Figure AI in WSJ, Russell d'Sa, Quaid Walker, Alex Dhillon, Robin Langtry, Everett Randle, Keller Rinaudo Cliffton

28:30I agree. winning and overcoming those objections, like you said. So really great work here, John. And hopefully - I think it's going to convert a lot of prospects for us. Yeah, convert some prospects and help grow the listener base. Yeah. Let's run through how Elon Musk rescued X from the brink. New report from the Wall Street Journal, diving deeper into the X and XAI merger. a crowd of investors gathered at Morgan Stanley's New York office to hear X's sales pitch, eager to get a piece of debt that Wall Street had once shunned. Cell phones were a no-go at the January event, and the audience was told to stay seated until X's chief executive, Linda Yaccarino, and others had left the room after brief remarks and without taking audience questions.

29:20Banks had planned to sell$3 billion in bonds at 95 cents on the dollar, but ended up selling more than$10 billion at even higher prices. It was a testament to X's ability to bring advertisers back to the platform, helped in no small part by TBPN, no, by Elon Musk's proximity to President Trump. Obviously, we can't claim victory 100 % of the time, but I do feel like we are shifting the timeline and making X a better place, hopefully. I mean, that is kind of the goal is to shift X back towards more tech and business content, really pull people back in. And fun fact, we had a guest on the show who didn't have an account, had never used X, signed up, posting, bangers.

30:04Yep. Great content. Yep. Fantastic. Also underpinning the debt sale was a possibility that X would one day merge with a hotter ascendant company, Musk's XAI. In private meetings with Wall Street, X executives said there was a good chance that the social media platform might eventually merge with Musk's artificial intelligence company, which makes the Grok chatbot. The billionaire has said he never lost money for investors, but for a long time, he looked like he was going to with X. After Musk bought it in 2022, advertisers fled over content moderation concerns and its loans soured as revenue fell.

30:38One month after he took over, Musk said the company, formerly known as Twitter, was on the verge of bankruptcy. I don't know how this was true. uh i think it was you know in part said uh to i don't think he obviously would have ever let it go bankrupt i think it was mostly meant to inspire the team to grind harder and grind harder they did they did uh so late last month musk posted on x that he was merging the company with xai in a deal that valued the newly combined company at more than 100 billion folding x into a larger company competing in a global race to develop sophisticated generative ai tools could open the door to raising money at a valuation considered impossible just a few years ago.

31:16The merger caps a string of events, some strategic, some fortuitous, that helped Musk announce a deal before Trump's tariffs effectively closed the market for deals. It is crazy that he's never taken a down round, but it's kind of underrated that - I don't actually, is it down round or that he just always eventually got higher? I mean, I guess like down round in terms of like - did raise a down round, right? Or no, I guess it got marked down. Marked down internally, which is not his doing. Like anyone could do that at any time. Internally, you can mark it down. People have definitely panic sold and lost money, but he's never done a primary round and ended up not returning.

31:55But I think the lesson for like actual entrepreneurs that aren't maybe in his shoes is that if your business is at all humming along and doing something like, even though Twitter rebranded as X and went through like a dark time and really was facing a lot of pressure on the revenue side, Elon was extremely quick to right size the business and get to a place where it was not burning as much money. Like that seems clear. Like we never heard rumors about like, oh, like Elon had to put in a billion of his own money. Right. And I don't think that happened. And so what does that mean? It's like, yeah, the whole business shrunk, but it continued to exist.

32:33And so there's a whole world where if you move quickly, whether it's post-SBB crisis, and you know you're not going to be able to raise up round, and maybe your own VCs have essentially marked you down if you're at a big enough scale. They might have actually done it. If you're probably just some seed or Series A bet, they probably didn't remark you. Yeah, Fidelity was the one that marked it down. Yeah, Fidelity has to do the remarks. I imagine a lot of their traditional investors avoided the markdown because they never lost faith. No, no, no. I'm almost certain that the big venture capital firms do not do markdowns in that way, the same way as Fidelity.

33:07Although if Fidelity puts something out and says, hey, we have marked it down and we're trading at this level or something in some secondary market, then there might be pressure from the big VC firms to pull that valuation into their own marks. But it didn't matter because they're up again, baby. A spokesperson declined. No one's talking to the journal about this, but we still got some interesting facts here. Musk borrowed$13 billion to complete his 2022 take private of Twitter. And the loans quickly went bad when advertisers paused their spending. He tried to persuade concerned brands to return, at one point offering steep discounts and threatening advertisers that they would lose verification if they didn't spend enough.

33:44The company's revenue fell to$3 billion in 2023 from about$4.6 billion the previous year. and the thing is is that like yeah that's a huge drop in revenue but when you think about like the most of the r &d has been done on x right like the apps you have to keep them alive and you do have to launch some new features but like they're kind of humming along you don't need to do a lot on user acquisition like the the people that are addicted are addicted and stay i'm never leaving yeah um and so you really can run it with a with a smaller team and when you when you have three billion in revenue, which is pretty high margin because it just adds, you have three billion to kind of slosh around and keep this thing going.

34:26Like that's a lot of money to keep a website going in an app. Like that, that is what it is. Like it's a big one, but it's not, it doesn't have any like crazy unexpected massive costs if you run it effectively. And that's kind of what it does. These companies, again, were always so heavily intertwined, right? It was X had a big position in XAI. And XAI paid X for data. They would have employees flop back and forth. So, and then staying on the revenue thing, X's revenue dropped again in 2024 to about 2.6 billion. It ticked up in the final quarter of the year, according to people familiar with the matter.

35:01So it might be turning around, but it's going to take a while to build that back up because a lot of people have left to go to other platforms, but it does seem like, you know, even like Twitter and X have reached their nadir, in my opinion, like in terms of like sentiment and like the people who wanted to leave have left. The people who have stayed are staying. The advertisers who wanted to leave have left. And so, yeah, it's still producing single digit billions in ad revenue and monetization, and that's great. Musk and his advisors had long thought about bringing X and XAI together, but after the election, those plans accelerated, according to people familiar with the matter.

35:42To do that, they knew they would have to successfully execute several transactions in the right order and get a little lucky, but Musk is a pretty lucky guy. With Musk ascendant after the election, X took a new approach to ginning up the new ad spending. In December, a lawyer from X called a lawyer at advertising conglomerate Interpublic Group, hinting that its recently announced$13 billion deal to merge with rival Omnicom would face trouble from the Trump administration. So he's putting the pressure on them. Other advertisers started to raise their spending, including Amazon.com in January. Amazon's an interesting one because, I mean, obviously a huge, huge advertiser, but very direct response and very product driven.

36:22And that's a little bit hard for the the the mindset that you come to x with because it's a reading platform it's it's almost like an education platform it's not the same experiences as instagram where you're just browsing different visual elements you see a product it makes a ton of sense and i think that's why ben thompson's always argued that your explorer feed now is just probably the the hennessy uh What's it called? The Cadillac Escalade V, Hennessy edition, which has a thousand horsepower. Explore feed of just like the reels is just different videos of that. Yeah. You can't get it off your mind.

36:59No, no. Once you figured out it exists. It has been interesting. Like I'll search, I find that my YouTube feed moves much faster than my Instagram feed, but my Instagram feed eventually catches up. So I'll get into cars. I'll be watching Doug DeMuro on YouTube and my YouTube feed will be flooded with that and it'll show me all the different, like, oh, here's VinWiki, here's, you know, all the different car YouTubers will kind of flood in because Google picks up on it. Instagram, I don't use as much, but eventually we'll learn, hey, we showed him one car video and he seems to be more into it than before.

37:32That's right. Let's keep it going. But again, on X, even though I do post about cars every once in a while in kind of a joking fashion, X hasn't figured out how to serve me ads. Plus I pay for like the most premium version that gets rid of all the ads. But even when I didn't, I never saw that. I've thought about turning the premium off, turning the verification off just so I can get the full flood of ads. I wish you could be on the highest tier so you could pay X as much as possible, yet still see ads to get them that sort of incremental revenue. I like that. Yeah, I liked, I mean, for a while, you could like pay for the check mark, but then turn it off.

38:06You should be able to do the same thing with ads. Pay to remove the ads, but then check mark, put them back. Yeah. But maybe you need a non-account just for that. um anyways uh i'm excited to see what this combined entity does yeah a lot of work to do still yeah i mean we talked about it before it makes a lot of sense in in a bunch of different ways uh from real-time data when you go to grok you're going to want to know about things all the data gets like sucked into x anyway and so makes sense from a uh data strength perspective um and and also just as a distribution vector for Grok. It seems like every major foundation model company has found a dance partner, and Google has Google.com, and they're searching, and they're sending generative responses into the Google search bar.

39:00OpenAI has been able to get everyone to download the OpenAI ChatGPT app. It's in my home row, and they've done a great job at that. there's been talks about, oh, perplexity might merge with someone or Anthropic might merge with someone or partner up with someone. So the X and XAI deal makes a lot of sense in that context. But if your business is collapsing and advertisers are leaving and you need to cut costs, get on Ramp. Time is money. Save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. Ramp. Ramp. And we have our first guest of the show.

39:33Alex, welcome to the studio. How are you doing today? One second. We are bringing him in from Outtake AI. We will give you a little background. How are you doing? Big news this week. What's going on? Thanks for having me, guys. I'm pumped to be here. Thanks so much. Thanks for coming on. Busy week for you guys. Hyper scaling and announcing the raise all at the same time. But before we dive in, introduce yourself and the company and whatever backstory you want to give for the audience. Yeah, of course. Well, first off, thanks for having me, guys. Backstory. I spent five years working at Palantir.

40:11I worked across a lot of crazy different stuff, as one does at that company. I worked abroad. I was in South America. I was in Eastern Europe. Eventually, I started to work on really deep core product things. Towards the end, spend a lot of time on what we effectively are experimental product team. So zero to one new product that's worked directly for the Pounder CTO, Sham Sunker, absolute goat. A shout out to him. Also one of our angel investors. Amazing. And yeah. And then, yeah, towards the end, you know, as everyone sort of became obsessed with AI, it was it was really obvious to me that like we're going to live in an increasingly like schizophrenic Internet, like, you know, what you see is not necessarily what you what you get.

40:54online anymore. Especially the way I think about it is the cost to be a shitty person online went to kind of zero dollars over the last like three years. You got infinite text, infinite images. That stuff is awesome, super creative. Just obviously there's bad people out there that're going to misuse it. And I wanted to do something about that. And that's really what Outtake is focused on. We try to preserve authenticity, identity online. Go deeper there. Who are the of companies that you're working with today and will be working with um you know i'm sure some some you can share some you can't etc yeah it's it's funny in cyber security there's this like there's a there's a lot of sensitivity around like what you can cannot share in us but um we've been lucky to work with phenomenal places like uh you know open ai is one of our one of our favorite customers really pushed us when you think about the kinds of cyber security threats that they might be dealing with.

41:47Really, anyone that has a brand big enough to really matter is a brand that can be misused, right? So a fun side effect for us as a company is like our customers are intrinsically people that matter because they're the ones whose names and brands are being misused to manipulate people, right? Yeah, can you talk about, so I feel like everybody's been aware of this threat around AI impersonation, some of these like voice models, even video models at some point are getting so advanced that it's becoming a big threat. Can you talk about, it feels like we haven't faced Armageddon yet, but I'm sure part of that is the work that you guys are doing and the work that these foundation models are doing.

42:32So can you talk about what's actually happening in the market? Because I have this sense that you see this tip of the iceberg where you're getting spam on iMessage or you're getting email spam or you're getting, you know, some phishing attempt, et cetera. But what is all the work that's going into this to make sure that you're only seeing that tip of the iceberg, right? It doesn't feel like we're completely flooded yet. But this thing, you know, this kind of phenomenon is scaling. Yeah, to your point, I hope we never see Armageddon. I think there's this like gradient of sophistication, as you pointed out, where like, you know, the average consumer deals with spam texts, maybe some shitty emails.

43:12And certainly, hopefully not like, you know, people have talked about the idea that your dad is like giving you a deep fake voice call and whatnot. But like we haven't necessarily seen that. Right. Interestingly, a lot of the attacks, you know, on the other end of sophistication are actually really targeting enterprises. Right. And it kind of makes sense. It's like that's where the money, that's where the data is. And so what we are seeing is like the quality and volume of, let's say, like inbound email phishing attacks has like gone up considerably. And then this just goes back to the idea of like the cost to do that dropped a lot.

43:44Right. And so enterprises are like dealing with an absolute flood of attacks at the moment. And there's a variety of attacks. Right. So there's like, you know, there's the good old email security stuff we just mentioned. There's just a lot of stuff around social engineering generally. Right. It's like, here, let me throw together a fake website and then use that to like DM people to send emails by that. or let me just get the customers of that company. Let's say I'm gonna use a random name that's not connected to us. Let's say it's like, I don't know, the Bank of Canada in some way, right? It has a website that's gonna now be used to scam Canadian citizens in some way.

44:21Yeah, the sophistication is like really, one phrase that I always come back to is like, it's not only that grandmothers are the ones being scammed, it's actually grandmothers can become scammers now. And it's because, right? Because it's like, it's just easier than ever. And that's actually the real issue. It's like, sometimes people talk about large language models and they're like, oh, like it could teach someone how to like clone smallpox. And it's like, yeah, dude, sure. It may be, but like it could immediately today tell you how to, you know, pen test someone's website and try to get into it.

44:51And so it's just like the barrier to entry is just so much lower than it used to be for all sorts of cybersecurity attacks. Can you talk about like the, the scale of, you know, some of these like phishing things? like when i when i think about like you know everybody's in tech is used to getting like a coinbase style fishing like hey you know give us a call like you had some issue and i just think about like okay if that works one out of a thousand times it's the best business ever like it is part of the reason that like you know this sort of um these issues are scaling so rapidly is just because it's super profitable yeah yeah i mean the the like one way to think about it is um we've all seen the tremendous growth of like AI outbound companies, right?

45:36They've done really well. It doesn't take a leap of the imagination to understand that like that same sort of like well-intended outbound can be misused, right? And so maybe one way to like paint an idea of volume is like just as the volume of AI outbound has increased on like legitimate use cases, where I'm sure you and I both deal with a ton of LinkedIn inbound or email inbound. it's basically been one for one on sort of the darker side of it as well. What about the stuff you guys are doing with creators? I know in the announcement, you said that you guys are working with Psycom, the team behind Human Lab.

46:16What are you seeing creators dealing with in terms of impersonation as these models have advanced? I mean, creators were some of our first customers, right? And it's actually because they were the first ones to feel the pain. I mean, to some degree, maybe you guys deal with this, right? Someone might make a fake handle of your account. It's happened, yeah. Yeah, fake versions of your profiles. There's a lot of value in impersonating you guys, whether it's a financial endorsement, a startup endorsement, just pretending to be you for recruiting and something.

46:49Basically, the creators were the first ones to hit because they were the most chronically online, right, is the short answer there. and in the early days when the models needed more data to train on they were also the ones that had the most data available. I think what was really fascinating for us as a company is especially since almost the whole team came from Palantir we had this we we had a lot of reps at selling to large enterprises government and incredibly secure environments and so creators ended up being this great launching pad for us where we like built a product really really fast and then and then grew, went up market really, really quickly.

