LIVE FROM HILL & VALLEY: Jacob Helberg, Delian Asparouhov, Christian Garrett, Josh Wolfe, Eric Glyman, Karim Atiyeh, Mike Solana, Keith Rabois, Qasar Younis, Shaun Maguire, Sampriti Bhattacharyya, David Friedberg, Joshua Steinman & more

26:15And we were able, using a lot of connections on the Hill and messaging about not interfering with e-commerce to put a lot of pressure back on the Treasury to draft much more reasonable regulations. They really wanted everybody to put in their Social Security number on every transaction, which is crazy. Intense. Last question. Jensen was saying SF is back because of AI. What's your take? Well, he stole my line. Yeah. I mentioned that my version of the line was slightly narrower, but you obviously can expand it. Mine was OpenAI saved SF. Without OpenAI's success, SF would be dead and still dying.

26:54You get another power law company, and that drives a ton of innovation and stuff. And the people who are favorable to SF would say, oh, well, that happens every 10 or 20 years. It was like the internet saved SF too. When I graduated Stanford before the internet, SF was like a 12th to 15th ranked city in the United States. There was no business going on. Oakland was actually a better commercial city at the time I graduated Stanford. No way. The only people who stayed in SF to work at like Bain or BCG were like for lifestyle reasons. Totally. It was a dead city. Then the internet revolution happened.

27:24And although a lot of the best internet companies, the best technology companies were in Palo Alto and Mountain View and Sunnyvale, there was enough spillover at SF to sort of save the city. Well, it was just cheaper in some ways, right? Yeah. No, and, well, cheaper, and you need large floor plan, like, floor plan, floor print offices, like, and those didn't exist in the city. The city's culture was really never great for building companies. Like, when we considered moving the PayPal office to SF in 2001, Peter asked this question, Peter Taylor asked this question, name a successful SF company.

27:58and the largest SF company at the time was like CNAC or something incredibly mediocre. So we didn't. We moved to Mountain View. Interesting. Wow. Well, thanks so much for joining. This was fantastic. Great to see you. We'll see you out. Enjoy the rest of the conference. Ben, do we need to shift? Thank you. Do we need to shift the microphone a little bit? Have Zach maybe sit at the end of the table, point towards us? Yeah, we're going to shift it now. Yeah. But come on in. Welcome. Repeat guest. Yeah, we're going to go right here so that you're kind of aiming at us right here. So just kind of sit right here.

28:32Thank you. And lean into the mic as much as possible. Look at this. Doing your own AV setup. Yeah. I'm going to get two of the best in the business here. Yeah. But, you know, it helps when everyone's an individual contributor when you're running a startup, right? Totally. I've got to say, getting into this room is the hottest ticket here. The line at your door is just like impressive person after impressive person. All right. Were you an early, like an individual contributor in the early days? At Platt? Yeah. Oh, yeah, of course. Who else would do the work? Yeah, exactly. Exactly. Remember, fintech wasn't always one of the hottest categories.

29:06The first four years of the business were me telling VCs, hey, financial services, we could innovate here. This might be a thing. Yeah, yeah, yeah. In 2016, someone came up with the word fintech and then finally caught on. Crazy story from Keith you wouldn't have heard, but he said the last time he was in the Capitol building was in 2003 fighting for PayPal's life. Oh, my goodness. After 9-11, there was a lot of regulation being pushed. But speaking of financial regulation, everyone here is obviously super aware of what's going on with the DOD. There's a lot of DOD budgets, and every defense tech company is looking for their next program record or SBIR.

29:43What is the mood in Washington around financial regulations? Is there low-hanging fruit? Is there a meme that everyone talks about? Are people talking about it enough? It's a good question. Right now there's probably three things that are top of mind for everybody. First is the Genius Act, which is the crypto stablecoin regulation that is, as far as I can tell, moving. I don't know the day-to-day details of that one. Second is there's Section 1033 of Dodd-Frank. This is the open banking regulation that was put into place under the last administration. This administration, we'll see what happens, but there's some talk of making a few modifications to it before it fully goes live.

30:25And then the third big thing is the conversation somewhat kicked off by Doge, somewhat not about payments modernization. Can we move the payment system of the U.S. to not send out paper checks to everybody in all these places with old addresses and so on and so forth and actually make it a little more modern? Do you have any type of estimate of how many of those paper checks just never ever even get, you know, basically been paid but just sort of sit in the ether? Well, they don't get cash. That's money back and the taxpayer, maybe we don't want to move off paper. This is free money for the taxpayer.

30:58You've got to keep in mind the cost in the system. You have people that are writing the checks. You have people that are mailing the checks. It probably costs $5 to$10 to send out the check to each person. Then you get it, you bring it to the bank. It costs the bank$5 or$10 to actually cash the check. Getting that out of the system would be a net way. Plus, getting people payments a little faster is not a bad thing. Talk about the difference in your experience this week versus maybe your first trip to D.C. for Plaid. For Plaid ever. Yeah. Oh, my gosh. What was your first trip ever? I think it must have been seven years since the first trip here.

31:29We were lucky. We hired our first head of business development, had worked in the previous administration. At some point, she said, hey, Zach, we should go to D.C. and meet some people and talk about it. You know, there's some things that are relevant to Plaid. We know that this open banking rule was going to come eventually. So even seven years ago, you were thinking about this new open banking? I mean, the concept of Applied has always been to kind of build open banking for the world, to build infrastructure that enables people to link their bank accounts really easily. We've, of course, created a ton of stuff on top of the network that came from that later.

32:00But we knew that this regulation was a thing that would be written at some point. So we started spending time here. We hired a policy team in D.C. I think we probably still have four or five people that are just based in D.C. full time. And right now, just the conversation is totally different. The size of this conference, the number of people that are here, the number of other tech CEOs that I'm seeing in D.C., even just casually. I was here about a month ago and was walking into a building and out of the building was walking a big public company CEO. Say hello. That run-in would not have happened seven or eight years ago.

32:35So it is kind of a testament to, in some sense, Silicon Valley for people being willing to come out here and have these conversations. in a big sense it's a testament to the administration and to a lot of the people that have put together forums like this to bring the two sides together so it's been an awesome event so far that's awesome well you gotta get to your next panel I think I do yes it's been great having you stop shopping on we'll see you out on the floor later see you soon let's bring in Zach you wanna come on who else is out there welcome to the stream let's play this song let's play let's play a sound effect to let everyone know.

33:11A sound effect? A song? It's like I'm on morning radio. Scoot in as much as possible. We want to get your mouth right up close to that. All right. You have me all the way on it. There we go. Thanks for having me, guys. This is great. Can you introduce yourself? Yes. By the way, I just got to say, you look very comfortable in a suit. Thank you. That's a horrible insult, but I appreciate it nonetheless. I'm not calling you a suit. I'm just saying some people here looks like they haven't put it on in a long time. I think that's true. That's what Will was saying. Will Manitis on the stream yesterday was saying, you know it's hill and valley when you can't when you don't need to put in new business cards because they're still in there for the last hill and valley that's the standard i will say when i first moved to dc i'm a lobbyist short version is i'm a lobbyist i was a venture capitalist for a long time general catalyst emergence capital before that i work here now i lead the tech and venture capital practice of a lobbying firm and i also hang out at a think tank called fai the foundation of american innovation where i'm a senior fellow too that's the short version yeah The long version, it is a suit.

34:05I am a suit. You are a suit. I wear a suit now all the time. I have ties. You're still a technology brother. I am, at my heart, a technology brother. This feels like a safe space for suits, to be honest. This feels like you guys rock a good suit. We wear suits every day. You guys brought back suits, actually. On the lobbying front, Lulu's talked about going direct in the comms world. Going to an event like Hill and Valley feels like going direct for lobbying. I agree, fully. talk about the compliments or substitutes of founder-led lobbying, essentially. Well, the best founders are the ones who are building the relationships themselves.

34:40The truth is, by the way, I guess I'm talking myself out of a job in some ways. But the truth is, if you are building in a space that is key to regulatory work, and you outsource your regulatory relationships, your government relationships to somebody else, you're not doing your job. I mean, think about it this way. If you're raising money, you wouldn't hire a banker if you're good, frankly. You wouldn't hire a banker to go out and organize your fundraise for you, right? But if you come to DC and your attitude is great, I'll have my lobbyists do everything. I don't need to go meet these people.

35:07That's a problem. And in fact, the biggest people, do you guys have Blake on the show from Boom? Has he been on? Not yet. Not from Boom. He should come on. One of these days, though. Yeah, yeah. He's somewhere back there. But Blake's done a great job of this, right? He came in here five, seven years ago. The idea of supersonic flight was totally outside the Overton window. But he's done such a good job getting into the DC establishment. Schmidt and I actually say that as a compliment, not an insult. So to put this all in venture terms, the job of a lobbyist is to make great intros, much like a VC does, and then back channel.

35:40That's exactly right. It's like a part shrink, part Ari Emanuel, right? You sort of do the like, you're a little bit of an agent selling somebody downstream. You're a little bit of a shrink because they complain bitterly about government. They have every reason to do so. So you hear all that out too. And then your job is to help actually in some ways, I think about it as, you are teaching people in government. who don't know about what you do. You're an educator to them because it's not that they don't care or they don't have any whatever. You're just not high enough in the priority stack and they don't have the background to understand it.

36:09I met a congressman a couple of years ago who was like, thanks for telling me about Android. Yeah, exactly. How do you not know about that company? How do you feel is part of the best lobbyists or selective on who they work with? Oh, hugely. You're not going to be successful if it's not a solid underlying sort of company. How much are politicians reading into who a company is working with on the lobbying front in terms of understanding the quality of the underlying sort of like, you know, potential? It's a really good question. The best lobbyists are tremendously demand constrained, right? So you're, sorry, supply constrained, by which I mean like an infinite amount of people more who want to work with those lobbyists than they have room to work with.

36:54The compliment that I love to get is when somebody says to us, hey, you don't feel like other lobbyists because when you actually come in and you bring the client with you, we actually have a real relationship with them at the end of the day. And it's not just, oh, I've come in and I've done my briefing book and I've given you your one pager and so on and so forth. So there is a step in primator. You're totally correct. And because the lobbyists who are smart, proactively think about organizing the opportunity, like I had dinner with two members, they came to be there like, great, I would love to meet folks in the Valley.

37:20I don't know anybody in tech. Is there a holy trinity of lobbying firms? We talk about McKinsey, Bain, BCG. We talk about Goldman, Morgan Stanley. That's a really good question. We talk about Sequoia, Andreessen, Founders Fund. It's not only a Trinity. It's more of a single firm, and it's mine, obviously. Oh, yeah? Yeah, yeah, yeah. There's not really much of a long tail. You have a coupon code we can share? Yeah, you can put that to you. Yeah, exactly. We want our cut. Give us 10 % of the ongoing revenues. Oh, 10 % of ongoing revenues. I mean, Athletic Greens does that all day long. Athletic Greens does that?

37:52What's the average order size of Athletic Greens? because I bet you it's a little lower than a lobbying contract. No, but that's the media of the Athletic Greens deal. You use the coupon code and you get paid every month. That's a nice plug, by the way. That was very well done. Very, very unique. Do you guys have specific sectors that you're most oriented around or things that you avoid? We do a lot of tech and science. As a firm, we do a lot of tech and science. I lead the tech component of what we do. We avoid things that don't feel values aligned. So there are some folks in the world who are doing interesting work, compelling work.

38:26Gambling, yeah. Sin, vice are probably outside of the scope for us a little bit. Anything with a foreign government is outside of the scope for us a little bit. But when it comes to things that are around American dominance, around American dynamism, around global resilience when America comes first, that's the sort of stuff we focus on. But lobbying is pretty fragmented. The truth is it's not a great comp for the Bain-McKinsey BCG because there's a huge... Like anybody, any schmo who has one rich friend can say, I'm a lobbyist now, right? Because they can get one contract and put up a shingle and say, okay, great.

38:55I'm going to service as one person. It's hard to have great 50, 100, 200 clients and do that at a really high caliber. How damaging can the wrong lobbyist be? I imagine it can kill your company. Yeah. Well, they're your representative. Like you shouldn't work with somebody if you don't feel comfortable with them telling your story when you're not around. Yeah. Because part of the gig is when you guys go back to SF or you go back to LA. They're the ones that are talking about it. there. Correct. Talking you up all over town. That's right. That's why we're in the market. So yeah, give me a call guys.

39:23We're trying to, we're trying to put really, really harsh bands ideally, but maybe tariffs on foreign podcasts. Yeah, I think that's great. That's great. And we want significant subsidies for American made podcasts. In fact, you guys should be getting a tax break. That's the real truth. You should have a tax break. We actually want it to cost a million dollars a year to host a podcast. Just be a license. Barriers to engine. Yeah, we have a email license. It's very dangerous. You guys are familiar with the taxi medallion system. It's a very similar idea for podcasts. Very, very similar. Podcast safety.

39:52Let's play them off with the sound. Thanks for having me, boys. I appreciate it. Thank you for coming on the show. Thank you for having me. This has been great. Hey, have fun out there. Would you mind grabbing Mike Solana? I think he's right out there if he can. Great having you on, Zach. The soundboard is a work in production. We are actively looping the short. But hopefully... No, no, no. Mike Salana is coming into the stream. Welcome to the studio, the Temple of Technology. What's up, guys? We got the sound effects. We're on cameras. We are live. We are live. What's up, guys? Thank you so much for coming on the show.

40:30Great to have you on. What's been your reaction? And also, I'd love to know, I know you're writing a piece. I'm sure it's churning in your head, but like, what is the, what is the angle? What is the interesting thread to pull on here? I mean, I don't know if I'm supposed to say this, but the thing that I thought was the funniest was getting out of union station. The first thing I see are a bunch of sort of failed bureaucrats and shirts that say federal workers matter. Um, it's just the overall circus vibe of, of, uh, of DC. I think it's funny. Um, and then I'm paging through the Washington post this morning it's just like the horrifying headline after horrifying headline in dc and they're talking about dc they're like people things are tense people are losing their minds no one is at ease yeah and it's just like i'm in this beautiful hotel overlooking the white house and there are all these people going to work they're laughing and drinking coffee people are happy i don't know what they're talking yeah i don't like what you're reading is not what i'm experiencing in dc every time i'm here i'm just like i mean i actually move home well it's a momentum thing the people at this event feel like they have real momentum an opportunity right now and then if you just lost the job you had for 20 years, then obviously they're feeling they're not accelerating, right?

