FULL INTERVIEW: Anjney Midha on Fixing AI’s Biggest Bottleneck

0:00First time with his new fund, AMPPBC. He's here in the waiting room. He's here with us in the TV panel.

0:07Anjney Midha:A man that finds generational run. Yes. Generational run. It's getting started, guys. No, generational run is used for people who are retiring. Oh, yeah. That's true. That's true. I think it's appropriate to recognize when you're on a generational run that you realize you have to actually level up even further if you want to stay on the same trajectory. Yeah, yeah. Because if you just get complacent, then... Yeah, it's important to count the chickens before they hatch. That's what you're saying? No, no, no. The opposite. Anyway, great to have you back on the show. Thank you for having me. It's been fun to...

0:44Anjney Midha:But yeah, catch us up to speed on the last. Yeah, when did the fund launch? What's the strategy? And yeah, walk us through the current thesis for how you want to actually develop the firm. No, I think we should talk about something more interesting. Let's talk about eBay. Okay. Yeah, what you got? Okay. So here's what I'm thinking. And I want you guys to kind of spar with me, right? I looked at, you know, Ryan did this CNBC interview and everybody's like pinging me and saying, oh my God, this makes no sense, blah, blah. And so here's my take on it, okay? Which is that, like, if you read the GameStock deck, like carefully for eBay, most of what's been said about the deal in the last 48 is basically totally wrong.

1:24I read, I was just before jumping on, I was reading Michael Burry's piece on it, which you guys should check out. And he's right that the leverage is pretty tight, but I think he's answering the wrong question. And so is Ryan on CNBC, where he's, you know, they keep asking him like, where's the cash? How are you going to fund it? 50 % cash, 50 % stock. I don't think the question, the question isn't, can GameStop afford eBay? the question is whether the underlying business actually works and I think it does but not for the reason I was expecting Ryan to pitch okay so if you pull up eBay's 10k from February yeah fiscal 25 and I did not understand as I'm glad I read it eBay spent 2.4 billion dollars on marketing mm-hmm how many new users did they get for that I mean you guys are marketers you understand 1 million whoa the user base went from 134 million users to 135 million users after spending 2.4 billion on marketing so and that's basically they're basically

2:29Anjney Midha:you would have to imagine they're just having to reacquire all their old users people that have been on the platform before or maybe even lost their account and they're they're they're coming back I don't know but it's the best$2 ,400 of marketing per new user on a site that every American already knows exists. Sure. Yeah. So where's all that money going? Right. So I don't think Cohen is, I don't think he's buying eBay. Like just watching Ryan, I don't think he's buying eBay because he thinks he's smarter than eBay's product team. I think he's buying eBay because he can see$2 billion of fat that wall street has been pricing as fixed costs.

3:07And so he goes, okay, let me cut that. And the interest on the debt just pays for itself.

3:12Anjney Midha:interesting right but he doesn't necessarily want to say that because he could kind of give that idea to them but he still has to put the money together right but is your thesis that like the deal is coming together he has investors that he's talking to but it's too early to say oh yeah i actually do have a fund that's going to give me another five over here i got seven over here and it will math out but just give me a week or is there something else going on it depends on which investors he's talking to but if he was pitching me here's what i would underwrite right I'd say, okay, that's the floor.

3:42The floor is Ryan's going to cut$2 billion from this thing of fat, put that into treasuries, and we're going to make more money than it's currently yielding. Okay, so that's the floor. Now, the ceiling, because I'm a technology investor, right? Yeah, the opportunity. The bull case. The bull case. So Amazon's used and collectibles business has been flat for six years. They tried Renewed. They tried collectibles. They tried Trade-In. None of it's still. You cannot put a 1962 Mickey Mantle card through the same warehouse as a phone charger. That category, collectibles, is structurally defensible against Amazon.

4:17Amazon is for phone chargers. Mickey Mantle for eBay, right? eBay has the marketplace. GameStop has 1 ,600 stores that could physically verify the goods. That's a real mobile. And it's worth more in the AI era than the human era. Why? Why? Because when I collect, I love collect like rare pens. Okay. This is a Mont Blanc. Sure. Rare pen guy.

