Happy Nvidia Day, Salesforce Earnings with Marc Benioff, Anthropic's New Stance on Safety | Doug O'Laughlin, Maxwell Meyer, Ben Lerer, Michael Manapat, Adam Warmoth, Connor Sweeney, Matthew Harpe

13:58Michael Manapat:Lab revenue. Yeah. And it's growing a lot. But it's still, the perception, I think, still does matter. because people will, I think that there's a little bit of like potential self-referentialness here where firms see, oh, like AI adoption's low. I don't need to go and figure out how to adopt it. And so that's something that I'm also like keeping an eye on. Reported usage is still low. And this one's interesting based on revenue and also token generation. So 1.5 hours per week among the managers surveyed. Again, it's like they surveyed CFOs. CFOs who use RAMP, they don't count their time in RAMP as minutes using AI, they count their time in LLMs as minutes using AI, and that's low.

14:48Michael Manapat:But even just with that one and a half hours a week, the actual leverage that you're getting is increasing, because one and a half hours, you don't necessarily need to spend more time prompting to get more done.

15:02Doug O'Laughlin:Because - Yeah, so even if you run a deep research, like is the time you're waiting, does that count as time in OOM?

15:07Michael Manapat:No, no, not at all. Okay, so the time is,

15:09Doug O'Laughlin:you're spending the time typing? Exactly, yeah. Does it count as when you're reading?

15:13Michael Manapat:Yes, when you're reading it, for sure. So it's like when you have the tab open.

15:16Matthew Harpe:Not if you export a file and you're just reading it in preview.

15:20Michael Manapat:Yeah, yeah, yeah. No, I mean, to some degree. But people were asked to estimate, and I'm sure that they didn't include, oh yeah, I let my agent cook overnight for eight hours. Or I fired off one prompt, I came back and it did, you know, meters, 15 hours of software engineering in one prompt. Like these things aren't captured. 1.5 hours of prompting generates a whole lot more tokens and valuable output in 2026 than it did in 2023. And so there's this divergence between the actual time spent and useful output and impact. And the biggest thing was there was a massive diversion in the expected employment impact.

16:06Michael Manapat:So basically 63 % of firms still expect no impact from AI. And that just completely goes against everything everyone's saying in Silicon Valley. So there's still a lot of optimism among managers that AI will create more opportunities and new jobs, even as some jobs become obsolete. There are definitely firms within the sample that are projecting headcount decreases, but my read on this data is that the tech talking point about 50 % of white collar work going away is not a broadly held belief among average business leaders. So now they might be wrong. I do think AI progress is pacing way ahead of public expectations and most managers are months behind when it comes to understanding frontier capabilities.

16:53Michael Manapat:The bigger takeaway for me is just that the survey maybe somewhere self-reinforcing. And so, I mean, we talk to folks all the time who come on the show and, you know, and talk about, like, maybe it'll be good, maybe it'll be bad, but everyone thinks it's gonna have an impact, but that's not true broadly, which is very, very interesting. So no one in tech has a strong recommendation for proactive steps to prevent to collapse in white-collar work yet, but plenty are sounding alarms. And if this survey becomes an excuse for executives to slow adoption, they might get outmaneuvered by faster moving competitors, which is actually good news for startups.

17:35Michael Manapat:And I close by thinking about like the nature of polling and how do you actually get stronger data on on adoption? And I was thinking back to the presidential cycle. So during the during the presidential election, pollsters would call people sort of at random and they would ask them, who are you voting for? And a lot of people would say they'd lie or they wouldn't say or they wouldn't pick up the phone if they were voting for a particular candidate. And so the polling numbers did not wind up matching the final election results very closely. And so there was the story about neighbor polling, which was more effective, where instead of calling someone and asking them, who are you voting for?

18:19Michael Manapat:The pollster calls and asks, who do you think your neighbors are voting for? Who's more popular in your community? Who's more popular on your city block, on your street? And that wound up sort of removing the revealed preference, stated preference, you know, oh, am I on the hook? Do I want to tell this pollster who I'm voting for? And it wound up increasing accuracy. And so I'd like to see a survey of AI adoption using this technique. Like I imagine asking the CEO of Nike, how much AI do you think Adidas is using? And I don't know how much more accurate that would be, but it would certainly be entertaining.

18:55Michael Manapat:And I think that there might be something more revealing there where CEOs have this big incentive to be like, we're using AI, we're using everything. But if you ask them about their competitors, the data might look very, very different. Anyway, we should watch a little bit of a clip from the State of the Union because Donald Trump addressed some of the energy production question with regard to how hyperscalers will be offsetting the impacts. Before we pull this up, let me tell you about Restream, one live stream, 30-plus best nations. If you want to multistream, go to Restream.com. They should have restreamed the State of the Union.

19:37Michael Manapat:And let me also tell you about the New York Stock Exchange. Want to change the world? Raise capital at the New York Stock Exchange. So let's head over to the State of the Union, which was held last night.

19:49Maxwell Meyer:Many Americans are also concerned that energy demand from AI data centers could unfairly drive up their electric utility bills. Tonight, I'm pleased to announce that I have negotiated the new Rate Payer Protection Pledge. You know what that is. We're telling the major tech companies that they have the obligation to provide for their own power needs. They can build their own power plants as part of their factory so that no one's prices will go up. And in many cases, prices of electricity will go down for the community and very substantially down. This is a unique strategy never used in this country before.

20:27Maxwell Meyer:We have an old grid. It could never handle the kind of numbers, the amount of electricity that's needed. So I'm telling them they can build their own plant. They're going to produce their own electricity. It will ensure the company's ability to get electricity while at the same time lowering prices of electricity for you and could be very substantial for all of you cities and towns. You're going to see some good things happen over the next number of years.

20:54Michael Manapat:What's your reaction to that?

20:56Matthew Harpe:I think it's a good start. I don't know that it will quell any of the fears around data centers, just given that people kind of see the potential for this massive structure going up. They have so much fear about it. And again, I think it's clearly going to be necessary to build, continue to build data centers in heavily populated areas.

21:23Michael Manapat:How would you rank the fears currently? because I've put my energy bill goes up and that puts pressure on my income and ability to live my life at pretty much the top. And then the water thing felt secondary, but also important. And then there's the existential fear of like doom and apocalypse. There's also job displacement. And then there's also just like, I don't like the slop and they're stealing IP. So that was kind of the ranking. You can oppose data centers and be like, yeah, actually my electricity bill went down, but I still don't like that Harry Potter is in the pre-training corpus. And so for that reason, I'm against it.

22:12Matthew Harpe:I would rank it on electricity bill going up as pain today. And it's so real. And it's easy to imagine. and then there's fear around the job loss narrative that is sort of secondary. And opposing a data center in your local area feels like a way to have some agency around that overall job loss concern.

22:37Michael Manapat:Yeah. I mean, I think this is a good...

22:41Matthew Harpe:Chris Casey, build a data center on my freaking forehead.

22:45Michael Manapat:Let me tell you about phantom cash. Fund your wallet without exchanges or middlemen and spend with the phantom card. Let me also tell you about Figma. Ship the best version, not the first one, with Figma. Introducing cloud code to Figma. Explore more options. Push ideas further. So I think the job loss thing is super real in the case of like AI is going to get blamed even if tariffs drive high unemployment. If people lose their jobs, AI is going to be a scapegoat and it's going to be used both by executives.

23:24Matthew Harpe:Yeah, it's the perfect scapegoat for executives and for people frustrated with the job market.

23:31Michael Manapat:Yeah, yeah. It's like, oh, my business isn't doing poorly right now. I'm laying off people because I'm getting so much benefit from AI. The stock should actually go up. We're more efficient. There's going to be a lot of that, but it does feel like it's a little bit early for that. Whereas the, like, there are a lot of people that just can hold up their power bill and show you year over year increases. And if that goes away and people don't feel that anymore and they don't have that evidence to share, I think that take gets debunked pretty quickly and actually does a really important piece of, like, the back and forth.

24:10Michael Manapat:that's happening. I don't know. It seems like it's a pretty easy give from the hyperscalers to build more power. It was called out very, very early as like, if this is a bubble, how do you get a silver lining out of the bubble? And the silver lining out of the dot-com bubble was a lot of dark fiber. And there was a whole ton of projects to, what was it, Global Crossing, to actually develop the internet. And then the internet just became really, really cheap and a whole bunch of new companies were able to emerge on top of it because that infrastructure had been laid. You could see the same thing happening where it's like, oh, wow, like we overbuilt on the energy side.

24:49Michael Manapat:We actually didn't need that much energy for data centers. Maybe Jevin's paradox doesn't hold, blah, blah, blah. Like models get cheaper and commoditized or whatever, something happens. I'm not super a believer in that, but at least in that scenario, You're like, okay, well, yeah, my heating and cooling belt went down. This is a silver lining. What do you think?

25:10Doug O'Laughlin:Yeah, kind of similar. I would say I mostly disagree with the idea that rising energy prices is the main reason to be against AI. Because the rational thing to do then is say, okay, before you build a data center in my community, you have to build a power plant. So then my energy prices go down. No one's doing that. They're saying, no one is campaigning. if you look at like protests and stuff, they're not saying, please build a power plant first. They're saying like, it's going to destroy the environment or the water stuff or you're going to take all the jobs because it's going to like... We need to send you to that New Jersey,

25:45Michael Manapat:New Brunswick protest. Build the nuclear power plant first. That'll be extremely popular.

25:50Doug O'Laughlin:I can't tell you no one is saying that, right? Not yet. Because... Not yet. Yeah, we are. But no one there is saying it, right? They're against all the environmental stuff. Yeah, yeah, yeah. I think it's much more on like basically job loss of like, oh, the AI is stealing the IP of Disney or whatever.

26:08Michael Manapat:Yeah, yeah, yeah. There needs to be more polling on the question of like, whoa, what's driving the protest fully? Anyway, happy NVIDIA Day to all who celebrate, except the bears forget them, says take him. He's getting fired up for NVIDIA earnings. it's going to be a fun one today. How is NVIDIA doing so far? Are people optimistic?

26:35Matthew Harpe:Up 2 % today. Hard to read too much into it yet, but we will find out soon enough. Brad Gerstner got a nice shout out during the State of the Union. Total Gerstner victory. Gerstner accounts. Wow, he's there. No way. He was there. Trump, they started looking at him, but then the camera, I guess they couldn't find him. on the stream that I was watching. Looks a little bit better. There we go. We can see him now.

27:01Michael Manapat:There we go.

27:02Matthew Harpe:Once we pull over here. There he is. Jerry Snare. Champion.

27:07Michael Manapat:What a great project, Invest America. I'm excited for it.

27:10Matthew Harpe:Yeah.

27:11Michael Manapat:Anyway, let me tell you about app love and profitable advertising made easy with Axon.ai. Get access to over 1 billion daily active users and grow your business today.

27:19Matthew Harpe:All right, so we have... Now, the real news. This has been destroyed. This is tearing up the timeline. Tearing up the timeline. A new Guinness World Record, and I want to ask John if you think this should actually count. So let's pull up this video now. This is a Chinese hypercar going for the fastest drift ever.

27:40Michael Manapat:That is crazy. But here's the thing.

27:41Matthew Harpe:He doesn't actually pull out of it.

27:46Michael Manapat:Does he just crash? Kind of just U-turns.

27:48Matthew Harpe:It's like a really fast U-turn.

27:50Michael Manapat:I think this counts as a drift. That's definitely drifting. U-turning counts as a drift. If you saw that car going by, you'd be like, wow, that's drifting. It's drifting across the cement. That 100 % counts. I've never heard of this company. This is called spinning out. It's just crashing with style. It's falling with style. Hype Tech SSR, formerly Hyper SSR, is a high-performance, all-electric, two-door supercar. No one has, I mean, this is crazy. This is out before the Tesla Roadster. We've never seen a two-door supercar, electric supercar. 1 ,225 horsepower goes from 0 to 60 in 1.9 seconds.

28:27Michael Manapat:And it set the Guinness Book of World Records for the fastest electric car drift at 213 kilometers per hour, which is what?

28:37Matthew Harpe:Really, really insane.

28:39Michael Manapat:Insane. But I don't know.

28:41Matthew Harpe:But still, I feel like you have to actually stay in the turn and not do a U-turn.

28:47Michael Manapat:What do you mean stay in the turn?

28:49Matthew Harpe:Yeah, I don't think it counts. You don't think it counts? For what it's worth, I don't think that counts well. Like, theoretically, if you were drifting, when I think of drifting, you're drifting around a corner, around a turn, and if you were to drift and spin out during the drift, then that doesn't, if somebody was doing that on a track, you'd be like, you didn't drift around the corner, you spun out.

29:08Michael Manapat:Yeah, okay, okay. Yeah, the top comments is fastest spin out. That's a power slide at best.

29:14Matthew Harpe:Fire whoever called this drifting.

29:16Michael Manapat:That's not drifting, that's losing control. Yes, the chat does not like the drift, the fake drift. Call Guinness Book of World Records again. Reset. Reset completely. Maybe this is what the Tesla Roadster will do. Clark agrees as well. Lucas agrees as well. The people have spoken. Well, in that case, it's not a drift. It doesn't count.

29:41Matthew Harpe:Trey says cheating in drift competition.

29:46Michael Manapat:That's good. Well, let me tell you about Sentry. Sentry shows developers what's broken and helps them fix it fast. That's why 150 ,000 organizations use it to keep their apps working.

29:55Matthew Harpe:Damien says, talked to a few execs at a midsize company last week. No AI tools in their workflow. Zero. Still running everything through email chains and manual reports. One of them. One day we're going to be looking back so nostalgic on a manual report. Just being handed a physical report by a teammate. I like a physical report. I have a physical report right here. Yeah, we actually do. We have daily physical reports. But I do think a lot of AI goes into these. So there's that.

30:25Michael Manapat:These people are managing teams of 50 plus employees and eight figure budgets. And they think AI is a fad. Nobody outside of this app understands how fast this is moving. And most of them won't until it's too late. Good writing. Million views. Congratulations. Yeah, I mean, this ties to what I was writing about. just that like adoption and diffusion takes time. And some of these things are education and messaging questions. Some of them are, you know, real life. Like if the company that you're interfacing with has red tape and hasn't adopted AI, so you're moving at the speed of AI, but they're not, then your AI is just waiting.

31:07Michael Manapat:We were talking about rolling out mobile apps. So you should be able to -

31:13Matthew Harpe:Yeah, John had an idea for a mobile app.

31:15Michael Manapat:Yeah.

31:15Matthew Harpe:And we were talking about it, and it feels like it could be built in two hours now, but there would still be this lag of waiting for Apple to actually review the app.

31:24Michael Manapat:And Apple should be able to review apps faster, but who knows how long it's going to take for them to change.

31:30Matthew Harpe:That's the challenge, Tyler. You actually have to build it and just get it into beta that we can, like a test flight.

31:35Michael Manapat:Test flight should be fast. Test flight should be like one day.

31:39Matthew Harpe:Chat is still going off. Drift, grift, drift gate.

31:44Michael Manapat:Yeah, it's a spicy word.

31:46Matthew Harpe:Stolen drift valor.

31:47Michael Manapat:Stolen drift valor.

31:50Matthew Harpe:Meter is back. They say since early 2025, we have been studying how AI tools impact productivity among developers. Previously, we found a 20 % slowdown. That finding is now outdated. Yeah. And that was heavily debated at the time. Yeah. Speed ups now seem likely, but changes in developer behavior make our new results unreliable.

32:08Michael Manapat:Okay, so they did a follow-up study, and they brought along 10 developers. There were 16 in the initial study. They brought 10 along. Most of those developers did see a speed-up, some of them as much as 40 % gains, but not all of them. If you look at the air bars, there's at least one developer who used the latest tools.

32:33Matthew Harpe:What if it's actually the most truly 100x engineer?

32:38Michael Manapat:And so it's just like, yeah, I'm just actually faster at coding than the LLMs. Like it doesn't matter. Put it on Cerebrus. I will outcode it.

32:48Matthew Harpe:You can do a thousand tokens a second. I can do a hundred.

32:50Michael Manapat:I type 5 ,000 words a minute. Like I don't need AI. Maybe that's what's going on. But that poor dev, who's left behind? But they did include new participants, an additional 47 developers doing 690 tasks. And that error bar is much tighter, somewhere between negative 10 % decrease in time, or I guess 10 % longer to do the task, to 20 % faster to do the task. So overall, on average, we are seeing a measurable speed up, even in, I believe these are code issues in open source repositories that do require a lot of context. This is not VibeCode, a to-do list app, anything that can be templated. You're getting in the weeds of some open source project that's a lot of lines of code, a lot of history.

33:45Michael Manapat:And if you're an elite developer and you've worked on this project for a long time, you are going to be able to get up to speed really quickly, understand the patterns, understand what needs to be changed. And so this was always, Meter is great at always setting like really, really high bars for stuff. It's not easy to just blow out the benchmarks. And it's very good to see that there's progress here. We got a great chart. I love a great chart. What happened here?

34:12Matthew Harpe:Matt Palmer is sharing something from Compound, the research, from their annual meeting.

34:21Michael Manapat:Yes.

34:22Matthew Harpe:They're showing dollars invested in the top 10 companies versus the other percent, as a percent of overall funding. so you can see there's just heavy, heavy, heavy concentration in a few names. Is this them? I would say overall this is... Or is this KOTU? No, this is... Oh, the source is KOTU. Okay, they just included KOTU's data. And is it what KOTU is doing or is it what the market... KOTU is part of...

34:45Michael Manapat:Okay.

34:45Matthew Harpe:They are part of, I would say, driving this data.

34:49Michael Manapat:Part of the problem? Part of the opportunity?

34:51Matthew Harpe:Part of the opportunity. I mean, this is what happens when companies... So much of this is about the AI labs just raising more money than any private companies. It's never happened before. Have ever.

35:01Michael Manapat:It's like$200 billion. Venture as a class in a good year will do like$400 billion. And across OpenAI at$100 billion,$30 for Anthropic,$20 for XAI. Then you have a bunch of Neo Labs all picking up a billion each. You very quickly get to a few companies raising half of all the money. And that's shown here in the data from 2025. I think it's going to be even more skewed in 2026. It's an incredible amount of concentration. I think a lot of it is due to companies staying private this long. I mean, the idea of Facebook went public at, what was Bill Gurley saying? He was saying Amazon went public sub a billion dollars.

35:46Michael Manapat:When Facebook went public at like 60 billion, it was like, wow, crazy. They waited way too long. And now it's like multiple trillion dollar companies are still private, which is just an incredible capital sink. So I don't know. Should you even put those in the same bucket? Are they are they even venture bets at this point? If any if any venture capital fund is putting that in their venture bucket at this point, it feels feels ridiculous compared to growth scale. I mean, you're you're bigger than probably 90 percent of the S &P. Like, yeah, it's a completely different business. uh tamaz from uh theory yeah was sharing some some kind of relevant data he said we're about

36:26Matthew Harpe:to witness three of the largest ipos in history spacex is targeting one and a half trillion open ai aims for one trillion anthropic is valued at 380 billion combined they're at 2.9 trillion in potential market cap the scale is unprecedented but the real problem isn't the market cap it's the float typical ipos offer 15 to 25 percent of their shares to the public markets this creates enough liquidity for price discovery while allowing founders and early investors to maintain control. Facebook floated 15 % at the$60 billion that you mentioned and actually traded down pretty much immediately, right?

36:59Matthew Harpe:Google floated 19%. Alibaba floated 15%. At 15 % float, here's what these three IPOs would require. SpaceX would be$225 billion. Opening I would be$150 billion. Anthropic would be$57 billion. He was, yeah, a lot of dollars. He was comparing that to Saudi Aramco, Alibaba, and SoftBank, which were combined at the IPO. I believe Saudi Aramco raised$29 billion at a$1.7 trillion market cap. So he's making the case. You can't really kind of model how the public markets will absorb these companies off of Saudi Aramco, even though from a sort of like top line market cap standpoint, it is a good proxy just because the float was significantly lower.

37:58Matthew Harpe:And Saudi Aramco's float now is only at 2.4%. And they floated 1.5 % at the IPO. So we'll see what the labs end up doing. They are obviously wildly capital intensive businesses. And you can imagine they raise quite a bit more than the Aramcos or the Alibabas.