41:38I don't know, but I was I hate to be Tom Freeman about it, but I was in a car today, and the driver was like, things change here. These people have to, we're looking at these protesters who are outside, and he's like, they gotta get over it. Yeah, they gotta get over it. That's what DC is. I mean, we're reflecting on this with the tariffs. There's all these crazy headlines about the global economy is destroyed, and yet the stock market's kind of flat this year. It's not really COVID level down 30%. We'll see after tech earnings. We'll see what happens with the earnings tonight. Nate Silver is predicting a recession, 70 % chance.

42:07But even then, we had a recession a couple years ago. It was very mild. We seem to be better than ever at just maintaining the status quo. America is somewhat Lindy in this case. Yeah, you just got to decide what you want to do and work on that. And you can't truly, the reason I brought up the noise was because also with those federal workers, they were just standing there. Yeah, yeah, yeah. But then Jack Posobich gets out there and starts a fight with them. And everyone's like, DC's in chaos. And I thought, it's not that bad. It's a lot of theater. Everything's fine. You got to just ignore the noise and focus on your own shit.

42:38And that's what I'm trying to do. It just so happens that the shit that I focus on is noise. That's my art. Running at the noise. The noise is my signal. The noise is my muse. Is there a good metaphor for DC? Is it like, you know, lunchroom tables in middle school or something? Like, I feel like it's very clicky, maybe even clickier than San Francisco Tech. I don't know. I'm trying to understand what's the mindset of DC. I think it's a little more sociopathic. I think it's sort of like all the people care about here is power. And they're willing to happily head over to the other table if they're in power, generally speaking.

43:13And then you have the exceptions, but mostly it's an industry town. This is why I felt kind of out of my element in DC. Because in tech, there's still a lot of power games. There's a lot of status games. And you can be a famous founder. But at the same time, there is the concept of locking in and actually going and building something. But in D.C., there's nothing really to build. There's no like, oh, yeah, this person was heads down for six years and then produced like a beautiful piece of legislation. That's not how it works. You're trying to make stuff happen. Sometimes that means a lot of dinners.

43:43Exactly. Anyway, can you talk about kind of your, I mean, obviously you've been in Silicon Valley forever. ever uh uh how has uh just the mood around silicon valley and washington changed over your career uh what was it like when you first got to silicon valley and how has it changed like yeah maybe talk about your first trip to dc too yeah that'd be interesting to hear ever yeah context or in the context of work and tech um well the first my first work trip to dc would have been i wasn't in dc ever we didn't do things here right yeah the first time i came out was for pirate wires oh no way Because I was invited out by a congressman, and I realized that, or maybe it was comfortably smug.

44:23That might have been the first time I came out. Effectively a congressman. And then I realized there were all these people here who were reading Pirate Wires because they were interested in tech. Totally, yeah. They were interested in the sort of tech center, right, maybe perspective, or let's say heterodox perspective within tech. It's very different than what it was, what, 14 years ago. No one thought about government at all. In fact, it was considered like, I don't know, a red flag if you cared about government. Sure. Yeah. And then the business has changed. And now, you know, the most exciting businesses, a lot of them are working with the government.

44:55Yeah. And you have to understand how it works. Yeah. And so there's a lot of excitement here and also in Silicon Valley. Yeah. I always think that that's like an underrated thing. I mean, a lot of people in tech kind of criticize media, tech media, when they start talking about politics or whatever. But I think that's like incredibly valuable because it's very hard for DC to get the tech perspective. If it's not from us, it's from, you know, somebody else. Yeah, Kara Swisher, right? Do you have that in the back of your mind when you're writing in terms of like the avatars that you're writing for, the messages that you want to send?

45:28Or is it just like you're just going to write and they're going to read? I just get on the page and just let it rip. Like spit out what I'm thinking. That's great. And I hope it resonates. Yeah, yeah, yeah. It's been as long. Oh, it certainly has been. Yeah, yeah. So, I mean, coming out of this, are you trying to interview the politicians and get their perspective and kind of bring that back to Silicon Valley? Well, I'm here with one of my colleagues, Blake Dodge. Blake, yeah. Who's a new writer at PowerWires. So she's doing a bunch of interviews right now and kind of sleuthing around, she said.

46:01Sleuthing. We love sleuthing. For our takedown. Takedown. I don't know. At peace and coming. Yeah, no, so she's just, she's exploring now. That's great. we'll probably collaborate on something the interesting thing is it does feel like, this is my experience but it does feel like it's hill and valley but there's not as much overlap maybe as you would like, right? There's like a lot of people from the valley, a lot of people from the hill and like technically we're in the same space but like it's like tech people I just don't think they know how to talk to each other I think, even myself and I know better but I showed up today without a suit and I I didn't, I don't, I haven't been following the facts at all.

46:40I didn't even know where I was going. I did not know I was going to the Capitol building. I just have gotten used to just looking at my calendar and doing things. So I got here and I was like, Oh no, I cannot be back. So I had back, but I, that's a cultural. I've never had to wear a suit in San Francisco. I didn't even own a suit until a few years ago. Um, or I think I'd won for our LP meeting, but that, that it's, that's it. So you're wearing Fiorentino label. Is that correct? Fiorentino. Oh, there we go. Good friend of the show. a true craftsman were you surprised at how much press was allowed to come today?

47:16we went to the press briefing yesterday we saw your name tag there we were sitting there looking around we are the fish out of water here I don't think so I think that journalists are looking for things to write about and there are a lot of people here my question was more like obviously they would like to be here just because there's so many ways that you could spin what's going on. I was just surprised that Delian and Jacob got the invite instead of saying, hey, no. Yeah, I think that broadly, Tech's relationship with the media is very different than it was five years ago. The war is over, and there are actually plenty of writers who are not unfair.

47:58Even in the New York Times, Teddy Schleifer, I just ran into it out there. Nice. That's a guy who's just reporting on wealth, and he reports what he sees in both directions, and I think that there are people who have integrity now. I think it's just the environment's different. They're going to be hit pieces, but you have to just read people's work and see who they are and what kind of interview they run and then make an educated guess. Every once in a while, Teddy shows up with the telephoto lens and goes TMZ mode outside of a party, but for most of the time, he's just writing good write-ups.

48:29It's good. Are you, obviously, manufacturing, re-industrialization, defense tech are sort of like dominating the narrative here is there anybody that that is kind of flying under the radar that you're or any like industries specifically that you're that you're seeing i feel like you've written a lot about like the sperm racing stuff and some of the like the zayner stuff is yeah where is the sperm race representation yeah infuriating yeah exactly yeah we maybe do we need subsidy or do we need a tax on foreign no i think i was having a conversation yesterday and what's actually interesting is they've really expanded beyond tech or defense tech.

49:05It's their energy. There's much broader interest in the technology industry now, which is pretty cool. People are open. Who was it? Oh, it was Dellian. He was talking to me about how senators and congressmen were just really excited to even talk to RAMP or something, which a few years ago was just not on their radar. Totally. Yeah, Keith was saying there's about four times more federal corporate cards than there are federal employees. And there was 80 ,000 charges at casinos like last year or something like that. I mean, gambling is the most American thing in the world. Federal workers matter.

49:43Yes, yes, yes. It could have been team building activities. Yeah, yeah, yeah. You take them to the casino. Slots. What's the difference? So what's next coming out of here? How do you think about covering this from the PirateWire's perspective? Is it just meeting people, doing interviews downstream or is there supposed to be like a definitive write-up or new angle you're just you're still on the hunt right i think we're still looking okay i think probably a lot of people are going to do the just here's what i saw hill and valley yeah maybe what would be more interesting is to find some sort of meaningful interaction between someone in tech and someone in dc i completely agree yeah yeah there's all these like big budgets and you see 150 billion in defense but then you get down into like okay what is the actual mechanic of a seed stage or series a founder like actually getting a 10 million dollar contract that was jacob jacob was talking about this too every hill and valley so far there's been some policy or like some major sort of business activity that's come out of it so it's clearly working the question is like if we've 10x the size of hill and valley are you going to get in order to 10x the output right yeah yeah probably I mean, last year's theme was TikTok.

50:56Have you been tracking that? Do you have a TikTok taker? Have you evolved at all since last year? Shut it down. Shut it down. Shut it down. Don't even sell it. Shut it down. I don't even believe that you can sell it and have it still not be backdoored in some way that I don't understand. But I also just think that we're in Trump era now and nothing matters. And the rules change every day. So it's like, why am I going to sit here and be like, the right policy for TikTok? because we're not playing those rules anymore. It's a new set of rules. The rules are, it's like Trump says some shit and writes executive orders and then a bunch of wizards in coats in D.C.

51:32fight back with their random pen shit. And it's like everyone is searching back to pass court cases for, I guess, justification for what they're doing. And it all is just, to me, quite chaotic. But also, I don't care. My intention for this administration was to be calm while others were crazy. And I am trying my best. to maintain the calmness through the storm. Yeah. It is a great time to be in media. Does it feel like it's the best time possible to be in tech media? Or is it like the war is over where the dog that caught the car? Yeah, it depends on what kind of press you're doing. I think right now what's happening in the tech press is people are trying to figure out who they are in the context of a very different culture.

52:15Totally. And how they're supposed to navigate that. You see this sort of center, left, like Atlantic type people. Yep. who have pivoted wildly to just anti-Trump, anti-Tech Pro stuff. But more so than I would say your standard issue left it. I think there's this strange thing that's happening where people are just trying to find a lane. And I'm trying to be... I just want to take my time and write the stories that matter to me. There's also that interesting development with the Ezra Klein abundance thing. That feels very new, but you're rolling your eyes. I roll. What's your abundance take? Because they just ripped it off of your standard issue tech bro from five years ago.

52:54It does sound like EAC, right? Yeah, like EAC or what about Anatomy Next? I talked about all of these things. Yeah, you did. All of them. All those anecdotes came from you. In fact, Derek, the co-author of that book, I saw at Founders Fun for a Charter Cities conference years ago, many years ago, which we hosted. But I would describe that as finesse. It's like, we took your best ideas, we rebranded them, and now we're selling it ourselves. Yeah. I mean, you incepted. You just say it's inception. I'm not saying they haven't. They've definitely successfully created something that they're now selling.

53:29The question is whether or not the conclusion is the right conclusion. Their whole thing is like, we've taken all of these ideas and we blame the fact that we don't have them on the people who created those ideas. Yeah, yeah, yeah. And I think the reason that we don't have, for example, housing in California is just the people who are in charge of the government in California. It's very simple. At what point do you expect tech's attention to shift more towards California, given that it's the home of our industry? And San Francisco is so bad. The Gary Tans of the world obviously took a big stand now probably a couple years ago.

54:09I would argue that he's suffered in some ways because of that, just given how much negative attention he's drawn locally. But at some point, tech seems so focused on Washington that at some point you're just going to look around your backyard and be like, actually, we have some pretty big problems here. Well, I guess I think a lot of people are. I think more people, I disagree slightly. I think more people are focused on local politics in San Francisco within our industry than at any other point in my life. San Francisco is different than like broadly in California, though, because we're in Southern California.

54:37and I would say most of the people in the gundo, again, have much more, partly is the nature of the industries. LA is a lost cause. I think it's just like, you're never going to save Los Angeles. We are saving Hollywood. We're bringing media to Hollywood. We're bringing media to Hollywood. That's our big push. I think that your best bet is San Francisco. I really think that's tactically the closest, that's the best chance you have at fixing anything. And if you could save even one city, maybe you could do something else. But I think that Gary actually has made a lot of progress and I don't think it's hurt his brand.

55:07I think that it's, he's, I mean, people are asking for his help online. Totally. I wasn't saying it hurt its brand. I was just saying like acceleration of like death threats and like people saying. Yeah, just frustration. Stuff like that. That's the price to play, unfortunately. Yeah, it's kind of like raise the standard deviation of his experience. Like he's had some really great experiences and then some really negative ones as opposed to just the anonymous VC who flies on the radar, doesn't get tagged. Switching gears a little bit, did you have a reaction to Benchmark investing in Chinese AI?

55:40That was very contrarian in some ways. But I was personally trying to understand the decision of like, okay, Hill and Valley is happening next week. We should invest in this company while TikTok probably should be banned. Maybe it's getting banned. Maybe selling. I mean, if their job is just to make money and they think that's going to make money, there's a moral question about it. but then are we gonna break down every single investment that everybody, I mean, what is, I don't know. This is a much longer conversation. I guess I didn't feel the way that other people felt. I don't, I have a much bigger problem with what they did to Travis Kalanick than I do with their investment in a Chinese culture.

56:20Are you digging in at all this idea that it feels like there's a divide right now? It's like if you're a foundation model company, you wanna tell people that we're in an AI war, an AI race, like we have to win the race. and that's a good narrative if you're needing to raise a lot of capital and sort of solidify significance. The other side, and this is a real side, and this is actually Gurley's position, which is that we're not in it. The idea that you can win the AI war or race in this technology is not just going to disseminate anyways. He believes it's flawed. In conversations that you've had this week, Do you feel like everybody understands we are in an AI race, we need to win it?

57:06And maybe what side are you on? I don't think anybody knows anything. I think AI is so... Like, we're waiting for a paradigm shift, and we're trying to also make really firm predictions about what happens after the paradigm shift. And so I think that all I kind of know is that it's obviously really powerful. It's obviously improving really fast. But if something is fundamentally changing society, then it's anyone's guess. I don't think that we know if it's centralizing. I don't think we know if it's going to be decentralized. I don't think we know if it's a race. I actually just, I don't think we know.

57:42I think all that anybody knows is that it's powerful and everything else is just people. I don't know. I saw Tyler Cowen announced that we had reached AGI the other day and I felt like you're just saying shit. Do you even believe that? I don't think he believes that. I think that people are just I think that a lot of people are just saying shit. That's kind of how I feel about the Trump administration. Did you think there was an overreaction then over the weekend when 4-0 rolled out and it was just saying like Solana you might be the GOAT. You're one of the greatest. So the latest ChatGPT 4-0 released they they fine-tuned it basically any question you ask you'd be like that is so brilliant mike you are you know you are one of the best writers because i was like yeah i am i was like these just accurately reading the landscape like i felt different a plus yeah keep it up i love it well then yeah you gotta call it potentially for pirate wires around that that was the first time i felt like a model could be dangerous where if somebody is having you know significant uh Delusions of grandeur.

58:48Delusions of grandeur, mental health issues. They think they're God. They think they're on some divine mission. It confirms all of that and says, yeah, you should go and try. Maybe if you go to a friend and you're like, if I went to you and I was like, Mike, confidentially, I think that I'm God. Right. I'm on this thing. You might be like, hey, Jordy, let's talk about it a bit more. Let's dial this back. That's not quite right. That's not what I would do. That's not what I would do. You would ramp it up. If someone shows up and is like some old kind of guy and he looks at me and he says, I'm you from the future.

