Ferrari EV, Enhanced Games, Alcohol & Podcasting | Christopher Hale, Sean Henry, Eric Ries, Alex Atallah

34:29like car I just bought like a week ago I'm I'll be in CarPlay and then I'm like oh I want to change like the the heating or air conditioning I got to get out of CarPlay to go and do it in like their software it's very very annoying um and so yeah Apple Apple would make a uh a fantastic car but even I just don't know with Apple part of it was like no one's been able to make a great, like a truly great car business. Like Tesla, but yeah. But it's not a good, it's not a good business. The car business is not a good business. Yeah. It's made 20 billion in free cashflow over the history of the company.

35:11Something like that. Yeah. For as a, you know, 20 years over a trillion dollar company. Yeah. So ship a lot of cars though. It is the number one, the model Y is the number one bestselling car in like California, China everywhere basically yeah that's what I'm saying so like insane product market fit global hit and it's still not objectively a great business crazy crazy crazy and that just feels like entirely new DNA for Ferrari to spin up it's like hand built that's the whole concept and you know Tesla to get to where they have on price point and distribution and scale like completely different Jack Butcher made a great point.

35:55He said, make the Luce 30 % wider and everybody would love it. Where's this? You can see it on the screen here. It has such better road presence when it is wider. It just looks when it's too boxy. Sure. And it looks just a little dinky, but it looks a bit more aggressive. It does seem like everyone... Everyone is just asking for something that it's not trying to be. Like, you make it wider, okay it's less drivable it doesn't fit in garages as easily you make it longer like the proportions look cooler but it's not like it's it's not going to be as easy to fit into parking spaces and stuff like the whole point of a vehicle like this is to be uh like accessible and usable uh and that's very antithetical to the ferrari ethos but maybe that wasn't the goal uh one car that was getting a lot to love was this special edition that was teased online you can pull this up this is the natural ice edition uh i thought i thought this looked fantastic uh if the team can pull it up here for everyone to see yeah with a wrap i think i think really beautiful people might be wrapping these for sure i'm sure color matching color matching the wheels to the the the gloss and the shine of the can, I think is really, really nice.

37:16And I could see this being a hit on, uh, at least college campuses. Yeah. Yeah, for sure. Uh, imagined you having this be your college car and wrapping it. Well, the wrap is usually paid for by the brand. So the brand will be like, Oh, we want to, we want a campus ambassador. I know, but I was hoping that Ferrari would just take the leap and actually do a full on partnership, special edition. Right. Yep. Uh, Well, Chad didn't like the Ford 021C example, the concept car in the orange, which we can pull up. But I want to know if Chad likes it more, if it has a body kit. Let's pull up the Ford 021C right after that.

38:00There we go. Does that do anything for you? There we go. If you turn it into a track weapon, are you getting somewhere? Look at the arrow. The arrow is so aggressive. But show the original photo, the first one. Yeah, there you go. You're going to take that, some slight modifications, and boom. Take it. You've got to track it. Take it away. Go back to John's version. There we go. Yeah. We should look at the Solo Cup-inspired. Oh, yeah. So John went really, really deep on designing some new cars with the Chatshp. I think I've got a future here. I think I've got a future. Look at this. Sign me up.

38:39They call this the red time, the red line. Good times, sharp lines. The red line. Inspired by the iconic, simple, universal Solo Cup. Driving a Solo Cup-inspired Hypercar. This is really the perfect Memorial Day weekend car. But this is what I'm talking about, where if you saw a company come out with this, I think the reviews, take away the joke of the beer pong thing, just the proportions of this particular hypercar, everyone would be like, oh, that looks like a supercar. That looks cool. But it looks generically cool. it like if it can be if it can be just like one shot by an image model it's probably not going to stand the test of time i don't know it's not taking any risk like this this feels like as hilarious as the the the solo cup inspiration is it's not taking any risk um when you were writing that the main the main the two things like again i my my criticism was never the design although the design is not for me.

39:38The criticism comes down to the price point and then positioning it as like an everyday car. And then the concern that I have because Ferraris have always had electronic issues that have plagued the brand forever. My personal experience, I had a Ferrari for a while and I replaced the main battery like three times in three months trying to solve an issue and eventually basically was like, okay, this is always going to have electrical issues. Do you think all the parts on the inside are glued in? Like an iPhone. You should replace the whole car. I mean, people will be doing that with Teslas. They'll just be dumping them and getting new ones.

40:20I really liked your version of the Nissan Murano cross cabriolet. Yes. Turning it into a proper hypercar. If we can pull this up, I mean, this thing just looks really... This one would sell. Nissan hasn't introduced a hypercar in a while. Could be this. Could be this. Look at this. The Nissan Murano Cruiser. The Spyder. It's crazy. It does look good. That was the thing is that I was like, oh, let's start with a joke and then get to something that looks ridiculous and still has some of that joke, jokiness to it. But the final result just looks like a normal hypercar. It just looks like any other hypercar.

40:57Anyway. Anyways, we should talk about Enhanced Games. Yes. So I went over to David Sendner's house on Saturday with my friend Ben, and we were all excited to watch. And we basically turned it on, and pretty much 15 minutes in, I texted John and said I thought the stock would nuke on Tuesday. Yeah. And it did. It's down. Let's see. From my perspective, I saw chatter about the enhanced games on the timeline. It seemed like everything was going normal. I saw some viral clips. I saw some posts about it. I didn't notice anything out of the usual, but you said that it did not like blow you away. And I wanted to understand what about it was not a great like you you you come away paying for ufc pay-per-view or watching it on paramount plus now uh very satisfied like why was this any different from my perspective this looks just like any other sport on tv it looks like you watch sports and yeah you root for somebody and you pick a team and yeah so so first of all yeah you know this company went public before they had ever hosted an event right so uh and we've been hearing about it for years.

42:20I said to you this morning, it feels like we've been hearing about this for like eight years. You said it's more like maybe two years or something that it's even being talked about. But anyways, a lot of anticipation. People have been super excited about this. The entire concept, I think, is just like really cool and wild, right? You take something that, like the Olympics, which, you know, even if you're not obsessed with swimming or weightlifting or running or any of these things, like the Olympics are always like, you know, an exciting cultural moment. Uh, and I think like, uh, I, I personally, you know, have a bunch of, you know, fond memories watching the Olympics.

43:00Right. So take something that I, that I generally think is very cool and you add, you know, steroids, uh, that's a very fun idea. Yeah. It'd be jet fuel, jet fuel should enhance the experience. And, uh, and then as soon as I started watching, uh, there's a bunch of stuff I would give them a pass on, right? Like the production value, putting on an event for the first time, it didn't feel like you were watching the Olympics. It felt like you were watching like someone's first attempt at hosting an Olympics. There weren't those like crazy, like drone cameras following things, ultra slow-mo. Yeah, they were trying to do stuff, but again, the people doing commentary have never done it before.

43:38You know, the whole event is, you know, just being birthed, right? So it had an insane amount of attention on it for first event, which is always tough um but then watching it i realized like the appeal like none of these none of these events like you can't just watch somebody run in a race and know whether or not they're breaking a record like you can see like oh that person's quite fast yeah but unless there's like crazy graphics yeah you need like an overlay of usain bolt of like the official yeah yeah so so it's never about it's never about like exactly how fast someone was right because sure there's records involved, but the difference, you can't noticeably see whether somebody lifted 220 kilograms or 220.1.

44:26It's not visible to the eye, right? And so what became really obvious to me instantly was like the appeal of the Olympics is you have these like very niche activities where athletes dedicate their entire life to this pursuit. And then every four years, there's like a five minute period where they're getting like the entire world's attention and they're representing their country and they're going for glory and they either they either do it or they don't they get the gold medal or they don't you know whether even getting a silver medal is like agony right because like you just dedicated your whole life to this thing and you're in second place and so it really is about um it really it just stuck out to me immediately that it's about you know national pride, representing your country, uh, you know, uh, uh, true excellence.

45:16Right. And in watching this, there was none, none of that. Uh, they were trying to do to basically build up the brands of the athletes ahead of time, but there was just like, no, I didn't feel like bought into any of the storylines. These are a bunch of athletes that were formerly Olympic athletes. And some of them had done quite well that are now basically opting into a like just a for-profit like the olympics are not about making money the enhanced games were about sure it was about the athleticism but a lot of it was just like a payday right and so like there wasn't the same i didn't feel basically we turned it on and then we walked outside and we just made a fire and like hung out and it was like really far in the distance uh and we eventually came back came back for the very end not realizing that no records have been broken the entire night until the last event.

46:14Last event. And then you watch the event. And I think what would have been made it more interesting, like a horse race, because is like if you had like an actual overlay of the person swimming the actual record, like they left a lane open or something like that. And you could have seen the person. I mean, it was seven one hundredths of a second. Yeah, so it was really, really tight. Would have been neck and neck. And so, yeah. So anyways, it didn't capture me. I think that it's something entirely different than the Olympics. I think it's a very clever way to market generic supplements, right? If you go on enhance.com right now, we don't have an affiliation, of course, but you can just get testosterone and a bunch of different products.

47:03But yeah, to me, you also came away being like the human spirit is way more powerful than any PED. Just like dedicating your life to something for decades and being absolutely obsessed and representing your country is more powerful than being able to do whatever performance enhancing drug. So major white pill for humanity. Humanity. Yeah. Actually somewhat related to Pope Leo XIV's new letter, Magnifica Humanitas, which we will talk about with our next guest, Christopher Hale, who writes letters from Leo and is joining us right now. He's in the waiting room. We'll bring him in to the TV pin ultram.

47:45Christopher, how are you doing? Great, yourself? Great. Yeah. I was reflecting on Magnifica Humanitas. And I mean, I was struck by, we were just talking about the enhanced games and the Pope's commentary on transhumanism and post-humanism. And I'm sure we can go into all of that. But why don't you start with a little bit of introduction on yourself and then take us through some of the key ideas or lessons that you pulled out of this letter and how you processed the news? Yes. Well, so my background is I work in the two things that you're not supposed to talk about on dinner dates, religion and politics.

48:25So I started my career working with President Obama after college. I ended up leading Catholic outreach, actually, ironically enough, for President Obama during his reelection campaign. And since then, I've done various initiatives representing consulting for companies on faith and in politics. And I've also done religious outreach once again for every Democratic nominee since 2012, in fact. But I also spent a lot of time devouring, consuming Catholicism and its intersection with faith and politics. I was a contributor, a columnist for Time Magazine for about a decade during the pontificate of Pope Francis.