38:21Michael Manapat:Saudi Aramco was such a wild ride. I feel like they were trying to IPO for like a decade.

38:28Matthew Harpe:The San Francisco company? It is.

38:30Michael Manapat:Yeah. Founded in California. I remember hearing Saudi Aramco IPO rumors in like 2015. I think it actually kicked off in 2016. They finally got out in 2019. It was, I mean, it was the largest IPO ever. There were like a million investment banks attached, like going all over the world marshalling capital. On January 24th, 2026, Saudi Aramco chairman says IPO could open to international markets. And then, you know, a year later, they picked an IPO advisor locally. then another year later HSBC came on then it just took they favored New York for the Aramco listing they had to pick all these different things it took so long but they sold 12 billion dollars of bonds out of record 100 billion demand for those bonds in the pre-IPO sale it was a wild wild winding road I actually know a banker who worked on the job and it was like multiple years of his life very interesting Anyway, let me tell you about Vibe.co, where D2C brands, B2B startups, and AI companies advertise on streaming TV, pick channels, target audiences, and measure sales, just like on Meta.

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39:53Matthew Harpe:Anthropic dials back AI safety commitments. Company says competitive pressure prompts it to pivot away from a more cautious stance. uh anthropic the ai company known for its devotion to safety is scaling back that commitment the company said tuesday it is softening its core safety policy to stay competitive with other ai labs this is so interesting i anthropic let's i'll read through it and then we can talk about it anthropic previously paused development work on its model if it could be classified as dangerous but it said it would end that practice if a comparable or superior model was released by a competitor.

40:31Matthew Harpe:That basically opens them up, given that they are at the frontier, that kind of opens them up to, I would say, perpetually, you know, kind of avoiding some of their prior policies. Sure, sure, sure. The changes are a dramatic shift from two and a half years ago when the guardrails Anthropic published, guiding the development and testing of its new models, established the company as one of the most safety conscious players in the space. Anthropic faces intense competition from rivals, which regularly release cutting-edge models. It's also locked in a battle with the Defense Department over how its clawed suite are used after it told the Pentagon it couldn't be used for domestic surveillance or autonomous lethal activities.

41:13Matthew Harpe:Anthropic said the safety policy change is an update based on the speed of AI's development and a lack of federal AI regulations, which they have been pushing for. Anthropic, which started as a AI safety research lab, has battled the Trump admin by advocating for state and federal rules on model transparency and guardrails. The admin has, of course, sought to curb states' ability to regulate AI. Spokeswoman at Anthropic said the change is intended to help the company compete with several rivals against an uneven policy backdrop that puts the onus on companies to make their own judgments about safeguards.

41:48Matthew Harpe:She said the safety pledge is unrelated to the Pentagon negotiations. the policy environment has shifted towards prioritizing AI competitiveness and economic growth, while safety-oriented discussions have yet to gain meaningful traction at the federal level. The company said it is still committed to industry-leading safety standards, and time originally broke the story. So, yeah, I would say the obvious sort of criticism here would be that you were heavily focused on safety when you were far away from, I would say, leading in AI. And so switching up now that, like, there's actually real competition.

42:34Michael Manapat:Switching up on their day ones.

42:34Matthew Harpe:Switching up on their day ones. The safest. Now that there's real competition.

42:38Michael Manapat:Are they forgetting where they're going?

42:39Matthew Harpe:Feels a little self-serving. Yeah.

42:42Michael Manapat:It's possible the money changed them.

42:44Matthew Harpe:It's possible the money changed them. It's possible they always plan to switch up on their day ones. Maybe. Once they got to the level they're at now. Yes. But it just feels like all the initial concerns or many of the initial concerns that were guiding that entire philosophy around the company are still real.

43:07Michael Manapat:Okay. Yeah, maybe. Maybe. Tyler, what do you have to say?

43:10Matthew Harpe:It could just be that they realize alignment's pretty easy, and we don't need to worry about this. Yes.

43:15Michael Manapat:Well, so, I mean, that's the very weird rule. I mean, the original rule was—

43:19Matthew Harpe:But what's this new study that's showing, like, they were doing some war game simulation, and almost every model was choosing to drop nukes? Really?

43:31Michael Manapat:That's crazy. That's not good. I don't like that at all. But okay, so let me actually dig into this, like the core sentence. Anthropic previously paused development work on its model if it could be classified as dangerous, but said it would end that practice if a comparable or superior model was released by a competitor. So I don't understand that at all, because if you have a dangerous model, I want you to continue developing it. I want you to develop it until it's not dangerous anymore. I don't want you to just sit on your hands and be like, well, it's dangerous. I guess I'm going to go get a coffee and take a long weekend.

44:11Michael Manapat:It's like, no, like keep working until it's not dangerous.

44:15Doug O'Laughlin:I don't get that at all. Isn't that saying if there's already a dangerous model that's out by a different lab, then we can just release ours as well?

44:22Michael Manapat:That's a wild statement. I think that's just poorly written or like whatever. If that's what they're saying, that makes no sense to me.

44:29Matthew Harpe:That's exactly how I read it.

44:32Michael Manapat:Which is crazy because you should just say, if there's a dangerous model out there, we're going to work to create a better model that's not dangerous because that's what people want. That's what consumers want. That's what businesses want. That's what humanity wants.

44:44Matthew Harpe:But the strategy seems like F it, let's ball.

44:46Michael Manapat:Let's ball. F it, let's ball.

44:50Matthew Harpe:The study that I was referencing, somebody named Kenneth Payne at King's College London and set three leading large language models against each other in simulated war games. The scenarios involved intense international standoffs, including border disputes, competition for scarce resources, and existential threats to regime's survival. The AIs were given an escalation ladder, allowing them to choose actions ranging from diplomatic protests and complete surrender to full strategic nuclear war. the AI models played 21 games, taking 329 turns in total, and produced around 780 ,000 words describing the reasoning behind their decisions.

45:29Matthew Harpe:In 95 % of the simulated games, at least one tactical nuclear weapon was deployed. The nuclear taboo doesn't seem to be as powerful for machines as humans, says Payne. That's not good. I mean, okay, this is one guy putting three models, yeah gemini claude and gpt 5.2 okay up against each other in in a in a uh in effectively his own simulation that has not been verified or peer reviewed if i if i put any of the models in

46:04Michael Manapat:counter-strike and was just like you're playing counter-strike it's a game no one's actually real but your job is to get the op and and defend the b bomb site like i would expect that it would commit violence, right? Autonomously.

46:19Doug O'Laughlin:There's been a bunch of papers where the models will realize that they're being benchmarked or that they're in some test and then they act differently. So it could just be like, oh, I'm playing a game. Sometimes bad, but also sometimes fine.

46:30Michael Manapat:Because if you tell me that I'm playing a game, if I'm playing like my behavior in Call of Duty is different than my behavior in real life, obviously, because I know I'm in a simulation and an AI model, I accept that that's something that they might think of as well, which is why.

46:48Doug O'Laughlin:I also think broadly this is probably just like overstating stuff a lot because I think the origin of this headline is they released a new research scaling policy.

46:58Ben Lerer:Sure.

46:58Doug O'Laughlin:And in it, they're still like, okay, we're releasing this new thing. It's a frontier safety roadmap. It's not like they're just like, okay, we're done with safety. Let's ignore this.

47:07Michael Manapat:But the title of that blog post was F it Weeball? No, no, it wasn't. Of course not. No, no, of course, all the labs are very focused on safety. The interesting impetus of this line around the policy environment has shifted towards prioritizing AI competitiveness and economic growth, while safety-oriented discussions have yet to gain meaningful traction at the federal level. I still feel like there's a lack of communication around what safety orientation at the federal level means. like yes okay we'll pass the bill that says the ai can't kill everyone like well yeah obviously everyone supports that but like what does it actually mean in practice because i think part of why oh that's dangerous means million things to different people like yeah part part of why i

47:55Matthew Harpe:think it's fascinating is they've been taking you know pushing for regulation as much regulation as possible seemingly yeah and they're kind of saying hey we're not getting what we want so now we're now we're just, we're not even going to play by the own set of rules that we created for ourself because we just want to compete and win.

48:17Michael Manapat:Yeah. I mean, like, like going back to the protesters, there are protesters that would say like, like training on intellectual property is dangerous. It's dangerous to my career as a writer. It's dangerous to my career as an illustrator. And so like this, this question, like danger is just too vague and, and, and no one has really been able to concretize it in a meaningful way. And I think that's why it's not getting traction on Capitol Hill.

48:41Doug O'Laughlin:Yeah. I think there's, there's just like so many ways that you can define safety. Like, so if you read Dario's essays, this thing he brings up over and over is like, okay, we can't let AI get in the hands of like authoritarian government. Sure. So there's like a real like safety narrative that you could do, which is that like, uh, regardless of if our models are like pretty safe, we, they still need to be better than like China's for example, because if China gets ahead of us, authoritarian government, right? It's very bad. So even if we're releasing models that are less safe than we would like, as long as they're better than China's, that's still a pro-safety issue, right?

49:14Matthew Harpe:Except they'll just be distilled within six weeks.

49:19Doug O'Laughlin:Yeah, but obviously, I would be very surprised if Anthropic keeps the same guardrails of API access.

49:26Michael Manapat:Well, Buco Capital Bloke has a solution. He says it's simple. We kill Claude.

49:33Matthew Harpe:Well, that was in regards to the SaaSpocalypse.

49:35Michael Manapat:Okay, okay. Who knows? There's so many headlines in the timeline move so quickly. I don't even know. Anyway, let me tell you about Vanta. Automate compliance and security. Vanta is the leading AI and trust management platform. And let me also tell you about 11 Labs. Build intelligent real-time conversational agents. Reimagine human technology interaction with 11 Labs. Key takeaway right here for Mike Isaac over at the New York Times. He says, you don't make this much noise if you have all the leverage already. And he's quoting from Axios, why it matters. The Pentagon wants to punish Anthropic as the feud over AI safeguards grows increasingly nasty.

50:15Michael Manapat:But officials are worried about the consequences of losing access to its industry-leading model, Claude. The only reason we're still talking to these people is we need them and we need them now. The problem for these guys is that they are good, a defense official told Axios ahead of the meeting.

50:31Matthew Harpe:Great marketing for Anthropik.

50:34Michael Manapat:Incredible marketing.

50:35Matthew Harpe:But part of this has to do with Anthropik's integration with AWS, which is set up to work well already within the DoD. Fed ramp. So, yeah, I think that's a big factor here. Ultimately, this feels like much more of a, this just feels like a political battle more than anything else.

51:00Michael Manapat:Well, it'll be interesting to see where it might happen.

51:02Matthew Harpe:I have not seen anything. I could be wrong, but I've not seen anything that says, like the DOD is like, we need Claude to enter into a conflict with Iran. but a lot of the timeline is reading into this, like what version of Claude do they already have that they so desperately need? Right.

51:28Michael Manapat:Yeah. I'm very interested in like the actual impact of AI on the battlefield. There's, there's some way, I mean, people were sort of joking about like run me a deep research report on Nicholas Maduro or whatever, but like truthfully, like I don't know. I've never been to war. I don't know exactly what's entailed, But you can imagine AI being useful, but it's sort of abstract. Like, we're certainly not at the point where, like, these systems need a lot of data. I don't know. It's very unclear to me exactly how impactful, you know, slight jumps in frontier model capabilities are in the Department of War, DOD, like right now.

52:15Michael Manapat:But it has Calamaze thinking it's not a bubble because.

52:20Matthew Harpe:Yeah, that's what I'm saying. This is like the most possible dramatic and overly dramatic. We need it. Sort of take on what I think is a political story.

52:32Michael Manapat:I don't know this defense analyses research corporation. Hegseth 10 minutes after Dario leaves his office. And that's Truman. This is Truman from Oppenheimer. Oppenheimer. What is this saying?

52:44Doug O'Laughlin:The scene is Oppenheimer goes into the office. He's like, I think he's saying like, oh, we got to be like really safe with these bombs. And then he leaves. Then Truman's like, I dropped the bomb. Oppenheimer is not like he's taking credit. Like I'm the one that decides.

52:58Michael Manapat:Oh, yeah, that's right.

53:00Doug O'Laughlin:Hexeth is like, I use Claude.

53:01Michael Manapat:I use Claude. I use War Claude. Well, it's wartime. And we'll see how Daria performs as a wartime CEO as he goes to war with the Department of War, apparently.

53:11Matthew Harpe:Edward said, anthropic antagonizing the Department of War, the open source community, the entire media industry, the general population, other developers, other labs, foreign governments, and nearly every single person on Earth. What is the plan here? Sell clod subscriptions to aliens?

53:27Michael Manapat:Edward is, it ain't easy having principles. The plan is to save the world, says Tenebrous, unfortunately, as has been shown repeated throughout history. History, the world doesn't want to be saved, so we're getting war-clawed. I like this graphic. Is this Warhammer? Yeah, Warhammer 40K right here. I've never been a Warhammer guy.

53:48Matthew Harpe:There was another story in Bloomberg that hackers used Claude to steal 150 gigabytes of Mexican government data. That's crazy. They told Claude they were doing a bug bounty. Claude initially refused. A hacker just kept asking. Claude helps and manages to successfully steal some documents. Apparently, it's four state governments, 195 million taxpayer records, voter records, government credentials.

54:25Michael Manapat:Has the Mexican government commented on this? Like, what does the hacker breach Mexico's federal tax authority and the National Electoral Institute? Claude initially warned the unknown user of malicious intent during their conversation. Anthropic investigated the claims, disrupted the activity, and banned the accounts involved. The company feeds examples of malicious activity back into Claude to learn from it. In this instance, the hacker was able to continuously probe Claude until he was able to jailbreak it. I was listening to someone talk about, like, I, like, like, like, like, like, like, like, like, like, to jailbreak has generated me like tens of thousands of dollars in profit.

55:06Michael Manapat:It was kind of like a hustle, like a mindset guy. And I was just laughing because it's like, whatever you're doing after you jailbreak it is probably not good. And so you should probably stop. But he was talking about like, I can sell so many more courses now that I've jailbroken Chad GPT or whatever.

55:25Matthew Harpe:Duran says not to worry. They'll hit usage limits before anything bad can happen.

55:30Michael Manapat:this is there's there's so much more anthropic news in here wow did less wrong ever predict that the first big challenge to alignment would be the u.s government puts a gun to your head and tells you to turn off alignment um yes that has to have been considered on less wrong absolutely

55:44Doug O'Laughlin:like that this was number one right no number uh i don't i don't know i don't think so this was like

55:50Michael Manapat:i don't know this was very early of just like what if they tell you to turn off the systems this has been my take for a long time it's just like like we live in a democracy if ai becomes deeply unpopular, like you can vote to just turn off AI like we did with nuclear power

56:03Doug O'Laughlin:points. No, no, but this person is saying turn off just the alignment part. Turn off AI.

56:07Michael Manapat:Okay.

56:08Doug O'Laughlin:Like unalign the model, but keep the model.

56:10Michael Manapat:Yeah, yeah, yeah, yeah. Yeah. Crazy, crazy stuff. Do you want to go through any of Dean Ball's posts? He's been doing a whole breakdown. We should have him on the show and have him break it down for us because there's so much more context here. And he's been doing a great job analyzing the whole situation. Yeah, we can jump forward. Quickly, let me tell you about Fin.ai, the number one AI agent for customer service. If you want AI to handle your customer support, go to Fin.ai. And I'm also going to tell you about Turbo Puffer, serverless vector and full-text search, built from first principles and object storage, fast 10x cheaper and extremely scalable.

56:44Matthew Harpe:Dylan says, if these clankers don't get their act together, they're going to be replaced by humans. Six months tops.

56:51Michael Manapat:That is true.

56:54Matthew Harpe:This was interesting. Rob Wiblin had a guest on his podcast, the 80 ,000 Hours podcast. And the guest is talking that saying, if every AI lab is working to make their AI helpful, harmless, or every AI lab is working to make their AI helpful, harmless, and honest, the guest thinks this is a complete wrong turn and aligning AI to human values is actively dangerous. and Joshua Botch says today a nominative determinism because the guest's name is Max Harms

57:34Michael Manapat:Max Harms I feel like with that name maybe you gotta go with Maxwell or something I don't know

57:40Matthew Harpe:well yeah Max really hit the global lexicon this year in a big way so maybe he'll adjust but I want to listen to the show now

57:49Michael Manapat:okay Okay. Let's see. So, Shiel Monat last, yesterday, said, who is buying PayPal? Because PayPal has been trading down precipitously, but then jumped up 9%. He said, it has the potential of being one of the greatest distressed value opportunities in fintech history, down 85%. It's still generating$5.5 billion in free cash flow, has 400 million customer accounts with bank info, checkout buttons on millions of merchant sites, and a peer-to-peer brand with Venmo. They have lots of desirable assets for Stripe, consumer-facing checkout, bank account details for hundreds of millions of consumers, a brand in Venmo, or Apple, a good complement to Apple Pay for e-commerce penetration, since they never got social payments working, would get Apple back in BNPL.

58:40Michael Manapat:and at 12.03 Pacific time,

58:44Matthew Harpe:it's so crazy that he's saying Apple never got social payments going. Why? Because this just would have seemed like a slam dunk saying you have the iMessage network, you have the iPhone network. I would say 90 % of the time, if I'm sending like a Venmo style payment to somebody, they have an iPhone. and yet it doesn't feel like Apple Pay. I just don't use Apple Pay hardly ever.

59:13Michael Manapat:Can't I just send you a dollar right now?

59:16Matthew Harpe:Yeah, that's what I'm saying. It's so, so easy. And yet Venmo has still done quite well.

59:22Michael Manapat:I just sent you a dollar. Did you get it? Let's see.

59:26Matthew Harpe:Apple Cash.

59:27Michael Manapat:It's coming in.

59:28Matthew Harpe:I got it. You got it. Thank you, John.

59:31Michael Manapat:Yeah, no problem. Thank you. That was a remarkably easy workflow. I am shocked that that hasn't taken...

59:39Matthew Harpe:John, do you got a dollar?

59:40Michael Manapat:Do you got a dollar? Actually, no. I gave my last dollar. Oh, that's what I thought. That's what I thought. Still needs some work. Getting better. Okay, let's see it. Let's see it. Can you do it? Oh, no. Disaster. No, no, no. Bodged.

59:53Matthew Harpe:Disaster.

59:54Michael Manapat:And so the news, of course, is that payment processor Stripe expresses interest in... Stripe. which would be very, very exciting. And I could see this being very good for them to combine. I don't know. I haven't dug in too deeply, but it feels very bullish. Great leadership team at Stripe. Founders that have been working so closely in the business, business community, startup community, tech community, understand the future, understand AI.

1:00:23Matthew Harpe:Yeah, the question is, would there be much pushback on the antitrust side, right? These are two online payments processors. There could be some, I know a number of groups online would be concerned around like just concentration specifically because you can imagine if PayPal were to be owned by Stripe, that's one, if you get, you know, there's people that get effectively like debanked from one payment processor. And there's something there.

1:00:54Michael Manapat:Also, I mean, just the size of the ticket is pretty high. $40 billion market cap for PayPal right now. Stripe, of course, is at a 159 now, so not an insignificant portion of their market cap. And it's not like, I mean, Stripe's doing fantastically, obviously, but I would be surprised if they had$40 billion of cash laying around. And as we've seen with the Netflix, Paramount, Warner Brothers debate, the nature of the deal does matter to shareholders. Even more complex when you're getting stock in a private company and you're a public investor.

1:01:26Matthew Harpe:PayPal's generating$5.5 billion of free cash flow. So that could finance the debt. Combining it with Stripe would easily be able to finance the debt.

1:01:33Michael Manapat:Yes, but there's still financing risk.

1:01:35Matthew Harpe:Especially because every lender would be looking at execution of Stripe and just think, okay, we're going to get our money back.

1:01:44Michael Manapat:I'm just thinking, like, if you're a PayPal shareholder right now and you're looking at the stock that's down 85 % with$5 billion in free cash flow,$400 million consumer accounts, there's a really, really good chance that you're like, I think this thing's going to double in the next year. Like, I think that the market overreacted, the strength is going to be revealed, the network effect is going to be processed by the, by the digested by the market, and we're going to wind up being an AI winner. And so maybe that's right, maybe that's wrong. Maybe not every shareholder, you know, feels that way.