47:23Can you talk a little bit about recent AI model progress? I don't know if you read this article on Less Wrong from Zero Path, but just to summarize it, it said recent AI model progress feels mostly like BS. This was from a founder who actually built an AI-driven pen testing company. And they said they kept upgrading to the latest and greatest model. It would completely destroy the benchmarks, but then they weren't getting real world results. and this was a question about benchmark saturation. I could imagine that to your point about like the script kitties are better than ever, basically, because pen testing is democratized now or hacking or scripting is democratized.

48:03But in terms of the work that you're doing, how important is AI model progress to all that? And what is the shape of the curve that we're looking at? Is it sigmoid or are we going accelerator to the moon? That's such a good question. It goes back to my sort of like gradient of sophistication response, which is like, you know, surprisingly, as we talked about, we're all dealing with that flood of texts. Clearly it's working, but people keep doing it. And so we all agree that like even if we paused all model progress, that would continue. Right. Yeah. And so my general take is like the models are already at a point where they're having serious social engineering attack effects.

48:42Now, as you go up that gradient of sophistication, for example, the pen testing founder, he might have a very legitimate argument where it's like, hey, sure, there's all this hype around progress, but I don't actually see a model being able to autonomously hack a website because maybe that's at the further end of the sophistication. But I guess my claim is that like, you know, it's something like 85 % of critical data breaches happen because of social engineering attacks. It's almost like machines are easy to secure these days. Like, you know, there's a massive multibillion dollar industry that is all of cybersecurity that focuses on that.

49:18I think one of the big contrarian things about Outtake was it was really two things. It was like, one, hey, if machines are pretty secure, let's actually focus on securing the humans. And then two, traditionally, enterprises will stop at securing themselves. So they'll say, hey, I have my corporate perimeter and then my VPN and everything. And there is really buttoned up. And that's great. Historically, cybersecurity companies have been kind of, I think, gun shy of stepping outside their perimeter and saying, hey, no, I'm going to go search for threats out in the world, like arbitrary websites, social media, wherever it is.

49:50And we're going to go look for those threats and proactively tackle that. That's intrinsically difficult because you're trying to influence the thing that it's not part of your org. Our ability to do that and actually do the really hard work to get there is really what helped us stand out. Is the only answer for a bad guy with an LLM a good guy with an LLM? And what I mean by that is that CAPTCHAs are not, they're deterministic essentially, and yet they can thwart a non-deterministic attack from an AI. You can imagine Arc AGI puzzles becoming the next Captcha. Totally. Or in your view, do we need just to stay?

50:34Is it a probabilistic on probabilistic combat from here on out? I love this question. Okay, so yeah, one of my biggest anxieties is that like generally, to your point, Captchas are broken, right? Which like, hey, we passed the Turing test a while ago. So for some reason, we just blew past that and don't talk about it enough. We are blowing past what effectively was the modern version of the Turing test, which just captures. And there is clearly, in my opinion, not enough panic about this, which is why I was so pumped to tackle this two years ago. And we spent a lot of time thinking about this.

51:05Anyway, to get to your actual question of probabilistic versus probabilistic, I think there's a few answers. I'll hint at the future of Outtake a little bit. some of it's still parts of it are still in stealth but I think a lot of what we do today is what you're talking about it's probabilistic versus probabilistic and we're thinking about hey here's the harm we're seeing and like can we go practically discover and remove it right the other half of it though candidly is like can you talk about briefly can you talk about the agentic approach there which is basically like you're sending good bots around the internet finding these sort of social engineering impersonation attempts and then basically like acting like a human would in terms of being like reporting this content you know basically flagging it being very specific about it but maybe could you dive in there around like yeah why yeah yeah why why this this sort of agentic experience is important when you're not building when you're building out in in the sort of like dealing with threats in the real world out on the internet versus internal yeah excellent uh point i think like the the one of the other reasons that I was so excited to take a bet on this space is, candidly, this whole space is full of a graveyard of companies that were services companies, right?

52:16So like, it intrinsically was a task so difficult that only humans can do it. Meaning, you know, let's say we're protecting, again, the Canadian bank, you need to have an ability to go like proactively search for every place that you think the threat might emerge. You need to be able to adapt to the idea, like, let's say that bank sells mortgages in the summer, right? The search terms that you use to find the scams that might occur because now they might be mortgage scams need to adapt for the season right now you and i as humans can get to that pretty quickly uh historically models we're not going to just like infer the season and then figure out the like latest trending scam for this particular customer right um we are able to do that right and so it's it's like having agents that are thoughtful about how search occurs from period to period really really matters the other thing is uh deciding what is considered harmful for that particular customer like there's a lot of nuance there by company i mean celebrities is a great example right where it's like there's fan pages you don't want to remove that stuff um and so there's a lot of nuance in how you determine harm again a reason why you would train up you know a team of people to be like hey this is what we consider harmful uh there's a lot of moat and frankly figuring that out uh it when you use outtakes product there's a there's an aspect where our users effectively train our models to explain what they consider risky and then the final bit is um taking over the actual like remediation steps right like um Everyone talks about legal AI.

53:36I think we've built one of the most effective legal AI workflows, right? Where we go out and interact with third parties to resolve external issues. Can you talk a little bit about the actual monetization or value capture here? I could imagine if I'm a bank and my customers are getting scammed, it's not exactly a bug bounty, but you are creating value for me because my customers are going to be happy. And they're going to be unhappy with me if they get scammed, even if I had nothing to do with it. But if you go out and shut one of these rings down, how are you getting compensated? It's a great question.

54:07The way we think about it is, so I guess good for us, the customers were thinking about these problems, right? They were just at a relatively lower volume historically, right? So if you look at the chart of digital attacks happening on, let's say, social media, websites, etc., it's flat, flat, flat. And then like 2022, 2023, it like starts to go exponential, right? We were, you know, positioned ourselves well. We saw where the puck was going and said, okay, great. All the people that were already managing that low level of attacks, I mean, they existed. They just were a cobbled together team of like cybersecurity analysts and occasionally lawyers.

54:46And every large organization had someone thinking about it. But they could sort of manage the one to 10 attacks a week, right? They were expensive, though, because they're, you know, yeah, very, very high, like hourly wages for these folks. And so when the volume spikes, it becomes untenable to use that old system. And then it became really clear that outtake could step in. And so to your point about value capture, it really became a question of like, hey, you would be trying to manage this. You would be trying to have these folks work like 24-7. They obviously can't do that nor want to candidly and slash you wouldn't be able to afford it.

55:22So let Outtake come in, do a 10x better solution at one tenth the cost. And this is a really good deal for everyone involved. Can you talk about, we had Ashke on, Chief Architect at Palantir. Yesterday, we were talking about the sort of forward deployed meme. Have you taken anything from that approach? You obviously were a forward deployed engineer all over the world. Do you end up talking to these big platforms and they say, like, can you guys please come and just post up in our office for a week and figure this out? or is it less intensive than that? No, I think the forward deployed meme is, there's a lot of truth to it.

56:00The reality is if you want to go do something meaningful, you need to go sit by the customer and make it happen. Right? I mean, a lot of our best product insights have happened because me or another engineer were actually on site and said, okay, here's how we thought you were doing it, but in actuality, you need to do it this way. So yeah, forward deployed engineering, huge fan. Love it. You got anything else? This is great. Yeah, I wanted to know a little bit about like mechanically, how do you shut down a ring of scammers? I remember reading this book about Paul LaRue. I don't know if you're familiar with this guy.

56:36He's called The Mastermind. People think he might have created Bitcoin. And back in like 2004 or something, he was, you know, those like spam emails you get that are like, oh magical pill you know pill mill stuff he was the one sending all of those and he leveled up so high that he would get a website shut down instantly spin up a new website but then he went even further and bought a registrar so that he could register like new domains for free and you couldn't shut him down at the registrar level not just like he had his own like tld basically it was crazy uh and so some of these some of these like rings are extremely sophisticated is there a moment when you transition from, okay, my AI agent is just like sending a little cease and desist to, okay, we're getting in touch with like the authorities on this one because we discovered like, you know, a major, major organization here.

57:29Yeah, okay. I have to be careful about what I can share. Sure, sure, sure. But yes, like, sure. Yeah, we saw it with the Mark Rober. Mark Rober like busted some fraud scheme in India, right? I don't know if you're familiar with that one, but maybe just tell us some historical stories of how this works. Yeah, yeah. So to your point on the mechanics, like the traditional way to like deal with all this is purely legal, right? You put together, let's say, or it depends on the exact type of attack, but generally everything you said is spot on, which is like cease and desist letter, maybe a complaint of the domain host, the registrar, et cetera.

58:02That was a key ingredient in the early parts of outtake. I think the big differentiator, you know, in addition to all the agentic stuff is like, we've thought really deeply about how do we become, um, how do we become the platform that is like trusted by domain registrars, hosts, um, social platforms, et cetera, to, to be a high quality source of reports, right? Like that is incredibly, incredibly important. Um, and I can't say too much, but like, yeah, we've, we've invested a lot of engineering resources in that direction as well. Yeah. That makes a ton of sense. Uh, well, thanks so much for joining.

58:35This This is a fantastic conversation. And good luck to you. Hopefully you bust some massive scamming ring soon. Every day, I'm sure. But yeah, your new cybersecurity correspondent. Thank you. Thank you for all the helps. He's already been finding people impersonating us. It's great. So I appreciate your hard work and the whole team. And congrats on the new round. Yeah. Thanks a lot. Thanks, guys. Talk to you soon. Cheers. Bye. Talk soon. Yeah. I actually have gotten multiple times people set up fake John Coogan accounts, copy everything, copy every tweet, and then block me so that I can't see it.

59:10And then I get, and the worst part about it is that I don't think that many people are falling for it, but I get so many DMs from people being like, there's a scammer that's impersonating you. I'm sure you've seen this. And it's like, yes, I have seen it. And then I have to go hunt it down and report it and stuff. And so it's just like annoying getting like a flood of texts being like you're, you're being impersonated. You got good friends. But yeah, yeah, yeah. I appreciate it. Thank you. if you've let people know. But in the future, yeah, I mean, still send it to me, but definitely just report it and try and get the account taken down if it's out there floating around.

59:42Next up, we got Quaid coming in the building. Watches and Wonders is done and it's been a busy week with all the tariffs. And so we want to get a breakdown from him about how the watch world is reacting to all the tariff chaos. He's been in Switzerland, called in from Watches and Wonders late night last week. and now that the show's over, we're going to get a full deep dive. Also want to talk to him about how the news breaks around different watch views and how the media cycle works. So Quaid, welcome to the show. Thanks for having me, guys. Excited to be back. are you back in la i am it's funny the the last time i dialed in the tariffs drop i think the minute i hung up with you guys so yeah yeah it was 4 p.m that day our time i i was i was in such a haze i i think i texted you quite i was like uh what's the reaction over in switzerland and you're like not good uh but now now you know we've seen things there's been a pause there's been ups and downs.

1:00:44Well, there's still the 10 % base tariff. Yes. So what was the whole journey throughout Watches and Wonders? Very funny timing. Good to be there on the ground. Take us through the reaction as things developed and where the heartbeat of the industry is right now. Yeah. And I think you can split the conversation kind of between the primary market and the secondary market. And so I'll intentionally walk through that. On the primary side, I think all the meetings I had the day after chatting with you guys, the tariffs dropping, there was a lot of like the Spider-Man meme pointing at each other, like not really knowing what to do right now.

1:01:22And I think you can split the reaction from brands kind of by the type of brand they are. You have like the giant massive brands that everyone knows, like the Rolexes and the Pateks and the APs of the world. And their reaction is decidedly different than some of the brands that sit kind of in the middle of the market. For every brand that isn't these very, very, very top tier elite brands, their focus was how quickly can I get product to the US? And whether it was functional products, watches that are just parts, they just wanted to move everything to the US as possible from most of the meetings that I was having.

1:02:03On the larger brand side, I think they had the luxury of sitting and waiting and seeing what was going to happen. you saw the Rolex of the world and things like that take their time. And the initial answer that I got from secondary feedback from authorized dealers meeting with Rolex that week was the large feedback that Rolex tended to give in that moment was like, we don't want to pass this on to the customer, but we're not going to eat the cost of these tariffs either. So we're just going to hold off. And the main focus point was we'll make it harder to buy outside of your local markets. because I think a lot of the authorized dealers in the US are all of a sudden saying, what happens when all of my core customers decide that it's actually cost efficient to prioritize that flight to Paris?

1:02:47Oh, interesting. So buy that watch there. The thinking was, how do we keep it in the local markets? Unclear how they hold that out, right? So that's what was happening in the primary market in the moment. On the secondary market in the US particularly, I think you saw a lot of dealers think it was an amazing moment for a second where all of a sudden the inventory that was just being in their in their lots in the U.S. was much more valuable than it was, you know, a few minutes before the terrorists were alive. And so on the secondary side, you saw it really came down to like what type of dealer and what your economics are.

1:03:23If you're a dealer that happened to have a lot of inventory and you don't have a hard time stocking that inventory, again, you have great sources. you had a lot of folks that just saw deals come through in an increase and they just sold them like they moved product and that was the name of the game and you saw a lot of other dealers try to opportunistically drop their prices you know 10 plus percent uh to all of a sudden increase that value so we saw the best weekend we've ever seen after the tariffs in the sense that there was a huge increase in demand and everything everyone was out trying to buy those watches And then the prices, I would say a lot of them are 10, 15 % more than they typically would.

1:04:04We haven't seen a lot of the craziness, like no one's pricing in selling at 30 plus percent to try to match the 31 % move. And then since they announced the 90 day moment, I think things have chilled out a little bit. We're still seeing pricing being up 10-ish percent on a lot of the sales that we're seeing come through. but it's really interesting to see what dealers are going to do i think it's a question of if you believe the 31 is going to hold and if you do i think you're starting to stock up right now if you don't believe it's going to hold and it's purely a bargaining chip then i think you're kind of sitting and waiting out and seeing what happens next were there any uh american watch manufacturers they're just like popping champagne like the hamiltons or the rgms just being like I've been waiting for this.

1:04:50I'm finally going to catch up to Patek. Not a ton. It's very Swiss-centric while you're there. It's very Swiss-centric. But it certainly would be a good moment. But it was like a lot of these brands were lamenting because, especially on the independent side, they had just opened up New York boutiques or they had just signed the lease in LA or whatever it is. And so the question was, how do we get product there? And a lot of the independent and smaller brands, the answer kind of became like, I'm willing to forget the US market for a second. Like, can I come up with other SKUs in Europe that make up the revenue I lose in the US?

1:05:26Or can I just incentivize, especially on the six figure plus pieces, can I incentivize an experiential moment where I take my best collectors and I organize a trip where they come to Geneva and hang out with me as the CEO and they buy their pieces there, right? Yeah. And is that, I mean, obviously that's like probably not completely kosher with the tariffs, but watches are unique in that if you buy one and you throw it in your suitcase and you're wearing it as you come across, like how would they ever know that you bought it while you were on that trip, right? That's just the nature of the game.

1:05:56I think most people, they buy it, they shop it on and they walk out. Yeah. Makes sense. What about, so one of the big concerns of the last week is that even, for example, auto manufacturers that make cars in the US, a lot of those parts come from overseas and specifically China. for the Holy Trinity brands. Are they making every single individual part in Switzerland? I've seen those claims thrown around. It almost is inconceivable, but it seems to be the case that they're not dealing with, you know, the same reciprocal tariffs from China or anything like that. But I'd love to get your point of view there.