49:07And got invited by Time Magazine and actually Newsweek to cover the conclave that elected Pope Francis this past year. I'm sorry, Pope Leo this past year. Yeah, and from that, I started writing a substack and it took off. The substack is called Letters from Leo. It's about the intersection of religion, pop American politics, and technology. So yesterday, though, it was a holiday, though, it was Memorial Day. It was kind of my super goal of sorts. Yeah, it seems like this particular news really broke through. It felt like, I don't know if it was just a slow news day. I think you mentioned that there was bad weather in a couple media markets.

49:44Was that literal? Like there was nothing else to report on or people were just inside bored and so they were reading all sorts of different stuff? Like what was your process on like how the actual announcement rolled out? I was very upset when the Vatican announced that it would come out on Memorial Day. The Pope is born in the United States. I just thought it was a bad day for sure. Media condition. There was bad weather. I'm here in D.C. It was rainy. In New York, it was rainy and cold. So my religious claim is that God opened the heavens and the poor weathers to allow the Pope's documents to be received.

50:19But yes, it took off. And I think that was really the hope of Pope Leo XIV. He really wrote this letter, and this is different from how these encyclicals normally work. We can talk a little bit about that. But normally these are very pie-in-the-sky. This certainly has pie-in-the-sky elements of it. But this was really meant for y 'all. for Silicon Valley. He wrote this with builders in mind. Obviously, Christopher Ola being there was representative of that. But he wanted this to take off in Silicon Valley. And yesterday morning, Jack Dorsey tweeted out the entire encyclical. So I think mission accomplished.

50:55I think he has woken up a lot of folks, both detractors and supporters in Silicon Valley. And I think this document's resonating and making a lot of noise. Yeah, yeah. What about it do you think is resonating? because it is such a broad document and it feels like he's taking sort of a middle path. I saw it as an optimistic document. I saw it not as a doomer. This is AI is going to, you know, kill everyone. And this is the end of the world. Like AI can be useful, but there are a lot of different decisions that we need to make, how AI is rolled out, how we maintain our humanity. That seemed to be the central thesis, which I liked.

51:36It seems sort of like a middle ground. Is that the goal? And then what would you expect Silicon Valley to take away or change based on that? So that was the goal for sure. I think Pope Leo XIV understands that AI is inevitable. Let's just put two minutes for a second. He's 70 years old. And Pope speak, that's like a baby. He's quite young. He's the youngest Pope we've had in 40 years. He's the first Pope to own a cell phone. He's the first Pope to send an email. He's the first pope to have an Apple Watch. So he's ingrained in the technological revolution in the flesh. He daily drives an Apple Watch?

52:12Yeah. Yeah, he has an Apple Watch. He also has a Garmin, too. Wow, both. So me and him have some sympath to go there. But, yes, he loves technology. He plays world every day. And most importantly, he consumes Western media. He consumes the Western media and what's going on, so he knows what's happening in the world. And so I think that really informed him what he wants. The Catholic Church never prescribes policies. We prescribe principles. It's really up to the policymakers to do that. It's really up to Silicon Valley and the products they make to do that. But what he wants Silicon Valley to keep in mind is this question of the human person, whether our projects are advancing the dignity of the human person or whether they are not.

53:02And I think that he hears language that concerns him quite a bit oftentimes. He's especially concerned about any time where human responsibility is abdicated to machines and there's no one that you can look back to. And particularly, he's been a lot of his document talking about war. Obviously, what's gone on in Iran has really concerned him. He was particularly affected by that first bombing on the day one of the war that killed 168 school children in Manav, Iran, and that he received a letter from those children's parents. So he's deeply impacted by decisions like this, and he finds that to be grotesque, but he thinks it would be even more grotesque if machines were killing humans without human decision-making involved.

53:48So those are some of the concerns he has. It goes on the economics as well, but really the underlying, underpinning concern is human responsibility. He wants that to be at the forefront and the dignity of the person. Now, that's at the Silicon Valley, what that looks like. I think that there's a significant chance that a lot of people in Silicon Valley will view this as, you know, de-cell nonsense, do-per-nonsense, which, as you said, it isn't. But I hope they take the focus seriously. Yeah. On the economic question, I was interested in the fact that he sort of called out that GDP might not be the best development measure because I've been hearing this from all over the place.

54:30We had Doug O 'Loughlin, who is the president of Semi-Analysis, very deeply in the inner workings of the AI build-out, talking about how GDP was an inaccurate measure of certain measures of progress in terms of just economic impact of AI. Then you have Kyla Scanlon has written about the vibe session, this disconnect between the economic progress of Americans versus the perception and happiness. And we can see it right now. The economy is growing. The stock market is at all-time highs, yet consumer sentiment is at almost all-time lows. And so I've talked to a lot of folks about this problem of like, what are we measuring?

55:14What is the goal? It's always been GDP. And I think it's interesting to see that the Pope is calling it out. I don't know that anyone has a really solid answer. My fear is that you wind up going towards happiness optimization, and then that takes you into a very dangerous territory, too. But in terms of unpacking that question of GDP, development, progress, measures, how do you think the church is reflecting on the way we have become a very measurement-driven society broadly? Well, let's go back. So Leo XIV was named after his – he took the name, his own name, after his predecessor, Leo XIII, who in 1891 wrote what was called Rear on the Barrow.

56:01If you're not a Latin expert, that means on new things. And Leo XIII, a lot of people in the West credit him for the intellectual force behind labor unions, the intellectual force behind a 40-hour work week and weekends, et cetera. I think that that is a good indicator of what Leo XIV wants as well. The word leisure is sometimes, I think, derided in a capitalist society. But in Catholicism, it's a great thing. We rest on Sundays. Jews rest on Fridays, Shabbat, the Sabbath. There's something about being able to limit the time of work, expanding the time of recreation, of spending time with your family and loved ones.

56:42Remember the word recreation. its root is recreate that's actually the mission if you will of the Catholic Church of Christianity is to recreate that's what Christ does in Christianity when he rises from the dead we're looking for more moments of recreation so I think the Catholic dream would be to honor the 40 hour work week and perhaps maybe a little less I don't think that's possible but to honor the 40 hour work week as sacred to honor leisure as sacred to ensure that people only have to work one job to provide for themselves and their families. I think that's what we're looking for. We're looking for a baseline comfort that everyone can achieve in this country by working hard for 40 hours a week.

57:27There's nothing wrong with having rest. Yeah. So help me, help me synthesize that with what the Pope said about like the unique human challenges, the challenges that make us human. He said, for an algorithm, an error is a flaw to be corrected. For a person, however, an error can be a catalyst for profound change. It was sort of a warning against transhumanism and this idea that every problem is to be solved. In fact, sometimes the problems are what make us human and our struggles are the value and what brings you joy overcoming. But how are you synthesizing those two ideas? I think that what, and so it reminds me of an author that maybe your listeners are familiar with Oliver Berkman wrote, I believe it was called, I can't remember the word, it was 4 ,000 Weeks, basically a survival guide for mortality.

58:19And for the Catholic Church, for Christians, for people of faith in general, mortality is not something to be overcome in and of itself. It's about having a dignified life. He's very skeptical of Rian Johnson. Of course, he didn't name check Rian Johnson. But for Christianity, death is a part, a noble part of the equation. So, I think it's really hard for the Pope and for the Church to understand this idea that that is something to be overcome. Just to get a little theological for a second, really the way that Christianity overcomes death is by dying. St. Paul says that Jesus, by dying, destroyed our death.

58:58So, death is not something we should be afraid of. It's something that is part of the journey. It creates a second life for us, a life everlasting. So, more practical levels, I think we want to do anything that can dignify the human life to make it better live, to make it more comfortable for people. But we shouldn't be afraid of our limitations. St. Augustine famously says that my shortcomings, who, by the way, St. Augustine's the patron of Pope Leo XIV. He says that my shortcomings actually give honor to God because what it does is it proves the need for a redeemer, a savior. Let me put it in more blunt terms.

59:37We can't save ourselves. I think if Pope Leo thought there was an original sin of Silicon Valley, it's that Silicon Valley at its worst thinks it is God or that it can recreate God. Yeah, we see a lot of that. How would you guess that he feels about people sort of implying that AI is alive? There were some comments at the event yesterday saying, you know, these systems mimic feelings like fear and joy. Particularly pointing out that Chris Ola or like Anthropic has written in the past that they have detected like, you know, emotions within certain reasoning chains. And then the Pope said that these systems don't feel emotion in the same way.

1:00:24But I didn't see that much incongruity there because one is sort of a description of, you know, the flavor of a text that's being generated. And the other one is like the real true emotion, I suppose. But how did you process that? Is there actually a divide or is there some more synthesis that can be drawn there? Sure. I think on the first, I will say that I think we abuse this as a side issue, truly, in terms of the practical first and foremost. But what you're referring to, I mean, we know Antropic gathered 15 faith leaders in March and asked the question, is Claude a child of God? The very short answer from Catholicism, from Christianity writ large, is that the inviolable dignity of the human person is unmeasurable.

1:01:09A better way of putting it, people always hear that phrase, the whole is greater than the sum of the parts. It's actually a Christian idea. The wholeness of what it means to be a human cannot be measured or recreated in a lab. It is a theological claim. It is a religious claim. So I think the best way the church could understand it is that you can mimic a human being 99%, perhaps 100%. But the fact that it wasn't brought to birth by God and brought to birth by a human person, first and foremost, and created, if you will, in a lab, I think that limits the possibility of it being divine. Jordy, what else stuck out to you?

1:01:53uh what was how do you feel the church more broadly uh sort of You know, I thought I was, you know, seeing some of the clip of Olaf talking about, you know, job loss and job displacement and economic disruption. I thought I can imagine a lot of people in the church broadly were upset to have, you know, representative of Silicon Valley there. and who many, I don't know if this is the view, but many would feel like is part of the problem, at least when you look at tech CEOs or lab CEOs specifically when they go and do interviews and historically when they've done interviews and they're saying like, we think this is going to cause massive disruptions of the labor market.

1:02:52People look at the person and they think, you're doing this. Like, why don't you stop? Right. And, you know, we don't need to talk about maybe why it's why it's why it's worth doing. But I'm curious what the kind of broader reactions to that kind of rhetoric are around job displacement, because I would say the industry is like the industry industry is becoming like quite divided. I think that everyone generally agrees that there will be some serious evolution of certain jobs and roles and things like that. But a lot of people in the industry believe that there will be significant job creation as new companies get built and entirely new roles emerge, even if some roles and jobs go away entirely.