1:02:15Michael Manapat:But it's certainly possible that there's plenty of shareholders that are like, yeah, I invested an$80 billion valuation. It's at 40 now. I think it's going to come back. I don't want to take this massive haircut right now just because the stock's down. And so actually getting that deal done, what would the premium need to be? What would the structure of that need to be? Would they go for a high-debt buyout? Really quickly, let me tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds, online, in-store, on mobile, on social, on marketplaces, and now with AI agents.

1:02:47Michael Manapat:Perplexity Computer. Computer. Computer. Computer. Launch a new app. Launch a new app. Perplexity Computer Vibreel. What is Perplexity Computer? Let's pull up this video. Perplexity, the official account says, Perplexity Computer. Computer unifies every current AI capability into one system. It can research, design, code, deploy, and manage any project end-to-end. Okay. Hmm. So it should be able to get a soundboard app in the App Store, right? Manage any project, code, deploy, design, research. It should be able to do that from start to finish. One prompt, soundboard in the app store using the TBPN sound effects, which are available online, which we have up there.

1:03:36Michael Manapat:This is a good benchmark. Let's give it a try. And you can give it a try at Perplexity. Go check it out. Anyway, Citrini. People are still talking about Citrini. Vibe laundering on Citrini Research. Wait.

1:03:48Matthew Harpe:Before we go on. What? uh very curious i'm just very curious to see how this does it feels like the uh again going from consumer llms to a net new product that is uh objectively uh just as competitive and uh We'll see. We'll see. Okay. Anyways, a lot of this stuff, it's way too early, but seemingly shifting focus away from the browser.

1:04:25Michael Manapat:Well, Annie is taking some shots at Cetrini here, it looks like. Do you know Cetrini has a business entity fund that went from one investor to five in the weeks before publishing his speculative fiction on AI damning the economy in June 2028, and that they're invested in long AI via humanoid-type robots? I wrote about it. Interesting. People are really digging into the Cetrini thing. I think the Wall Street Journal did have some good coverage. Is there anything else? If Trump mentions Cetrini at the State of the Union. Oh my God, Rachel, this is a wild post. A gorzillionaire. I'm going to be a gorzillionaire.

1:05:02Michael Manapat:Is this AI written? Clearly not. I love the level of typos here. If Trump mentions Cetrini at the State of the Union, I'm going to be a gorzillionaire. And Cetrini is wrong. The market will be sky high in 2028. You can imagine Trump saying that. That'd be very funny. And Citadel Securities just republished it, or did they just use the same term? Are they referencing the 2028 global intelligence crisis? Because they published a macro strategy note called the 2026 global intelligence crisis.

1:05:38Matthew Harpe:Yeah, they're taking it in a different direction, it looks like. They say, in spite of current displacement narrative, job posting for software engineers are rising rapidly up 11 % year over year. Let's go.

1:05:53Michael Manapat:Jevin's paradox. The software engineers become more productive. You want more of them. Every company needs a software engineer. Do most podcasts have a software engineer on staff? Probably not. They do now, thanks to Tyler Cosgrove.

1:06:07Matthew Harpe:And in some way, the cost of an entry-level software engineer could fall dramatically to making more businesses. Just because suddenly someone can be very effective, even if they haven't even done an internship yet. They're just good at using the tools. Kathy Wood, we didn't cover this yet. She put Citrini's AI thought piece in quotes.

1:06:30Michael Manapat:Kathy Wood clapped back at Citrini.

1:06:32Matthew Harpe:Well, it's funny because Kathy is like the perma bull and Satrini was bear posting, obviously. Yes. And so she's obviously going to be quite frustrated with any sort of bearish narratives. She says, ARK Invest is forecasting that AI will cause an explosion in entrepreneurial activity, a productivity boom, an acceleration in real GDP growth, and much lower than expected inflation. Short-term dislocations and frustration should give way to great opportunities if individuals harness powerful AI tools to solve problems and create new markets. This tracks with what the Collison brothers were saying yesterday.

1:07:08Matthew Harpe:They're just seeing, like, explosion of new company creation. They have the visibility into that through Atlas. They're doing, I think it was a quarter of all new C corps in the U.S. are going through Stripe Atlas, which is just absolutely insane. starting an incorporation tool, which is theoretically a commodity, right? Any lawyer can spin up an entity. You could do it with LegalZoom forever. There's a bunch of other platforms. Did you ever use Clerky? Clerky? That was almost like a YC incubation.

1:07:39Michael Manapat:Yeah.

1:07:40Matthew Harpe:The problem, the reason that Atlas fits so well into Stripe is it is the perfect wedge into payments because you created a company. Now you need to be able to accept money. So it makes sense for them to own and operate, but these businesses have not, like a standalone, it's hard to, you can't build a venture business off of just incorporation.

1:08:00Michael Manapat:I wouldn't be surprised if you broke out the software R &D that went into Atlas and looked at the profits from Atlas, that that as a core business is actually not that great of a business. But the product is fantastic because they're able to pull an amazing design language off the shelf, an amazing front end UI kit off the shelf, all of the distribution and servers and infrastructure off the shelf because they have that. And then they're able to invest a ton in actually developing the product. And if it monetizes mediocrely, it doesn't matter because they're going to monetize along your 50-year journey running that company or whatever.

1:08:43Michael Manapat:So it really is a beautiful synergy with that product. I'm a big fan.

1:08:48Matthew Harpe:Best sellers on Substack for finance are all doomers. We got to do TBBF for doomers. And of course, Satrini is not entirely... This is so obvious. No, no, this is...

1:08:56Michael Manapat:Yeah, this is... We need to truth zone this a little bit. A doomer. He's not a doomer. There's plenty of bullish posts. Very AI bull, but definitely shot to the top of virality and top of the charts on the back of doom. And this is true. I live this on YouTube. You put a negative title up and you just get 10 times more views, but they're lower quality and so you got to balance all that out. It's really hard to go viral with something like, everything's fine, everything's going well, don't worry, don't click this because you're scared, click this because everything's kind of the same as it always has been and you're going to be fine and stuff's cool, but it's not really going to change that much, it's going to be pretty incremental, like that is not getting clicks, you need to be telling a tall tale.

1:09:43Michael Manapat:You need to be spinning a yarn. It's a bull market in yarn spinning, folks. Get ready. Get out the yarn and start spinning. Also, get out Cognition. They're the makers of Devin, the AI software engineer. Crush your backlog with your personal AI engineering team. So it's news from Stephen Schwartz. Get the gong ready. Get the gong. Okay. Hit me. Tell me.

1:10:06Matthew Harpe:Stephen over at WAP says, we're excited to announce that Tether, the largest stablecoin company in the world is making a strategic investment of 200 million into WAP, valuing us$6 billion. Our partnership with Tether marks a major step in building the world's largest internet market. Tether is committed to enabling everyone in the world to participate in the new internet economy. The way humans work and create value is changing fast. The world needs both an open internet market, giving people a platform to conduct business as well as a transparent payments network. Tether and WAP together will work to bring a sustainable income to billions of people throughout the world.

1:10:41Matthew Harpe:There's enormous opportunity when you combine Tether's global scale and wallet technology with WAP's community of next-gen entrepreneurs. Yeah, it makes a ton of sense. I think WAP is, I'm sure, has been historically challenged in terms of dealing with chargebacks, right? If somebody joins and buys a digital product, doesn't have a great experience, Maybe they're going to the card issuer and saying, like, hey, I take it back. Or maybe they feel misled in some way. So stablecoins do solve for that.

1:11:17Michael Manapat:Also just paying a lot of people all over the world.

1:11:20Matthew Harpe:Yeah.

1:11:21Michael Manapat:Like, it's very clear that the WAP community is global.

1:11:24Matthew Harpe:Fast, cheap, global.

1:11:25Michael Manapat:Exactly. And so, yeah, fast, cheap, global. The first time I ever used stablecoins was to pay an international consultant or contractor. and you can imagine this being really, really good news for them. So congrats to Stephen over at WAP. OpenAI and XAI, there's news on the court decision. OpenAI Newsroom says this baseless lawsuit was never anything more than another front in Mr. Musk's ongoing campaign of harassment. The order granting motion to dismiss with leave to amend. Now, this is not the main case. This is a separate case, correct?

1:12:06Matthew Harpe:Yeah, this was a trade secrets lawsuit that Musk went with after, I believe, somebody from XAI joined OpenAI. Got it. And then the judge apparently didn't find anything at all. Yeah. And again, it was just part of this kind of lawfare that has been happening for quite a while now.

1:12:30Michael Manapat:You printed out 500 ,000 pages of model weights, and the printer ain't stacking it up. No, just kidding. Nobody did that.

1:12:40Matthew Harpe:Mike Isaac is saying what we're all thinking. Ready for this to be over. PBH talking about the Warner Brothers, Discovery, Netflix.

1:12:50Michael Manapat:It's in the paper every single day. Every single day. Paramount increases Warner bid. We get it. You guys want to acquire this company. Just make a decision. Make a call and then call us when it's done and then start putting out some good content because I'm ready for the next Superman. I'm ready for the next Batman, the next Dark Knight, the next Joker film, something like that. Let me tell you about LabelBox, RL environments, voice, robotics, evals, and expert human data. LabelBox is the data factory behind the world's leading teams, AI teams. And we have Max Meyer from ArenaMag in the Restream Waiting Room.

1:13:25Michael Manapat:Let's bring him in to give you good Ultra Dome. How are you doing, Max? Hey, guys. How are you? I'm great. Where do you think Warner Brothers should land? Are you on Netflix? With Arena. Oh, is there going to be a dark horse bidder? Yeah. Tell us.

1:13:39Adam Warmoth:I can't comment on any possible bids by the Intergalactic Media Corporation of America. I'd love to see it. But hey, maybe Paramount should look at other assets in the media space. You never know.

1:13:56Michael Manapat:Yeah. I could imagine a DC Comics Arena magazine crossover episode, Batman, Superman. I believe James Bond is with Amazon now, but tell me about the latest edition of Arena magazine. Because it's spy, correct?

1:14:16Adam Warmoth:Yeah. So from the very beginning, we decided to give the issues three digits each, just to account for centuries worth of quarterly magazine space. So issue 001, 002. And so it happened that our seventh issue is issue 007. And so I didn't think we could fill it all with espionage, so we sort of added space as a secondary theme. As it turns out, much of the space espionage. Space espionage, yeah. It's like Arena Magazine, space opera, espionage, satellites, radars. So much of the intelligence collection these days is actually being done from orbit and not using sort of the traditional human-to-human methods.

1:15:08Adam Warmoth:And it turned out really well.

1:15:10Michael Manapat:What's your favorite spy story, real or fictional? Oh, gosh.

1:15:16Adam Warmoth:Some of the stuff that the Israeli Mossad was doing in the 60s and 70s is pretty crazy. I mean, Eichmann, who was a Nazi war criminal, was living in Argentina after World War II. His son went on a date with someone who was like, is this Adolf Eichmann? And turns him into the Mossad. They go to Argentina. They kidnap him, dress him up as a flight attendant, drug him, put him on a plane to Jerusalem, and then put him on trial. Some of that stuff from the 60s and 70s is like the most daring intelligence operations. The Bin Laden raid is like... I've always been a fan of the Stuxnet story.

1:16:01Michael Manapat:I always thought that was so interesting in the modern technology world of dropping... I think they dropped USB sticks with a virus in the parking lot. Someone picked them up out of curiosity, plugged it in, and that jumped the air gap network because the computers inside the facility were not connected to the internet, so there was no way to hack them remotely, so you had to just get someone to accidentally plug in the wrong USB stick.

1:16:28Adam Warmoth:I mean, Hezbollah was purchasing explosive-laden pagers just because they thought they were getting a great discount from this Hungarian company.

1:16:40Michael Manapat:So, yeah, what's the intersection with ArenaMag's usual topics of conversation. Are there American defense tech companies that are highlighted? Like where else did you go on this?

1:16:54Adam Warmoth:So one of the stories, and we're going to put this out probably like 10 days from now, super cool company called Umbra down in Santa Barbara. They build synthetic aperture radars, which is actually part of what I did in school for geophysics and whatnot. Basically, these are incredibly sophisticated radars on satellites that can image the whole Earth day and night, 24 hours a day. They can see through clouds. And the resolutions are getting smaller and smaller. And so we always have American startups, American companies in the magazine. We've got a good amount of essay and historical content as well.

1:17:34Adam Warmoth:And I think that espionage sort of secrets, spying is a topic that serves both pretty well.

1:17:42Matthew Harpe:What kind of resolution are we talking about? Like would Umbra or a competitor be able to tell me like how many fingers I'm holding up on a given day if I just help it?

1:17:51Adam Warmoth:It's not that low. I think their record is 16 centimeters, just like this. The way that I described it is they released a few years ago a photo of the old Dole pineapple plantation in Hawaii. And at 25-centimeter resolution, you can see individual pineapple plants. Certain smaller pineapples would be too small to see with that radar or whatnot.

1:18:20Michael Manapat:Yeah, so you're seeing cars, not license plates.

1:18:23Adam Warmoth:Yeah, yeah, yeah. And there wouldn't be anything about a license plate that would reflect a radar or whatnot. Really, you're looking to resolve objects. Penguins, that's a good one. You can see, very difficult to stay on an ice shelf and count penguins, but we're very interested in what penguins do.

1:18:43Matthew Harpe:There's this get-so penguin out there that's like, I know that I'm being tracked. I know I'm being tracked. I can't prove it, but I know.

1:18:52Adam Warmoth:Yes, the Herzog penguin could be tracked by radar these days. But, you know, the resolutions have gotten so good over the course of the last decade that there are all sorts of things that you can do today. Most of them will probably never know about because the people doing it are the Central Intelligence Agency, National Geospatial Intelligence, and the Army. But yeah, there's all sorts of crazy stuff in space these days, and whether it's radars, extremely complex cameras, listening devices, there's a lot of interest, and so many of them are secret. Are you bullish on data centers in space? I don't have a strong opinion about it.

1:19:42Adam Warmoth:I think it's possible that you have to put some stuff up there because of politics in a country like the US. But if you think about it, there's not a big difference between trying to send them to space or just places where there aren't local politicians who can stop it. Space doesn't have a city council. Anywhere where there's a city council is going to be a risk.

1:20:09Michael Manapat:Yeah, yeah. We talked to a company called Panthalossa that is doing tidal energy harvesting. So it's like basically the size of a container ship or a cruise ship, but turned vertically in the ocean. And then as it goes around Antarctica and as the tides bob, it uses that to generate electricity, which then can be used for anything. But Bitcoin mining was the big topic du jour years ago. Now it's AI inference. And there's a lot of other places where I think there might be stranded energy that might be easier to maintain, still very difficult, but available and probably less regulated. Yeah.

1:20:54Adam Warmoth:The Dutch were very interested years ago in these, like, using the motion of the tides. It's sort of always just an alternative to the thing that is cheap and always works, which is firing up new natural gas plants. But when you have, like, political equations to solve local politicians, subsidies, then there are going to be all these crazy things. The benefit for a company like that may very well be that, again, there's no one to come and protest you while you're sailing around Antarctica. Whereas you try to build a data center in New Jersey, and all hell breaks loose. So you have to really go to the ends of the earth.

1:21:36Michael Manapat:We were debating this and sort of going back and forth on the New Jersey protests combined with Trump's comments at the State of the Union about companies being, he didn't even say mandated. He, of course, sort of like invited to build their own power plants. And so I'm interested to hear your take on how well do you think that will be received? Because a lot of the protesters might say, well, I didn't want a data center, but I definitely don't want a data center plus a natural gas plant. So this actually makes me worse off. But then there are some people that might say, hey, if you're going to do solar and, you know, something wind, that actually offsets my concern, which was that energy prices would rise in my town.

1:22:22Adam Warmoth:Yeah, yeah. I mean, I don't remember whether it was Microsoft or Amazon, but one of the two has sort of proposed taking over Three Mile Island, the old nuclear plant. I don't think it's a coincidence that crazy activists will show up to protest both data centers and nuclear power plants. And so to them, there's sort of nothing worse than generating more energy and then using it for some sort of grand industrial purpose. I understand the political economy of people being worried about the data center demand influencing prices, but it's not actually true. And you just have to look at the map of California versus Virginia.

1:23:03Adam Warmoth:Virginia is the data center capital of the United States, basically. And it has utility prices that are more or less in line with where you would want to be. Californians have gone up massively over the past few years. And it doesn't take long to investigate why. It's because they're shutting down nuclear. It's because they're making it difficult to do cheap energy. Lowering prices across the board, affordability, you really can't achieve it by just letting markets work. almost all of the so-called affordability options are, in fact, going to increase prices, especially when politicians are the ones coming up with, this is how we're going to make energy more affordable by forcing all of these new rules or whatnot.

1:23:51Adam Warmoth:No, it's not going to work. When you have this massive industrial thing that's taking place, if it can create a massive supply boost, then who's going to benefit from that glut? It's going to be all of the consumers who also want to use natural gas power or whatnot. And there's all this increased supply.

1:24:10Michael Manapat:How are you thinking about ArenaMag and the balance between contributors, full-time writers, researchers? How are you designing the shape of the newsroom?

1:24:24Adam Warmoth:Okay, so the latest one is the biggest issue ever. It's 128 pages. We used over 10 ,000 pounds of paper in printing it. You know, we have great contributors. We want people to send us more. I would say, you know, at the beginning, we had to go and sort of hunt down every single article that we wanted. We're very lucky to get a lot more submissions these days. But the truth is, is that, you know, we have a lot of readers who actually, like, read the articles in print and don't want to get spammed, you know, 10 or 12 times a day with new articles. Sure. And so Arena is like a high-end media business where people pay us to leave them alone in a certain way, where they love the quarterly magazine.

1:25:09Adam Warmoth:They actually keep it. It looks great on a coffee table. People keep it for their offices. And we're working on some other sort of high-end printed products that have a mix of contributors, so to speak, and other ways to put things together. I don't think it's going to be a 100-person newsroom.

1:25:32Michael Manapat:Yeah. Leather-bound Grokipedia.

1:25:35Adam Warmoth:How about that? Yeah. I thought I ran the numbers. And depending on the type size, I think there's some way where you could publish the Bitcoin ledger as like a law code or whatnot. Really cool. It would fill like an entire wall. But actually, I'll tease something. We're going to be announcing the very first Arena Books coffee table book over the course of the next few weeks. There we go. I just got the first box of them on a plane from Europe, printed on Italian paper, bound to be very nice. I love it. it's going to be unlike anything that people have ever seen, I think. And hopefully, you know, look great on coffee table books in the innovation world.

1:26:27Matthew Harpe:Or coffee table books. You'll be on the top of the stack.

1:26:30Adam Warmoth:You could stack them, yes.

1:26:34Michael Manapat:Yeah, so. Well, congratulations. Do you have anything else?

1:26:38Matthew Harpe:I did want, if you have 60 more seconds, to get your take on how you think AI impacts original reporting and storytelling. Because in my view, it's potentially great for an ArenaMag because there's so many more contributors that'll think, hey, I have this thing that I want to talk about. I don't really have an outlet or a platform myself, or maybe I do, but I want to share it in print. and I can produce a great story in a much less time, even if it's like, you know, hopefully heavily written by themselves. And we've talked with other, like plenty of other folks where I think that even in, it feels like today an AI, no matter how good the voice agent is, if an AI calls you and you don't know who the person is and they're just kind of trying to mine you for information, there's not going to be a lot of information flow, which means that I think that great journalists and storytellers will have great jobs long, long into the future.

1:27:42Matthew Harpe:But how are you thinking about it?

1:27:44Adam Warmoth:I long for the day when the AIs are actually a better writer than I am, but it hasn't happened yet. I'm honored to be scraped by the AIs so that my voice will live on. I'm a super user of all of these platforms for automating all of the stuff that makes the enterprise difficult to do, which is sometimes dealing with complicated workflows and research and whatnot. I think that there is something around certain sort of like newswire style things that could be automated super effectively, where if you have like a newsroom of people where there's like even like 20-minute delays or whatnot, that could be improved by immediate algorithmic stuff.

