Keith Rabois, Ramp's $13B Valuation, Crypto Reserve, Moon Landing, Packy McCormick and Sheel Mohnot

31:30Bad vibes on this. So they were basically doing a public sort of like equity financing type thing that you just got tokens or something and now now they just have this you know basically uh hedge fund uh trump coin he says nine out of ten completely unhinged just a crazy move overall uh melania coin he's he's actually pretty harsher he says six out of ten kind of sad at this point but it was the beginning of the end for meme coins and introduced us to kelsior which was behind the malay project which was funny so there are positive and then he said crypto reserve featuring cardano and xrp 10 out of 10 i didn't even know what to say about this a government bailout for your buddy who gets crypto news from tiktok silver lining at least the maxis are upset sad how long this list is so i think to be honest i think uh nick had the best takes across the board over the last 24 hours uh we should get him on tomorrow and uh so we got another post from jack uh rains over at slow he says this is a great take and it's a post from david sacks in 2021 that says uh who's now our crypto czar yep uh he says the problem with government as a capital allocator is that the money goes to special interests who have the ability to lobby but not to innovate and it has to come from somewhere usually innovators haven't built up influence yet uh so anyways uh and uh Good, good, good one to surface.

32:55Sam Lesson, another crypto project guy and GP over slow says LOL. So anyways, tough one. Again, David Sachs, you have to imagine. If I had to if David Sachs could say what he actually thought, I would say that maybe he thinks that there should be a Bitcoin reserve in the same way that there's a gold reserve. I don't think that if he could have made this policy himself, that he would have just made it the top five projects by market cap. Yeah, he does. He is in a weird situation. And again, we have no idea how much he's actually shaping policy. Yeah. He is the crypto czar. Yeah. But what does that really mean?

33:40Well, he's also the crypto and AI czar. Yeah. And arguably, AI is probably a lot more important for him to be focused on. Yeah. But to date, you know. If anything goes wrong, he's going to take the blame. Yeah, so I remember Saturday night, Trump coin gets launched. And I'm thinking to myself, it's very possible that Sachs didn't know this was happening. Totally. And now he's in a position where he has to defend the actions and make up some... He kind of has to say something about it. I don't remember what he actually would have shared. But he's definitely along for the ride right now. I mean, clearly anytime someone, anytime the government does anything iffy with crypto, he's going to take the brunt of the attack effectively, even if he was not in the room when it happened.

34:28But he has been pretty good on comms. He very quickly anticipated, people are going to think I'm pumping my own bags. Let me make it clear that I did sell all of my personal holdings. I might have some look through exposure, but that's a separate thing. I'm not actively managing any any positions here and most importantly it's not like I went I'm not front-running this I'm not like egregiously insider trading this and like the bar so low that I think a lot of people look at it and they're like yeah okay like at least you at least you're not trading aggressively. Go TA over at Alongside who we've had on the show before takes a screenshot of Truth Social Donald Trump had to add a clarification he says so basically he came out and initially just said the crypto reserve featuring solana cardano and xrp and then he had to follow it up he had to follow it up and say and obviously bitcoin and ethereum as as other valuable cryptocurrencies will be at the heart of the reserve i also love bitcoin and ethereum so the coming out and just saying the meme coin network cardano and xrp are i know i like i do i do genuinely i i think the the the team behind solana is fairly like legitimate i did a whole the whole thing no and it's the i think they're building cool technology genuinely bitcoin is digital gold solana is payment rails for the greatest casino in history yes and uh with the native sort of like poker chip yeah right like it it makes sense and then card and then cardano and xrp is the is like the the immutable like uh yeah instrument it's like the fundamental unit of value on solano is the poker chip but but cardano and xrp are you know people were joking like this is huge for uber drivers because it's like the fake one right yeah anytime anytime somebody that's outside of tech asked me like oh what do you think about crypto they're always like yeah i'm like oh like blah blah blah yeah like i have bitcoin and cardano cardano and they're like and the funny thing is is cardano and xrp yeah like one of the reasons that you could make the argument that you should put them in the strategic reserve is they sort of just like generally trade based on bitcoin too so like they're all sort of like fluctuating at different rates but um uh overall fantastic and then it's hilarious yeah people were trying to put But Sachs in the truth zone over Isaac Saul says that's a pretty weak dodge, David, calling out that.

37:01The conflict of interest here. And they say first, Sachs' firm, Kraft Ventures, has been invested in a startup called Bitwise since 2017. David Sachs was a lead investor. Right now, Bitwise is celebrating. So the CEO of Bitwise came out the top five holdings of the Bitwise 10 crypto index fund. because the main crypto coins going, the best way to out yourself is not understanding crypto as to call them crypto coins. That's hilarious. Not ironically. Anyways, so the main crypto coins going in the crypto strategic reserve just so happened to match Bitwise's top five crypto holdings. And the reason for this is that the tokens going in the crypto reserve are just the largest project by market cap.

37:39Yeah, except for Binance coin, which didn't make it in. Because that's like the Chinese one. Yeah, right, right. Which makes sense. Anyway, so... So we talked about this. It's not crazy. Also, there's a question about like, you know, yes, he, uh, so Sachs invested through Kraft. I, I don't know if Sachs is stepping back from direct control over Kraft over the czarship. It could be, uh, I don't have an obvious, but I doubt he has a board seat. Um, like that doesn't mean that he also invested in the, in the index fund. And it's like, yeah, there's just like, there's like seven layers of like conflict here that where it doesn't seem like that bad, but also it's not great.

38:19But also it's like, how could you ever find someone credible at all to advise the government on crypto who had never invested in crypto? Like that's basically impossible, right? Well, yeah. And to be honest, the way, so Saks is very good at the internet, right? He has one of the biggest podcasts in the world. He's got a hyper-engaged X following. If he was running point on the strategic reserve announcement, it wouldn't have gone out like, hey, we're putting Cardano, XRP, and Solana in the reserve. Oh, and also we're doing this. So it would have just been, so clearly he's not actually running point on anything or has any impact on sort of the comms around this stuff.

38:57Right, that feels very obvious. We have another post here from Joe. He says, even prior to today, there are a lot of professional people in crypto who have been denigrating coins like XRP and ADA for a long time, and yet they're still here largely riding the same beta and performing not much differently from Solana and ETH. Why is that? um he says all the big defy stuff is on salon and eth most of the nfts you hear about are on salon i completely agree you would intuitively think that salon and eth would have built up some gigantic market cap over others like ada and xrp and yet um and uh laura shin has a take yeah it's a good point it's kind of interesting uh it's because their total supply is many billions 45 billion for ada and 100 billion for xrp that gives them an inflated market cap even if you limit it to the circulating supply of 36 or 58 billion respectively it's still many many multiples of the circulating supply yeah other side is of the coin is that they benefit from small unit prices someone with a limited crypto allocation can feel like they're buying a lot of coins it's still still doesn't fully explain it um it's ridiculous but like these psychology things are real i mean like even like warren buffett has to split shares i mean at a certain point yeah i mean you can't buy Berkshire Hathaway Class A because it's like 250k a share.

40:16Well, there was a while where you couldn't buy fractionalized shares very easily too, which is a big factor. But that never was a thing on crypto. We have a post from Fat Man. He said the whale. So on Saturday night, there was a bunch of hubbub on X because all this is happening on chain. This whale comes on and does a 50x long on Ethereum and maybe one of the other positions. using only$4 million in capital to create a$200 million position. As the strategic reserve was announced on Sunday, they went up, I think, about$6 million. It says$5 million here. Coincidentally, perfectly timing Trump's true social post, confirming a United States crypto reserve.

40:59So obviously some insider action here. Who knows who it was? But it's hard to say, right? because these assets haven't been explicitly sort of designated as securities. You know, it's sort of a gray area, but at the same time, you know, sort of insider trading collusion is broadly illegal. And you would have to hope that this kind of thing got cracked down on because it's, you know, some serious size being thrown around. It's a bad look. Yeah. Very, very bad look. Yeah. And for what it's worth, that guy, Nate Chastain, went to prison. He's in prison today for doing the same type of activity on OpenSea.

41:42He was the product manager at OpenSea who was involved in the decision making around what NFTs got featured on the homepage. And so he would just buy them. They would pop. He would sell them. And he went to jail for that. He went to jail. He's sitting in jail. I think it was at least for a few years. Yeah. I mean, the question of like, of like is it a security or not blah blah it's like there's just something clearly immoral about having an edge on anything that has a financial asset wrapped around it and so i don't care if it's a monkey picture or a decentralized cryptocurrency or a stock like you clearly have an edge you're trading on it you're stealing money from people like so he's actually out of prison now he only had to go in for three months and then three years of supervised release uh so They were trying to make an example out of him.

42:30But overall, I think this is enough of a precedent. It doesn't seem unreasonable. Yeah, enough of a precedent to say whoever was trading on Insider Info ahead of the strategic reserve announcement probably. It's kind of crazy, too, that they got a 2x in 24 hours. They had to put it less than a 2x, right? I mean, 50x long is pretty crazy. I mean, like... But the issue is... It speaks to the lack of volatility. and it's a very low volatility asset right like like i feel like for something as monumental as like the government is going to be stockpiling this asset like yeah you should not need to go so long just to double your money like i feel like a 50x long like just like an nvidia earn a slight nvidia earnings beat is enough to do this but it's pretty sticky yeah and then uh there's a funny post here if he was really an insider he would have longed anything other than ethan btc though let's be honest because of course everything else no this is a good response he says uh i don't uh the original poster says i don't know if it was an insider or not but it's possible for an insider to know the tweet is coming but not know the exact contents of the tweet which was again good hey this is gonna happen i mean the rumor was out there i heard the rumor months ago the original way to index the crypto market which is why crypto indexes didn't become super popular so you could just buy the few biggest coins by market cap basically have an index yeah it is interesting also when i see this i want to know like okay yes uh four million dollars 50x long that seems like a lot but does this type of trade happen every single day because in that case maybe this isn't insider trading maybe there's just one random person who's doing this every day and then something big happens and then you see it pop you know this was out of the ordinary it also was funded by a wallet that was associated with phishing okay so uh who knows what's going on there uh we can cap it off uh we have a post here from paki who's joining in about an hour he says not to get all political but cardano crying emojis uh and then uh another post from i actually don't i actually don't understand cardano that well because wasn't the guy like one of the co-founders of ethereum like is cardano not a serious technical project or because it hasn't been like hacked or anything right like like it works i think i think cardano and xrp are two two blockchains.

44:47I know that they're not taken seriously, but I don't know if they're. They were super early and they were ICOs that never delivered on from a - From a product perspective or an adoption perspective. An adoption perspective. The price is really the only thing. It's one of those things like Solana came about, they were like, we're gonna build a really fast blockchain. We're gonna build this amazing developer ecosystem on it. And then they basically did exactly that. They kind of did it, yeah. Right. And and one of the things is payment rails for the global casino. Yeah, that's the sound fight. And yeah, overall, it makes sense that, you know, you know, in 2022, every other week you'd have a new L1 blockchain and then it was a new L2 blockchain.

45:30And what we're seeing now is that it seems like, you know, developer and investor activity have sort of focused in on Solana. and you know it makes sense right there's there's no reason that um there should be you know a hundred different l1s um anyways last post for this one we have from atlas uh at creatine cycle he says american strategic scam and gambling reserve with the uh with the bald eagle i was so inspired by that yeah you were inspired we got it we got it uh immediately ripped i'm gonna pull up John's post. He says, you want to read it out? Say, now that we have a strategic crypto gambling reserve, the next obvious step is to introduce universal basic parlay.

46:15Every Friday, Uncle Sam should send$5 to every citizen's DraftKings account to give them a little thrill going into the weekend. Fantastic. Obviously, I'm very anti-gambling. We got to get that into sexier. you know that's next yeah i mean there's something to it just giving someone a little hey there's a chance it you know it's like the government already runs casinos or like the lottery and they give you little stimulus the stimulus is giving everyone the same amount of money right um and so this is a version of uh of that but uh instead of giving instead of giving everyone a thousand dollars for the covid checks the trump checks remember that yeah what was it a thousand bucks something like that something like i don't know i don't think i qualified i don't think i got it but uh i think everyone got like a thousand bucks uh and then they went and bought sneakers and bitcoin and and uh game stop stock yeah instead of that it cut out the middle man instead of giving everyone the thousand dollars and then they go gamble it yeah just give them yeah a lottery ticket yep and so everyone gets it and it's like hey we need we have a trillion dollars in stimulus we're gonna make we're gonna give you a thousand billionaires so so every american we know you're suffering there's a one in a million chance that you become a billionaire incredible the american dream the american dream yeah the american dream um okay we got we got keith coming on 15 minutes amazing uh we got paki coming on in in third in 45 minutes and we got shield in an hour so let's keep moving on let's keep talking we got 15 minutes to run through you know what's something else that people would take uh strategic stockpile of no what's yeah strategic what's what's another thing that the u.s government should be getting a strategic stockpile of holy trinity watches and you know i want it i would be more comfortable as a citizen if i knew that uncle sam had a hundred thousand day dates yes

48:22yeah yeah like just rolex is for everyone like i would like to know that the the u.s government yeah could at any point decimate the watch market yes by flooding the market yeah and if you really so imagine let's let's say if trump really wanted to build goodwill yeah he would buy up every single watch yeah on the market and then at the end of his term market sell them all yeah drop Drop the prices and then every American could buy a Daytona or a Nautilus or a Day-Date. Everybody would be walking around in style. I mean, you know Fort Knox is filled with gold. Let's take that gold, turn it into Cartier tanks, turn it into Presidentials, turn it into, I don't know.

49:08What's another good gold watch? A Santos. Yeah. Let's take our gold, ship it to Cartier. One for every price range. And just be, yeah. Yeah. We'd like 1 million gold Cartier Santos. Bernard Arnault wants to avoid tariffs. Yeah, let's do a deal. Use the Fort Knox Gold. Use our Fort Knox Gold to make more watches. And then give us a cut of the net revenue on the final product. We want some of your margin. And of course, the U.S. government should order all of their watches on Bezel. You can shop 22 ,000 luxury watches, fully authenticated in-house, which would be important. Bezel's authentication team is going to be busy.

49:42Yeah, maybe we should send the Bezel authentication team to Fort Knox. They're authenticating gold watches. Why not have them authenticate gold bars? Do the bars too. Do the bars too. Yeah. Are these, are these bricks that were spray painted with yellow? Yes. Chrome spray paint. Yeah. If they can, if they can tell, is this watch just, you know, gold plated versus gold. Have you seen that viral post? That's like, like, oh, like there's like these fake jewelry companies that sell on Tik TOK and no one can tell the difference because they gold plate them instead of making them solid gold. And Ryan Peterson was like, didn't Archimedes figure this out 2000 years ago?

50:17Like you literally just have to figure out the density. So you just put it in the tub and look at the water displacement. And then you weigh it on a scale, which has existed for thousands of years. And everyone on TikTok is like, it's impossible. We can't figure out if it's gold plated or not without destroying it. It's impossible. It's so funny to me that he just like, he's just dunked with like the Archimedes thing. like we've actually been able to solve this problem for thousands of years uh but misinformation continues to be continues to be the problem anyway uh information is back yeah well we have some real information for you real information uh trump and chip maker tsmc expected to announce a hundred billion dollar investment in the u.s it is the latest effort by trump to persuade companies to make big investments in the u.s what do you got john uh it's exciting i mean the the whole tune and the whole the whole just i don't know vibes around the chip ban and how we are playing the the semiconductor strategy in the era of ai has changed pretty radically like there was definitely a thought in post chat gpt post doomers having a serious say and being taken pretty seriously there was definitely a vibe of like yeah like this is going to be a weapon this is going to be something that's very valuable.

51:38We need to corner this resource. This is maybe like nuclear weapons. We should maybe lock it down. We should make sure that it's not just, you know, being stolen left and right. And also we should restrict the chips that allow these models to run at scale. And then, you know, flash forward a few years, we've done the chip ban. NVIDIA was able to restrict the memory bandwidth on the H80 instead of the A100. They basically created a custom one that complied with the chip bands. China bought a bunch of those. DeepSeek team optimizes, winds up building a frontier model. Now, we've talked about this before.