59:19I'm leaning in. I'm like, alright. Prove it. Give me the evidence. If you said you were God, I'd be like, do some God shit. That's amazing. Thank you so much for stopping by. We need you to do some reinforcement learning for AI. Thank you so much for coming on the show. We'd love to have you back. Thank you. I'll see you guys later. have a great rest of your day we'll talk soon i i i texted sean mcguire told him we are ready um hopefully he can swing by in the meantime why don't i give you a little we should just literally read some uh hey how you doing what's up we are on air on air um you can feel free to introduce yourself sit down tell us about yourself um what's uh tell everyone uh who you are what'd do michael eisenberg general partner at olive tel aviv before that at benchmark fantastic yeah an original member of the hill and valley forum really yeah four years ago it was just a dinner in the library of congress rotunda yeah so uh yeah was it bet was the dinner you know more intimate was it more you know what what was your read on it then what's your read on it now this is overwhelming yeah yeah it's big you know for a guy like me it's like super overwhelming yeah you know i'm used to be under the other side of the microphone i have my own podcast and basically if I interview other people.

1:00:39This is kind of funny. It's fun. It's fun. Well, yeah, what are you trying to get out of the event? Are you specifically looking for founders that you could potentially invest in here? I'm not. So we invest only in Israel. Okay. But come to Hill and Valley. Why? Because politics, the intersection of geopolitics and technology is perhaps the most important issue of our time. Got it. And where there's enormous opportunity. Yeah. Maybe a little cap by the size of, in general, the defense establishment. The M &A side won't be as big as Google, Cisco, Microsoft. Sure. Yeah. So is there an angle here where you kind of act as like a part of your value add as a venture capitalist is a de facto lobbyist until they can afford a lobbyist?

1:01:15I'm not a lobbyist. I won't take it personally. But you can make introductions. I can make introductions. This is a relationship place. Yeah, exactly. I remember at the first Hill and Valley. Senator Cotton was here. J.D. Vance is now the vice president of the United States was here. I remember. I met him last year. Josh Wolfe is still here. Josh Wolfe is still here. You should have Josh Wolfe. He's coming on in 20 minutes. He's a great guy. The best. You and I will be together in Tel Aviv next week also. We're having Sean McGuire jump on in just a minute. He told us about how Talpio has become a pipeline for great founders.

1:01:46Can you give us more insight there? Have you backed any Talpio founders? Yes, we've backed many Talpios. I've been doing this for 30 years. What is Talpio? Why is it such a hotbed for entrepreneurial talent? Everybody knows about 8200 unit, which is like the cyber unit of the Israeli military. Talpio is a unique program that takes about 30 kids a year who are the best and the brightest. The Israeli genius goes there. It's a 10-year program in which you get a couple of degrees along the way, and then you get a budget to go do a big weapons program or military program. And so we give these 22, 23-year-old kids the most immense responsibility.

1:02:17They grow up, they deliver, and they know how to build essentially companies in a box. Can you give some examples of alums that you think are worth digging into or understanding their history? Sure. So we backed a company called One Step. It's actually three Talpio guys, which is like hitting the jackpot. There we go. led by Tomer Schussman. Three of a kind. They just took this little telephone device and turned it into what's called a gait lab. And it turns out that how you walk is predictive of your health. Oh, interesting. In many ways, it's like a blood test. Literally like a blood test. I can tell if you're going to have dementia or Alzheimer's, by the way, whether your hip and knee replacement works.

1:02:53Interesting. That's why, I mean, only guys who are literally rocket scientists could turn the phone into what's called a gait lab and use it to measure everything. That's one example there. What's the business model? Sell to the customer directly or vend that into Apple Health or something? No, they're actually selling to facilities that do rehab for elderly people or people of hip and knee replacements. They sell to medical device guys like Zimmer. It's going extremely fast. That's great. And, you know, incredible genius. And then there are others. There's a guy out there you might have met him, Michael Kaufman, who's working with a bunch of guys who come out of that place.

1:03:22Cool. I think I met him last night. Talk about collaboration with this group here and your companies back in Israel. What does that look like? The interesting thing about Israel is there's no local market, right? 10 million citizens doesn't make much of a market. 400 million, on the other hand, is big. And so if you assume that U.S. defense spending is going to go up, this is a good place to do defense technology. We backed a bunch of companies in the area, a company called Ore, which makes rocket fuel and explosives using natural and biological means. And another company called Dream. It's like a chemistry company.

1:03:56It is actually a chemistry company using biological means. It's a specialty chemicals company. Our co-investors there are Standard Industries. He's on WR Grace. And we've backed a company that's in the kinetic defense area and another company called Dream. You may have heard it was founded by Sebastian Kurtz, the former chancellor of Austria, and Shalev Julio. Yeah. They're doing national-level AI protections, one of the fastest-growing companies, I think, in the world right now. What's your read on whether or not we are really, we're clearly in an AI race? Is that something that can be won, or is it like any other industry where it's just sort of a perpetual race There's no ending.

1:04:34Do you have a thesis around? Do you agree or disagree with Bill Gurley? I agree with Bill Gurley. My former partner at Benchmark, Bill Gurley. I agree with Bill Gurley. It's an infinite game, but I'm not sure the question is framed right. Sure. So AI is going to impact just about everything we do. It's a super accelerant of many things. I think the question becomes, because the clock gets sped up, you could fall really far behind in every iterative game you play if you're not at the head of the game. If you're not winning the game, it's not that you win in order to defeat the other person. You win in order to stay ahead.

1:05:08I've read a bunch of books. One of the core theses of the books is that civic society runs on iOS and AI and runs really quickly, and government runs on the fax machine. And that inevitably creates friction. And the civil society pulls ahead, and it creates tension with the government. I think that's part of the loss of faith in institutions. So if you don't accelerate the clock on absolutely everything, what you'll just have is unending friction society kind of collapses on itself so you need to stay ahead of the race in order for your society actually to be healthy and then also to deter others uh from doing other things but you know science accelerates with ai and weapons development starts with ai it can be troubling i gave a talk in abu dhabi about it's about a year and three months ago where i showed that there is correlation we can argue whether there's causality i think there is between the increase in compute power and cyber attacks and interest in bioweapon attacks online.

1:06:00I think it's not an accident. There's agents of chaos in the world, and now they have access to super tools like AI. So if we don't stay ahead, these people get emboldened and you can't keep them in a box. There's a lot of talk today around efficiency in government, specifically around payments, things like that. Does the U.S. have anything that we can learn from Israel? Do you think Israel has done a better job in terms of like modernizing the way that governments actually run or is it still fax machines all the way down the really interesting thing about israel is not the government what israel has is the most incredible civic society on the planet if you look at what happened october 7th the government was absent but the civilians all turned up yeah they turned up to evacuate people turn up with their own weapons and their own cars and took care of business that one needed to be done in fact the evacuees were taken care of mostly by civilians the government didn't turn up and what I think Israel is a model for the 21st century, which is it's almost impossible for government to catch up on so many of these technology things.

1:06:55It's just going to take them a while. What we're doing now is devolving this to citizens to take over more control of the economy, emergency response, and everything else. I chair the largest volunteer organization in Israel. There's actually wildfires going on right now in Israel. They've been set on fire by terrorists. There's 20 places that the fires are. my civilian organization that I chair called the New Guardians is out there with thousands of volunteers stopping the fires and stopping people from lighting more. And so the lesson from Israeli society is how you leverage technology and civic society to take over more capabilities from the government.

1:07:28Now, you can't defend people like that. That still requires the government and policing should be done by the government. But the Israeli government, I think, is like every government right now, which is there's lower trust in institutions. They're still very, very slow. And they're kind of coming around to this very late. But because of the force of the public, I think it'll get there faster than most other governments. Yeah, that makes sense. What do you think about different geos to invest in? Benchmark was obviously in the news for the Manus investment, which is kind of controversial, but you could see a world where, hey, they're just great founders, they want to get out.

1:08:05And so, you know, American capitalism is like the path out. Are there more, are there other geos that you think are interesting or more on this continuum of East versus West narrative? I'm pretty bearish on Europe broadly. I've said that Harry Stebbings podcast and other places. I'm super bullish on the US and Israel. Sure. You went on the King of Europe's podcast. That's right. I did. By the way, I should say I'm an LP of Harry's too. But he feels the need to disprove me right now. I was super bearish on Europe. He's going all in. He's all in. He's all in. He's dying on the hill. He's got to make it work.

1:08:42He's got to make it work. It's good to be young and ambitious like Harry is. Yeah, yeah, yeah. And do it. I think there's interesting things going on in pockets, but still Mecca is. By the way, it's not the United States per se. It's Silicon Valley and New York and maybe Austin, a little bit of Miami and Tel Aviv. It's cities around the world. And maybe Minnesota and London. I think the most interesting thing going on right now is actually in Abu Dhabi and Dubai. They've become a massive magnet for the talent fleeing Russia and Ukraine. It's really easy to come there. More and more companies are setting up facilities.

1:09:12Just here, I met three people who've set up in Abu Dhabi. Well, they have a lot of incentives, too. I've heard that they'll basically say free space, free energy. They'll basically massively reduce the cost, my understanding, of operating things like manufacturing, any type of hard tech projects. They're also really good at building big projects, and they have low-cost energy. So they're going to build big data centers. They're building big data centers for the U.S. giants. And Microsoft has a partnership in MGX with Mubalala in Abu Dhabi. I think there's interesting things going on in the Emirates more broadly.

1:09:44Not as much entrepreneurship coming out of there, but places where you can kind of build infrastructure and deploy. And I think the really, really big question facing the West right now, and I'm a fan of Alex, I think we're here to defend the West, is how do we create a secure and resilient supply chain for the infrastructure we need to stay ahead in AI, and not just in AI. AI, robotics, defense, whatever the next generation of bio is and chemicals, as we've talked about. That requires real infrastructure and a secure supply chain for the West to win. And we've got to focus on that. Yeah. What is your postmortem on the BRICS narrative that I don't know, I grew up with?

1:10:26Brazil, Russia, India, China. Goldman was calling these the next major markets. And the way that's bifurcated, if you invested in Russia and China, it's really rough. but Brazil and India, they've developed, but not fully. Are there still jump balls on the geopolitical chessboard that can be pulled towards the broader definition of the West, even if India is not in what we traditionally think of as the West? It's funny you should ask this question. I was just remarking to somebody a couple of days ago, there was BRICS and now there's IMEC. IMEC, what's that? Ah, the India-Middle East corridor.

1:11:00Okay, sure. So we assume that India would go with Brazil, China, and Russia, But if you look at China and Russia, in particular, on some level, Brazil, these aren't real democracies. And India is a democracy. I think it turns out, by the way, if you invest in a non-democracy, you actually don't own what you think you own. They take it from you. Free markets, as Friedman said, create free societies. It turns out the opposite is also true. If you don't have a free society, you actually don't have a free market. You don't own what you think you own. And I never thought India was actually a part of that.

1:11:31But this IMEX thing, what's the IMEX corridor? India, Middle East corridor. It's the alternative to the Belt and Road Initiative. People don't understand this find you a political point. So Turkey, which is kind of on the side now, Turkey, Pakistan, which is now warring with India, are part of the Belt and Road Initiative that China has initiated to try to get to Europe via land. IMIC, India-Middle East Corridor, is the alternative to that, where you go via India, via the sea, to Dubai, Abu Dhabi. You cross through Saudi Arabia, Jordan, Israel, and out to the Mediterranean, and then in there. And this, I think, is a big deal.

1:12:04I think bricks fell apart because democracy doesn't belong with these people. But I think there's a giant opportunity for the West and for the United States if we can bring India on board and make them a core part of the supply chain across the Middle East and into Israel and Europe. Apple looking into it and more and more companies testing the waters there. But these things take more time. It takes a long time. These things take more time than anyone believes. The supply chain created in Shenzhen and China and Taiwan is 30 years in the making. It's not going to happen overnight. Well, thank you so much for coming on.

1:12:33Sean McGuire's out there waiting. Can you go grab him? I'm like a warm-up for Sean McGuire. That's like, you know, life goal unlocked. Yeah, there we go. Opening for Sean McGuire. This is great. Hey, thank you so much. Yeah, great to meet you. Thanks so much for stopping by. Fantastic. I think Jordy has to send a tweet or post promoting the feed. We're going to bring in Sean McGuire from Sequoia Capital. Welcome to the stream. Third time appearance on TVPN. How are you doing? Let's go. I think we have a question. By the way, he's leaning down. These guys are much taller in first and then you're doing.

1:13:06Oh, yeah, yeah, yeah. Yeah, at one? Yeah, we'll do six minutes, then we'll bring him in. Great. Great to see you. Who's the VIP at one? Josh Wolf is coming on in six minutes. Oh, dude, legend. Great guy. Good buddy. You guys can share a mic for a little bit. I think that'd be entertaining. Yeah. What's the initial reaction? Is this your third Hill and Valley, fourth Hill and Valley? Something like that. Third. I actually met you for the first time at the last Hill and Valley. Yeah, yeah, yeah. I missed the first one, which was a big mistake. Got the invite. I think I got food poisoning. or something right before.

1:13:34Yeah. Thing has grown. Every year, it just gets crazier and crazier. Yeah. Are you, do you like the framing of like re-industrialization being the focus? Last year, it was a lot of like TikTok stuff. Is there something else we should be focused on or is re-industrialization really the heart and soul of the agenda with Hill & Valley now? Whatever the agenda is, I think the conference is focused on how tech meets Washington and like how we play nice together in the future. And I think that's the right focus. And it's, you know, what technologies are going to matter in the future, what policies can happen that will help us get there.

1:14:13And I think like re-industrialization is critical, but I'm already hearing, you know, there's a lot of talk of a lot of other things too. Yeah. Yeah. Like energy, you know, all sorts of things. Yeah. Yeah. Yeah. It does. It does feel like even defense tech, if defense tech ends up being involved in anything, it ends up overshadowing it because it's just exciting. You have these planes and drones. Great videos. Great videos. Even better demos. Even better demos. Yeah, the nearest demo is wild. It's pretty good. I got that one early on. Soren's a champion drone pilot. Great demo. In terms of energy, should every venture capitalist be on the hunt for the Elon of energy?

1:14:55It feels like there is a power loss CEO. I think the Elon of energy might end up being Elon. You think he's going to go into it? I can't read his mind, but if he does, just tell me where to wire the money, Elon. Is there any limit? Elon is Elon. Because we're talking about reshoring semis, but there has to be an upper limit to how much industrial work he can do at some point. I mean, look, so there have been, to the credit of the tech industry, there have been probably 10 to 20 pretty promising vision startups in the last five, six years. and probably five to ten fusion startups. I haven't invested in any of those, which means I'm not doing my part to just raise the tide of all.