1:06:34Yeah, I think for most of the brands that we're talking about, everything's made in-house. and even a lot of the brands that are using generic movements, like they're buying generic Swiss movements for the majority case and like these$10 ,000 AOV plus. There are a number of brands though that will manufacture or use parts from other places and then yeah, they'll be hit with those tariffs 100%. I hate to say the word cheaper, but on the kind of cheaper model. Less expensive. Less expensive is the right word, you're right. um what about uh any any further thoughts on the land dweller uh were you surprised at where it's being priced on uh on the secondary market where is it being priced i think the steel is roughly sitting around high high 30s low 40s is that correct yeah we actually we haven't seen any come through yet so i'm yet to see like a transaction or a listing on bezel for it so uh kind of waiting to see where that lands but uh yeah i mean double retail i said i said that last week i think that wouldn't surprise me at all i since i i spoke with you i had a chance to like see it in the metal and and put it on my wrist and and play with it a little bit and and i liked it a lot i didn't think i was going to like it as much as i did frankly i didn't want to like it not at all but um it's just rolex has this thing where they they they drop a model and it's just always good.

1:07:58Like there's an executed finesse in everything that they make happen. And sometimes it's fun when it doesn't work out maybe, and it always works out. So it's quite nice. I like the Rosebilt example better. So what is the base price at retail for a Rolex Land Dweller? I think the steel example is$14. $14. Oh, so yeah, more than double. And then when the first one comes through, can you talk to me a little bit about how you think about that deal on bezel are you going to push that person to do an auction uh is that a better move for someone who's sitting on the land dweller who's thinking about selling it or should they just try and price it uh through the normal marketplace i think like uh we'll leverage the auction probably to do it we did that with the cubitus too like we sold i think we sold if not the first cubitus at auction one of the first to go cubit eye to come out at auction um and uh i think we'll do the same thing on the Land Dweller side.

1:08:55The fun thing is like the folks that are buying the initial examples of the Land Dweller are doing so exclusively to be one of the first owners of the Land Dweller. And I think it's like that is the, you'll pay a premium for that. Certainly the same thing happened with the Cubitus and any of these kind of new drops. If you want to be courtside wearing this watch and everyone know that you got it first, then obviously you're paying a premium for that. I don't know where it's going to settle though. Like, uh, I imagine the premium for the initial examples will be certainly over double retail. Um, but then like, is it going to be evaluated?

1:09:28Like it's in, in a Royal Oak kind of like very hyped. Is it going to settle to be similar to a Datejust where it, you know, it trails, it's a little bit above retail, but it's, you know, not as exciting. I don't know. It kind of splits the middle there. Obviously I'm, I'm leaning more towards the hype train, but. yeah the the thing that makes me think it potentially pretty sustainable is just it's a great looking watch and it seems to wear really well i think i saw the picture you posted and it just looks great it's hard to it's hard to not like uh even if you're not a rolex guy traditionally i liked it what what's the sentiment around patek right now yeah uh i felt like the general react that felt like the reaction of the cubitus couldn't have been worse online i mean like so many people just didn't like it i think it looks fine it wears well but like what what's the feeling around the brand um you know last week yeah i think like it was cool to see them double down on a lot of like traditionally interesting patek models like there are not there are deviations from the sports models like you know there was a really badass calatrava that came out in platinum with the salmon dial and it's incredible and it was my favorite watch in all of watches and wonders to see in the metal.

1:10:45And they came out with the 40 millimeter Cubitus, which I think is a very fresh take on the Cubitus. The other one is just quite massive and doesn't really feel right in the wrist, in my opinion. I think the vibe against the Cubitus is like similar to Rolex. Patek tends to not miss, like they kind of bat a thousand when when they do things and uh i think everyone wants these big brands to catch an owl so they can talk shit about it and feel like you know they're they're able to say that um so i think the cubitus like paired with a bit of like an interesting take that felt maybe like it was overly modernized from a marketing campaign like didn't sit well with a lot of early early um collectors but uh Yeah, I don't know.

1:11:34I think like I put the 40 millimeter one on. I liked it. You know, it's like they make great watches. It's a little bit angular and I'm a bigger fan of like a 5711 Nautilus. But, you know, if I was allocated one of those things, I would certainly wear it and I would rock it. Love it. Any interesting takeaways around the secondary market? You were on a panel specifically about the secondary market. I'm curious what your major points were and anything else you learned from other people that may have been on the panel or just that attended the event. Yeah, it's really cool to hear how the brands are thinking about the secondary market and how the difference from how we're thinking about it and just, I think, where it's going.

1:12:18We entered the space when the secondary market from a brand perception was kind of like, ugh, don't dip your toe into it, buy primary only. And now to see that, you know, I was in a panel next to Vacheron Constantine, I was in Sotheby's, and you have, you know, a bunch of representatives from all the top brands at the panel. It's quite cool to see that these primary brands are now embracing the secondary market as something that's quite interesting. and I think it allows customers to feel comfortable kind of interacting with the space as long as they're asking the right questions and they're making sure that they're focusing on authenticity and they're buying from reputable sources.

1:12:58And so it's been awesome for our business because it allows us the avenue to double down on our initial goal, which was just make a really, really safe, comfortable experience to transact in the secondary market, lower the barrier of entry to buying your first watch, but also just generally, if you don't want to wait on a wait list, you know, come through and transact and buy the things you want. And that's why like the tariff conversation was super interesting for the secondary market, because if the premium from, you know, a lot of these pieces from the secondary market to retail is close to 30%, all of a sudden, if a primary market watches 31 % up from a cost perspective, that delta is certainly meaningfully decreased.

1:13:36Do I actually want to wait on a wait list any longer? Or should I just buy one that's available in the market in the US? Of course, sellers know that and they're pricing it up 10%, but it still makes that, that difference smaller than it was. And so all of a sudden, maybe it's not as appealing to wait two years to get that Royal Oak versus just buying it right now and getting it when I want it. Never wait, never wait to buy a Royal Oak. Always buy one just immediately. Just do it. Um, what, how does, I'm curious, uh, how does influencer marketing work in the, uh, you know, for a company like Rolex when, you know it feels like there's just this permanent stream of images coming out from the most influential celebrities in the world and whenever i see one of the pictures because i've been like involved with influencer creator marketing forever i'm always looking at the image i'm like does um you know does this athlete always roll out of bed and want to wear a rolex you know like does tom brady always want to roll out of bed and wear like the it rolex you know submariner of the day or is there some type of you know sort of transaction happening behind the scenes whether it's free watches or you know it's totally possible that they just love the watches and there's enough of them out there but but i'm curious if you have any insight there yeah and it was a big influencer marketing year for rolex like i prior to watches and wonders they they hinted that there would be like a massive announcement and we were all kind of spiraling because it a new model are they launching a new platform like what's going on and they just announced leonar vicaprio as an ambassador and they dropped the whole like rolex family page where it talks about like all aspects and touch points of creative entertainment sports whatever uh the dominance they have on like really influential people uh yeah they call their they call their family page a celebration of human achievement and it's so funny because i didn't see the announcement about leo but i've just uh instagram just like serves me pictures of you know celebrities wearing you know watches and i'm always just like leo doesn't go anywhere without a rolex on and it seems like now it's like okay yeah he's contracted basically be like don't leave the house without a rolex and everywhere he goes he's just getting photographed and and it's just sort of like that natural marketing yeah and it's funny because i mean leo is a tag guy for a long time Like there's that story where the, the, um, in Wolf of Wall Street, he's wearing what looks like a, like, I believe it's like a vintage GMT Rolex, but it's actually a tag core that they had like intentionally made to look like it was like an old eighties, not like, you know, stock market-y looking watch, but it was, it was a tag.

1:16:14So, um, I think the interesting part, you mentioned Tom, Tom Brady, like Tom Brady was an IWC ambassador for a really long time. I love those brands. I think like it's a lot easier for those guys to be a Rolex ambassador than maybe another brand they don't wear as much. And you ask the initial question of like, do I feel comfortable wearing this everywhere? I would love to be a Rolex ambassador. I think they're very lucky because the tap and tap into the brand that everyone wants to wear a lot of the most. Same with the APs of the world. They have a lot of amazing ambassadors there. But yeah, I think there's undeniably a set of collectors that don't want to be ambassadors because they want to wear a diverse collection.

1:16:52You saw the same thing. I remember sitting down with some early investors in Goat and they capitalized that in the sneaker space where you had athletes and folks that didn't want to just wear Nikes when they stepped out. They wanted to wear a more diverse set of streetwear and shoes and whatever it is. And Goat became the business that allowed you to catalyze that and wear multiple things. I think the same thing is happening in the watch space. And that's why I'm so excited to build kind of consumer brand around the secondary market. If it's like you can get to a place where you can have a watch sponsorship, but it's like more of a secondary oriented one.

1:17:28So you're making the statement that I like wearing watches, but I have a diverse collection. I'm not necessarily bound to one specific brand. That being said, not a bad gig to be a Rolex ambassador. What are some of the known unknowns in the watch industry for the rest of the year? What are the things that we might expect announcements around, but we don't have the final details on if we want to be completely dialed in going into the next Watches and Wonders? What should we be tracking today? Yeah, I think like the immediate term known unknowns is like kind of a general like, I don't know what's going to happen with tariffs.

1:18:08It's gonna change everything from that perspective, or is it gonna fizzle out and everything's gonna go back to normal? Got it, so we might concretize that by saying something like, if we see an increase in Rolex's stated prices on their website, that would be a reaction to the tariffs, right? Precisely, yeah, yeah, yeah. Like those prices can be passed on to the consumer. And I think like the consistent known unknowns that are always fun to, you know, deposit ideas on in the watch community or like what's coming next, what's being updated next. We were talking about this via text before the episode, but like there's a very cyclical process that exists every year for a lot of these major brands like Rolex pretty much exclusively drops models that are in catalog in Watches and Wonders.

1:18:54So all year the watch community is throwing out their ideas, making renderings of what's going to happen next. The introduction of the chat GPT image product has been funny to see because you're seeing all of a sudden like anyone can render a green whatever GMP or whatever it makes happen and so the way that typically works is a lot of the investigative Instagram journalists in the watch space will look at what Rolex is trademarked or patented like Rolex trademarked Land Dweller a number of months before dropping Land Dweller and everyone knew that but it was like i didn't know what they were going to do with that and then you'll get renderings of the watches that are coming out and you don't know if that came from someone's photoshop file or if that's real yeah and then go tie this home with the influencer marketing like federer wore a land dweller somewhere in the swiss alps and dropped it on instagram and it looked unintentional but i'm sure it was intentionally you know very much planned But so I think a lot of the known unknowns are like what's coming next, what's going to be dropped and then and then what's going to be discontinued and replaced.

1:20:09That changes the market significantly. Yeah, that's very fun. Well, it's such a fun market to follow. It's so interesting. It's it has all the drama of like, oh, speculation about the next iPhone with the fake renders, except the iPhone hasn't changed at all. And so no one really cares anymore. But it's like within in the watch world, it's like we're going from iPhone 3GS to iPhone 4. like every single year. So thanks for coming on and chatting with us. Great to see you, Quade. You too, guys. Thanks. We'll talk to you soon. Thanks for the insight. Talk soon. Our official watch correspondent. Yes.

1:20:39I'll be right back. Super important. Next, coming into the studio, we have Robin from Avalanche talking about nuclear energy and fusion in particular. I had a chance to go up to Seattle with Ben, actually, and do a whole tour of his facility and see how he's building a, probably, I don't know, maybe the smallest nuclear energy product. It's pretty small. It's almost the size of a battery. Like you can kind of hold this thing. But fusion, not fission, much safer. A whole bunch of trade offs there, which I'm sure we'll get into. And I'd also like to talk to him about some of the deregulation efforts that are happening.

1:21:18And there have been some announcements and executive orders, a lot of speculation about what might happen. Even Keith Herboy was talking about long-term looking towards energy deregulation as a potential driver of innovation. We've talked to a few people about how energy production is growing 20 % a year in China and 0 % in the United States. We don't love that. And so I'm excited to talk to Robin and see if we can bring him in the studio and chat with him about how everything's going. Robin, are you there? I think we're trying to get audio. Can you talk again? Can you hear me now? We can hear you.

1:21:59How are you doing? Awesome. I'm doing very good. How are you? I'm great. Can you start with just a quick introduction, the company, and then the announcement? Sure. So we're Avalanche Fusion. I like to say we're trying to build the world's smallest fusion machines. So we're trying to do a very SpaceX-style test-fail-fix approach to fusion, try to be really capital efficient. The fusion machines we're building in our lab today are about 12 centimeters in diameter. That's the plasma core. And yeah, raised a 40 million Series A in fall of 2022. That was not an easy time back then. And we've been sort of in the lab grinding and improving these machines ever since.

1:22:40And so we've kind of made it to the point where we have something interesting. And so the announcement that we're doing today is we're announcing our new test facility, which is going to be in eastern Washington in the Tri-Cities area called the Fusion Works. And so what the FusionWorks is, is it's basically a facility where you can come test different, you know, fusion technologies. So we're going to provide the neutron generators with our fusion machines. We're going to have a broad scope radioactive material license, including the most advanced capability to handle tritium that's available commercially.

1:23:16And so you can kind of think of this like a wind tunnel facility for fusion. So if you have some, you know, blanket technology, you want to come test and see how it does, you can bring it to the fusion works and we'll hit it with neutrons from our machine and you can go qualify your hardware and then, you know, off you go. So I think I'm really excited. I think it's sort of like the next level and sort of, you know, expanding the fusion supply chain workforce, all that kind of stuff. And then we've got some really great partners we're going to be working with in the Eastern Washington as well.

1:23:46I remember talking to AJ at Hermia's building hypersonic planes. And one of the main hiccups to their progress is just getting wind tunnel time. And so I haven't heard of anyone building a wind tunnel startup. Maybe that's a good idea. Can you talk about where you're seeing demand, who you were talking to that made you realize that you needed to build a facility that would service a broader swath of the fusion community? Yeah. So funny, should they mention that. So like, AJ and Hermia just recently announced their heat facility, which is like, basically, so what it sounds like after that conversation, what they did is they went and built a hypersonics test facility themselves.

1:24:25And so the the Hermia's announcement, I think it was a couple weeks ago. Was basically they're opening up their test facility to the rest of the DoD because there's a shortage of hypersonics testing. That's great. So it's kind of, it's kind of like, duh, like if you spend all this money standing up this like unique thing, um, you know, if it's operating 24 seven, obviously it's going to be a much better facility. And you probably don't have enough work to operate this thing at that cadence. So why don't you open it up? Um, you can bring in some revenue while you do that and you can make this like really awesome facility.

1:25:00That's just sort of like grinding day in, day in, day out, getting really good at what it does. And so it It turns out that idea applies to aerospace and hypersonics. And I think it's also going to apply to fusion at the end of the day. Yeah, it's commoditizing your compliments. Okay, I got to ask. I got to ask. New presidential order this morning. Zero-based regulatory budgeting to unleash American energy. There was a whole bunch of mumbo jumbo in here, but it seems important. What's your take? We'd love your take. Yeah, I read that this morning. I kind of love it. you know this idea that every now and then regulate a regulation is going to come up for review and it needs to justify its existence is kind of awesome i can give you an example of how it applies to fusion so you know tritium is regulated at the state level if you're in agreement state so like we're working with washington department of health to get it licensed but the nrc has this rule that if you can't account for 10 curies of tritium in your system you have like like 30 days to report it as an incident to the NRC that you've like lost 10 curies of tritium.