52:16We don't think that NVIDIA has gotten enough sort of flack for sort of working around the chip band. But at the same time, so many major US institutions have so much, such large positions in NVIDIA. you know there's actually a good you know you brought this up earlier ben thompson has made a good argument for we actually should the chip ban is probably bad we want china to be dependent on you know tsmc chips and not to build uh their own sort of alternatives to it so that they they're they sort of worry about you know invading taiwan uh for that reason and ben thompson uh lives in taiwan obviously doesn't you know wants to continue living there i don't think he would be too welcome after a Chinese invasion, given his long history of critiquing.

53:07Yeah. And so China's rebuilding the TSMC supply chain right now. They have SMIC and SME, which are the TSMC and ASML copycats, but they are potentially a decade behind. It's very hard to tell how close they are to the frontier. I mean, even Intel, AMD are not near the frontier. and American companies have been struggling to catch up, which is why we, you know, both every administration, every tech leader has been like, let's get TSMC to come here. Can't we just, you know, give all those people green cards or gold cards? We didn't really talk about the gold card thing, but I think people would happily pay 5 million per person to bring over the TSMC experts and manufacturing.

53:52Yeah, the challenge there though is you have Taiwanese people who love Taiwan and have yeah they don't just want to leave their country because there's like slight tensions between two companies that aren't uh two countries that are just rivals like yeah we're not enemies with china we're just rivals like we're not allies but we're in the world trade organization together we're in the un together like we are not at war sure sure that's a bigger debate but we are not geopolitical experts we're we're in like an economic tiff but that's about it and i don't know one's killing each other i mean ask the ask the fish off the coast of argentina okay okay uh i i know but but you know what i what i like about this announcement hopefully it goes through is that this sort of america first investment executive order yeah uh this is the kind of thing that makes that eo real yeah and so 100 billion in chip manufacturing plants of the next four years in a short timeline too yeah it's not a xai speed but uh you know certainly pretty and there was news that uh that tsmc was making good progress at their arizona plant yep i don't know if it's in this article but yeah that should give them confidence in you know making a much larger investment yep uh to the u.s advanced chip packaging is particularly critical for ai related chips as it enhances performance by integrating multiple semiconductor components reducing size improving power efficiency and ensuring faster data transfer key applications for key factors for ai applications the u.s has supported tsmc's growth through 2022's chips act which earmarked tens of billions of dollars in grants to domestic chip manufacturing and this is the other criticism that uh ben thompson has always uh lobbied against the chips act is that it's grants it's hey we'll just give you money to just go try and build these instead of instead of being demand side It's supply side.

55:44So much better to just say, hey, we want to create, actually, strategic reserve. Like the U.S. is a buyer of these chips at this price. If you can domestically manufacture a chip that is competitive with a NVIDIA H100 or H800 at scale in America, boom, we'll buy it. We'll build a data center. And then we'll be the leaser. And then maybe we'll just sell it immediately. But you know that the demand's there. and that's enough for the free market to go work and figure everything else out as opposed to, oh, there's this grant that's going out and so the grant got parceled up and now all of a sudden you have to do it.

56:19You can't just do it in America, you have to do it in Arizona because the Arizona guy gave more of the grant and like this and the taxes and this and all of a sudden it becomes like the government is now managing the project fully instead of just being like, hey, we're just a buyer. We're just a buyer. Yeah, and so going back to one of your earlier points, so TSMC, the world's largest contract chip maker, Baker set down roots in Arizona in 2020 when it said it would build a chip factory there for$12 billion. Its ambitions for the site have expanded rapidly since with two more factories on the same site and a total investment of$65 billion.

56:51The company's first factory began mass production late last year. So we'd love to see them make a significant$12 billion investment and then commit to expanding that site as well as committing additional capital. hopefully this announcement isn't final yet but uh have to imagine it it'll be um sort of set in stone later this week that's great um yeah love to see it and yeah i mean the the the the tsmc stuff it is it is it is somewhat interesting how ai has made everything it's democratized learning in the sense that like the you know like it just codes for you you can also learn pretty much anything any history you can just go and talk to it and it's your teacher uh except for making the chips that make ai possible yep all of that knowledge is just locked away yeah you have to legend you are you know uh in these uh what do they call them like mentor mentee uh you know artisan like like uh like they they don't open source any of the papers so there's nothing to build on and so deep research like if you actually ask it how to run an asml machine and get good yields uh it will come up very very short yeah the uh interesting thing is it seems that the conversations around intel and potentially elon getting involved with intel have gone uh silent i haven't heard much uh from that front yeah all the all the airplanes were like encircling and we'll see where it goes yeah anyway um let's move on to the moon let's talk about the moon what a shot the first lunar sunrise and everybody assured by a commercial lunar lander we tried our best to get a you know flat earther on the show today somebody a moon denier uh but we're squarely and the moon should be a state category here which is why we're happy to see yeah an american private company is landing on the moon in collaboration with nasa i really want to know the moon yeah the moon landing denier like they have to deny this too and then they have to deny the next one that's going to happen and then space next and then elon and it's just like well the moon was a bit of a lost art for a while right it was it was it was easy to be a denier when it was like oh that happened 30 years ago it's great footage was involved and now it's like okay we're gonna be up there all the time uh and so huge huge news we have the uh we have the breakdown here uh blue ghost uh which is a private u.s spacecraft landed on the moon after its successful lunar touchdown Firefly Aerospace's Blue Ghost mission could soon be joined on the moon by two more commercial spacecraft.

59:25And we have two minutes to rip through this before Keith, I think, will be hopping on. Yeah, and we just have to call out that Firefly Aerospace's comms are not where they should be, right? Oh, good point. The fact that nobody really knew this was kind of happening until they were basically on the moon. And Austin's calling out a private company just flew to the moon i didn't hear about it until now so yeah it is hilarious like anyone else who would do this would be like seven days until we land on the moon five days until we buy merch here's a documentary about it here's the video about it they just went and did it it's amazing i mean which is also cool it's cool yeah i mean they were clearly rare and deep tech today uh what do they call it monk mode monk mode something um they were just doing they were just focused on themselves after 45 after 45 days in space and a pulse pounding semi-autonomous hour-long descent to its landing site at 3 a.m.

1:00:19Eastern Standard Time. The boxy car-sized spacecraft's four-foot-tipped legs crunched into the surface of Mare Chrissium, a vast and ancient impact basin filled with frozen lava on the moon's northeastern near side. This marks the second time the U.S. has soft landed on the moon since the crewed Apollo 17 mission of 1972. The first occurred just more than a year ago when another robotic commercial mission the odysseus lander from the company intuitive machines made moonfall lopsided but intact how do we not know about intuitive machines i don't remember either so space companies please reach out to lulu yeah and get your act together that is so yeah that is truly stuff just going up there yeah the the fact that uh who knows what we were talking about when when intuitive machines went to the moon but um Here you may believe in geschüssel you three times if you know how to do the� Demokraten 하는 guy.

1:01:10Thank you. Yeah, I want to know more of this. Maybe it's because it's not launching on SpaceX. SpaceX? It's just not getting enough attention? How did they? I think they went, it says, it's a suite of 10 experiments provided by NASA as part of the space agency's commercial lunar payload services, CLPS, public-private partnership. So NASA's effort to save cost by enlisting more than a dozen U.S. firms to ferry cargo tied to the U.S. space agency's ambitious Artemis program. I honestly don't know. I honestly do not know how it's going to happen. an elon critic might say that elon is intentionally no sort of look resilience also also called hakuto r mission to launch to the moon alongside blue ghost on a spacex falcon 9 rocket in mid january but unlike other landers okay so i'm surprised that elon wasn't pumping this harder but he's been a busy he's been busy he has been busy there's been a lot going on anyway um One of these inward-looking instruments, dubbed Lister, is a drill capable of reaching a record setting three meters beneath the lunar surface to measure heat flowing up from within, deep enough to give scientists a better idea of how exactly the moon cooled from a ball of molten rock to the cold, inert world we know today.

1:02:31Another called the Lunar Magnetotelluric Sounder LMS will place electrodes across a roughly 700 square meter swath of terrain. Its measurements of subtle electric and magnetic currents coursing through the moon can probe more than 1 ,000 kilometers into the interior. Two thirds of the way to the lunar center. That's crazy. Wild. We got Keith in the waiting room. Oh yeah. that's perfect you have to imagine blue ghost was running on ramp to uh you know make it to the moon undoubtedly you can't you can't get to the moon if you're taking 45 days to close your books every month it's impossible what do you think keith is it possible the future's on ramp so all the companies that want to create the future hopefully are saving time and money up on Ramp.

1:03:26Yes, yes. I love it. Can you give us the update? What's going on with Ramp? They seem to be on a tear. Valuations never been higher. Actually, I would push back and say, take a victory lap. I know the job's not done. Eric has been very clear about that. But I feel like you can take a little bit of a victory lap and probably more this year to come, given the momentum. Well, the amazing thing about Ramp is the value proposition has been clear from the beginning. We're going to save you time. We're going to save you money. And now there's empirical evidence across any type of company. We can show that, you know, 5 % this, 10 % that.

1:04:00So it's very obvious. And the CFO world is one of the most archaic worlds, parts of any business, even the most cutting edge organizations typically have a very archaic, call it analog CFO function. And Ramp has the vision of we're going to digitalize and bring the CFO function and all the finance into the modern age and use the same tools, same techniques, same data, same software, same SaaS tools that everybody else in your organization uses. And that's why it's such an exciting vision. Like the valuation is somewhat art, not science. But the reason why investors all across the globe are ecstatic about investing in RAMP at any point is because we have this vision of changing and transforming the CFO suite.

1:04:43And every company has this broken engine, has an old engine from the 1800s or 1900s. And we're going to bring the engine of finance into the 22nd century, first to 21st century. AI will probably bring us into the 22nd century with RAMP, too. So that's why everybody's excited. The thing that's special about the company, though, in the short term is usually at this level of scale, companies slow down. The product velocity slows down. The quality of talent decreases. We have a reversion to the means, so to speak. And RAMP, if anything, is firing up all cylinders. The product velocity is increasing.

1:05:16The quality and insights of the products in the team are improving. The intern classes for the last two years are by far the best intern classes anywhere in the globe. So that's the future. And so that's why this round is very exciting because it's a prediction for the future based upon a lot of savvy people who get access to all the best companies that RAM still has the highest slope, which is a play on their metaphor. Do you think that's because Eric and Kareem are second time founders? Can you break them down as founders? What makes them able to stay on the just insane cadence going into year six, going into year 10?

1:05:56How do they have so much energy? Great question. I wish I knew the answer because I would love to invest in more. If you can come up with a formula or predict a formula, that's great. But having worked with them now for over five years, I think there's a couple ingredients. One subtle ingredient is Eric has amazing marketing instincts and you really can't train us. The best CEOs are the chief marketing officer for the company. And Eric entered originally a space that was quote unquote crowded. There were large incumbents. or other funded startups, and we're able to cut through the clutter immediately.

1:06:32And he deserves the credit for being able to clarify, distinctly, powerfully, and communicate the value proposition of RAM, and then reinvent that every year or two to make it broader, more relevant, more impressive, actually. Korean is definitely setting the engineering both tempo and quality bar, and has been from the beginning. And I think the combination is really interesting. And, you know, maybe a global point is if you look at some of the other heroic companies in people's portfolios, let's say Stripe, you have two brothers. So you're getting two executives for one. I think, you know, a ramp, there's like you're getting two CEOs for one.

1:07:09And so I think that other amazing companies, that incredible synergy between two incredibly talented people where you're always on the same page and you really reinforce each other is very rare. And so if I could find two other founders that are that much in sync, that might be the reason to invest, actually. Yeah. What are you seeing for young Gen Z founders? There's this narrative like, oh, Gen Z hasn't produced their Zuck yet. What's your take on that? And what would be some advice for the younger entrepreneurs who are coming in, maybe deciding between like, hey, I build a ChatGPT wrapper, make some money.

1:07:51maybe it's not a VC backable company, but it gets me paid versus let me take a big shot at something massive. Like how do you counsel people these days? I don't think there's a formula that works for building an iconic company. Like as you pointed out, Zuckerberg is his first company. Eric and Kareem did build a company, did sell a company. So I don't think there's a one size fits all formula. I think it really comes down to, do you have a vision of what the world needs? and do you have a strategic advantage in your own traits, your own personal superpowers that maps to that problem set? And if you have one when you're 19 years old or 20 years old or 21 years old, it might be a really good idea to proceed.

1:08:31If you don't have that combination of a vision and your own superpowers, then learning, building, working with other talented people might be a really good sort of formula. For those of you who are sports fans, there's this epic debate constant in football about you draft a rookie quarterback in the first round. Do you start that quarterback and do they learn trial by fire? Or do you sort of sit them on the bench for a year or two, have them carry the clipboard around, occasionally enter a game that's over, so to speak? And I've studied this actually empirically, and it's really interesting. There are Hall of Fame quarterbacks of both sort of backgrounds, career progressions.

1:09:10The career progressions of those who start right away, typically the first season, the performance of the quarterback is miserable. It's the worst year of their career, almost without fail. Interception to touchdown ratio as a specific illustration. The people who sit on the bench, though, for two or three years, put aside the opportunity costs there. When they start, they don't have an upside down intercept to touchdown ratio. So they do learn things. And so it depends upon the quality of the team. Anyway, I think it's most useful most of the time for founders to work in an outstanding organization for a year or two before starting their own company.

1:09:46You get a feel for a taste, taste of what great is, like what excellence really means, excellence in quality, excellence in driving an organization forward. And I think there isn't a great substitute for that. But if you're really ready to go, there are people who learn better by being told, you know, I'm throwing in the pool, learn to swim. I love it. Yeah. The question I have is, you know, you obviously noted earlier that ramp was already a pretty competitive category. People thought that it was not, you know, a lot of people had made a bet and were kind of ready to just watch the category play out.

1:10:22Do you see categories today that are like fintech in 2020 when you made what I believe was your first time investing in Ramp that are ripe for a team to come in and take this sort of new approach, kind of potentially invert the value prop in the way that Ramp did? Have you identified anything there? Is there kind of categories that you would like to invest in? Well, I was fortunate. It was in 2019. I had a fair amount of expertise in the space. And I'd come to the conclusion that there's massive opportunity in replacing Amazon business card, let alone this bigger vision of digitalizing the CFO's world.

1:10:56but the people that were funding other operations those founders and teams were missing some key ingredients and were kind of naive about some stuff underwriting specifically but there's other points so actually unusual for me i was proactively trying to find high quality founders that were interested in this problem step and then delhi unfortunately intercepted green playing a video game having listened to me probably annoyed by me pontificating every day that we needed to find like people to you know kind of compete with brax or avex and blah blah blah divvy and all this stuff and then he's like he actually walked into my office i was in shock he said like i found i think i found two founders i was like really like um but he turns out he he did um we had actually been like pitching other founders and trying to recruit people to do this so i don't usually do this but i have a lot of expertise in the area so i'm not usually proactive about trying to find investment opportunities and then similarly you know when i was working at founders Fund at the time, it was a very non-standard Founders Fund investment in many, many ways.

1:12:02The most acute one being, if you have all these competitors that are doing well, what's the monopoly story? Totally. And there is a monopoly story. I believe Ramp will be a monopoly. But imagine pitching the investment team at Founders Fund, the monopoly story in 2019 in a category that includes Amex, actually SVB even had a product in the market, Brax and did very well funded with quote-unquote traction. So it took a little bit of massaging. Fortunately, Brian Singerman also saw the potential at the time and really was alienated by some of the other founders too. So that helped correct the anti-monopoly crusade.

1:12:45That's great. Are there any categories that you're looking for right now? Hunting for founders? I mean, obviously everybody talks about AI all the time. And I think there are opportunities in AI that probably fit that characteristic where people have assumed there's a winner or winners or, you know, whether an application layer or foundational model layer or somewhere else, infrastructure layer. But perhaps the right founders, it's now five, 10 years into that story. And sometimes it takes a lot of time to bake before you get the next generation of founders. who have insights into what could be reinvented.

1:13:23The other thing about this is kind of like what SpaceX did, you know, in some ways the rockets was like the rockets were really good, but they were invented in the 1960s in the United States. And, you know, I waited about 20 years, maybe 30 years to reinvent rockets. And then Rocket Lab, which has a very competitive offering for certain kinds of payloads, was another 20 years post SpaceX. So sometimes you just have to let the wave, you know, sort of go on for a while before you have a vision about how to reinvent it. And then it's the right founder. So I would love to invest in something that's a next generation replacement for LLMs, not a better LLM, but something that transforms a pretty good double tendra, but that's something that would make LLMs obsolete.