1:15:43And the challenge for me has been, even though I believe so much in the category, I believe in the macro, I have to get the micro right. I made that comment before. And it's been hard for me to pick who's going to win in that category. And I think this is something that we kind of struggle with. And I think some sectors, there should be a lot of government support. For all these, if one ends up as number 10 in the space, but it's still a public good and is a positive payback for the government. Anyways, I think we need more government. I just feel like there's an opportunity for a startup that's like, yeah, SMRs are cool.

1:16:21People are building those. There's new designs that are great, but our startup is just copy-pasting Diablo Tandon. We're going to copy-paste it a hundred times. Five hundred times, exactly. But that does seem hard to get done. We've had a lot of people on from the valley side of Hill and Valley. Who on the hill side have you been excited about talking with that you think really gets it? I mean, I was just on a panel with Senator Todd Young, and I think he deeply gets it. And, for example, one comment he just made was he doesn't want to re-onshore everything. only like a small number of very strategic industries.

1:17:00He doesn't want it on short garments. And he's fine with things that are not, there's different levels of like how strategic something is. And, you know, it's fine if the medium strategic things go to friendly nations. And so anyways, I think Todd has had very nuanced opinions. I think up right now or next is Richie Torres, who is someone on the left who I've generally admired and felt like has very, even though I disagree with him a lot of times, I think he's a very principled person who really deeply cares about America and is willing to say unpopular things that he believes in. And for me, anyone that is willing to be bipartisan, like not just purely tribal, but take on some topic that is core dogma of their party and they're willing to go against that dogma, that's someone that I generally admire.

1:17:54Yeah. I mean, that should be a good fit for Silicon Valley. The whole search for contrarianism is pervasive in Silicon Valley, right? Pervasive in Silicon Valley, a little less pervasive in Washington. Yeah, but it still exists and there's pockets of it that you have to seek out. What is your read on the new defense budget? We're hearing this$150 billion number. For a while, it seemed like there was going to be a freeze, maybe very bad for challenger defense tech companies. Then it seemed like the floodgates opened and there's all these huge numbers for even just small Series A companies are throwing out, oh, there's a billion dollars hanging out for my thing.

1:18:29How optimistic are you about that? And how optimistic are you about not just like the SpaceX's of the world, but the actual up-and-comers, the next generation of defense tech?

1:18:42Unpopular opinion. I simultaneously believe that defense tech is one of the most important categories in the world. But I also believe that there's going to be a very small number of winners. Sure. Call it in the West, this is including Europe and Israel and America, roughly 10 companies that go on to be really big next generation companies call it 10 billion plus market caps. Yeah. And I think there'll be multiple with greater than$100 billion market cap. Wow. And I think that the defense tech companies of the next generation are going to be way better businesses than the last generation. So I think it's kind of - So focus on efficiency.

1:19:21Focus on efficiency, focus on vertical integration. If you go look at, like, I think one of the core things people got wrong about Tesla in the public markets going back to like 2017, 2018, is they were comping it to auto companies. And they're comping it to GM or Ford or whatever. And people didn't realize that GM and Ford don't really make anything anymore. They basically design cars and are, you know, customer acquisition channels and maybe some financing. But they subcontract out everything. And so they would look at, oh, GM or Ford have these market caps and Tesla's already here. But they would ignore NXP and ignore all these supply chain companies.

1:20:00And I think we've kind of been doing the same with the defense prime. Interesting. You know, Boeing, Lockheed, they subcontract out almost everything that goes into their So you're only getting a slice of the market cap. You're only getting a slice of the market cap. Makes sense. And I think these next generation companies are going to have way more vertical integration, higher margin. and actually think that we're going to see a change with how procurement happens to move away from cost plus. I think we're already starting to see that. But basically the reason it's unpopular is I think there's going to be a very small number of winners that win mega hard, and then a lot of losers or companies get rolled up into the big winners.

1:20:37Were you surprised that, I think the number was$500 million was earmarked for autonomous systems, and when you compared that to some of the other categories, it felt pretty low? Do you have any insight into how they got around to that number or general reaction? So there's different philosophies. I think one philosophy would be that we're trying to push a boulder up a hill in terms of changing the defense budget and moving budget towards next generation, emerging industries. And if that's something where every year it's predictably getting bigger and bigger and bigger, and if 10 years from now, 40, 50 % of the budget is going towards kind of next generation strategic technologies, then I'll be very happy.

1:21:23What would be very bad is if it was like 500 this year and then zero next year. That's a really great take. It's like if a company raises$100 million in VC and they have to spend it all in the first year, they're going to probably spend it really inefficiently versus like, hey, let's stage this out based on certain milestones. And so, yeah, I think that's a right take. And this has been the, look, I learned this lesson the hard way with my cybersecurity company that focus on defense. Our first big contract, we got awarded a$10.5 million contract. And then government sequestration happened. Like they couldn't pass a congressional bill.

1:22:03And we basically got told, like, either we accept the contract with 60 cents on the dollar or no contract at all. So obviously we took the 60 cents on the dollar. and we were lucky this was actually our first big contract because it taught us from day one how unpredictable government funding can be but it's that predictability like if you know it's going to be 500 this year and a billion next year you can invest strategically if you have no idea what it's going to be in the future so it's very hard to plan totally you guys get Josh last question 60 seconds do you have a take on this idea of whether we're in an AI race but is it an infinite game?

1:22:44Is it just sort of a perpetual game? Or is it... Is an AI war even the right framing, right? I feel like this has been a debate. Oh man, I'm so glad you asked this. I've been obsessing over this for a couple of years. I have a pretty strong opinion that the foundation model companies are going to capture way more value than people realize. I think it's a combination of operating systems plus cloud. which means this would be incredible businesses. Let me just make this point. So if you think on the operating system level, there's Windows, there's Apple, there's Android by Google, there's Linux and open source.

1:23:25And these companies, the value capture of Microsoft or Apple, it's not on the operating system, it's on all the applications that they control and built on top, and same with Android. but by control I think the operating systems are going to be the foundation models themselves. I think there's incredible kind of capex and development to get to the point where you are the one of the top operating systems that has eyeballs but then I think the lock-in and the value capture will be with the applications that are kind of verticalized on top and I think there will be an additional moat which will be the moat of cloud, cloud has done a very poor job of the application lock-in the way the operating systems did, but they've done a very good job of having a hardware mode and a CapEx mode.

1:24:14I think these AI foundation model companies are going to have both. They're going to have a CapEx lock-in mode, and they're going to have the usage and application mode plus value. Then just the last thing I'll say on this, if you look at Linux, Linux probably has five times as many installs as Windows, but the value capture of Linux is one-one-hundredth Microsoft. But Red Hat's still a big business. Red Hat's still a great business, but I personally think this is where we're going to go with AI. The open source, deep seek, and all that stuff will be great. There will be more open source models used in the world.

1:24:51I think the value capture will be lower by that than XAI, OpenAI, Anthropic, some Chinese income, etc. Get Josh Wolf on here. Let's go. We've got to do a whole deep dive on that. We'll see you back in LA. Let's bring in Josh Wolf. And I got a post that we are live. So much to dig into. 60-second question, Jordy. You hit him with the deepest possible question. The deepest possible question. I wanted to take more on this idea of, you know, should we be investing in Chinese AI companies? Yes, yes, yes. Well, we have Josh Wolf, the man himself. Good to see you. Great to see you. Welcome to the stream.

1:25:32How are you doing? We've been wanting to. Please. Awesome. We've been wanting to have you on for a while. Yeah. I've been wanting to be on for a while. Yeah, I'm glad you could make it. I'm going to disagree with everything that Sean said. Okay. Perfect. Line by line. Line by line. Yeah, he said AI is valuable. What about that? You're in front of a camera. Can you? I think you're good right there. Yeah, you should be good there. Yeah, that's great. How's it going? I'm wearing a tie. I love it. You're wearing a tie. I'm wearing a tie. Has it been exactly one year since you put on the suit and tie for Hill and Valley last year?

1:26:06Break down your first business trip to Washington. I've been coming to D.C. for a very long time. I feel like you've been banging the public-private partnership drum for a long time. And many of the companies, I feel like, oftentimes I see a new fundraise announcement from a new hard tech company. And I'm like, I feel like Josh invested in this exact company six years ago or something like that. Hopefully it was the same company and they raised a lot more money. Yeah, no, we've been in this for a long time. I think we really started with a lot of, like, Intel community-facing things. So most of that was sort of software, maybe sensor, SIGINT, data collection.

1:26:41That was a lot easier to work with. Then we started working with SOF Special Operations, which basically had rapid fielding so they could deploy stuff, and it wasn't at the scale that you need to, like, win a big army contract. Sure. We started doing stuff in space with satellites. And then I would say, like, really the first pure play, non-quote-unquote dual-use thing, which was unapologetic, was first round of Anderle. and I wish that there was some sophisticated analysis we did for that but it really was me and Trey at Balthazar in New York and he's like I'm going to start this company with Palmer Luckey, I'm like I'm in so that was the diligence How have you found you do a first round in Anderol and then you're like okay this category is going to be really important, you want to invest more but then there's this issue where the Anderol of Anderol is probably Anderol Yeah, it is.

1:27:31And so have you had to hold back in a lot of instances where you're... There are venture funds, and we compete with them, and we partner with them that are sort of a little bit more polymerous, and they're doing lots of deals with lots of different people. We try to be really monogamous. And so there was one company in particular, I'll say it out loud, but it was Dive Technologies. And they came to pitch us, and they were doing Subsea, which was sort of complimentary to our company, Sail Drone, which is doing autonomous fleets of Onsea. And I said, you know, I think you would really be better off as a part of a platform that has the muscle and the mechanisms to be able to win contracts and scale and manufacturing and think about this as part of a portfolio.

1:28:06And so at first, I think they were a little bit hesitant, but then they ended up going to Anderil. And I got to say, I think it was like 60 or 90 days. We then won the big Ossoff deal. And that to me is just like proof positive of high tech in the right platform, able to execute. Matt Grimm, credit and props to him. I mean, he picked up his family, moved to Australia, set up this operation, 60 plus people, billion dollar plus contract, like very, you know, but clear sign of winning. So we love that. But yes, it is harder to do something that is in a category as Anderil expands because we really want Anderil to just be, you know.

1:28:35Is there a different type of underwriting that investors could be thinking about? Not necessarily, hey, I'm trying to back the next Anderil and I'm underwriting to a 1 % chance of$100 billion outcome. or is there a world where, yes, we're building something that might get acquired or might go through an M &A process? And is that even the purview of venture at that point? Look, you go back to Sequoia. Sequoia funded Cisco. You know, Cisco. Yeah, yeah, yeah. But then Sequoia made a fortune selling company after company to Cisco in the late 90s, right? So if Anderle, you know, ends up being a 50, 80, 100,$200 billion business, the ability for them to buy a company for a billion is venture making for a lot of fun.

1:29:11So I think that the ecosystem is growing the right way that it should. we will have a bubble in aerospace and defense. It will happen. And it will happen in part because of capital formation, which is really interesting. So you've got venture funds like us, us and Sequoia and founders and KP and Coastal, and a handful of people that are doing these kinds of investments. Then you've got dedicated specialist funds. And then you've got fund-to-funds. And the fund-to-funds are interesting because you have a bunch of universities and endowments and hospitals that are like, we won't invest in the defense category because we are not comfortable being part of a kill chain.

1:29:42We as a partnership are, right? But they might not be. But we would invest in a fund of funds that is investing in a venture fund that is investing in a company. So you have this moral remove that is going to provoke more formation of capital, but there won't be enough companies in the first few years. So you're going to get a bubble. There's going to be a bunch of frauds. There's going to be a bunch of crashes and disasters. Is that an argument against building like a dedicated defense tech fund? Have you ever done a segmented fund? I know a lot of big, big VC funds have. No, we, we, uh, we have like a little opportunity fund for some of our best defense companies, but not a carve out.

1:30:11We are generalists. We like to have one pocket, one pool. You can do a$100 ,000 check. You can do a$100 million check. That's great. And you can go sort of all sectors. But I don't think there's anything wrong with it. If somebody's a specialist and super passionate about it, go for it. Yeah. Rudy? What was your kind of DC playbook? What advice would you give to your portfolio maybe five years ago? And how is it different than today? You know, five years ago, I think you were working with a lot of lobbyists to try to get meetings on the Hill. You'd be lucky if you can get a center. You were mostly getting congressmen or staffers.

1:30:39Today, I think everybody wants to be in the conversation because they don't want to be ignorant. You have a lot more alliances between red and blue, Republicans and Dems on things like shared adversaries. China, you know, that's a question which everybody converged upon. So American competitiveness, thinking about the scientists, the engineering. People are going to debate some of the policy stuff. Should we be cutting science funding? Should we be partnering with South Korea or Japan or UK and these kinds of things? But everybody wants to be in the conversation. So your access today is evidenced by this conference.

1:31:07I mean, what Jacob and Delian and Christian have done here is just really amazing because it started as this napkin sketch. It became a crowd. Now the crowd has become sort of a movement. But the caliber of the people that you're getting is both extraordinary. And the politicians sort of keep getting older. But the people that are doing the tech companies that we're looking to fund keep getting younger. And I think that's a beautiful thing. Are you taking, would you say you're taking more, a lot more pitches today? I mean, I imagine. In the halls here? In the halls here. No, no, no. Just in the context of, I know you guys have all been focused for a long time on finding researchers that were developing, things that could be commercialized.

1:31:43But I imagine just the scale of inbound as hard tech, manufacturing, defense tech, all these categories became hot. Oh, the number, for sure. I'm assuming the number of pitches just gone through the roof. I mean, the number of entrepreneurs, and by the way, the best entrepreneurs, frankly, are the people that we backed at Anderle. We've done two people that have vested and sort of with blessing have gone and left and started their own company. And so being able to find these fountains of talent that have seen success, have seen rapid scaling, have seen valuations, they understand the venture game, they can raise money, they can attract technologists, they can in-license IP or develop it themselves.

1:32:17Those are the people that you can back time and time again. So I think we have a decade-long run of amazing talent in this ecosystem that isn't going to be just Silicon Valley, right? It's going to be SoCal, and it's going to be other parts of the US down in Texas and maybe even Florida. How do you think about... And by the way, sorry, international too. We did our first two ever Israel investments, both our defense companies. Yeah. We did a company in Japan, company in the UK. So we're interested in not just American defense also, but American allied defense. Totally. How do you think about VCs as a conduit to DC?