4:40Anjney Midha:I love it. I'm a pen guy and I love old vintage glasses. I don't know if you can see my Jacques-Marie Marche box in the back. But when I'm out of time, what do I do? I have Claude go look for rare pens and glasses for me online. The biggest problem with used rare asset purchases is fraud. So I often will tell, so Claude will be like, Anja, I found this amazing pen, this Montblanc pen. And I say, okay, can you triple check that it's real, it's not fake? And that's where things go off real because there's no way for him to verify that without messaging the agent and so on. But if you have 1600 stores where people who have Montblanc pens can go and physically verify those assets at GameStop.

5:24Now Claude just says, yeah, I checked. it has the physical verification stamp from somebody. Somebody brought it in. Exactly. So you need physical verification built into the system for agentic commerce. And look, the reason I know this is real is because a few years ago, I think you guys, we talked about this last time, but I sold my last startup to a company called Discord in 2020. Peak pandemic. So I come on as the head of platform. My job is supposed to be, you know, go build SDKs, APIs and so on for gaming. We helped this company called Mid Journey get going, AI you know. But 12 months later suddenly I find myself running without realizing an

6:03Anjney Midha:e-commerce business because it was the summer of NFTs and the board Apes are blowing up and suddenly we have more than 10 billion dollars of GMV flowing through Discord buy sell page channels. Yeah. And Jason and Stana are like, hey brother, your job is to like capture a piece of that pie. yeah okay homework is accepted so we start doing a deep dive and we realize ultimately the what what these users need and pay for like so you have liquidity right ultimately that's what a marketplace like ebay and discord um provide in sort of community commerce is liquidity but you cannot provide liquidity if you don't have physical verification and for discord that was just out of scope you know use sneakers and it worked you're saying it worked for nfts because you had the on chain.

6:48Anjney Midha:You don't need any physical. There's nothing physical to verify. You owned it and you can transact. Yep. Exactly. And so we had we are bootstrapping the e-commerce platform at Discord with NFTs. But of course, everyone on the board is like, well, how long are NFTs going to last? It's a fad. So what else is coming? And we go look at rare sneakers or keyboards like pens, all this stuff that nerds like me love. But for those you need physical verification. And once we realize physical verification is out of scope, we nix the project. You're not going to go have the 1400 retail locations where people can drop things off.

7:16Anjney Midha:Yeah, that's That's quite interesting. So that's when I realized, okay, eBay is this undervalued asset. And I hope that Ryan has figured it out as well. Because if he hasn't, he's giving me ideas. Yeah, yeah. Have you tried to walk through what, you know, given that you're probably more AGI-pilled than I would say 90 % of VCs, have you tried to play out what is it what how would you how would you build ebay from the ground up today with an agent first approach is that even the right question to ask look i i have not guys because right now i'm in a i'm a computer infrastructure guy right we started amp as this public benefit corporation whose job is to be an independent system operator of the compute grid we think about we think we're roughly in like 1885 industrial england where the steam engine's been invented everybody knows that you can make cool new products like you know steel and and notebooks and pens and cars and there's this very scarce input called coal that everybody is hoarding in this case it's compute and when i if you fly over industrial era england you'll see all these factories getting set up and everyone's running a generator in their backyard at half capacity i'm going this makes no sense if i'm looking at all my portfolio companies you know these these clusters are running at like half utilization.