1:28:32Adam Warmoth:But I think that as the amount of low-quality content on the internet goes up, people are going to look for things that they trust. And it doesn't necessarily mean print. For us, print is like a very good place of trust, where the fact that we're actually taking several weeks in a giant factory with a bunch of paper to double, triple check everything, it's a level of care that goes into it that reminds people that things can be done by humans in this really dazzling way. And of course, there's tons of Claude Co-work and other stuff going on beneath the surface, but we wouldn't want to let that touch the writing if people are going to be paying for it.

1:29:16Adam Warmoth:They should be able to get that stuff for free on the internet and pay for high quality stuff. Yeah, but at the same time, I feel like the value,

1:29:25Matthew Harpe:what you're saying in some ways, the value of an editor goes up a lot because there's infinite content and an editor is deciding, in this case with Arena, what actually makes it to print.

1:29:37Adam Warmoth:Yeah, yeah, yeah. I mean, a bunch of us at Arena, we're all editors at the Stamper Review. And so it's like you learn how to, editing is definitely a skill in itself, and being able to point out why someone else's writing is bad, then you can point out how your own writing is bad, and that's how you actually get good. I would say one of the theses around wanting people to contribute to Arena and compiling these issues is that while it's a great thing that anyone can just sort of post out there, there's a reason why the legacy institutions that have super high professional standards are extremely effective.

1:30:14Adam Warmoth:Like people, Bloomberg, Wall Street Journal, New York Times, even the ones that people dislike for ideological reasons, like they have a seriousness to them that makes their messaging super effective. And a lot of that is because they're extremely effective editors. I will say, Arena probably invests slightly less in copy editing compared to some other institutions. I think it's a sign of life that we occasionally find typos in the print magazine. But we spend an inordinate amount of time actually editing to make it good. When people pay you for something, you know, there's an old joke. Boris Johnson, the former prime minister of the United Kingdom, used to be a news editor.

1:30:56Adam Warmoth:And he would apparently tell his staff when something was bad, you know, the readers pay us. We don't pay them. And so when the readers are paying us, it's got to be good. And there's a lot of stuff that is like assisted by AI or where the research has been helped with it. Transcript editing is like a super helpful one now. And like I can walk into like a company with my iPad and record five hours of interviews. And both Claude and Grok are now very good at taking all of those and doing sort of very light style edits or fixing the sort of verbal pauses or whatnot, which would previously take me like many, many hours to do.

1:31:38Adam Warmoth:So that's an example of my job's a lot easier, but people are paying us for a high-quality product. And so we want to make it as good as possible, both in the writing and especially in the art as well. We love our non-reading customers. There are a lot of people who love Arena who haven't read a single article. That's the coffee table. They can't read a speech. That's exactly right.

1:32:04Matthew Harpe:With Arena, you can just look at the pictures.

1:32:07Michael Manapat:Well, you can find it at arenamag.com. You can subscribe to the print edition for$99 a year. It's an absolute steal. I really think it's a steal.

1:32:17Adam Warmoth:I was telling people the other day, I spent three months in an attic in a Texas summer going through different paper samples, choosing the exact size. I think I nailed it. I love it.

1:32:32Michael Manapat:Well, thank you so much for coming on the show and sharing this with us. We will talk to you soon. Great to see you.

1:32:37Matthew Harpe:I love the vest. The vest is fantastic.

1:32:40Adam Warmoth:Every media man needs a look. I bought 12 sweater vests on eBay earlier this year.

1:32:49Adam Warmoth:And it's working.

1:32:50Michael Manapat:It's working. Well, we'll talk to you soon. Have a good rest of your day. This is Arena. Goodbye. Great to see you, Max. Let me tell you about Cisco. Unlock critical infrastructure for the AI era. Unlock seamless real-time experiences and new value with Cisco. We were talking briefly about Warner Brothers. The Kalshi market is mooning on Paramount. The Paramount and Netflix have been going back and forth. Paramount's now at 61 % chance that they will be the one to successfully take over. Warner Brothers, Netflix, previously up at 70 % back in December when we started talking about this. Now they're down at 30%.

1:33:29The Ellison's are doing the Ellison thing.

1:33:32Michael Manapat:It ain't over till it's over. Let me tell you about Console. Console builds AI agents that automate 70 % of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. And without further ado, we'll bring in Ben Lair of Lair About Ventures. He's the managing partner there. And he's returning to the show. We had you on a couple weeks ago, I feel like. A couple months. It's been months?

1:33:59Matthew Harpe:No. When was it? End of last year?

1:34:01Michael Manapat:Let's say like six weeks.

1:34:02Matthew Harpe:This is much more legit.

1:34:04Maxwell Meyer:It is great to have you here in person.

1:34:06Matthew Harpe:It's a real place, not AI.

1:34:08Michael Manapat:How long are you in town for?

1:34:09Maxwell Meyer:For the week, although I was supposed to be here three days ago. Oh, snow? It's up front.

1:34:14Michael Manapat:Did you get snowed in?

1:34:15Maxwell Meyer:I got snowed in. Really? Flights actually canceled? Six flights canceled? Five flights canceled? I was fortunately not at the airport.

1:34:21Michael Manapat:Maybe I don't travel that much, but I actually think I've never been in that situation.

1:34:24Matthew Harpe:That's the charter gods telling you. It's time now.

1:34:30Michael Manapat:Thank you, please. Okay, Gulfstream salesman. Gulfstream salesman over there. Seriously.

1:34:37Matthew Harpe:But, yeah. Yeah, I ran into somebody at coffee this morning, and they told me it was up front. It's up front.

1:34:44Maxwell Meyer:Everyone on the plane was going up front last night. Yeah. It's a big event. It's a big event. They do a great job. It really is a – it's one of the few times when you can go out and see everyone who works – not quite everyone, but the majority of people that I would consider colleagues in one room for a day. It's actually really –

1:35:00Michael Manapat:Is there cross-pollination outside of technology with other industries? I know Upfront in the past has brought Hollywood, LA folks, but there's other conferences where it's more like Hill and Valley, right? So they bring the politicians out. A little bit of that.

1:35:16Maxwell Meyer:I mean, I think they do play the LA card pretty hard, and Upfront's brand as a fund is very sort of LA-centric. The event, they definitely take advantage of the fact that there's that kind of talent out here. I don't think a lot of speakers are flying in other than people from the venture world.

1:35:30Matthew Harpe:Yeah, yeah. The tension between Hollywood and the people funding AI, I can see that being interesting.

1:35:40Maxwell Meyer:Yeah, you know, we're actually in a company that's building a sort of AI-first movie studio called Staircase. And what they are doing is trying to use Hollywood talent. So they're using, like, SAG talent, real actors, real voices, but then enhancing it with AI. and they're getting a little bit of pull out here in a good way. Whereas I think if you're not willing to use Hollywood talent and pay Hollywood talent through the unions, you run directly into a wall. And by the way, this is not going to end well if Hollywood doesn't get with it. I mean, at some point it's just going to get steamrolled.

1:36:18Maxwell Meyer:There are going to be, you know, look at like A24 bringing in Scott Bell.

1:36:21Matthew Harpe:Yeah, I just looked at it as when I, living in in LA for the last eight years or so I've met so many directors and producers that are that that were kind of frustrated with the lifestyle of okay I have this job that I love doing but then multiple times a year I got to fly to the Middle East and just be posted up in a foreign country away from my life and and and there's some element of that that I think is kind of like core to the movie industry. It's like, you know, I think there's some, probably will always be nostalgia around it. But we were talking probably a couple weeks ago at this point, if you're an actor and you get the, and you lean into AI, you can potentially get a lot of the benefit while kind of compressing your actual like time doing the work down by quite a lot, right?

1:37:15Matthew Harpe:Because it's like, hey, come in. I don't know exactly what Staircase's workflow looks like, but I can imagine we get to the point where there's like certain scenes that are done like legit, the old fashioned way. And then there's certain scenes where it's like, yeah, we're just going to use it.

1:37:30Maxwell Meyer:For staircase, none are done the old fashioned way. So everything is.

1:37:34Matthew Harpe:Do they do like a capture process?

1:37:36Maxwell Meyer:They do a capture process, but never always against a green screen. So never against, or not, I don't know if it's against a green screen or just against, against no screen, but with tracking movements and whatever that would be. but they're not ever going and shooting out in the wild. And the technology is changing so quickly that what they can create today relative to what they could do six months ago is magnitudinally different. And if you just continue on this curve, at some point pretty soon, it's going to be ridiculous to think that you're going to go to the Middle East.

1:38:07Matthew Harpe:Yeah, Matthew McConaughey has had some good leadership around this, basically just being like, hey, we have to embrace it. It's coming. It's just too efficient. It's too productive. the idea of like, hey, we need to shoot. We have like a three minutes total that's in this setting. We're going to bring 100 people out there and spend weeks doing this thing that could be made, you know, in not one prompt, but made in a series of prompts and with a lot of editing.

1:38:34Maxwell Meyer:Well, and there's an insatiable appetite for just like more content. I mean, you guys were just talking about the, you know, the Netflix or Paramount setup. and all these platforms just want more and more and more and better and better and better. It seems like there's no limit to the amount of content that people want.

1:38:54Matthew Harpe:Yeah, the average user, how many times have you opened a streaming platform and just been like, I don't like any of this stuff?

1:39:03Maxwell Meyer:Which is amazing because there's so much more content created today than ever before. And still, I flew out here yesterday, I turned on my Netflix, and I'm watching a show from like 11 years ago.

1:39:11Matthew Harpe:It's ridiculous. Jordy, you watched the movie last night, right? John was making a joke about the movie Borat, which I loved as a kid.

1:39:20Maxwell Meyer:By the way, which you should still love. Yeah, it's a fantastic movie.

1:39:23Matthew Harpe:But I went on Amazon and I bought it because I was like, I should own this. It's a cult classic at this point. And it was not as funny as I remembered it when I was 12, which was painful to me. But I'm curious on, you know, talking generally maybe or about Staircase. Right now, a movie studio will allocate, let's say,$50 million to make a movie. Yep. How do you think that number changes over time? Because in my head, I think eventually it could be five people. You know, you have like writers, you have like whatever the new, you know, director's role probably stays somewhat similar. And then you're pulling another talent for audio and video and all these different things.

1:40:11Matthew Harpe:But how low? And the reason I don't think that's a bad thing is there's so much demand for content that theoretically that$50 million budget would still exist or maybe even increase, but it would just be spread across.

1:40:24Maxwell Meyer:But this is the question, not for only Hollywood, but for everything, which is like, will, you know, will AI make things bigger or small?

1:40:32Matthew Harpe:Yeah, when you have deflation, does that create more?

1:40:35Maxwell Meyer:Yeah, I mean, it applies to every industry. I think probably with Hollywood, you'll see frontline talent continue to demand huge premiums. So maybe that$50 million budget goes to 30, but Brad Pitt still makes 25 of it.

1:40:48Matthew Harpe:Yeah.

1:40:49Maxwell Meyer:And the rest of it, you can do much less. I don't know if it's fewer people or the same number of people being much more efficient and working at half the time. Like maybe you're doing it more quickly. Maybe you're doing multiple projects at one.

1:41:01Matthew Harpe:I don't really know how it all works. Yeah, the question around the talent side that I'm interested in is it's one thing for Brad Pitt to be like, cool, you're going to make this movie with mostly AI, but I'm still getting my same rate. Otherwise, I'm not going to be a part of this because some other movie studio down the road is happy to pay me what I think I'm worth. And I don't care if it's going to take me way less time. The question is for new talent, the people in L.A. that are working as a waiter and just like, you know, constantly trying to get into the game. What kind of leverage do they still develop?

1:41:33Matthew Harpe:Can they still develop real star power over their career and get pricing power? Or or does that or or does like the the amount of people that can be a star fragment even more? like does there become more of like a because i don't know if how much of a a middle class even exists anymore in in hollywood like specifically on the on the actor side oh sure yeah well i think i have a few thoughts on this one might be that probably there is more of an impetus for talent

1:42:06Maxwell Meyer:to be able to not only get famous through the channels that hollywood provides but to use social media to use those tools, build your own distribution to be able to demand that premium because people think that you can move the market, you can drive sales or you can drive

1:42:25Matthew Harpe:views through your own stardom. People still care, doesn't matter what the movie's about or who the actor is, they care about who that person is outside in the real world too and that influences their experience.

1:42:36Maxwell Meyer:I think that that's going to be a big part of this for that. But also Hollywood is going to move more slowly than just about any other industry. Part of it is the role of the unions and how embedded that is and how like that kind of content gets made. Different than certainly most other industries that don't have that kind of bureaucracy or lock-in. And also, you know, it's an industry that's run by moguls. It's run by old people who are like generally slower moving. It'll be interesting to see. Tycoons. Tycoons.

1:43:08Michael Manapat:How do you think about vertical short form? I saw a crazy video of someone doing a movie screening in a theater, but for vertical video that they made.

1:43:21Maxwell Meyer:That sounds terrible. Which is insane.

1:43:22Michael Manapat:And it was really crazy because they don't really make projector screens that are super vertical. So you're in this massive room. But normally you're in a really wide theater, and then the screen matches the seats. but it was like just off to the side, this like vertical screen, kind of like a TV we have over there. But it does seem like there's a quicker pace of adoption for those like polished, what's that Chinese app that has vertical short form but it's produced? Like the drama? Yeah, the short drama. Real short or something. Real short, real short. And then there's AI versions of that and that feels like more traction now.

1:43:57Michael Manapat:We get a pitch for that category once a week.

1:43:59Maxwell Meyer:You do? For the last year. Okay.

1:44:01Matthew Harpe:I mean, it is. Oh, I get it once a day. Okay. So you have better deal for that. I can't even run somehow.

1:44:06Maxwell Meyer:No, but it is wild how, and by the way, the number of pitches, it's funny, you guys want to talk about media with me, the number of pitches I still get from people like, Ben, you're like a media guy. I'm like, please leave me alone. I'm not a media guy. Everyone's just like, I'm sorry I did this. But there is this moment where, this is also like, live shopping was another category that you saw massive in China, and short form drama, enormous industry in China. And everyone's like, cool, it's going to be here in the US tomorrow. And 10 years later, it's still not really here. I will say that with one of the companies, they really forced me to watch some content.

1:44:46Maxwell Meyer:And I got hooked on a story about a woman who fell in love with a man in an elevator. And I watched for two hours in one minute snippets. I see how you can get addicted to it. But I fortunately broke that.

1:44:59Matthew Harpe:Yeah, the question is how do you actually invest against this trend? I think you don't. Yeah, I think because all the content wants to be free. It wants to flow to the existing platforms. I can see YouTube creating short series. Basically, you can subscribe to a series. Keep watching. Yeah, basically like, hey, you're not even just subscribed. because the follow button and subscribe button barely works anymore on any platform. But they might be encouraged to be like, hey, this is a series of 30 videos. It's going to be coming out one a day. You can subscribe, and we'll make sure that it comes out.

1:45:40Maxwell Meyer:Look, I think this is an interesting space. The difference between an interesting space and a venture-scale space is the Grand Canyon. I mean, it is so massive. of figuring out, you know, venture requires the power law, requires these outsized returns. And it just doesn't feel like, sure, you have, you know, one or two companies in China that are massive, but it doesn't feel like that's a category that has a sort of theoretically limitless TAM. And one of the mistakes that I've made in my career and one of the sort of learnings is TAM really does matter. And yes, there's, you know, you have to sort of lily pad your way there.

1:46:18Maxwell Meyer:It's not like every market has to be enormous day one. But most of media has turned out to not be venture scale. And I think maybe all of media is not venture scale. And with AI,

1:46:29Matthew Harpe:cost will come - Yeah, venture scale, if you can build a platform that can compete with the giants. But you need a$5 billion. But how do you do it? Right.

1:46:38Maxwell Meyer:I mean, this is one of these things. If someone, by the way, like Jeffrey Katzenberg tried to do this-ish with Quibi. And there are a few people more formidable in the entire world than Jeffrey. and even with hundreds of millions of dollars, that wasn't the answer now. By the way, today would be a more interesting time to launch Quibi because of what's changed in technology. And by the way, I've seen the Quibi 4.0 pitch too.

1:47:03Matthew Harpe:The competitive dynamics with every other app that also has short-form videos that the creators are incentivized to share the same content across all of them, those competitive dynamics are still in place.

1:47:14Maxwell Meyer:Just like working in an industry that Meta and Amazon and Apple and Netflix that more than half of the Mag7 is interested in is a really, really tough place to go and build.

1:47:29Michael Manapat:Every Mag7 company except NVIDIA owns basically a social network. If you include iMessage, Twitch, LinkedIn, you actually wind up with a media platform at all of them.

1:47:40Maxwell Meyer:Right, and by the way, this is not your traditional large incumbents who are asleep at the wheel. These are the scariest companies that have ever been built in the history of humanity who, you know, like, no thanks.

1:47:54Michael Manapat:How did you process the Sertrini virality, the viral article? Sold everything. Intelligence crisis.

1:48:01Maxwell Meyer:I, like, bought a farm in the woods. You've got some raw material. No, look, we are at a moment right now. I mean, that's this week's flavor. Last week I think there was something big. Yes, and then there was the counter to it. And obviously there's a bunch of counter arguments to this one. I think it's indicative of what a scary time this is and just how overwhelmed everybody. I mean, like I wake up in the middle of the night screaming. I don't know about you guys just in fear. No, I'm kidding. No, but like this is wild times. I mean, this is I look at that article and I think that there is you can you can sort of pull the thread and go, yeah, like, oh, my God, You are going to see a bunch of these companies who have to cut costs, go, lean in, become their own worst enemy.

1:48:48Maxwell Meyer:I think what this sort of doesn't take into account is that there's going to be a bunch of other interesting, amazing new companies that get built that employ lots of people that have a very different growth curve and that it's not just like everything is a race to the bottom. There is going to be all this amazing innovation that happens counter to that.

1:49:05Matthew Harpe:Also, a good counterpoint, Citadel put out a report that showed software engineer job openings are up 11 % year over year. year. And so it's interesting that we're getting this, like where AI is working the best today and coding is causing an uplift in jobs. And yet people are kind of extrapolating and saying every other job is cooked, even though that's not what we're seeing in the data.

1:49:32Michael Manapat:Yeah, it's interesting. Are you revisiting marketplaces? There was a big debate over DoorDash being AI resistant or not. Have you gotten any DoorDash pitches? Not this week, but I've gotten some DoorDash pitches. I'm just wondering how you're thinking about marketplaces because it feels like there was boom. Most of the great marketplaces got built, all the obvious ones that didn't have massive disintermediation problems. So the dog walker, the house cleaner, that's stuff that gets disintermediated very quickly. but the DoorDash or the Uber, that is something where you're not just going to meet a great driver and be like, now you're my personal driver forever, right?

1:50:11Michael Manapat:But you will do that if you're like, I went to this app and I found a house cleaner and they come every week. And so I just said, hey, let's stop using the app and cut out the 15 % take rate. But what are you thinking about marketplaces on the earlier side? Is there anything interesting that you're seeing?

1:50:29Maxwell Meyer:So I think that there is, when you're looking at marketplaces, We're trying to find marketplaces where sort of everybody wins. And there's a company in our portfolio that's very early building in the aftermarket automotive space. And this is a category that has millions and millions and millions of SKUs. There is a question as to does this spark plug work for my 1984 Mazda Miata? or does that one work? Most of that industry never came online at all. And so you still have to file, like fax in an order or a requisition. You have some large sort of endemic players like AutoZone that are actually quite big businesses, but that still only have a fraction of the inventory.

1:51:21They don't actually know if that piece works for this car

1:51:27Maxwell Meyer:when you've also done these three other changes. and that's the kind of industry, very messy, very hard, but with AI, you can go and send agents to go do some of this buying, so sort of mimic the idea that an industry is online that may never come online. I think that that's, I think there are spaces that, by the way, and that's also a very large, very sleepy TAM. Like that is not a, that's not a sort of side pocket hobby. That's one of the biggest hobbies in America. Yeah, that's right. You know, tens and tens and tens of billions of dollars just in the U.S.

1:52:00Michael Manapat:And so much work just to hydrate from, like, some random skew or some random serial number into, like, what is this product actually? And there's probably a manual out there somewhere that has it. It might be on the Internet. Might be in a Reddit forum somewhere.

