Like, you know, AI sort of replaced crypto as the sort of darling of a lot of investors, but the consumer product is very tangible, right? Like the crypto stuff is all like, oh, I'll make tokens that other people can trade for more tokens. Wait, that actually sounds like AI too. Because I make anthropic tokens, I sell them to you, you make cursor tokens. The circularity is, you know, if you want to be troubled by the circularity, it's like a little weird. but it's um the difference between that and like crypto where no one like like the thing about sam bankman freed that was obvious at the time was that he didn't care about crypto he wasn't like oh yeah this is a world-changing product it was like oh yeah this is a casino where people will give me money um and like ai is there's a lot of people who are true believers and again they've rolled out consumer products that disney's gonna license its characters right i mean like there's a real um uh sort of there are many real obvious use cases and so like there's a lot of value being created and then the question is like is it commensurate with the you know 10 trillion dollars of debt that's being incurred and that's uh it's not obvious but it's like you know there's there's something there there's not how much how much would i have to how much would i have to pay you for you to agree to not use any ai for the next year um i'm kind of a lot of like i mean i use AI, but I'm assuming it's like for research here and there, like better kind of search.

1:51:16Give us the prompt for your column. Give us the prompt. People pretty regularly email me. They're like, I asked ChatGPT to write about this and the stuff I love Matt Levine. It did pretty good. And they sent it to me. I'm like, okay, I'm safe for another three months. It's like never close. No, it just doesn't get the flavor or something. I don't know. The answer to your question is less on you than I kind of do it for. Yeah, yeah. How have you been processing Oracle over the last six months or so? They're getting zero credit for their backlog, their half a trillion dollar backlog. I think they're trading at less than the backlog currently.

1:52:03they you know people have brought up the dot com bubble and obviously are drawing comparisons between the two moments but what's your view about Oracle being like not the darling of the AI bubble I don't really know

1:52:23they're just not I don't I don't know enough about like Oracle's backlog but I think they're not just you know they're not the name that people go to as the as the alien darling i don't know the dot-com bubble is like you know it seems like a reasonable comp in that uh i don't it just feels like obviously

1:52:48even if there's a huge shakeout there will be huge value you know there'll be an amazon of this bubble right like there'll be big important survivors of it which you know again like i can't say it wasn't true of crypto but like there's nothing inevitable about that in crypto right like that was you know like there's there's there's the possibility of nothing happening there whereas here it's like like the changes to the economy and to society are kind of already tangible the thing that's somewhat of a narrative violation is the like the median crypto fund has actually done pretty well over the last few years and it's possible that the median AI focus It is very much like the dot com boom It's like you gotta be in Google or Amazon Or you're probably in a lot of trouble And And with crypto Because it's so liquid There are so many funds that were trading in and out Even if something went way down It's like well they already distributed They got out early There's tons of ways to make money I don't know One kind of random Question on your workflow, I'm assuming people email you kind of like tips all the time that are really trying to feed you information on their enemies, things like that.

1:54:06How do you kind of... I'm not an investigative reporter, and so I don't... I'm not that useful for that. But yeah, people are like... You should rant about this. You should call this security fraud. What's your what's your process for trying to figure out what of that is like actually real because i mean we we get that where people are trying to like convince us of certain narratives and and we're trying to process you know maybe off air trying to process how real something actually is um you know again i don't like do a lot of investigative stuff so if people are like oh look into this secret thing i'm like no yeah um so like they you know like if i'm if they're sending me information about their enemies it's like here's their 8k filings and i can read them myself and I do try not to I used to like find it flattering when like you know big finance people were like let me tell you about this and then I was like they're just shopping me their version and so I try not to yeah sure I try not to either have those conversations or if like I have conversations with the hedge fund manager about how their position is so good I just don't write about it because I don't I it's like too easy to be to be God bless you.

1:55:22I'm flattered and persuaded into thinking that what they say is right and so I just try not to expose myself to it very much. That's good. Yeah. I just try to, you know, like people are like, oh, this is an interesting thing. Like, okay, send me the public documents and I'll read them and I'll make my own thoughts about it. There's a balance. Somewhat related question. You have to get some information from people, but I try not to be hearing their opinions. Somewhat related question. What is your theory on why Bloomberg is able to retain top journalistic talent? They've seen very little churn over the last couple of years relative to other legacy outlets.

1:55:56What's going on? What's the secret sauce? um i mean there's a lot of things like we have a great audience like the audience is so good like it's so you know there's like the feedback that i get from readers it's like they're so smart like it's it's so concentrated in the financial industry so like the audience is so good um it's the best business model in media like we're a good stable profitable company in a world where that is not true of a lot of legacy media. And I mean and you know and there's a flywheel where like your colleagues are great. Like I really like like I wouldn't leave Bloomberg just because my friends are all here.

1:56:34And then the other thing is like it is a huge organization that nonetheless gives people a lot of freedom to do weird stuff. Like what I do

1:56:47like I've been doing this for like 10 years and you know if I tried to do it at like another media organization they would have various statistic objections and they'd say are you sure you can do it this way like i feel like i proved out the model and so bloomberg just lets me do it but like bloomberg does that a lot right i mean like oddbots just had its 10th anniversary party this weekend like oddbots is a weird overnight success yeah it's like a program that just you know like a lot of people in media would have been like oh that won't work and bloomberg just let them do it right so there's a lot of stuff like that where it's a huge organization that also is like quite experimental.

1:57:21Agile. Yeah, and gives people a lot of freedom. That's really cool. Yeah, that's great. Well, thank you so much for taking the time. Yeah, thanks for having me. This was fun. Really enjoyed letting us bounce our theories off you. Yeah. Well, have a great rest of the year. Have a great rest of the day. And we will talk to you soon. Thank you so much. Cheers, Matt. Goodbye. Fin.ai. It's the number one AI agent for customer service. automate the most complex customer queries on every channel within dot ai our next guest is mike gallagher from palantir he's the gallagher i don't know if that one's gonna stick but hopefully he's here welcome to the stream merry christmas how are you doing do you have some christmas music for mike gallagher thank you how are you doing i'm good how are you guys What's the nickname?

1:58:19The Gallaghanator? That didn't stick. No, that one's not sticking. Have you had any nicknames throughout your career, throughout your life? Mostly just Gallagher. G Money for a while. G Money. Yeah, I think that's it. Mixmaster Mike G. Was that on the hill? What's that? Was that on the hill? G Money. No, that was like high school, college. I imagine it was the floor. I think that sounds like a high school name, not necessarily one in Congress. But anyway, it's great to catch up with you. I hope you've been having a wonderful year. It seems like Palantir's been on a tear. I'd love for you to take us through the news today and kind of get us up to speed on what's happening in shipbuilding specifically.

1:59:02And then I'm sure we can zoom out and talk about shipbuilding more broadly and just geopolitics and competition. Well, I wonder if we could reverse it. I think it's important to make the geopolitical case first. First of all, you guys seem to be crushing it as well. I see you everywhere. I have merch in my office now. All my friends are constantly on your show. So congratulations on all your success and taking over the world. It's very cool to see. Thanks for coming on so early and helping us. It was huge. Hey, listen. Some call it the Gallagher bump that you're now a beneficiary of. Gallagher bump.

1:59:39The Gallagher bump. The G-Money bump.

1:59:44Anyway, geopolitically. Yeah, that's right. My entire eight years in Congress was devoted to this question of how do we enhance deterrence with respect to China? And if you look at it, there are things we need to do in the short term, killer robots, a lot of the stuff, andurals building, long-range precision fires. But over the long term, if you just look at a map of the Pacific, we need a bigger Navy. We had a four-structure assessment that called for a 355-ship Navy when I was a freshman member of Congress in 2017. We made it the official policy of the United States to get to a 355-ship navy as quickly as possible, as quickly as practically possible was the language.

2:00:22And then the size of our fleet continued to shrink. It's on track to bottom out of 279 ships in 2027, which happens to be the year that Xi Jinping has set for having his military ready to invade Taiwan should he make the decision to move. So if for no other reason than if you look at geopolitics in the most fundamental sense, the collision of geography and politics, we need a larger Navy to preserve the peace. We need to start cranking out ships. We need the high-low mix of ships. Now, the reason we haven't been able to do that, I think, is a combination of factors, right? We have had an inconsistent demand signal from previous administrations.

2:01:03And that's usually what the shipyards say. It's like we don't know the right mix of ships that the Navy wants to build. You have inconsistent budgeting from Congress, right? I mean we go from omnibus bills to big beautiful bills to continuing resolutions. Continuing resolutions are particularly destructive for the Navy. A former secretary of the Navy said because of continuing resolutions, the Navy put about$5 billion in a trash can and lit it on fire. All of this is to say as we were trying to figure out – What are the dynamics that causes that waste? Yeah, the biggest issue is under a continuing resolution, you basically agree to fund a previous year's levels.