1:14:08That would be a cool investment. Yeah. Yeah. How durable do you think the AI revenue is today? You obviously were around for the dot-com era and companies going public with little to no revenue,$5 million in revenue going public. The counterpoint today is that we have great private companies with nine-figure run rates that are growing tremendously fast. But we've talked about this on the show before, this idea of easy come, easy go. So if you can create a bunch of traction really quickly, how durable is that? Do you think that the companies that are adding 10 million of ARR every month are durable yet?

1:14:45Are they going to be leaders in five years? What's your take there? Well, there's a quality of revenue, and it's different. For example, OpenAI, most of their revenue comes from chat, QPT subscriptions. That's pretty durable. Consumers or people using it for business applications, but on an individual basis. There are revenues you can get that are more like pilots. and those are completely non-durable. And then there's somewhere between, like if you sell to an enterprise and they roll out to the entire organization this AI-based product, the chance that they're going to swap in any short term is very, very low.

1:15:19So if you get through IT, you get through procurement, you have a champion and you change business processes within a very large 14 ,000 organization, that's pretty damn scalable, durable revenue sustainably for probably five plus years. And so those kind of companies, those AI companies are in pretty damn good shape in my opinion. But you do see people adopting something as kind of like a trial. Like, you know, my board told me there's this AI wave. I need to test out this, this, and this and have an answer to my board. That revenue is very precarious. Another set of revenues is around training and post-training.

1:15:58I think the advances in AI are so fast that the way we build models today with fine tuning and different kinds of training may be also obsolete a year, two years from now. So there may be models that are built that don't require any human training. So revenues that are built on and companies that are built on that kind of revenue may not be as durable as people think either. Yeah, while we have you here, what's your take on one of the hotter categories in deep tech, humanoid robots? everybody's got to take because I think they rightfully should. But I'm guessing you have something spicy for us.

1:16:39Well, spicy is that, look, the Chinese are ahead of us, and it's very dangerous politically. Geopolitically, I think the administration is going to have to take some action there. I think you have large companies like Meta publicly embracing this, and their CTO is responsible for this, so it's a very top-down initiative. You have a lot of startups. We funded several at KV. It's probably the hottest sector among VCs right now is robotics startup, you know, walks in and it's like, OK, how much money do you want? And the value is going to be hundreds of million dollars. So, you know, and then Tesla has had a lot of progress.

1:17:12Like, actually, I think some of the private progress is better than the public stuff. So it's very impressive. I think the sector will be successful for somebody. I think as a VC right now, it's really hard to invest in a sector given the proliferation of startups all with high potential, the prices you'd have to invest at. It's unclear that there will be monopolies, yet some of these companies are being priced that way. One of the concerns that I have is I think we need to learn from DGI. We need to understand that they were able to flood the market with products that they were selling for less than it cost them to produce.

1:17:49right if you just take apart some of these you know products and you understand the component costs it's actually uh more than what the retail price is and unitree is doing the same thing right now right there you can go on unitree and buy a humanoid and uh you imagine they're pretty happy with how the dgi rollout went and they want to do the same thing again no this is why i think geopolitically the trump administration is going to have to address this i think robotics have military applications too so not only do you have this like imagine the data collection potential um but the military applications of a robot that can run 17 miles an hour so yeah i i would be shocked if this administration doesn't figure out a way to ban chinese robots before it's too late yeah with dgi there's this idea that you're not too worried about the drone in your closet because it's like zippered in you know the box that it came in and and there's the idea that like okay like in this doomsday scenario the drones take off and you know become these sort of weaponized devices but a humanoid who's doing your laundry and then can turn around and you know get up and take you out is a is a totally different story so i think that you have a good point also training data i mean there's there's a lot of dangers and i said i think this is a real political issue that needs to be top of mind like once we get through tiktok which will happen you know sooner rather later i think robotics and humanoid robots are particularly severe particularly severe threat and so that said we will need an american competitor one way or the other like the world is going to develop at some point.

1:19:19Yeah. Humanoid robots that are effective and better if American competitors are great. Yeah. But we really need to slow down the Chinese progress, especially the involved subsistation by the CCP. Yeah. Yeah. One thing that's been interesting is seeing how Uber has been positioning themselves in the context of autonomous driving, right? They're basically Dara's positioned the company to be like a booking.com for autonomous vehicles, giving you an opportunity to potentially talk your book a little bit. Does Trava, and I don't know if you can speak to this, but does Trava have a position where, you know, today they're using sort of human capital across the sort of network of customers that they have as their world where, you know, I'd be curious if you could speak to sort of long term potential of humanoids through Trava.

1:20:05Well, I think not immediately. I think if you look at the tasks in late industrial warehouses where Trava specializes, a lot of those tasks are not yet ready for robotic intervention. However, if trauma is succeeding in running, the most sensitive part of a light industrial operation is the human labor and your action, quality control, reliability, all of those things. If you get the credibility of making a business more successful, you may be a great pathway to introduce more and more technology. So you may not obviate humans, you may supplement humans, You may introduce a combination that does some humans and some robotics, but some company from afar that doesn't understand how a warehouse works, that doesn't understand real workers and what real workers' needs are, and tries to run a mixed system without having any understanding of real people, I don't think it's going to be very successful.

1:20:59And I don't think we're ready to rip out in the long tail fragmented sense, light industrial, the investment required for robotics to rip out all the humans isn't going to be economically feasible. Amazon may be able to justify, you know, the R &D plus the fixed cost. But no, and we had we had Ryan Peterson on the show last week talking about how the bar that the bar to clear if you want to replace humans is so high because we're actually we're pretty good at what we do. right we've got you know all this you know ability to to an agency um and uh it's you know very clearly going to be the same type of uh situation within within warehouses as in ports but over 20 years i can see trauma introducing more and more technology to their current customer base like say you know look look we've already satisfied you we're delighting you trust us this is going to make you more efficient more competitive more scalable etc and so that could be a long-term strategy that makes tons of sense for the company and for their customer base Yeah.

1:21:56How do you think about the rollout of humanoids specifically around depreciation in the EV space? We've seen massive depreciation on the consumer side, right? Somebody buys a Model Y, it's worth 30 grand less a few months later, right? This sort of extreme depreciation. Do you see that as potentially a headwind for the rollout of humanoids where factories basically say, hey, look, I think your tech has potential, but if I just wait a year, I can get a much better robot for the same price? well i don't think anybody really knows on the decay curve you know because what is wear and tear due to these robots like and what functions too it may be very different like if you ask robots to do this versus versus but like a year are they completely dysfunctional like imagine a simplified metaphor you if you have weights like a gym at home it could probably last for a decade easily like you're squat racking your weight you throw up in a commercial gym those things are going to show where and tear in the first year especially you and berries you and berries you they got to change the treadmill out every day after you at berries i'm sure literally literally like the where it so it does depend upon the use you use and i don't think anybody knows really what that like curve looks like and then that affects the economics like help fruit and just on a purely rational basis is using a robot to do x y or z because you don't you don't really understand that trade right now the only way to really do that is you have to throw some robots at some problems and then monitor what breaks why and how and how fast and how expensive are the replacement parts yeah uh what about the strategic bitcoin reserve do you have a take uh prepared for that yet yeah i'm probably not the biggest fan i mean i'm very supportive of the trump administration i think almost everything they've done has been really good and really strong and i've been very impressed i probably if i was going to do it would have done it bitcoin only i don't think i don't think we need to do it but if we're going to do it i don't think we kind of stepped in the middle of a bunch of messaging problems by like including a bunch of other cryptocurrencies but i'm not the biggest fan of like the government doing performing business functions period so i don't like the sovereign wealth fund either um i mean i'm happy to manage it if they you know kb wants to if they want to eat kb if they need professional managers we'll probably do it but that's great the reality is i don't think mixing business function and politics is a good idea.

1:24:14I think you should separate those. And, you know, free enterprise works really well. Capitalism works extremely well. And the government should do, you know, protect the American people, defend, defend the border, you know, et cetera. And I don't, I don't see any, you know, the only argument for the Bitcoin strategic reserve is obviously we do have gold reserves. Yep. You know, and if you believe the metaphor that the future of short value is like gold, you can talk yourself into it. I don't think it's the most compelling thing, Yeah, there was a good point. The strategic reserve could just be Bitcoin we seize from criminals, right?

1:24:48And it just goes into fund. We just don't trust them for that, too. Yeah, I mean, obviously, the FBI and other people, Treasury winds up getting their hands on a lot of valuable assets. And that could be a good way to fund it without taking American tax dollars. You know, I think the burden, and I think Doge is showing this, is really setting a great example here, is the burden for taking a dollar from an American family should be increased by an order of magnitude. The justification should go up. Not that there's never a justification, but we need to raise that bar. The dollar belongs to the people who earned it, barring the most extraordinary justification for it.

1:25:25We can't have these frivolous soft justifications or low ROI justifications. It really belongs to the people who create the value. Interesting. Well said. You're spending more time in DC. Do you think that there's a potential for startups or specifically defense tech startups to move offices there earlier or actually build companies there? I don't know. I think for non-defense startups, I would recommend starting an early stage company in D.C. Obviously, the people who are already successful are spending more time in D.C., which is valuable to me to some extent. But I think if you're an early stage company that's not really targeting the government as your first customer, federal, in some way, then I think it's probably a mistake right now.

1:26:08That could change in five or ten years and maybe there's a better ecosystem there. I don't know the defense landscape and how fast the defense department is going to innovate. We'll see. I mean, there are people in the administration who believe that reform is going to be fast and furious in the Defense Department and that we need it from a budget perspective. We have to, the Defense Department needs to do more with less. And so, but until the proof's in the pudding, I don't know how vast the opportunity is right now. We have time for maybe one more question. I'm curious to get your take on Sundar.

1:26:41Do you think he's still got a job in a year from now? uh the the rollout of ai across the google uh ecosystem has been atrocious from my view and i think consumers feel this john always jokes he's like i i pay for gemini i don't know where to find it but i it's cool when it pops up uh he seems to be under underperforming dramatically in the context of satya you know what's your what's your take on on that whole situation well he seems to outperforming tim cook which you've read the latest yeah yeah at least they have models that are good yeah for those that missed it apple just said we're delaying oh yeah series two years two years something like that two years as other people pointed out two years in an ai world is an eternity you might as well say i'm playing something for 20 years or you know it's crazy at this point and so i think that's a serious problem and i'm an apple fanboy forever you know happen forever.

1:27:32So I think it's pretty devastating that they're so far behind. I think Sundar made several miscalculations. And I actually do think that Microsoft and Satya got a lot of credit, but I think they're seeing some of the downsides to some of their strategies now. I think they are going to wind up not having quite as much of a strategic lock on AI as they thought they were. I think that said, they maybe played the cards the best they could. You can't always control everything. But I think the world is changing really rapidly and the people who control the future of AI may not be at Microsoft. Yeah, that makes sense.

1:28:11Right. Well, thanks for stopping by. Pleasure. I love having you. You're welcome anytime. Anytime there's breaking news, I'm sure I'll give you a call. This was fantastic. We're going to hop on. Keep talking about Ramp. We're going to Paki McCormick next. Oh, awesome. Thanks for stopping by, Keith. We'll talk to you soon. Great to chat. Have a great day. Thank you. That was great. uh good questions jordy i like i like i like keeping the humanoid question going across all of these we got to ask paki that too and then eventually we can put together a super cut yeah here's every every important capital allocator every silicon valley person uh talking about humanoids well while we are waiting two minutes to bring paki in uh let's talk about wander find your happy place let's go i got a hat for this throw it on we got a hat on uh book a wander with inspiring views hotel grade amenities dreamy beds top tier cleaning and 24 7 concierge service it's a vacation home but better i've been looking at one uh up by yosemite thinking about taking the kids up there uh big yosemite guy over here yeah it's snowing and we wanted to go to the snow but we didn't want to do crazy hotel we didn't want to do some you know airbnb thing wander was just It's like the perfect middle ground.

1:29:26Perfect middle ground. And they have this really nice UI feature where if it's snowing at the Wander, when you're going to be booking at it, it will drizzle snow over the webpage while you're on it. It's amazing. Amazing. It's a really, really nice touch. While we're buying some time until Paki joins, Paki did an entire deep dive on Wander. Oh, fantastic. And we got Paki in the waiting room. Let's bring him in. Let's bring him in. let's bring him in i wish he was here in person he could do the wander oh there we go hello welcome to the show good to have you here oh my god it's great to be here long time long time first of many first of many first of many uh yeah break it down what happened today why why are you wearing a ramp hat take a victory laugh take a victory laugh No, I always wear a ramp hat.

1:30:24I've heard that TVPN is just unbiased journalism. And so I wanted to join you for an unbiased conversation. Exactly. Yeah. Guests and hosts of this podcast may hold securities by the presenting sponsor of the show. So anyways, great to have you on, Paki. I wanted to go back to March 21st, 2022, when you, this was like probably your second time covering when they announced their$8.1 billion valuation. Was that the back-to-back round, the double round or whatever? I mean, every single round for a minute there was, you basically would read a ramp fundraising announcement. They were speed running for a while there.

1:31:11And then you'd get a notification on your phone that said, scoop ramp is raising another round uh it was wild yeah that was the eight point that actually might have been the third piece i think the first time i wrote about them was december 2020 i think we didn't talk about evaluation but i think they were valued at 300 million at the time so like something just pathetically like series a at that point yeah that's like a personal kind of net worth type number um and then the next time i wrote about them was when they had raised back-to-back backgrounds. I think it was like 1 billion and then 1.6 billion.

1:31:45And I spent a lot of the time in these pieces. One, just being like, you know, praising ramp, obviously. And then two, kind of justifying that, you know, if you're growing this fast, like these valuations kind of end up catching up. I think there was a period in between, they took a down round, they took their medicine in 2023, but now they just kind of continue to grow fast. And we're we're back way above that$8.1 billion valuation. Yeah. Thinking about the ramp down round was directly tied to the market, not business performance, which is why they're back above that last financing, just given that they were taking that down round while still putting up ridiculous numbers.

1:32:31And also, I mean, down round is like, I mean, Facebook did a down round at one point. But down round can mean so many different things. And like, I saw some down rounds during that year that were brutal, like pay to pay, pay to play total cram down. Yeah, it's$100 million on 50 pre. So new investors are taking two thirds of the company. Yep. And then yeah, there's a 10 % option pool for the executive team or something like that. That's like going to get rolled out. And literally anyone who touched the company for the first half decade that they were running it is just gone wiped like done didn't exist never thing you got paid w2 wages i hope you i hope you put some in nvidia stock because you got nothing now and it was like that happened all the time and it was like terrifying but you know it happens yeah i was on i was on the other side of a few of those but i remember reading about the the ramp piece the ramp down around when it happened yeah and that's when i really knew like i think you know in 2020 2021 you know you can you could be impressed by a company but a lot of people are going fast a lot of value valuations are going up when you read a story about in you know this terrible market a company doing a down round and it's like pretty much gushing and all of the commentary around it and twitter and everything about them doing a down round was gushing commentary on how how smart it was for them to kind of just take the hit and keep going yeah that's when you know you got a company that's it's pretty special on your hands yeah so you're talking about ramp safety yeah so this is john's So yeah, so Paki, like obviously like ramps moving really quickly.

1:34:03We're worried about a future where ramp is like closing the book so fast that like you go to ask ramp to close the books and it thinks like if we didn't have any humans, we would never need to close the book. So it just kills everyone. Yeah, ramp AI. Yeah, kind of like a ramp doomer scenario. Like should we pause ramp? I've seen some people throwing out open letters, maybe trying to lobby the government to slow down ramp. What do you think? What's your take? it's i mean i think it's a real risk i think pausing doesn't work though right then the chinese are going to start yeah yeah you can't do that the thing that i get worried about is that you run out of atoms in the universe at some point true right if you're an investor and you're thinking like can they continue to double every year yeah like at some point you run out of of atoms in the universe and so that to me is kind of one of the bare cases i guess yeah i think generally is what they're doing is like they're building a machine god that lives in your cfo's Chrome tab, but ultimately it will be a beneficial, benevolent machine God that lives in your CFO's Chrome tab.

1:35:02That's focused on saving you time and money and it knows its lane. Exactly. Exactly. And so in a post-ramp society, kind of like a post-AGI, post-ramp society, I think humans will be doing fantastically. I think it'll be great. At least the CFO suite will, right? They're going to get all their time back to be able to think strategically about the business, about life. So I think that's one of the things, you know, my, my dad is, is a CPA. And so like, I just think, you know, when I, when I write about ramp, I think about my father, right. And like how much, how many basketball games, you know, he, he could have been out of mind had ramp existed at the time.