1:32:51It feels like potentially low-hanging fruit for some sort of value add. You know, a lot of VCs would say, oh, we'll help you find your first VP of engineering or we'll help you with some comms puzzle, but almost like light lobbyist, just making some introductions to the senators and congresspeople that you might know. Is that a more modern form of value add that's coming out of venture funds these days? I think partners at firms like ours and others have relationships and they're authentic relationships and spend time with these folks and you admire them. There's congressmen who I deeply admire and I think are the future leaders, both Republicans and Democrats.

1:33:25People like Richie Torres and Jake Alkencloss and then on the Senate side, Young and Slotkin. I mean, these are like real patriotic Americans that are smart and savvy. Might have been in the CIA, might have been a Marine, but quite savvy. And they are tech savvy and they're young and they want to know these companies. And, you know, they want a future donor base too and their own self-interest. As Ben Franklin said, would you persuade appeal to interest, not reason? But I think understanding that game and also understanding tech moves at this crazy velocity that is hard to compete with. It's why tech wins because they out-compete because they move faster.

1:33:54Government does not move that fast. And so you have to be a realist. Government is moving faster than it has in the past, particularly in defense. You look at this appropriation bill, this reconciliation bill,$1 trillion,$47 billion plus going to be going towards shipbuilding, autonomous systems. That's going to be a big boon for Anderil, for Hadrian, for Varda, for SailDrone. How do you think about founders that are trying to time some of these broader structural changes? If you're in shipbuilding at all, the best time, if you want to take advantage of this new bill to start your company, was maybe a decade ago.

1:34:26because you're sort of ramped and scaled and you have a great team and you have some credibility. But how do you think, what's your advice to kind of early stage founders that are seeing the world change and trying to kind of navigate and see opportunities? You know, an example being like, you know, I'm not convinced that like every manufacturing, you know, automation company is like going to do, is the right time to start it is now because we don't know. The future is like murky, right? Like a lot of these things are unfolding. how do you help founders kind of understand market timing when there's so much in flux?

1:35:00The honest answer? A lot of it is luck. I mean honestly I always say that there's a five year psychological bias that you want to be invested today where you should have been five years ago. Okay but I'll just give you a few quick examples. You think about the people that were doing modular reactors. I'm not a personal great believer and I think it's great for society. We're not invested in them. I did a lot of nuclear waste cleanup. You agree with Sean on that. You guys, it doesn't sound like you guys I hope it happens. Is it more solar bowl? It's happening and it's getting cheaper. I'm not crapping on solar, but it's not super exciting.

1:35:29But I'm a huge nuclear bowl. I've renamed it elemental energy. But if you were developing modular reactors, you might have been like, okay, it's large baseload power. It's better than interminency. But you weren't anticipating that there was going to be this data center buildup, which is at least part of the narrative. Now you need gigawatt scale. Correct. And whether or not that will actually see the light of day today, they're able to capitalize and draft off the hype of that. So that's number one. They're thinking about bringing back Three Mile Island, Diablo Canyon potentially. There's a lot of big opportunities for a large-scale nuclear.

1:35:57You look at people that are doing minerals and mining, which is not a really sexy area, but suddenly you're thinking about supply chain geopolitical conflict with China. You're thinking about robots and magnets and things that have to go into magnets and orders. My question is if you're doing anything in mining or rare earths, obviously great if you started a company three years ago and then you get to capture this momentum. But do you see potentially enough explosion of sort of demand and new markets that you could still start something today? You can always start something today. But you've got to remember that I think some of the best successes are not just like execution.

1:36:32You follow this playbook, but it's luck. 15 years ago, we started a high-tech nuclear waste cleanup company to go after the defense nuclear waste from pre - and post-COVID war bomb making. All of a sudden, earthquake, tsunami, Fukushima disaster. We become the only U.S. company picked for the cleanup to clean up this nuclear disaster, right? That became a boon for this company. It was a total black swan for Japan, a negative one, a total positive black swan for this company. Today, SailDrone, autonomous fleets of boats, they started oceanographic research and all this kind of stuff. Bright orange ships.

1:37:00The guy that's here, I don't know if you've seen him, Hondo Gertz. He's a big hulking guy. The two of us are together. It looks like the old poster of Schwarzenegger and DeVito. He's like, you know, I got a big strategic idea for you. What if you paint these things gray? Yeah. It's got a bright orange. We could do some other stuff with them. you open up to this defense market. But that wasn't in their founding thesis of we are going to make a fleet of autonomous systems for Task Force 59 in Bahrain and expand to the rest of the world. What do you think, I mean, you mentioned some of the other countries that you're investing in, Japan, I think you mentioned Australia.

1:37:34What do you think the future of partnership between the United States and Middle East allies looks like? Huge. Explain. You know, we call this SciTech diplomacy. We brought onto our team maybe six, seven years ago, Tony Thomas, T2, head of SOCOM, 90 people, 90 countries, 90 ,000, all special operations, incredible guy, great entree into aerospace defense. A guy that was on the boards of one of our early intel companies that were focused on intelligence community was Brett McGurk. Brett just left the administration. He was in Bush White House, Obama White House, Trump White House, left the Trump White House because he had put together the counter-ISIS coalition.

1:38:07And when Trump surreptitiously sort of pulled out from Syria, he abandoned the Kurds and he had built that allied nation with the Kurds and said, that allied force with the Kurds and said, we're going to supply you militarily. He then resigned. Came back in for Biden. His capstone deal was the Gaza-Hamas-Israel hostage deal. John 20 left, joined us a few weeks later. Company in the Middle East. We met with MBS. We've met with Tanun and ABZ, Abdul bin Zayed. I am so bullish about UAE. UAE is so ideologically righteous on being coexistence. All three major religions, you know, the Abraham Accords, major signee tech forward Cleveland Clinic NYU Johns Hopkins the Guggenheim the Louvre cultural institutions it's incredible and they're building it super fast but they're building it thoughtfully yeah and the ability to make a decision very quickly high tech you think about G42 and some of these other things they've decided we're not going to cast our light with China we're going with the US we're going to build data centers we're going to partner with the US and it's going to be at like giga scale hundreds of billions of dollars super bullish about UAE Saudi I think is next, both for normalization with Israel.

1:39:12They want to be in the defensive role of the U.S. They are going to spend a lot of money on AI infrastructure and compute. Sure. We saw it with Falcon 9B. Huge. Yeah. So UAE, Bahrain, Saudi next, I think, in the region, but of course, Israel. I mean, it is a tech mecca. Many of those countries realize it's really far to fly to Silicon Valley, but if you can go to Israel, it's a big deal. Tel Aviv is right there, short of flight. Our first two deals, like I said, defense-focused. Hamut Al-Marador, who ran Palantir in Israel. We backed her with Sean in a company called Kella. Oh, great. So Lux and Sequoia teamed on that and just really bullish on the region.

1:39:46How do you think about how quickly information spreads today? It feels like a category, you know, a decade ago, you'd have a category that could be underhyped for a long time. Now somebody enters a space, they release a video, and suddenly like a bunch of new people are pouring in. Where are you looking at this point just besides your own network for the next founder that you're going to fund? So I have this as a flaw in my personality, which is, you know, I want to know everything that everybody else is talking about, but then I need to understand what's the white space, like Sherlock Holmes, what's the curious incident in the dog of the night, the thing that people aren't talking about.

1:40:17So I'll give you one because it's unsexy, and I've talked about it publicly. Maintenance. Yeah. Maintenance is the most boring thing you can think about, but here's the simple logic that I had. It wasn't reactive to a quarter or even a year. It was the basic idea that the cost of capital is going to rise. Yep. Okay. If the cost of capital rises and you're not funding low interest rate stuff, if you think about CapEx on a financial statement. You've got growth and you've got maintenance. Everybody's been finding growth. New data centers, new satellites, new military installations, new HVAC systems, equipments, hospitals, everything.

1:40:45Now, if you're a CFO or you're a capital allocation committee or you're a board and you're like, do we really need to spend another hundred or billion on that? Do we need another data center or can we maintain the stuff we have? So I think that there's going to be a demand shift from buy the new shit to how do we maintain the old shit? And that is going to be demand for preventative maintenance, early maintenance detection, robots that can go out into certain things and repair them. So all of that, I think, is going to be a big wave. That's the kind of thinking at LOX that we're thinking about orthogonally.

1:41:11Everybody else might be tacking here, but how do you find something? Start making some bets, and then in three, four, five years, everybody wants to be in that space. Yeah. Fantastic. Well, thanks so much for joining. This is great. Triple J. Triple J, love it. Hey, come on the show again. Yeah, yeah, we'd love to go way deeper on a proper interview. So much to talk about. Thank you so much. And we're bringing in Delian Asperuha from Founders Fund, And a co-host and co-creator, co-founder of Hill and Valley Forum. Very excited to have him on the show for the, what, seventh time. So let's bring him in.

1:41:41Jordy is posting, amplifying the stream, pumping it up, pump up the numbers. How are we doing, Ben? Can we get a little review? The stream is up. The internet's working. It was fascinating. I'll give you a little inside baseball here. We brought in something called Pop-Up Wi-Fi to do this stream. and it does not look like something that would normally get through security at the Capitol. It's locked and only the TSA can unlock it. Capitol Security Police do not have the key that TSA has. And so it was very tricky to get in. They had to x-ray it a bunch. We couldn't get into this locked Pelican case that has a Wi-Fi router and a bunch of cell phone modems in there.

1:42:22But we got it through and we are live streaming and we're very excited to have Delian coming in later. We also have Christian Garrett hopping on to break down the other third co-founder of the Hill and Valley Forum 2025. And Jordy is tagging madly all of our guests, getting us into the timeline, promoting the stream. And we have an absolutely stacked lineup. We got Delian and Christian coming on, then Eric Lyman. Lulu should be coming on. A lot of repeat guests breaking down what's going on in D.C. today at Hill and Valley. and here he is. Delian, welcome to the stream. TBPN, Hilly Valley, TBPN, Hilly Valley.

1:43:05Let's fucking go, baby. Welcome to the show. Let's go. How are you feeling? Good. You know, made sure to arrive here on Monday. Got a little accustomed to the East Coast. Realized I haven't switched time zones in like three months. It's tricky. It's probably, it's weirdly the most brutal time zone. Yeah, it is. Yeah, it's tough. It's tough. But you know, we started off the day strong. Yep. Hamas protesters from the get-go. Pretty wild. That's how you know you've made it as a contest. This is the first time you've been protesting. as a journalist. First time, yeah. That's when you know you really made it.

1:43:30If somebody is disguising themselves as a journalist to sneak into your conference and protest on behalf of terrorists, you made it. What was Karp actually saying? Was he being particularly controversial at the time? I think he had said anything. He had said anything? Literally, he was like, you know, he was like talking about his book and they were like, oh, you're killing Palestinians. Okay, okay. Oh, yeah. As Trump was saying. But other than that, how's the reaction been? What have the most important messages been? And obviously re-industrialization is the theme, but what else is popping up today?

1:44:00Yeah, I mean, I think what's cool is like this is a week where, you know, we talked about this in a couple of prior segments around the continuing resolution. So this week, the sort of big bill in Congress is the reconciliation. Yes. Transferred from basically sort of leadership into now congressional language that actually goes and gets appropriated to individual program offices. And so I think it's like a really fascinating week to have this conference because, you know, a significant portion of that bill was around shipbuilding. and then today we have panels on shipbuilding with some of the appropriators that are literally, by the way, on the other side.

1:44:28I've been bopping back and forth between Capitol Hill briefing congressmen and then Congress. And so it's just like, there's something magical about it where this stuff is happening on like the perfect, you know, sort of week. And then the other thing that's been fun is even for congressmen that weren't aware or not even attending the event, they've been like, so do you know what's going on? Like I have like a lot more Silicon Valley tech companies on like my briefing calendar this week than like ever before. And I was like, well, sir, like I'd like to describe to you about this thing called the hill and valley forum would love to have you yeah so i don't know it just feels like an institution and then the you know other piece of feedback that's been fun is like um congressmen have even said that like this is a place where they get far more casual time and especially on a bipartisan basis like tonight's dinner we have 17 republicans 17 17 democrats wow and it's extremely bipartisan and it's totally off the record completely casual if one person misses the dinner, somebody will write an article.

1:45:19Oh, it's left wing. It's right wing. Exactly. We keep it right down the middle. We guarantee it's 17. We guarantee it's 17. It's 17. It's got to be equal. On the$150 billion appropriation, is that an update to what we talked about, I think the first or second time you were on the show, where you said, hey, maybe there's not more money coming. Maybe it's not going to be a jump ball for a bunch of startups. Has this updated your thinking? Yeah. I mean, I think it was sort of, you know, the February bills were clearly like a pause. I was just like, look, we're not just going forward with what the prior administration did.

1:45:48And even though we're very late in the game on passing this year's budget, we're just going to pass a continuing resolution to put everything on pause. And then, let's instead, you know, sort of set it from the top. So it's definitely, you know, sort of a step in the right direction. Obviously, you know, SecDef is talking about the first trillion dollar, you know, sort of defense budget. Since we last chatted, also, they pushed out the executive order on busy analyzing all the contracts and programs that are behind schedule and behind budget. You know, sort of, you know, looking at canceling those.

1:46:12So yeah, I think generally trending, you know, sort of all in the right direction, but I'll always continuously reiterate of just like, this doesn't mean that there needs to be like unbridled optimism. All of this is default going to Silicon Valley companies. Like a significant amount of that reconciliation package has a bunch of line items that are currently only possibly be served by traditional defense contractors and like the primes. And so, you know, it's... Is there anything to read into when you see a really round number versus a very precise number? um the round numbers are when leadership are doing it the precise numbers is when the program office is actually saying like what they actually need but it's one is one more bullish than the other if i see a if i see a very precise number and i'm like oh that's definitely happening versus the round numbers just like oh they just threw something out and they're going to figure it out oh yeah the precise number is one to be more bullish on okay the reconciliation package is like great yes but it's leadership saying like there should be approximately 150 like million dollars you know sort of sent towards you know sort of this package and it's like okay but like what does that really mean?

1:47:06Is that really the right number? Like it happens to be exactly$150 million. Exactly. It's like, what's necessary? There'll be some fine. Early in my career, VC was like, Oh, we, we, we, we had our whole team run like a DCF. We know exactly. And the value of your company came back at a hundred million dollars. And I was like, there's no way that you actually have a spreadsheet that's been out perfectly seven zeros or whatever. No way. Well, you know, according to leadership, it happens. It happens. It happens sometimes. How do you, how do you think about sort of forecasting, government demand. One of the things that was top of mind this week was $500 million allocated for autonomous systems broadly.