2:01:42You can't have new starts, right? You can't fund new things, whether it's a new ship class or a new innovative AI program or a new robot that scares the hell out of Xi Jinping, right? And then there's just also a lot of uncertainty hanging over a CR. They're usually short-term, hard-to-do long-term planning. There's this other phenomenon where the military actually, because of how messed up congressional budgeting is, the Pentagon fails to spend about$15 billion a year. So think about that. For the last 10-ish years, we've lost about$125 billion in defense appropriations, money that was appropriated for defense that went unspent.

2:02:23It goes back to the Treasury. It sits in abeyance for five years, and then it evaporates. For$125 billion, I could build you a regional military that could definitively prevent World War III if I was unrestricted in how I could use that money and how quickly I could move. Certainly you could have prevented the decline in the Navy's number of ships, like you mentioned just a bit earlier. Exactly. I think there's another thing, right? We obviously went to war in the Middle East after 9-11. I was part of these wars. I deployed twice to Iraq. The Navy was largely the bill pair for these wars. We had a large infusion of money into ground forces and overseas contingency operations.

2:03:08What we didn't spend money on was investing long term in the future naval fleet and growing the size of that fleet as well as the mix of capabilities on various ship platforms. And then we had cost overruns in key programs, whether it's the Ford class carrier, Columbia class submarine, you know, the Constellation class, forget the littoral combat ship prior to that. So all that is to say, for the first time in a long time now, in the Trump administration, under the leadership of Secretary Phelan, the Navy is taking advantage of some money that was appropriated by Congress for nontraditional bets on leveraging AI and autonomy and applying it to shipbuilding and bringing in Palantir in this specific case to turbocharge production in key shipyards, both public and private yards, and 100 key suppliers.

2:03:58So this is$448 million over two years. It's based on pilot work that we've already done at various shipyards and suppliers, the results of which have been incredibly promising. At one shipyard, we saved over 200 planning days, 20 planning days a week. You may ask yourself, there's only seven days in a week, but that's because there's four people whose full-time job it is. They spent 160 hours working on mandraulic processes. Now with our software, it takes 10 minutes. At another supplier, a process that used to took 200 hours for manufacturing bill of materials is now down to 12 seconds. So just by modernizing the underlying software, leveraging AI, it's our belief that we can maximize production at the shipyards and then link the suppliers to the shipyards and all of that, what's called the maritime industrial base, to the Navy itself.

2:04:48so key Navy officials in general and the Secretary of the Navy in particular can look at the maritime industrial base and understand what's going on in real time and make critical allocations decisions. Because a lot of what's happening at the yards, particularly the public yards, is just simple decisions about what do I buy now, what do I not buy now? And there's really no source of truth to make a sophisticated judgment on that. And that's what causes us to waste money and time. So this is all about maximizing production, getting more ships in the water, and ultimately fulfilling that geopolitical need for a bigger and more lethal Navy.

2:05:24Are there sailors that don't have boats right now? Or are we going to recruit a bunch more sailors as we build out the physical boats in the Navy? I'm just wondering because I imagine if you are an American citizen, you join the Navy, your dream is to be on a boat, and then they're like, oh, we're all out of them. You've got to stay on land. That's got to be depressing. But do you think there'll be a recruiting push for more Navy sailors as we build out our fleets? Or are these going to be autonomous boats? Are these support ships? How do we think about the human side of the future of the American Navy?

2:06:00Sure. It's a great question. I mean, one thing we've seen in recent years was a full-on recruiting crisis that had little to do with the decline or the growth of the fleet and more to do with a lot of, at the time, it was, in my opinion, a misguided push for diversity, equity, and inclusion initiatives that were based on species political science that really turned off a lot of people. We had a retention crisis as well. The interesting thing is, at least in most services, that's starting to turn around. I was just at the Reagan National Defense Forum. They release a survey every year. And one thing that the survey results reveal is that the so-called Hegseth reset is extremely popular among current service members, which is important because that's the big recruiting pipeline.

2:06:45It's usually someone who is serving or recently served to tell someone else, yes, you should join the military and among veterans. So when it comes to things like gender neutral combat standards and some other changes, this is wildly popular. So the recruiting crisis has gotten better. I actually think over time, it's not going to be a problem if we stay on that trend because, and this is the second part of your question, yes, more of our ships are going to be autonomous. There's still going to be destroyers that are complex man ships. There's still going to be carriers. There's still going to be submarines.

2:07:19Submarines are our biggest asymmetric naval advantage right now. But increasingly, I think you're going to start to see a lot more autonomous vessels in the fleet, both autonomous surface vessels and undersea robots. And that's where you have, I think, as we talked about before, I believe, what's most exciting about the current moment is you have so many people in your world, right, in the investing world that are willing to put capital into nontraditional defense tech startups that are building really cool capabilities for the Navy. And I think this is a really exciting moment for the nontraditionals.

2:07:51I think the defense industrial base is going to look a lot healthier four years from now where, you know, Palantir shouldn't be the last company to enter the S &P 500 as a defense technology company. We need five more companies like that. And so I actually think the companies that are building autonomous vessels, that are building killer robots, that are building long-range precision fires, hypersonic missiles like Castellian in California, I think it's a great moment for all those companies. Yeah. I mean, it's hard to pick a favorite branch of the military, but it feels like - Well, Marine Corps.

2:08:23Obviously, it's the Marine Corps. I mean, it's not hard. It's not hard? Yeah, I'm a Marine. Hit the gong for the

2:08:33Let's go. We're not picking favorites. But I am super fascinated by this Palmer Lucky line that he's been delivering a few times about. He wants America to be the world's, not the world's police, but the world's arms dealer. And so the idea that maybe if he's building something that can shoot down a drone, that goes in the hands of the Ukrainian service members. And maybe America doesn't put boots on the ground in Ukraine, but we do put equipment that can neutralize an attack for a Ukrainian soldier. And so I'm wondering how that interfaces with the naval strategy in your mind. And are there are there do you think that are there already boats that we're going to be supplying to other allied navies?

2:09:29We want to build up our own navy. But is there also an incentive to build up ally navies as well? And what role do you think the U.S. will ultimately play in that dynamic? A hundred percent. Well, first of all, Palmer is at the leading edge a lot of this stuff. And one thing that gives me hope as we look at this new Cold War with communist China is like, I think our, you know, Our private sector leaders, Palmer's a great example of this. Yeah. Oh, did we lose you? Oh, no. A nation state again. What a coincidence. Wow. He starts mouthing off about near-peer competition. It gets immediately taken down.

2:10:05They get immediately taken down. Good question. Sorry. We're under cyber attack very clearly. We thank you for bearing with us. Well, we have technical difficulties. I know. I know. The Chinese Navy. It's crazy. Okay, anyway, kick us back off. Well, I'll make it simpler. I think it goes both ways, right? Like we are seeing foreign shipbuilders, world-class foreign shipbuilders like HD Hyundai with the Palantir's had a longstanding partnership with. They represent, I think, 17 % of the global tonnage that's built. And a lot of the work that we're now applying to American Yards is built on some of the lessons we've learned in applying AI to Korean shipbuilding, Hanwha, et cetera, are trying to invest in America.

2:10:50Hanwell bought the Philly shipyard, and that's great. We need more shipyards. We need that investment. That's sort of, and they're going to have, you know, American subsidiaries that are doing important work. So that's one thing. And then on the other hand, and I think maybe the AUKUS agreement, this was the arrangement we had to provide nuclear submarine technology to the Aussies is an example where we can take what we're best at, i.e. building nuclear submarines, and share it with our closest allies and get more interoperable vessels west of the international dateline to enhance our collective combat power.

2:11:23I think this gets to a broader issue. Really, the promise of AUKUS and a promise of a lot of our alliances in the Indo-Pacific is that we can start to build out something resembling a free world technological industrial base where humans with appropriate clearances, technology can float seamlessly between the borders of countries that we truly trust. And then if you layer on geography, And you look at, OK, Taiwan, the first island chain, the second island chain. We need countries, including treaty allies like Japan, to invest more in their military. There we have a really positive story in terms of Japan, what's happening in terms of their investment in asymmetric capability.

2:12:02It's probably one of the best developments for deterrence in the last 20 years in the region. So the answer is yes, all of the above. We need to have a more coherent foreign military sale process where we can provide our best technology and our companies can sell around the world and we make it easy for them. But we also want to leverage areas where allies might have key capabilities either to invest here in America or we can fight as a team. And that's where a different sector, what Palantir does with our Maven smart system. We are the solution for joint all-domain command and control. This is how you see the battlefield, how you see the enemy, how you see yourself.