1:26:11And to give you an idea of how small that is, an exit sign has like 25 curies of tritium. So, you know, here you are running your fusion machine. If you can't account for 20 or 10 curie because it got like absorbed into the walls and it's self shielding. So you can't even measure the x-rays from it. You just don't know where it went. That's a big deal and you need to report that as an incident but like if someone like throws an exit sign in the garbage and nobody knows where it went like nobody cares right there's no like what do you mean an exit sign like an led exit sign do you see it at a theater or like what what do you mean by exit sign is that something like like an exit sign above the door right like let's say the fire there's a fire and the lights go out okay and you have this glowing exit sign, those are powered by 25 curies of tritium.

1:27:00I had no idea. Yeah. And so we decided a long time ago that people being able to see how to get out of a burning building in the dark, the safety associated with that was worth the very small risk of having tritium in these exercise. I had no idea. We decided human safety over some very unlikely chance. They're going to freak out, Jordy. He's going to avoid every exit sign he sees now because he's super paranoid they're made with microplastics too yeah oh no we can't uh uh yeah yeah that's hilarious uh can you give us a broader picture yeah there's no agency out there investigating missing yeah uh exercise whatever right that would be like silly yeah and so um you know i think this nrc 10 curie missing thing is an example of a regulation that maybe made sense at the time yeah but man if it had a sunset clause and had to go defend itself like everyone in fusion hates this one.

1:27:54Unanimously. I feel like this was an example of something that probably should die. And if this executive order is a way to get rid of some of that stuff, I'm all for it. At the same time, it seems like my novice understanding of it is that on the fission side, we are highly regulatory constrained and there's high regulatory risk, and relatively low, high regulatory risk, relatively lower science risk. In fusion, we're higher on the science risk and lower on the regulatory risk. Is that the right frame to think about it? And can you just give us a brief overview of how American scientists broadly are thinking about progress in fusion?

1:28:38We hear papers go viral. Oh, it's solved every couple years we're trying to get to uh you know net energy created where are we on the path of progress towards uh you know this amazing uh fusion future yeah so i mean we've demonstrated ignition or q greater than one using lasers like hitting you know a pellet of deuterium tritium with lasers and making more fusion energy in than the laser energy that went out that's awesome and so there's a bunch of fusion startups that are working on laser approaches to doing fusion energy there's another crew that are working on like magnetic confinement or combinations of that.

1:29:16That's like what I would consider what we're doing essentially. CFS, Helion, Zap Energy, or other companies that are kind of doing that. They have not hit Q greater than one yet, but we're all building machines that have a chance of doing that in the next couple of years. And so I actually think it's going to be really exciting. There's a chance that one or multiple magnetic confinement fusion companies are going to cross Q greater than one during this administration. And those machines look a lot closer to what a fusion power plant is going to eventually look like than sort of the laser fusion techniques.

1:29:52And so if that happens, and I think there's a good chance there is, that's going to really change geopolitics around energy. You're going to see this like amazing, you know, rush to kind of try and commercialize magnetic fusion confinement, which is going to be super exciting. To give you an idea of like the regulatory split. So right now, there was a decision about a year ago that fusion machines are going to be licensed like particle accelerators and specifically on the radioactive materials they produce. And so what that does is that pushes the regulator you work with to the state level if you're an agreement state.

1:30:28So in Washington state, it's an agreement state. We work with the Washington Department of Health to license star fusion machines as particle accelerators the process is essentially we design our radiation vault and do all the calcs with that and then we apply for a particle accelerator license they come in they review it they do a tour we show them what we've built they have some suggestions on how to improve it and then a month later i get like a letter in the envelope in the mail from the washington department of health with my particle accelerator license which i hang on the machine and now I'm licensed.

1:31:03So that's like pretty great, especially for like, you know, at the point where we're building experimental machines. And then you contrast that with what Fission has to deal with. It's like many, many years of regulatory work, working directly with the NRC. It's a really, really tough process. And we haven't actually even licensed any of these small SMRs that we're trying to like build here, right? So I hope that Fission gets some regulatory relief in this administration. They definitely deserve it. We should probably talk about Texas and Utah that are suing the NRC to try and get regulatory control over small modular reactors.

1:31:44Yeah, can you break that down for us? I saw a couple founders tweeting about that, but I didn't really have full context. Yeah, so I went to this investor event in Dallas, Texas in December that Valerian Ventures put on. and rick perry was the special guest speaker there and i almost think i was in the room when this got decided but like rick perry's advice to all the fission people in the room was you should join up with texas you should sue the nrc because there's some clause in the in the regulations that say the nrc has the right to regulate large power plants but it's not clear they have the right to regulate some of these smaller things because the risks associated with them are so much less if something goes wrong.

1:32:28And so I like, you know, Brent Kugelmess was in there from last energy, and he's like one of the main parties to the lawsuit. So I feel like I was like an observer to history when the fission community decided we're gonna sue the NRC and get them out of Texas. And if they succeed and Texas becomes the regulator for SMRs, that's going to be really exciting in terms of their ability to innovate and go faster. Yeah. Can you talk about the positive sum nature of sort of nuclear broadly? It feels like it's been so hard to build in the space that everybody just generally wants to see people be successful in the space.

1:33:10So maybe it actually creates a dynamic where - Yeah. You don't see energy companies suing each other. They're suing the government, which is very different than what's happening in AI and every other startup. I don't see a lot of spying going on like we do in B2B SaaS. Seems like a lot friendlier community. It is. I mean, the Fusion people definitely kind of get rid by the Fusion people. It's like, if only you could solve your science, blah, blah, blah. But I want my Fusion siblings to do awesome. I think there's room for both Fusion and Fusion. I think my personal belief is that fission is going to go bigger, like hundreds of megawatts to gigawatts.

1:33:48And fusion is going to be really great from the kilowatts to a few megawatts. And fusion is going to be really great for mobility and stuff. So like autonomous vehicles, fusion powered, like Andro Dive XL or something like that. I think that's going to be a really great application for fusion in defense of space. I think the Russians are the only people crazy enough to put a fission reactor on like an autonomous vehicle so I don't think that's a thing that's going to happen with fission but I think I think if you have sites where there's people around like guards and stuff that's a great use case for fission and it's going to scale like nobody's business if they can get the regulators if they can get some regulatory reef and get some reasonable regulations there So I'm really excited to see what happens over the next couple of years.

1:34:40Can you talk a little bit about lessons from the past two decades in rocketry and specifically lessons learned from how Elon and SpaceX approached building rockets versus other players in the space and the decision to go more modular, smaller, higher iteration speed? I've talked to you a lot about that, but I'd love to hear you kind of retell that story. Yeah, yeah. I mean, the idea that, like, so, like, I was at Blue Origin for six years working on New Gland. It was super exciting to see it fly in January for the first time. And so, like, one of the things we learned there was, like, the importance of size, right?

1:35:17If your rocket is too big, all of a sudden there's only, like, three suppliers in the whole country where you can get castings made, and now you're at a nine-month, every iteration takes nine months, right? It's just too slow. So, you know, that was the thing that we really tried to bring from New Space is, like, you don't necessarily know what the final answer is, but you need to be able to try things. You need to be able to try things quickly and have low barriers to build things and test things. And so that's sort of the key takeaway I took away from NewSpace. And we're trying to bring that to fusion, right?

1:35:47Like very low barriers to test. We said at the beginning of Avalanche that we want a physicist to be able to go from like, I have an idea to testing it in a week. And we've actually achieved that a couple of times. Like someone had an idea on Monday, they worked with the mechanical team to design it. And then we fabbed it on Wednesday, Thursday, broke vacuum on the machine, implemented it, pumped out over the weekend, and then off we were going testing on Monday. Like we've hit that cadence a couple of times and it's really kind of exciting to see that happen. And I believe that's how you solve really hard engineering and technical problems is you try it and you iterate on the thing and eventually you're going to find something that works and then off you go.

1:36:27Yeah. Can you talk a little bit about the pipeline of talent in the fusion community? Because it feels like there's a lot of like thankless PhD tracks that are more theoretical. But again, I've been to the facility. It's a lot of wrenches and hammers. It's a very different culture, I imagine. But what has that been like scaling the team and getting people to adapt to kind of the different style of experimentation and work? Yeah, that's a really hard one, right? There is not a lot of places you can go to learn how to do fusion. And so what we've taken is a very broad approach. Look, we'll teach you fusion, we'll teach you plasma physics, but you bring your mechanical engineering degree, your electrical engineering degree, right?

1:37:14You know, we love people from Blue Origin, SpaceX, Tesla, who've kind of worked in that kind of an environment that like go fast, try stuff, iterate, stuff like that. And then we will teach you the plasma physics, don't worry about that. And then we'll turn you into a fusion engineer, if you will. So I think that's kind of how we're going to have to do things for a while, until sort of the universities catch up, and you can take a degree in fusioneering, if you will. And, you know, I would love to put a couple of fusion reactors on campus at some universities, so like, like programs can get some experience actually like operating them and building them and running them but that's maybe something for a future yeah we'd like one for the studio yeah bring it in the studio in case the power goes out we'd love that um yeah i mean there actually are some small nuclear reactors some fission reactors at like mit i believe in some yeah and and they work on them and they produce a small amount of radiation and there's a little bit of risk but it's much lower than chernobyl right uh oregon state you has one i've been there like i stood on top and look down at the vision.

1:38:19Washington State, WSU has one. Last question for me. They're called trigger reactors. So they're used basically for nuclear engineering programs to teach. You have basically students, like undergrads running these things. That's awesome. They're licensed by the NRC as nuclear operators and stuff like that. I have one last question. I mean, we saw, everyone saw Oppenheimer and everyone knows the progression of the fission bomb to the fusion bomb. If your devices really get baked into society and autonomous vehicles, is it even possible to turn it into a weapon? I know obviously we'd want to be careful, but from a science perspective, is it just impossible?

1:39:06No, it's a vacuum chamber, right? And it needs to have very, very deep vacuum to maintain the plasma and do the fusion. yeah and so we actually had a machine break on us when it was running so we had this cathode that was held on with the set screw it's like one of the first janky machines we ever built and this set screw came loose and the whole rod cathode fell through the bottom hit the window and like ended up on the floor of the factory somewhere and the whole thing just like imploded and spread glass all over the thing but like nothing that happened like it's just like why is the cathode on the floor what's going wrong here i don't understand oh if you're shit it's gonna be very safe uh you know some of the conversations i've had with the do and he's like well what happens if i shoot it like with like like with a gun it's like well same thing with the cathode like it'll implode and then it'll stop and that'll be the end of it like yeah so makes sense yeah the the real problem is just getting it to produce energy and that's uh that's the path you're on it's hard enough right yeah yeah it's hard enough it's hard enough to do to it well just shut it down can you before you leave could you give us like a one minute uh rant around the the you know when fusion is really working and we have these sort of small i don't know exactly sort of like cooler sized devices that can create energy yeah where where are all the places that we're going to put that black mirror just dropped i want to hear the white mirror i understand like you know the dod applications but like uh yeah is it like backup power you know at when when a hollywood uh you know if they even make movies then uh in person uh is it you know uh you know for your house right like you know what are the what are all the different use cases give us the adam punk future i mean the practical one is they're probably going to be containerized and you're probably going to just be shipping containers all over the place like powering a neighborhood you know that's like probably what's gonna happen uh everyone wants this containerized one to five megawatt form factor it seems like so that's like probably what's gonna happen but like the atom punk like future would be like you're driving around and you've got one in the trunk of your cyber truck and like you don't have to like you know supercharge if you're going to eastern washington because there's actually not that many charging stations you could just like flip on the fusion reactor and go go on fusion power um i've driven around san francisco in a DeLorean with a plastic 3D printed fusion reactor last year at Deep Tech Week, I'd love to do that with a real one someday.

1:41:36That'd be fantastic. Well, thanks so much for stopping by. We'll talk to you soon. Congratulations on the launch. Yeah, congrats. Cheers. Bye. Hopping on next, we got Russ. Is that right? Yes. From LiveKit.io. That's right. That's right. Coming into the studio. We got our next guest joining. Some big news today. We pivot from watches to fusion reactors, but that's the nature of the show, folks. We're men of many talents. We keep you on your toes. Keep you on your toes. We'll do dedicated days where there's one theme. Some days you just get a tour of the entire technology industry. So welcome to the studio, Russ.

1:42:16How are you doing today? I'm good. I'm good. So you're saying that I'm following fusion reactors? You're following fusion reactors. And immediately before that, we were talking about fine watches made in Switzerland. So we got a little bit of everything today. Taking us on a whirlwind tour. I don't know if I can follow Fusion Reactors, you guys. I'll try my best. Well, we're excited to talk about voice AI. Yeah. But why don't you introduce yourself and the company, and then we can talk about the news and go from there. Sure. Yeah. So I'm Russ. I'm the CEO, co-founder of a company called LiveKit.

1:42:50LiveKit. So LiveKit, what we started actually is an open source project. So back during the pandemic, if you think about all the technology that Zoom has underneath, we started an open source project that kind of built something similar to all the technology that underpins Zoom, but as an API for any developer to integrate similar type of technology into their app. So you could connect any two people or any number of people on the planet kind of instantly with less than 100 milliseconds of latency over video and voice. Fast forward like about a year and a half, two years, and we built a demo when ChatGPT first came out where you could talk to it instead of text with it using LiveKit's infrastructure.

1:43:41And a few months later, OpenAI ended up finding it, wanted to build a voice interface to ChatGPT. And we started to work pretty closely with them on voice mode and then advanced voice mode after that. And kind of almost by accident, I guess, we got pulled into this AI space. Voice AI was not a space back then. Happy accident. Yeah, I remember our Series A, which we closed at the, well, we closed the first tranche at the end of 2023, 2020, just at the start of 24. And everybody was just telling me that, hey, this is cool, but voice isn't going to be a thing for three to five years. And then, of course, GPT-40 happened.

1:44:26Yep. Can you steal, man, at all why speech to text is still bad on my iPhone? I just really want it to be good John's a big voice guy He's always He's always using LiveKit unknowingly I worked at a voice AI company In 2010 or something Oh really? Yeah it was You know Dragon naturally speaking I do yeah yeah yeah Dragon eventually acquired this company And it was like It was direct competitor to Siri Apple bought Siri And Vlingo Was purchased by Dragon And their primary It was such a funny start I think I remember Vlingo actually. Yeah, Flingo. It was a good company. I think it was a good exit for everyone involved too.

1:45:07And their primary target was BlackBerry. And their whole goal was let's get pre-installed as BlackBerry. But there was a lot of chaos in the market at the time. It was a$20 app. Then they had to cut their pricing, do an ad model, all these different things going on. But I'd love to know, like just if you were in charge of, you know, Apple, how would you improve speech to text? Speech to text specifically, like transcribing text. Oh, well, anything in voice agents or just improving the customer experience broadly, like surprise and delight, right? Well, you know, it's one of those things that I think is funny, like people talk about hallucinations as this bad thing.

1:45:52But in a lot of ways for like kind of this speech-to-speech interaction model where you're talking to an AI, hallucination is a feature. So if you remember like your Alexa or Siri, like when you were talking about this, you know, 2010, 2012, you go and you ask it a question and it's just going through a bunch of like a decision tree. And if it hits, you know, a dead end and it can't answer the question, it just doesn't do anything or it says I can't answer the question. And so the second that it can't do something you expect it to do, all of a sudden, you, you know, it's a, it's such a punishing user experience.