1:35:40I mean, the guy was, you know, he was a business consultant who was traveling all the time. He'd fly to Germany for the day and fly back and like imagine you know ramps ai just does that for him right and like we're hanging out he knows me better i know him better like and it just suddenly gets super dark that's amazing he's like my dad never made it to games in the first 15 years no he actually did it was pretty incredible that he would like fly back he would take the early flight back to make it to my stupid game uh so good on him i just mean he'd be like a lot less tired had ramp uh existed you know i'll I'll give a personal anecdote.

1:36:13I got to hang out with my kids this weekend because we're on ramp and it just, the books closed themselves. Pivoting a little bit. John and I were talking this morning. There's too many top signals to count right now. Everywhere you look, you got Trump coin, you got Cardano going in the reserve. You got, you know, OnlyFans competitors doing something. and we got humanoid robot companies with one customer raising at 40 billion uh what is bmw's valuation by the way yeah that's a good question oh my god if it's less than 40 billion you know ford is less it's 53 billion euros billion euros okay so yeah so what's that in usd like 12 dollars 50 we're mogging the the euro these days but um it's probably 50 billion yeah so so yeah you there's definitely there's definitely a bull case to be made of why figures should be worth as much as their customer um uh their first customer but uh anyways how do you think as an investor right now we're clearly living through one of the greatest times in history right we just had a private spacecraft land on the moon yeah uh elon's launching rockets every day there's there's you know, austerity in the government, which is, you know, potentially bearish for GDP short term, but probably good for the dollar long term.

1:37:37Yep. How do you think as an investor and even a writer and somebody who's called a lot of trends, you know, early, you know, what do you think the next, you know, talk to us about the next five to 10 years? Oh, the next five to 10 years. You know, you know, what I found really fascinating is that a lot of the stuff that I'm not investing in has been super overvalued. And then a lot of the stuff that I've been investing in has been undervalued and underappreciated and i think it's going to be worth like a lot more in the next kind of year or two so that that's kind of my take i you know i'm not a figure investor big fan of their videos and actually my daughter loves figure videos and was like really psyched to see two of them uh two of them together i don't know i mean i think like there's a lot of probably overhyping ai there's probably going to be like a couple of 10 trillion dollar ai companies that are going to pay for the whole thing humanoids scare the hell out of me as an investor because it's like this really impossibly hard thing to do with a lot of really, really smart people working on it, where like, if you pull off this impossible thing, then you're competing against these 10 other companies and like who wins a big consumer surplus event.

1:38:38But there's, you know, like human labor doing things. There are some people I've heard who don't just kind of podcast and write who like, do you like you make cars or whatever, physical labor. I think like, you know, human salary and wages and all of that it's like 45 trillion dollars it's like half of the world's gdp and so like if you underwrite robots is like some small percentage i mean i think figure already got like 0.1 of that gdp got credit for 0.1 of that gdp which is pretty uh pretty amazing um but like there will be like massive massive massive companies built here and i think there's also going to be uh a lot of people who lose a lot of money we could talk about what's happening in in venture i think it's like a really i think like the big funds are actually super well positioned and all there's going to be a lot of these like emerging ish funds who try to compete who i just think it kind of like wiped out i don't know i think there's going to be do you have a take on general catalyst going public that's a good one i don't have a good take on that i mean it's like it's a really i would say like one of the you know when i think back of some of your one of my favorite pieces of yours over the year i'm not going to know the title but you had a really great deep dive on this idea that as our tools become better and more efficient, you know, a group that, you know, a company that would have taken 100 people to build, you know, five years ago now only takes 20, right?

1:40:02And I think we're really seeing that right now in AI, where you have companies like Cursor, a big one, you know, with 20 people doing 100 million of ARR. It's been amazing to see that play out. Basically, one, take a victory lap there, maybe double click in and share some more insight. But I feel like that was really, you basically called that and did it in a very eloquent way. But I expected it to be something like maybe five years from now, that would be the case. But it feels like it's that way today. So there's a few different ways that goes. And it's really like there's the Russell russell conjugation where like you know the person who's doing something different than you is doing it bad you're doing it right whatever and like i literally think about this a bunch when i see all the charts of uh of these companies making like more money than ramp faster i'm like that's actually like way too fast and that's totally unsustainable ramp however is like actually growing perfectly but i think that really actually goes through my head just right but they're they're not and i think i'm actually responsible for like yeah yeah yeah the bigger the bigger growth rates scare me it's okay your growth rate is perfect growing faster is unsustainable right and i like actually disaster you're growing the perfect right the goldilocks effect the goldilocks growth rate i mean that's just you know that's eric and kareem just doing what they do i think just like really nailing that that's hilarious but i do think there is something about that that like really actually does uh it does scare me that fast growth and just like how easy it's become.

1:41:33So really the, you can build more with fewer people. I took to me kind of two different things. Like one, it just made me scared. And this was like back in 2022, like really scared about software in, in general, uh, because you can go out and build with five people, a company that grows really, really fast. And two, I think the other point of that, that essay was, uh, because we have better tools and because you can do more with fewer people, startups should be able to just like actually start fresh and compete with these companies that you never thought that you'd be able to compete with. I'm writing a follow-up on Primer right now, which is taking on K-12 education, taking on public schools, like not a group or a group of incumbents that you thought you'd ever be able to take on.

1:42:14And I think they actually can. You can put education on a Moore's Law-like cost curve and make education better for less and less money. And so that's pretty amazing. Obviously, Anderle is starting to approach kind of Prime's valuation. And so that, I think, is like the really exciting part of it to me. Less that five people can build things really, really quickly and more that a hundred people can build things to take on like these really old, big companies. Yeah. What's your AI stack? You've been a little bit critical of AI's writing ability, which I think is fair. We also, we have Coogan's Benchmark, which we do about once a week where we get the latest model to try to tell us a joke.

1:42:53And it's pretty - It's hilarious when you read it like you're a standup and it just bombs intentionally and it's funny to watch someone bomb intentionally so it's good in that regard but how have you been uh yeah what's your what's your ai stack and uh yeah what's actually useful uh i mean i still use claude and chatty and grok to just kind of like if i don't understand something yeah throw it in or like to make sure that i like i have explained something the right way or to get feedback on an essay basically four point what's that you're using it like a better google search or like better wikipedia google search and like just a little safety blanket on the like i don't have an editor so somebody to like tell me that this isn't like the worst thing i've ever written um 4.5 is actually a little bit better it stopped doing like the thing that killed me that i've tweeted about a couple times recently is like the m dash it's not just blank m dash it's like a totally different blank and 4.5 is actually stopped doing that which is really good because i would see that in people's writing and it's just like it really made me hurt but yeah uh what was the pg1 uh delve delve but you know it's funny i i when i read older stuff that's like that totally predates i find delving it all the time i think pg might have been wrong on that people oh really interesting yeah yeah i i thought there was some some some weird round tripping thing where like like the rlhf team in kenya that open ai was paying to do the RLHF stuff had learned English in a very proper way.

1:44:26And so delve was one of the words that was like in the vocab course that they all took. And so they thought that it was like a much more popular phrase than Americans think. And Americans use it, but just not all the time. So it's kind of weird. But I mean, you'd see these aberrations all the time where you'd be like, write a tweet and it would like use hashtags. And it's like, that's kind of what a tweet is, but not really not today it's not a banger like no one uses hashtags or if you do use hashtag it's like in this funny like kind of meta ironic way it's not just like yeah yeah uh so yeah yeah give me some other hot takes on i mean it's i literally just asked it uh today because i was trying to you know make my own joke uh for this podcast you know the joke that ended up becoming you know the fact that with this unbiased conversation about ramp yeah there's like that one phrase like no bias no something no conflict no interest no mercy no conflict no interest that's what i was So I said that.

1:45:20I said, no bias, no dot, dot, dot. And it was like very confidently, no bias, no bet. No bet. What you're thinking of, I was like, no. The phrase you're likely thinking of is no skin in the game, no opinion. What? Oh, my God. And Jordy got it in two seconds. Yeah, still got it. Not a paperclip yet. What's going on on Substack these days? they've got some like social activity that's happening seems to be picking up you're still writing on Substack correct I'm still writing on Substack I've seen a lot of conversation about people going over to Substack you can use links there it's a friendlier conversation I have not done that at all people are on X we're on X live right now right is this our first live X episode it is first ever you should go retweet it right now don't get too distracted

1:46:17yeah I don't know I don't know where you want to take that oh no I just like as a company seems to be doing very well like the last time I saw Chris and and I got like some kind of I don't know if I should even say but like you know you should say so some reference on like oh I'm like hiring an accountant that worked for them and they're like oh yeah it's actually pretty good business and so congrats to the team I think they've I think they've done really well from a company that was like kind of like maybe overhyped at one point it's like oh it's like playing in the social It seems like it's broken through the cultural norm.

1:46:47I see it on Instagram. And my question to you is you pay them 10 % of your gross revenue, right? No, I don't. Because he, unlike the podcast, run ads. This is why he's on the show. There we go. You got to run ads. I mean, he is an ad respecter. Ad respecter. We're both, you know, Ram sponsored, obviously Wander portfolio company. long time friend of the newsletter and just feel good getting to tell people about that if i were there you go if i were a subscriber business i wouldn't get to tell people about ramp i wouldn't there's not nearly enough ads on the screen right now we need more so we got everyone has a sponsored hat right now there we go jordy got bezel i got the wander you got the ramp let's be sure to look down so i can see the logo there we go that's good uh there we go yeah so so so i mean he is kind of a bit of a failure mode for for subs i am well it's funny because people will ask me like you know you like what do you think about sub stack and like you've talked to the team obviously and like i actually have never talked to the co-founders i've talked to one person at sub stack once well because you just go like the worst possible business for those guys i haven't paid a dollar to sub stack what do you think about this idea that like they should be doing the bundling and aggregation on their side where like you should go to sub stack somebody should pay 20 a month and they should get you know like you and pirate wires and you know barry weiss's free press like all instead of instead of those folks like leaving and you monetizing elsewhere like do you think that makes sense or is that just like a crazy idea no it's a good idea i mean it's like it's the idea that everybody i think has that they should do that that they should build an ad network that like there's all these things that are like clearly good for good for business um that actually i think in practice like when you when you're like dealing with people who have kind of like egos and think that their own thing is like the thing most important are really really really hard to pull off in practice like i wouldn't want to be part of a bundle um and so i think that that ends up being a challenge same with uh you know like ramp is not going through an ad network and buying like random slots right they're partnering with you know just top shelf kind of shows and specific people and so i think the ad network stuff falls apart there i really like what substack is doing for the simplicity like i in the beginning was definitely somebody who thought that i would move to a different platform i wanted more customization whatever you'd have to pay me a lot of money to move to a different platform now just because it works really really well the core product that they they built yeah have you ever experimented with a like a paid offshoot because i know you've done other offshoots like uh what was the thursday white pill one we did the friday yeah the weekly does optimism yeah yeah weekly does optimism which is kind of like oh yeah yeah offshoot but but that's still free right it's all still all still free we could i don't want to write more if anything i want to write less this year uh and so uh i think i don't want to bangers only bangers only i don't want to limit what i send exactly uh and i actually don't know like at this point i'm in too deep and i don't know what the conversion rate would be and maybe it would be incredibly embarrassing and so i'm just going to stick with stick with what i got there you go love it uh where you mentioned earlier you've been finding uh companies you feel are undervalued you obviously have an insane top of funnel right you've you're broken through the mainstream if I ask somebody that you know is on x they know who you are if I ask somebody that's kind of even linkedin mode like they usually know who you are right so the top yeah the top of funnel must be crazy um but uh what like where where are you excited to be investing right now um I'm sure you're flooded and and doing a bunch of ai but at the same time uh it feels like an interesting time right now where you maybe wouldn't want to invest in the next humanoid robotic, you know, company, you probably don't want to be investing in more defense, like net new defense tech companies that are just incorporating today.

1:50:34What, what's got, you know, space feels, uh, like in many ways, there's more opportunity than ever because the cost to get up there is dropped, but where, where is exciting to you? What's the weird stuff you're looking at? Yeah. Um, really like the way that I've been thinking, like my catchphrase on this is Anderle and SpaceX for everything. So as opposed to like, you see Anderle and SpaceX, the move is not like, go do the second best version of that. It's go find that in the other industry. So, you know, like a base power company or Somos Internet doing telco or a primer doing education, like find the thing that is going to go win that category is really what I'm looking for.

1:51:10And those end up looking weird. So I was kidding about the stuff that I'm investing in being undervalued. But I do think that because it doesn't really fit a thesis that a fund would have on defense or whatever, it is a little more affordable than a humanoid company or a foundation model company for sure yeah yeah i mean stuff in like power energy deeper in the supply chain way far away from the core hot ai consumer stuff there's going to be more reasonable prices there also are you looking at bio stuff yet or bio adjacent oh we've been doing a lot of bio stuff i imagine i think yeah hot take would be cancer is probably gone in 10 years i think it's one of my favorite hot takes There's just so many different attacks on it and CAR T cell therapies are doing well.

1:51:51And it's a matter of kind of scaling, scaling those out. Yeah. I'm sure you've read Sebastian Maliby's The Power Law. I'm sure you've read Sebastian Maliby's The Power Law. And before that, he wrote that book on More Money Than God about hedge funds. And so his whole thing is like, go and find the group of people that are making trillions of dollars effectively or like really moving capitalist markets, like the biggest power players and then write the definitive history and profile of them. And so I went to a speaker series with him and afterwards, you know, somebody comes up to me and he's like, what's the next book you're writing?

1:52:25Because that's where I want to be investing today. Right. And he said bio. He was like, I think that the next book I write will be about like the flagship pioneering, like, but also the biotech public companies and then the biotech funds. And so it's something that I've, I've certainly been meaning to get more up to speed on. I have a lot of friends and co-founders who have done like i have to say it is hard bio is hard like i compare like of all the other things you know yeah i've been working with on the bio side who's you know stanford phd in genomics and he like without him i wouldn't invest in bio you see other generalist investors investing in bio and he'll be like that is the dumbest fucking deal i've ever seen in my life are we allowed to curse on x dumbest deal i've ever seen in my life you are allowed to curse on x but you will what would your mother say and we will shame you for cursing generally because this is a uh this is a friend uh our kids watch this kid friendly show our kids watch the show oh my goodness i'm so sorry we don't we don't curse personally but do whatever whatever's right for your brand yeah they're uh you know if you want to have like a low a low tier like i i i know you're an irish guy you're you're you're you're up in boston getting drunk and hammer all pot trick

1:53:30curse words out all to say it was incredibly exciting and bio is like a really funny one where i i think like people get really excited and really oh my god like they told me that they're gonna make people live till 250 years old they're definitely investing in that and people are gonna lose their share but yeah i mean at the same time it's like it's like every category is hard until some power law company comes along and makes it look easy like andrew hardware was hard and now there's like now there's a new hardware company like every two days and then they like yeah they can't like beat andrew necessarily overnight but they can like sell and get deals and then sell to andrew or like create value or like there can be good deals done in hardware now even though like hardware is hard totally i i mean more just like and me this might just be me calling myself out uh on it what do you have like millions of people watching this right now calling myself out for being uh stupid but like just the vocabulary of biology and like understanding how that whole thing fits together it's just like a totally different beast even i think compared to hardware and other things yeah one of the one of the things i've been sort of realizing around everything deep tech hard tech biotech fits this is uh within software we went through a 20-year period in silicon valley where software entrepreneurs could go out and make these sort of outlandish claims around the products that they would build but then just go and do it right because the software is hard but you can kind of make the pixels like, you know, work and whatever it's code, right.

1:54:55We, we know how to do it. And then in hard tech is very different. You know, Elizabeth Holmes, like I do believe she genuinely believed that she could build the blood testing device that only needed one drop, but then like physics got involved and it was like, I gotta, I gotta tell you to pump the brakes there. Um, so it's been interesting to see that play out where for you as somebody who's a definite optimist, somebody that wants to believe in human potential and the ability to great, build great things you probably have to dial it back at points and say like i want to believe this is real but i'm not going to invest because i can't kind of reach that conviction threshold yeah i i have said and i think this is fair for for me not for people who are better at science but like i i do i'm trying to actually moving closer to the series a now and like not doing deep tech because like i'm not the guy to underwrite the science and if i'm like the investor that you're calling to to have something that has a bunch of science risk in it like i shouldn't actually be it's more like the you know the furthest out proven thing and putting a bunch of those together and into a company gentlemen i have to uh i have to leave you last can we can i get a minute yeah you can get a minute okay as the godfather of solana the guy who kicked off solana summer you did you gotta you gotta get credit uh uh you gotta you deserve some credit for that.