2:12:38We obviously want us to have a similar, if not identical, picture when we're thinking about how do we fight China with the Aussies, with the Japanese and with other key allies. We have to fight as a team in order to enhance deterrence on a timeline that's actually relevant. Yeah, makes sense. Jordi, anything else? uh not sure how much you can comment or riff but what should what should people be paying attention to in regards to venezuela as a casual geopolitical spectator i saw that video floating out that that very clear uh clearly at the top it said unclassified or declassified it felt uh i didn't want to read too much into why it was immediately you know look like seals uh you know taking over But what should people be kind of paying attention to on that front?

2:13:28Well, you know, it's almost similar in my mind to some of the recent naval operations we saw relative to the Houthi rebels in CENTCOM. You know, I started this conversation off laying out the challenges we've had with shipbuilding. That being said, what our recent operations in the Middle East and what our current operations in Southcom and in Western Hemisphere demonstrate is that we are still the world's best military far and away. And we have capabilities that nobody else has. Now, that should not be a cause for complacency. Like, we need to build off that. We need to keep investing more in the military.

2:14:04But, like, our sailors, our soldiers, our airmen and Marines, like, when you give them a mission and a difficult job to do, like, they will get it done. And if you are an enemy of the United States, like you should be on notice. When we have presidential leadership combined with military professionalism, there's almost no limits to what we can achieve. And so I welcome a renewed focus on our own hemisphere when it particularly particularly where it intersects with Chinese and Russian influence our own hemisphere. That being said, what I'm most concerned about over the next five years and beyond is what is the conventional balance of power in the Indo-Pacific region?

2:14:44Because what I've been saying now for a decade is that Xi Jinping is serious when he talks about taking Taiwan by force. And all these operations, whether in the Middle East or whether they're off the shores of Venezuela or in the Caribbean, will look like child's play compared with a major naval war with China over Taiwan. The scale is almost hard for us to imagine because we just haven't fought a war on that scale since World War II. Really, since the Battle of Lady Gulf in World War II, we haven't seen something of that scale. And I think one of the disadvantages, I almost hate to call it that, that we have is that in a republic like ours, in a democracy like ours, we're very sensitive to casualties.

2:15:23Rightly so. We have an all-volunteer military. We don't want to spend lives uselessly, right? The American people won't stand up for that. In a dictatorship, in a Marxist-Leninist system like that in China, I don't think Xi Jinping cares if he loses 10 ,000, 20 ,000, 50 ,000 PLA soldiers to achieve his lifelong ambition. This is actually a lesson that endures from the last time we fought the communists on the battlefields of Korea, on the Korean Peninsula. They were just far less sensitive to casualties. So I only bring that up to say there are certainly lessons that are relevant across the world, but there are certain things peculiar to the nature of the adversary we face in China that I don't think is – that I think makes it a much harder problem to deal with than Venezuela, if that makes sense.

2:16:11Yeah, completely. What's up with the gong? Can I ask about the gong? Is that – can I get a Gallagher gong? Of course. The gong is usually a celebration of funding rounds, big numbers, milestones. A chip OS. Yeah, I mean, this is obviously a massive deal. And so totally gong worthy. And the Packers beat the Bears. So we have a lot to celebrate. You know, there's a lot going on, a lot of numbers. And we should ring the gong every day that Xi Jinping doesn't invade Taiwan, because that sounds terrible. And I don't want that to happen. And you just delivered a very chilling, you know, potential sci-fi future where that doesn't happen.

2:16:56It's miserable. But thank you for everything you're doing to stop that from happening because I very much want peace in the world and in the Indo-Paycom region. And, of course, you and the rest of the team over at Altura are working very hard on that. So thank you so much for taking the time to come and chat with us. Thank you, guys. Merry Christmas. Peace on Earth. Peace on Earth. See you. So up next, Turbo Puffer, serverless vector, and full-text search, built from first principles on object storage, fast, 10x cheaper, and extremely scalable. We have Sagar and Jetty, the co-host of Breaking Points with Crystal and Sagar, obviously the Realignment Podcast, the second time on the show.

2:17:36He's also a girl dad. Welcome to the show. Suited up. How are you doing? Looking sharp. Good to see you, gents. Good to see you. Great to see you. How's the family? Merry Christmas. How's the holidays? Thank you. Merry Christmas to you all. Family's doing well. That's great. She's old enough that we've got her pigtails going. This is true girl dad. Yeah, it's as good as it gets. Yeah, that's amazing. Well, I'm glad that that's going well, because it seems like everything else on your timeline is not going well. If you had to pick one to snap your fingers and eliminate, would it be rising energy prices from AI data centers or sports betting at the touch of everyone's finger all over the world.

2:18:18Impossible, impossible question. Very tough, because one is going to be a future. Before you say, is it okay if I bet on this? I'm sure somebody already out there, there's going to be a market that's going to exist in terms of which one that I would pick. I don't know. Both are going to be very financially draining to the American household. Sports betting in the immediate term would probably be the one that would ban immediately. But power use in the future. Well, what was that reason? There's a reason. That could be bad. I saw a study floating around that in states that sports gambling was legalized, like the average credit score drops like 10 points or somewhere in that range.

2:19:00So it has effectively a direct impact on financial health. Do you think that sports betting is something that will come for us all? because the odd thing is that I have... Yeah, John and I have some weird genetic immunity because we went to Vegas for F1 and didn't gamble at all. I have zero interest in gambling. I don't have the bug or something. It just doesn't do anything for me. If I sit down, it actually stresses me out. I'll tell you why it comes for us all. Yes. I'll tell you why it comes for us all. Okay. Even if you casually watch sports, casually watch the NFL. I don't sports bet. I think sports betting is bad.

2:19:34I still know the line on every game. Oh, because that's how you know. oh, who's going to win? Because that's how, that's the drama. No, I'm like, oh, well, so-and-so's the favorite or the over-under on how many yards somebody is going to throw. I shouldn't know that. People should know, but I do. Even just casually, you know, the last time I was on here, I talked about how I think that there's a media bubble in sports because I think sports gambling is just pumping all these money into people with microphones who talk about sports. But that's part of the issue is in all mainstream sports coverage from ESPN, pardon my take, everywhere you go, a daily segment is I like the over, I like the under.

2:20:10Here you're going to take the first half. And so even if you don't bet, you can't help but think about the sport without thinking in sports betting terms. And that's what I would say is like frame domination, where even for people who don't bet, they have to think in betting terms. So that's winning in their part. Yeah, maybe I have a weird perception of it because I also don't watch sports. I watch movies a little bit, but there's no sports that I follow regularly and so I'm like I'm not even getting into the top of the funnel for this stuff and so it's really really hard to ladder me down and so I'm a little bit more me so of course you were excited to hear that Trump would consider eliminating taxes on gambling this must have been good for you well okay let's talk about this though guys because he said gambling winnings gambling winnings and what I was crashing out about was there are no winning gamblers it doesn't exist there's a longitudinal study of sports bettors, only 4 % of people over five years ever took profit.

2:21:104%. So it is a skill. Here we go. Be in the 4%. I'll take those odds. You're telling me there's a 4 % chance that I could be one of the greatest gamblers ever? I love those odds. I'll take them all day. It does exist. I got the over on me becoming a generational gambler. I will tell you, if I had to bet, I would bet on both of you. But statistically, it would be a bad bet. And so the reason I was crashing out is because that is going to give advertising to casinos and sports betting apps who are like, oh, your winnings are tax free. There are no winnings. The winnings are fake. 96 % of you are losers.

2:21:48And all it will do is it will increase that funnel of people who may not previously have sports. It's tax free winning. I mean, I can't lose. Right. Except I'm going to lose. Yeah. So I think it's really disgusting. Basically, just giving away. Well, we don't know it's going to happen yet. It was an offhand comment, and hopefully it doesn't go anywhere. It might not. Well, since you're the resident Puritan on this show, do you believe that you can drink responsibly? You can have a glass of wine every once in a while. Obviously, you don't want to become an alcoholic. Can you ever responsibly sports bet?

2:22:23Like Super Bowl Squares? Can you responsibly sports? Super Bowl Squares. That was the only thing that I ever did in college, was I was in an office setting, and they said, hey, there's squares. You put down$10. $1, whoever gets the right square gets$100 or something. I have never said people can't responsibly sports bet, but what I want to highlight is that responsible sports betting would put all these companies out of business. They literally cannot operate without addicts. What I'm trying to highlight for everybody is responsible sports betting would end the industry as we know it. The vast majority of the profit comes from a very small percentage of the customers, which is why, look, this is the casino model, right?