1:47:43Felt low for a lot of people when you compared it to other categories. Yet, Sean McGuire's point was like, if you kind of just as long as that number is going to go up over time, maybe it's good and it's a more efficient way to deploy budget. If you spend$5 billion this year, it's going to be spent pretty poorly. How do you think about forecasting in government demand and how should teams think about it? Yeah, I think you can sort of use the reconciliation package as your sort of like combination of TAM and CAGR, right? It gives you a sense of like what the current TAM is, but they're clearly indicating also what the CAGR of that is going to be.

1:48:16And so I think in some ways for defense startups and startups in general, you know, to go back to like the Peter Thiel's year to wonder philosophy, you want to monopolize a small market first and then grow from there over time. And so in some ways, if they were forced to spend$5 billion in a single year, probably inefficiently and probably zero chance that it happens to be one provider. There's no way that any startup, no matter how great you are, is ready to spend$5 billion in a single year. So by default, it's super disparate. There'd be a bunch of different players, which you might not necessarily want.

1:48:4315 shipbuilding players. Like, you know, probably what's best for the country is like probably not one, probably not 15, but probably like three that are constantly competing against one another, right? I think that's probably what happens in like the launch provider world, right? If you look at last week, they announced the latest phase of national security, basically, you know, to launch contracts. and SpaceX and ULA won as per usual. But they did introduce Stokespace and Rocket Lab. So it's like, yeah, I think that's probably an appropriate-sized pool and the equivalent on shipbuilding. So I think you can think of it as a TAM, but it's not guaranteed.

1:49:12Just like in any TAM in technology, you're not necessarily immediately going to capture it. It's like VARTA had equivalent areas where there was some language around nuclear weapons monetization, reentry testing, et cetera, of budgets that were in that same dollar range. But again, that's just literally the first step of, okay, now that's going towards that program office. Now you have to start thinking about what do the contract look like? What are the actual missions that you're going to be providing for them? The hardware that you're providing for them. But yeah, I think generally, you know, bull for defense tech, that there's a whole set of, you know, sort of budgets now that in particular are very uniquely tech forward, right?

1:49:43So if you look at like the concept of like unmanned fighter jets and unmanned service vessels, this reconciliation package is by far the biggest budgets that you've ever seen for those types of activities. And obviously that is a particular area. There's some in there that's like ammunitions and like, you know, army barracks, like, you know, refurbishment and things like that. I'm not sure that like Anderle's great at like army barracks refurbishment. Sure. But like, I think they'll probably be pretty great at some of this like unmanned surface vessel sort of type of activity. And so it's really exciting to see like some of these TAMs be pretty big that are very clearly only servable by like, you know, this next generation of tech companies.

1:50:16Yeah. We got to get to Christian. So last question or we want to let No, this would be great. Yeah, just congratulations. Yeah, this is awesome. I said this is the highest density of absolute killers that I've set foot in in a long time. I'm glad after I saw you guys' YC thing, I just texted Cougan afterwards, and I was like, yo, this at Hill and Valley, it's going to be sick. We pulled it off. Here we are. Good to see you, boys. We'll see you out on the floor. We don't need any more part-time podcasters. Let's bring in Christian Garrett from Hill and Valley 137. How you doing? Let's break it down.

1:50:55How's the day going? What's the latest with you? Is that your third or fourth coffee? Or are you on tea now? Because you're losing your voice. I'm a tea guy. You're a tea guy. I'm half European. Okay. And any way that I can dig at Delian by showing how strong Europeans are. I think one way I can do that is by drinking a lot of tea. And you're also wearing a European watch today. We got the Pabier Santos on. I can neither confirm nor deny anything that you're saying. It looks fantastic. How's the day so far? I'm sure it's been more. Yeah, it's been awesome. I'm sure you've heard from folks all day.

1:51:32You'll hear from more from founders, investors, folks in office. I know you guys will have elected reps in and out over the next few days and today. The enthusiasm and excitement is really, really special. This is the fourth year. And just to see how big it is, is a testament to how much our ecosystem has changed. I talked about earlier, it was less than a decade, nine years ago, that Palantir sued the Army for commercial preference and violating Title 10, US 2377. And today, Palantir is seen as one of the greatest partners, and the Army particularly is seen as one of the greatest partners to Palantir and to our ecosystem.

1:52:12It's incredible. Apparently, SpaceX sued as well, and they used the same lawyers as Palantir. There's a lesson in that. He's got a good business going. I know that the theme is re-industrialization. What are the other conversations that are happening here? What are the other subtopics that people are digging into? Yeah, yeah. I think within that, right, you can go all the way down the supply chain or value chain to rare earth elements and minerals. Sure. We just had a panel recently with James Letinsky from MP Materials, Ray Scully from Lyrac. Talk about right place, right time with MP Materials.

1:52:48Oh, right time. He's awesome. Crazy. He's awesome. When did that company start? Years ago, right? Years ago. Oh, and the company's been around for decades. Decades. Decades. It's one of the oldest mines, and they took it over, and it's a great turnaround story. Oh, wow. One of our partners, Lower Carbon Capital, and Clay Dumas moderated that. Congressman Richard Torres is in that. Yep. That was incredible. That's great. We then went all the way up to, you know, we had a panel with Friedberg and Sean McGuire and Senator Todd Young on manufacturing, which we hit on everything. We actually talked about how energy and education are the key unlocks there.

1:53:15Yep. And then you go up to defense, right? Yep. And Andrew obviously has hit on this, and you'll see more talks from Saronic and others talking about the work that all these defensive companies and the existing primes are doing to shore up our industrial capacity. So I think you've just seen the full gambit. I know Jensen hit on semiconductors as well. Yeah, Jensen's interesting because he's, I was asking this question of like, is he a customer of re-industrialization or is he truly a re-industrializer? Oh, he's both. And I think you see where NVIDIA is going, right? They're now selling full systems, right?

1:53:45I mean, they're moving, they move far away from just the GPU. I mean, they're doing the networking, the cooling. So if you extrapolate where that company is going, um, and you look at where they are today, a hundred percent, you're right. They're on both sides. Yeah. You can't really be a trillion dollar company with just, Hey, we just designed some stuff and then let TSMC handle the rest. There's so much more about that company. Yeah. Fascinating. Jordy. Um, yeah, I mean, I, I'm interested more on, uh, who, who on the, on the, on the hillside really gets it. Richie Quite a bit. How many people like that does the Valley need in order to continue to be successful, right?

1:54:24Because I feel like a big part of what's exciting about this event is because it's bipartisan, it's not about this admin, right? It's about the next 10 years. It's about the next 15 years, the next 20 years. And so how many people are, you know, we talk about this in Silicon Valley. it doesn't take that many great CEOs to like transform an industry, right? A hundred percent. Sometimes it just takes one, right? Yep. And so how many true allies do you think we need? And are those people today or are you hoping, you know, next year we get more? Well, I mean, one piece of that, which is more of a meta point, but I think it would be great for government to have its own version of founder mode, right?

1:55:03We need to get back to that within government. Sean Sankar talks a lot about this and how that's something that's been missing. And if you look historically, when we've had success, when we were really great at building, it was because we empowered individuals within government to own these programs and see them through. So I think that's a meta point. And no one knows the name of the person who's responsible for high-speed rail at all. I mean, Sean always talks about Admiral Rickover, right? He's a great example of this person, right? I mean, like we need these people again. Now I will say today, Congress, there's a lot of champions in Congress.

1:55:33There's a lot of people that get it. They provide support. They obviously draft policy. They provide cover. but what you really need more of are these kind of founders at the individual level from the program officers to the folks running these departments and so you know I think that will be a big unlock and then starting back on your question right within Congress you look at the folks here today right you have Senator Shaheen you have Congressman Richie Torres you have Congressman Gabe Amo you have Senator Todd Young yep and then you have you know House Speaker Mike Johnson speaking later I mean you really see across the board both Democrats and Republicans there are folks that understand the importance of this.

1:56:08And the last panel said this, this is as bipartisan as it gets. We want to have a critical mineral and rare earth element dependence. We want to get rid of our dependency on China there. We want to have redundancy there and a strong supply chain. We want to have energy abundance. And we want to have a strong deterrent strategy and a strong military. And so Democrats and Republicans align on that. And the tech industry is preaching something that is in and of itself aligning and unifying. And so I think that puts us in a very good spot to try to build bridges and be successful. Yeah. Can you, I know you work with a lot of later stage companies, but can you share some best practices for government relations, lobbying that you're seeing tech companies get it right?

1:56:49What are they doing? Yeah. You know, I think what's interesting is, and I've talked a lot about this. Mark Andreessen has a lot of great stuff on this. You know, tech doesn't have a trade association and that's actually a very good thing. So it is on the onus of individuals, founders, entrepreneurs, operators, the companies, and the investors, I think, as well, to spend time within government educating policymakers on various subjects where they're experts in. A lot of the work that you see here are from folks that do not sell to the government, right? There's no revenue to be had here, right?

1:57:19There's just educating and making sure that their industry is a recipient of good policy, good regulation, and good support. and I think that from the first part I think the best thing is making sure you have these relationships with folks they are willing to take the meetings it's incredible and so I think that would be the first step I think the second is also figuring out where's the highest leverage thing that you want to focus on you don't want to come here and just take meetings for the sake of meetings either you want to be focused on something very specific you want to care about something very specific and that makes it easier for folks to digest and so I think that's the other piece figuring out where your business should be focused on whether it's a potential contracting opportunity or something you want in a budget, or whether it's just a specific policy or regulation that you care about.

1:58:01So I think it's like, first, go build relationships. Go rely on your investors. Go do this directly. Like, that's the way to do it. And that's how our ecosystem is going to do it and always has done it. And then number two is figure out what the high leverage thing is. And quite frankly, don't go take the time in DC until you have that. Interesting. Okay, cool. Well, we'll let you get back to it. I'm sure you've got a million meetings and panels. Yeah, we'll see you guys later. Yeah, we'll see you later. and let's bring in Eric from Ramp. Welcome to the stream. Let's hear it for Eric Glyman. Has your panel already happened or is it coming up?

1:58:33It happened this morning. It happened this morning. It was a ton of fun. We were locked into the stream. Yeah. But give us the overview. Revoi was fired up. Yeah, give us the high level. What is the pitch and how did it go? It was fantastic. Look, I think for private companies, startups, whatever it is, for a lot of years, getting more from every dollar spent is just obvious, right? A dollar saved is not a dollar earned. The average American business has an 8.5 % profit margin, so a dollar saved is 12 earned. The government is thinking about this. Of course, there's a lot of tax dollars in, but the deficit is growing every year.

1:59:12Whether it's Doge and the folks there or other parts of the government, everyone is starting to think about how can we start to apply modern tools to drive savings. And in many ways, RAMP is at the forefront of it. A lot of the payment systems that are used by the government from the Treasury, which doesn't require, at least in the past, who was sending the payment, why did we send it, what was the purpose and attestation on every payment, now that's starting to get put into on credit cards, they're still using old, antiquated designs where you have one system for cards, but your actual expense policy doesn't drive how these cards behave.

1:59:47And so there's people who are able to go and use cards for purposes that are not really advancing taxpayer interest. And so we talked about this both at a high level. So Senator Joni Ernst talked about how she's approaching it, how the Doge team's approaching this. And then Keith and I shared a little bit from the ramp context, how we work with private companies. Is there a story that you're particularly drawing from of a more recent tech company selling into the government that's not in the defense tech? Obviously, we all know the SpaceX Palantir and Earl stories. But at a certain point, Microsoft must have said, hey, we're going to try and sell Windows into the government.

2:00:27We're going to try and sell Outlook or Excel into the government. But that's a long time ago. It's a huge company. Are there other companies that aren't maybe government first, but have developed best in class government sales functions that you look to or as like interesting anecdotes? Are there other case studies that you've heard about that are interesting? Is there anyone out there? It's I mean, I just think. I mean, a couple of things. I don't think people realize the scale of how large the U.S. government is. Yeah. Between federal, state, local education, one of the most mind-blowing stats that I learned is one in six Americans who work, work for the U.S.

2:01:07government. That's wild. It is huge. And I think at some scale, if you want to go and be a scaled technology provider, financial service provider, healthcare provider, you're going to work with the government. Yeah, of course. I just think so. And so one of the openers this morning was the Secretary of the Interior, Doug Bergen, who, you know, he had started an accounting software company called Great Plains. He sold it to Microsoft. I think Microsoft is a great example of it. Yeah, totally. Yeah. That's probably the best example that I can do in terms of a government contractor. And interestingly, they're one of the big tech companies that never really blinked in their support of the government.

2:01:46For sure. when there was that era in 2015, 2014, where a lot of the tech companies were saying, hey, maybe we want to stay away from the US government for a variety of reasons. So it's good to see that there's a resurgence here. In terms of technically, or not even technically, but just the sales process, is that wildly different than a normal sales process, or is it somewhat like just selling to a Fortune 500 company? I look at it, I mean, not to interrupt, up, but I think the dynamic, if you're a scaled up fintech company and you plan to be in business in 50 years, like you said, you know you're going to be working with the government at some point.

2:02:23So it's more about figuring out the right ways to do it early on and also not being, you know, understanding, like always having urgency because I think that every American can get behind efficiency, right? It became political over the last 90 days due to Doge and stuff like that. And like you said, one out of every six people works in some way for the government, then obviously that's going to get political. But when I look at it, it's just about how do you defense if you're dual use or you're primarily serving the private market or private companies. You can think, I feel like, a lot more long term versus the defense tech companies that are here and they're like, if I don't get the government this year, I'm done.

2:03:07You know, and I think like having that, I'm sure that sort of like long-term thinking around partnership with the government has driven a lot of your decision making. Oh, for sure. I mean, look, it's, I mean, maybe a couple things. I mean, first, I actually just think there's like a very... I think some of the story of technology, I think about Steve Jobs' old famous quote of, You know, a computer is almost like a bicycle for the mind. It allows you to go faster, do more, think at an accelerated rate, and ultimately achieve more. And so I think it's not, well, it's great that people are trying to modernize defense.

2:03:45I think that there's a lot of people doing many types of great work, you know, departments of veteran affairs, departments of whether it's like it's education, interior, there's people doing important work. and I think one of the examples that often I think just makes clear and connects with people is you know there are I think about a million folks serving in armed services and they're doing expense reports too yeah yeah and you take you know some America's most courageous people who are who are serving sacrificing a lot to do this and then you say you know what I'm gonna make you do hours of expense reports.