8:39In fact, Elon's got 500 ,000 GB300s in Memphis at running at 11 % MFU and less than 60 % node allocation. I mean, this is$12 billion of compute being wasted. So I set up AMP as an AI infrastructure organization where we buy a bunch of compute. We do long-term leases. We pull all those clusters on the grid. We coordinate capacity, drive up utilization. And by the end of this year, I think we'll have several billion dollars of compute coming online. But that's what I've been focused on night and day since like i left and recent horowitz in january and so no i have not had time to look at how to redo ebay but if ryan called i'd probably help him out but right now it's wartime on compute guys so yeah i i want to talk about uh amp but i also want to talk about just last question on the the the combination of ebay and gamestop like i get the thesis the bull case uh gamestop is 10 billion dollars ebay is like 48 billion right now you put them together maybe you get to 100 billion i'm in for the bowl case the question is like how what's going on with like the plan because it feels like ryan just doesn't have the capital but then he announced it like what like what what what do you think is happening behind the scenes because there's one thing where you could throw it out as like oh like these two companies should work together here's a bull case let me know if you want to be on the team that does this and then there's the other one which is like make the offer before the capitals lined up, but I just haven't been through enough of these stories to actually understand why it's playing out this particular way.

10:03To be honest, I think he's sitting there with,

10:06Anjney Midha:he has$9 billion of cash. He's in a$10 billion company. I think when he announced this, I think he expected the stock to pop like crazy and he'd be going on CNBC being like, this merger could make sense. Sure. And I think that - We'll issue another$20 billion of equity and then we'll merge or something. And I think if you looked at how kind of frothy some things in the market could be, you could have imagined that playing out. I mean, the Allbirds thing was, I'm sure you appreciated that from a meme standpoint. Direct competitor to you. Yeah, direct competitor. You've got to be careful. Amp versus Allbirds will be the new horse race.

10:45Anjney Midha:Anyways, that was my read. Because GameStop is basically valued at like the brand and all the retail locations and everything is valued at like a billion dollars, right? He's getting no credit for all the cash. So to be clear, AMP is not a cloud business. So I started AMP as a holdings business. And I've got an infrastructure business and a capital business. And the infrastructure business secures compute and passes on at cost to our portfolio companies. We have more than$1.3 billion in commits for our first fund. I've been at it eight weeks. And so we do do venture capital investments. We put$300 million into Anthropic.

11:17Oh, okay, cool. We need to raise another roughly$6.5 billion this year and more is getting committed by the day. But we give away the compute at cost to the independent ecosystem because my belief is that the optimal unit of research today is a focused, talent, and steam outside of the hyperscalers. Anthropic and coding, which I was one of the first... I'm certainly the first angel investor, if not the first investor in the round.

11:46Anjney Midha:They're saying you're the Jason Calacanis of Anthropic. Unfortunately, JCal... I could never top JCal, but like intern or something fine I'll take the win but I think more importantly like I think compute is the strategic asset I which I've been yelling about for four years and it's a primary bottleneck on these teams and if you're not at the hyperscalers you just can't get access so we buy up that compute we give it at cost to the portfolio teams and then we reinvest the profits of carry and fees to buy more compute and so on and so forth and so I'll take as much capacity as I can get from all birds I love it when new people go into the business because that gives us more supply so if you're the all bird see listening to this, please send us your compute.

12:22We'll take it all.

12:23Anjney Midha:That makes a lot of sense. What are you excited to invest in? You're investing in teams that need a lot of compute. You're trying to find things that aren't going to get steamrolled by Ampropik, who's another big portfolio company. There's, you know, I'm sure you see things that need compute, but what do you think? Because I feel like a lot of VCs would never say this out loud, but I get the sense from a lot of VCs that they're kind of paralyzed, where they don't have a clear understanding of where things will be in five years, and they feel like they need to be active. And so it's a mix of doing some neo-Neo labs, maybe doing some application layer stuff, and just kind of praying.

13:15but I would hope that you have a given given your background and how you're approaching this you

13:21Anjney Midha:have like a stronger thesis on on where the opportunities to invest at the early stages look in some sense it's it's back to the future I started my career at Kleiner Perkins when I was 19 my first board seat was as an observer with John Doerr when I was 20 I wasn't old enough to drive technique or drink sorry I didn't have a I didn't have a driver's license I wasn't old enough to drink and and I got the chance to apprentice with like the greats like you know Brooke Byers And that's the vintage of venture capitalists I grew up admiring, like Arthur Rock. And that's my, you know, our thesis at AMP on the venture capital side.