2:22:57The whales are the ones who fuel everything, and they lose the most. So that's why they shower these people with gifts and they call them every day and they invite them to games and then send them to concerts and all this stuff is specifically to milk them for as much money as humanly possible. Basically a sales SDR that calls you with like a custom parlay for your specific, oh, I know you like this player and I know you love betting on the coin flip. So we're going to get you coin flip. What did you think about the policy, like an MBS policy in Saudi on like you've got to be in your bag to be getting, cracking open a cold line?

2:23:34I saw the alcohol thing. So, I mean, in principle, I'm smiling a little bit, but no. I mean, because I lived in the Gulf, guys, I can explain this to you. That's just a way to target the Indian laborers, so I oppose it. So the way that it works over there is that they create this entire social structure so that all the Indian, Pakistani, and all these other laborers, like the day laborers, are basically excised from all polite society. And they don't want them drinking, so they're just going to set an income cap to make sure that the foreign laborers don't get to have a drink as well as their own people.

2:24:06and it would just apply to like the wealthy white expats. So because I know that it's just basically going to further immiserate their like slave labor population, I do oppose it. But you know, just broadly, you know, I just want to get to the fact, you know, from the gambling thing, like, there is no such thing as a gambling company that can operate profitably without with responsible gambling, like if it literally would cease to exist. And remember, because people always forget this. The sports betting apps, if you're actually good, they ban you. They literally do not allow you to place any large wagers.

2:24:41They limit you. They say, we want you to be responsible here. No, no, no. They don't limit you because you're responsible. They limit you for being too good. Yeah. I think Nate Silver is banned from sports betting. He is. Yeah. He's limited on all the major apps. My major question, when somebody tells me, they're like, oh, I'm pretty good. I'm like, oh, really? I'm like, have you ever been limited? And they're like, no. I'm like yeah you're a loser then i'm like if you're any good you would just be limited that means you're a statistical loser yeah well you need like a complicated network of you know people that can make that shadow accounts yeah it's a whole thing and i mean we were just talking to matt levine about this like sesquahanna has a desk like an actual trading arm of their firm like it's very serious like the guys some guys trade oil and gas now there's people that are trading trading the i can't name a sports team sports lines the yankees uh yeah anyway well Well, that's the thing.

2:25:30The real bettors, they don't care about the sport at all. They're just looking for value. They're always betting on golf and tennis. Yeah, this one is up at 2 a.m., halfway around the world, but it works for you, so you're going to play. Right. Exactly. I mean, in terms of like the actual politics of this, how does this how does this wind up becoming like where does this go over the next four years? It seems like Trump's sort of like leaning in. But is this actually going to is there a constituency here of people that want to say like, hey, maybe we need to rethink this at the national level? Well, already the tide is turning, guys.

2:26:04More recent Gallup polling showed that all age groups, including young people, the most increase is against sports betting. the governor of ohio mike dewine he actually said that if he could go back in time he would never legalize sports betting knowing what he knows right now i think people can feel it man it's the most expensive advertising real estate in the world is all being bought by these gambling companies you can intuitively feel that this is off you know nobody's getting rich if they're able to afford all of the stuff they're able to put in front of you so i think america's beginning to turn uh the trump administration very recently you know you didn't let me crash out on what i'm crashing out the most on, which is weed.

2:26:40But, you know, the Trump administration is making their vice play right now. You know, they're doing very badly with young voters. So they want to try and reschedule weed. And yeah, let's do some gambling winnings and the TikTok thing. It's like this libertarian kind of giveaway. But I think that really misunderstands why all of these younger people are even turning on the administration for economic reasons in the first place. The reason they resort to all of these horrible vice activities is because they cannot afford, or at least feel they cannot afford the very basics of life, like health insurance, being able to buy a house, crushing interest rates for a mortgage.

2:27:15So I would spend more of my time on that rather than a cheap trick like weed, but that would require actually doing something. Maybe you get busted for weed, the arresting officer flips a coin, 50 % chance you get a 50 % chance you get. Let's talk about another thing I'm sure you're thrilled about, the Disney OpenAI deal. I think it's incredibly bullish for OpenAI. It's really good. I want you to agree with me first that it's bullish for OpenAI, at least over the next year, that they're going to have exclusive... For their profit? Yes, yes, yes. Literally because if you're a dad and your kid comes to you and says, I want to be in Frozen or I want to be in Star Wars, well, there's only one app that can deliver that.

2:28:03And even if Nano Bananas is a little bit better for today, it's like you'll go to Sora because it's there. Yeah, sure. It's bullish for users. It's for creating more users. I think it's one of the worst things that I've ever seen. I mean, last time I was on here on the show, I was like, Sam Altman is like, yeah, we're going to do AI porn. And I was like, oh, well, I thought you were going to cure cancer, but OK. And so now we're going to have Disney princesses to addict children, like you just said, so that daughters and others will come to their dads and say, can you create a video of Elsa saying my name and doing this, this, and this so that we're continuing to breed the phone addiction.

2:28:41And as you guys all know, we're also going to see the most disgusting pornography known to man as a result of it. Yes, I know that they have controls and all that. They're going to be pretty good at shutting it down. No, they're not. No, they're not. Have you guys been on Sora? Have you been on Sora or Grok or any of these? They're not that good at it. People have been playing around with trying to create some pretty disgusting content. John is a little too confident. I'm pretty confident. I also had them generally. Yeah, I just think I don't. The internet will always figure out a way to jailbreak anything.

2:29:15Exactly, and they will always find a way. Earlier in the show, I went to Sora and I said, put me in a Sora video fighting Spider-Man and Darth Vader. And it said, this content may violate our guardrails. concerning similarity to third-party content. So whatever deal they announced, they haven't implemented it yet because I got completely blocked. But I don't know. As I've scrolled, I don't scroll that often, but as I've scrolled, I have not seen shocking stuff. I was reflecting with Jordy about some of the crazy, crazy stuff that was on the internet when I grew up. I mean, the stuff that people would send you a link to, you'd open it up, it would be like jump scare level.

2:29:54I feel like I have not gotten that from ChatGPT randomly. I have not gotten that. I think if you want to make the argument that, you know, this is so bad because it's going to get kids more addicted to devices and their phones, like you just got to go even further and say like, well, we should ban all electronic devices for children or buy a ban. And maybe, maybe, maybe, maybe, maybe you're willing to go there. Speaking my language, brother. how do you how do you feel about some of the how do you feel about that new law in australia that's that's banning social media yeah you don't think it's going to create a bunch you don't why but you don't think why not put it on the parent why i mean yeah so my concern there is plenty of evidence out there there are plenty of access controls you can set a passcode you can i mean yes like the really inventive 13 year old can go out and make the money to buy the ipad and hide under their bed every night.

2:30:48But like in general, parents do have the ability to, you know, effectively be the own authoritarian of their home. Why do you need the government? Why do we need a nanny? Yeah. My concern with these laws is understand. Yeah. Go ahead. Yeah. My, my main concern is if you tell a group of young people like, Hey, you can't use these apps, there will be new apps created. It's not hard to make a social media app and there'll be new, like kind of homegrown wild west social media apps where there's no like the the the properties aren't doing any content moderation they don't have any groups that are trying to make sure that that um that you know pedophiles are not able to get on etc etc so i think it'll just create a bunch of like dark corners of the internet that could very well be worse for kids it's certainly possible but to just answer like the spirit of the question which is basically like why should parents not be the sole responsible ones for this.

2:31:44In the same way that social media only works when everybody's on it, not being on social media works best when nobody's on it. And so if you talk to Jonathan Haidt or others, what the most, the best and most successful experiments for schools, for example, which are phone free or people who are opting out of social media is being able to be in a social network where everybody else is also not on social media. Because one of the things that's often raised is like, oh, they're missing out on, I don't know, school drama or communication for this, this, and this. And they feel as if they're explicitly removed by the parent from like the social way that their high school or their social network operates.

2:32:22Whereas by explicitly making it a top-down way of saying, no, nobody's engaged in it. It's going to facilitate a lot more actual, like pro-social, real social behavior and make it easier in order to basically look at the end of the day, what we're trying to talk about, and this is what I always argue with libertarians, like, no, this idea of like a totally free society is ridiculous. Like there are so many different ways in like, you could act quote freely, which would impinge upon my freedom. That's why we have, you know, we have government enforcement mechanisms. Ultimately, what we're trying to do on this is to decide what is the optimal way and for our outcomes to facilitate happiness in the family unit and for our children.