1:46:25You just don't want to use the thing anymore and you stop using the thing. But with kind of these new models that actually, you know, hallucinate answers into existence, even if it doesn't know the answer, it tries. Um, you always get a response, uh, that comes back from the model. And for, for like voice interfaces that actually can be more of a feature than a bug. Um, it also helps that these models just know. Yeah, it's funny because it's human, right? So like if you're having a conversation, John asked me a question, I don't know the answer. I go, well, like, is it like this thing? And you're like, no, it's this thing.

1:46:55And like, but for some reason with like, you know, these older generation of models, it was like very annoying to like go down that wrong sort of path. Exactly, and it's always the same answer, right? It's like, I don't know, or I can't help you with that. I can't help you with that. Or I'll search Google for you or whatever. And so I think that like just having these LLMs that have ingested the entire internet and can always generate some plausible answer for everything, whether it's 100 % correct or not, I think that that just makes the user experience so much better with these kind of modern or contemporary voice agency you interact with.

1:47:31So, you know, I think the other thing I'll say related to the Apple stuff and that's improving very quickly is the latency. So, like, we have a lot of providers out there now, Grok, Cerebris, folks like that who can run inference much faster than even a year ago for some of the model providers. And now like LLM inference can actually be done in less time than generating speech with TTS. And so I think like getting that latency end to end down, you know, to 300 milliseconds or 500 milliseconds on average for like turn latency, that kind of helps you cross this uncanny valley for voice AI. I mean, should we be thinking even faster than 300 milliseconds?

1:48:19And is there any efforts that you've seen to bake some of these models down into silicon? We've seen what Etched is doing with putting the transformer architecture on silicon. You could imagine that once mid-journey gets good enough or kind of hits some peak, that they would just bake it down into silicon and we would just have image generation models, you know, ASICs essentially, like what happened with Bitcoin. Is that the future here? Not that you would pivot into hardware, but maybe you would like vend your software into a hardware provider at that level? Well, so we like, I mean, we partner with like folks like Cerebris and Glock.

1:48:54And so we allow you to kind of plug in their models and plug in effectively their hardware accelerated inference. And so we're compatible with that world. I think on the inference side, you can definitely i think it's going to continue to push as low as it can get um there there's obviously some limits you know it's a trade-off between uh kind of capabilities and level of knowledge and how fast you can kind of kind of you know run that that pass through uh the model to get the result out so there are trade-offs of course that follow the laws of physics but there's also kind of diminishing returns after a while to give an example i once built this Cerebris demo.

1:49:36I used like a Llama 7B or 8B. Llama 8B. I have to remember these numbers on the primary accounts. But Llama 8B hooked up to Cerebris and I got a bunch of feedback on that voice demo that the model was responding too fast and can you slow it down and it's kind of going off the rails a little bit. Yeah, yeah. Interesting. I mean, on that note, is there a kind of like like at inference time fine tuning that needs to happen on the voice agent side to give the human listener the appropriate interaction like some people want to have you know this really fast back and forth conversation and i'm like just get to the point here i'm just trying to book a flight can i just like just give me the information as quickly and condensed as possible other people might might prefer an agent that speaks slower and really draws things out and gives the full context and then lets them answer and kind of ping pong back and forth that way.

1:50:34Is there any movement towards like that level of fine tuning that you think might happen in the future? Is it already happening? I don't know. Yeah, it's already happening. So I think that there's kind of two different flavors of this and you can kind of combine them together over time. So the first one is that if you've interacted with like the real-time models, like the ones that are, So there's OpenAI real-time API. There's Gemini multimodal live API. There's a few others coming out as well. And for all of these models that natively understand audio, you can actually tell them to whisper or slow down or speed up or act hyper.

1:51:17You can kind of give them an explicit signal of the style or the way that you want them to communicate with you. So that's already available and possible with these models. Then there's another part of it, which I think will come in the next year or two, where the model will implicitly be intelligent enough to pick up on what your pacing is or your state of mind is, just based on the way that you're talking and expressing yourself. and also if we weave computer vision into it, it might see you and understand from visuals, okay, this person is stressed or this person seems like they're in a hurry or this person is calm and like relaxed and you can kind of tell that by your body language and by the way you're speaking and it can automatically adjust you in the same way a human would be able to.

1:52:06So you guys work with a lot of the biggest companies in voice already, OpenAI, Speak, Character AI. You're working with Tinder, I see. like really broad swath of companies, Spotify, Oracle, things like that. Are you seeing as many startups as you would like sign up and start building in voice AI? It feels like a category that for if you go back like five years ago, people were really excited about voice. But then you had these sort of like high profile companies that didn't quite work. But, you know, maybe in many ways they were just too early. So what are you seeing on the on the startup side in terms of new companies being formed specifically to leverage voice?

1:52:45and LiveKit and the underlying models? Yeah, we're seeing probably about, you know, we're doing like thousands and thousands, many, several thousands of like signups to the cloud product or commercial product. And most of those, the vast majority are startups and growing companies. And out of those, probably around 75 % or so, 80 % of those signups are voice AI companies that are building voice agents. And so the way that I kind of see the market segmented to a degree is that you have the large AI labs and they have popular consumer apps. And a lot of them are building kind of open ended voice agents that you can talk to about kind of anything.

1:53:30Right. Their assistants, you can they do question answering. They do therapy for mental health, all kinds of language learning in the case of speak. And then on the other side, you have these kind of pockets that are what I call kind of voice native systems. And those are really anything you pick up the telephone to. You know, when you call someone on the other end, call a business, there's someone that answers that line. And they're either, you know, doing patient intake at a hospital or they're doing loan qualification or insurance eligibility checking. There's a lot of these kind of business process flows where there are pockets that are like really large in nature.

1:54:14So customer support is the one that gets talked about a lot, right? Like some of the markets at Sierra, Decagon, and folks like that are playing in. And so for all of those systems, we're seeing tons of startups flood into those spaces because it is now viable to take an LLM and have like a voice stack, like LiveKit, for example, that's hooked up to that LLM. and you can build like an automated version of whoever is picking up the phone on the other end. Well, yeah, the thing that I'm excited about, everybody's gotten on one of these like robo CX calls and I've had the experience in the past where I just say talk to a human until I get to a human because I know they're not gonna resolve like the issue the way that I want and I'm like the annoying guy to the robot.

1:54:59But I do feel like there's a point here quickly where the AI can be considerably better than the human on the other end because they're not tired. They're not in a bad mood that day. Like, you know, they're really, you know, they just have like high energy because they're code, right? There's going to be a flippening and it's going to be like, oh, I'm talking to a human. Robot, robot, please put me on there with the robot. Yes, throw me on the robot. Yeah, I was on a customer support call with Comcast the other day and I was talking to a human for sure and they were trying to look up something for me.

1:55:32And then they started asking me if I'd ever seen the snow and if I'd ever spent time in the snow. And I was like, what? And where do you live? And I'm like, California. They're like, so do you experience snow in California? I'm like, well, in Tahoe. Yeah, I guess. But it was so weird. And I was just like, am I talking to an AI right now or is it a human? And if it's a human, I kind of want the AI. Yeah, it's very bizarre. People are awkward. Can you tell me about some of the more like nuts and bolts enterprise customers you're working with. I see this case study from Playback. We actually had the CEO of Playback on the show.

1:56:04Live streaming for sports makes a ton of sense. Do you know exactly how they're leveraging LiveKit and how you can kind of give us a more concrete example of like their infrastructure basically? Yeah, for sure. So Playback, they're also going to integrate AI into that flow as well, like a voice-based commentator or whatever that can watch the game and provide an overlay for, for fans, but they use us for a pretty different use case. In that case, they, um, they have these kind of courtside cameras at like NBA games, MLB games, and all of that. And these cameras are, you know, the way that you watch sports on TV.

1:56:41Um, and so one interesting part about, and this is kind of like a deeper technology thing, but one, if you've ever watched like the Superbowl or the NBA finals or any, any sports game on a TV, and then like you're texting your friends about it and they're watching the game or there's someone in another part of your house that has a game on on a different TV, you'll notice that you're not synchronized. Like you're seeing plays before they are sometimes up to like 30 seconds or a minute before. And so the technology that we use for live broadcasts of sports games is not true real-time technology.

1:57:14Not everyone is synchronized in the same way that in 1969 when the, you know, the lunar landing, everybody saw that at the same time because there's a server that is sending all these kind of broadcasts out over TV antennas that are receiving these things. And it is truly a shared experience. And so playback, what they do is they ingest the video feed from these cameras at courtside or at the MLB game. And they're ingesting it using LiveKit. That goes into a single system. And then And LifeKits Cloud Network, effectively, everybody who's watching that NBA game, for example, we are effectively shuttling those bites from that camera in a synchronized way to every single person that's watching that game.

1:58:01So when like Steph sinks a three, everybody who's watching that game through playback is seeing that three get sunk at the same time, able to truly have a shared experience of watching their favorite team play the game together, cheer together, all of that stuff. And so playback is effectively using us for the backbone of all of the audio and video kind of transmission that is going on within their application. Before we let you go, we should probably talk about the news today. You guys had a bit of an announcement. Why don't you share a little bit there? Yeah, for sure. So kind of how I mentioned at the start, right?

1:58:37We started as an open source project, you know, connecting humans to other humans. But now we have found ourselves kind of operating at a very large scale, connecting humans to machines. So using voice and computer vision. And so we closed a Series B today that's led by Altimeter Capital. Let's do it. Let's go. Let's go. We love BG. Yeah. So we closed that round and now we're really going after voice AI. We're building like an all-in-one platform for anybody, any developer to build a voice agent. Give us the stats. 1 million, 2 million. How much did you raise? 45 million. 45 million. Let's go.

1:59:22I got to do 45 hits. I'm not going to submit it to that. Congratulations. Amazing milestone. I think, you know, clearly like a five-year overnight success. Yes, classic. Classic example. But it's cool. I love these stories where you sort of work on a really hard problem and then discover the most powerful application years later. So congratulations to you and the team. It's great to have you on. You can be our new official voice AI infrastructure correspondent. You love that line. I'll just make a clone of me, and then that will be your official voice AI correspondent. Cool, guys. That's perfect.

2:00:04That's perfect. Well, thanks so much for stopping by. Yeah, thanks for coming on. We really appreciate it. Thank you, guys. Have a great one. Talk soon. Talk soon. Cheers. And next up, we got Ev Randall coming in from Kleiner Perkins. I love how like there's always like you can always go niche enough to make somebody a correspondent. Yeah, exactly. Hyper, hyper niche. Anyway,$45 million. That's a great round. There are so many funding rounds happening. Now that we're like in the thick of it, I'm realizing like, wow, like the money is flowing in Silicon Valley. It's great. But we will get a full market update from Ev, hear what he's seeing over at Kleiner.

2:00:38Actually crossed paths with him at Founders Fund two years ago, maybe two and a half years ago. Great dude, wrote one of the most probably banger memos during the Zurp era, all about Tiger Global and crossover investing. And I want to follow up with him on that. But I think we have him here. Ev, are you there? Welcome to the studio. Hey guys, Jordy Coogan. Great to be here. Longtime friend of the pod. Finally, dude. It should not have taken this long. You're in our original pitch deck because you posted like how can I go long? which hilariously caused a lot of problems for us because someone created a fake uh pump.fun token about us and everyone would say oh they endorsed this and we're like we did not we just by the way i didn't get rich off that so that no that is uh i have a bone to pick with either the creators of the coin or you i don't know don't even joke about it it's just don't even joke about it if you say anything they'll they will they will turn it into a into a coin uh anyway but it's great to have you thank you for the early support um why don't you john gave a little introduction but why don't you introduce yourself.

2:01:40Yeah, yeah. What are you working on most recently? What's interesting? Yeah, of course. Yeah. So I'm a partner here at Kleiner Perkins. KP, obviously, one of the more storied firms kind of in venture capital history. As a firm, we've led early rounds of companies like Amazon, Google, Genentech, Sun Microsystems. More recently, companies like Rippling, Figma, Glean, Harvey, and many others. Ventures evolved dramatically, obviously over the last five years, but especially over the last decades. And I think what made KP special back then is what makes it special now is that we're a very small team.

2:02:14There's 10 of us total on the investment team. And we all just care very deeply about the craft of venture founders, company building, and we want to keep it a craft. So we, I mean, we're fully multi-stage. We have an early stage fund. We have a growth fund. We announced a new set of funds last summer that we're$2.1 billion in total size. We can do seed through pre-IPO. I personally help head up our growth fund. So I spend the vast majority of my time kind of on Series B and beyond investing, but all of us invest across the venture and growth funds. So I've led our investments in companies like Flock Safety, Huntress, a cybersecurity company, Captions, involved in our investment in Rippling, and a few others soon to be announced.

2:02:56How were you processing the tariff news where you're just texting every portfolio founder like hey have you seen this yeah sending them a sending them a screenshot of the nasdaq 15 what are we doing about this hey wait oh yeah can you fix this hey hey what are we doing about this is there a memo coming is there a black swan memo are you gonna get in the black swan memo game give sequoia a run for their money sequoia has pretty good market share of the of the black swan you know memo market and And so it feels like, you know, it feels a little too memetic. I'm a little too pill-pilled still to do something that memetic.

2:03:29Yeah. But, I mean, how have you been processing it? Do you think it affects tech? Do you think it affects any of the... I mean, like, immediately the reaction was like, all the NASDAQ was way down. But at the same time, like, even semiconductors were, you know, on day one kind of excluded. Was there... Is this something that all founders should just tune out? Or is there something here to pay attention to? I think it's probably both, right? Like I think I think Mike McDonald from from Lightspeed had a good tweet or post today or yesterday where he was like, I'm getting a lot of questions from maybe his LPs about the tariffs.

2:04:05And they have to realize, you know, I invest in companies that aren't going to exit for seven to 10 years. And so there's like something about the like duration of the asset class where, you know, something like economic turmoil that happens today, if you're investing in the venture asset class, isn't going to necessarily impact like your exit, because ultimately the founders and the board and the management team have some control over when they exit. And so you can kind of theoretically wait a little bit for a better environment to either IPO or sell or whatever you want to do to get liquidity.

2:04:36I think at the same time, the underpinning, the undercurrents of what's going on, especially politically, are immensely relevant for startups and tech. like obviously everything around Taiwan and just like semiconductors generally. And if that escalated, how bad it would be for not only technology companies, especially in AI, but like just our day to day lives. Like I think our day to day lives would pretty much come to a halt. And I don't think that people really have an appreciation just for how permeated, you know, semis and other critical materials and inputs from from places like Taiwan are in our day to day lives.

2:05:19So I think it's of critical importance. But again, it's like it's one of those things where it's like, well, what are you going to do about it? You know, unless you there's very few, you know, there's very few companies or folks that can actually have an impact on this. And so I think for most companies, the best advice is always just to go heads down. And yeah, let's talk about one of the immediate impacts, which is the IPO window, which was so briefly open, feeling like it's slammed shut. I love when it's open. Personally, I wake up. I wake up, I get out of bed. Huge fan of open windows. Huge fan of open IPO windows.

2:05:53No, but poor Klarna and StubHub, you know, they've been waiting around. Moment of silence for Klarna? Yeah, moment of silence brought to you by RAMP. No, but yeah, I don't even know if like, you know, Circle gets out at this point. But at some point you can imagine the companies that end up going out are the ones that have to go out. And then that just becomes a vicious cycle where they maybe underperform because they're not these sort of best in class companies. And then it's like, well, it's really shut now. Yeah, we're not going to touch it. But what's your what's your kind of read on on that situation?