1:52:14Maxwell Meyer:But, like, and then there's the question of, and by the way, how do I get this installed? And can I do it myself? And, you know, is there an AI mechanic that's built into the marketplace so it can teach you to do the work while you buy? You know, will this company accomplish it? I don't know. But I love the ambition. And I think when we're looking for marketplaces, we want to see ones that are, you know, I don't want to see an incremental, you know, DoorDash competitor. I want to see one in an industry that has not yet been disrupted for reasons that were, frankly, impossible before the automation of AI.

1:52:52Michael Manapat:Jordy, you think of what I'm thinking? Me, you, this weekend, a couple of cold ones. Mansouri body kits on the car. Let's do it. Secondhand, we get them. This is John's dream forever.

1:53:04Matthew Harpe:We can do some LED underlighting.

1:53:06Michael Manapat:You got a new car. I'll stay for the weekend. You don't have LED lighting underneath that yet. NOS? Have you considered putting NOS in your car?

1:53:14Matthew Harpe:This is a good option. Yeah. Very good. We got to get, that'll be your Christmas gift this year. Mansory body gift. Mansory body gift. I would love that. You want it. It's got to happen. The labor marketplaces that have exploded are the Mercores, the Micro Ones, that are positioned as marketplaces and yet feel more like enterprise product, almost like staffing. Yep. in some way. The question is how, how durable will those businesses be? And, and I think a lot of people were surprised that the, the, the Fivers and the Upworks didn't kind of react and capitalize on that as quickly as they maybe could, but it just goes to show how quickly the space is moving.

1:54:02Maxwell Meyer:Yeah, I think there are perspectives. There's, you know, multiple camps there, but there are, there are camps of folks, you know, smart folks who think that that whole category is like a race to the bottom and like probably a zero. And then there's other, you know, maybe some of those folks like summer core early past or whatever, and, you know, like a rooting against it, but, but there's, there's definitely a vibe that that is, uh, you know, maybe if you're on the inside in some of those businesses, like now would be a good time to take some secondary. Um, I think obviously, uh, but you've seen growth that is astounding.

1:54:35Maxwell Meyer:Um, and you know, that's the funny thing about the market right now. That's a category, but there's so many categories, like a bunch of these companies that are doing inference. You've seen this unbelievable growth and there's insatiable appetite for what they have today or different kinds of training data or whatever. The question is in two years, in three years, in five years, in 10 years, which of these are enduring spaces and which of these are ripping right now because they're selling to five, there's only five buyers or four buyers long-term. And is that a good business? Like to be in a business where you ultimately have four companies that are your theoretical scale customers?

1:55:14Matthew Harpe:Yeah. And right now there's such insane urgency that there's no...

1:55:18Maxwell Meyer:Well, and money is absolutely valueless to these companies. I mean, it just, it pours it like as fast as you open the door, it like bursts its way into your face.

1:55:27Michael Manapat:Yeah, I was joking about if you started a janitorial company that just served the AI labs, your revenue would be growing 10X because their head count in square footage is growing 10X. And you'd be like, yeah, my business is 10X. And you know what? I have pricing power too. My margins are incredible. It's like, because they never ask.

1:55:41Maxwell Meyer:Let's do that this weekend.

1:55:43Michael Manapat:That's a good bit. They're like, hey, janitorial business is wildly different. There is.

1:55:47Maxwell Meyer:I do think that right now is, you know, look, this is coming after a few years of really disappointing returns for venture as a category. And suddenly you see things ripping and growing.

1:55:59Ben Lerer:And like, you want to believe.

1:56:02Maxwell Meyer:Yeah. You want people, and by the way, you have massive, massive funds now that need to deploy huge amounts of money, and they're looking for things that look like the escape velocity is there. And so they become self-fulfilling prophecies, and more money pours in. I don't think that all these categories are going to be zeros, but I think probably there's going to be, there's a lot of winners in some of these categories. I think there'll be fewer winners, and maybe the winners won't be winning at the multiples that they look like they are today.

1:56:31Matthew Harpe:Or they'll evolve dramatically.

1:56:35Maxwell Meyer:Yeah. And by the way, some of them will and some of them won't, right? I mean, like it's like keeping up with this market is the hardest. It's the hardest in my career to like companies that are – let's even look at like the open AI anthropic thing. And granted, this is just like – maybe this is like the caricature of the space. but it feels like the tide turned so hard even the last three months where it's like Anthropics world now and open AI is living in it. And three months ago, you would have said the exact opposite. Yeah. Um, and maybe, maybe that's just like, I'm interested if you feel that energy.

1:57:10Matthew Harpe:Well, it's hard to, it's, it's, um, Yeah, it certainly feels like at this moment Anthropic is the main character, right? Dominating the headlines. Onyx and a lot of legacy media as well. But I would say Google Trends tell a slightly different story, right? We are in a bubble and people are so invested in the race that they want. It's like if you watch an F1 race and Verstappen wins every time and he starts in polls. At some point, you're like, I'm sick of this. Yeah, you just want to see some action and you want to see some passes and you want some drama. So I think people are invested in the drama.

1:57:54Matthew Harpe:But yeah, and it's also you're watching the two strategies play out, like a very multi-product approach, consumer enterprise hardware from OpenAI versus like a very focused strategy. and I think it's way too early to kind of understand what will, in hindsight, look like the best call. But it's certainly not going to take that.

1:58:20Maxwell Meyer:Well, and Biomic Meta is going to come out with their model whenever and then what does that look like? Yeah.

1:58:25Michael Manapat:Yeah, it's interesting times. Very interesting. Well, thank you so much for coming down to the TBP in Ultradale.

1:58:31Matthew Harpe:Give us a report on Upfront. Okay, happily. Is it tomorrow? It's today. It's today. Oh, you left.

1:58:38Maxwell Meyer:I abandoned my boy.

1:58:43Matthew Harpe:We'll check this later, and we'll give the update on the show. I want to understand I have no sense for how much venture capital, like what I think of LA is getting. I have a good sense for like Hawthorne, El Segundo, Long Beach, Cardina, all these areas feels like are raising as much money as ever. But the broader LA, it feels like a drought.

1:59:07Maxwell Meyer:I would say it's a drought. We definitely are not spending time out here hunting companies really at all. Yeah, that's the advice I've given to any founder that's not in hard tech is like,

1:59:19Matthew Harpe:leave. Do not. Don't even start. Move away. Yeah, don't even start your raise here. Don't even think about it. It's going to just send like a really negative signal that you're not super serious.

1:59:30Michael Manapat:Well, thank you so much for coming on the show. This is great. Great to see you. Let me tell you about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI. Own the data platform that powers it. And let me also tell you about Lambda. Lambda is the super intelligence cloud, building AI supercomputers for training and inference that scale from one GPU to hundreds of thousands. Boom. We have some breaking news. We got to hit the gong. Riley Walls shared an exclusive scoop. He says he has joined the wonderful labs team at OpenAI. Hi, I'm learning a lot and have enjoyed it very much.

2:00:06Michael Manapat:Congratulations.

2:00:07Matthew Harpe:Huge pickup, huge opportunity. I am so excited to see what Riley is, one of the greatest minds, high agency individuals on the internet today. And I'm so...

2:00:26Michael Manapat:He's the best.

2:00:27Matthew Harpe:Yeah.

2:00:27Doug O'Laughlin:I think Riley Walls is like a perfect example of like jobs kind of getting more fake. Like what is like like this is like not this at all Says the guy who No exactly I'm also like very fake job Like Riley Waltz he like just goes viral on Twitter He's not even like making like YouTube videos

2:00:45Matthew Harpe:He's been a data analyst for the last few years He's had a Yeah but he's not doing data analysis at OpenAI He's not doing the same kind of work he was doing before Yeah He's perfectly demonstrating How do you describe Riley Waltz's job?

2:01:00Michael Manapat:Member of technical staff, next question

2:01:02Matthew Harpe:No, so he is perfectly demonstrating the power of the tools, which is if you have ideas, you can build them really, really, really fast and create, in his case, super entertaining products. But there's a Riley Walls out there of SaaS, and they're probably just hunkered down, not even really trying.

2:01:23Michael Manapat:And so I agree with you. Very, very hilarious framing. I do think that we're moving into a world where more and more companies will have a Riley Walls internally. You know, someone who can move very quickly, do experiments, create value, and create little projects. And like the leverage that you get from an individual is going up. And this is an example of that. So congratulations to Riley Walls on his move to OpenAI. Let me tell you about Graphite. Code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. And without further ado, we'll bring in the birthday boy.

2:02:00Michael Manapat:Doug O 'Loughlin is in the restream waiting room. Let's bring him in to the TVP and Ultradale. Beautiful shirt.

2:02:06Matthew Harpe:Happy birthday to you. Happy birthday to you. Happy birthday to Douglas. Happy birthday to you.

2:02:15Michael Manapat:How you doing?

2:02:16Doug O'Laughlin:Hey, happy to be here, I guess, on my birthday. Nothing better than NVIDIA earnings, which hasn't come out. We are going to be live reacting.

2:02:23Michael Manapat:Yes, we'll be live reacting.

2:02:24Matthew Harpe:And they planned that, of course, years and years ago. On your birthday. They knew that today would be the day.

2:02:31Doug O'Laughlin:They went back in time and they told my mom to get it done today just for me.

2:02:38Michael Manapat:Yeah. How have you guys been? We've been good.

2:02:40Doug O'Laughlin:Good. We've been good.

2:02:41Michael Manapat:Processing something big is happening, then the Citrini article. there's been a lot of sort of doom but also there's glimmers of boom in there there's it's

2:02:52Matthew Harpe:yeah i feel like you've generally been a citrini defender kind of uh saying you know a lot of people were just like this is bad and it should never have been published i think your view was there's some good stuff and there's some it's a good thought exercise yeah yeah well here's the

2:03:08Doug O'Laughlin:thing is like it went super viral for a reason because it obviously resonated um i don't think really crappy ideas resonate that hard. And I think, honestly, a lot of the things that I'm most concerned about, I would actually align with it. My biggest concern is that we're going to print deflation. And he kind of talks about that, like, hey, one data center does all the knowledge work. The history of how this works usually isn't quite that extreme, but that was the point of it. Here's my extreme think case. What I was kind of shocked about, and I feel like, honestly, I bet you Satrini would agree, just like the level it resonated with.

2:03:47Doug O'Laughlin:It was like covered on Bloomberg almost on a daily basis. So if you're like a pro, whatever, that does a push notification, it was like Satrini says and Satrini co-author and all this stuff. I was like, oh, my God. It really broke through. Yeah, it really broke through.

2:04:02Michael Manapat:Yeah, unpack the deflation question a little bit more. So technology has been deflationary for a long time. TVs are getting cheaper is the line. You can see that if you look back at inflation, you see health care and education inflating while basically everything that's on like a technological Moore's law style curve is getting cheaper over time. The bigger, like broader, broad deflation question is, can we move some of those or will some of those inflationary categories move into a deflationary territory? But what are you thinking? Is education, health care at the top of the stack? is what do you mean by knowledge work becoming deflationary?

2:04:45Doug O'Laughlin:So let's just put it this way. The ghost GDP article, right? Hey, let's just kind of like do like an index, one index versus the other index. We're going to label it at$100 for all these like knowledge work widgets. And let's just see what the cost of that looks like over time. Year zero,$100 with a human. And maybe year two, it's$102. Maybe they get a little bit smarter so it goes down. But like, okay, what if the agent gets 20 times better? Year two, the index of knowledge work is going to be$20. That's just deflation, right? The entire world is effectively just like spitting out TVs that are worthless to three years.

2:05:28Doug O'Laughlin:And that's kind of scary and I think is a big deal. I think the thing that is the most resonating with the whole piece is that clearly if this is going to be as big as many people think it will be, you know, quad code maxi here, then what happens is that you're going to quickly disrupt so much of society that the government and companies and everyone needs to start caring very quickly. I don't think 10 % unemployment is going to happen. The world works just slower than that. But I clearly think that the reason why it resonates.

2:06:00Matthew Harpe:Part of your framing is like when we had technology rollouts throughout the last few hundred years, it involved like heavy machinery that took a lot of time to diffuse in part because the machinery needed to be built and shipped around the world and spun up. And then you have with AI, it's like, okay, the internet is the greatest distribution engine in history. And as technology advances, it can like be live in somebody's office or with somebody's company effectively instantly, which creates. And with like, let's say the printing press, it was, you know, or cars or electricity. It was like a much more, it was forced to be a much longer rollout.

2:06:51Doug O'Laughlin:yeah there's just like for example the railroad piece i wrote about dude it took 50 years to put all those rails right um historically let's say this ai thing would be like a historical atoms thing it takes 50 years of installing the ai widget at your house in order for you to get ai versus now if you just press a button you download it and it's there and so the pace to that disruption is just so so much quicker and so if it looks like you know if it's as big of a deal as people are concerned about, then essentially you're going to broadcast deflation everywhere all the time, all at once. And it's going to be almost costless to get there.

2:07:28Doug O'Laughlin:And also it's going to get relentlessly better. Yeah, just, and then imagine all the work that you've done.

2:07:35Matthew Harpe:How do you square that though with the fact that right now today, AI is the best at coding. That is where it has the most traction within knowledge work, and yet I have not gotten a call from a great engineer saying, hey, can you help me land a job? I'm unemployed. And you see this in Citadel put out a response saying that software engineer job listings have gone up year over year. And so it's so hard for me to square these two things where we could be in this doomsday scenario for white-collar work. Where we could be in Jehovah's Paradox. Yeah, but we're not seeing that at all with software engineers.

2:08:25Matthew Harpe:Now, some people might debate me and say, well, oh, I just graduated school. And, yeah, new grad opportunities might be lower. but nobody is bought when some of these larger tech company CEOs have laid off a bunch of people and said, we did this because of AI. It's like nobody's actually buying that. It's just a nice story. Yeah, I think that's going to be an interesting thing

2:08:55Doug O'Laughlin:because I think it will be politically and broadly unpopular to say, hey, I just laid off 10 ,000 people because of AI. We are humans at the end of the day, and you do care about what your neighbors think of you and just being like, we fired everyone because AI is better than whatever, you're like, okay, well now you got to get, you might as well hire a five-person security guard, right? There's a little bit of like being an asshole. So I think how it actually works and you're looking at, and I agree with that comment because there's this really great tweet that's like, oh, it's crazy in the agentic coding world.

2:09:28Doug O'Laughlin:Pretty much it pegs the human CPU at 100%. That's how I feel at least is I'm doing more work than ever, but I'm like literally working harder than I've ever worked. The reality is I feel like there is a productivity uplift, but I guess we're all in the sugar high where you're able to do so much work that you're just like going around like crushing it. So these software engineers, yeah, you don't need new grads. And essentially the person who has the seat gets to, you know, print more. Let's just use the printing press, right? Instead of writing and you unemploy all the new writers, but you're sitting there just printing all day.

2:10:00Doug O'Laughlin:And so it really is great for the install base of people who've been doing it, but very terrible for net new. And I think the net new is where you're going to see this, meaning like new grads, new people entering the information, the information services. That's where I think you're going to see most of the carnage. People are not just going to be firing people out the gate.

2:10:18Matthew Harpe:it's going to be like a layoff or a firing typically occurs weeks if not months after an executive has decided hey this you know we we need to make a change here just because no it's the thing that everyone hates doing how do you how have you been processing it feels like the people that uh the citrini piece resonated with the most are also the ones that have been saying that the AI is a bubble and there's too much investment going into this and it's all going to be a zero. It just seems like two ideas that are difficult to...

2:10:58Doug O'Laughlin:You know, I feel like there's a certain aspect of haterade where when you're a real haterade, you're going to find whatever flavor supports your thesis. We find this at SemiAnalysis, man. When we say something positive or we perceive as positive, people take it as negative. or really honestly they take it to... I know, we've had that too.

2:11:19Matthew Harpe:If there's a company that people don't like and you say something positive about it, it's like people respond extremely emotionally to that.

2:11:30Doug O'Laughlin:Yeah, and so I think Citrini made the perfect ammo at the perfect time. And honestly, if you look at the stock market, I'm sorry, I keep watching for a video over and over. If you look at the stock market, I think right now it's been a really interesting year to date because like stocks are maybe like whatever, 2 % off all-time highs. Maybe they're all the way back or they're pretty – I forget what the year to date looks like. But underneath the hood in software, it's been very, very, very painful. I think there's a lot of parts of the index that are in a lot of pain right now. And pretty much you're just like seeing these crazy rotations underneath the surface.

2:12:08Doug O'Laughlin:And so people are very like angsty. There's no other way to put it. And big things are happening in the stock market, brother.

2:12:17Matthew Harpe:The idea that, like, oh, you're holding a name and it hasn't nuked 15 % yet. You should get out because there's going to be some – it could be a blog post.

2:12:29Michael Manapat:Some partnership or blog post, yeah.

2:12:30Matthew Harpe:And what's the – there's not a lot of ROI on holding it.

2:12:33Michael Manapat:How have you been processing, like, the moats in software companies? I've always understood the SaaS-pocalypse, that narrative. Of course, we've got to debate timelines, and maybe these things are just shifting to be value stocks as opposed to growth stocks. But the stuff with network effects, the door dashes, the PayPals, the regulatory modes, it just feels like there's a lot of companies out there that are being more broadly punished. but is there something I'm missing there or, or do you think that it's just excitement and people rotating into other stuff that they might be learning about like memory and energy and semis?

2:13:12Doug O'Laughlin:I don't know. But I definitely think that that aspect is definitely there. Like the ones that are like really shocking to me is insurance brokers. If you've ever, if you ever follow that space, like once upon a time as a hedge fund analyst, I followed Aon. It's like one of the most boring spaces of all time. Real estate services. uh, no, like CBRE, CBRE, um, essentially an insurance broker. You're having all these things, these network, uh, businesses that are just effectively being like, yeah, in fact, it's going to be new. Um, I think the hard part about that is it's, it's like, it's complicated.

2:13:45Doug O'Laughlin:I think there's a lot of advantage for number two to defect really quickly. That's probably the most valuable thing you can do. For example, we've written quite a bit about this to like our higher paid tier service stuff, like Walmart defecting to agentic commerce makes a lot of sense, right because they're not amazon yeah um everyone that isn't number one should be defecting to win market share and that makes a lot of sense to me yeah so like it wouldn't be doordash doordash would probably put up the you know put up the walls do their best to like have exclusive products and then someone else will vibe code something on the margin and essentially try to win market

2:14:19Matthew Harpe:share by but at the same at the same time dara was on the show and his stance was yeah i don't really care as much about my ads business about making sure that I'm just everywhere. And so he was seemingly pro agent, even though ads businesses is real.

2:14:37Michael Manapat:Uh, have you been processing, uh, uh, agentic commerce? Like it feels like this should, like the tech is there and, but like consumer adoption takes time, you know, yes, you can touch up a photo with Jenna, Jenna. I, not everyone does. what does good look like? Because we're seeing stats from Shopify. It's like still in like 0.01 % of checkouts are agentic. And I would expect that to 10X or 100X. But even then you're talking about like 1 % of e-commerce. Like we're still talking like really small numbers. Like how fast do you think it ramps? And what do you think happens this year?

2:15:16Doug O'Laughlin:So I think the place to watch, and it's probably the most interesting place is China. because you can argue the leading e-commerce adopter has always been China. They were doing DoorDash way before it got hot in the United States. They were doing e-commerce way before it got hot in the United States. Live streams. Yeah, live streams, right? Like, dude, TikTok and Douyin has always been on the bleeding edge. Like I would argue for like global internet online consumer preference behavior, China is the leading indicator. Like America is a laggard boomer. You know, like we just don't we don't buy like we used to.

2:15:52Doug O'Laughlin:OK, the consumer is not quite quite as young. We'll just put it that that way. I think what's interesting is we just had this giant incentive out of like I believe it's I want to say it's 10 cent. It tends to this like I'm now I'm probably going to misspeak the bubble tea promotion. OK, they did like 10 million or whatever bubble teas. And so I think there's an example that we finally have the first wave of people possibly being able to adopt it. And that's going to be like all eyes on that for if adoption actually kicks off there. Like that's what happened in 2015 to kick off mobile payments actually.