2:33:03And there's just too much evidence here on social media and on phones. So that's why I get with the Sora thing, especially in the totally unfettered like Wild West that we live in here in the US. I just know this way that this is all going to go in a perfect world where everybody is very informed. But, you know, right now, in a lot of ways, there's a huge class divide on phones, like from the very, very richest people, you know, are probably the least likely to actually give phones to their children. But the Anxious Generation might be the best-selling book in the United States. But let's all be honest, it's a class signifier, right?

2:33:36It's something that the top 25%, 30 % have read, are implementing, have the time to be able to. And then the iPad kid thing is still definitely not yet fully known for a lot of other people. And so I think everyone should try to live under a more uniform standard. And yeah, that's why broadly, I take your concern, dude, about Australia and backwater ways to get around it, but the government's sending a signal, and we have enough data on gambling, on all other vices, that when you send these signals, especially with a real information campaign, the behavior will reduce. And there's a lot of different ways that we can deal with the backdoor ways of getting around it.

2:34:17You'll never make anything zero. How do we try to facilitate the best outcomes for everybody, for all of our citizens? That's the way I would look at the Australia policy. Have you ever thought of setting up you know, breaking points, you know, one of these neo cities, you know, you go down to South America and set up your Puritan. I was down to Honduras. Yeah. Down to Honduras. No, I don't have enough money for that. Right. I don't have nearly enough to buy off the president and then get him pardoned whenever he deals drugs. That's that's not my bag. I'll leave that to a few of the other guests on your show.

2:34:49But no, look, I mean, at the end of the day, like we have our country. We can just do it here. We don't need to leave. I think that the people that's always been our point of view. Yeah. No, no. That makes sense. Let's talk about H200s. NVIDIA is now able to export them to China. The previous rhetoric was we're not going to give China the best. We're not going to give them the second best. We're not even going to give them the third best. We're going to give them this nerfed H20 chip that's two generations behind, blah, blah, blah. Now, Now, we're giving them the second best, effectively. The argument in favor seems to be keep the government out of the boardroom.

2:35:29And Jensen is a founder of an American company. Let him sell everything. Again, to your point about the AI, it doesn't seem like you're doom-pilled. Is this nuclear weapons? No, it's AI slop. Let him have it. Yeah, if slop is so bad, don't you want our enemies to have it? Don't you want our enemies to have it? They're much smarter than us, and they're not going to allow any of that. They don't have any problems over there about Sora or about image generation. Do they really, though, do they have, like, incredibly high rates of youth unemployment? Are they not using the phone to kind of medicate those people?

2:35:59What are those 20 % doing all day? Yeah, I mean, that's a great question. You know, is it phone-related, social media? I'm not entirely sure. They don't seem to have the same issues, at least in our way. Obviously, they're going to have their own unique set of circumstances. But on H200... Imagine being one of these unemployed Chinese youth and having no job, but also no slop, no sports betting, no weed. What are you doing all day? You're getting shamed by your elders for not having a job. That's what we need. I suppose. That's a good thing. I suppose. Yeah, no, that's great. Maybe you're studying.

2:36:37Maybe you're practicing. Maybe you're growing. You're studying the blade. Studying the blade, yeah. Hopefully you're studying the blade. Studying the blade. But anyway, sorry. uh h200 it seems like a while you know to say what your your kind of uh articulation of the h200 policy it's more complicated and i've spent the last couple days interfacing with some of the guys who are pro exporting uh h200 i'll give their their argument their argument is to keep china on the u.s and nvidia technology tree as long as possible so what would happen according to them is if we cut off H200, what it would mean is that Huawei would have the impetus and the incentive to not only compete, but to have all of the developers in China and everybody there explicitly build the software, everything on top of that, right?

2:37:26And so the argument that was posed to me was that it was a bad idea and a mistake to not have Android be very, to not have Android and other operating systems that are explicitly US-based be dominant in China, and that the domination of Harmony OS is actually bad for the United States. And here was my counter, and I'm really curious for what you guys think, is that in a world, as we see with Apple, where we see a huge portion of US business, which is based in China, there has never been, at least in my opinion, over the last 25, 30 years since the PNTR with China, the reopening of trade relations, we have never had a situation where we have a huge business penetration in China and that company ever really stands more for American interests.

2:38:12Usually what happens is that the Chinese use U.S. market penetration, like U.S. companies market penetration, to make that company a lot more malleable to Chinese interests and to basically make them this multinational actor, which because of their ability, policy and scale, they can shape for their own interests and strategic, let's say, direction. So the point that I really am trying to make here is that I understand the technology tree argument entirely, but the longer that Jensen, NVIDIA, and others see China as this gold mine, which he obviously does, he's over there once a quarter kissing their ass on camera out in the open.

2:38:49Well, they have a dedicated R &D center in Shanghai. Yes. Right. But it's not just that. He goes there and explicitly is like, I want to continue to do in business in Beijing as long as possible. He's been lobbying for against a lot of these export controls. It's obvious that a lot of his stuff is getting trans shipped via Singapore or whatever. Even the Blackwell chip. I'm sure you guys saw that very recently with the deep research that came out. But the point the point remains, he knows it's good for his business. The more that this remains kind of an opening, it's going to have somebody have to straddle both sides.

2:39:23And it's going to be a lot more beneficial, I think, for the ability of the Chinese to shape him as opposed for us to be able to have our companies working in our national interests. And look, I mean, more libertarians are listening to the show would say our company shouldn't even work towards our national interest. Their sole job is to make profit. I think that's a ridiculous argument, you know, sitting here in Washington and especially just over the last 30 years. I just don't think that there is a good example from Hollywood to tech or anywhere else where they've made a lot of money in China and they become, you know, very reliant on that business line where they have not shaped themselves as lobbyists against, you know, any more hawkish Chinese action.

2:40:04I think the, my read on it generally is that selling into China will make it more expensive for them to reduce their reliance on the USAI stack. They still will do everything that they can to reduce that reliance, which they are. but yeah it's going to be more expensive because there's clearly the Chinese companies and AI have a lot of demand for chips and you know dollars that they spend with Nvidia and other other players are dollars that aren't going back into local you know kind of national champion I'm trying to think of a counterexample and all I can come up with is the Hermes Birkin bag as we've exported the Hermes Birkin bag to China that's a French company not a US company so that's not really something But they have become dependent on it.

2:40:53And the more Birkins that they buy, the harder it is to rip out the authentic Birkin bag, much like the NVIDIA GPU, where the CUDA stack and the open source CUDA ecosystem has been built up around. No, I'm still somewhat sympathetic to the, you know, hooked on the AI stack. I get it. I just want to say, I don't think it's fully, I don't think it's wrong. I think it misses the forest for the trees. They're looking at it purely from a technology question. I'm trying to point out the dangers of extending this relationship. And also, look, let's look at the Chinese side. The Chinese were like, yeah, we may not even allow H200 in the country because they want Huawei to compete.

2:41:33They want to create the market incentive. Yeah, but I think they said that because of Lutnik's comments that they were very offended by, which he was like, we're trying to get him addicted. We're not going to give him our first, second, third, fourth. We're going to give him our fifth best. And they were like, actually, we don't want any. And also, the country's not a monolith. Like, it's very clear that, like, even if the CCP says, like, absolutely not they're banned, like, there's still a world where, like, a Chinese company smuggles them in and uses them against the CCP's will. And, like, that could have a dynamic where that boosts the CUDA ecosystem further.

2:42:04Although I don't know why you'd be open sourcing CUDA software if you're stealing NVIDIA or smuggling NVIDIA in. That's probably a good way to draw the ire of the CCP. But who knows, of course. You know, we'll see how this plays out. I still think a lot of the reason why this H200 news is not so much of a firestorm is because this year has been somewhat of the end of the AI Doomer narrative. And just we've been backing off this idea that these are nuclear weapons. More and more people have been using the models for, I mean, Chachipiti is three years old now. OpenAI is 10 years old now. And after three years of everyone saying, or all the wild, crazy people in Silicon Valley saying, it's going to kill you next year.

2:42:51It's like, okay, boy who cried wolf, the sky is falling the second year. Yeah, or it's going to kill you more slowly because everyone falls in love. Yeah, yeah. It's become more abstract. And so I think there's this idea that like, oh, just like one more training run and then it's the super intelligence and it's run away and it's going to completely dominate. And like it's either the United States or China. That narrative has kind of fallen by the wayside a little bit. And so I think people are maybe more accepting of export controls loosening. My question is just like, do you agree with me that it was a phenomenal L by the tech community to come out so early with this AI is going to kill everyone narrative?

2:43:33that just feels like AI is the first technology that we've had since, you know, the phone, social media, software and the internet. All of those were products that I feel like they were technologies that were enjoyed by people for years. And then we had the conversation about what are the phones doing to us? Like, but we got 10 years of like, phones are cool, right? And then we got, okay, maybe we should, you know, understand if they're addicted. With AI, it's like out of the gate, we hate it. That's why I'm not yet ready to say like, oh, they stopped saying that. I'm like, no, they still say it guys.