1:56:11Give us your 30 second take on the strategic reserve. It would have been unimaginable to think that the US government would be buying Solana, but you probably, maybe I wouldn't be surprised if you alluded to it. What's your 30 second take? Oh man, my 30 second take is that it's all so dumb right now. I think Solana is great. I think it's like fast tech. And I think at some point in five years, a lot of finance is going to run on Solana, on ETH, maybe on SWE. or, you know, like a lot of, I think it's inevitable that, that more and more finance will move over to crypto stable coins and having Stripe behind it is like a real thing.

1:56:44Any strategic reserve that has Cardano in it is just, it's a joke, right? Like it's like, not to get political. There's a bunch of like, and I'm guilty of this too. There's a bunch of, a bunch of dog that caught the car stuff going on, I think in crypto right now where it's like no regulation, strategic reserve. And we're like, this is actually kind of stupid. Like not this way. Like this is not what we've been. Yeah. Bitcoin's down 8 % today and basically round tripped back to where the announcement happened, which is so bearish. Like that's the US government is buying crypto and everybody's bearish.

1:57:14But I know you have an in-person meeting in like four minutes. So sorry for making you late for that. No, this is great. Thanks for coming on. You're welcome anytime. We'll talk to you soon. Have a good one. See you later, guys. See you. Let's move on to garage mahal's. This is important stuff, people. This is really critical. If you're building a garage, how big should it be? Yeah. A couple hundred square feet? No. A couple thousand square feet? No. We're talking to people that are making 6 ,000 square foot garages bigger than most people's houses. And where are we talking about Minnesota? So I have spent time in Minnesota.

1:57:45The CEO, my co-founder at Aurora, Brian lives in Minnesota and you can play. Everything's bigger in Minnesota, right? The houses are bigger. The basements are bigger. You can play basketball in his basement he's got a half court uh and when it's below freezing for half the year you got to go big you got to build man caves and we're talking about man caves today so i'm excited three car garage in the minneapolis suburb already full he had a three car garage brett bailey talk about struggle i mean we need a moment of silence for this guy uh because he had to keep his racing Porsche in a trailer outside through brutal Minnesota winters.

1:58:25Then one March, as he prepared for a race, he discovered the wheels of the trailer had frozen to the ground. Unacceptable. But he didn't just take it lying down. He figured out a solution. For two weeks, he was throwing salt out there. But now he is part of a man cave meets storage wars revolution spreading across the country. I love it. I'm a huge fan of man caves and storage wars. And so he now keeps his two Porsches, a Ferrari, a custom Harley, a dune buggy, and a racing trailer in a nearly 2 ,700 square foot space outfitted like a sleek European car dealership. it sports a tequila bar heated floors bathroom with a shower giant tv leather sofa stack of racing tires and a car lift so you can lift up the car work work on it wrench on it with a couple of cold ones over the weekend it's great nothing like getting under your car after you've had a couple of beers yeah going to work on going to work on it it's a little dangerous but sometimes you hit that balmer peak right yeah working on your car call them car barns barn dominiums toy sheds garage mahalls or chouses for shop houses they're a big hit in the land of 10 000 lakes all right so what's the controversy here john the controversy is that uh they're too big and they make the town look stupid everyone hates how they look uh they called it what was it what they call it they call it the the the tin tin city or something so i don't you you know this but ben vice president producer of the show is actually from minnesota yeah uh so we might have to send him out there to and and just have him zoom into the show on the site because this is just such an important story it is we gotta get original reporting we we don't like to do original reporting here we like to just you know spread misinformation from the timeline yes yes but uh we got to get ben on the ground there because yeah there we go ben ben says he's got friends with garage mahal's.

2:00:27That's fantastic. Yeah, in Cross Lake, a forested vacation mecca two and a half hours north of the Twin Cities. Space is limited on lakefront lots, making storage space elsewhere, often in simple metal buildings, highly valuable. The city council has twice put a moratorium on new storage, combating an image that has led some to dub the community Tin City because there's so much tin going up as storage. But if you look at some of these photos, They look fantastic. It looks like a lot of fun. If you're in one, Nelson and others tout the expansion of the tax base from the storage boom, which includes his new 4 ,200 square foot building.

2:01:08That's a massive house. And he's got a taxidermied Kodiak Bear. Yes. It's jammed with boats, an RV, sports cars, motorcycles, a taxidermied Kodiak Bear, and his father's Model A. One section designed with input from his wife includes a full kitchen, flat screen TV, bathroom, and stone fireplace. You know, the biggest thing here, John, is I can't go in my backyard and throw up a, I can't do one of these because California, they don't want you to build. You can do ADUs every once in a while, but not 4 ,000. I want 5 ,000 square feet of podcasting. I got to run to the restroom. Can you keep it going?

2:01:44I'll keep it going. Let's jump through to the next post. We're going to jump into the timeline. we got a post from Reggie James. Somebody posted, do you think that Steve Jobs did a market survey, you know, did a consumer survey to build the iPhone? And Reggie jumps in here with a fantastic point. He says, they literally did. They got all the phones on the market. They saw it was all junk by Apple standards. And they knew this for a while, but had to get a few technical things in order first. They had to get really good at miniaturization. iPod helped them learn that. Then they had a cross-learning moment where the company they acquired for their touchscreen technology, which was working on computer displays, they took that and brought it over to Project Purple.

2:02:29And that is how the multi-touch was born. So now they have multi-touch and know how to make things small. And they are still looking at these junk phones on the market. Once they see what's wrong with them, they ask themselves, what's the phone we make for ourselves? They vibed after they knew the market. they had technical pieces in place and this is where all the software love that made the iphone and the iphone finally comes together pulling from springboard and all the mac oss work that's what made the iphone feel so good with directional multi manipulation and multi-touch the iphone wasn't some isolated do what you want event it was built off of decades of hci learnings a key acquisition and the success and learnings of the ipod learn the real stories and don't just take a cliche like users don't know what they want as an excuse to build nonsense so shots fired yeah aggressive but completely fair uh analysis the guy who posted this though was like was like hey i'm actually i actually don't know the history i'm just curious like can you just like educate me uh but reggie's a good poster so he kind of amps it up and it's like let's let's go let's let's talk about this uh but yeah i have reggie you know reggie's had some amazing analysis of apple over the years and their different trends it'd be great to have him on the show sometime soon.

2:03:42We should have him on the show. Uh, it's interesting. I, I remember this old core post by, uh, Joe Lonsdale talking about the Hegelian dialectic. Are you familiar with this? No. It's this idea of like, uh, the dialectic is basically like there's a, uh, thesis antithesis and then the synthesis. And so you take like the, like an idea, you think about the opposite of that idea, the counter argument, and then you synthesize something that takes into the best art the best pieces of both essentially um and it's a very popular like mental model and the example that he used in this quora post to explain the hegelian dialectic was literally steve jobs both being like the vibes guy but also the spreadsheet guy And it's so easy in thought leadership and posting for people to be like, oh, like vibes are the only thing that matter.

2:04:29or like you should never think about the market map. Don't ask, don't talk to customers. Don't, exactly, exactly. People want axioms when in fact, like the best leaders are often like, you know, the best generalized advice is to like, don't do traditional market research. Just talk to as many customers as you can. The thing about consumer is consumer is a category where you can have no preexisting business experience with a category and just build the product that you want. I mean, you can do this in B2B as well, but I think it's more common to just kind of ignore the market and just build what you want and consumer.

2:05:05But even then it's, it's cool to see the history of how the iPhone came together and not just being, Oh, here's a good idea. We should just do this. Yeah. Anyway, anything else on Apple? I got a lot of hot takes on Apple. You got to be more positive about Apple. I think I just, I've just been positive on Apple for 20 plus years of my life and it's fair to be negative in the short term, but I'm positive in the long run. It's more just like, like, I feel like at the end of your, after you go massively viral for talking trash, uh, there needs to be like, Hey, like we can, I gave Apple an out. I said, if you're just giving up on innovation, buy an F1 team.

2:05:45Exactly. Then we'll, we'll shut up. There's something about like, I still love this company and I want it to be great. And there is a sliver of greatness here. Let's just, there's more than a sliver oh yeah it's way more than a sliver totally but uh if tag hoyer will sponsor f1 why not why not apple that would be very cool an apple car and no other sponsors yeah like red bull like i mean red bull has a few others yeah they've got a bunch but they got a bunch imagine just but i'm sure they can't do it because it's like some emissions thing or something like they've made so many like they've pandered so to so many like special interest groups essentially like they're like completely bought in at this point.

2:06:22Yeah. I don't know. Uh, it'd be very cool. I'd like a, I'd like an F1 team. Do we want to talk about the GC? Yeah. General Catalyst is going public. You'll be able to, uh, invest in a venture capital firm soon on public.com. Uh, so get ready, move your assets over to public.com. Uh, but no, this is a real story. Uh, general Catalyst is considering an IPO. Dan Primack has the scoop. We've been hearing rumors about this for, uh, a couple months. And as these asset managers get bigger and bigger, it makes more sense to trade them publicly. There's a few reasons behind that. The main reason in my, I mean, we can list out a few, but when you're a public company, you are subject to much more aggressive audits.

2:07:06And this is why people don't want to go public because it's a hassle. They will put up with that hassle. And as a result, they will have access to more capital. And it will be a, there will be potentially more of like a power law consolidation in the actual fundraising of these funds. General Catalyst has, you know, billions and billions under management at this point, tens of billions. And if they want to go for even bigger funds saying, hey, we are publicly traded. All of our financials are public. You can go see them. You know, you don't have to rely on newcomer scooping some random things to count on it.

2:07:44But there was some debate over this. Dan Primack posts that General Catalyst is considering an IPO. Jason Calacana says, what is going public exactly? The returns or the LP interest? Dan Primack says, what do you mean? In this case, it would be the management slash holding company like Carlisle, Blackstone, etc. And a lot of people don't necessarily understand this, I guess, but asset managers are themselves businesses that make money from fees and all sorts of different pieces of that. Yeah. And GC, I think, didn't they roll out a private wealth? Yeah. Yeah. And they have private equity investments.

2:08:20They have, they have growth stage investments, seed stage investments. And so every time they make a deal with someone else's money. And so it will be valued similarly to a bank, although it's a very like high performing bank in the sense, but how do you, when you invest in a bank, when you buy, when you buy shares in Citi or Chase, JP Morgan or, or I don't know, Goldman Sachs. What is happening? Well, Goldman takes money from some people, put my money in the bank, and then they lend that money out and then they return it. And over time they make money and it's just like any other business. So I don't know why Jason isn't thinking about this.

2:08:58Jeremy Gaffan has a good bit on this, which is basically that at the end of the day, private equity is the greatest business model on earth he always says like merchant banks the merchant banks yeah he talks about merchant banks but specifically it makes sense that the the people that invest in private in public in private markets yeah um who study businesses all day long created a business model for themselves that's just absolutely fantastic sure yeah i mean they certainly have like an advantage playing in the question the question is is uh it will be very interesting to see a venture capital firm going out and doing you know a road show and putting together materials and saying look how much EBITDA we're going to put up in this year and it's based entire you know presumably entirely based on the fee accumulation from their various funds that are all kind of funneling into this one vehicle it'll also be very interesting to see what comp looks like post IPO at these firms right because instead of carry points you're looking at stock options potentially there's a whole variety of ways to slice of supply.

2:09:59Yeah, that's what's unclear is the fund performance, the carry, where do those returns flow through? Because some of them will flow to the partners still, but you would imagine that investors in GC and the public markets would want upside in the returns as well. Yep. So the partners own the general partnership, right? Yeah. So then they would just own shares in the company. Exactly. And so when you buy them, you're buying a slice of the general partner steak. And if you buy enough, it's like you're a general partner. Right. But you just paid for that instead of worked on it. And yeah. And this type of thing has happened before where firms have sold GP steaks and said, hey, I'm cashing out of my fund.

2:10:44It doesn't happen a lot. Yeah, Thrive did this. But I'm selling, I don't know if that's actually, I haven't heard that. But basically, I'm selling part of my GP steak. you will be the one to earn the returns from that upfront. But yeah, so this happened in 2023, January 24th, 2023. Thrive Capital sells minority stake to Bob Iger and other moguls. So this was kind of like a party round. They sold 3.3 % of the company, including CEO Bob Iger. And yeah, so they were able to raise$175 million to the balance sheet. That's so fascinating too. Yeah, and because you think about three percent like that could be just like hiring another gp and giving them a slice of the gp right yeah uh like you hire another partner you say oh you're gonna be the one who does the ai deals or the deep tech deals or the defense deals or whatever and you wind up giving them the effectively the same share but they didn't pay for it or unless they you know bought in for some reason um or they and and and they don't get the same alignment like at this point it's kind of like Iger's like a partner almost in the sense of like if he had he owns a stake in this one firm so if he has a deal that he wants to bring or a partnership or he wants to do a deal with a portfolio company like he is linked to thrive in this like very important way that's more tangible and more economic than uh just like oh I'm an advisor to your fund it's like no like I actually invested in your fund I not just as an LP but also on the GP side which is fascinating anyway So, Shields sums it up.

2:12:15He says GC would be the first major US VC fund to IPO. They own a health system, a wealth business, a fund of funds, a debt business, et cetera. They all started from a$73 million fund, one that had 0.7 IRR. Wow. Not good. Legends. But they kept it going. I mean, you just got to give them credit for that. Yeah, it's amazing. That's incredible. Their first five funds weren't exceptional. I mean, I'm sure if you look at the J curve. But that all changed with stripes when hemant led stripes series b and of course hemant tanaja is uh the ceo now yeah and he refers to himself as ceo he has never he he's never said i'm sure he said gp and but more recently he's been saying hey i'm the ceo of this firm i'm not just the i'm not just the gp or like the the named gp or the most important gp because all of that's kind of like uh you know fake essentially yeah we should ask sheil he's going to be on in 20 minutes we should ask him uh uh, yeah, for kind of a deeper analysis here and how he thinks, uh, all the fees and a huge percent of GC's returns, 5.85 billion came from Livongo, a chronic care company sold for 18.5 billion in 2020 written down two years later.

2:13:24I wonder what it was written down to. And I wonder, um, and I wonder exactly what, uh, what happened with that? Like, what, like, why was that asset so mispriced but this happens all the time uh i mean plenty of times uh companies get uh get sold early and then wind up not doing the thing but then on the other side you have the instagrams yeah so teledoc was the acquirer they took a 13.7 billion dollar loss in 2022 tied to the lavongo that's a lot that's a lot i wonder what happened i wonder how they mispriced it so bad this is uh maybe on par with with square square's acquisition of a firm or not a firm who did square acquire uh wasn't it title or something well that was that was the uh wasn't that like the music streaming thing didn't they wasn't jack dorsey bought after pay after pay was that not a good deal i don't know so i mean all that stuff blew up when the interest rates they acquired after pay for$29 billion.

2:14:24Yeah. And then like two years later, they were worth like maybe$40 billion. Interesting. Public company. Okay. Well, should we zoom in on much smaller deals? A company making$30K in 24 hours, selling through Google Meet after one viral tweet. Interesting rhyme scheme here. I wonder if that's intentional. Eddie Zoo. So just to clarify on the last bit, then we'll restart that. So Square buys a firm in the Zerp era for$29 billion, and two years later, they're worth$26 billion. You mean afterpay, right? Sorry. Afterpay. Sorry. Yeah, yeah. So Block or Square buys afterpay for$29 billion. That's a lot.

2:15:07And less than two years later, they're worth$25 billion collectively themselves. Block is worth$25 collectively? I mean, they're worth$40 billion now. So they'll build it all back. It's just one figure, basically. Yeah, yeah. I mean, they're just one really good parlay away from getting back to nine-dig territory. Yeah, we don't see public companies ripping parlays. What's 100 billion? I don't even know. I think that public companies should start ripping parlays Friday after the market closes. What is your job as a CEO if not a parlay? It's like, I want my CFO to work out. I want this financing to go well.