1:03:48And, of course, we saw the same thing in the Industrial Revolution itself. I'll stay on Christopher Ola's remarks. I wanted to step back very quickly. Ola's presence there was on the result of really a 10-year effort by the Vatican to engage with Silicon Valley. And to be very blunt, that engagement was at times rebuffed by some, not by others. Christopher Ola was there because OpenAI, more than any other company in Silicon Valley, took these questions seriously and took the engagement of the Vatican seriously. And I know for a fact that February dusted up with the Pentagon and the Vatican would argue, at least officials of the Vatican would argue, the courage that Enzopic showed in that.

1:04:33And that fiasco was the final straw that made them the guys for the Vatican. But very quickly, I thought Ola's remarks struck a lot of people in Rome here in the United States, and it's quite honest. I appreciated him saying that we're not driven by these questions. In fact, we are driven by innovation. We are driven by profit. It was something of a it was the opposite of a pitch, you know, and I appreciated the honesty. In some ways, that's all someone argued is actually a confession. He went to Rome and asked for a confession. He said, well, we have these shortcomings, and we need outside institutions to be I don't know if referees is the right word, that's probably too strong a word, but advocates for a human-centered development of AI.

1:05:17Yeah. Have you looked at, who do we have on the show? Pat Gelsinger. Have you looked at any of his analyses of these different LLMs? He's benchmarked all the LLMs on how spiritual they are or how they map to different religious values. And his sort of complaint is that the LLMs are overly agnostic or overly atheist in the training data, perhaps because there's like a lot of Reddit in there, maybe. And I'm wondering, like, if there's any perception of like the training data, like the actual products themselves misaligning with the views of the church. I would say the Catholic Church, Pope Leo XIV, is not looking for an LLM to replace a priest or religious advice.

1:06:15And I think that he would have concern that people would go there first, quite frankly. So I don't think he's most concerned about the bias. I think he's concerned – I mean I think obviously Pope Leo is neither left nor right, but I think a lot of his concerns due on this really attack to what the left in the United States is saying. I think that there's concern about bias in profiling, bias in credit scores. He talked about that. I thought that was remarkable that he talked about credit scores and mortgages, getting access to mortgages. I thought that was profound. So I think that is more of his concern.

1:06:45We actually saw another study today that said that when you asked some LLMs to compare religions, the Catholic Church got a nice review, a glowing review. So perhaps Claude's Catholic or not. But I don't think Leo cares as much about that stuff. I think he's concerned more about, quite frankly, access to resources and judgment calls about who gets something versus not and punishment or not. Those are really what I think overwhelms us. Look, this document was long. He did a lot in it. But the thing that really kind of took most of, like the least of a lot of part of it, a bigger portion of it was war.

1:07:24Yeah. Can you help me understand his views on international governing bodies, international cooperation? A lot of the debates in artificial intelligence right now, they sort of run into problems where the different American companies sort of agree on something. But then there's this boogeyman of international competition. And if we don't do it, China will. And so we must continue to accelerate. And it feels like Pope Leo sort of gestured towards a view of international cooperation that could be the solution. But also there were some detractors who were worried about the negative outcomes of that.

1:08:11And I'm wondering, like, how you interpreted his his vision for international cooperation in the modern era. Sure. I think the first thing is obviously he's an American pope, but he is the pope of 1.4 billion Catholics. So, of course, he's a globalist. Of course, he puts global institutions at the forefront. He's not, unfortunately, to some chagrin, not America first on these questions. I think that the critics of Leo are going to be disappointed because he does believe in regulatory order. He does believe in international norms. He does believe in governing societies. The most conservative pope we've had in the past 60 years, Pope Benedict XVI, was very big on the United Nations and equivalent organizations.

1:09:01Now, I think some in Silicon Valley might rightly argue that's naive, that those things don't work. But I would say that for a practitioner, I think that what he would ask is at least allow the question of can we have more cooperation? Can we have more agreed upon constraints? And can we at least engage in this in good order? He obviously, you all are profit run companies that are listening today and that's the reality of it. But I think he wants everyone to take to heart. What can we do to ensure that what we're building is for the common good of everyone? But I very much think that J.D. Vance, when he went to Europe and Paris in 2025, and he said, let's talk about innovation more and guardrails less.

1:09:53I think Leo's saying, no, let's talk about guardrails as well. Oh, interesting. Okay. Well, thank you so much for coming on the show and breaking it down for us. Yeah, great to meet you. Jordan, anything else? I appreciate it. Have a great rest of your day. Thanks so much. We'll talk to you soon. Goodbye.

1:10:09Interesting. I am excited for more people in tech to digest the encyclical and see where all of this goes. We have our next guest joining in just three minutes. Three minutes. We have time for one quick story, closing out the Enhanced Games, of course. the next thing was that over the weekend uh diary of a ceo host steven bartlett went viral for saying that tyler throw me throw me a beer yeah so this was a this is a funny clip we can play this actual clip uh ross hendricks a lot of people were not on we're not happy with this uh the quote is it's uh it from uh from a clipper says steven bartlett says a few glasses of wine ruined the next three days of his life.

1:10:56Let's play this clip. It's one of those areas where you don't understand the hidden cost until you really give it up for a while. And I think about my own relationship with drinking, and I stopped drinking at 30 years old. I'm now 33. And I had just drank because I just drank. I'd never ran the experiment of just giving it up for a while. And then, like, I don't know, maybe I was at 31. I thought, you know, I'll have a drink again. Because now I could really A-B test it. I had a year of not drinking, decided to have a drink again. It ruined three days of my life. I had a couple of glasses of wine.

1:11:24didn't get drunk it ruined three days of my life because of the the domino effect it caused so it meant that i got worse sleep that night and then because i got worse sleep that night i ate more poorly the next day because my my dopamine system or whatever the cortisol system was all messed up and then i podcasted worse i didn't go to the gym the day people did not like the i podcasted i felt really bad i then slept worse and i could track all of this on my week hashtag ad hashtag sponsor hashtag investor whatever yeah and i was like oh my god i love that chris is just chilling The perfect, perfect wage bait.

1:11:55Hidden domino effect that I must have been living with for my whole life. So this is like a very non-controversial take that has been popular on podcasts for years, really. But it's so pointed here. And I think, I mean, there's a bunch of interesting things. I mean, a lot of people are just saying like, oh, you should just be able to drink. And like, it's gone too far with the total abstinence culture. Like you should be able to have a glass of wine and be fine. If you're, if you're completely knocked off of everything for three days after a couple of glasses of wine, like you're not actually like, you know, strong and hearty and you like, like you life will throw other problems at you and, and much worse than three glasses of wine.

1:12:38You will lose sleep because your kid is sick and you will still be asked to perform. And so I think, I think parents, parents watching this certainly looked at it and thought, But if one bad night's sleep doesn't allow you to work out for two days or throws you off so significantly, you probably shouldn't have kids because get ready for every other night. A lot of craziness. Life will throw all sorts of stuff at you. It was funny because when we started doing the show and you saw my various health habits, you used to joke. John would say, I'm a junkyard dog. I just eat everything. And I just assume it's healthy and nourishing.

1:13:18and I feel great. Yeah. Right. And you would joke that you would say if Jordy had a single inorganic blueberry, he would it would kill him. He would explode. He would explode instantly. The thoroughbred diet. So, yeah, I've certainly just, you know, battled that myself. Like the point of being healthy is to be resilient. I mean, the funny thing is that we used to have Dom Perignon episodes where we would drink on the show and it actually did make us podcast worse, as silly as that sounds. Like it was harder to maintain the flow of conversation. and you'd think, oh, having a couple drinks probably loosens you up.

1:13:50Like, no, this is actually a performance. Like, even though podcasting is a silly job, like, it is a job, and you need to be on. Yeah, another example. So we basically decided early on to never take sick days, partially because we would – we spend so much time together. Like, we're always – if one of us gets sick, usually the other one gets sick. It's just part of the game. and think about moments where you just feel like completely terrible. But because we don't take sick days, we're like, okay, we're going to power through. And you end up still like we end up still having a fun time. We end up hopefully still having a good show.

1:14:29And so, yeah, I think we probably hit. I was talking with some friends yesterday, and it feels like alcohol is going to go the way of cigarettes. where it's broadly established that it is very unhealthy, but can still be quite enjoyable and will maintain some level. Like cigars, cigars. No, but I mean, cigarettes are still widely consumed. Cigarettes are so addictive that people either smoke them all the time or not at all. Whereas I think a lot of people who do drink wine will have a glass of wine on the weekends. whereas there's no one who's like I have one cigarette a week that's not like a thing but people do that with cigars they'll be like oh yeah there's definitely people that are it's pretty rare though it's pretty rare anyway the the last thing is that I was I was fascinated by this fact that this went so viral because of this clip and crypto Mickley who is web 3 clipping at counterparty TV not thread guy clipped this and I was interested in it because at first I was like, is this out of context?

1:15:40And this is sort of the full context from the actual show, but it does sort of change the context because this is obviously from a longer show. It's two people hanging out for an hour. They're talking about a lot of different things. But when the clip is introduced as like Stephen Bartlett says a few glasses of wine ruined the next three days of his life, it's the most, it's written like a press release, you know, it's like a statement. And it's not necessarily what Stephen would have put out as a press release. He wouldn't put it, He wouldn't necessarily have done a blog with the title. Yeah, and the actual, this is a guy that cares a lot about performance.

1:16:14Yeah. And he's basically admitting that he had a few glasses of wine and it threw him off. Yeah, and he's just trying to tell like a positive story of like, yeah, just, you know, removing something, feeling healthier. It made him happy. I don't know. But it clearly triggered everyone because there's 24 million views on this and 2 ,000 quote tweets. And Ian over at SciComm, the team behind Huberman. uh, Ian is pulling up the chart of new podcasts by year. It's possible that drinking is correlated with podcast creation. People are drinking. Because people are drinking. We should start a podcast.

1:16:50We should start a podcast. Maybe, maybe. It actually peaked right in 2020 and it falls off a cliff. This is a crazy chart. Right when drinking really fell off a cliff because of COVID too. Yeah. Make it make sense. So where all the podcasts launched in 2020, I guess, is that, is that where this line lines up? because I guess during COVID, a lot of people started shows and then it went back to sort of the baseline, I guess. I'm surprised. I'd like to know more about this data because it feels like there's been like an ongoing boom forever, but I guess not. Anyway, we have our next guest waiting in the waiting room.