2:44:04Like Elon was on Rogan the other day being like, Hey, you know, you're never even going to have to work again. Like, don't worry about it. And Jen said, what did he say recently on Rogan? He's like, all knowledge in the world will be AI and that's fine. I was like, um, is it? I mean, I was watching, so I was watching Sam Altman on, uh, on Fallon and, and, and Fallon comes to him with the premise of like, give me the pros for ChatGPT. Give me some examples of how people can use it for good things. And then he's like, and I got to ask you about the cons. Like, what are the cons of this technology?

2:44:40And I was like, no, no, no. If Tom Cruise was sitting there doing the interview and he's like, give me some reasons why, you know, moviegoers might like the new Top Gun. And then he's like, now give me some reasons why people might hate the new Top Gun. Tom Cruise would be like, what are you doing? Like, no, I'm not talking to you about the negatives of my movie. Get out of here. I'm here to promote my movie. And same thing with, you know, any technologist that goes through the normal late night circuit. Normally it's like, oh, wow, you invented this new trinket. And you can buy it at the local Walmart this Christmas.

2:45:13Like, amazing. You made a gadget. And with AI, it's always about the negative has just been so drilled. Well, that's because it's new. Well, that's their own fault. Yeah, that's what I'm saying. Yeah. It's like you could write a story every day about violence that happens in grocery stores, right? But it would not, grocery stores have been around so long. It's everyone knows. Every time you walk into a grocery store. But there's not one guy who controls all grocery stores. Okay. So it's like, you know, it's a little different. And look, I mean, again, to their point, like Sam and them don't do themselves no favors.

2:45:45Like when he's like, I can't imagine raising a baby without chat GPT. look maybe just me i'm like whoa man i don't know again it's just one of those where look they sold domination of our lives our tech are not only in terms of our digital lives but saying that they're going to take away our physical ability to work uh education they said we're going to take away all knowledge and we're going to feed it back to you so i'm still not ready to extrapolate you're extrapolating a little bit he said he said all knowledge will be a you're you're sort of piecing together like three different statements which is fair because that's how people perceive the tech industry all reddit all reddit will be ai there'll be one human on reddit just running around and talking to that's the shit that they say guys they're like you don't need to work anymore uh what's his dadario i mean you guys are acting like this is three years ago i'm talking about like three months ago you know all the comments i just made i think are literally all within the last month so the they're continuing to feed the narrative um and i think people believe them.

2:46:47And I think that's the danger. Well, fear really sells to the capital markets. Like if you're somebody that has capital and somebody tells you that like all jobs are going to go away or huge half of all knowledge work, what do you want to do with your money? You want to give it to the guy who's going to take away the jobs. Right. And so I think that is the challenge is these people are having to go around and give the optimistic vision one hour and then the next hour do the fear-based version of the story and then the next hour do the optimistic and but then the content just gets shared everywhere right so it's like then everybody sees it and they're like wait i don't really know what to believe at this point yeah my i mean last time i was on the show john i have stolen your line completely credit card i thought it was the best comp that i've heard is you you were like i think this will be like the credit card we just made transactions more frictionless it created more wealth people built on top of it and in general people's lives were like mostly better and it didn't, you know, like horribly change anything, but it definitely was very valuable.

2:47:48I love that comparison. That's kind of the modal one that I'm working with. Just like leaks into all the different cracks. And I mean, there was, there was data yesterday from our sponsor ramp that, uh, 55 % of businesses are, they don't pay for AI and that's like, and it's slowing down. It's like flatlining too. So it's sort of like a bombshell, like, okay, like there's a lot of businesses out there that are just like, I'm good. And it's like they are good because they're using other products that probably have enough AI in them. And so if they're on a POS system. So they're indirectly buying AI because they hired a creative agency to make a logo and the creative agency used AI or whatever.

2:48:25Or their back-end finance and all that stuff. I totally agree with you guys. But that also doesn't justify the valuations. And that also doesn't justify the spend. It might justify the valuations. I think it doesn't justify the panic and the fear that it's going to kill everyone. It's like if we're talking about the credit card, it is like much more incremental. But of course, there are other sides because we have the social media angle. I agree that that's where it'll end up. I'm mostly with you, but I can't help but take them all a little bit seriously. I mean, these are the wealthiest, most powerful people in the world.

2:49:00So like when the wealthiest guy in the world says, I don't need to work anymore. and especially if you're walking out there and you feel very out of control of your own life and you hear that you hear about the data center stuff that i've talked about here you have a lot of fear about your own children and their addiction you're watching their behavior i mean do you guys ever see your kids uh you know like my daughter is seven months old man she's crawling for the phone like it's it's it starts so early like already i'm like oh my god i can't even use this thing in front of her that makes me concerned does it make me a doomer no but it does make me feel Like it makes me immediately calculate some of the downsides of the use of technology.

2:49:37Letting her go for that phone might be what gets her into the 4 % of gamblers that wind up making money. You got to start her young. You got to start her young. I forgot about that. You're right. Is there an optimistic story being told by the cannabis industry about weed anymore? I feel like that one is just like people are just like, yeah, OK, it's. Well, they're still faking medical benefits, which is complete bullshit. Yeah, explain that. Yeah, I mean, they're still talking about supposed medical benefits. There's a huge new study that just came out in JAMA. Almost all of the so-called medical benefits.

2:50:12Total BS. It's all fake. People just want to get high. What were the benefits, allegedly? Oh, you know, somebody, you know, they're always talking about people with cancer. Oh, anxiety. They're talking about seizures, epilepsy. The anxiety one is the fakest one out of all of them. But, yeah, I mean, they're always like, you know, oh, it helps me sleep. and it's like, well, it knocks you out. That doesn't mean it helps you sleep, but it's like, does alcohol help you sleep? No, it actually makes you sleep 10 times worse. You may not be awake, but that doesn't mean that you're asleep. You'll be happy to know we were looking at a new studio space here in LA, and it checked every single box.

2:50:46There was a great space, but right across from it, you could see out the window a pot store, and I was like, no way. I just don't want to look at the flashing lights. There was another studio that we looked at where it was like the royal flesh of like gambling sin companies. It was like the previous three companies had been like an adult content, a weed company, and then also a gambling company. And we were like, that is just a cursed building. It was like an amazing building. We told our broker, we're like, sorry. It's just like it has bad vibes. Like we can't possibly be there. I totally agree.

2:51:22Oh, John, we should do debanking on the porn thing. Yeah, tell me. Yeah. This is so interesting, guys. So you guys know about the whole debanking, you know, Andreessen, Zuckerberg, everybody goes on. Yeah, it was Operation Chokepoint 2.0, Nick Carter's been on the show. So the Treasury Department takes this seriously, and they conducted a study, and they just put out their report two days ago from the Office of the Comptroller, and I was reading it this morning, and it's like, oh, they've unfairly targeted gun companies. I was like, okay, you know, that's bad. They've unfairly targeted oil and gas.

2:51:53I'm like, oh, that's ESG. We hate that. They're like, the banks have unfairly targeted the adult industry. And I was like, whoa, whoa. I was like, hold on a second. Wait, what? What was that? So they are actually pressuring, the Trump administration right now is pressuring via this report banks to do business with porn companies. Now, why do the banks not want to do business with porn companies? It's not just vice clauses. It's because they're afraid of the internal standards that these companies have been doing now for decades, where they're often in violation of the law whenever it comes to children, exploitation, all of this.

2:52:28And they don't want anything to do with that. That's why OnlyFans, you know, had that problem at one point. So our great debanking conversation is now basically being weaponized by the government to potentially force the largest financial institutions to do business with major porn companies. So this brings me back to the whole vice stuff. He's like, I've had enough. If you twist my arm on this one, I'm going to get in the White House. Come on. The idea he doesn't want to do business with the porn companies because he has a heart. Like, get out of here, OK? Like, they're desperate to take their money.

2:53:00They just don't want their risk. I don't know about that. It's not that big of an industry. J.V. Morgan has like a trillion dollars. Come on. What was it? 2.2 billion from consumers in the U.S. just last year? It's not nothing, though. What is that? 2.2 billion? Yeah, what is that? That's OnlyFans. You're talking to AI. We had a guy on the show earlier who brokers big land deals, ranches. What do you think the odds are that Breaking Points a decade from now is just based on like a big ranch property in Montana? and you're just yelling into the microphone. It's possible, man. You know, regenerative farming, just fully off the grid, except for Starlink, right?