2:04:21I had a person on a nuclear submarine for years. And I was like, what was that like? And he was like, a lot of paperwork. A lot of paperwork. I was like, I can't believe you're 30 ,000 leagues under the sea doing paperwork. But he was like, yeah, that was my... Don't get me wrong. It's important work. You should explain why, but it's like, actually, it would be great if a lot more of the work was to defending the country, going in the VA, serving our veterans, whatever it may be. So I think that there's a human and moral side of it. But to the other question you ask of working with the government, in some ways, this was all pretty organic.

2:04:57I mean, there was a tweet put out, I think, in February that I think there was 4.7 million credit cards issued for, I think there's about half the number of federal employees and people were running, where are all these extra cards? And so a lot of cards were turned off. And at the time, we reached out to someone who was a former customer, put us in touch. And so it's early. We're involved in the same process as everyone. And I think no matter who does it, I just think that the way I would almost describe it is people would find it ludicrous if our Air Force is flying with propeller planes in a jet age.

2:05:37And yet that's kind of what's happening with the tools we use to make expenses, do our accounting, make sure attestation is clear. These are old disparate systems that I think private industry has adopted tools like Ramp leading the forefront of. It's integrated. Your expense policy drives that you can buy. It does your expense report, your accounting. And so however it goes, I just think countries can be a lot better off using modern technology. Yeah. I mean, the thing that I thought was fascinating is they couldn't actually turn extra cards fully off. It was a dollar limit. Which is like, okay, there's a system.

2:06:15Well, and even speaking of that, like, you know, you'd think, okay, let's go and turn a limit, you know, to zero or$1 or whatever. I've heard stories of individual people because of the way the portal was designed, spent four days going one by one. Oh, they couldn't even run a cron job. No one has done something like this, but it's like when you look into these things that you think should be trivial are very hard when you hold systems like this. That's amazing. Well, we'll let you go and we'll bring in your co-founder to dig deeper into the bowels of the financial system. Welcome to the stream, Kareem.

2:06:52First time. First time. The man himself. Good to see you, guys. Good to have you. Great to see you. Welcome. Welcome. We get all the supplies. It's fantastic. Yes, we do. So obviously we're talking about getting the entire government on ramp and then getting every country in the Western world on ramp one at a time. I was talking to the Anduril guys about some of the integrations that they have to do into these antiquated systems just to do communications because they want their drones to play into the modern systems. Have you started even digging into what the technical standards are that are running?

2:07:30We've talked to folks about the SWIFT system and stablecoins, but then there's also the overnight payments thing. Where do you even start with that? Is it a GPT query, or do you start talking to people? How do you build your knowledge as a technical mind in how the government runs? Because I was telling Jordi I want to talk about running the government on a ramp more just because I don't think most people know how expense reports work in the government. I don't think it makes sense. So yeah, what was your journey to kind of digging into this and seeing like, is it technically feasible? Yeah, yeah, yeah.

2:08:03I mean, it was crazy. Even yesterday I was hearing a story of someone who spent three years in the government and filed an expense report on their first week and only got the check back after they left. No way. Every year delay. It's kind of crazy. I mean, think about it. You're at a company and you file an expense report and the company says, yeah, we're going to pay you back for this. But you don't get it for three years. you would be, yeah, yeah, yeah, interest, but also it's just offensive, right? It's not nice to an employee who's, you know, to basically take their funds for such an egregious amount of time.

2:08:39It's kind of crazy. It's basically companies and government, in some cases, using their employees as a bank. That's kind of what a bank is supposed to do. Yeah, yeah, yeah. Front the cash so they can do your business and eventually you pay them back. Yeah. And to your point on the complexity of those systems, I mean, one of the first thing I did when we started on RAMP is try to understand how ACH works. Sure, totally. And it is absolutely mind-blowing. It really boils down to very basic CSV files, Excel files almost, that every single entity puts together, constructs. And at the end of the day, they get shared through some system.

2:09:18And there's some computer sitting somewhere that's reconciling these files together. That's why it takes so long to send money. All these systems run in batch, take a full day to get access to information and be able to reconcile it. And you've got about eight of those, right? You've got one for bank-to-bank payments. You've got some for... Yeah. Really, the way people used to file expenses is they used to submit their credit card statement that doesn't connect at all to the receipts that they have in their inbox. and then you have to wait an extra day before you find out that you actually forgot to submit the receipt that you wanted to submit for the restaurant that you were at.

2:09:57But I mean, I think if you connect these systems, obviously you can move a lot faster. Talking to people in the government, I don't think they even know what they're supposed to do. So a lot of them just end up either not filing expenses or they get a card with no controls and they're lucky if they have it and they share it with their friends and who knows what the money is being spent on. But yeah, one step at a time. Do you know much about the counterparty? Obviously, Palantir pioneered the forward-deployed engineer because Shamsankar was telling us the first time they sold Palantir for on-prem installation, the team on the other side, a software developer, tech person, IT person, who worked for the government, installed Palantir on a box with four gigs of RAM, and they needed 16 or something like that.

2:10:45and we've seen with Doge, folks like Luke Ferretor are going in. You can see Luke Ferretor in another world, like working at Ramp or working at Palantir or working at any of the high growth, very strong engineering culture companies. Do you think that there's a need for America's best and brightest to kind of do a tour of duty as maybe just an insane IMO level software developer in the government, even if that takes away from your pipeline, I'm sure. 100%. That would be great. I mean, this is a company that we all have a stake in. Yeah, of course. The equivalent would be... Yeah, that's a good point.

2:11:20We're all American, right? Yeah, yeah. You get an equity stake in the government. We want the government to run well. Exactly. We all win if we're operating more efficiently, we're making better decisions, and we all pay less in taxes. Yeah. No, it's funny. Efficient spending, which, you know, Ramp is focused on non-payroll spend, right? And so payroll spend gets political really quickly. We talked about this with Eric briefly where, yeah, if you're on the government's payroll, most people don't want to be off it. They have a job. They've maybe been doing it a long time. But non-payroll spend should be the least political thing ever.

2:11:55It should be like, we should spend as little as possible. And the dollars that we do spend, every single one down to the penny should be spent efficiently. What are your other kind of reactions? How much are you spending time here at the event versus meetings around town? The event is taking another form this year. It seems it's a lot bigger than it used to be. And the level of excitement is incredible. I think it's the first time that I felt that government is really trying hard to modernize, build bridges with companies in Silicon Valley, New York, and other places. So I think people are on the same page that, yes, we do need to spend less.

2:12:39We do need to introduce technology to help us. And look, with a lot of the advancements in AI, some of the problems that seem too intractable, now you could just throw your massive database into an LLM and you can wrangle it that way. So we got better tools now to do the work. A lot of people are excited about it. So we'll see what we can do. There are a lot of founders that are here thinking about very specific regulation or deregulation. Obviously, nuclear energy is the biggest one that is very concrete. Speed up the time to get a new reactor design approved. Is there anything like that in finance?

2:13:17What is it? Give us some of the history. What's the good and what's the bad? It's everywhere. Money transmitter licenses is the most basic one. Today, to move money around, you need a license. but you not only need an American license, you need a license in every single state, which is kind of crazy. Because they're all looking at the same things and making sure that you're abiding by the rules and the rules are quite similar, but it's kind of crazy. I remember having to sit down in a room with Chor on our team who helped us do a lot of that work and there was a stack of papers this thick and I just had to sign one at a time.

2:13:52No way. I read the first one, I know what this is about. I read the second one, they're very similar and at some point I'm just like, I'm already all in. You were trapped in a room. There was a cup of coffee. There's a go. Sign. Yeah. How has it been when you look at sort of incumbent financial services companies, a lot of them have had, I imagine, a large presence in Washington for a long time. Yeah. You imagine Ramp ends up with a fairly big office here at some point. How do you look at that? I imagine you've been taking trips here. I know you've been coming to Hill and Valley, but is this a place that you and the team expect to be a lot more?

2:14:30We'd love to. I mean, we agreed to put our best resources forward and try to help. But I honestly think about it the same way I thought about a lot of the products that we built. I think it would be a win if people spent as little time as possible in them. And more of the work is being automated. I think part of the problem that you have in and around Washington right now is the incentives are so misaligned that you have incentives to drag projects on. They cost massive amounts of money. Any little change that you want to do is also another massive bill. And our hope is to build great technology.

2:15:06And hopefully if we do that well, we don't need massive time and people investments to get them to work. Technology is just doing their job. I was talking to Eric too, that the thing that stands out to me is Ramp is playing in decades. And there's a lot of founders here that are like, if I don't get a program of record in the next two years, I'm done. And I think Ramp's position is being able to think long term. There's very pressing problems that we have right now, spending being one of the biggest. But how do you kind of zoom out and be like, in the fullness of time, I imagine Ramp and the government will have a very meaningful partnership.

2:15:46And it's about finding the kind of right ways to do it in the beginning without understanding that you have tens of thousands of happy customers. And you've got to make sure that they're continuing to get resources and attention. Well, that's fantastic. We'll let you get back to the conference. Thank you so much for coming on. Thanks for coming on again soon. We'll have Aura on probably next week at this point. Oh, yes. Great. The rotation. And let's bring in Josh Steinman. You got a minute? Come on down. Josh Steinman. There he is. Look at that. Look at that. He's back in the center. He's from 1A.

2:16:20What's up? Yeah, so Steinman, we ended up on the same flight. Yeah, it was fantastic. For those who didn't see. And Steinman spotted us because I had a huge ramp logo on my back. Your jacket is outstanding. It's fantastic. It's great to see you. Yeah, great to see you, too. Where'd you get that, though? Oh, we made it. This is a one-of-one right now, but we will be multiplying them soon. Our people will talk to your people. Every guest will get one for sure. That's the thing people understand. The LA streetwear scene. Yes. Like so far away from tech. Yes. You can get super high quality stuff very well made.

2:16:54Totally. So I saw that and I was just like, it's perfect. Yeah. Yeah. It's awesome. So yeah, how's the conference been? You're probably one of the few tech founders here with real DC experience. When did you first go to DC? When did you first get into politics? Take me through your journey a little bit. Yeah. So, you know, I started my career doing expeditionary stuff as a military officer. Yep. So two tours in Iraq. Wow. One, my first tour, I was at a unit down in Virginia, in Southern Virginia. Yep. And then my second, I came up here to an intelligence agency here in D.C. Yep. And honestly, it was 20, I think I showed up in like 2011.

2:17:38And it was like peak Obama. and as a military officer in D.C., you were definitely the help. You'd go out to a bar and girls would be like, oh, what do you do? Oh, you're not some staff director on the hill? You know, thanks. Get out of here. But it worked out. You have a family now? It worked out, yeah. Someone liked you. It's true. It's great. It's true. No, it was good. So did that, got out, went to Silicon Valley. And then, yeah, I got a phone call from an old boss after President Trump won election the first time during the transition. He's like, come help me out on transition, White House transition.

2:18:15And I came and just didn't leave. He asked me to stay. I was a National Security Council staffer in the White House for four years. Fantastic. What were the top issues then and how have they evolved? Yeah. So I think the biggest issue in the unclassified space was telecom technology. this is the Huawei I assume 5G so 5G so this was like one of the big issues that I you know owned for four years so yeah think of it like if you were in the middle of the cold war to go to the Russians and be like hey can you build out the electrical grid yeah yeah yeah oh of course my friend yes we'll have the best electrical grid for you that's a fantastic Russian don't worry yeah and you know it's very clear that like and there's there's wall street journal journal articles about this.

2:19:00Like the Chinese in Africa with Huawei, they just use it as a spying tool. Yeah. So it's like, why would we have those people build the American telecom infrastructure? Why would we have them build the telecom infrastructure of our five eyes partner? Yeah. Like London, Australia, other places. So yeah, I think that was probably the biggest. And where do we stand today with 5G? I see a 5G icon on my phone sometimes. Is it real 5G or are we behind so interesting you should say that yeah you know a bunch of the companies kind of raced to brand yeah g as like here yeah when actually the it wasn't quite there right exactly so i think a lot of that stuff's been rolled out being rolled out you know the big challenge is that america's a big landmass yeah yeah totally right so um i'm guessing we're probably mid-rollout you'd have to talk to yeah actually you guys should have brandon carr the fcc oh yeah yeah yeah i've met him a few times yeah that'd be great he's great yeah so he'd be able to tell you like what percentage if you put a gun on my head and you're like, take a guess.

2:19:56I'd say like 65 % or something. Um, cause it's a race. Yeah. So the themes re-industrialization, but, uh, in terms of what you do, uh, what are the more interesting sub themes going on? Um, I'm sure you're excited about reshoring manufacturing, but there's other stuff top of mind. Yeah. Spain power, power outage and explosion of Northrop Grumman missile man, you know, manufacturing and testing facility in the past week. Okay. So like there's this, Oh yeah. You think that was an attack? So here's the thing. Do I think it's an attack? I'd say it's likely 50-50. Can we get a tinfoil hat? Get the tinfoil hat.

2:20:31Here's the problem. You look at the top five, you list out the top 10 facilities that the United States and our allies use to manufacture weapons. Half of them have had catastrophic events in the past two years. So I don't know, does that seem like a coincidence to you? In the military, we used to say, once is a tragedy, twice is a coincidence. yeah three times his enemy action so like the number's big yeah and yeah they're like oh these things go boom yeah like let me tell you like it is 10 plus years old unclassified you have cyber actors going out and uh modifying safety systems to tell operators that things are operating within the right parameters yep so that they blow up yeah yeah it's well it's well established that western you know uh groups have have tried to meddle with bronze you know uranium enrichment why would the adversaries not want to do the same thing back?

2:21:27It's just common sense. This is what warfare looks like. And the fact that we don't know, and I'm not saying it is or it isn't. What I will say is every single person out there building these types of facilities today or running them now needs to have the capacity to monitor them 24-7. Otherwise, you're not going to know. And so it's like, what are you actually building for? You're building so that on the day that things actually kick off, you'll finally figure out if you build a defense company or not, if it survives. I want to talk a little bit more about the shape of your business today. I embarrassed myself as a podcaster.

2:21:58You know, we try to be experts in everything, but I completely botched the understanding of your company. And so how much of it is consulting driven? How much of it is product driven? How much of it is SBIR, program of record, the stuff we hear in defense tech? Give us a rundown of where you are today and where you want to go. Zero consulting, zero government, 100 % private sector. Interesting. It's a SaaS offering. We come in and protect an industrial facility against cyber attacks. So we do that by installing sensors in the facility. And then we've got a software layer that's collecting essentially anything that generates data.

2:22:33These things are already generating data on like a big, like... You're looking for patterns, right? We're looking for patterns. We're looking for the absence of certain things. We're seeing like, hey, what process is running in this place? What's talking to what? And we're basically the first company to actually take every single thing that's generating data on an industrial infrastructure and take that information and look for threats. We talked to the founder of Chain Guard looking at maybe supply chain attacks. Is that something that's completely complimentary or in some ways competitive to what you do?