1:17:21We have Sean Henry from Stored. He's the founder and CEO joining us today. Sean, how are you doing? Good to be here. Thanks for having me, guys. Welcome to the show. Very cool green screen. in the background. Not a green screen at all. If anyone goes by, this is real time. This is live. I'll blame all of my performance on my three glasses of wine from Friday or Saturday night. There we go. Otherwise. There we go. Great to see you. Great to see you. Been too long. You got some big news today. Yeah, break it down for us. What happened? For sure, John, Jordy, good to be here. Thank you guys for having me.

1:18:01Well, we're announcing that Stored has raised$250 million, a$3 billion valuation. Congratulations. Thank you, guys. Thank you. Really, the power of the physical intelligence layer for commerce. We spent a decade building this at Stored, and we think that the scale, the vertical integration, and the ability to apply robotics and AI to the massive data set we have is just transformational for commerce and what we're enabling for our customers. So, very proud to announce this round and thrilled to be here. live sharing it with TBPN. So what's been the biggest growth driver? Obviously, you're expanding in your commerce market, your offerings, but also is e-commerce, is commerce as a general category still growing?

1:18:47What are sort of the macro trends that are tailwinds for you? Yeah, if you look at our announcement, what you'll actually find is we put out a pretty public chart of revenue. And you'll find in our tweets that right around the time that AI came out, about six months later, we accelerated massively as a business, which really is in part that we had spent eight years to that point already building so much vertical integration of software from the time we're speaking to a consumer during the checkout, saying, order now, get it on Thursday, to the time we're orchestrating that network, to the time we're executing it with software in a building like this across our network of nearly 100 facilities.

1:19:25And so when we took that vertical integration with the scale that we had, maybe two years ago at that time, powering about$5 billion of commerce, today powering almost $17 billion of commerce. What we've been able to do is drive just faster deliveries, cheaper outcomes with all of that technology and with all of that scale combined. And so a lot of what we're using this new capital for is to keep expanding that scale. There's such a flywheel behind this business, whereas we get bigger, we're getting faster and cheaper to then also complete the front-end stack of software. That's been a big part of our growth the last few years is that we've built out that whole front-end consumer experience that's now interacting with tens of millions of consumers per year now that we power deliveries to over a fourth of U.S.

1:20:12households. So, we're going to keep expanding that front-end software stack. And then the final big pillar of our growth is we're also announcing stored labs with this raise, which was a big part of why we We raised so much capital,$250 million, to apply AI and robotics to all of this real-time volume in the real physical world, already running real-time. And we've carved out an entire facility here in Atlanta just dedicated to testing next generation robotics and AI before we apply them and roll them out across our entire network. Oh, sorry, Doreen. Yeah. What is what what are the different why now is that you're feeling in robotics specifically around, you know, in fulfillment infrastructure?

1:20:55Is it like is it happening on the model side that that there's, you know, other neolabs just working on the intersection of AI and robotics all the way through, you know, you know, new actuator technology coming out of, let's say, China? Like what is, and I imagine it's the combination of a bunch of factors that's creating the opportunity, but what are you seeing? Why is now the right time to invest what sounds like, you know, nine figures into your own robotics and AI products? Yeah, there's really two why nows going on right now. One is why now for our business and one is why now for this investment in stored labs.

1:21:34For our business more broadly, I think the why now comes to by 2020, consumers have been taught they wanted fast, affordable deliveries. And that was really what was driving commerce in today's world. Since then, for the last five years, brands of all sizes have fought to get that Amazon-like delivery on their own channels so that they can win and retain their consumer, rather than as one of our customers said in a quote for this round, they don't want to just be askew on Amazon. They want to be a brand and own their channels and own those direct relationships. It's actually been a really hard five or 10 years for e-commerce when you take into account all the changes with Apple and Facebook and rising ad costs, then with tariffs, then with, or first with COVID, then with tariffs, and all of these kind of compounding challenges to where the why now for us is really that these brands have been beaten down.

1:22:25They've faced rising costs. They've face rising competition from Amazon, from TikTok shop and more, all that are just disintermediating them with their customer and harming their unit economics. And so we want to give them those unit economics on their own website. And we even saw two, three weeks ago, Amazon themselves announced this kind of AWS for supply chain moment. Well, we don't see that as any different, that Amazon is really just subletting some capacity in their network. What brands want is truly structurally different, which is independence. They want somebody who's not using their data against them, who is driving all the branding on their packaging, their tracking, and more that keeps consumers coming back to them.

1:23:05But it was validating. The why now for robotics and stored labs is equally interesting, which is that you kind of look at a company like a Tesla, let's say, and you go to the algorithm. They often put hardware and automation last because Because first you have to nail the processes physically and the operational excellence around those processes. Then you have to nail the software to run those processes and kind of unify those two. And that's really what Stored spent the last decade building. And then only once you've gotten every efficiency out of software, every efficiency out of process, then do you go hard code with hardware, which is physical, it's expensive, it's hard to undo.

1:23:45And that's really where I think Stored timed this perfectly in that hardware is changing. The hard-coded robotics from yesterday and now the agentic robotics of tomorrow that can learn better, adapt better. Already in this building, for instance, all of our cameras are equipped with AI that are telling us about productivity across the facility, about safety issues, about compliance issues. That wasn't available a few years ago. So when you take our vertically integrated software with then all this hardware and sensors and vision and how it's then feeding dynamic agentic robotics, we're in this like fundamentally different paradigm in automation forward.

1:24:21But you have to have the existing software and vertical integration to capture it. How are you thinking about the different robotic opportunities? Like, I think there's a lot of excitement about humanoid robots. We saw last week a demo of a robot sort of humanoid flipping over packages so that barcodes could be scanned. And when I'm in a manufacturing facility, I usually see much more purpose-built machines or robots for those specific tasks. If there's a million boxes that just need to be tipped over, typically there will be a conveyor belt and some sort of device that just does that one task.

1:25:01And I'm wondering if you're seeing more energy being devoted to task-specific robotic optimization or more generalist projects. Like, what excites you? Where's the next, like, couple years look like? Yeah, that's a great question. And I think it's where we're headed, which is more general. I think the task-specific automation of the past is what kind of causes issues because oftentimes the task at hand changes. You implement that robot and six months later with a new skew variety, new production change, new consumer demand pattern, all of a sudden the model you built that ROI off of is now fundamentally changed.

1:25:41And if your robot can't adapt to it, you've just wasted so much capital. And so we're very much focused on this kind of new generation of more agentic, more dynamic robotics. and a big challenge in the past was that you kind of either had a robot that moved the arms and could grab something or a separate robot like the Kivas of the world that were kind of moving the legs and it was just shuffling something around the facility. So now you're entering this new paradigm where what could a humanoid do in a warehouse if you could move the top arms and the bottom legs at the same time and really see this new level of movement going on in a facility.

1:26:16But it's in part why we're so excited because our foundational insight when we began store beyond the kind of consumer trend and that every brand was going to need these Amazon capabilities was the reason brands can't do this is that traditionally physical logistics and logistics software and then the software that serves a brand and speaks to the consumer are all sold separately. And you're trying to figure out how to integrate all this together and tie it into the physical atoms moving out there in the physical world. And so our thesis was, well, if we build all of those together, the infrastructure, the operating software, and the consumer-facing software, we will be the platform that can iterate off of these.

1:26:56And right now, our biggest costs are essentially either decisions, labor, or deliveries. And with how our decisions are going from ML to AI, we're getting faster and cheaper than our industry because of that proprietary software. With how robotics are going from hard-coded to agentic, we're getting faster and cheaper at a faster pace than the industry. And even things like drone-based delivery, it's such an awesome capability and incredible category of companies and what's happening there. But you still need inventory everywhere to be able to deliver from a drone, which has a limited radius. And you need that front-end consumer experience software telling the consumer drone delivery is available.

1:27:36And storage is what controls that part of the stack that then extends out to then enable things like drones. So the shortest statement is we kind of see ourselves as the vertically integrated platform that can first take advantage of a lot of these emerging technologies because our industry is so far behind us. Talk about international expansion. Where are you live today? Where do you think you'll be in 12 to 18 months? Like what international opportunities are exciting to you? Yeah, so we're very large in the U.S., approaching 100 million packages a year to about a fourth of U.S. households this year.

1:28:15Internationally, Canada is our next biggest market, followed by Europe and the U.K. We're expanding with recent launches in both China and Australia. And that's taking U.S. brands internationally to say, hey, we can already ship your products globally to over 180 countries. We do that every single year. But what if you actually wanted to hold your inventory locally in those markets and deliver locally? So if you step back, when you think of stored as saying we are the physical intelligence layer for commerce, what that means is really we're trying to give all the physical infrastructure, all the software tools, all the robotics and all the AI that you need to sell anywhere and deliver to those consumers.

1:28:54And so already today, our platform is infused at every level with natural language AI, where I only bring that up because one of the most fun questions we've seen brands asking is, where should I expand globally based on where all my consumers are already purchasing from? Yeah. Is China an underrated opportunity for independent brands? Like we were just reflecting on the fact that the Tesla Model Y is the best selling electric car in China. It's obviously an American made, American developed vehicle. And I'm wondering if that's not on the top of anyone's mind, but is there some sort of opportunity there?

1:29:30I think you may be on to something. That's not necessarily why we expanded into China. We are very customer obsessed. And so we tend to follow our customers globally. And to your point, we went with one of the fastest growing US brands who wanted to access consumers in China and expanded with them. And so I think oftentimes we think about the inverse, which is, hey, if I launch a brand here, my product, my IP or other is going to be quickly replicated internationally in markets like China. Well, there may be the opposite, which is the end consumer there may actually want that brand from other markets like the US.

1:30:05I think there's just this often underestimated fact of opening up more channels tends to decrease your CAC on your first channel. because what we see is, let's say, a brand goes into a new marketplace, a new store, a new international market, and therefore the audience just gets larger and larger and larger who's seen them at least once. And so then your ad effectivity goes up, and so your CAC organically continues to go down. Yeah, that makes a lot of sense. Well, congratulations on the funders. Great update. Thank you so much for coming on the show, and have a great rest of your day. Talk to you soon, Sean.

1:30:37Thank you, guys. Good to see you again until our next run-in. See you later. Bye. Up next, we have Eric Ries, the author of Incorruptible, Why Good Companies Go Bad and How Great Companies Stay Great. Eric is in the waiting room. We'll bring him in in just a minute. You probably know him from his first book, The Lean Startup, which focused on why successful companies drift. This book is focused on why successful companies drift from their founding principles and how to prevent it. The lean startup was foundational to me when I came to Silicon Valley. I remember I went to a lean startup book event, probably back in 2012, you spoke there and it was very inspiring as I was starting my first company.