2:53:42I'll need Starlink to be able to zoom in to be able to do shows like this. But it would be a bad idea. I put it at 55%. You want to make a market? Do you want to make a market on Kalshi? Yeah. What was Tarek's exact quote? By the way, Tarek, if you're listening, I've been trying to get in touch with you, man. please come on my show. But Tarek, what exactly did he say? He's like, our goal is to be able to create a market. Tarek going on Breaking Points is like Sam going on Tucker. Hey, that was good for Sam, wasn't it? Because it showed that he was open to difficult conversations. No PR person in Silicon Valley believes that, but I actually do agree with you.

2:54:23I do think it was good. No, I mean, look, if you're going to live in a world where you're going to make all of these claims and you're going to have a high level of distrust already from the democratic populace, then you're going to have to go out there and defend your business. I mean, all of the big tech companies have been doing that or had done that for a decade prior. I know that they all now think that that was bad. I totally disagree. I think going on podcasts where you're just fluffing your product all the time makes you look even more disingenuous and you should come face hard questions.

2:54:53But yeah, I mean, he said we're going to make a market between every difference of opinion and uh i yeah so look mr tarik i would love to speak with you about why you think that's a good idea and vision for our future and some of the protections uh that you may have in place john did you read the prediction thing i sent you about the russian map i love this story this just came out so i actually used to be an intern there it's called isw the institute for the study of war here in washington What they do is they create battle maps. And so there was a poly market market for like 1.3 million, this particular map that was trading on this map.

2:55:32And there was like a 33 ,000 % payout. If Russia seized a particular town in Ukraine on this date. And the story that's now come out is that the guy who worked at the think tank altered the map specifically for that date so that the market would resolve in that 33 ,000 % payout for that specific date of bet. And now the think tank has actually come out and said that they fired that person and that he violated their internal principles by going in and editing this map beforehand. And it was a sizable enough market. We're not talking about one of these$5 ,000 ones. We're talking about 1.3 million.

2:56:13So I just want to highlight that, you know, just in terms of how these prediction markets and all that should work. I've been reliably told no realistically large market, even trades on anything degenerate. I can't think of anything more degenerate than betting on the fate of individual Ukrainian towns in a war of attrition. The really dark ones. What if you just load a billion dollars into a world peace contract, and then everyone has an incentive to bring world peace around? You're going to need a hell of a lot more than one billion. If you're going to shame me about 2.2 billion, you're going to need a shitload more than one billion.

2:56:52Yeah, maybe it's a trillion dollars. I do believe in the next. call it one to two years, will see even darker markets, specifically around individual people. Like John was joking offline yesterday. He's like, Jordy, I'm going to load a market that Jordy's going to have a – I'm going to put a million dollars into a market that Jordy's going to have an amazing year next year. Because I'm betting on you. He's going to bet on me because he's my friend. He wants to bet on me. And then what happens? Somebody says, well, if I can make Jordy have a bad year, I can make a lot of money. There you go. Anyways, the guys, the one I'm worried about the most is elections, because, you know, now we have state not not just the national level.

2:57:36I don't think the national level will be as corruptible. But what I worry about the most is individual counties. And these markets already exist. So, I mean, come on. Like if you guys know anything about our election system, an individual clerk in an individual county, the ability to swing, let's say, a mayor's race and people on Polymark already do these like parlay ask style debate, you know, bets where they'll be like all X counties in the state will go for Trump or something just because they have a little bit better odds. These are massively open to manipulation, county level races, mayoral at the state representative level.

2:58:13There is just way too much ability. Like the one I just gave you all is the classic example of somebody being able to manipulate just because it was based on a think tank map. And they couldn't they never thought, oh, some guy making probably twenty five grand a year who makes the map isn't susceptible to a one point three million dollar market. But I mean, in a lot of cases, our election infrastructure, it relies on volunteers, you know, it's not even people who are paid. So I'm very worried about stuff like that or individual primaries where there's not as much scrutiny. They, the, yeah, I mean, already we've seen the, there was the Google insider.

2:58:51Did you guys see that one? Well, I couldn't get to the bottom of that because what was weird was that that was, that was published by one of the, one of the, uh, Yeah, I was like, why are they admitting to this? And it's like, no, they're not. They're bragging. And so I don't know that I should even believe that it's real because it's so counterintuitive that you would kind of self-snitch in that way. It was very, very bizarre, and I didn't see it truly fact-checked, so I just kind of wrote it off as like, who knows, just chaos on the timeline. I don't know. Anyway, thank you so much for coming on the show.

2:59:23Jordy, anything else? We could do this all day, but we'll have to have you back a couple weeks. What, are you doing anything fun this weekend? Let's lighten it up. Not this way. Oh, we're just, we're going shopping. Final Christmas. That's all it is. Merry Christmas. Let's play some Christmas music. Thank you so much for coming. Thank you guys for having me. Love you guys. I love you guys. Love you, dude. I'll see you. Bye. Let me tell you about getbezel.com. What a great way to go shopping for a luxury watch. You can shop over 26 ,000 luxury watches. Fully authenticated in-house by Bezel's team of experts.

2:59:58You can head over to getbezel.com. You can also get your loved one a billboard for Christmas. Go to adcook.com. Out of home advertising made easy and measurable. Plan, buy, and measure out of home with precision. You can also put an eight sleep under the Christmas tree. Eightsleep.com. How'd you do last night? Without exception. Fall asleep faster. Sleep deeper. Wake up energized. I better have one. Eight sleep last night. 87. I got a 90. I got a 90. Lay that sound effect. You're cooking the books. You're cooking the books. I'm not cooking the books. You're cooking the books. You're putting a bunch of weights in the bed when you leave in the morning.

3:00:36No, no, no, no, no, no, no. No, Tyler loaded$10 into no, John will have a good sleep. And so I had to do it to win the$10. And hope everyone enjoyed the conversation with Sagar. I think it's critically important that TVPN not just be an echo chamber of capitalism, libertarianism and uh you know i think uh it's important to have an open dialogue i love echo chambers i love i was gonna say i mean i was born in the markets i feel like i disagree with every single one of his points okay like uh elections like that's like there's so much value in the information of like who people think is going to win yes but if you're a local business owner yes there's a local election yes like there's and maybe one one of the candidates says oh, we're going to do this tax, we're going to start, you know, change the regulation around building certain types of buildings.

3:01:30There's so much value in knowing that. Yes, yes, yes. Seeing that six months in advance, even one month in advance, that is valuable. If he's saying that someone has the incentive to like actually mess with the election, I mean, that's like a felony. So like after one person, like, does he think that more people at the ISW are going to mess with the map? Yeah, I don't know. Yeah, it's like one. Yeah, the first time it happens, it's bad. It's like, yeah, if there's if there's if there's economic incentives to meddle in local elections, like, yeah, like, at the end of the day, there are laws. I don't know.

3:02:06I think, yeah, I would be much more worried about a normalized situation of the opposite where, where the insider trading not changing the underlying outcome of reality based on a big market, but the opposite. Like, you know how the market will resolve, so you size up the market as much as possible. But we're clearly going to be grappling with both of these issues going forward. Sean in the chat says, lock me in the echo chamber. Never let me out. That's amazing. Well, speaking of Sean, we got a post from Sean Frank here. He said, we are in the shop ads beta, and it has been great. Eric Sufert has a story here.

3:02:46He says, Shopify is expanding shop campaigns with a new ad format that allows merchants to recommend products on other merchants' websites. So you're already in the checkout flow. You're buying a Ridge wallet, and you see, would you like some Tecovas to go with that Ridge wallet? That's basically what's happening. Very cool. David Stickland says, tell me why you would want to encourage someone to click away from Ridge to another website after you paid to get them there. And I think the answer is that it's basically like an after-sell, post-purchase. You have someone and you can cross-sell. So you're not necessarily surfacing an ad that will take someone away from your checkout at the most valuable point.

3:03:29It's that - Yeah, the shop app, the way I use the shop app is for like tracking an order, right? Yeah. And so if I'm in there and I bought something and then I get served something else that says like, hey, you bought this, you might like that. It's a pretty, it's just a valuable ad placement. I think it's pretty additive. Well, speaking of advertising, John. Wander.com. Here's an ad for Wander.com. Book a wander with inspiring views, hotel, great menus, dreamy beds, top tier cleaning, and 24-7 concierge services. Quinn had a post here. I've been seeing this lately. Meta has a special ad unit that they reserve for themselves.

3:04:05It's like a personal ad for the Meta Ray-Ban classes. I've gotten this actually multiple times this week. It's a fantastic placement. And what's notable is you actually have to hit the X to close it out. So if you just see it and scroll past it, and you close the app and join again, it'll just be back there. So really one of the greatest ad units of all time. It's a fantastic ad unit. Well done to the meta team. And yeah, sometimes you got to save the best for the family. I mean, I would advise this to anyone who's starting a sunglass business. Get a few billion DAUs. Get a few billion DAUs on a major social app so that you have effectively unlimited ad.