2:06:30Yeah, I think I mean, obviously, before before this all kind of blew up, obviously, it was unfortunate that there was like, you know, four or five IPOs kind of on the shelf, ready to go right when this blew up. And so it seemed like, ah, you know, we were opening things back up and then immediately some black swan event happened and it kind of shut it back down. But for, you know, like a full almost nine to 12 months before that, it was a solid environment. It wasn't, you know, IPOing in 2021 where you could go and, you know, SPAC for 50 times ARR or something. But it was not a bad environment.

2:07:01And I like I kind of have a slightly orthogonal take on the IPO window, which is there's this kind of like rock and hard place situation for the IPO market, which sums up to like one, do the IPO markets want you? but then also just as important, like, do you want the IPO markets? So on the first one, I went and counted this morning, the number of public software companies on, you know, the Meritech kind of software comparables index that they run that currently have over$500 million in ARR, which is like an incredible achievement. And right now there are over 80 public SaaS companies that have more than$500 million of ARR.

2:07:38So if you want exposure to some trend or idea, and you want it to be a big company that is profitable, there is very likely a public SaaS company that can give you exposure to some theme or trend or idea that you want that already exists. So it is much, much harder today to have an IPO that bankers, long only public funds, like the people that make the IPO machine work, it's much harder to have an IPO that they're going to care about. Like you probably need to be free cash flow positive. It probably helps a lot if you're closer to a billion dollars of revenue scale than even$500 million, which is already incredible.

2:08:13And you need to have some unique angle or something that's really cool or unique in the story, like the qualitative kind of framing of your IPO that's special. So I think like one, that's like, that's already hard enough. And then on the other side, in terms of like, do you want the IPO markets? I think what we're seeing out of several of the very, very best tech companies is that they've gone to pretty drastic measures to not IPO. And I think there's like many reasons why you'd not want IPO. So SpaceX obviously is kind of the poster child of this. But then you saw Stripe obviously do that really large kind of like RSU catalyzed round at like$55 billion, I believe it was.

2:08:52Databricks obviously in Q4 did a mega raise for the same reasons. And the asset class has grown so much that if you're an amazing company compounding your intrinsic value at 25, 30 % a year at scale, you can raise practically unlimited capital. Databricks raised$10 billion of equity. They did a multi-billion dollar debt raise too. But$10 billion of equity in, I think it was probably three months, it didn't take very long to raise an unbelievable amount of equity. So the fund sizes have gotten so large and the amount of capital that's available for these companies is so large, as long as you're one of these top 10 companies, that if you don't want IPO, you don't have to.

2:09:28And I think there's several reasons why you wouldn't IPO. The main one, or one of the main ones is that you can be a lot more aggressive on M &A. Databricks, for example, bought this company Tabular. I think the reported valuation was$2 billion. And it was also reported that they were either pre-revenue or close to pre-revenue. If you're Snowflake and you're a public company, you probably can't buy a pre-revenue company for$2 billion. Your stock probably goes down 20 % the next day. Almost said effing, but I think this is a PG show, so I'm not going to cuss. But, you know, the stock probably goes down 20 % if you do something like that.

2:10:05That's an extremely strategic acquisition that Databricks is able to do because it's completely founder controlled. No activist can buy 10 to 15 % of your stock. No one can mess with you. So I think there's good reasons to do it. And the only thing that you have to figure out if you don't want IPO is you have to give employees liquidity. Like you have to give employees regular opportunities. We love when employees get liquidity, but what about if you're a, you know, just a$2 billion fund and, you know, you're trying to show DPI to your LPs. Are you seeing these sort of funds that, you know, like KP that there's now funds that are like effectively like four or five times larger and then these sort of crossover funds that are getting involved?

2:10:47and are you seeing more like do traditional venture funds like kp ever try to sell into these rounds that are intended more for uh employee liquidity is that a potential future if companies are just staying private yeah i think we're we're just now in the early innings of this um but we are 100 starting to see it we we certainly have not done like a continuation vehicle is kind of like the most common term for this, like a CV where you can sell essentially like a slice of your fund. Because, you know, commonly venture funds have like a 10 year life. And then sometimes you can have an option for like two years of extension.

2:11:28And then after that, you're kind of supposed to be have the capital returned and like everyone can move on with their lives. Hopefully, hopefully much richer for it. And, and, you know, SpaceX has been a private company for what 20 years now um you know over 20 years um and so i think the most common vehicle for this would be a con a cv um where you sell either like a bundle of company like a slice of your holdings or like a slice of your fund and you're starting to see that like several funds have done that i think i think nea um has has done it in the last year or two and you're seeing more funds do it we certainly haven't done that before but i think as an asset class we're going to have to start coming to grips with the fact that the liquidity timeline for these amazing companies is very different than it used to be.

2:12:13And it's actually really flipped on its head because it's almost like the better the company, the longer they wait to IPO because they can be private, you know, again, compounding their value at 30 plus percent IRRs for much, much longer than they used to. And so obviously you can sell in these rounds. Like I think like obviously SpaceX is extremely liquid. Stripe is pretty liquid. Databricks, I think is very liquid. There's some names that are very liquid, but it's only the best names where that exists. And so if you have a portfolio of names that are good, but not like SpaceX level, call it, then your best bet is probably one of these CVs, which is very, very common in private equity.

2:12:48But as venture kind of becomes more institutionalized, we're going to see a lot more of them for sure. Speaking of DPI, it seems like you got some mathematical formula behind you. Can you break that down for us? Are we leaking alpha right now? What's going on? Just copy paste that and I get your returns? Yeah, I was trying to figure out the equation for DPI. I've been searching for a long time. That's the first one. The second one, I was also trying to find the equation for Delian's gross margins on his investments. Oh, yeah. That one actually might be harder to find than the equation for DPI.

2:13:23Yes, a little Easter egg for the FedMath. That's fantastic. How do you and the team decide if something is in the wheelhouse or not? obviously 10 people on the investment team. I'm sure you get pitches all the time where you're excited about the entrepreneur and kind of their vision, but maybe feel like it's not right in the wheelhouse. But clearly, you're doing flock safety to these other sort of like app layer companies, clearly willing to kind of look everywhere for opportunity. Yeah, 100%. Yeah. I love to say that there's, you know, a lot of people talk about Conway's law, which is like you ship your org chart and as it relates to kind of like how companies mature and ship product over time.

2:14:11And I love to say that like Conway's Law exists for venture firms, for sure, which means that you like you invest your org chart. And it's like very hard to, you know, have an investment strategy or a portfolio construction strategy that doesn't match the size and kind of scope of your team. So for our team, seven partners, 10 total on the investment team, what that means is that like, if we want to be company builders, if we want to be involved in our companies, we can't do that many investments per investment professional. Like we need to really stay concentrated and stay tight. I think you also see this at my previous employer founders fund.

2:14:47You see these headlines where they're doing massive, massive checks into really high quality companies. And I think that's because it's also a small, really lean team that has the trust and a high degree of relationship with really strong founders. And I think we approach, especially growth investing with the same model, each of our growth funds is typically only 10 to 12 core investments. And so every single investment that we're looking at needs to have something very unique or special about it where we can look around the table and say, this is going to be a company that we're talking about on TBPN in 10 years as one of the top five companies in the world.

2:15:24It has that potential every single time. Can you take us through a little bit of a retrospective on playing different games now that it's been, I guess, four years in two days. April 12th, 2021, you dropped playing different games or why Tiger is eating your lunch and your deals. This cycle, it feels like we haven't, no crossover funds have really made a name for themselves. But at the same time, Databricks is doing bigger deals than ever. There must be new pools of capital coming in. What does the late, late, late stage look like and how is it changing? Yeah, so it's funny. I actually dropped a sequel to playing different games like very quietly.

2:16:04I initially wrote it in 2022. And it was one of those things where like, I think it's like solid, but it's just nowhere near the banger that playing different games was. And so I had a lot of like sequel anxiety about it. And so I just like kind of like quietly put it out there because I'm like, I like it. My thoughts should probably be out there. But it's called Game Over? And you can go read it on my sub stack. And I think it's held up pretty well since I wrote it in 2022. and I think the like overarching message from that um and I use a Game of Thrones analogy in playing different games so I'll use one for this too um there's like you know there's a part in Game of Thrones where you know spoiler alert if anyone hasn't watched the show where like Roose Bolton for a while is this like lord who's kind of like one of the big bads he's one of the main bad guys and he gets killed by Ramsay Bolton his son and then you realize like oh my god this guy is like so much worse and it's like he has like the scope of his destruction is like so much greater than like this guy was actually kind of a pedestrian bad guy and i think the kind of version of that that happened to our asset class is that um obviously people saw tiger kind of fail the marshmallow test of like they went too far too quickly and kind of stretched the bounds of what you could do um and definitely paid the price for it but instead of tiger you know continuing to be this large platform you now have like four other platforms that were actually established in those days of 2021 and so it's like okay yeah like you don't have tiger but like how big is indresence last fund and how big is general caddis last fund and how big is lightspeed's last fund there's like four or five of these folks that have like filled that gap um and continued what i think is like a um like a secular trend towards platformization in the asset class um i think that the to your specific point around um like our crossovers kind of like coming back into venture and playing in the asset class again.

2:17:47I think the most important thing here is that like venture means at least like four or five different sub-asset classes, right? Like venture includes growth, but then like investing in it and in, you know, Anthropic at 62 billion and investing in a hundred million ARR company that's growing like 20 % at like eight times ARR. Both of those are called growth investing, but they're like as different as you could get in every single way. So like our crossover is doing venture again, I think yes, but they're sticking more to their knitting like is like what about doing series b's like no but they're you know i know several crossovers that have invested in like majorly in the big labs for example was there any investments that tiger did that you wish you did there has to be there has to be some right because like i remember ftx was like spraying money like crazy too but then they invested in anthropic and like they kind of made it all back in one trade right so do you And Tiger hasn't, I don't have a full list of their investments or anything like that, but do you think it's possible that in the fullness of time they just did okay, or did they actually light money on fire?

2:18:54You know, it's funny. I mean, this is probably just a rumor. So this is, you know, assume this is total hearsay. But I had heard that there was like maybe an internal like, you know, justice for John Curtius trend at Tiger where like, you know, like he did push for them to get into Databricks. And like that's gone really well. And it's like a truly generational company. And like, you know, it's probably going to be an amazing investment for them. And like and so I don't know their their full investment track record and returns. But I do think there is like a potential where like, I don't know if Databricks is a 500 billion dollar company.

2:19:25You end up with like a pretty good portfolio, even though you had a bunch of strikeouts. Like, I think if you look at someone like Neil Mehta's track record, it's like, is his hit rate like 90 percent? No, there's like a ton of flame outs in there. but he's just invested in situations where he's put, you know, 400 in and gotten 5 billion out. And it turns out like if you just do that at, even at the growth stage, like the power law still exists and you still have like an amazing track record. So, I mean, they're, they're huge investors in Waymo. This is Tiger would love to be in Waymo. I think, I mean, it's like an unbelievable technology company.

2:19:55Obviously they're huge investors in data bricks. I'm sure there's lots of investments like that for them. Yeah. That's fascinating. Well, well, this was a really great conversation. We'll have to have you back really, really soon because I'm sure we could talk for two hours yeah about yeah let's make it a regular thing yeah this is great anytime guys thanks so much thanks for the alpha talk soon cheers see ya the uh the little jab back at dalian yeah perfect it's great yeah uh we're not going full like jerry springer yet but we like a little bit of drama on the stream yeah and then when the sass companies are spying on each other we're covering it when uh the wall street journal's putting a robotics company in the truth zone we're covering it that's right and coming up next is uh just a great story about zipline we got keller coming in the studio to break down uh the news that zipline the drone delivery company that has been to america around for a long time uh although not operating on american shores went and found a less regulated environment delivering life critical medical supplies and blood, I believe, scaled their business, did all the R &D risk in a low regulatory risk environment and is now ready to come back and has some really amazing partnerships.

2:21:04And so we're excited to invite Keller onto the show and give us a breakdown on what Zipline is up to these days. Keller, welcome to the studio. Hey, thanks for having me. Thanks so much for joining. I have to say first, fantastic launch video. There are so many launch videos these days that I mean, I'm, you know, suspect number one in propagating this type of content. That's, oh, let's pull Top Gun footage. And, you know, like, let's put Freebird over it. And we're hard tech and it's us welding. And there's a lot of that. And it's really cool. But it was getting a little played out. And you went a very different direction with this announcement.

2:21:44And so I just really enjoyed the launch video. But can you take us through exactly what you're launching, what this means for the company and where the company stands today? Sure. Yeah, day before yesterday, we officially launched our next generation service in Dallas. So as you mentioned, you know, Zipline has been operating these autonomous delivery services across eight countries over the last 11 years. but really this is the first time we're seeing like major metros start to launch and scale in the U.S. Our first customer is Walmart. We've already announced a number of other partners like Chipotle and Sweetgreen, Mendocino Farms, and a lot of the biggest health systems in the U.S.

2:22:24who are all relying on this technology to automate and accelerate their deliveries from businesses or hospitals or warehouses directly to homes. Do you feel like this opportunity is under hyped today? It felt like there was a time when drone delivery, you know, maybe it was, I'm sure it was when you started the company, you believed in the vision, but then it actually took years and years and years to like get to the point where we are today, which is like, it's a reality. You're partnered with Walmart. I'm going to be able to drop a burrito on John's backyard if I want. I mean, you guys started in 2014, right?

2:23:03So complete overnight success. Yeah, 2013, really. 2013. Yeah, yeah, we love a 10-year overnight success. We love an overnight success on this show. So congratulations. It's going to be a household name soon. Everyone's going to be like, oh yeah, you just did it so quickly. Maybe I should get into that market. Maybe I should. No, hopefully it makes sense. But I think there's this trend in technology where people get excited about the potential of an opportunity. And then the reality sets in that it's really, really hard to do. And then there's this period where, you know, it gets less attention and actually is good for you because there's less people going into it.

2:23:33And then now I can just imagine a future where we're just seeing zip lines everywhere in the sky. So, yeah, I mean, talk about your maybe excitement today. I'm sure it's more than more than ever. Yeah, I mean, you know, I I agree. and there's so much to say on that front, but I think there is this obvious hype cycle curve of extraordinary excitement. This is coming tomorrow. I mean, when we started, the CEO of one of the largest tech companies in the world was on 60 Minutes promising that they were gonna be doing drone delivery to every home in the US within two years. And so we always assumed we would be a fast follower to them.

2:24:09We thought they were gonna lead and we would be a fast follower. Had you told me that 10 years later, Zipline would be crossing 100 million commercial autonomous miles would be the largest autonomous system on earth of any kind. And that big technology company would be less than one ten thousandth of the scale. I mean, it would have seemed impossible. I think that the main takeaway for me is that that 10 years, because then you have the hype and then you have the trough of disillusionment, I believe is what it's called. And I think especially for hard tech or hardware companies, that trough of disillusionment might be like five to eight years.

2:24:43And so for us, it was really important to walk rather than talk. It's really easy to talk. And maybe that's apropos of what you were talking about on the launch video side, John. But yeah, if you just focus on walking and focus on these small use cases, I mean, we started by delivering just blood to 21 different hospitals. It was such a very narrow, clear thing that we needed to do. and we're also willing to do very unfancy things like operate in countries that are hard to get to and get our hands dirty and figure out really hard, unfancy problems like how do you operate in all kinds of gnarly weather, you know, rain, thunderstorms, snow and icing conditions.