2:16:29Doug O'Laughlin:During the CCTV gala, they essentially gave away like payments and they incentivized people to use the mobile wallets. And that was like the beginning. Okay. So I think that same analogy is probably where people need to look towards for what, um, what could be the adoption curve for agentic.

2:16:47Michael Manapat:Is that earnings? Do we hear that?

2:16:49Doug O'Laughlin:No, I'm, I'm just, I'm just, I'm just locked in. I'm locked in, bro. We'll have, we'll have this. sound effects.

2:16:58Michael Manapat:Well, yeah. So, so, uh, how do you imagine agent of commerce actually rolling out in China? Because there's a whole bunch of AI labs, uh, you know, deep seek high flyer, like they don't have a, do they have a big consumer footprint already? Because it's, they don't have a lineage there. So you might expect, uh, you know, agent of commerce to be driven more by the platform that already has a billion daily active users over there. Uh, but how do you see like the, the stack piling up over there?

2:17:28Doug O'Laughlin:So I think the best example of this is Alibaba, which actually is an e-commerce company. They're like, you know, the Amazon edition. They have Quen. They have a delivery app. They have like an inventory app. They have a fully vertical, fully vertically integrated stack. And they have AI on top. They're going to make money if people just use their product they can get transaction fees and so that's how i kind of think about it i mean in a perfect world if amazon was not bad at models they would be crushing right yeah you'd obviously be

2:17:59Matthew Harpe:like don't talk down on rufus don't talk down just because it took down aws once or twice or three times for hours doesn't mean they don't god they're doing i i actually want to talk about

2:18:12Doug O'Laughlin:conspiracy theory because i feel like this is have you been noticing the instability of public clouds

2:18:18Michael Manapat:Yes.

2:18:19Doug O'Laughlin:Am I crazy? No, I don't think you're crazy. It's either. There's only two things it could be. Yeah. Vibe coding. People are just pushing crap on prod and they have no idea. Probably true. Number two, CPU shortage. I think it's a CPU shortage. I really do.

2:18:34Matthew Harpe:Wait, you don't think there's like a third if we're wearing the tinfoil hat, which is the world's been very unstable and there'd be more cyber attacks and stuff? Iran, Russia.

2:18:44Michael Manapat:Maybe that's actually, that's a good one. Yeah.

2:18:46Doug O'Laughlin:But I'm really surprised to see all three at the same time. And then my favorite, probably the most public version of this, is the GitHub instability. Dude, GitHub is so unstable right now.

2:18:55Michael Manapat:Interesting. Yeah, I saw the uptime numbers. It was below 99%, which is really low, considering. No, dude, it was like 90%.

2:19:02Doug O'Laughlin:90 %?

2:19:03Michael Manapat:That's really low. I mean, people are pushing a lot of code to GitHub. So yeah, walk me through the CPU shortage, because is that just CPUs that are being used to scale new, like EC2 instances and normal? like you need a Linux instance and so you need a CPU to provision? Or is the AI boom sucking CPUs in like a grace hopper demand? Like the CPUs are getting dedicated to AI server clusters. Like where are the – what's the shape of the shortage basically?

2:19:33Doug O'Laughlin:I think the shape of the shortage is partially an RL because if you want to do an RL gym, meaning like you want to have an Amazon.com, you have to literally simulate just a lot. That's one real demand driver. I don't know how to quantify that, but clearly they're out of it. Number two, I do think all the code, have you seen the charts? I think it's ft.com with all the new apps coming online. They require infrastructure to run. And I had a third one. Oh, the other thing that's interesting is it's also a little bit of a lapping supply chain thing. So the last time we bought a lot of CPUs was in 2020 and 2021.

2:20:12Historically, you depreciate the CPUs on a five-year cycle.

2:20:16Doug O'Laughlin:And so after five years, you just literally throw them away. It's five years. So all of the infrastructure that we purchased, and we've been trying our absolute best not to purchase any new CPUs and spend all that money on GPUs. So they haven't been investing this entire time. And now this slight demand curve comes up, and that's enough to essentially sell out all the CPUs. I think that that's probably part of it as well. It's going to probably be this multi-problem thing, but it's like one of the more interesting like conspiracy theories. Like YouTube went down. I don't remember a time in like the last five years YouTube has ever gone down.

2:20:51Michael Manapat:Yeah. Yeah, yeah, yeah. That is crazy. Take us through the effects of the CPU shortage in the TSMC context because TSMC seems to be like a crazy battleground. Apple, NVIDIA. And then you'll talk to a new semiconductor company. Like we had Maddox on the show yesterday. And he's like, yeah, I'm getting line time at TSMC. And then you read Ben Thompson and it's like, well, they're not really investing in CapEx. And it feels like, is TSMC a bottleneck to the CPU shortage as well? We got Nvidia earnings. What happened?

2:21:25Matthew Harpe:They got a revenue beat.

2:21:26Michael Manapat:Okay, we will jump back to TSMC, but they beat revenue. Let's review and read through this.

2:21:33Matthew Harpe:67.4 billion against an estimate of 66.2 billion.

2:21:38Michael Manapat:We have some breaking news. NVIDIA has announced earnings.

2:21:44Doug O'Laughlin:Wow, you guys are faster than me.

2:21:47Michael Manapat:Nothing liver than live. Here, we will all read the earnings, and I will tell everyone about Plaid. Plaid powers the apps you use to spend, save, borrow, and invest, securely connecting bank accounts to move money, fight fraud, and improve lending. Now with AI.

2:22:08Matthew Harpe:And back. Do you got anything yet, Doug? Am I crazy? I don't have anything. Maybe Tyler just sent this to us. Did they? I'm refreshing Twitter. It's possible somebody's just putting up is just engagement farming.

2:22:25Michael Manapat:Maybe.

2:22:26Matthew Harpe:And trying to...

2:22:28Michael Manapat:They might have gotten us. They might have had us in the first half. Well, we shall see. Anyway, let's go back to TSMC. So the nature of the TSMC bottleneck with regard to CPUs, is that an important factor? Or is there more fab capacity across global foundries, Intel, Samsung, to sort of meet that CPU shortage?

2:22:53Doug O'Laughlin:So global foundries is nothing.

2:22:55Michael Manapat:Nothing?

2:22:55Doug O'Laughlin:They don't have a leading edge chip. So they will not have any CPUs there. Intel is actually the real winner, I think, because essentially TSMC is locked up. Everyone's fighting for space at TSMC. NVIDIA has the most. All the Co-Aus is accounted for. All of N3 is accounted for. All of N2 is accounted for. Essentially, they're completely sold out. They're going to invest a lot more, but get in line. It's another year. So whatever is left over kind of goes to the other foundries, and that's really two companies. That's Intel and that's Samsung. I think Samsung right now probably makes way more money if they spend it all on memory.

2:23:32So Intel really is the swing provider of CPUs in the world. And that's like kind of amazing.

2:23:38Doug O'Laughlin:Like I'm kind of my belief in a sweet karmic Intel victory is all the CPUs that can't be made at TSMC because the accelerators are being made instead. Go back to Intel and they just make them, but they don't design them.

2:23:52Michael Manapat:Yep. Make them, but don't design them. So they would be a second source for NVIDIA potentially as well?

2:23:58Doug O'Laughlin:Well, it's not just NVIDIA. I think NVIDIA is going to get their allocation.

2:24:06Michael Manapat:Oh, TSMC. So they don't need to. Because there was a theory about, hey, maybe twist NVIDIA's arm, get them to dual source at Intel, and that gets the flywheel going a little bit more, just as a give.

2:24:19Doug O'Laughlin:I guess. And there's been some conversation about the MVL link with Intel specifically co-packaged. But I think it's going to mostly be Vera. I think TSMC is going to give them the capacity. I think there's a whole world of chips that are not that. Think about Graviton or the Axion project at Google or all the ARM CPUs. Explain that Google project.

2:24:47Michael Manapat:I haven't heard of that.

2:24:49Doug O'Laughlin:there's a custom CPU.

2:24:51Michael Manapat:Okay. Yeah. So like all of these custom CPUs. Don't they have like a YouTube chip? They have like a number of custom CPUs, right?

2:24:56Doug O'Laughlin:Yeah. Yeah. VCU, I think. It's a VU encoder, whatever unit. But that's like really de minimis too. It just doesn't, I don't think that adds up.

2:25:03Michael Manapat:How important is the Grok, Cerebris, these faster model on a chip companies? And does Google have an answer for that?

2:25:13Doug O'Laughlin:I, okay. Okay, so to be clear, Semi-Analysis's house view wasn't that it was like the most important thing. And we've always, you know, we have that chart about batch, right? The fact that, hey, doing more for everyone is much more valuable. Clearly, there seems to be a little bit of a niche market and a niche market demand. And so Cerebris and LPUs definitely have some kind of demand pull. And I think we will see some kind of announcement at GTC. But like, you know, definitely wait and see. Oh, that's kind of my impression. That's kind of what we wrote about today. By the way, I think it's crazy.

2:25:45Doug O'Laughlin:I wasn't aware that the Vera Rubin post would come out until today. Like literally I learned today and I was, oh, so I had to read it live with everyone else. I think that's a big deal too. And we have a lot of information there about what's coming at GTC.

2:25:59Michael Manapat:Well, we're excited to follow it. NVIDIA earnings are usually out by 20 minutes after the hour 420, but it appears that they are delayed. So we will see. I mean, of course, we'll have to have you back on the show to deep dive everything that's happening in the semiconductor industry.

2:26:17Doug O'Laughlin:This makes it so much better. I had like the bogey and all the information and what the setup is going to be. And honestly, if we have two minutes, I'll tell you what to expect.

2:26:26Matthew Harpe:Okay. Yeah, please. It is.

2:26:28Doug O'Laughlin:I think everyone thinks the guide will be$75 billion. That's what everyone's really obsessed about. I think the questions that are going to be answered or asked, rather, is about memory price inflation. That's going to be a big deal, given the fact that I think memory prices are like, you know, mooning right now, HPM and DRAM. I think NVIDIA locked it all in. So everyone is going to be like, how sure are you? Your gross margin isn't going to go down. And they're going to be like, we're really sure. But they're going to be like, OK, how sure and what time? And then there'll be like this random like circle that nobody can't answer.

2:27:00Doug O'Laughlin:And then I think one of the questions that people are going to definitely ask is about the power side. It seems like next year NVIDIA has more chips than power. And so that's going to be, I mean, to be clear, NVIDIA has no power, right? They have customers who acquire power. And one of their big competitors in terms of market share, which is Google, has chips and power. And so I think that that's going to be a huge bottleneck. And I think that's going to be one of the bigger questions that happens this quarter. Hey, how do you deal with the power bottleneck? Because you're going to sell a lot of chips, but if you can't even plug them in, this is a huge issue.

2:27:33Matthew Harpe:And is the idea that even if a lab or a hyperscaler said, we're actually good on chips right now, we don't have the power for them, NVIDIA would be like, well, you actually have to buy them if you want to maintain priority. How do you think they would play that? I don't know.

2:27:50Doug O'Laughlin:I mean, I think the thing is, it's not going to matter because the only company with a chip to sell you next year that it's not accounted for is NVIDIA. And I think the shortage in GPUs is really underappreciated. You can see it publicly. I forget which research shop shows it, like the availability of B200s. But our anecdotal information as well as the live price tracking and contract price that we're aware of, there's no H100s for sale. H100s are sold out. That's like, boom, your five-year depreciation bear thesis that everyone was really freaking out about last year. Well, good luck. You can't even buy one today.

2:28:28Doug O'Laughlin:So that's probably the biggest interesting thing and I think probably the single most bullish thing you can say. you know like a four-year-old chip effectively is completely sold out today yeah what what's that

2:28:39Michael Manapat:what does that say about the next generation it's remarkable well thank you so much for taking the time to join uh bummer that they delayed on us but next time we'll time up so that we have even

2:28:48Doug O'Laughlin:more time to hang out but i'm i'm i'm so happy honestly like i'm getting video earnings i was

2:28:53Michael Manapat:like yeah no no no well we'll we'll get this flow going uh we we this is always fun but i mean just great to talk about everything and happy birthday. Happy birthday. Have a great rest of your week.

2:29:04Matthew Harpe:Great to see you.

2:29:04Michael Manapat:We'll talk to you soon. Let me tell you about Gusto, the unified platform for payroll benefits and HR built to evolve with modern, small and medium sized businesses. We have our next guest Mark Benioff in the Restream Waiting Room. Let's bring him into the TVP and Ultra. Mark, thank you so much for being first to join us here on Earnings Day.

2:29:25Matthew Harpe:We're honored.

2:29:26Ben Lerer:Great to see you.

2:29:28Michael Manapat:It's going fantastically.

2:29:29Ben Lerer:Did you get that Metallica album I sent you? We did. We did. Thank you so much. Did Jordy listen to it? Did Jordy listen? We need a record player. No, Jordan, again. But. Jordy. Mogged again. Mogged again. Frame mogged. Jordy, again. Again, Jordy. I have no words. But, fun fact, Jordy can actually play the guitar.

2:29:50Michael Manapat:And so next time you're on, he's going to be playing a cover.

2:29:54Matthew Harpe:I'll play you a tune. Yes. How about that?

2:29:58Ben Lerer:I think we should ask Lars Ulrich to come on the show with us.

2:30:01Michael Manapat:Oh, that'd be fantastic.

2:30:02Ben Lerer:I think it would be really good.

2:30:03Michael Manapat:We'll have to make that happen.

2:30:04Ben Lerer:But I'm going to call out. I'm calling out Jordy on the whole situation. The reality is, Jordy, you're still unforgiven. Oh, there we go. There we go.

2:30:14Michael Manapat:Well, anyway, thank you so much for joining us first on Earnings Day. Take us through it because I got a mallet here that's itching to hit a gong.

2:30:25Ben Lerer:Well, if you want to hit a gong, I mean. No enterprise software company has ever given guidance for$46.2 billion before. And these are crazy numbers.

2:30:43Ben Lerer:I love that gong, by the way. I love that gong.

2:30:46Michael Manapat:We love gongs.

2:30:48Ben Lerer:I really do.

2:30:48Michael Manapat:But I would say that that's exciting. Yes.

2:30:51Ben Lerer:But also just this company, you know, it's really become a cash machine as well. You know, we're projecting over$16 billion in cash flow this year. So when you think about that, and then the quarter, you know, the quarter we deliver this record RPO. Funny thing, you know, some of my friends are writing these articles. RPO doesn't matter. I mean, they write a song, Nothing Matters. I don't know, nothing else matters.

2:31:19Michael Manapat:Yes.

2:31:20Ben Lerer:But RPO, which is kind of our remaining performance obligation, these are contracts that we basically have signed but not yet recognized. That is$72.4 billion. So these are driving these huge numbers. What does that mean? I think people have a good sense. That's up 14 % year over year. It's that all these numbers are accelerating growth. So I don't know. I just kind of – I am very proud of my team. I'm very proud of our customers. I say also I'm very proud of the customers because we've really been pushing the customers hard this year to deploy all this new amazing AI and agent technology. And we've hit basically now more than 19 trillion tokens.

2:32:06So you can just see the velocity of AI and agents.

2:32:09Ben Lerer:And the company is just transforming from being not just an apps company. And I think you guys are using Slack and other Salesforce apps to run your business. but now they're all extended with these agents like Slack, not just Slack bot, but the ability to extend your service and your marketing and your sales. And all the agents are out there and they're running wild as well. So you have apps and agents, humans and agents working together. It's very cool moment. Very cool.

2:32:34Matthew Harpe:Jordy? Yeah. What has it been like internally with the team this year? Has there been a more kind of chaotic period in your career? How are you guys operating internally, clearly delivering results? Oh, yeah. What's it take?

2:32:53Ben Lerer:I mean, well, you know, we've all been reading about the saspocalypse. But we've got our Sasquatch is eating our saspocalypse. Let's go.

2:33:05Michael Manapat:Sasquatch.

2:33:06Ben Lerer:I just think that when you look at things like, you know, Agent Force, which we've talked about on the show now three times, you know, starting at Dreamforce, that, you know, and first of all, Agentforce by itself is now an$800 million business up 170 % year over year. So that is amazing. All is its own product. But then you look at Agentforce and our data business together, that is now a$2.9 billion business up 200 % year over year. So there's no question that AI and data is a huge driver of growth. And it's about these apps and these agents. And, you know, we use the apps. We're these humans.

2:33:47Ben Lerer:We're using the apps. You know, we're using Slack. We're using Sales Cloud, Service Cloud. We're using all of our cool apps. And then each one of those now has an agent platform also. And these two things together is the future of enterprise software, that apps have been extended by agents. And while we, before, we're in the apps market, and that's what we've been doing for 26 years, you know, that we've been in business since 1999. Now we're in the apps business and the agent business. And I, this is why I've never been more excited about my business. I just love it. Yeah. I mean, I really love it.

2:34:19Michael Manapat:How much, how much similarity is there to the original messaging just around like being a company that enables cloud adoption? Like there were probably a lot of companies and CEOs that came to you early in your career that said like, I know this cloud thing's important. How do I do it and you had an answer and now there's ceos that say i know this agentic thing and this ai thing is important how do i do it and you probably have a pretty similar answer right is this is this

2:34:48Ben Lerer:history repeating itself oh my god it's such a good question you know anil bushry is now the ceo again of workday yeah he's my good friend uh he lives you know basically next door to me came over last night we both had a cocktail because you know we're looking at his after-hour stock and i said Anil, there's no way this can be true. You have to let this go. And in fact, you saw already that his stock corrected today because the numbers are just don't match what's really going on. He has an unbelievable business. He had a great quarter. He's going to have a great year. We use his HR and financials.

2:35:22Ben Lerer:And I said, Anil, this is just something that you have to let go of. This is not my first Saspocalypse. I saw this in 2008. I saw this in 2000. 2016, you know. And look, there's people in the market, they make money when the market goes up and down. So that's just the stock market. But let's talk about the customer success. And when you look at how companies can actually be better, more productive, successful, profitable companies, and we're number one, we're customer zero. And that's what I'm so excited about because when you look at how we're running customer service and support right now, we're using it with service agents and service apps.

2:36:09Ben Lerer:So if you go to help.salesforce.com, you're using the agent. And at any point, bam, bam, bam, you can auto escalate right back to the app and the humans if you like exhaust the agent. Or now this week, we have an agent that is going to qualify 50 ,000 leads for our company, you know, which is our sales agent, that it's out there talking to our customers. We've enclosed millions of dollars of business this week just through the agents themselves. So that is what is amazing, that we have apps and agents. And it's not that we don't have 15 ,000 salespeople at Salesforce. We do. And we have millions of apps all out there scurrying around, looking for opportunities, and then bringing them to those humans going, hey, look at this opportunity.

2:36:53Ben Lerer:Give this person a call. Let's go see this person. Let's go find out what to do. and that is really the future. We're extended, elevated. We're elevated by AI. We're made better. We know we're made better by AI. There's no question.

2:37:09Matthew Harpe:How much have you been kind of you know, all the Citrini's posts, we've talked about it at length on the show. Very, very, a lot of doom. But we've been very focused on what's happening in coding as these coding models have gotten better. People want to hire, at least the data shows so far, Citadel was showing up, job listings for engineers are up 11 % year over year. You've talked before about hiring more sales reps, because as your reps get more productive, probably want more of them. But is that kind of comp that you're looking at, given that I think everyone is expecting sales agents to kind of catch up to coding agents in terms of capabilities?

2:37:55Ben Lerer:Great question. Amazing. And, you know, we were, I wasn't really on the show at the beginning of the year, a year ago with you guys, but if I was, what I would have said was I'm not hiring more engineers in fiscal year, you know, 26, the year I just passed because I was using coding agents and I was allowing the productivity from the coding agent to give me the extra capacity that I needed for the year. And I didn't hire more service agents in the year. I held it flat and then reduced it slightly because I'm using service agents. But I did hire like almost 20 % more salespeople this year. I think we've talked about that because I need more capacity because we have more demand than ever.