3:04:46Take it public. Yeah. Have a bunch of cash flows from that and then invest that into the sunglasses. Yep. I mean, with this ad unit, the glasses better move. I better see some big numbers because everyone should be aware of these at this point. But, you know, it is hard to hear these people It is a good gift, right? It's a great gift. It's the kind of thing a lot of people wouldn't necessarily buy for themselves, but they'll, you know, get some enjoyment out of it if it's in a stocking. Flo over at Lindy is highlighting Max Meyer's post asked about by the Wall Street Journal, whether spending 500 million renovating the Fifth Ave, Tiffany flagship, Bernard Arnault replied, you cannot dream when you talk numbers.

3:05:37When you create desires, profits are a consequence. And I didn't have to say - You need to be creating desire. That is one of the hardest lines of the 20th century. Unironically, the most profound business insight I've read this year makes sense that it would come from the biggest luxury company and industry that only exists because of its ability to create desire. arguably the clearest distillation of the function of marketing. I have no idea if that can be applied to tech at all. I agree with Flo that it is a profound business insight, but I think it should probably be used sparingly because I can imagine so many scenarios where an enterprise software CEO would go off and spend$500 million renovating an office and realize that it did not really move the needle for their business because what they are selling is not a Birkin bag.

3:06:29Yeah. In other news, Lululemon stock, hashtag Lulu, surges over 12 % after the company's CEO says he's resigning. This is not as a manager, as an executive of a public company, you never want the stock to rip when you resign. I'm wondering if we get Chip back in the driver's seat. He's been on kind of an activist. kind of a proxy fight. I would be interested to see what he would be able to pull off back in. Speaking of other stock pops, this is insane. Google is about to turn a$900 million investment in SpaceX into$111 billion if the$1.5 trillion valuation materializes. There are some crazy big tech circular deals.

3:07:22I'm pretty sure, didn't Jeff Bezos invest in Google? If he held, then he gets SpaceX stock as well. And it all goes back to Bezos, jefe boss. The final boss. The jefe boss. The final boss. The non-determinism. Zeke in the chats is going, Tyler Potter and the echo chamber of secrets. I like that. We should actually build an echo chamber around your desk. Yeah. A small echo chamber. just so that your own ideas and thoughts are just constantly reflecting back on you. It's very comforting to see these AI input names sell off, says Buko Capital Bloke. Very unbubbly. Confirms we are very much in a more rational, discerning next phase of the AI build-out and adoption.

3:08:08I agree with that. It does feel like there was a world where going into the end of the year, we were talking about valuation as a function of tokens or IPO-ing any company that could just throw a.ai or throw an AI name on their company. And we backed backwards from that abyss, fortunately, I think. So I've been happy. Well, yeah, you didn't have to have a.ai domain. You just had to say, we're going to do something with AI at some point. You got a pretty big premium. Well, Chipotle rang the bell at the New York Stock Exchange, but they didn't hit the gong on TBPN yet.

3:08:514 ,000 restaurants. 4 ,000 restaurants. 4 ,000 restaurants. And we'll see. They're under intense pressure from Sweetgreen. Sweetgreen's putting 400 grams of protein in every bowl now, something like that. Can Chipotle turn it around? Win Jordy Hayes back as a daily customer? I would love to see that. Maybe 2026 is the year. We'd love to see it. I'm still a fan of Chipotle. I still love that in tech, you have people that are like, well, I can predict out pretty well the next one to two years. But after 10 years, the way that we're accelerating, it's very hard to predict. Chipotle is like, in 10 years, we will add 300 new Chipotle locations in these key metros.

3:09:35Yeah, things are more certain when you've been running business for a long time, I suppose. Well, in other financial news, Wealthfront raises$485 million in IPO, valuing it at$2.6 billion. Let's go. Let's go. Oh, my God. If the SpaceX IPO ticker is SCX, that will be crazy. It probably will be. SPACs would be better, though. I'm rooting for SPACs. There's no way. SPACs has terrible, no aura. I'm not saying I advocate for - SCX? but I think that Elon will do that. Can't he just get dollar sign X? He likes X. Let's just do that. How about that? Anyway, what else is in the news? Is there anything else we should cover?

3:10:23There's some news around Substack. I guess Substack changed how much you can read without installing the Substack app. They're really pushing the Substack app. uh gurgly orzos is orzos is upset about this he says my paid subscribers cannot even read my email without installing the substack app eric newcomer says wtf uh bullish for substack if they get everyone to install their app obviously uh d like like yeah yeah and max child is there saying i was wondering if this was a growth hack and eric newcomer says for substack yeah it's for their for their app would be very interesting. I don't know if this affects us.

3:11:06You should subscribe, tbpn.com. You should drop your email. You get a free newsletter. We don't have a paid version. I don't know if this affects us. We'll have to figure it out. We'll have to talk to Brandon. I'm sure it affects us. The newsletter is pretty long. And again, And so it's not sending the full thing in the email? Yeah, you continue reading in the app, which is just, it is, this kind of decision, I like Substack as a business, but this decision is good for Substack, and it's not good for the reader, and it's not good for the person sending. They could argue that it'll have a long-term benefit because people might be more engaged in the app.

3:11:41They might be more likely. But again, when you look at the data, at least for us, like 95 % of readers are reading it in their email. They're not reading it in the Substack app yet. Substack wants to change that, but I can see why people would be frustrated here. And this is why the traditional email platforms have pushed back on Substack and said, like, look, they want to become a social network. They want to build a garden. They're building a garden. Then they're going to put some walls up. Right now, it looks like this beautiful garden. You can just come in and. I mean, if they get the app cooking, they're going to put ads in that thing and they're going to print.

3:12:18It's going to be a great business. on the flip side we are we are big fans of being in the big social media feeds like we have not like we you know love x love instagram love youtube these are algorithmic platforms if there were to if substack were to become an algorithmic you know long post app basically like twitter with more words I think we would be the long trough Yeah, the long trough. We would be okay with that. I mean, we would certainly be the first ones because we have no paid subscribers. Yeah, but the whole premise of Substack and, you know, you look back at every, all the marketing materials is like own your audience, have a direct relationship with your reader, don't be disintermediated by the platforms.

3:13:07And so to come out and make a product decision like this and you see where this goes, it feels at odds with everything that the company is built on. hmm yeah yeah i mean at the end of the day for me it's about like can our business model flourish in the long form written text and whether it's delivered like there are a certain amount of people that read our newsletter in their email if we can get them all to read in the in the app like it's it's kind of six and one and half a dozen of another to me like it is it is sort of neutral And the bull case is that by going into the app, our stuff can go more viral and we wind up getting more views on average per post.

3:13:48But you live and die by the content, just like we do on YouTube, just like we do on Instagram, just like we do on X, just like we do anywhere else. It would be a unique thing. And every time that a feed switches from subscriber enforced to algo, creators always hate it. This is what happened to YouTube. YouTube, the default homepage used to just be your subscriptions. And then people realized that you could just bomb the subscriptions feed with a million videos and you'd get tons of impressions. And eventually they went algo feed and they show you a single video from Mr. Beast or whoever you're subscribed to.

3:14:21Maybe you're subscribed, maybe you're not. Maybe they just know that you'll like it. And you could see that same thing happening with newsletters. You open up the Substack app and it says, hey, look, today, TVPN put out a fantastic newsletter. Here you go. Other days, it wasn't good. so we're not showing it to you. And that's weird because that's not the Substack model, that's not the email model. I think people would revolt, but there is a world where being in that feed, being able to go viral within the Substack app is actually a net positive. It is, it's sort of a, it's like a Darwinian survival scenario.

3:14:58Like you really have to thrive, you have to fight it out. You have to earn every view, earn every impression. But we'll see. We will assess. Yeah, it is notable. I don't think Chris or Hamish have responded to any of the criticism. Maybe they're responding on Substack. Maybe. Let's go over there. Maybe. Maybe we should have been on the show. Debate it more. I don't know. It's interesting. Anyway, that concludes our show for the day. Have a great weekend. Merry Christmas. Thank you for listening. Leave us five stars on Apple Podcasts and Spotify, and we will see you on Monday. And next week is Christmas week.

3:15:41You thought this week was Christmas week. We're just getting started. We're just getting started. We're just getting started. You're not going to be able to see us. There's going to be presents. We might be dressed up. Yes. We might be interviewing public company CEOs while dressed up. You'll have to wait and see. We hope you have an incredible weekend. Thank you for being with us. this week. We'll see you soon. Goodbye. Love you.