2:15:48I want that distribution deal to pop. And I'm going to rip parlays. It is a parlay. Well, yeah. And even you are constructing the ultimate CFO. His job is automated away by ramp and they have all this free time. Yeah. They could be ripping parlays and it would be fun for the market to be able to sort of anticipate. All right. How's the company, you know, the company's putting up a hundred million dollars on DraftKings this weekend. How's it going to go? Right. No, no, no, no, no, no. Don't, don't bet on sports. Bet on yourself. Bet on yourself. But view your organization as if it is a parlay. Yeah.

2:16:23Because you can get this right. And we're going to get this right. And we're going to get this right. And you only have to do that a few times. Exactly. One T. Jensen Wong. He's like, I want China to not invade Taiwan. I want... TMC America to work. TSMC America to work. I want Microsoft over 80 billion in CapEx. I want Zuck to develop 20 billion dollars. Stargate, NASA secures the 500 billion. 500 billion. and if he gets that boom 10 trillion stock you gotta post that 10 trillion stock he's like here's my 10 trillion dollar parlay for nvidia it's like it's like the tesla secret plan you know it's like if all these things go right my stock should be worth a 10 trillion and so you know great stuff this is my plan just express it in a parlay i think it's a viral format i think it's good i i like i like thinking about things in parlays even though i don't participate them in the sports betting realm because it's low class and vulgar anyway moving on uh eddie says he made thirty thousand dollars in 24 hours selling through google meet after one viral tweet and i like the rhyme scheme there he says he was inspired by pmf or die yeah this is amazing so he made a post yes on saturday and he said i built an algorithm that simulates how thousands of users react to your tweet so you'll know if it will go viral before you post it's a really cool concept everybody's experience this if you post it on x you think you've got something great you post it 300 impressions later you got one like from from you know your absolute boy and you realize like all right this wasn't a good post sometimes the opposite happens and something that you weren't super confident in um rips but um anyways uh very cool he ended up launching this uh and starting to sell it kind of immediately and did thirty thousand dollars in volume in a day which uh annualized is pretty good business.

2:18:10He basically would have gotten out of the cage in an hour. Insane. Oh, I didn't even annualize it. Yeah. That's crazy. Yeah. You got to annualize everything. Yeah. Of course. Don't talk about, you know, you had a good day say, well, annualized were, you know,$200 million revenue business. It's great. It's great. Yeah. I saw some big, big people quote tweeting this. It seemed really fun. We should give it a try. And congrats to Eddie. I love that people have been inspired to go build stuff and take a crack. Yeah, I saw Emmett Scheer from... Yeah, that's what it was. Tick, tick, tick. Yeah, saying something dramatic, which basically alluding to if we're letting truly...

2:18:46Right now, there's a lot of human input. Your brain's basically an algorithm. It sort of creates a concept, releases it to the algo, and then humanity sort of reacts. And then in a world where algorithms are dictating the sort of entry into the algorithm, it's just an entirely new level. Yeah, and so Emmett Scheer says, tick, tick, tick. and essentially, you know, he says we're going to start, he's going down like the wire heading path. We're going to, you know, be optimizing for the algorithms too much. That's going to lead to, you know, some sort of AI doom scenario essentially. Not full doom.

2:19:22I don't want to like mischaracterize what he's saying, but he's just saying like, it's clearly just like things are getting weird, which I agree with. And so Yaxin chimes in and says, would work better to replace this app with something that just has a blank screen with the text, everyone likes you. Because, you know, the goal is to get lots of dopamine from the like people, basically. But that's not really what it is. The goal of a social media, everyone thinks it's the goal to get like, you know, a pat on the back. And oh, people like me, I'm popular. No, the goal is to make money. The goal is to make money.

2:19:53And that's what a proxy for, you know, getting a banger post is, is that it will get you a job, it will sell your product, like this kid is making money and so um it's not about that everyone likes you it's it's you know you cannot replace the app with with with shareholder value with with actual capital trends uh changing so emmet says do you truly not see the oncoming train of consequences for building optimizers that can predict the discourse generated from a post both volume and tenor do you truly not see the oncoming train of consequences for building optimizers that can predict the discourse generated from a post both volume and tenor and so i can't i mean break it down i i gotta dig into it i mean i can imagine some consequences from that i don't know about all of the all of the consequences on this oncoming i think i think the, you know, the reality is right now, every active creator online is already hyper fixated on how to, um, what does the algorithm want?

2:21:05It's like, TikTok does this where they're like, if you do this song, we're going to surf, you know, surface it. If you talk about positively about if you, uh, are against the TikTok ban, we're going to surface it. Right. So people know that and they start to lean into it. So how is this an oncoming train? I see this as like, the train has been whizzing past us and continues to whiz past us and is is accelerating and you know i don't see this as some binary moment that emmet is is kind of i don't know we'll have to have him on and discuss this with him because uh i i think that's the main thing that i that i disagree with the characterization here is like i mr beast literally built this for youtube like two years ago yeah like it's like it predicts how well your thumbnails and titles are going to do and so like we're here like people people have these tools maybe maybe it's not good enough yet and when it gets better then it really becomes you know give the people what they want but i don't know i mean yeah it becomes all ai generated it becomes all all very addictive and it becomes wireheading and no one ever goes outside and uh they get the juice reward and they get the the the nutrients directly delivered into them and and uh that's the end of humanity beautiful except for us because we'll be lifting speaking of the end of humanity we got a post from patrick uh patty colson he says grok's voice mode remains active when the app is closed this behavior is made very clear with a live activity it ends up being an awesome experience plop it beside you while reading a book and bat occasional questions its way without interrupting your flow i read this post and i read the first sentence grok voice modes remains active when the app is closed and i just thought like oh this is gonna be bad this is gonna be like it's spying on you you need to be aware of this like i thought because i didn't even see it was him uh and i love that it's just like this is exactly what i want actually this is great uh and i completely agree uh what was i it's funny because because patrick has the perfect index on ai yeah which is every ai company pays him you know 2.7 percent right of every dollar so he can be the sort of switzerland He's like the true Switzerland of AI.

2:23:13Everybody can run on Stripe. But this was cool. I mean, it does seem like voice has been this sort of lingering trend that everybody's been predicting, but it hasn't quite played out. It seems that voice has been predominantly used by people that aren't good at using their thumbs. And it hasn't been the preferred sort of method of communicating with your device. That seems to be changing. right sesame uh sesame came out last week and and had a pretty incredible response it's a wild experience to use and um and now grok is you know i i i flagged this post from patrick because i think we should try to um uh i think we should try to leave grok running for a show and just start interacting with it and saying you know when we have a question that i would otherwise google we can just ask grok yeah and it'll have the context from the conversation to be able to sort of surface relevant data so that's cool but we're having trouble with x servers today our live stream on x uh the entire live servers to grok yeah what happened yeah clearly they're not they're not deploying ai they're not deploying the servers to the humans we're the second class citizens now yeah well it's a disaster oh but uh sweet well let's uh jump in we got a promoted post from AdQuick, our favorite way to advertise out of the home.

2:24:35Out of home. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only AdQuick combines technology, out of home expertise, and data to enable efficient, seamless ad buying across the globe. And what I think is amazing in the same way that, you know, any company in the world can go on Meta and just sort of sign up and start running ads alongside the biggest companies in the world. Same thing happens on AdQuick. Biggest companies in the world. there's like a ton of the fortune 500 that runs on adquick wall street journal warby parker ramp discount tire instacart credit karma h &r block lift all these massive companies use it but you as a startup can go and start testing out of home yeah uh you know even on a smaller scale so you know another way to advertise out of home make a t-shirt like jason carmen did there we go on to the next post he says we made a movie about space for free on x then we made some t-shirts all the designs are love at story.inc slash apparel go check it out we love to support jason carmen here he has made some incredible documentaries and yeah he's building a whole media company around it now and it's fantastic uh and uh yeah i mean really cool designs like very very iconic i think these will age very well and uh yeah good to get it out in the world and i'm sure it'll start a lot a lot of conversations about the content if you see somebody in rocking a jason carmen original you know they're you know they're an absolute killer techno optimist uh should we go to carpathie on uh 4.5 again let's do it uh so this is a reply to someone uh zvi moshvitz saying uh gpt 4.5 reaction time go anything you want to make sure i don't miss or your own reactions and carpathy says my reaction is that there is an evaluation crisis i don't really know what metrics to look at right now.

2:26:26MMLU was very good and useful for a few years, but that's long over. Sweebench verified real practical verified problems. I really like and is great, but itself too narrow. Chatbot Arena received too much focus, partly my fault, that LLM labs have started to really overfit for it via a combination of prompt mining, private eval bombardment, and worse, explicit use of rankings as training supervision. I still think it's okay, but there's lack of better. It feels like it's on the decline in signal. There's been a number of private evals popping up, an ensemble of which might be one promising path forward.

2:27:03In absence of great comprehensive evals, I tried to turn to vibe checks instead, but now I feel they are misleading and there's too much opportunity for confirmation bias, too low sample size, et cetera. It's just not great. TLDR, my reaction is I don't really know how good these models are right now. Yeah, You got to get the models to write little stand-up sets, feed them to stand-up comics that get bucket pulled at Kill Tony or go on the stand. Put them on the stand. No, it's got to be humans that step on stage at the comedy store on an open mic night. And don't get booed off. And then you measure the boos to the laughs.

2:27:42Yeah, booze to the laugh. No, I think the only thing that really matters right now if you're a foundation model company is being significant noticeably better not to benchmarks noticeably better than than chat gpt yeah for specific use cases right so claude is noticeably better at coding right and so people use claude uh grok is notably notably more entertaining for some specific use cases for consumers than chat gpt right so that that's like something that you know potentially but but you have the situation right now where 100 million plus consumers love chat gpt they think it's awesome so if you're competing with them yeah you don't just need to be 10 better on some random math benchmark you need to be 50 better so that somebody will try you and switch to you for their day-to-day use i think that's what actually matters in terms of winning and you know you can see what in my view you can see what companies are actually consumer AI companies are actually doing well by looking at the app store rankings, right?

2:28:45It's not, it's a snapshot and certain, and it's obviously momentum driven, but if you're a consumer AI company and you're not on the app store chart, while open AI has continued to have a pretty dominant position, you're not in a good spot. And that like the app store chart is the final benchmark, the real benchmark that matters. It's gotta be so hard to try and be competing in llms right now because it's like you have people who are everyone there is like an open ai co-founder or adjacent to the president or a state actor it's like if you're not on the highest highest level like how are you how are you competing there it's going to be tough anyway we got shiel in the waiting room let's do it let's bring it man let's talk fintech let's talk financial technology hey ramp we're not going to call it fintech today we're going to call it finance technology finance finance tech finance technology uh let's go let's bring him in let's chat let's chop it up with shield how we doing should we do one more related post will brown says it's interesting that 1.5 billion parameters is all you need to crush math competitions but you need like 15 trillion to make the model funny maybe humor is the right measure of true intelligence and i agree i agree it was very difficult can you see him in the waiting room yeah i just see his photo here oh well 15 trillion parameters quickly to be funny uh the whole be me thing is funny because uh it feels like it's going to really benefit from personalization like the people that are like oh it's so funny it's like well yeah tyler cowan like you did laugh at it because like it's funny that the llm knows so much about you yeah you give that to just some random person off the street and it's like be me like i don't know the llm doesn't know anything about you or like you just have a normal job hey hey guys welcome up oh looking good in the suit let's go he was prepared yeah i mean when you come on on this show you gotta you gotta dress up you gotta do the part i appreciate it i mean we had we had uh quite a lineup today Paki, nobody showed up in a suit, but you did, which is why I think you win the day.

2:31:04You win the day. Hey, let's go. Let's go. Let's go. I love it. Uh, super excited to have you here. I mean, we we've had you on the show informally dozens of times, constantly surfacing, uh, the stories that matter, but, um, I don't know, we've had a big week. I think, why don't we start? I want to kind of start with, uh, maybe kind of extrapolating on your stripe adjun point of you you covered this last week let's start there and then i want to kind of broaden it and talk about fintech more broadly there's been some big news um but maybe we start there what um what's your takeaway yeah yeah what what's like the main takeaway from you know i i think you've tried to generally stay somewhat impartial right and just sort of like put the the numbers out and let readers take away their their own opinion but um but yeah what what's your what's your expansion there?

2:31:53Yeah. So the overall headline is the Stripe puts out an annual report now and Adyen's a public company. So they do. They process a similar amount of volume. Stripe is slightly ahead, growing slightly more. It's like 1.4 trillion processed by Stripe. And I think a lot of people look at that and say, OK, well, these are equivalent companies. So it's crazy that Stripe trades at 91 and a half billion when ad yen's a public company trades 56 billion so a lot of people said okay that's a sign that the private markets are overvaluing stripe i don't think that's exactly true like although they have similar processed volumes their margin profile is different so like when you make a transaction on stripe stripe actually charges more than ad yen does in part because of the types of businesses that stripe serves ad yen has a lot of enterprise businesses.

2:32:47Stripe has some smaller businesses. So Stripe most likely actually has greater net revenue than Adyen does. We don't know it because Stripe hasn't posted that publicly. But overall, I think both are amazing companies. I think Stripe, people fault them for having more employees, but I actually think it's interesting. I think Stripe is investing more in R &D, and they're growing faster and they have a lot more business lines. So I think both are outstanding companies. I actually have exposure to both, which I'm quite happy about. Amazing. You got to be, the best case scenario is you're conflicted, but the even better scenario is you're double conflicted.

2:33:27And they're both ripping. Yeah, they're both ripping. I'm happy to hear that. Where do you think, one, Stripe's had this amazing ability to build a behemoth by basically betting on these super early stage companies, right? Many of their biggest customers today were startups when they were all going through YC together. And that's turned out to be a fantastic strategy. Is part of the reason that Stripe could be worth significantly more than Adyen right now is that the sort of general investor base believes that they'll be able to take customers away from Adyen, these sort of bigger enterprise players because all the marketing, you know, Stripe has been able to take these two lines, right?

2:34:09They've got Stripe Atlas, so they're going to get the next generation of companies. But then simultaneously, when you see their out-of-home ads today, it's all oriented around, hey, we signed Hertz Rent-A-Car, right? They're clearly marketing. And so do you see Stripe's, what are Stripe's biggest future opportunities, enterprise and sort of beyond? Yeah, so you're absolutely right. So Stripe does a phenomenal job of getting all early-stage startups or a huge percentage of early stage startups. And actually like this business, it started like almost 15 years ago now. And at that time, your CTO was not making the decision on who you chose for payment processing.

2:34:49That was not a CTO's decision. That decision was made by, if you had a CFO as a CFO, or it was like the CEO, because it was a money decision. And then what Stripe did is they said, we're going to save you so much time and energy in getting a payment processor up and running, that it's going to be the CTO's decision. And the CTO is a little less price sensitive and is going to go with the best option that saves them time and engineering resources. So Stripe charged a little bit more money than you would pay if you went somewhere else, but it was transparent and you knew what you were paying. And then along the way, a lot of those early companies that they signed ended up growing into massive behemoths doing many billions of revenue.

2:35:37And so that was awesome for Stripe. But now Stripe is also saying, okay, like we got those customers that started with us when they were small and grew up. But to your point on the out of home and like when they're at conferences and stuff, they are trying to attract these other behemoths as well. And so, you know, I think they have part of Amazon's business. They have Shopify is large in the, I think if you look at in aggregate, all the sellers, Shopify one, then Shopify is probably the largest single opportunity for Stripe. But it's made up of, you know, thousands or many more than that of smaller individual retailers.

2:36:20Yeah, that makes sense. What other what you know, they've obviously they're making a push into stable coins. Yeah. What do you think they're, you know, I think it was very smart to identify that, hey, what is the stablecoin developer tool that has the most traction that's really working and just pay kind of any price to get that and then sort of bolt that on, right? That's basically what happened. What do you think, you know, what's your thesis around Stripe and stablecoins? coins they obviously wanted to own that sort of asset and have exposure to it but it's not like they're exactly rolling it across out across the entire portfolio today but what do you think that rollout actually looks like so yeah one thing that's kind of interesting is like how this came to be so one kind of funny thing is i think the bridge stripe acquisition was announced i don't know three or four months ago yeah and literally in the next month i was getting five to 10 stable coin pitches per week.

2:37:17It's amazing how quickly that happens. Like as soon as some large acquisition happens, you're instantly VCs are getting pitched all sorts of companies around that space. And everybody thinks, you know, because Stripe made this acquisition, now the space is super hot. I think what actually happened here is pretty interesting. I think like Bridge is a very, a great company. I think what happened is they, So SpaceX had this problem with Starlink. So Starlink is an international ISP accepting payments in developing markets. Developing markets are really hard to accept payments in. Traditional banking infrastructure totally sucks.