1:31:23And I took away from it just, you know, money is not infinite. Don't die. Don't burn all your money. But I mean, Maybe we can start there and sort of reset. What are the correct lessons that you think should endure from the lean startup? And then we'll go into Incorruptible and sort of all of the evolution. But I'd love to sort of have a reflection. Yeah, I would just say super incredibly influential on my career and journey. Really unlocked entrepreneurship for a lot of people. Totally. It was the perfect time. You needed$20 million to be a business person. Well, yeah, for me, as somebody who just grew up obsessed with startups, beyond TechCrunch every day, and all the startups that I thought were cool and crushing it were in TechCrunch every 12 months raising all this money.

1:32:09And it feels like out of reach when you're a teenager, and then you realize, like, hey, capital is way less of a constraint than you would think. So thank you for that. Well, guys, thanks. First of all, congrats to you. Thank you. You know, what's really held up, like a lot of the techniques and the specific tactics from Lean Startup are a little dated now. I mean, you know, Groupon, it's a case study. Like it's old now. It came out in 2011. But I think the principles have held up really well. And especially if you think about like from a megatrends perspective, the book said that the world's going to get more and more and more uncertain.

1:32:46So our ability to plan and forecast is going to get worse. I think we nailed that one. and that the democratization of technology is going to mean that more and more and more people are going to be able to build faster, cheaper, better products. And so when you put those two things together, every industry that's been hit with a double whammy of those two things, lean startup holds up real well. Yeah. Do you think startups are getting leaner or less lean in the modern era? And what I mean is that I will see, we have folks on the show all day, oh,$200 million seed round. It doesn't feel lean. At the same time, we hear about the mythical one person, one billion dollar company.

1:33:24And although there's been some reporting that's been a little bit debunked on it hasn't happened yet, it feels like it is becoming more attainable. You can run leaner even if you're just using SaaS products, but also AI agents can do a lot of things. You can answer a lot of questions. You might have slightly lower legal bills just because you're a little bit sharper going into that negotiation. And so I'm wondering on the net leanness, how are you processing the modern era? Well, every time we have a mania or a bubble, you know, whatever you call it, right? The situation goes bimodal real fast.

1:33:56You have people who are struggling to raise money if they're not in the favored category. And then obviously the money is flowing ridiculous. What's funny is I've been at Lean Startup long enough that people periodically write these articles that are like, such and such company proves that Lean Startup is over. And they always pick a company like Quibi. Okay. So it's like, you just never know what it's going to be the thing. I think fundamentally, like using resources well is an eternal entrepreneurial virtue. So even the people that are overfunded, a lot of them run into trouble because now you don't have that reality kind of barking at you all the time to make sure that you're actually building something that people want.

1:34:30It becomes easier and easier to delude yourself the more money you raise. The other kind of startup that's emerged is the lean startup that ends up raising a lot of capital, but simply because they were lean and they were really scrappy and so they grow super quickly. I'm thinking of a Turbo Puffer, our friend's company, where it raised very little money. It's at a nine-figure run right now, but extremely attractive to capital. but his entire approach is like, how do I maintain that scrappiness even once I have a fortress balance sheet because that's what made the company great from the beginning.

1:35:07It's just like doing things that customers want that they'll pay for, you know, all these things. When it's so easy when you take in that level of money to lose that ethos, the thing that made it worth investing in in the first place. And I think it's interesting. Like I know quite a few companies like what you're describing where the fundraising was done for some other reason than for the money. In fact, I know a bunch of founders who brag to me, we raised this money and never spent it. Because it can make sense to have a Fortress balance sheet. But to me, the real question is not about how big or small is the organization, how much money was they raised, but how much control do the people who are locked into that mission actually have over what happens next?

1:35:45And sometimes when you raise too much money, especially too much money too early, you think, you ring the gong and you're really proud and it's straight, you know, like it's, okay, that's really fun, but then like, how do you actually, yeah, or you guys get the air horn, You guys get the sound effects. And like sometimes, you know, the media environment, like steadily building a product that people love day in, day out. Like that's not the sexiest story. And so sometimes, you know, we get distracted by all these other things that take us away from the one and only one thing that truly matters, which is can you build a great product, build a great company?

1:36:14Yeah. Yeah. I mean, there are so many and a lot of financial reporting sort of misses the changes of control that happen. Like there might be a company that's raised a$1 million series seed and then a$5 million series A and there's two VCs on the board and one founder. And then there might be five founders on the board and VCs are stuffing$100 million checks and they can't even get a board seat because there's so much demand. And which one tells you more about the future of that company, potentially the governance side? How are you grappling with the just governance in the modern era? I mean, I feel like that's a lot of what this book is about.

1:36:50There are so many different paths. There are PBCs and really diffuse, lots of co-founders having even stakes. Then you have the SpaceX AI, immense control in a single founder. Both can produce fantastic products and good financial outcomes. How should we interpret all the different roads that are available to founders these days? It's really confusing. That's actually part of the reason I wrote the book. The book is meant to blueprint to actually show a new, better way forward. Like the extreme founder control has its problems. You know, psychologists call it hubris syndrome. Not to name check any particular founders, but that can cause some issues.

1:37:31But also investor-dominated companies really underperform precisely because we have this financial system that has this gravitational force that pulls companies down into mediocrity or worse. and the book I document like over and over and over again we we reenact the parable of the the goose that laid the golden egg and just stab it right through the heart when we by removing the thing that actually made it worth investing in in the first place how many times have you gone to a restaurant and you like look on your phone you're like take one bite you're like did private equity buy this restaurant it tastes disgusting no I have the best I have the best example of this My favorite hotel in the world was bought by Private Equity.

1:38:14And one of the things that every guest would talk about, didn't matter at all, it just barely contributed to the cost of having a guest there, was that every night the hotel would walk around and they would leave a warm chocolate chip cookie and milk for each guest. And Private Equity bought the hotel, which only had something like 20-something keys. And they immediately removed the free chocolate chip cookie with milk at night thing. And I just so such a funny thing to like take out. But is exactly the kind of thing when you met you transitioning from, you know, this like founder led, you know, family operated business to invest around.

1:38:58yeah what's sad about it is we built an economy where people are routinely rewarded for cutting costs but never held accountable for the downstream brand and quality consequences of that so like on the balance sheet getting rid of the cookie is immediate roi positive yeah and you can justify it you can justify it because they're well the cookie's still on the menu so people want the cookie we looked at the data we looked at the data a lot of people don't even eat the cookie right and and so it doesn't matter of course no you got it right like how is it possible that the capital structure of a company has a flavor that you can literally taste it and it because like notice how when you said that private egg took up your hotel we're all ready to give you condolences right like you could in theory you might be like well having those resources made it better right go that's great i know they're gonna no no one ever feels that way and everywhere i go you know i've been as happy doing this book tour on the new book people are coming up to me to be like i know that story yes that happened to me and they've named like 20 different restaurants to me, hotels, like so many service products where, and again, it's not about private equity per se.

1:39:58It's that we've built this pervasive force that is just dragging companies down. So if we're going to get now get to the governance question, and I know for founders listening, it's like, oh God, governance, so boring. But like, as I say in the book, if you don't get the governance of a company right, no other decision you make will matter in the long run because you won't be the one making it. So we have to figure out how do we create that like incredible alignment. You've seen it in mission-driven companies, right, where everyone's on the same page. And how do we protect that special thing from outside pressure?

1:40:27And when you put those two things together, we can create what I call mission-controlled companies that cannot be corrupted by this temptation. Yeah. There's a bunch of different things that I want to click through to interrogate that. The first is probably quarterly results, quarterly earnings. I've seen proposals to go to every six months reporting and it seems like okay that would align public companies with like the CEO could think for six months instead of three months and take bigger risks and and and think longer term that feels very good at the same time it feels like the the the rug that you sweep things under is potentially just getting twice as large or the The closet where you hide the bodies is getting twice as big.

1:41:15And I'm wondering, is there a tension there? Am I wrong to think that there's a tension there? Because a lot of, like, I think about, you know, problems in the public markets with long-term value creation, long-term alignment. But then I also think about the transparency that comes with being public, the regulation that comes with being public, the access to public investors, retail investors that can participate in a company before it's a trillion dollars if it's going to be a great company so how are you dealing with those tensions if there are tensions yeah okay first of all attention is completely real okay and you think you gotta know is is long-term stock exchange the company that i founded um is the one who filed the petition last year to the sec to switch from quarterly you're the one okay so obviously i have a i have a strong strong view about it Oh, nailed it.

1:42:06Exactly. And what's funny about it is, okay, so first of all, we have to understand the scale of the problem. You're not going to believe this, but we have really good action. By the way, sorry, before we continue, you should have named it like, you know, Eric's Law or something like that. You're not getting enough credit. You're not getting enough credit for this. Listen, the memes and everything, that's your department. Okay, I just, I just, all right? Okay. So, okay, but you've got to understand the magnitude of this problem is insane. Yeah. If you look at other countries, there's these natural experiments where certain countries have switched from semi-annual to quarterly reporting or vice versa.

1:42:39And they happen to do it in such a way that not every company changed at the same time and it was random who did which. So we actually know the valuation consequences of quarterly reporting. And it's roughly a 5 % loss of total equity value. Companies are 5 % less valuable when they report quarterly than semi-annual. So the academic research on this is pretty good. and the magnitude of the cost, we're talking about so much, so many billions of dollars of lost value. It's not because the effort to do a quarterly report is expensive, although it is expensive and annoying. Rather, when people report quarterly, they start to run the company for the quarterly report.

1:43:16So companies no longer make products. They start to view the quarterly report as the product, which means they're basically meme factories. What do I have to do to generate the report that will get me what I want? Now, getting rid of quarterly reporting just by itself, I don't think is a very good idea. We'll see what the SEC ultimately decides to do. I think we should replace quarterly reporting with a better, more fulsome disclosure project where long-term investors can actually find out what the F is going on at the companies they invest in, where today, companies are strongly incentivized to give out as little information as possible.

1:43:45That's broken the partnership we need between long-term companies and long-term investors. That's, of course, part of why we created the exchange in the first place. Yeah. Talk about public benefit corporations and how incentive alignment might play out. In the longer term, when you get to a stage of a company that's a lot more like Apple than a founder run, Anthropic is a unique example with a set of co-founders, but the normal Fortune 500 company has a leader at the top that might have 1 % equity and a board seat, But there is a chairman of the board. There's a board of directors. It's much less controlled.