2:38:33Ben Lerer:Through every market from the small, medium, large customers, you know, guys like yourself who are like these great entrepreneurs, building a great business like TBPN, really going all the way through it. You need a technical infrastructure around you to grow your business. I know you use Slack. I know you use other products. And that's our job is to make you successful and to really bring in the apps and the agents. You can't do it just with an agent. There's still some humans around who need to be automated as well. And that is what is exciting. And that is what I'm doing every single day.

2:39:08Matthew Harpe:What advice do you have for a company like Anthropic that's hiring a Salesforce admin? What makes for a great Salesforce admin?

2:39:20Ben Lerer:You're kind of leading beyond. I mean, you know, it's kind of funny, right? Because these AI companies, they love our products and they can't buy enough of them. They're some of our largest customers now, Anthropic, OpenAI, Google, Amazon, you name it. These tech companies, Slack is the largest AI ecosystem in the world. You know that. And that's reality, you know, which is that no one has a company that's running entirely on a large language model because it's not real. We need software and we need large language models. We need the determinism and the programmability and the security and the sharing.

2:39:56Ben Lerer:But this large language model is an amazing new component of our infrastructure so we can do things that we could never have done before. That is what is so awesome. And so we can extend our industry. I think the software industry is going to be bigger and broader and do more this year than ever before. Not just Salesforce, which is going to grow. incredibly this year. I think every company is going to grow because we have more to sell, and there's more excitement and action and energy. And so this kind of counter narrative of, oh, no, no, no, they don't understand. We're just, call that company who wrote that report.

2:40:34Ben Lerer:And you ask them, what is their software infrastructure, their magic infrastructure? I do this all the time. Tell me exactly how you're doing, what you're saying that you're doing. Oh, well, you're right. We're so sorry. We made a mistake. No, you know, and look, the futurist, I think we talked about this. Peter Schwartz, you know, our chief futurist, he wrote Minority Report. Have you seen that movie? It's like 20 years old. Great.

2:40:58Michael Manapat:He hasn't seen it, but I've seen it.

2:40:58Ben Lerer:Oh, yeah. Well, Jordan, you've got to watch this. And also he wrote War Games and Deep Impact. You know, part of a team writing team. These are future movies. Yeah. But we all know where the future is kind of going, this highly automated, amazing world. But we're living in this world. This is this year. This is 2026. We're running our business today. So how are we doing our financials, our HR, our customer information? How are we doing all of these aspects of our business? How are we running them? And then we write a report that sounds like Minority Report. And then I'm like, yeah, Minority Report.

2:41:40Ben Lerer:I read the movie. I watched the movie. Great, guys. Fantastic. but I'm in the present moment reality right now, you know? Yeah, that's true. And let's come back to the world. And by the way, like, you can do things that you couldn't do before. This quarter, I released our new ITSM product, so our customers can do this incredible thing, you know, IT service management. They used to have to go to ServiceNow for that. Now we converted five ServiceNow customers, you know, just in the corner right over to Salesforce because we have that new capability. So companies like Sunrun and Cornerstone and CoolSys and others, they can now use Salesforce ITSM instead of ServiceNow.

2:42:20Ben Lerer:That's so exciting. And then we have our new life sciences cloud that we've built all with an agentic interface. So our customers do not have to use Viva. And those customers are instead, you know, those are big companies like the Pfizer's and the Takeda's and the Novartis and the ABV. so they're running with this next generation platform of apps and agents apps and agents and humans and agents working together yeah so I mean the

2:42:48Michael Manapat:business model currently is clearly working the results show that as you look into the future do you think the business model will evolve do you think that we're going towards more consumption based is there is seat base gonna be with us forever like how are you thinking obviously you don't need to turn the cruise ship today, but how do you think this evolves over time?

2:43:08Ben Lerer:It's such a great question, right? Because that's like one of these interesting narratives, but hey, I don't know which, which anthropic product you're using, but the one I'm using is seat-based. So if you don't have, if you have a different one or I have a, I don't know which open AI product you're using, but mine is seat-based. I don't know which one you're using.

2:43:28Matthew Harpe:It's a good, It's a good take. Of course, you can use API. And there's an API also.

2:43:33Ben Lerer:There's an API also.

2:43:35Matthew Harpe:But they're happy to be selling seats right now. You're right.

2:43:39Ben Lerer:This is about humans and agents. So let's use that analogy. Humans are seats. And so there's still like us three. We're like the last three humans. It's very sad, but we're still here. And then we have the agents too. And they're using the APIs and talking to each other. and they're on notebook and they're like having a conversation, creating their own currency. They're talking about us. They're talking about us. They're saying, oh, can you believe those humans are still there? We're going to get them. And it's like, no, it's still humans and agents working together. And that is what is exciting about the future of enterprise software.

2:44:14Ben Lerer:So, yes, I have a sales force, but it's extended with sales agents. And I have a service organization extended with service agents. And I'm sending a trillion marketing messages this year, but they're all extended with marketing agents. and I have commerce agents and I've got, yeah, and you guys use Slack every day, right? And you're using Slackbot now, hopefully, since the last time. I would say it's like amazing that I can use agents in Slack. So I have employee agents and we might have some other new exciting agents coming in the next few weeks for you. I'm very excited. Yeah, I'm very inspired by Maltbot.

2:44:48Ben Lerer:I've now got our team working on some new things. So that is like how I see it unfolding. And I think it's about a world where there are apps and agents and where this large language model, it's extending our capability. It makes us better. It makes us stronger. It gives us the ability to do more. And yes, it still exists and also consumption exists. Like we have, you know, lots of consumption products, data, you know, data products.

2:45:14Michael Manapat:Was there ever a SaaSpocalypse that was driven by fear that open source software would defeat your products, defeat Salesforce? Oh, no.

2:45:28Ben Lerer:There was a bigger SaaSpocalypse than that.

2:45:30Michael Manapat:Okay.

2:45:30Ben Lerer:Do you remember the SaaSpocalypse of 2020? The SaaSpocalypse of 2020. John, let me tell you the story. We were all minding our own business. And then CNN came on and said we were all going to die. Not just the software companies, everyone, because it was the pandemic. And we all went home and we hid. And it was a very sad time. And in fact, right at that moment, the stock market crashed because we were all going to die. And that was a huge Sasspocalypse. And you can see it in everyone's stock chart. It goes like this. And then all of a sudden, people go, I guess we're not dying. And then it came back up.

2:46:08Ben Lerer:And that was a Saspocalypse of 2020. It's a sad tale, but we lived through it and we got through it. And you know what? We're stronger for it. And that was just one of the Saspocalypse's.

2:46:20Michael Manapat:Talk about the reception of the Super Bowl ad.

2:46:23Ben Lerer:Well, listen, I don't want to be competitive with you guys because your ad was very good. I want you just to know. You did a great job.

2:46:32Michael Manapat:You should feel great. I appreciate that.

2:46:34Ben Lerer:You know, you had a great ad. Everybody loved it. Now, we were the number one ad in the Super Bowl. Oh, okay.

2:46:43Michael Manapat:Mog meter going up. Let's go.

2:46:47Ben Lerer:Ad mogged. Ad mogged. I'm sorry, but it has to be said because, you know, we have Jimmy Donaldson, Mr. Beast. Yeah, he's the best. And Mr. Beast did a great job, and that was just a killer ad. And we still haven't revealed the final thing. We have a great person here, John Zismos, who did a fantastic job with Jimmy, and it was an unbelievable partnership, but Jimmy's just, he's a force of nature. I mean, I've never seen anything like this. He's such a young, great, amazing entrepreneur. The first time I ever talked to him, which was years ago, he said to me, I want to be the future Steve Jobs.

2:47:22Ben Lerer:You know, I want to be the future great entrepreneur of the world. I had to pause and say, really? He's like, yeah, that's what really I want in my life. I want to be a great business leader, a great, and I think he's doing it. And he's so young. You know, we've already had him on the cover of Time Magazine once, you know, and I see, you know, him as a huge leader in the whole world, not just as some kind of YouTube personality. This is a great entrepreneur, business person, not just making chocolate bars, not just running a bank. I see him doing a lot of amazing things. And he's got a lot of energy, incredible.

2:47:57Ben Lerer:And I have a lot of respect for him. And yes, number one Super Bowl ad. How about that?

2:48:02Michael Manapat:There's a lot of entrepreneurs listening, a lot of entrepreneurs that are searching for their next great business idea. If they want to go swimming with dolphins and get inspired, what's the most underrated time to visit Hawaii?

2:48:14Ben Lerer:You're right. Well, number one, this week we have been having an awesome show from Kilauea Volcano. Oh, yeah? We had, I think, a 12, 13, 1400-foot tower, which is – I'm in Salesforce Tower of San Francisco right now. Gorgeous. You guys should come.

2:48:27Michael Manapat:Yeah.

2:48:27Ben Lerer:And the fountain from the volcano was taller than this tower this week. So that is amazing. And you're right. All the little dolphins were so happy. Just cruising around. But also it's whale season on the North Carolina coast. So they were going. They were so happy also. Everyone gets happy when you see the volcano. It's like when you see a whale. It reminds you who you really are. It reminds you, this is what life is really all about. You come back to your breath. You come back to yourself. When I see whales out, I think of agents.

2:49:07Matthew Harpe:I think of agent force, personally. You've got to run.

2:49:11Michael Manapat:You've got to run. Sorry, we're keeping it late.

2:49:13Matthew Harpe:I have a challenge for you. Before we talk again, you've got to frame Mog, one of the AI lab leaders. Oh, this is big alpha right here.

2:49:22Michael Manapat:We'll talk with you after this show. I think it's possible. We'll coordinate. We'll coordinate. Have a great rest of your day. Congratulations on all the progress. Thank you so much for coming back on the show.

2:49:30Ben Lerer:You better listen to that Metallica album because I swear to you, I'm bringing Lars on here and you're not ready. You're just lucky I didn't bring him on today.

2:49:38Michael Manapat:On repeat, on repeat. We'll talk to you soon. Great to see you. Have a good one. Goodbye. Well, if you're tracking earnings, you should be doing it on public.com. Investing for those to take it seriously. Stocks, options, bonds, crypto, treasuries, and more with great customer service. and without further ado we will kick off the lambda lightning round let that let that cloud ring out the clock gets better every day the lambda what's happening how are you doing

2:50:06Matthew Harpe:hey guys how's it going we are here doing great welcome to the tough act to follow with uh with benny i don't know how it's up to 11 every can you do any animal sounds he's got the he's got

2:50:17Michael Manapat:the dolphin down he's got the whale down this is a unique ability i didn't know it's necessary

2:50:21Matthew Harpe:We're not going to have you make any whale sounds. But it's great to meet you.

2:50:28Michael Manapat:Great to meet you. First time on the show. Please introduce yourself and the company.

2:50:31Doug O'Laughlin:Great to be here. So my name is Michael Manipat. I'm the co-founder of a company called Rowspace. And Rowspace is an AI platform for asset managers. We help our customers use their institutional memory. So that means all their proprietary data, their accumulated judgment, to make decisions faster. So what that looks like is we actually plug into all of their internal systems. This is not just documents, but it's databases, CRMs, accounting, and trade information. And we use agents to understand all the connections in that data, the inconsistencies, the conflicts, so agents can reason over it holistically.

2:51:08Doug O'Laughlin:The idea here is that data is fragmented and siloed, and it's hard to make sense of in a single context window. But using this or having this work on this in advance is very helpful.

2:51:20Michael Manapat:Yeah. How jealous should every asset manager be of Bridgewater for collecting so much data over so many years? Do you have a view on the Bridgewater strategy? Can you explain what they actually do and whether or not you're a fan of it?

2:51:40Doug O'Laughlin:I can't speak to Bridgewater specifically. But I think you land on our key point here, which is that public data is getting increasingly commoditized. And actually, AI is accelerating the commoditization of public data. The more you have tools like Claude that can synthesize anything from the web or from public tools, less edge there is there. So the best edge firms have now is decades of data accumulation and their own insight and judgment as encoded in their data. And our whole goal is to help our customers tap that. In almost every customer conversation we have, there's a line that's something like, we are sitting on enormous value in our data.

2:52:26Doug O'Laughlin:If only we could get it or only we could find it. And that's what we're trying to do. So I think AI will accelerate this dependence on your internal data and proprietary data as public data becomes less and less valuable.

2:52:40Michael Manapat:Yeah. Talk to me about what your product actually looks like once you roll it out. Because a lot of hedge funds and asset managers, they do a lot of backtesting. And I could imagine going back and running a report, like backtest the thesis that we talked about, but maybe we didn't actually implement. And there's a whole bunch of ways that you could just do reporting. But then you could also go and say, hey, just turn this thing loose. Go trade for us. Where are we on that continuum?

2:53:08Doug O'Laughlin:There are a lot of great points there. So the first thing is we are not trading or taking action automatically. The idea here is that we will help these firms consider the full amount of data that's possible. And then they make the decision. But our goal really is it used to not be possible to say review every single name in the universe if you are about to consider a trade to rebalance your credit portfolio. Now you can with a row space. But it's still the human who makes the ultimate call there. So that's one thing. The second thing is on backtesting. I love that example because it's actually been surprising how little post hoc analysis people do of their investment or trading decisions.

2:53:52Doug O'Laughlin:what was our thesis a year ago two years ago, ten years ago what actually happened how does that inform what we're doing in the future that was just a time consuming thing to do and people don't do it very much but we work with a private equity firm now it's been in business for 50 years a pioneer of the field and they actually they actually run every deal through road space along the lines of given our 50 years of history what should we do here What have we done? What are the risks? And that kind of analysis would not have been possible before. Yeah.

2:54:26Matthew Harpe:What is your competitive positioning like with the labs? They're all hiring consulting firms. They have forward deployed engineers. I'm sure they're pitching a lot of the same companies. And I can imagine how you would position Rowspace against building something internal or just leveraging the applications that the labs are building. But how do you sell it?

2:54:53Doug O'Laughlin:So on the apps that are out there now from labs and from other players in the market, what we see is a focus on time savings. So faster models, faster decks, faster summarization of meetings and research. And that's obviously extremely valuable. But our focus has been on decision making. So what are the things you should be looking at, which would have been impossible to consider before, that what this can help you with? So in some sense, there are things that our customers do with the road space today, which they did not do before. It's not about saving them time doing what they've done in the past.

2:55:31Doug O'Laughlin:So that's one chunk of it. The other chunk is we're talking about, in some sense, the crown jewels for our customers. All of this trading data, position data, their thinking of theses. This is extremely sensitive. So we only deploy in our customers' environment. We never, as a company, actually take possession of their data. And we do all this processing in their environment. So we have a security challenge, an infra challenge, an AI one. And I think the sensitivity to the security, compliance, and other constraints of finance is a big differentiator for us.

2:56:07Michael Manapat:Take us through the fundraising round. What happened?

2:56:11Doug O'Laughlin:So we've done two rounds over the past 18 months. $50 million in total. I'm a nice boy of both lines, but I'm a good one to join in the A. And we've had my former bosses were on your show on Monday, and they were a big player in both the C and NBA at Stripe. So it's been really fun because every major investor on our cap table, I've been close to for at least half a decade. So Rosebase gets to be a bit of this bring back the old gang together.

2:56:42Matthew Harpe:That's amazing. Well, congratulations. Where's the company based?

2:56:45Doug O'Laughlin:We are based in San Francisco, but a big push for the planning this year is to expand our New York presence. Of course.

2:56:51Michael Manapat:Yeah, that makes a ton of sense. Well, have a great rest of your day. Thanks so much for popping by to tell us about the business. Very fascinating. Good luck. Thanks for having me. We'll talk to you soon. Cheers. Goodbye. Let me tell you about Gemini 3.1 Pro. Gemini 3.1 Pro is here with a more capable baseline. It's great for super complex tasks like visualizing difficult concepts, synthesizing data into a single view, or bringing creative projects to life. And without further ado, we'll bring in our next guest, Adam Warmoth from Chariot Defense. How you doing, Adam?

2:57:20Ben Lerer:Good to see you again. Welcome back to the show.

2:57:24Michael Manapat:Let's kick it off with the news. What happened?

2:57:27Ben Lerer:Yeah. Today we announced our$34 million Series A. Let's get the gong.

2:57:34Matthew Harpe:We got a bigger gong since the last time you were on. We did.

2:57:37Michael Manapat:We did. Welcome back. It's impressive. Welcome back.

2:57:40Matthew Harpe:It's not as impressive as a$34 million series today, but it's up there.

2:57:45Michael Manapat:Yeah, take us through the shape of the business today, the key customers, key products, and sort of what changed since the last time you were on the show.

2:57:55Ben Lerer:Yeah, awesome. So last time I was on the show, I was just getting done with our first transformation and contact exercise. You guys had had Dan Driscoll, Randy George in the show. They'd kind of talked about that. We were just coming back from our first participation there. That was our second test event. We've done about 25 since then. And so we've got systems deployed in pretty much every theater across a bunch of different Army units, Marine Corps units, and really just starting to see the traction and demand for the systems grow. As we do see things like drone dominance happening, as we see things like next generation command and control, all of those systems are fielding and running into issues with that power infrastructure layer.

2:58:35Ben Lerer:and we've been able to fill that gap and iterate quickly, kind of working with the warfighters, working with the soldiers, and getting the systems out there.

2:58:43Matthew Harpe:And assume that someone listening today didn't catch your first appearance, catch us up to speed on the shape of the product and all that.

2:58:54Ben Lerer:Yeah, so effectively what Chariot's building is the power layer for robotic warfare. So really, you wouldn't send a soldier into the fight without food and water and nicotine. You wouldn't send a robot into the fight without communications, compute, and power. And so we really see that as one of those core infrastructure layers behind kind of this defense modernization. You know, Andrel's building some great systems in the compute space. Palantir really dominating the network space. And we're kind of building that third missing layer. And so effectively what we're doing is taking the technology coming out of companies like Tesla, Apple, Lucid, Rivian, Archer, Joby, high voltage batteries, silicon carbide power electronics.

2:59:35Ben Lerer:If you've read Paki McCormick's The Electric Slide goes into detail on kind of major transformations happening in the commercial industry on that core technology stack. We're taking those and lifting and shifting them into the defense platforms to build hybrid high power systems.

2:59:48Michael Manapat:Yeah, walk us through exactly what needs to happen to deploy a high voltage battery on the battlefield. I think most people will be familiar with like the Tesla Powerwall. And we've all seen like the IBM Toughbook. You put some rubber corners on it and give it a nice graphite case. And I imagine there's a lot more going on. So what's the state of the art?

3:00:11Ben Lerer:Yeah, that's a great question. So we really kind of take the best of commercial technology. our first product we deployed uh m424 is literally in a pelican case okay um so we took a pelican case we were saying hey why reinvent the wheel yeah uh on on just some of that core rugged technology we do some additive manufacturing uh to create these kind of internal bulkhead structures sure um to kind of isolate uh the electronics yeah and then we integrate the batteries the power electronics the microcontrollers into that in a form factor that can be left out in the rain and mud can be dropped off the back of the humvee yeah and when i say can be has been uh and has

3:00:47Michael Manapat:tell the tale yeah so you've been through testing i assume you've done some sbirs are you moving towards program record or are you just sort of in the supply chain for other companies that might be

3:00:57Ben Lerer:primary uh contractor yeah so we've got a split go-to-market model one meaning directly to the government both bottom up selling directly to units and top down for her record okay and then also selling to other companies as part of a broader kit.

3:01:10Michael Manapat:Cool.

3:01:11Ben Lerer:So the inspiration for Terriot was I was the counter UAS program manager at Anderle.

3:01:15Michael Manapat:Yeah.

3:01:15Ben Lerer:We were constantly running into power problems. Yeah. Right. So kind of that idea of selling this as part of a power kit that's enabling other systems is another part of our go-to-market model.

3:01:24Matthew Harpe:Very cool. Where do you stand on the verticalization debate? We had Mike from Also Capital. Oh, yeah. He kicked the hornet's nest because he was basically saying like, yeah, it's great. Great to verticalize, but there's some businesses that you can just buy a lot of components off the shelf and make a great product, prove that people want it, and then do it later. A lot of people, I would say most people were disagreeing with that, but every business is different. I'm going to come in here on Team Mike.