2:38:01It's slow. It was like blocking transactions. Like traditional infrastructure in some of these markets was blocking transactions. So SpaceX said, okay, we're looking for a solution. I don't know if Sean McGuire was involved at all, but like Sean is close with SpaceX, is close with, was an investor in Bridge. And so Bridge - You can imagine between raging, fighting the culture war on X, he was also doing the side deal to get the Bridge SpaceX thing to happen. I'm just saying there's a world - It's amazing he has ties with anything else. Yeah. The man contains multitudes. Yeah. He's a man of many talents, for sure.

2:38:44uh yeah do you want to finish and i have a follow up i think like i think spacex using stable coins was a big moment um and i think a lot of other people said oh like we're having this issue too spacex is using stable coins with the bridge yeah i think that was actually super instrumental for that even the scale ai example like really concretized it for me where it was like oh it's very clear that you're paying a bunch of people in international philippines I paid video editors internationally using stable coins. And just because like, it's so much easier for them to get the money. And so I think as soon as you have that, it's very hard to be a skeptic about it because you're like, okay, I actually used it.

2:39:22It worked. It was what everyone's been talking about for a very long time, about easier, faster, lower fees, et cetera. But I wanted to flip it around for you and ask, you know, in consumer tech, you always have like, oh, Zuck's going to kill you. Do you feel like, you know, you get these bridge pitches post bridge acquisition? Is there any fear like, oh, Stripe is going to build that? Is that a vibe that you see among early stage fintech companies? Because there's been a lot of successful fintech startups. Also, Stripe is a founder-led Decacorn that is very able to move quickly. Yeah, I do think there's some of that.

2:40:01But I think that there are other areas in which people have been able to build great businesses that Stripe was competing. Actually, you know, kind of crazy, maybe blasphemous to talk about. But one of your sponsors here and friends of ours, Ramp, you know, Stripe ended up investing in Ramp. Stripe, as you may recall, had a competing product. So it's not like you can't beat Stripe at anything they do. There are a lot of businesses that are going after. Well, Stripe also had a stable coin, internal stable coin team that had been working for a while. So while Stripe, you know, those guys are super sharp.

2:40:39And as you said, founder led. My brother works there. I'm, you know, I'm all about Stripe. Love it. But I think there are plenty of opportunities to build businesses that go after businesses that Stripe is in. And Stripe has a core focus area that they need to, that they're doing phenomenally well at. And they're doing a bunch of other stuff that I think there are opportunities to compete with them on. just don't start a high-end publishing company because they will kill you i would not touch it with a 10-foot pole that industry i think that's the one that they just have completely locked up monopolized and they will actually break your legs if you yeah the irish mafia the irish mafia will come out for we should just hope the stripe does not launch a podcast because oh game over yeah yeah yeah yeah yeah uh very true um what uh you posted a day or two ago about the general catalyst IPO and rumors around that.

2:41:33How do you talk about, I don't know if you speak generally, you don't need to give us any inside baseball on it, but how do you think the fee structures work when a venture fund goes public? And do you think that's going to impact GC's ability? Is it going to be good for GC's ability to recruit top investors is because there's more liquidity? Is it going to be bad in the sense that, you know, people that really want to bet on themselves are like, oh, I could go work for BTV and get a bunch of carry and I trust my picking ability and I can make a lot more, you know, getting actual carry. How does that unfold?

2:42:12I think on the latter part, I think like these mega funds, we'll call them the like, you know, double digit billion AUM going out to raise five to 10 each time. um they're already huge behemoths and like somebody who is considering working at them should not be considering working for us like we're we're we're playing a different game yeah um it's like you know you're you're a seed or series a startup and you interview somebody who's like and you're like who are they who are you considering and they're like well i'm considering meta stripe and you guys i'm like get out of the room dude don't waste my time yeah we just had this it makes so much sense so i think you know i think we play a different game like they're in the asset accumulation game and going public only furthers that sure um we're like they're gonna make a lot of their money off of management fees from these billions of dollars they collect and you know returns like they've had some great returns along the way you know they led stripes series b and i think a 500 million dollar valuation it's now worth 91 billion so obviously they've done phenomenally well there.

2:43:20They have a few other bangers that they've had through the years, Livongo amongst others. So I think in the past, they've had some pretty good returns. I think in the future, it becomes more of an asset accumulation game. And if I think about how we as BTV, if we're pitching or if we're trying to sell a startup to take our money, It's like, look, like we're returns motivated. We're driven by you being successful. They're just, and like, you're really meaningful to us versus if, if it's a multi-stage firm, it's like, take their money later. Like they're not, they're not as driven by always be there.

2:44:00Yeah. They'll always be there. We, we won't be. Yeah. Yeah, exactly. Um, but I, I think it's interesting. I think you're going to see more funds IPO, frankly, I don't think this is the last one. And I think it's certainly possible that Andreessen could IPO and any of the mega funds could. Yeah, that makes sense. Especially if they're already set up as RAs, right? Yeah, exactly. You have to be feeling pretty good lately, given that FinTech is back. I'm sure you had a... No, I remember this in late, early 2023, FTX had collapsed. I was running a FinTech at the time that had digital asset features and traditional fiat features.

2:44:38And it just was like, where do we really go from here? Brex at the time was burning, spending like 800 million a year to make, you know, like what it was totally inverted, right? It was like 500 million in revenue on like 800 million of expenses. I was like, is this category like, you know, where do we go from here? Right. It was sort of a dark time. You guys rode through it. You know, crypto is really good at this, right? Like crypto VCs, like the market's down. They're like, I'm going to get paid if I just hang on. VCs typically are like, you probably had a lot of fair weather fintech investors that were like, we're going to go and do other categories.

2:45:16Where do you think the biggest opportunities are in fintech today? And yeah, I'd even be curious, without naming names, out of the last few deals that you've done, can you kind of talk about the investment areas? Yeah, sure, sure, sure. So I'd say like fintech overall, look, it's been a crazy time. We started this fund five and a half years ago. It's been a roller coaster. And I've been investing in fintech full time since 2016. Nobody gave a shit about us then. Then fast forward to 2021, we were the belt, the ball. Everybody wanted to invest in fintech. People were begging us to give them advance notice on deals we did and then investing months after us at, in some cases, 15 times the valuation.

2:46:01It was absolutely bonkers and stupid, frankly. Good for fundraising, I'm sure. Yeah. You know, good for fundraising, actually not actually good for those companies that took too much money. Sure. And then what happened was an overcorrection in 2022 and 2023. And in part because those companies had so much money, they didn't have to find PMF. Like it wasn't PMF or die. It was PMF or survive because you raise a hundred million dollars. Yeah. Yeah. Yeah. For coast for five years. Yeah, exactly. And so, you know, fortunately most of the companies in our portfolio, like they had enough money to survive and then they didn't burn too much.

2:46:46And they're now like, now they're having killer years. Like a lot of our companies actually kind of struggled in 22 and 23, but then 24 was a banger year. And like, especially the second half, I think it was just coming out of that. whiplash and and you saw it in the public markets too like if you look at fintech companies 22 and 23 they were totally in the in the doldrums yeah i was just explaining i was just explaining to john that square bought afterpay for 29 billion and then was worth less than 20 20 like 25 billion combined like less than a year later i mean one of the one of the most one of the most devastating acquisitions ever in recent memory.

2:47:27By the way, that's a fun topic. So Afterpay. So the cool thing about that one is our friends at Matrix, Dana over there, when they invested in Afterpay, I believe it was a$80 million public company. What? Matrix led the A. It was an Australian. They were already publicly listed. money and raising money in australia just meant you go public there's a lot of canadian companies like that i see them all the time where it's like oh it's a hundred million dollar company and they just happen to be public because like that's how you get a deal done if you're raising five million dollars like you have to go public because i want all of the oversight and i want all the accounting and i want all the audits and so you better just be public if you want me to underwrite this yeah so so what a banger of a deal like they invest in a company any of us could have invested in yeah and then like i don't know i don't know how many years later it's four or five years later sells for 30 billion dollars i i think when all is said and done what what happened was it got announced at 30 billion but by the time it closed square stock had already dropped a lot so it was it was like half as much still sure quite a banger yeah yeah amazing um how that's why they brought in tj to find the next one right yeah yeah yep um so uh there was a bunch of you know a bunch of businesses started super low rate environment that that worked in that in that sort of setting and then sort of started to not work uh in in 2023 and beyond how are you advising your founders around you just are you are you telling them like plan like this is the new normal uh you know it's been easy to imagine a situation where trump just lays on the pressure to to drop rates but um and then and this reminds me you have a portfolio company mercury that that generates you know basically like really obscene levels of EBITDA, but it's predicated on, you know, this sort of Fed funds rate that they don't control.

2:49:25Right. So they've built a fantastic product. But so, yeah, how are you advising your portfolio companies around the sort of rate environment, given that that so much of the returns in fintech are driven by, you know, finding that perfect balance. Yeah, it's true. And I would say overall, lower rates are great for us. We have Mercury and one other portfolio company, Relay, that are benefited by having higher interest rates. It's because they're sitting on deposits. So that's how they make a lot of their money. It's tricky for both those companies. If you think about, to your point, they're printing money, but um investors have to think about okay like what is the rate that we can make we can assume is going to be the case going forward it's really hard to predict these things i don't think it's going to be back to where it was in 2021 anytime soon if ever um so at the same time you could totally imagine like you know like a period in the next decade where we have effectively zero interest rates for like five years plus like post some sort of recession like yeah and that was why when the mercury news came out and you know they were getting a three billion dollar valuation and everybody's like oh this is great because it's 2x whatever they got priced in 2021 i was looking at that and saying they're not really getting credit for that oh totally profit at all they may as well like there's you know other companies that are losing 200 million dollars a year much less making 200 million dollars a year that are getting priced like that so fundamentally america just has a lot of debt and keeping a high interest rate is not fun when you yeah yeah totally i think So I guess a lot of pressure from Trump.

2:51:03I think there will. At some point in the future of American history, we will see low interest rates. Yeah, the next the next grift, there's been one grift every two weeks, but the next might be dropping dropping rates just long enough to refinance the whole Trump. Yeah. You know, but anyway, so your general position is like assume they're going to be somewhere between here and two percent. And you got to make your business model work kind of anywhere in that range. Sure. Yeah, totally. And one thing that's interesting is like Mercury started before, like Mercury was making a large portion of their revenue off of the rate.

2:51:38And then in 2020, rates dropped. They lost a huge portion of their revenue and then actually like built up a pretty substantial interchange revenue business. And like kind of, I don't remember the exact amount, but like in March 2020, rates dropped. Mercury lost a shitload of the revenue. And I believe that like two or three months later, they were back up to where they were. Where they were. Yeah. Yeah. That makes sense. Gross years all. Since it's the topic of the last 24 hours, I would love your take on the strategic scam and gambling. Yeah. The strategic crypto reserve? Yeah. Yeah. Yeah. I think it's total bullshit.

2:52:24It's a classic big government idea that masquerades as some sort of forward thinking policy. You can say we're innovative or whatever, but it's actually quite the opposite. We're literally handing public funds over to private cronies and wealthy people like myself. Yeah, you said your single biggest personal position is Bitcoin. So you're actually, and the craziest thing is, you know, we started the show today and we realized that the Bitcoin price had almost roundtripped back to, which is the biggest bear signal that the government announces, hey, we're going to be investing in crypto now. It doesn't move the market materially or in any permanent way.

2:53:05Yeah, it's crazy. This wasn't really priced in fully. It's ridiculous. I think like my point of view is on this and a bunch of the other stuff that that has Trump has done in this administration. I feel like, you know, it seems like a short term political win, but long term, it's bad. And in this case, I think this crypto reserve undermines the dollar's position, which is like fucking awesome. The dollar is the global reserve currency. And this sends some sort of confusing signal about our own confidence in USD. And like, so other countries hold dollars because they're stable, consistent, and predictable.

2:53:48Yeah. And, you know, I think you could make the case for Bitcoin. I wouldn't personally. Sure. but you could make the case that bitcoin is the new gold and it's some sort of hedge against inflation or currency instability i don't think you can make the case for fucking cardano or you know xrp like what what is this shit it's it's bullshit it's uh it's basically a taxpayer funded backstop now david sachs came out today against joe lonsdale and said it's not taxpayer funded i think that's bullshit let's say there's confiscating coins and holding them it's the Same thing. Like if you – like previously when they confiscated, they sold.

2:54:29Yep. That's not selling. It's the same thing. Like it makes no difference. What about the argument of like during the bank bailouts in 2008, obviously like it looks very bad because it's like taxpayer money is going into the balance sheet of Bank of America, Wells Fargo, save those companies. But if you look back historically now and you read the Tim Geithner book, it's like, well, the banks paid them back with interest and the taxpayer actually made money on that. What about that argument? Yeah. So what's the – but what's the argument for the crypto reserve? The argument is that it could be net positive to the taxpayer.

2:55:08Like the taxpayer, yes, the taxpayer does put money into this thing essentially. But if it goes up, then they wind up paying less taxes down the road when the government wants to fund something because, hey, we don't need to tax you as much because we went 10x long on X, Y, or Z. Yeah, it's just a question of do you trust the government to allocate our dollars or do we trust individuals? And so I think it's like a personal freedoms issue. So it's kind of strange to have it come from the Republican Party, frankly. Yeah, totally. It was odd. Anyway. Um, what, uh, talk to us about, you've got an accelerator, which vertical specific accelerator makes a ton of sense.

2:55:47It, you know, if you're, you know, YC is an amazing product and platform and why are you locking them in cages though? Yeah. Yeah. No, yeah, no, that's the real question. Why aren't you locking them and putting a live stream on it? Yeah. Um, no, I don't think that, I think people are sick at this point of the PMF or die approach applied to financial products. you know uh we we very clearly did not want that because there's been some bad uh bad things that happen when you just try to but uh what kind of companies are you looking for i imagine that it would be insane if somebody had the opportunity to go through the your guys's accelerator and they're building in fintech to to choose yc not because yc is not great but just because you guys can connect them to this hyper hyper specific network and yeah yeah i totally agree yc is great um look i i ran an accelerator 2016 to 2018 yc's i think gary said that they had four and a half percent of their companies became unicorns actually um in mine seven percent became unicorns so we have a good success um so we have a good success rate i think the idea is like look if you're building in an area that we have expertise yes ring the gong um we have expertise we can be helpful.

2:56:59Now you asked what areas I'm interested in. I'd say, look, we're sort of founder driven first and foremost, but there are some areas we've invested in a lot. One is this, very unsurprisingly, we're investing in AI companies. We've done a bunch recently in the services as software space, including one actually we did with a previous guest on here, Keith. We have a company called Basis that's an AI for accounting company that is able to do a lot of the work that a low-level accountant does. We led the seed last year. Keith led the A recently. We've done a bunch others in that space. We did one in the SMB loan underwriting space called CODGE.

2:57:44We did one in the mortgage space, did one in insurance. And all these companies basically are using AI, but embedding themselves deeply into a workflow and solving a problem for somebody who probably could not build it themselves, which is exciting. I think, you know, my worry with a lot of these AI companies, you've seen all the charts, zero to a hundred million revenue. I think a lot of them that aren't as deeply embedding into a workflow, I think are in danger of going from zero to a hundred down. Easy come, easy go. Yeah. So, so we're trying to invest in companies that we think have some durable lasting value, some data distribution, and embedded workflow value.

2:58:28And those kind of things are easy to find in FinTech. Yeah. Have you touched any of these broader sort of more PE style roll-ups? There's some opportunities and payments, obviously, for that. Have you gone into that space at all yet? And what's your general point of view there? We haven't done a whole lot of these PE roll-up style things. We've done a couple of things that are similar. We did one in the healthcare space that works in private practices called Maroka. I think, honestly, jury's out on those kinds of businesses and raising venture dollars to do so. Probably works better for the asset accumulator harvester model where you can deploy a lot of capital with lower risk unless you're saying, we're going to replace every employee with AI.