1:44:25But in that scenario, they are reporting to shareholders and they have a fiduciary duty to shareholders. If, you know, you have a company that's, you know, broadly held and has diversified board and diversified ownership structure, but is a PBC. How does that play out? Like, what are they doing differently? Is it that the CEO has two different hats and they're mentally taking these on and off throughout as their decision making? Or what is, how does that actually play out? Yeah, that would be too hard. The so-called double bottom line, triple bottom line, I think has not worked out very well precisely because it leaves CEOs really confused.

1:45:02Okay, you want to be multi-solder, great. Customers want lower prices, but employees want higher wages. Now what? So it kind of leads to a compromise. But what's interesting, PPC is actually not that new. For the vast majority of time there have been joint stock corporations on this planet, it was considered obvious by everybody that they should be incorporated to do a specific thing. When they're just trying to make money for themselves, they wind up hollowing themselves out. That's what makes them dangerous. It was only in the 1980s that the idea of so-called shareholder primacy came into effect.

1:45:31So if you walk by your local park, you will see trees that are older than this idea. This is not some ancient pillar of capitalism. And in the book, I make the case for, first of all, we've got to get rid of shareholder primacy. I think it's just a terrible idea. But the question is kind of like attacking it is easy because the data is so good about all these best practices being so bad. The issue is what do we replace it with? What does mission primacy look like? And I think the key to that is to understand that being a for-profit company is actually great. Making a profit is actually about making the world a better place.

1:46:01That's literally the definition of it. It's like a positive margin transformation. So in the book, I argue, and I feel we're doing it on the same day that like Pope Leo made this same point in way better fashion. Hundreds of pages. I only mentioned it in passing. But like literally to make a profit is to maximize human flourishing. That's what it means. So now coming back to the PBC, all PBC does is give the CEO and the board the legal cover to pursue long-term value creation in the face of hostile investors. So if you go there and say, listen, I want to sell the company to Philip Morris because they're willing to pay a dollar more per share than it's worth, you need the tool to be like, no, that's ridiculous.

1:46:37Of course we're not doing that. And that's what PPC allows you to do. Interesting. What do you think are some of the most underappreciated companies in history that you feel like had mission primacy? Yeah, yeah. Obviously, these are profiled in a great deal in the book. And what's really interesting is if you talk to people about corruption and say, like, why does companies go to, you know, go to bleep after they get big or whatever? Most people would be like, it's inevitable. It's human nature. Companies get old. They get big. There's a lot of money involved, blah, blah, blah. But those same people, if you're like, are there any companies you trust?

1:47:11They're like, man, I love Costco. Yeah. It's like, well, interesting. Like, how come? But I thought it was inevitable. Costco is a$400 billion public company. Oh, yeah. Well, they're the exception. You're like, well, what about Patagonia? You got a Vanguard mutual fund? Yeah, Vanguard. What about, you know, John Lewis Partnership? Or you ever eat a Hershey's chocolate bar? You ever taken a Novo Nordisk medication? Like there's all these weird exceptions, many of which are decades or even like more than a hundred years old. And what's interesting to me is if you take that whole category of companies as a data set and say, what do they have in common?

1:47:38Every single one of them violates pretty much all of today's so-called best practices about how companies are supposed to be structured, built, and run. So I think we actually have really good data that this is not some abstract thing. So, for example, when the founders of Anthropic left OpenAI, so what is that, like three or four OpenAI crises ago? I can't track. But anyway, it's hard for me to keep track. But anyway, it's been a rough, you know, it's been a rocky road. When they left, I was one of the people that they talked to setting up their governance structure. And not only – and again, I am not taking credit.

1:48:12Okay, don't do the meme thing, okay? I'm not taking credit for Anthropic success. Obviously, I played only a very big part. They wanted to call it the Eric PBC, but you said – And I had to talk them out. I was like, guys, please, please, no, no, I don't. No, no, no. They were looking for an idea, and you told them, like, I think you should work on AI. That's what happened. Yeah, yeah. They were, like, maybe thinking of pivoting out because they left open AI. They were like, maybe we should give up on AI. They were going to do protein shakes. They were going to do an energy drink, and you were like, I think AI, AI.

1:48:36I just talked to you. I said about Dara's CEO. Don't get me in trouble here. We're going to clip this out of context. You're going to get me busted. Yeah. Okay. Well, listen. So I'm not, for the record, I am not taking credit for their success, nor am I trying to talk smack about open AI. I know you guys love them. Yeah, yeah. But the specific thing I think is really interesting is because they were really worried about this specific issue, when I gave them my typical litany of founder loss of control horror stories, they could see how bad that would be. And in fact, it's funny talking about the Pope.

1:49:06I was at an event at the Vatican last year, talked about AI governance. And I was on this panel with every major AI company, OpenAI, Anthropic, Cohere, Palantir, Google, Meta, everyone on the one panel together and me for some reason. And I'm looking down this row and I'm like, oh, my God, not a single one of these companies has standard governance. They all consider it to be too dangerous. They got to have somebody playing the role of what's called the mission guardian. But Atropik, to their great credit, I think, did not want it to be the founders personally holding that special responsibility because it's stressful as many founders who are trapped in this situation.

1:49:41So they created something called the Long-Term Benefit Trust, which is like a multi-branch government. So you have the for-profit PPC and then you have the board of directors accountable to a second entity, this outside trust. And the data shows that companies with that structure are something like five times more likely to live to year 50 and have way better long-term value creation metrics too. So again, I think we have the evidence that there are these better structures, yet most founders are never given this as an option. And by the time they find out about it, it's too late. They've already lost control.

1:50:11I want to talk about... I think one interesting thing is if we move to by annual reporting, there's going to be a lot of work. Accountants, lawyers are going to have less work, but you're creating a new structure. You know, these complicated structures, they can just shift their attention to working on mission aligned companies. Maybe, maybe. Yeah, sorry. That wouldn't be that bad, would it? No. I think I would like... No, no, I'm sort of joking, but at the same time, I think it would be a much better use of their time. I want to talk about Mondragon. Is that how you pronounce it? Oh, sure. I'd like you to introduce it, though, first for those who aren't familiar.

1:50:55And then I have some questions about where we go, what lessons we learn from it. But first, how do you understand that? See, I don't get to talk about Mondragon very often, so I know you did your homework and I just A+. Awesome. Okay, so it's funny we're talking about the day of the Pope's encyclical. So a Catholic priest walked into the war-torn Basque region after the Spanish Civil War. So it's not the setup for a joke. It's not like a priest walked into a bar. He actually went there. And instead of like preaching, you know, just comforting people who are being devastated, he had this vision for a new kind of economic reality where workers would be empowered to learn a trade and to control their own destiny.

1:51:37And to make a very long story short, he started to create this network of worker cooperatives where the workers themselves own the means of production and they build all kinds. They started with like industrial equipment and now make all kinds of stuff. And if you zoom out today, Mondragon is this gigantic company that employs 90 ,000 people in Europe, one of Spain's largest companies, makes elevators and have a grocery store chain and all kinds. If you look at it from the outside, you say, oh, that's like a fully diversified industrial conglomerate. Makes sense. Like making a lot of money, that's perfectly sensible.

1:52:10But if you zoom in, there's nothing about Mondragon that actually resembles a typical for-profit corporation at all. It is a network of, I think, 80 or 90 of these independent worker cooperatives that work together. They have like a congress where they send representatives and they self-govern. And any of the cooperatives can leave the network if they don't get benefit from the central services that it provides. So this is an example of what I call a mission-locked constellation, which is a set of entities that when you zoom out, the customer, the investor, anyone from the outside perceives it as one thing, but it's actually many things.

1:52:45Now, be honest. If I pitched you this as my business plan, that I was going to create a 90 ,000-person network of 80, if I pitched it to you, wouldn't you say it was impossible? Well, that's my question. That should never work. uh yeah i i would i would say it's not that it could never work it would just be extremely hard to reproduce like i think if you got a really talented group of people and you tried to rebuild something like this even knowing all of the mistakes and challenges that this last one had it would still be very difficult and probably end in failure but right so but it's clearly possible So like, well, the fact that it exists obviously proves that it's possible.

1:53:27But I think most people, when they're thinking about how to start a company, like just have a very narrow view of what can be done. Cooperatives, I don't have the stat in front of me, like millions of people worldwide. Like it's not some like weirdo niche thing. It's actually like it's a tool that we can use. Now, in the book, I try to go through all the different ways you can create mission lock. this is a huge man guard episode like rei as well no i guess i i guess my question with it is that uh so i i i agree with you like you got me if if somebody came to me and pitched me that i'd be like oh that's too complicated that doesn't pattern match to like the usual series a like i i don't i don't get it i'm out right uh but is that why we don't have an american mondragon in the modern era, you know, like, like, why is there no, uh, why aren't there as many, like, you know, Mondragon style counterparts to the monolithic traditional founder led companies?

1:54:25Because the, I've heard people pitch this as like, America would be better if we had more co-op networked, like Mondragon style entities. And, and, and, and my initial pushback has always been like, well, it's a free country. Like, I don't, I don't know that that's illegal. I think it's legal. I So is it that people don't want to or is it that like Jeff Bezos is secretly out there like killing people who want to try to start the Mondragon of Amazon and like what's going on? That's a really good question. And like so for example, so credit unions, credit unions are the closest thing we have in the US that serves like I think it's like 40 percent of American households have an account or credit union.

1:55:02So they're pretty big. They're all not, you know, they're not for profit member on financial institutions. And the fact that they exist holds big banks accountable in really interesting ways. So that's like maybe the closest. the point that I was trying to make in this book is not so much that we need to copy Mondragon or any particular company but rather collectively these what are called alternative structures control something like 5 % of world GDP so I don't want to convince anybody to do anything but for founders that want to attempt something like this, most of them have never been given the permission to even try if you talk to most lawyers bankers, and you just say I'm thinking about doing this, they're always like oh honey that's so sweet that you're concerned about mission.

1:55:41How about a Delaware C Corp with a safe bet? Why don't you worry about getting your first customer? Yeah, exactly. Just go focus on this other stuff. One of the most important ideas in the book is this principle I call, it's always too early until it's too late. So what happens is you talk to all these advisors and like, oh, it's too early. Oh, they're so condescending about it too. Like, don't worry about that. And then one day, I've actually been in the room where the CEO is like talking to their CFO and bankers and GC and everybody there and being like, hey, whatever happened to that like mission protective provision thing that Eric was talking about?