13:52Our business is called the AMP Foundry, where we help create, co-design new labs one at a time. My current one is called Periodic Labs. And we just decided to lead this. So I led the seed round last year with Liam, who was the co-creator of ChatGPT, and Doge, who led some of the quantum physics teams at DeepMind. And we're trying to find new high-temperature superconductors there with physical. We have a 30 ,000-square-foot facility in Menlo Park. I spend three days a week there. We do a stand up every morning from 8 a.m. to 830 a.m. And then we make our priorities and then go execute. And, you know, basically we have AIs predict new materials.

14:21We then have robots synthesize the new materials. We then have an X-ray diffraction machine that tests whether the material has the properties that robots, the AI said. And then we pipe that verification loop back into the training room, like as many times as we need for the agents to continue predicting new superconductors. And in the last 90 days, we've had more material verification than I think in the last decade in the field. And so I'm a huge believer in unblocking frontier progress in domains where the verification sort of loop is clearly just like we know it's going to work, but execution is the bottleneck.

14:50And then I like getting the best teams, the best scientists, the best engineers, the capital, the compute, the commercial help they need. Now, I think that the beauty about having Anthropic around is that it's made this idea of the bidder lesson and scaling legible to the capital market. So now instead of me having to call up 22 friends, I'm getting 21 nodes, which was the case with the seed round of Anthropic. Like now I make two calls. Instead, we get like, you know, like we get three times oversubscribed. So capital is no longer the bottleneck, which is phenomenal. You know, again, we've been at it eight weeks.

15:16I have more than a billion dollars committed for my first fund. I'm a solo key man GP on the fund. And there's lots of institutions, pension funds, sovereign funds who are like, how much more can you put to work, especially in publics, privates, buyouts? It's a bonanza for people who want to be true partners, who want to be the Arthur Rock of this era. I think if you believe in the bitter lesson, it's not new. It's been around for ages. The three of us talked about this over a year ago at the last recent Horowitz AGM. Still bitter.

15:41Anjney Midha:I'm more zen than I am bitter.

15:46Anjney Midha:How are you thinking about building out the team on both sides? Trust is the moat. So there's five of us on the team. My full-time engineering co-founder was Sebastian Lobo. We were roommates 14 years ago at Stanford, and then he went on to build a grid. Overnight success. There we go. What was that one? Overnight success. Overnight success. Thank you. 12 year overnight success in California. Exactly. So Seb and Mihai built the Borg XBorg GQM scheduler, which kept the Google internal capacity pool at more than 95 % utilization. Therefore, it was at 94 % utilization that was considered a major outage globally.

16:18Andrew Erskine is my partner on the operations side. He was a partner at Oric, which was the outside counsel for Anthropic. And he was my GC at Ubiquity 6, which was the company I sold to Discord. And then Rosie, who's my chief of staff, ran comps for me from Edelman when I was at Andreessen Horowitz, you know, when I was a VP there. So you got the band back together. It's the Ange reunion, basically. And, you know, we called AMP not after my initials. Sometimes people think that. It's not Ange Meta Partners or anything like that. It's about energy. It's about, you know, Ampere is the unit of energy.

16:49And we want to amp things up because we think we're entering, like, the great renaissance in technology. And, you know, if you can have a small team that trusts each other across context, you know, compute capital, sports teams, buyouts, leverage technology, all of this stuff. It's these are all buckets and categories that we've all put, you know, traditional capital allocators have put around these asset classes that shouldn't exist. And I think if you have the flexibility to go back to first principles with a small team that you trust, you can execute, you know, with with orders of magnitude, less less size of a team as a firm in this new era with the right tools.

17:20I don't know if that makes sense. No, totally. You mentioned taking positions in public companies. The fund structure is a PBC. Are you also an RIA? How are you thinking about navigating both of those asset classes? We are in process of becoming an RIA because we founded the firm barely 90 days ago. But I'm used to that cadence because Andreessen Horwitz was an RIA. I was a general partner in the AI infrastructure fund for several years, as you guys know. And we were an RIA. I'm used to the compliance, the regulatory sort of guardrails we got to follow. and I think LP's trust us to have that cadence from day one.