2:59:19It's easier to say, we're going to buy a bunch of companies at fair prices and get some efficiency, but that's basically just private equity, which is not the business that you're in. Not the business that we're in. That's exactly right. And so I completely agree. I was going to bring up General Catalyst is buying a hospital system in akron ohio that's they're in a different business than we're in um and i can see why it makes sense for them really quickly you say is buying can you break down like i heard about that deal like last year why is it taking so long like what's going on with that what is is this like a regulatory approval type of situation yeah i'd imagine i don't know i don't know any information but um i'd imagine when you're buying a health system there's a ton of shit that you have to do there's like there's pushback from the community i noticed like immediately like when we heard about it i also saw articles like hey this is fucked up like a venture capital firm is buying something that should be for the public good yeah there's been a lot of pushback on like oh private equity bought this uh you know local clinic and like made it worse or like reduce the quality of care to like maximize profits so it's always been controversial it'll be very interesting to see how general catalysts position themselves in the ipo i mean citadel was thinking about going ipo back like i don't know 10 years ago and they they like hedge funds were seen as like villains of the yeah of the crash so they bought an investment bank to try and make themselves look better which is hilarious to me because it's like like oh yeah we're not the bad hedge fund guys we're the good investment bankers both of those are like kind of villainized already uh it's bad if you go banker to make yourself look better.

3:00:59That's bad. Exactly. That's great. I think they paid McKinsey like a fortune to advise them on how to position their brand going into the IPO. And then they just kept it private and then they created some little securities and printed. It was great. Yeah. You're probably got to jump because I know we had 30 minutes. Is there any IPOs that you're pretty convicted are happening in 2025 and FinTech specifically? I mean, there have been rumors around Chime and Klarna. and you know um uh i'm in carter the biggest i think where chime prices is going to be you know very important to the fintech world i think like i think in the private markets it's currently trading at 10 but people think uh you know people think it's going to go out stronger it's going to have a huge impact on on me and our portfolio actually we have we have some other companies that are in a similar space so i'm i'm really looking forward to that one clarna i think um you know i actually don't know where it's going to price quite has something interesting you know they raised at a crazy valuation and then did a massive down round which is not necessarily bad thing especially for them clarna actually does not have liquidation preferences crazy enough so it actually was just like they also replaced 100 of their employees with ai right supposedly it's just the ceo and claude three sonnet cursor actually now somebody should go buy a peloton and then see if see if a human bangs on their door or it's just it's just a chatbot being like hey please pay this back uh no it's fun what but but chime what was their last what was their 2021 or 2022 um valuation it must wasn't it or you know forex yeah 25 billion in 2021 yeah nice And I remember it trading privately at like 30.

3:02:51Yeah. yeah cool very cool well we will have to definitely have you back on this is super fun guys enjoy You're welcome any week. And thanks for jumping on. Appreciate it. Cheers. See you later. Bye. Fantastic. Should we close out with, we're going so long the lights are turning off because we're running out of a little battery. We're really pushing it to the limit today. It's great. Should we close out with some timeline? What do you want to do? A little bit of timeline. It's 2 p.m. We got to drive around in a Ferrari later. You know, it's a hard life out here. More to come there soon. Also not kidding.

3:03:25Did you see the Mr. Beast backlash? I thought this was kind of interesting. I didn't. So Mr. Beast did a podcast on Diary of a CEO. Have you ever listened to this podcast, Diary of a CEO? No, but it's like the biggest. It's the biggest business podcast and no one in Silicon Valley listens to it. It's very odd. I mean, it's like, it's popular, but it's popular just with like a very different crowd, I guess. I think it has a lot to do with the fact that it's not an American show. Yeah. The guy's British. And so even though he has, he has great guests. Like, I mean, Brian Chesky. He also has like a Web3 startup.

3:03:56He does? yeah yeah oh i had no idea the the host really yeah wow he should have stuck to simple supplements i guess but anyway um i'm gonna let you read through this yeah yeah the restroom yeah sure so uh mr beast goes on diary of a ceo and then kotaku writes an article about mr beast going on the show and says mr beast life is quote so much easier when you're broke and of course this is very controversial. People get very upset. There's a viral post saying F you. It gets like 100 million likes. Everyone sees it as very negative and flippant that this rich guy would come on and say, ah, life's so much easier when you're broke.

3:04:38But that's not actually what he said. And it's very interesting. So Jack Appleby breaks it down. He says, this might be an all-time PR team screw up. Mr. Beast went on Diary of a CEO podcast. The podcast PR team pitched Jack Appleby and other writers to cover it, which is something most people don't know about podcasts. But when you go on a podcast, there's a PR team for trying to amplify the attention that this guest gets. It's all very planned out, very insider plant, industry plant. And so when Kotaku wrote about it. They used a pretty harsh quote. He said, I'd have done the same, except it's not a real quote.

3:05:19The podcast publicity team somehow confused Mr. Beast saying bro as broke. So maybe they use like AI dictation or something. But in a moment where he's just saying life is harder when you travel, they misquote him and made him sound like a jerk when it's not the case at all. And it's all not naturally gone viral with the misinformation side of it, all because the publicity team tried to get coverage and they screwed up. So now Mr. Beast is taking heat. Kotaku is taking heat when neither of them deserve it. And so the real quote was, this is killing me to be honest. It was like so much easier when you're broke if you don't travel constantly.

3:05:56And that's not what he was saying. He was saying, it's so much easier when bro, like you're not traveling and it's fascinating. And of course his original point is correct. But the Straussian reading of all this is of course that life is so much easier when you're broke and that and that with wealth comes a responsibility yeah and that and that when he's when he's getting canceled for he should have said the quiet part loud and that everyone else is wrong yeah it's true he's also built up a brand where he's sort of almost promised his audience that he's reinvesting like 101 of whatever he makes it doesn't fit with his brand at all but uh i mean elon has said this uh and not back down from it where he said like look i have all this money i'm the world's richest man i'm miserable you don't want to be me like i'm not having fun yeah like i'm i'm like like i'm having i'm doing there's forward motion there's energy but i wouldn't call what i'm doing fun and that's fine that's good that's also a choice you don't have to be optimizing for fun he could retire by the biggest yacht and not ever talk to them exactly exactly yeah he could totally didn't have to buy and plenty of people have yeah the the google founders did for a long time bill gates you could say has kind of been on that tip for a long time uh even ellison is kind of chilling from time to time like there are people that choose to be much less aggressive um yeah jason calicanis was the first investor in uber one of the first and now he's deciding to be in this you know go to war with a defense tech founder.

3:07:28He does not need to do that. You know, he could, he could pass on that. And yet he doesn't, he keeps, he keeps kicking the beast and everyone involved in that seems to love fighting, love fighting. It's very annoying. Makes sense. I'm totally over it. Anyway, over it. Uh, should we stay on the topic of VC? Liz Wessel, ramp investor. Congratulations to Liz. She was an angel. Uh, she says, has anyone written about the trend over the last six to 12 months of founders, 18 to 26 years old raising VC to buy old school businesses and inject AI into them. I've seen so many pitches in every vertical on this in 2024 and it looks like still in 2025.

3:08:05I'm curious to learn how VCs who have done these seed and A rounds often priced pretty high are thinking about this approach. Blog posts or podcast wrecks. Appreciate it. Well, let's just do a podcast about it right now. Let's do it. Here we go. Let's do it. So Liz, we got the answer for you. We're going to go to Jordi, an expert in this exact topic. Jordy, break it down for us. Would you invest in a 18-year-old founder buying a old school business, injecting AI into it? And the seed round is at, you know, you're going to get one. You had me at AI, John. One on 99 pre. I'm in. Send me the wire instructions.

3:08:39Fantastic. No, so there's two things that happened. The concept of the search fund exploded because the idea of these sort of old school, IRL, real world businesses. It wasn't a Silicon Valley thing. It wasn't a Silicon Valley thing. It was a HBS. Yeah, it was an HBS thing. It was saying, hey, you could have gone to Goldman. Yep. Instead, you're going to take$5 million and try to turn it into$15 million in five years, something like that. So that became popular. And then the AI sort of enabled roll-up started blowing up. And Liz is right. There's just tons and tons and tons of these companies.

3:09:15My concern, generally, I think we're going to see returns in the category. It's not going to be one where everything that gets basically zeroed out. But that being said, you're taking venture dollars and you're going into this sort of private equity world, which is like one of the most efficient markets in the world. Private equity has spent decades honing the ability to buy assets, make them better, and then sell them for a higher price. And so by going in there and saying, it's a huge bet to say we're going to be able to replace 80 to 90 % of the employees with AI, right? When the models are good, but they're not agentic yet, right, for the most part.

3:09:58And so my concern is that you're going to have, it seems like the most likely outcome is like some of the big winners end up being, the big winners still end up not being venture winners right and that they they they get a nice three to five x and on invested capital but it's not enough to to to sort of return any any type of fund yeah i i think that's a good point i'm i'm trying to think of like the private equity deals that i've seen like kind of up close and personal and i'm going back to like bain capital when i was there they the the the historical like banger for them was staples yeah you know the staples stores and that was not a digital transformation story yep like that was very much a nuts and bolts like what should the capital structure be how do we lever this thing up properly how do we close underperforming stores ramp up overperforming stores it was not it was not hey the internet's here i mean this what this happened like the 90s like this is the main capital story so they i mean they think they owned i think they owned staples from like the 80s 90s to the early 2000s like the internet was a thing they there there is a world where you could be like buy staples and turn it into amazon.com yeah but i'm sure they launched an e-commerce site at that point but it didn't like materially change the business uh same thing they bought uh who they buy toys r us and that one i think they got out but eventually it went bankrupt and it was not a digital transformation story and so yeah the private equity thing it's like the the even though there's been a trend of like the internet for a long time they're like that hasn't been the story of private equity in my, in my, in everything I've read over the past like few decades.

3:11:37It hasn't been, oh, let's, like, let's go and buy the hospital network and we're going to improve the user experience flows of the payments plan or whatever. It hasn't been, let's use the internet. The challenge is when you're buying a legacy sort of S &B, typically the founder is retiring. And the reason that that company, you know, outsiders will look at the business and say, oh, they run on pen and paper. They're not factoring in the fact that that founder was a staple of their local community, would work 12 hours a day for decades and put their blood, sweat, and tears into the business. And so you would get this effect of you're ripping out this sort of owner operator who's made their life's work, this company, and then you're slapping some AI on it.

3:12:22And I don't know, I think you almost are better off with the owner operator, right? And so the value, and so in these business, when you're buying businesses that are being valued on cash flows, you need to make them grow faster and you need to increase earnings. Otherwise the value is less. And so you can rip out costs to increase earnings, but the sort of replacement, the sort of what you're ripping out is human capital and ejecting artificial intelligence. It's unclear what that trade is going to look like in the short term. And where the value capture lies, because so hold on to that second point.

3:12:56But the interesting thing is like like oh they're doing stuff on pen and paper well if they're paying somebody you know ten dollars an hour and they're only spending one hour a month on it well that's 10 bucks a month docusign is going to hit you up for 100 bucks a month you're going to 10x your bill by going not paper right yeah and so there's a question of like how efficiently priced are the digital tools yeah because if they're really efficiently priced with these they're going to take their pound of flash. Some of these small businesses are like, you have the, the, uh, niece and nephew of the founder who like kind of work for like below minimum wage and they're getting ripped out too.

3:13:35They're not sticking around. Yeah. Yeah. We're the grandchildren coming in on the weekend and like, you know, rack and servers. I've got a, I've got a buddy in Malibu who's like, has a multi a hundred million dollar, like healthcare software focused PE fund. And he, uh he has like people don't realize like how um how precise these um managers are and that he does not care to try to get a 10x he's like i just want to get you know 2x uh i want a 2x uh and that's really all that i care about but i'm never going to miss and i'm just like only and so you're coming in and you're competing with an operator where you're going to have to pay you know people that are selling their businesses, usually they have some type of long-term incentive to make sure that the acquisition is successful.

3:14:23Do they want to sell to the guy that's a proven operator? That's like, literally like, I'm going to go out of business if this doesn't, you know, my fund is going to be damaged if this doesn't work? Or do you want the 22 year old that's like, you know, I'm rolling up, you know, pools. Like I saw like a pool roll up that was like, and I think it's awesome like it's a cool like it's a cool shot but you know uh i i'm it's unclear if public pools no no like residential pools so like if you can so if no so you can go on a biz buy sell or some of these other sites right now and you can buy a pool route and it'll be like oh it's basically the client the clients and so these things trade over time where you can go and say yeah i'm gonna to buy, you know, thousands of pool clients and outside of Austin, right?

3:15:12And roll those up. The challenge is like the, the, the competitive pressure on a pool route is so intense that anybody with, you know, a hundred dollars worth of equipment can clean pools. Right. And so it's not, it's certainly not a monopoly type environment. Totally. Yeah. Yeah. I mean, I can see a lot of VCs getting burnt here. Um, mostly because like, yeah, like even if you wind up shifting from, look, we have 100X in our fund to everything's a 3X. And you work out the math and the IRR should be the same. That's not the entire purpose of a single fund because there's plenty of situations where, yeah, you want to get a seed into some company and then you want to pile into it with your growth fund.

3:15:57And if you're just getting a 2X, you're not going to pile into it and scale it. So it's kind of just this hope that AI will transform private equity. And maybe it will, but we don't know we haven't seen yeah and the risk for venture funds is that you're running a traditional venture model and then you say oh we're going to put 20 of our fund into a bunch of you know roll-ups and then you get a banger and it's a 4x and they're like great like we still are like are under going to underperform yeah so anyways i think um yeah venture people need to understand that uh you know we like to go into other industries and and you know sort of say like oh, like you guys have been doing this all wrong.

3:16:38Expeditionary or boondoggles. I mean, they're basically boondoggles. Maybe. Hopefully it works out. I hope they figure it out. Let's go to Molly O'Shea. This is a fun one. I think we should take this into account. We've been podcasting pretty hard. I think we should announce that we're taking a break. We're going to take maybe 18 hours off. Yeah. So you won't hear from us for a while. Yeah. We're going to end this stream eventually and it's going to be about 18 hours before we start up again. Yeah. so we're gonna spend time with our family yeah yeah really recharge the batteries yep deep breaths and stuff but then we'll be right back at it uh but let's let's close out with this uh post from molly she says after further analysis i've come to the difficult decision to go into hermit mode i will be refraining from any generalized social interaction or networking like events travel conferences and coffee chats for the foreseeable future if you want to hang out sign up link in my bio my team will get back to you brave molly brave you're brave i wonder who inspired that i wonder who inspired i wonder who inspired that um no no we love molly on this show and uh yeah she's our default answer when we get invited to events now is uh come on the show yeah happy to cover it on the show if you invite us to an event we're gonna say no but if you tweet about it we'll cover it on the show and if you want to call in you can call in too everybody wins but But you're probably not going to get us out of this chair because it's so much fun.

3:18:00It's just too much fun. It's too much fun. You never want to turn off the stream. Are there any bangers you want to go through? What was your sleep score last night? Because I had a rough one. I had a good one. I got a ton of sleep. It takes me having the worst night of the last 30 days for you to do better. I got a 72. I got a 94. I slept eight hours and seven minutes. Let's go. You consistently do eight hours. this is great you got the laugh it's great yeah amazing huge numbers built like a bear sleep like a bear just hibernate every once in a while uh i have i've been a bit under the weather so i had to go to bed early still got up at six got in so i had a funny so so i didn't set an alarm yeah i use the eight sleep alarm i didn't set it yesterday yeah you shouldn't have told me about that because if you're competing with me now i got an edge yeah you gotta keep these features to us well i got some other secret features okay that i'll share with the audience but but not me i'll have to cover my ears no but i i didn't turn on the the warming feature at the end of the night yeah and so it was like impossible to get out of bed yesterday even though i was sleeping in like two hours past like whenever you normally get up so anyways go to uh yeah go to i forgot my transition my original transition was when we go to the moon with Firefly, we'll sleep on an Eight Sleep on the moon or something.

3:19:21But somehow I missed that. And we are interested in competing with the audience. So go to eightsleep.com slash TVPN and get a discount on Eight Sleep. And then DM us. We'll get in a group and we'll all sort of motivate each other to put up crazy numbers. Anyways, we got some more timeline? I think let's do more timeline tomorrow. I think we're good at this point. It's getting late. Good, good, good. we got a promotion to film yeah we are gonna go drive a Ferrari around which you'll hear more about soon fantastic thanks for watching leave us five stars on Apple Podcasts and Spotify leave an ad in your review we gotta do a review of the reviews tomorrow yeah we should do a review of the reviews we'll get them up on the show and thanks for watching we appreciate you thank you brothers we'll see you tomorrow see you tomorrow