1:56:09Did we ever get around to doing that? And they're like, oh, you were serious about that? Yeah, I told you to do it. You said it was too early. Like, yeah, now it's too late. When was it the right time? That's wild. Yeah, you should have said something, man. Like, I did say so. I just feel like that has become the way that this is done. And it's why so many founders lose control. Japanese Keiratsus. Alternative. Do they fit in the category of alternative structures? Are they good? Are they bad? Like, I only know about them from the very highest level. Tell me. I imagine you've interrogated them more.

1:56:43Do they fit in? And is big tech emerging into KeiRetsu? Like, Google owns Anthropic and SpaceX and Microsoft owns OpenAI. Like, we're sort of maybe walking our way into a KeiRetsu. I don't know. Let's see after the financial engineering recedes. Yeah, yeah, yeah. Who owns what? The accounts while we're fielding. Yeah, I got into this. I originally got into all this from studying Toyota. Remember, lean startup comes from lean manufacturer. Yep. And it's really funny. I can remember when I first was going around, just like when we met in 2012, talking about lean startup, people would sometimes be like, hey, you're telling us to create the next Toyota.

1:57:22But you're also telling us to build a venture-backed company and take it public. Yeah. Like WTF. Like I thought the public markets are super short term. But if you read any books about Toyota, they're super long term. So I actually like spent a lot of time on that question of like, have we just grandfathered Toyota into the modern economy? me, but even when I was in Japan, I remember people talking to me about how we don't even create them anymore. We have these legacy companies that have this really unique, cool structure that are kind of a hybrid of public and family-run. It's a little bit in between both.

1:57:48I think if you look at the data, these structures only work if the company in question has a really strong ethos to accomplish something other than making money. That really is like, that's what you see, that's what unites everybody from these really progressive companies we've been talking about to Elon to everybody. If you have a larger vision that is long-term in nature, that is like trying to – whether it's something really lofty like I want to fix climate change or I want to go multi-planetary or something really simple like I just want to create high-quality products. No matter what it is, if you have that vision, you are a business revolutionary whether you know it or not, whether you admit it or not because the economic system we have has been designed to destroy these companies, to suck the marrow out of them because they're too weak to stand up for themselves.

1:58:33So if you look at the historical examples where they're talking about Mondragon or the Koretsu or all these different structures, like they're only good if the thing they're protecting is good. So the question for me is like as founders, as investors, as leaders, as board members, like how can we create more and more and more of these companies that have a real long-term mission that are what I call mission-driven, not just like mission hopeful. And when you do that, you see this like really counterintuitive economic benefits that you get. So it's like you also get moral and ethical benefits, too, you know, like but that's not even really the reason to do it.

1:59:06You can do it just on the basis of the economic argument alone. Do you think that AI will force companies where it was otherwise maybe too late to maybe over time, you know, sort of massively sort of rework any of any of their corporate structures? I mean, the example I'm thinking of that is notable recently is Samsung had 48 ,000 workers basically say, like, give us a much greater share of, you know, AI driven profits or we're not going to work anymore. And started a, you know, pretty big negotiation. I could see over time that happening at more companies, specifically ones that are, you know.

1:59:51You know, facing disruption due to artificial intelligence. Yeah, there's two things I think that are pushing in that direction. The first is the data on employee ownership creating commercial advantage is actually really strong. So I didn't know this. I was always a big, you know, everyone at Silicon Valley, like we're into employee ownership, but I didn't know it was like an ideological thing. I thought it was just good practice. Actually, we have really good data. There was a big meta study of like 55 ,000 companies with various levels of employee ownership, and they found that employee ownership exhibits dose response.

2:00:25Like 10 % ownership is better than zero, 50 % is better than 10, 100 % is better than 50, not just in terms of employee welfare but in terms of commercial success of the company, revenue growth, stuff like that. The second thing is I really think AI is going to make collective action problems like very different, very different than it was before. So, for example, an old Toyota production system piece of wisdom was that if you're doing a lean transformation, taking cost out of a business, it's not ethical, nor is it effective to ask the workers themselves to contribute to their own firing. Nobody wants that.

2:00:57So they're going to sabotage the effort, but also it's just not right. It's just fundamentally not right. You should take the savings you're getting from whatever the thing is and use it to grow the business. Like if all these CEOs who are like, I'm getting a hard on for laying people off using AI, like if they were serious about how powerful they think AI is, they'd be trying to use it to gain competitive advantage. Like I call BS on that whole thing. So I think you're going to see a lot of companies who actually sincerely believe in this possibility realize that we have to enlist our employees in it.

2:01:26This is existential for our business. We're going out of business if we don't do it. We need to be allies with labor to get it done together. I think that alliance is going to be far more powerful than what we currently teach, the way we teach leadership today, which is this very zero-sum game thing. What is called shareholder primacy is really the idea that companies should treat their employees and their customers like a resource to be mined. One of my favorite quotes in the book is, if you'll indulge me, there's a Wall Street analyst that was criticizing Costco. He said something like, Costco takes money that rightfully belongs to shareholders and instead invests it in improving the customer experience.

2:02:02Like that's supposed to be a criticism. Like what are we doing here? That's how you get$1.50. My favorite, my favorite bit in here from Costco is I, I'd heard this quote before. I thought it was just a meme, but from Costco CEO, Jim, is it Senegal? Senegal? Senegal. If you, if you raise the effing hot dog price, I will kill you. Figure it out to then CEO Craig Jelinek in 2008. I always, I seen that quote before. I thought it was just a joke, but I guess he actually said it, which is remarkable. No, he actually said it. And in fact, he said that and another quote, which is he said that if Costco raised the price of a dollar bottle of ketchup by three cents, they would sell the exact same number of ketchup.

2:02:45No one would notice. They did that across the whole store, 3 % across the board raising prices. They would increase their net income by 50 % and not lose any sales. So why don't they? He says it's like the business equivalent of taking heroin. You do it once and then you got to do it again and again and again. Next thing you know, you're not the no price leader. Low prices are the easy way. Now, that quote and the hot dog quote are the stores. There are memes online and I was like so worried that I was going to quote him incorrectly that I actually contacted Costco PR. They put me on the phone.

2:03:18I was so nice to them. They put me on the phone with him. I was like, is this really true? Did this really happen? That's good. He confirmed it to me. He confirmed it to me personally. So, yeah, I think this like very distinctive countercultural way that they have run that company now for 40 years, the$1.50 hot dog and everything. Like what's interesting to me is when I tell people that story about the hot dog, nobody ever says like, how come the COO was trying to raise the price? Because of course he was. Like we've all been trained. If you can get away with screwing people over, you always do it no matter what.

2:03:50You raise margins. Margins are a source of strength. But Costco is, I think, built on a very different philosophy, which is that margins can be a source of weakness. Jeff Bezos understood it. He used to always say, your margin is my opportunity. So when you are making too much money, when you are being too extractive, you're actually harming your competitive position in the long run. And the fact that we're consistently incentivizing that all across our economy is, I think, a bit of a travesty. There was a recent story. Everlane was acquired by Sheen. Sheen, Everlane, darling of Silicon Valley, raised a bunch of venture, very strong mission, ultimately to get swallowed up by the beast that it sought to displace.

2:04:32Michael, the founder, his buddy of mine, he seems very fired up. There was a leak earlier today that he's working on something new in apparel. how would what is your what is your kind of general advice to somebody that wants a mission a company to have mission primacy like what is what is kind of the there's no stripe atlas equivalent today you can't just go press a button and make one of these but how does somebody get started i'm working on it i'm working on it obviously yeah check out the book the book has a qr code actually has a really detailed implementation guide and we have like an incorruptible term sheet, all kinds of like legal docs, the whole thing, if you want to, for those that want to do that.

2:05:15But for your friend and for so many people who've been through this, I've personally counseled, I can't tell you how many mission-driven founders who get betrayed. The company gets destroyed, they get ousted, whatever. And you talk to them afterwards. I just had this conversation with Whole Foods, John Mackey. I tell a bunch of stories in the book of people who've been through this and you ask them about it and they really take it personally. They're like, I failed. This happened to me. I didn't trust the right people. I tell a story in the book of a founder who on their deathbed was like, I just didn't trust the right people, put the wrong people on my board.

2:05:48We personalize it, which means we keep the structural causes invisible. We don't see how it's not personal. This is a force that is dragging us down. So I tell the story even of a really close friend of mine, great entrepreneur who was just tragically ousted by his employees onto a new mission-driven company. I remember asking him, dude, on the new company, what are you doing differently by way of governance? And he was like, like what? It didn't even occur to him that there was like any possibility that the new company could have a different outcome. So for your friend, there's two things we got to do, okay?

2:06:22Just two. One is what I call the path of ethos. We have to build a company operationally to stand for something. The great Saul Price, the father of modern retail, the progenitor behind Costco, he called this being a fiduciary to the customer. Who would you rather die than betray? Write it down. Make that the operating system of the company in its management structure, in its business model, and its culture. The second thing we have to do is what I call the path of integrity. We have to create companies that are capable of making and keeping promises, like that have structural integrity. So they don't give in to inner temptation.

2:06:55They cannot be bullied from the outside. You're trying to buy them. They can say, F you. If you try to incentivize them to do some bad thing, they have the structural strength to resist. And that's where things like PPC, Board of Mission Pledge, the Long-Term Benefit Trust, like that's where many of the kind of so-called governance structural best practices that we currently are taught have to go by the wayside. When you have that special formula of ethos plus integrity, you have a company that is, wait for it, incorruptible. Woo! Sounded. I'll be here today. Thank you. This is great timing. That is what I love to do.

2:07:31Thank you. Thank you. talking to a founder yesterday. I was giving them advice and they're with an idea that a lot of people have raised venture to do in the same way Bezos talks about your margin is my opportunity. I was telling this founder, like your competitors raising venture is your opportunity because they're going to have to do a bunch of things that aren't really aligned to what would make the product great for customers or what would make the product that you really want. And what I like about this approach is setting things up in a way that a lot of the problems that you're talking about are problems where you have other shareholders and there's other people that have a stake in what you're doing.