17:53And so we're going to make sure that we, you know, Zach, if you remember this, like, you know, 12 years ago, Zach went on TV to say, move fast and break things. And then you have to update the thing to be like, move fast with stable infrastructure. And I think we move fast with stable infrastructure from day one, essentially, because we are an AI infrastructure team. Yeah. Talk about the PBC. Like, if I'm playing back, like, what year were you referencing? 1850 or something like that? 1885. 1885. So if I go back to 1885, And I think about the financiers that, you know, created the industrial build out.

18:25They were not public benefit corporations. They were personal benefit. Yeah. And I mean, there was a lot of good that was created. We got railroads and trains and, you know, machinery and cars and all sorts of things out of the Industrial Revolution. There were also things that were rough and there was unionization and battles and back and forth. Like, what is the PBC in service of solving? Why PBC? Yeah, great question. So there's the, I'll tell you the substantive answer and then the vibes answer, right? Sure. So from a substantive perspective, we do two things, right? We have a venture capital business and we have an infrastructure business.

18:59Both things have this very unique property called positive externalities. When implemented correctly, venture capital can unlock massive positive externalities for the ecosystem and for the world because you end up funding innovation when done correctly. And then infrastructure is the same, right? When you have compute that's used by small focused down-dense teams like Anthropic that's able to produce 10 times more soda capabilities than like DeepMind, which is 60 ,000 or 160 ,000 people, then you're generating positive externalities for the world by being much more efficient per unit of input with the output they create.

19:25And so I was like, huh, well, what happens when as an economist, you look at positive externalities? Usually you have market failure. You have underconsumption of that good. Well, how do you correct the market failure? Usually you get the government to intervene. But if you don't have the government intervening in time, what do you do? You become a private sector participant. And then if you look at the arc of 1885, you know, private sector businesses that ended up correcting market failure by by producing public benefits, they ended up getting regulated as utilities. That's what AMP is. AMP is a self-regulated utility event that provides venture capital and infrastructure to the world's leading scientific teams.

19:59the next Dario, the next, you know, Guillaume at Mistral who created Lama, the next Robin who created Stable Diffusion. These are my generation's smartest minds. I'm not smart enough to be, you know, them, but I can be their intern. And instead of waiting for the rest of the space to come up with standards and institutions to enforce this, we're like, dude, let's just do it ourselves and show the world you can have fun while doing it with a small team. You don't need to be, you know, something called a, you know, like these words like RIA, multi-stage asset class firm, doesn't matter. Just let's skip ahead to the part, the good part, and, and like, you know, use all the proceeds that we get from management fees and carry to keep the space, like innovating at the pace that we were promised, you know, 12, 13 years ago.

20:41And instead we got tweets and not flying cars. You know, when I was at Stanford, I got the chance as an undergrad, I had the chance to take Peter Thiel's class, the zero to one. And he was, you know, his whole moniker was, we wanted flying cars and we got, you know, 140 characters. Well, 240 characters. Thank you. And And now I'm back at Stanford teaching CS 153, which is the largest class on campus. It's called AI Coachella. We've got thousands of people following along. Coachella is a good one. And it's got frontier systems because it's all possible now. We're literally in our lifetime. We're going to have flying cars.

21:12We're going to have room temperature superconductors. We are going to solve cancer. We just want to do it in a way that's stable, predictable. We want to skip all the boom and bust cycles. And the way to do that is to lead by example and say, hey, guys, the public benefit, you know, is to provide goods and services that are utilities and make sure that we don't like, let's be the adults in the room and not do the stuff where we try to be robber barons and monopolists and got greedy along the way. And so that's the substantive answer. The Vibes answer is, look, I don't want to get sued by shareholders for whom it's not legible why I'm giving away billions of dollars of compute at cost of portfolio companies, right?