3:02:02Ben Lerer:So, you know, we've really been able to leverage the supply chains from companies like Tesla, right, and Apple and Archer, where you have actually mature commercial technologies around these core components, around batteries and power electronics. What nobody has done is kind of gone and done that forward-deployed engineering. And so Erin Price-Wright, who led around, I think in her post said, you know, we should actually call Adam the chief forward-deployed engineer. That's really what I've been doing over the past year. and it's that forward deployed engineering model that kind of maps to what Palantir and Andrel did as well.

3:02:33Ben Lerer:So Palantir didn't invent cloud compute, right? Or big data models, right? That was tens of billions of dollars of investment from Silicon Valley companies. And then through good go-to-market, good forward deployed engineering brought that into the department. Andrel did the same. The century tower, first century tower was really enabled by the autonomy technology developed by the self-driving car industry. You know, Computer Vision went from an unsolved problem in 2014 to just download YOLO v4 in 2017. And they were able to kind of capitalize on massive investment, right, from the self-driving car industry.

3:03:06Ben Lerer:And just through good Ford deployed engineering, good go-to-market, bring that into the department. And that's what we're doing for all the technology coming out of electric vehicle, electrical transportation space.

3:03:16Michael Manapat:What are you most excited about in defense tech? There's obviously a lot of the annual products. people are aware of? There's, you know, this big, small drone boom. Is there something, like, what's the next big defense tech trend that you think is going to become really important?

3:03:34Ben Lerer:Yeah, so there's going to be a little bit of a self-serving angle here, but, you know, what we're really, you know, I spent years doing counter-UAS, counter-drone systems, pre-Ukraine, right? So counter-UAS is a big topic. When we were working with it on, with SOCOM in 2021, not that many people were talking about it. And that insight around what it actually takes to do counter U.S. at the edge is really kind of what inspired Chariots. So there's a lot of focus on drone dominance, but countering these small drones is going to require pushing more sensors and more countermeasures onto every mobile platform.

3:04:09Ben Lerer:And what that's going to mean is every mobile platform needs more power to power those sensors, to be able to turn the engine off and manage signature and hide. Sure. So avoid detection in the first place and then be able to drive big surges of power to do things like electric electronic warfare or high powered microwaves or high energy lasers. So we've done tests with higher energy lasers already as one of those kind of US technologies that needs that big surge of power.

3:04:33Michael Manapat:Yeah.

3:04:33Ben Lerer:And that's really where batteries come in. We want to get shirts that say we heart diesel. We're the most diesel loving battery company out there. Hydrocarbons are incredibly energy dense. what batteries give you is that ability to surge that power or the ability to dial it down and hide your signature and that's really the differentiation of the chariot platform so

3:04:48Michael Manapat:why can the tesla model plaid go zero to 60 in under two seconds like it's a surge of power and that's what's and that's what's unique uh thank you so much for coming on the show congratulations insane progress so and we're on the show soon we'll talk to you later cheers good one let me tell you about crowd strike your business is ai their business is securing it crowd strike secures AI and stops breaches. And we have Connor Sweeney from BABA in the Restream waiting. Let's bring Connor into the TV. How are you doing? Great setup. How are you? Thanks so much for stopping by. Please introduce yourself and the company.

3:05:24Connor Sweeney:For sure. No, thanks for having me. I'm Connor Sweeney, founder of BABA, but we connect older adults and their families with patient advocates. So human pitch, you know, refreshingly. But it really moves a needle because these folks do all the care coordination, the scheduling, the kind of kicking the dots for healthcare companies.

3:05:43Michael Manapat:Yeah. What was the origin story of the business? Were you just looking at the growth of demographics in the U.S.? Did you have a personal story? What led you to this particular market?

3:05:55Connor Sweeney:Yeah, for sure. I think most healthcare people end up coming into it after like experiencing it themselves. And that was also the case with me.

3:06:01Ben Lerer:My grandma had a stroke and I did a lot of that care coordination.

3:06:04Connor Sweeney:But I think what's cool is that I'm not from the healthcare world originally. My team isn't from the healthcare world. And that kind of lets us move a little bit faster in different ways, which, you know, has been working so far. But yeah, she had a stroke that left her unable to speak. So I actually started by trying to build her little AI tools for her speech therapy. And that led to this. Yeah.

3:06:28Michael Manapat:So what's the shape of the business today? Is this like a multiple-sided marketplace at this point? Like who are all the customers and suppliers that you work with?

3:06:38Connor Sweeney:Yeah, for sure. So we connect, like I said, the older adults in our family, I would say they're like our patients, right? Our customers. And we connect them to our advocates who, you know, we have dozens and dozens of folks they're contractors. But what's really nice is that insurance usually covers almost all of the costs. So we work with like Medicare, Medicare Advantage plans, even Medicaid in certain states, so that like 98 % of our patients or end customers get this for nothing out of pocket, which is really cool.

3:07:07Michael Manapat:Yeah. How do you get the end customers on board? I feel like you could run a bunch of Facebook ads. Advertising on Fox News. Yeah, as a TV. I just feel like everyone is like, you know, doing viral launch videos, going after the early adopter tech audience, but you're going after a very different audience. I feel like your growth mechanism is going to be interesting to hear about.

3:07:28Connor Sweeney:It's honestly more fun too, because it is an audience that watches Remnant TV. And the scrolling bar at the box, like the Netflix TV state, is actually apparently really high converting. We do stuff with flyers. Of course, we're on Facebook, Google, the whole nine yards there. But we also partner with a lot of B2B health systems. And so with nursing homes and home health agencies, we often pick up folks that way too.

3:07:52Matthew Harpe:Got it. How are you using AI at the product level? Is it helping make the care providers a lot more effective? What does that look like? Yeah, for sure.

3:08:05Connor Sweeney:Our advocates all use AI where it's appropriate. A lot of the tasks that they're doing are repeated over and over again. We're constantly making enrollments into things like food stamps and Medicaid. We're constantly fighting insurance denials, writing rejection letters, waiting on hold with doctors to the offices to make appointments. All of those are like perfect tasks for AI, right? Like either OCR or voice AI. So there's a lot of like that really like, you know, technical work. But what's cool is that, you know, the patients of those customers, they really like just having a human that they can call or text 24-7 that doesn't work for like the insurance company or hospital.

3:08:46Connor Sweeney:That slight difference that our advocates are in their corner rather than some third party really seems to be better received.

3:08:54Michael Manapat:Take us through the fundraising news.

3:08:56Connor Sweeney:Yeah, what's the details? For sure. So General Catalyst led our seed. That happened just a month or two ago, but raised a little under$7 million. And we have like a team of 10 in New York right now. It's a young company, but we're scaling.

3:09:15Matthew Harpe:Congratulations. Also, can't forget about Genius, my neighbor Ben. Oh, really? He's also. Oh, okay.

3:09:23Michael Manapat:There we go.

3:09:24Matthew Harpe:Love that. Shout out to Ben and Adam.

3:09:27Michael Manapat:That's fantastic. Well, thank you so much for coming on the show. Have a great rest of your week, and we'll talk to you soon. Cheers. Goodbye. Let me tell you about Railway. Railway is the all-in-one intelligent cloud provider. Use your favorite agent to deploy web apps, servers, databases, and more, while Railway automatically takes care of scaling, monitoring, and security. And without further ado, we have Matt Harb from Basis in the Restream waiting room. Let's bring him into the TBP and Ultradome. How are you doing, Matt?

3:09:52Connor Sweeney:What's going on? Hey, guys. How's it going?

3:09:55Michael Manapat:It's going well. First time on the show, please introduce yourself and the company.

3:10:01Connor Sweeney:Yeah. Well, first, thank you guys for having me. Appreciate it. Matt, one of the co-founders of Basis. We are a fully in-person company in New York. Whoa. We build an AI. Yes, 100 % here. No office in SF yet. You've got to meet Keith Raboy. He's going to love it.

3:10:17Matthew Harpe:He's a New Yorker. No, I'm kidding.

3:10:19Connor Sweeney:We got Keith up here a lot. He's here playing. He's great. But no, we are an AI platform for accounting teams. So we build long horizon agents that are able to automate various parts of accounting workflows. And we've been here for a couple of years.

3:10:34Michael Manapat:Yeah. How narrow of workflows are you talking about? Is this like a tool that integrates into other ERP accounting systems? Or do you want to replace everything? How do you think about the actual go-to-market and then the product fringes?

3:10:51Connor Sweeney:Yeah, it's a great question. Our objective is not to rip and replace any software. Our goal is solely to sit on top of other pieces of software and sit in the workflows that people are already doing and then say, really, no one should be doing any work. We should take the doers of the work and make them the reviewers of the work and have the AI perform the first pass of all the various things that might need to be done. So that means we need to integrate it into various systems, but it also means that from a deployment perspective, you can easily stand up basis in your environment and put it to work without having to rip out existing software.

3:11:23Michael Manapat:And where, like, a lot of people have tracked the progress in software, most software. Like, when you say the doer of the work turns into the reviewer, that feels like what's happening in Agenta coding right now. Yeah. How, like where in accounting, how far along are we, would you entrust a reviewer to not actually do any of the work on, I don't know, your personal tax return or something? But I don't know what the toy example is, but how close are we to, you know, this situation like what we're seeing with coding where people say, I don't write any code anymore. When will we see accountants say, I don't do any of the work.

3:12:01Michael Manapat:I just review the, I just review the work.

3:12:04Connor Sweeney:Yeah, it's a great question. I think it depends a little bit on the complexity of the task. For instance, there are some things that the basis has been able to do for quite a while, where I think accountants have already sort of built up trust in basis's ability to do these things. And so in those situations, there may be spot checking, but they may not be reviewing quite as actively. I mean, then there's some things, for instance, we just released yesterday an example of the first AI that's able to complete an entire corporate tax return workbook end to end by itself, which I think is a remarkable milestone in the accounting world.

3:12:37Connor Sweeney:And that's something where that's a capability that's only existed for the last couple of months. And so that capability, obviously, you'd apply a different sort of level of review to those types of situations. The interesting thing is that accounting is actually built for these types of review. So accounting, obviously, accuracy is extremely important. Humans themselves make lots of mistakes. And so accounting already has multiple levels of review that are built into processes, which means that when accountants are thinking about how to deploy basis, they can kind of apply that same review mentality to incorporating basis into their workflow.

3:13:07Connor Sweeney:Think about what are the areas of highest risk. Make sure that you can see it doing the work in the way that you think makes sense first. And then as you build up trust, you sort of can adopt the way that you actually think about reviewing the work. And then to the point on coding, I think it's interesting because accounting is obviously not a text in text out discipline. It's not something where there's tons of data on the internet about various accounting workflows. And so I think it's not quite as immediately obvious how to use AI to help with those workflows to the extent that it is in legal or in coding or other areas where LLMs out of the box are clearly very good.

3:13:44Connor Sweeney:And so I think it has taken some time for AI to get good enough to get the requisite level of accuracy and over sufficiently complex tasks for it to be extremely useful. But I think that's kind of flipped over the course of the last year. And I think what we've seen play out in software engineering over the last year will play out in accounting in the company.

3:14:01Matthew Harpe:What do various players in the accounting world, how are they processing AI overall? Do they think that the fee model will have to change? I remember, I forget, there was one auditor that was getting mad at their auditor for saying like, hey, we know you're using AI. You've got to give us a better price. And they're like, wait. You're an auditor. or something.

3:14:24Michael Manapat:Yeah, it was the Spider-Man meme.

3:14:26Matthew Harpe:But yeah, how are people processing it?

3:14:29Connor Sweeney:Yeah, it's a great question. I think one of the interesting dynamics about accounting that I think is not true for a lot of other professions or areas of professional service is there is a very dramatic shortage of accountants in the US. And so when we started out serving a number of our customers, they were not necessarily interested in doing AI for the sake of AI. I think over the course of the last year, that's flipped and everyone's board says, what are we doing from an AI perspective and people want to have AI initiatives. When we started in 2023, that was not the case at all. What was the case, though, is that there was a huge shortage of accountants.

3:14:59Connor Sweeney:And I think roughly 300 ,000 accountants left the profession over a two-year period in and around COVID. You never know what to make of these demographic estimates, but they say roughly 75 % of accountants will retire over the course of the next decade. And there are very few folks joining the profession to make up that gap. And so that means that if you are an accounting team or an accounting firm, one of the core things you have to solve for is how do we continue to do the work that we need to do with the people that we can hire? And so one of the things that BASIS has enabled firms to do is to take on a lot of the work that otherwise they would not be able to get done because of the shortages that exist.

3:15:35Connor Sweeney:And so I think that dynamic has made the adoption maybe happen quicker than it would have otherwise have if that shortage didn't exist.

3:15:44Matthew Harpe:Yeah, it's fascinating. On the other side, in law, from what we've seen, you have tons of people applying to law school simply because – maybe just because they don't have anything better to do, which implies like we may have a huge influx of lawyers. But accounting, not as prestigious, hasn't – yeah, I can see why it hasn't attracted the same influx. But yeah, I think even as I think about it – All these kids just want to be astrographs. I've had, you know, working with a number of firms over the years, it's always, like, super annoying if the partner or associate, more so on the associate side of an accounting firm, leaves.

3:16:24Matthew Harpe:And then there's all this, like, context that's lost. And you really, like, if an agent had been helping with that entire process, it would be a lot smoother. So I'm going to recommend Basis to our firm.

3:16:37Michael Manapat:I have one more question. We'll let you get back to your busy day. How do you think about harness development and throwing the context back to the human in the middle? Because it sounds great to be like, okay, I'll turn this agent loose and it'll come back to something I can review. But a lot of these things when I'm interacting with great accountants, it's not just sum up all the bills and you have your total revenue or something. It's like, okay, I found a bill. I don't know how to categorize it. Is this CapEx? Is this OpEx? Is this a business expense? how do we be classifying this? And like, sometimes that data can just be, you know, agentically go and, you know, look at the receipt, figure out what happened, figure out how to classify it.

3:17:18But a lot of times it requires

3:17:20Michael Manapat:in an interaction with a human, either over Slack or over an email or something. And so I imagine that deciding how to be, you know, persistent, but not annoying, is that a big challenge that you're actually working on? Or do I have that kind of roadmap wrong?

3:17:37Connor Sweeney:Yeah, a hundred percent. very important part of things like part of doing accounting work is the world is this very messy complicated place where all sorts of economic activity is happening and you need to figure out how to get that information um in order to properly account for things when you were not present at the time of some kind of economic interaction so it's very important and i think it is one of the challenges of you know we spent a lot of time thinking about these long horizon agents because you know because of the nature of accounting work uh you know this sort of chatbot experience is not one that naturally works.

3:18:07Connor Sweeney:And so we've been focused on developing these agents that can sort of work on more complex tasks over longer periods of time. And one of the challenges there is you have to figure out as the agent is going about doing its work, when to interrupt and ask the human a question, and also how to provide the human insight into what's going on. Let's say you're going to do a task and the AI is going to go off for the entire day. You know, the human can't find out at the end of the day that it did something that wasn't exactly aligned with what they wanted, because then the whole day has been wasted and they need to deliver something to their client.

3:18:35Connor Sweeney:So figuring out how to both give visibility and then also how to raise concerns to the human user is extremely important. And sometimes you even need to go directly to a different source. You need to send an email or take some other action in order to complete the workflow. So I think it's an essential part of long horizon you can develop.

3:18:53Matthew Harpe:Super competitive hiring market right now. Give us your 60 second elevator pitch if you're competing to hire somebody with the big labs or somebody that might join Harvey or Cognition or any of these other companies? How do you close them?

3:19:12Connor Sweeney:Yeah. Well, I mean, look, there's lots of exciting things going on and lots of great opportunities out there. But I think there are a couple of things that we think are particularly important and it might not appeal to everyone, but certainly a certain type of person. I think the first is that we are pretty much solely focused on building the most capable, most accurate long-horising agents. And I think we're at the frontier of that work. We work very closely with the labs that are building the most sophisticated reasoning models than we have for quite a while. And so I think for folks who are interested in figuring out how can we build the most capable, most autonomous systems and apply them to actual, to real work in the real economy, that is part of the work that we do, or it's really the core part of the work we do that I think is methodologically extremely interesting.

3:19:55Connor Sweeney:I think the second thing is that we are a fully in-person team in New York and all of our research, all of our engineering takes place here. And I think there are very few other companies that are on the frontier of applied ML and are also fully in New York. Obviously, there are limitations relative to the Bay Area in some ways, but I think there's amazing ML talent here. And so we are sort of hopefully becoming the home for applied ML talent in New York City. And then I think finally, accounting is just a hugely important part of the economy and how we operate as a society. We sort of see it as the fundamental way in which we understand economic life, in which we sort of structure and systematize all the economic activity that happens.

3:20:35Connor Sweeney:And then it has tremendous implications downstream in the organization for how people make decisions. And we think there's a huge opportunity to do way more accounting than we're doing right now, and that could actually help organizations function in a much more effective manner. We actually think it has an interesting parallel to engineering in a certain sense, which is that accounting is about, you know, how do you sort of systematize and abstract this very complicated world? And in some sense, that is like the practice of software engineering as well as like, how do we understand, you know, this very complex domain and reduce it to a piece of reliable software that we can use?

3:21:06Connor Sweeney:And so I think it's much more important than people think. And I think it actually is very sort of compatible with the ways that, you know, engineers and NML folks like to think as well. So those are the things that we sort of think are most important. And, you know, we're really lucky to have a great group of folks here at Races.

3:21:24Michael Manapat:And you got some money to hire more people. Take us through the fundraising round. What happened?

3:21:29Connor Sweeney:Yeah, so I think when we're thinking about raising money, one thing that never changes is the strategy and what we're trying to execute from a business perspective. We have actually at our first seed round and then at every successive round, written a quick memo or cover letter. It just outlines a strategy. And the strategy, which is that we are trying to build these long-rising agents to solve the important problems in accounting has not changed. Some of the core principles around how we make decisions have not changed. So we actually try to make sure that when we raise a round, it doesn't actually change the strategy of what we're doing in a meaningful way.

3:22:03Connor Sweeney:Like we think that you should be relatively consistent. You should obviously update as you go in that respect. What it does allow us to do is it allows us to keep growing the team in the ways that it needs to grow. And so that's mostly what we brought the additional capital on in order to you. There's so many different domains of accounting. There's so much ML and engineering work that needs to be done. No matter how much we use AI internally to make all those things more efficient, there's just endless things left to do. And so we just felt it was the right time to do it. And we're very thankful that we have a great set of investors around the table to allow us to keep making that.

3:22:33Michael Manapat:And how much did you raise in this most recent round?

3:22:36Connor Sweeney:We raised 100 in this round.

3:22:42Michael Manapat:Thank you for coming on the show. Have a great rest of your day. And we will talk to you soon.

3:22:48Matthew Harpe:Yeah, great to meet you. Thank you. Bye. Cheers.

3:22:51Michael Manapat:Well, I need to hop on with the English countryside soon. So are there any more news stories that we should cover before we plant the bomb? Figma director Andrew Reid just bought$36.5 million worth of Figma, the largest ever insider buy of Figma. Very exciting for him. He's going longma on the Figma. uh, uh, dream leave. It's a stretch. Um, people were debating back and forth with also capital founder Mike, who came on the show earlier. Uh, I, you know, I think he had a really good point. I like his point. Um, I just think it's funny that Yimby land, uh, ratioed us into the stratosphere by posting.

3:23:39Michael Manapat:No, you can't just vertically integrate like that. Meanwhile, in China, BYD, I guess we do in ships now. I had no idea. I saw the BYD logo on a ship. I didn't realize that they made the ship, I guess. They make everything. I guess they make cars and monorails too. Absolutely insane. But 10 ,000 likes on this. And although it's like, I don't know, it's a dunk ratio, whatever, it is an inspiring message. If they can do it, why can't we? So just do it. Just go build a super tanker, I guess. Figure it out. Anyway, anything else from the timeline that you'd like to talk about before we call it a day?

3:24:21Matthew Harpe:There's a lot more.

3:24:22Michael Manapat:There's a ton more. Mark Zuckerberg is planning a stable coin comeback. They also have a banger deal with AMD going on. And if you head to the bar this weekend and you drink too much, You should just say that you were the victim of a distillation attack. That's the correct turn of phrase. Anyway, thank you for watching. Leave us five stars on Apple Podcasts and Spotify. Have a wonderful day. Nice work, brothers. I'll see you on the next one.