2:08:11And that's most businesses will end up that way over time. But if you can find a way to create a corporate structure that mimics this insane mission-driven founder and allow the entity to maintain that even after the founder is gone, this sort of permanent structure, I think it will be incredibly powerful. So thank you for coming on. Oh, thank you. Thank you for saying that. I will say, you know, obviously you've heard, I believe in feedback. I really like it. It's kind of my thing. Anyway, so I had a lot of people test read the book, you know, maybe 600 people generated something like 10 ,000 comments.

2:08:45Like I really, I eat my own dog food. And the thing I'm the most proud of, of that set of people is I'm, I think we're up to five or six of them now. You know, it's like, well, coming up on 1 % of the people who read the book so far have reached out to me to say that they had a new business idea that they wouldn't have even considered before because they were able to use this framework to see new opportunities to make a profit that they just were blind to before. And a bunch of them have that, just the thing you were talking about a second ago, like that there's some category where everybody hates all the vendors because they're all like, they're all eight holes, you know, they're all extractive jurors.

2:09:19Yeah, yeah. Like, oh, what if we had a company that competed by being trustworthy to companies? You're seeing that obviously in AI, but you see that in so many categories where it's They're like, oh, that's actually very simple to make a business like that if you take this idea seriously from the beginning. So anyway, very excited to be here on launch day with you guys. What else do you need but TBQM to get the word out about? Congratulations. Thanks so much for coming on the show. Super exciting. This is fantastic. Hopefully we can talk soon. We'll see you. Goodbye. Alex Atala has some news. We're seeing a Cambrian explosion of AI models and it's happening on Open Router.

2:09:53The future of AI is neurodiversity. agents choosing the most cost-effective model provider tool for the task. He's back. And he's back. Welcome to the show. How are you doing? Doing well. Thanks for having me back. You've been very busy. Been busy. Give us the news. What happened? So we actually raised this round back in February, but we did our CAC from Capital G as the lead and our existing investors participating and a lot of strategics from different corporate VCs participating too, like NVIDIA, ServiceNow, Databricks, and a bunch more. That's fun. And we're growing the team. So not only do we believe in neurodiversity as a good thing that every company will need to leverage, but also neurodiversity within our team as well.

2:10:42So if you're smart and you get things done and you think in a unique way, we want you. How much did you raise? We raised$113 million.

2:10:59Now, let's talk about ROI. You're obviously pushing tons of tokens. People need to measure the ROI on these tokens. How have you been processing the next KPI? There's this back and forth with Uber. I'm sure you've seen this where they started token maxing. They're pushing tons of tokens through. Now they got to see what did we get done? How are you actually talking to people about cost optimization ROI? Like what are you hearing around the the value that people get? Where are the best use cases? What are the places where you're telling people hey, you might have gone too far on the token maxing that way?

2:11:39Yeah, there's a really important trend that we're observing among all of our customers Sometimes you just don't need it uber black, but yeah You're using it all the time because you just don't know what else to do. There was a time where everybody was in the pre-product market fit phase for leveraging AI for their needs. And now many companies are past that phase. And they're realizing that most of their OPEX is going to inference. And that's pretty insane. That means that if you make cost-cutting decisions and if you optimize your model usage, that directly flows to your margin. And now the business is directly more efficient.

2:12:17This is not, you know, like optimizing your data dog bill. Sure. So I think the future is going to be multi-model for many reasons. And that's a big one today. And it's a big one this coming year. And there are a lot of companies who are also just doing one task that should be broken up into multiple tasks. Yes. Served by specific lower cost models. And they're getting massive cost savings out of it. in addition to improving their recall and accuracy. So it's really important to do. And then down the road, another use case will be getting better than state-of-the-art performance by using multiple models.

2:13:00And that's something we're also helping our customers with. Like a mixture of models? Like ask the same question in multiple models, synthesize the results? Yeah. Orchestrating multiple models that were trained by completely different companies to do something for you, and then using a judge or some other set of heuristics to select the best result or combine them together. Can you talk about opportunities or entrepreneurs or small operations that are bringing compute to bear on OpenRouter? I saw George Hotz talking about he found some building that had a bunch of power. He was going to rack a bunch of NVIDIA GPUs in there and sell the tokens on OpenRouter.

2:13:43I think everyone's familiar with what the hyperscalers are doing. People are familiar with what the NeoClouds are doing. But how diverse is the compute supply on OpenRouter these days? What does a small shop look like in the modern era? Good question. A lot of people think that basically everybody's just using one model, and that's completely untrue. We have about 350 models that are being used by hundreds of active users per day. And the token diversity is growing over time. If you go to our rankings page, we have a chart that shows the graph getting more and more diverse. We're doing about 120 trillion tokens per month now.

2:14:29So there's diversity on model selection, but there's also a ton of diversity in providers for specific models. It used to be the case that being a provider is just really hard because how do you get distribution? Even if you decide to specialize in very, very, very low cost but slow inference, so stuff that's optimized for batch agentic workloads, how are people going to discover it? So we're building all these SKUs in the marketplace so that providers can find a market really, really quickly. And so we become the go-to-market strategy for the long tail of providers. We've built an enormous number of tools to do quality checks and rigorously test these providers on the SKUs that they aim to support.

2:15:20And then we send them back all this reporting so they can really easily optimize their inference and get better and better over time. Predictions for American open source.

2:15:38I think American open source will become a mixture of taking existing models, some of them might be foreign, might be Chinese, and improving them. And then creating new models from a new foundation. and it's hard to make a prediction on it. It remains to be seen because we're just seeing so much adoption right now from foreign open source models and domestic closed source models. I think the best thing the American open source models have to leverage is some enterprise demand that really wants only American open source models. they're American companies and they're aiming at it directly so we provide easy ways of like exploring the model providers on open router by their family type so you can easily look at which models follow a specific family and only filter down to those and we do want to help model labs that are trying to aim for some kind of niche use case in the market or some kind of niche demand in the market, find that market.

2:16:58It's really hard to discover otherwise. How are you thinking about personal AI routing? Obviously, with companies, you have this very economic calculation around OPEX, and there's an agentic workflow that's running for every customer, so millions of times worth squeezing every cent out of the equation. but we are also seeing growth in open claw hermes like these personal agents there will be some closed source providers there but memory feels like an important piece of the personal agent puzzle a lot of that can be offloaded to the context window to md files is do you expect the shape or the cost constraints to be any different in sort of personal ai or consumer ai versus enterprise?

2:17:52Yeah, I think, I mean, this is not going to be that big of a surprise, but local context is the number one difference that we've seen over the last year. If you build an agent that can really leverage the full computer, it works very well for personal AI use cases. And that's because people have a personal computer. What's interesting is that there isn't something that works on the phone very well, even though a lot of context is stuck on your phone. So we may see a cool personal agent develop in that direction. What's also interesting is that we don't have something very social yet. There isn't something that pulls your social media data and really leans into that part of a person's life.

2:18:40So I'm curious if we'll see something there. And we've also seen shockingly few games, I think. and there may be a really good opportunity for something that looks like a game but turns out to be much more. How big can Open Router become?

2:18:59We really believe that everybody in the future will want to use multiple models in the same way that even if you could hire a 250 IQ chief of staff but you had the option of hiring five instead for the same if not lower cost. You would go for five because the five people are just going to be significantly more likely to flag issues that one person would have missed. And not only that, but it helps you cost optimize significantly. You don't need uber black all the time. So inference, I think, will be the largest software market, potentially the largest market in the economy. All knowledge work will need to leverage it.

2:19:49Otherwise, you're just handicapping yourself dramatically. And Open Router aims to be a very large chunk of that. we do help the model labs find customers as well, and we work symbiotically with them. And same with our providers. So a lot of Open Router is about building things that enterprises need. When you bundle a bunch of models together, immediately you realize that there are all these boundaries between models that you have to secure and observe and manage the costs. And so Open Router is a really good way of managing and securing the boundaries between models and between server tools. So we're building a bunch of new agentic tools that you'll see in the coming months that help do this, both for enterprises and for individual devs.

2:20:42What are your scaling challenges? Are you CPU constrained? we are memory constrained i think first on on uh uh you know like server memory yeah and and i don't think we're cpu constrained quite yet but memory is time is but uptime is particularly important for you i imagine but there are probably other uh other considerations around uh you know multi-cloud availability interactions with different, uh, geolocations and being like, you have a different set of, of optimization parameters from other companies. Yeah. So we, that was the first problem we aim to solve is like, given a large set of providers for a given model, um, how do we really perfect the router to like send you to the model that will be up as quickly as possible and send you the provider that can like best serve the parameters requested.

2:21:48So we've been doing pretty well there, but I mean, we can do even better and it will get better soon. We do a lot of like internal benchmarking against the rest of the market, against going direct providers. And so we can kind of track progress and hill climb internally. uh i think i think what what becomes like a real constraint for us is like brand new models that don't have much capacity because only one provider is serving them you know there isn't a ton sometimes we we host them all ourselves or we work with a provider to do it um and sometimes we just tell other providers like all the market signals that we're seeing and be like guys you should host this model like look you know there's in this region of the world there's like this going on and we you know we we blast this out and that sometimes solves the problem jordy anything else no congratulations i'm very bullish and thank you so much for taking the time to come chat with us thank you be back have a great rest of your day congrats to the team we'll talk to you soon goodbye well we have some words of wisdom to end on you can lead a horse to baja but you can't make it blast these are wise words i'm make sure i'm angry that we didn't think of this we've talked a lot about baja blasting if you're in a code red when you finish the code red you got a baja blast you got to make sure that that part leaks out but uh we never thought of you can lead a horse to baja but you can't make a blast also uh michael timms ran into some problems here he said he's been trying the whole two grams of creatine per one pound of body weight thing for a month now and he's never felt worse.

2:23:33How do you guys do it? It's also like a thousand dollars a week of creatine. Hilarious. Also, it's supposed to be, what is it? One gram per body, per pound of body weight for protein, I think is the joke, but two grams of creatine. What's a normal creatine dose? Five grams, right? Five grams a day, maybe 10 grams a day. about one one hundredth of what he was doing in this joke, of course. Anyway, anything else we need to? We will be off tomorrow and Thursday. We have a short week. We'll be back on Friday. We are heading to New York for some business trips. I asked Chatsy B.T. for a phrase like, you can lead a horse to Bob, but you can't make it blast.

2:24:17What did it say? It said, you can lead a horse to Taco Bell, but you can't make it live moss it's terrible but kind of good

2:24:30well folks thank you so much for tuning in it's been an honor we hope you have an amazing rest of your tuesday we'll see you on friday it's like a monday leave us five stars on apple podcasts and spotify sign up for a newsletter tbpan.com and we'll see you on friday goodbye cheers