2:25:23These are hard problems. It's probably a bit similar to autonomous cars in that way too, you know, that there's a lot of hype and then the reality sets in of what it's going to take to make these systems work at scale. Can you talk a little bit about the regulatory environment? It seems like you probably couldn't have just gone straight to the American market because of the regulations, but you found a way anyway. And I love that. Is that actually a bull case for the regulatory regime in America working as intended? And we should have companies that can go test things elsewhere and then bring it back when it's mature and the technology is ready.

2:26:00Or are there specific regulatory changes that you'd like to see over the next decade to either spur more innovation or just make what you do easier? Yeah, it's a good question. When we were launching, we really had this sense. There was such an unclear regulatory environment with regard to what we were proposing. We thought someone would build an automated logistics system for Earth. That seemed like a really important idea, but it was so unclear from a regulatory perspective that I think we really just concluded we have got to go do the most obvious life-saving thing imaginable because that would maximize the chances that we could, you know, I mean, it was both powerful because it was an amazing mission and because it would maximize the chances that we could innovate and get started and operate in the real world.

2:26:46And so we needed a public health care system to do that. We didn't want to work with a whole bunch of, you know, helter-skelter health systems, which you kind of have in the U.S. We've got to be good if we could have a public health care system. And so that immediately caused us to go to certain parts of the world. And then I think also there's just a lot of people think, oh, the regulatory environment must be so different in Africa than the U.S. Actually not true. Pretty much the same regulatory regime when it comes to airspace because planes fly back and forth between them. So you need the same rules.

2:27:13I think the difference was finding a government that behaves more like a startup, a small, agile government that is willing to make decisions and exhibit more like, yeah, just executive decision making. So those were really the things that made Rwanda such a powerful place for us to get started. And it was about six years later, at that point, we had about 50 million commercial autonomous miles and zero human safety incidents. That's the moment when we thought, hey, this is a good time to bring this massive data set to the FAA and kind of help them see this technology is ready for prime time. It's safe.

2:27:48Once we did that, it then took about five years from then until where we are today, where ZipLine is the only company in U.S. history that's been awarded full permission to fly beyond Vigilina's site in all 50 states. So I think part of it was building that data set, showing that it can be safe. And then part of it was working directly with the regulator in the U.S. to help make sure that the U.S. doesn't fall too far behind in this core area of new technology. yeah the uh immediate benefit you know as your network rolls out i love the idea of just being able to press a button and get you know an item uh you know in in minutes uh you know it's obviously been a dream i think for so many people for so long can you talk about some of the second order effects that you're anticipating at we we're here in la i can imagine like a lot of traffic on the roads is just like items being delivered and it just so happens that it's a human in a car right now.

2:28:42And so with Zipline, when Zipline rolls out here, I can imagine that there would just immediately be less congestion. But that's just me making a bold potential prediction. But I'm curious how you think about it. And the cool thing is we're already seeing this. I think people don't necessarily appreciate how massively instant delivery has scaled in the last five years. And it was obviously accelerated by COVID. But we're going to do five and a half billion instant deliveries in the U.S. this year alone. And we're using a 3 ,000 to 4 ,000-pound gas combustion vehicle driven by a human to deliver something to your home that weighs five pounds.

2:29:22That's so much. You don't have to be a physicist to realize this is actually a bizarre solution. Essentially, we're using technology that's 100 years old to solve a problem that's like five years old and to serve a market that's growing super fast. So we think it's super obvious that if you want to deliver something fast that weighs five pounds, you probably want to do that with a vehicle that weighs 50 pounds. And you want the vehicle to be electric and autonomous. As soon as you realize that, then I think the future, you know a secret about the future that most people don't know. The other thing is like I personally, if I'm ordering delivery, it's like, do I really want this person to have to go to CVS and get Advil?

2:30:00Like technically it's like a form of employment. They're opting into it. But like it's like, oh, I'll just do it myself. like it's a bit of a hassle, but when it, when it's fully autonomous and it's literally like an extension, you know, of, of the service that I'm using to get the item, it's, you'll use it a lot more. And actually just, just on that front, I mean, you know, the customer behaviors we're seeing just in the last year in the U S are quite mind blowing. I mean, first of all, you know, I may have thought, Oh, maybe it'll be these like tech adopters and some of these, um, some of these, nerdier.

2:30:35No, no. It's like moms and grandmas who are our power users. More important than that, you talk to them and we have users who have ordered 300 times in the last 12 months. This is a part of their daily. It's way different. I was talking to a woman who said she's 78 years old. She goes to the grocery store once a week and then she orders from zipline three to four times a week. And, you know, as I was, you know, as I was talking to her, she's like, yeah, you don't get it. I mean, this saves me like five hours a week. It's totally priceless. There's no way I go back to the old way of doing things when the weather is bad.

2:31:15You know, I don't want to risk my health or I like fall down and get hurt. And she has a lot of friends who might, you know, either single moms who it's not as easy to get out of the house or, you know, older people who it's not that easy to get to the store. I mean, I think people underestimate, yeah, if you make it super fast and convenient, this is something people actually they use every day, not every week or every month. Yeah, even just thinking parents, right? I think every parent's had the experience, it's bedtime and you realize there's no diapers, whatever. And so then it's like, well, are we gonna get the kids and go to CVS or whatever to get diapers and they don't have the brand?

2:31:48So it's like, I can just think of so many use cases where it's just like, oh yeah, we're gonna delay bedtime by 15 minutes. And Jordy, as someone who has a one-year-old and three-year-old at home, like these kinds of systems operate 24 seven. Yeah. Which is also pretty game-changing relative to the way we currently think of logistics. It's a really big deal to have something that is always available whenever your kid happens to wake up or isn't feeling well. Yeah. On the topic of the evolution of the actual technology that you're building, I always thought the name was interesting because obviously it's a metaphor for a zip line that just goes from one place to another, but then you were catching the drones with something that looked kind of like a zip line.

2:32:29And now you have the mothership drone dropping a smaller drone with something that looks like a zip line. How, I guess, when in the evolution of the company, did you come up with the mothership and baby ship? I don't know what you call it. Like system. The delivery zip is what we call it. What do you call it? We call it a delivery zip. Delivery zip. Okay. And yeah. So how did you come to the pairing system and why is that important and what's the evolution of the technology been? Yeah, I mean, I think it's a really good question. So first of all, you know, the plane spent 10 years operating these kind of more long range systems at Platform 1.

2:33:07You can actually see some of them sitting right here waiting to go out and begin making deliveries. It's a fixed wing, right? Yeah, it's a plane. And so this aircraft can fly 300 kilometers on a single battery charge. So it's all about range and serving like very rural hospitals and health facilities. For Platform 2, it's becoming obvious to us that home delivery is by far like the holy grail. I mean, that's what automated logistics really has to solve globally. And the most important thing is you want to be able to deliver quietly, like silently. You want to deliver silently. It needs to be extremely safe.

2:33:41You need to be able to deliver gently and with dinner plate level accuracy is kind of how we describe it. That's actually super hard to do. And you see a lot of other companies talking about - You don't have to stress that. It sounds very hard to do. Well, I mean, if you see the way other companies are talking about solving this problem, a lot of times they're talking about like descending, you know, an octocopter of death. I mean, it looks like a lawnmower, you know, like within 10 feet of your home. It's incredibly loud. It's incredibly disruptive to your neighbors. It's not really a part of like we think, you know, new technology, it needs to be part of a beautiful, serene world that we would be proud to hand to our kids.

2:34:19And so, you know, the big advantage of designing the system in this way is that the, you know, the aircraft is staying 100 meters in the air. The aircraft is, first of all, designed to be extremely quiet. And then on top of that is far safer because it is staying far away from you, your family, your pets. Only thing that's coming close to your home is the delivery zip, which you can see behind me. This thing is, you know, inspired by Eve from WALL-E. I was going to ask, was there a specific sci-fi that you and the team just love that you kind of reference? I think we're really into Solar Punk.

2:34:53Have you guys heard of Solar Punk? Oh, yeah, of course. Yeah, I think that really, to me, is nobody talks about that. And so much of us, I mean, a huge sci-fi nerd and obviously so much of it is kind of apocalyptic and the robots are out to kill you. And we're like, well, what if in the future robots are trying to save your life? You know, that's a different take. That completely came across in the video. The video was very saturated, very orange, very sunny day. And it was just so pastoral and lovely. I really liked it as a different vision of the future. It was cool. and to and to jordy's point you know i think that uh these kinds of systems people people are often like oh it's going to be so loud and it's you know the star the sky is going to be darkened with drones it's like it's kind of funny it's the same way people actually originally felt about cars if you go and like read the you know if you read the newspaper articles from like 1910 people thought you know cars were going to be the scourge of cities um but i think the reality is actually this is going to take a lot of delivery vehicles off of the roads this is going to reduce traffic in our neighborhoods.

2:35:52This will reduce pollution in our neighborhoods, improve air quality. It'll reduce noise because these systems are ultimately much quieter than cars. I think there are a lot of pretty exciting advantages when you just... Yeah, I think the world 10 or 15 years from now can actually be far more beautiful. We can hand space back to humans. Your kids could be playing hockey in the street again, which I think today you just don't do anymore. You don't want between all the cars zipping. yeah could you talk about any thoughts you know ideas around larger payloads like you know we've seen like airship uh airship startups emerge that are you know basically building like big blimps that could deliver you know something closer to kind of a competitor to the cargo ship yeah the cargo ship or some of these bigger you know but even like the flying car startups that are trying to ferry individuals around i'm sure you're like loosely aware of the technology there yeah in many ways like you know doing these like ultra small drones and with super precise delivery feels a lot harder than just like lifting up you know basically an air airship bus and going from point a to point b but is that at all i'm sure you guys have thought about it any any immediate thoughts you know the market that zipline is focused on instant delivery is one of the biggest markets on earth and it's just such a huge problem and keep in mind really today it's only available to rich people in the US.

2:37:18It's way too expensive. Even just in the US, it's not universally available, not to mention the 7.5 billion people who don't live in the US globally. So we actually think that as you automate, as you decrease the price, as you expand access and make it universal, I mean, we're going to continue to see 10 or even 50x growth in instant delivery globally. So whereas 5.5 billion deliveries might seem like a lot in the US, we actually think there's probably demand for 50 billion deliveries, instant deliveries in the US. So I guess long story short, we've got our work cut out for us just focused on logistics.

2:37:51I think, you know, we deliver this, this system delivers an eight pound payload. It's designed to deliver an eight pound payload. Eight pounds is actually a lot, you know, that's like a big grocery bag. It's dinner for, you know, four to eight people, depending on what you're ordering. And I think ultimately, these kinds of systems, if you can get a system that can do, say, a billion, you know, instant deliveries of these kinds of packages, it is actually likely that you would be able to then scale that autonomy up, autonomy stack up relatively easy to carry humans, for example. I mean, I think carrying humans is a far harder problem.

2:38:31And it'll be interesting to see, you know, where that plays out over the next 10 or 15 years. Well, last question, then we'll let you go if you have time. I would love to know about, Obviously, everyone's thinking about tariffs and whatnot, but how are you thinking about scaling up manufacturing? It seems like you have product market fit. You've solved the regulatory risk, the technical risk. What's next in terms of scaling up manufacturing? Are you building a gigafactory for these things at some point? And is that just an entirely new challenge that you foresee on the future? Zipline has always manufactured everything in the U.S.

2:39:05And so one of the advantages, obviously there's this huge competition playing out between, it's kind of great power competition between the US and China. And I think that a lot of that competition is going to revolve around key areas of technology and everybody's talking about drones. I think the current perception is that China dominates drone manufacturing. And that is true for DJI quadcopters that are plastic and take pictures. But the good news is there are a few companies that are completely focused on manufacturing in the U.S. There are U.S. companies driving different classes of vehicles.

2:39:45Anduril would be another good example, Neros. And ultimately, Zipline isn't even – it's not even because it's more efficient from a global supply chain perspective to manufacture in the U.S., which in our case it is. but actually the most important consideration is if you're a truly innovative company, you want manufacturing and engineering to be right next to each other. Like Zipline, so I'm actually downstairs at our headquarters. This is now kind of like an engineering prototyping space about a third of a mile away. We have a very large factory and we're scaling that to build about 55 ,000 aircraft a year in their first full year of production.

2:40:20You guys should come visit if you want. But I think that, and by the way, that's in South San Francisco. So I think people are often surprised that you can achieve that level of scale in California. You're doing the re-industrialized meme. Yes, exactly. I love it. But it's just all about engineering and manufacturing together. The ability for engineers to go get hands on their own parts to start to understand, but how does that part actually get built? What does quality look like? And to be able to rapidly change parts of the assembly process if necessary to achieve reliability, safety, and cost.

2:40:54These things are so much easier to do if you do them all in the same place. Sorry, I have so many more questions. We won't let you go, but I have one more. Are there any huge developments in either open source technologies, you see all this development with AI that's getting better and better, or even just like partners? For a while, there were companies that were thinking about drones as we'll build the operating system for drones and we'll vend into a company like Zipline. And have there been any other key partners or technologies that have really you've kind of built on the shoulders of giants, so to speak?

2:41:30Or has it really just been like you've got to build everything from scratch? Yeah, it's interesting. I hoped that what you just said would happen. And in fact, when we started, we were using a lot of off the shelf components. You know, we used an off the shelf IMU, off the shelf GPS system. We used we were using something called RTK differential GPS. we were using, even for the first few months, we were using off-the-shelf autopilot. Like, all of these systems kind of failed. And I would say it's actually very similar. You know, when Tesla got started, they were like, oh, we're going to use an off-the-shelf Lotus Elise chassis and an off-the-shelf battery pack that we're buying.

2:42:07We just combine them together and we're going to have a good product. Turns out, like, they were wrong. Like, to actually build a great electric vehicle, they had to design the battery pack from scratch. They designed the entire car around the battery. Zipline found itself in a very similar position where no one is building electric aircraft at commercial scale. Zipline is the only company that is operating a full fleet of commercial aircraft at this scale. And so it means we had to design the battery completely from scratch. We had to design a flight computer completely from scratch. We had to design the motor completely from scratch because, you know, ultimately what all of our customers care about is just teleportation.

2:42:42They just want something to go from point A to point B fast enough to save a human life. and that means we have to make it safe, reliable, cost effective. And the way to ultimately do that has been to design every component around the use case, really. And so that's... Well, and it's amazing, too, that you started in this ultra high-stakes use case, which is blood delivery, where if you mess up, there's massive, the biggest consequences. And then now every other American can get their burrito or their cheeseburger with the same reliability as... Yeah, no, it's fantastic. Well, we'd love to have you back on, too.

2:43:18This was fantastic. It's so fun to watch the strategy play out. I'm just genuinely so excited to be a DAU, a Zipline DAU. I think you're going to be more than a DAU three times a day. Jordan's going to be doing 1 ,000 deliveries a day. As soon as you get Erewhon on board. HAU. Yeah, hourly. Yeah, as soon as you get Erewhon on boarded, it's game over. You're going to be profitable. No, I just don't think, I don't think this is priced in yet to be honest. I think it's going to be like, imagine people, you know, shopping, like, you know, the whole like drunk, drunk shopping meme. It's not just like instant delivery on, uh, you know, you want food or groceries.

2:43:57It's like, imagine being able to like see an item on an Instagram, you know, shopping or whatever, get an ad and get it like 30 minutes later. That's going to change. It's going to change everything. This is so awesome. I'm really excited for you. So congratulations on the overnight success. Thank you for your service. Yeah, thanks for the 11 years of hard work. You make it look easy. But yeah, we really appreciate you coming on the show and sharing all that with us. This is very fascinating. Thank you. And seriously, congrats. Thank you, guys. Really appreciate it. We'll talk to you soon. Talk soon.

2:44:30Bye. I would almost invest in that company at any price. Yeah. Who is in this company? Because they've just been grinding for so long. and it must be super capital intensive. So there's probably a pretty deep bench. Not a lot of very well-known funds. Sequoia, Google Ventures. Yeah, that happens sometimes. Another 10 trillion to the Holy Trinity. What do you know? Of course, of course. Anyway, that's great. Yeah, Sequoia got in the Series A. Let's see it. You love to see it. Anyway, let's move on. Let's do some timeline and then get out of here. We started late, so we're ending late. You already heard from Quaid at Bezel, but I just wanted to let you know that at getbezel.com, your Bezel concierge is available to source any watch on the planet.

2:45:23This is an interesting fact that people might not know about Bezel. So they have auctions, they have prices, like buy it now prices, but also you can chat with a real person who works for Bezel and say, I want this exact watch. Maybe I saw it in a movie. maybe I'm hearing rumblings about it at Watches and Wonders, you can tell them this is the one you want and they will actually go out and source it for you and bring it to you, which is great. Anyway, let's move on to the OpenAI announcement. Starting today, memory in ChatGPT can now reference all of your past chats to provide more personalized responses, drawing on your preferences and interests to make it even more helpful for writing, getting advice, learning, and beyond.

2:46:02Seems like a nightmare because I've been lying to ChatGPT for about three years now about my expertise. Well, every time, because of the prompt engineering, I'll always say like, you know, I'm interested in trains, but treat me like a train expert. I work in trains. I actively own trains. So I, because I want to, I want to prompt engineer to give me like the best data. And so now when I talk to it, it's going to be like, as a train conductor, you probably want to go with this train. I was like, I wasn't actually a train conductor. You're using the like, explain this like I'm five. Yeah, it's like, oh, you're five.

2:46:32Oh, turns out I didn't know you were five. John Coogan. the five-year-old. Oh, yes. As a five-year-old. So now I have to go back into chat GPT and tell it, forget that I'm five. Forget that I'm a five-year-old industrialist who owns trains. And let me tell you about my real history and get you up to speed on the real memories that I want you to save. But obviously, this is a very cool product release. It makes a lot of sense. They go on in this thread saying, in addition to the saved memories that were there before, It can now reference your past chats to deliver responses that feel noticeably more relevant and useful.

2:47:06This happens a lot because you have so many different chats going. You want to reference another one, and you have to go in the search bar, copy, paste. Obviously, that's a product feature. And this is a testament to OpenAI expanding from nonprofit research foundation lab into product consumer tech company. No, and this is the thing. People have been saying, oh, the models have no moats, et cetera. This is one of the moats that will come up. And I'm sure other foundation models will build this and copy this, but the name of the game is staying just a little bit ahead forever. And that's what Google did.

2:47:35And no one ever pivoted to Bing because Google search is always just a little bit ahead. Well, if you want to stay ahead, you should get an 8sleep. Yes, you should. And let's do a quick score check here. I think I did pretty well. I was going to cover 8sleep during the F1 breakdown, but we'll have to do that tomorrow because Charles Leclerc is an 8sleep. ambassador and we love f1 i got a 94 little low on the time slept 96 you you have an uncanny ability to beat me by like two points how much did you sleep i slept six hours and 49 minutes brutal i mean i slept eight hours and eight hours and 11 minutes you put up big numbers man but i get in bed at like seven yeah you do you do i gotta get to bed earlier it's it's it's so the the key to sleeping well is like you have to go to bed when you don't feel like going to bed.

2:48:27Yeah. And then you actually get your eight hours. Yep. And you can go to eightsleep.com slash TVPN. Yeah. Anyway, there was an interesting interaction between John Carmack quote tweeting someone named Devin about SpaceX. Devin says, I'm going to call it right now. A lot of stuff is going to break on this mission talking about a new SpaceX mission. It's by design. It's as part of the plan. Don't get upset. I'm not saying SpaceX plans to fail. I'm pointing out that SpaceX has taken an ultra important principle from software engineering and realized it applies to all engineering Feedback beats planning.

2:48:59It's a good good lesson And that you see is why SpaceX doesn't do things the NASA way The NASA way was to gold plate everything plan and test and plan and test and generate mountains of paper detailing every contingency With every scenario plan SpaceX just shrugs says it's unmanned and sends it Half the time it blows up. That's the whole point They don't actually want it to blow up, of course, but they're anticipating that it might. That possibility is part of the plan because one rocket blowing up or crashing is an actual end-to-end test. This beats many, many man years of planning and plotting.

2:49:30The key realization here is that knowledge only comes from empirical observation. Everything else is just speculative. The sooner you get into that feedback loop, the faster you run it, the more iterations you can do in less time. This means while others are planning and speculating, you actually learn something. Relevant data is the most precious thing in the universe, and it's worth blowing up any number of rockets to get it because rockets are just stuff. They're just made of stuff, and you can always get more stuff. You can never get more time. It's a great insight. It just means we're doing it cowboy style.

2:49:59And the post is good. You should read the full thing. But John Carmack endorses it and says, I have never seen it expressed exactly like that, but I wholeheartedly endorse it. Feedback beats planning. My plea at Meta was no grand plans. Follow the gradient of user value. And I was chatting with John Carmack years ago on X about this, talking about how just getting the VR cost curve down, just every single headset, just slightly lighter, slightly cheaper, slightly better. Like that's what I wanted. I was pitching, like I pulled up this video of the N64 and you turned on the N64, put the GoldenEye cartridge in, turn on the N64, this is like way before your time.

2:50:44Um, but, uh, you turn it on and it would just blink on and you'd be ready to play. And it was, it was crazy. There was no login screen, no off, no, no intro, no credits. It was just turn it on and you're just playing. It was amazing. And, and I was like, they need to get there for, uh, for VR. He, you know, agreed and gave some other feedback that was really interesting, but, uh, interesting, uh, speed of execution stuff. Anyway, um, speaking of VR, if you're trying to sell VR headsets all over the world, maybe you're a big screen VR, you got to get on numeral sales tax on autopilot, spend less than five minutes per month sales tax compliance it's that easy yeah thousands of companies rely on numeral um you can go to numeral hq to uh get onboarded uh they'll do a white glove onboarding oh yeah they are just absolutely fantastic over there 25 states are now taxing software sales john i didn't know you know that no yeah actually you did i did because i said it yesterday well vittorio says thank you to numeral for supporting the show vittorio says it's so over they automated italians i saw you put this in there i like this you put it in the show notes i like it uh did you see the uh this hand movement was crazy it's the italian i think vittorio is italian yeah he's having fun but uh very interesting art installation good viral video lots of fun um i i like this one from framer thanks to ai every meme can be turned into a cartoon easily and it's uh it's so funny because you remember i we joked about this early on it It was, there needs to be like, you know, South Park meets Silicon Valley where something happens on the timeline and just immediately gets turned into a cartoon.

2:52:20And we kind of looked at that and we were like, it's like funny to do. Seems really expensive. Super time intensive. Super expensive. It wouldn't make sense. It's just like, at the end of the day, it might just be a viral video. It's not really. And we have a friend who's already using voice AI to make these like. Incredible deep fakes. Incredible deep fakes. And they're very funny because they're not funny because of the AI. They're funny because he puts so much thought into the punchline and how it leads into the punchline. And he's so creative with it. And it's really his life's work. And it completely copies the accuracy of the voice.

2:52:52I can't believe how accurate it is. It's really, really good. And so this Framer thread is interesting because not only do they share this video of the Paris Olympics, that crazy breakdancing video. But Framer actually breaks down exactly how to do it. So you can kind of follow along with all the different prompts. You go into ChatGPT, turn the images into cartoons, and then obviously change those into videos. But it was remarkable. It's a very watchable video. And I think this will be part of like the meme stack going forward. When an iconic event happens, it will be instantly turned into a cartoon.

2:53:28You'll be able to enjoy it as anime if you want. But the real creativity will come from that human insight of what would be particularly funny to do in a cartoon setting. It'd be very funny. Anyway, let's tell you about public investing for those who take it seriously. Multi-asset investing, industry-leading yields, trusted by millions. Go to public.com to get started. And thank you to public. They are the ones that power our ticker down at the bottom. Stock market goes up, goes down. It's all driven by what the hosts of the All In Podcast are tweeting apparently uh every time they tweet uh it seems to go poorly phone away from him but it's going up it's going down today is not as bad as other days we had a pretty pretty big dip in the middle of the day but we're doing okay now yeah i mean we almost hit the circuit breakers today but we didn't so i guess that's a win any day where there's not circuit breakers is uh is a dom periande in my opinion it's great uh should we talk about uh the open ai lawsuit this is uh Kind of interesting, this is developing.

2:54:31So Elon has sued OpenAI, I believe. And there's been kind of back and forth about Elon being a co-founder of OpenAI, putting a lot of money into the nonprofit via donations and then not getting equity in the for-profit when that conversion happened and the investments started rolling in. Now OpenAI is suing Elon or counter-suing. And OpenAI Newsroom writes, Elon's nonstop actions against us are just bad faith tactics to slow down open AI and seize control of the leading AI innovations for his personal benefit. Today, we countersued to stop him. He's been spreading false information about us. We're actually getting ready to build the best equipped nonprofit the world has ever seen.

2:55:13We're not converting it away. And so that's an interesting take, basically saying like the nonprofit is not going away. That actually isn't new. Sam did address that in that interview. It's new positioning. But it's new positioning. It's getting out there. Yeah. Yeah. And so if you think about it - They've never been really leading with, oh, we're actually making the best nonprofit ever since founding. Well, yeah, because the VCs are like, well, look, we don't care about the nonprofit that it's going to continue. We only care about the for-profit. But obviously, if you're a nonprofit and you have some insane equity position in this, like, banger consumer tech company, that's going to be very good for funding your nonprofit.

2:55:49And so what will the nonprofit do? Probably continue to work on AI safety and AI research and all this stuff, which, you know, I think can be very valuable. And so they want to make it loud and clear that the philanthropic efforts at the OpenAI nonprofit are not going away anytime soon. And you can expect for them to keep fighting. So, you know, hopefully that all just resolves. My take has continually been mom and dad are fighting. Let's try and get them to sort it out and build a glorious future together with amazing ChatGPT and Grok functionality for all of us to enjoy. Yeah, I feel like if Grok and ChatGPT actually sat down, just the two chatbots, they could resolve it with enough back and forth.

2:56:36Little chatbot arena to sort it out. Yeah, yeah. Hopefully not. Two bots enter, only one can leave. No, no. They should be able to work it out. They should be able to do enough iterations on the situation to run a million simulations. You know, that's actually kind of the scenario laid out in AI 2027. like there's this whole nationalization push and the three scenarios that are proposed are essentially one, the government just says, we're nationalizing you, we're taking the complete control because we're afraid of runaway AI. The other one is like the open brain, the leading lab kind of like turns inward and kind of goes offshore and really fights it and doesn't get nationalized.

2:57:20But they actually advocate for the third, which is kind of a truce and a deal gets broken, gets brokered. And the government winds up working very closely with the leading lab, but the lab is not entirely nationalized. And that's kind of what you're describing where, yeah, we will better AI models that can go and do crazy simulations and get to more reliable truces. That actually might be a great outcome instead of this dystopia where everyone's fighting, everyone's suing each other constantly. It's like, no, actually everything's just balanced out because we have a million PhD lawyers talking at all times to make sure we have the perfect deal struck at any moment.

2:58:00That's right. Who knows? Anyway, Scale AI founder Alex Wang proposes a national AI data reserve to bolster US data dominance. I don't know what this means, but it sounds awesome, John. Let's push it forward. Aiming to secure a competitive edge over China in the AI race. Very interesting. We used to have gold reserves. Now we've got data reserves. Big data reserves. Yeah, I wonder what that would look like. I mean, certainly sequestering some of the data and protecting it seems extremely valuable since DeepSeek seemed like it was completely reverse-engineered from ChatGPT. Esoteric PDFs with forbidden knowledge.

2:58:34Yes. I think Nat Friedman should be the one on the case. A national AI data reserve should be the scrolls cannot be ingested into the next LLM training run. They must live in Nat Friedman's house forever. Anyway, there's some other news. But first, let's talk about Wander. Find your happy place. Find your happy place. Book a Wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning, and 24-7 concierge service. It's a vacation home, but better, folks. It is just delightful. Yeah. Just delightful. Brad Gerstner, who recently led the round that we discussed on the show today, says, Google is holding the line on CapEx.

2:59:15As I said tonight on CNBC, tech CEOs are ready to run. That's why today's tariff clarity was critical to maintaining our leadership in global AI. Smart targeted tariffs plus a trade deal with China plus a tax deal will extend US national advantages. And so this is on the back of Google CEO Sundar Pichai reiterating their$75 billion CapEx guide for 2025 despite the tariff uncertainty. We've been hearing that Microsoft might cancel a certain it was kind of a big hit like because it was like i think it was framed by that one poster is like it's so over microsoft cancelled a one billion dollar data center this is so terrible and it's like well they're still spending 74 billion then you know it's like on capex like the capacity is going to increase maybe they're slowing down a little bit but uh it still seems like and then also like there's just the dynamic between all the hyperscalers that none of them want to get caught you know flat-footed here and so and there's also the the amazing story about zuck being like yeah we did reels we got caught back we caught we got caught flat-footed on reels we didn't have enough uh ai data centers to train uh reels recommendation algorithms at scale for a billion instagram users uh so we built out a re a reels training ai data center and then we were like let's just do two of those and and it worked out perfectly because then they were able to train llama and uh you add llm functionality ever all over the place and so i think every uh mag 7 ceo has to be taking that seriously and thinking about well yeah maybe we don't want to get over our skis on capex but we got to be in the game and that means double digit high double digit billions of capex every single year we're scaling our capex here at the show as well we are scaling up uh well let's close with is there anything else you want to do or you're good let's save this this next piece for tomorrow.

3:01:07I think so. It's important. I think we should give it some real attention. Anyway, fantastic show. Some really great interviews. I had a great time today. And just thank you for listening and thanks for dealing with the cyber attack that happened on the show earlier at 11. We had to start late as we fought off. Just an absolute nightmare for Ben and the whole team. They were stressed, but they got through it and they're feeling good. And I'm sure tomorrow will be a banger episode. So tune in right at 11 on the dot. We're going live. You heard it first. We've been pretty good about going at 11.

3:01:40Yeah. We used to be all over the place. So the general trend line is more accuracy, more professionalism on this show. And so thank you. If you've enjoyed the show, leave us five stars on Apple Podcasts, Spotify. Fun fact about Spotify, you can't just go leave us five stars there. You got to click listen to the episode on Spotify. Let it play for a while. You can put it in the background low, and then it will let you leave five stars. Spotify knows, don't spam us, but we're going to get through that. We're going to get through that. Thank you to Ramp, Polymarket, Public, Bezel, Numeral, Adquick, Eight Sleep, Wander for sponsoring this show.

3:02:15We are entirely corporation supported and we will never forget that. Thank you. Thank you. Have a great day. All right, folks. Bye. Cheers.