2:23:02We're trying to do a deal with them right now. Okay, cool. We're live, by the way. It's all good. But we'd love to see it. We love companies working together. I don't think my co-founder is meeting with them right now. Fantastic. Hey, guys. Switching gears a little bit. How important is it that Hill and Valley is bipartisan? that's been something that you know we're uh delian and and christian have been typically isn't not really bipartisan but in the context of if you're a serious uh technology company and you want to be around crushing it the next four years and the four years after that and then the 10 years after that right totally right um i i feel like uh and you i'm sure got to experience It's the sort of back and forth nature of Washington.

2:23:44But when it comes to, you know, talk about how you think Hill and Valley can kind of evolve from here from your perspective as somebody who's spent so much time in Washington. Yeah, here's the reality is that obviously like I spent four years, first day to last day in the first Trump admin and was never going to be befriended by people on the left just because of that. They didn't have to know me. All they had to know was that piece of information. and like I was just never gonna have an opportunity to even talk to them. Sure. I do have friends, I wouldn't dare mention who they are that are on the other side of the aisle.

2:24:19I wouldn't wanna, you know, I wouldn't wanna put them in a spot. In the crosshairs. Yeah, exactly. But like there's good people on both sides. Yeah. And I've done a lot of good work with folks, you know, in the Democrat party. And so I think that you wanna find people that wanna solve the problem that you're solving, right? And that can be any number of reasons. It's because you're gonna put a factory in their district. It's because they care about an issue because they're on a subcommittee and like you hope, and I would encourage folks to just look for those folks. I'll be on both sides. Obviously, you know, part of it is just like the brand that I've built coming out of the place that I came.

2:24:56I was, you know, I'm talking to folks that I know and that's what my feed looks like for that reason. But yeah, I mean, it's part of it is just that's, you know, that's how I've been. Yeah. I mean, you mentioned you're entirely B2B, no B2G yet. Or are we properly resourced on the cybersecurity government? Huge fight. Because we know about Palantir. We know about some, I mean, Microsoft sells to the government, but is there a cybersecurity champion that sells to the government right now? Who should we be looking to? Yeah, not really. I mean, some of the solutions in the space are okay. They're not great.

2:25:33and you buy them and then you have to put a bunch of people on top of them to make them work. But yeah, look, we're in some talks with some interesting folks. I'm hoping that we'll be able to announce something soon with some of the folks here in this space about building secure facilities, secure factories. And I just think that that's probably the most critical thing for us to think about from a security perspective because I want us to be able to sustain operations on day one or day two or day 10 or day 50 of a conflict because that's going to make it more likely that we're going to be able to stay in the fight and win.

2:26:07And if we can't, it's a huge problem. That makes sense. Well, should we let him know? We have a question. It's fantastic. Thanks for jumping on. See you back on the flight. See you back on the flight. Phil, come on. Give us an update. You haven't been on the show in weeks. It's been far too long. We got Phil from Dirac in the studio in the Temple of Technology in the capital of the capital. Great tie, by the way. Is that a unicorn? Yeah, fantastic tie. What's on there? No, no, no. I thought it was a unicorn. Actually, it is Moogle Conquerors. I was recently in London. Okay. Took a trip down Savile Row, walked into Drake's, and said, you know what?

2:26:43That six of six, you know, only six made tie? Oh, you got to have one. You got to have one of six. You got to meet the other five guys who wear the same tie. So true. I was thinking about this. Let's get a group chat going. Let's get a group. 1990s, you know, Patrick Bateman style, like, you know, let's see Bateman's card. Yep. popular in the 90s, I'm thinking we're going to be bringing back ties. I love it. We've talked about your business before. It feels like mostly B2B selling into defense tech companies, selling into hard tech companies. What is top of mind for you here? Obviously, it's a great event.

2:27:19Good to meet people. But is there a particular agenda item that you think is important to highlight at Hill and Valley this year? Absolutely. So, yes, we sell into aerospace and defense, automotive, ag construction, maritime recently. Could be announced soon, but closed the maritime deal, which is very exciting. There is a very, very critical lack of discussion around the American worker. Sure. You know, we, the average age of the American manufacturer is 55. Over the next five, 10 years, we're losing a lot of those folks. And with that, critical tribal knowledge. Yes. That without writing down, institutionalizing, capturing in some way, we are going to see an immense loss of our ability as a nation to produce.

2:28:00And so there, you know, I've said this before, I'll say it again. You know, we have spent billions of dollars on environmental conservation. We have spent zero dollars on tribal knowledge conservation as a country. This is something I'm advocating for from a policy perspective. You have a hot take on AI not disrupting your business or not really disrupting the, I guess, like the American worker. Can you unpack that a little bit and take me through how you see AI changing the way we design and manufacture things in America. So a little bit of a complex perspective, I guess. When you look at what LLMs are useful for, generally, people will throw them at generative tasks.

2:28:40But when you look at what LLMs have been trained on, it's more broadly like the internet. The internet, all the forums and all of this context. Chaos. And context is key. And what you do not have in those LLMs is the context of what you need made, the specs of it, and how to actually do it. Because, kind of like what I mentioned earlier, it's tribal knowledge. And by that virtue, it means it wasn't written down anywhere. And even if it was written down, your scan is probably private. It's not just out on the internet, not crawlable. Some sort of private database, interesting. Exactly. And so while LLMs are useful as a technology, you need to put them in a position to aggregate, contextualize, and then leverage critical information that is not in a LLM that OpenAI might have been able to train on.

2:29:27So I think if you were ever going to see AI actually disrupt manufacturing, you're going to have to have a way to embed it within the workflow and infrastructure of an existing manufacturing facility and make sure that you are able to well integrate it into the flow of folks who are not super tech savvy. That's great. Where are you bullish in terms of AI and manufacturing? I can imagine, we've seen those reports that like, oh, I emailed a Chinese manufacturer, a European manufacturer and an American manufacturer and the Americans and the Europeans didn't even get back to me for a week. That feels like at the very least you could just have a chatbot that takes your order and gives you some data.

2:30:04What's that? That specific problem is the problem of quoting. Complex, not really AI, LLME. People have been doing quoting software for a while. It's really computational geometry intensive. Generally pretty complex. And so companies like paperless parts or Xometry will help you with this. what we're describing there isn't really like an AI problem it's a work culture problem generally we as Americans work very very hard but the Chinese have the underdog mentality they've been hungry for 30 years they've been on the come up what we're running into is that 1991 was a 1776 moment for China what specifically in 1991?

2:30:49So basically for 50, 60 years from 1945 to 1991, we were in the Cold War. And so we have this global battle of the West versus communism. But is 91 different than 89 follow the Berlin Wall? Why 91? I say 91 generally. Either one is just sort of like that marker of when we basically said the West has won. Global American hegemony has won. We can sort of like rest in our liberals. Very similar to... Beginning of the Clinton era. Yeah, exactly. You know, NAFTA and all that stuff. We basically said, let's pick a couple of nations to offshore our production to. Globalism is going to win. Let's pick China, Japan, Korea, offshore our production, fund all that infrastructure, and then just trust that they'll have our best interests in mind.

2:31:32Very much like this industrial colonialism, like our own version of it. So if you look at historically, you had the global power, do that, set up colonies, and then get very comfortable and think it's the end of history, we've won. what's happening with China is exactly what happened in 1776 now where we you know have basically seen China say you know what you know Japan and Korea you want to play with the U.S. fine you know just like Australia and Canada you know pay ties to the vassal state or to the to the mothership um fine right but China is now saying you know what we're not going to play ball we are going to go you know 1776 we are on the come up so there's that underdog mentality of one generation two generations of 30 years of that baked into the culture of the Chinese manufacturer.

2:32:18And that's what we're fighting against. Talk about, do you think there's enough conversation at Hill and Valley around just labor in general? Because I imagine like part of your thinking is like, who's going to be using my product in 20 years? Right? Like that's a big question. And it's one that's interesting because it actually does feel like there's less direct ways for private companies to develop the next labor force for manufacturing. Right? It's like, yeah, individual companies can train people. You can try to poach people from legacy firms. But it does feel like an area that the government can have a tremendous impact.

2:32:53Are you hearing conversation so far throughout the event on that? Certainly a little bit, but I would like to see more. A lot of technology brings the top up. So you see this distribution of technology at manufacturing companies. This has always been the case. And so the companies with the most money, all the enterprises, the Lockheeds, the Toyotas, the Fords, all the big guys can just dump money on the fanciest schmanciest AI LM stuff. But the key to saving the American industrial base isn't just making the top most wealthy companies have more and more advanced technologies and having like a 99%, 1 % split of that distribution technology.

2:33:30It's bringing the bottom up. And so when you talk about the labor base, what I'm starting to hear folks get is, this is something that I deeply agree with. We don't want cheap labor. like we don't want bug man cheap labor we want smart labor yeah so that's why you know tools like us tools like a bunch of other things out there are geared towards saying hey we are not just going to radically improve quality of life for the modern manufacturer we're going to build something that makes people want to go into this job because of how cool and modern it is like you know people love building software engineers love building tools for other software engineers and there's this flywheel effect and positively reinforcing feedback loop of cool tool cool tool cool tool when you start doing that for production you end up having younger folks saying that looks super cool spacex has all these cool tools that sounds awesome let me go work in that facility and so government um yeah spacex is an interesting example because didn't didn't their uh their warehouse management system like spin out as its independent company or something uh no not exactly it is uh people have it is like very very common for like somebody to work in this like thousand Plus Software Engineering Org.

2:34:36They have this internal software they call Warp Speed. Okay. Warp Speed, Warp Drive. Yeah, sure. It is, you know, fairly sophisticated. Yeah. And you'll often have like somebody who was at SpaceX fairly early on that team say like, I'm going to do this and productionize it. Sure, sure, sure. And then they're like, spinning out. There's been like five or six of them. Yeah, yeah. There's been a couple of those. Yeah, yeah. Okay. They're fine, but you know. Yeah. Anyway, Jordy, any other questions? Yeah, this has been great. Back to the conference. Thank you so much for stopping by. If Aaron's out there, you want to send him in?

2:35:03I will. I think I just saw him. Okay, great. Yeah, grab him because I think he was hanging out for a little bit and we got to bring him on. We got four more people, maybe five more people on the guest list. Ben is sweating. He needs a bathroom break. Should we take five? Can we go to a break? We are going to take a five-minute break, folks. Thank you for watching. We'll be back in five minutes. Have a good one. We're live. GBPN. We just took a quick break. got another coffee. We are in the capital of America today. This room is the capital of the capital today. That's right. It's the center of the American universe.

2:35:40And we're here with Aaron. Been on the show before. Great to have you in person. Camera was a little shakier last time. Oh yeah, you were walking around your factory floor. I don't know if the team could shake the camera a little bit. So you walk around the floor to simulate what it's like to be in the trenches. Yeah, there we go. Just so everyone's familiar. Big moment for you. You've been banging the re-industrialized for years and it's the theme of the entire event. Why don't we start with your reaction to Jensen's speech earlier on high-level AI, but then AI factories and how you're thinking about that.

2:36:18I mean, it's amazing, right? He's obviously... Oh, you got to do a little holding. How's that? Close as possible. Okay. There we go. No, it's amazing, right? You have the most powerful man in AI sitting up there talking about bringing American manufacturing back. And the role of AI converting electricity to now tokens for everything. It's a really phenomenal way to wrap the story, I think. And converting that into real outcomes, no matter what the industry is. With the focus on, obviously, manufacturing. And yet you've often said that AI is not a one-shot solution for manufacturing. Break that down.

2:37:02So, all right, yeah. When people get a chance to go through the transcript, watch him talk or whatever, there are key things that he kind of mentions you can pick up on. We can do this stuff in anything that has to do with text and images today. You might not want to diagnose a disease because there's no room for error there. manufacturing and like all of his talking about like getting to physics faster this is kind of like how we do these things eventually right like it's a matter of computing accurate real-time physics for something not just you know like a bottle falling but like if i'm trying to design a mold right for like mass production i need that thing to be five micron tolerant or better and right now you know there's no way to do that uh with current architectures and models and stuff like that this is why not blackpilled on it but like the horizon is longer okay yeah so a lot of work to do uh can you talk a little bit about some of the work you're doing with re-industrialize yeah so last year you know incredible show of force from this community right like grew from like wait was last year the first year yeah yeah because it grew from like an idea to like a massive massive conference what give me the stats break uh so last year we had about like 4 000 rsvps and 800 attended.

2:38:20Wow, that's a lot. It snowballed from I wrote that techno-industrial manifesto. We threw together two and a half months. It was crazy. It just all came together magically. Going back to Detroit for this one? Or DC? We're going to be back in Detroit. We have an amazing benefactor who was pretty impressed, I guess, by the first one. That's great. They're giving us a brand new skyscraper that they just built. It has a beautiful... I'd hit the size gong for that. Beautiful, beautiful convention center attached to it. It's going to be wild. It'll be very, very high quality. More than 800 this time?

2:39:07What does it take to get off the guest list then? That's hard. Just DM me. It'll probably be around the same. Is it a similar hill and valley mix? Founders, politicians? or are there other folks? Is this a place where someone could go and just find a job or talent? Everything in between? This is like a, it's a good champagne problem to have because you want all these different facets from everywhere to be there. But at the same time, I think ultimately what we're going to struggle with and need to refine over the years when we do this is we want high quality decision makers there, right? Because the whole community has to move forward somehow.

2:39:44So that might just be day one eventually. and then day two we can kind of go into like startups and like you know maybe a trade show kind of thing like that so there's you know it's all in motion but we'll take all the feedback when is it how can people learn more give us the plug is there a TBPN coupon code yet if not can we get one set up yes we will have a TBPN coupon thank you I want to kick back on every sale it happens golf stream 50 golf stream 50 will be yeah yeah just send the jet that's all July 16th July 16th in Detroit. Yeah, we're super excited for Reindustrialize. Yeah, we'll be out there.

2:40:22Yeah, where do you think people are missing this week around Reindustrialize when you look at kind of like the guest lineup and everything like that? Are there areas, we were talking to Phil, one area that I kind of identified as something that doesn't feel like it's a huge part of the conversation is labor, right? It's like who's going to, even if we're building automated factories, we still need to upskill just due to how many people within manufacturing are retiring education technology has always been hard it's insane because in Jensen's talk he was talking about trades elevating trades if we want to be able to accelerate these things faster just because the gap has grown so large and we don't have time we don't have another 20 years to teach these people so yeah that's kind of where my company comes in right like we're trying to encode tribal tradecraft into technology and then maybe it doesn't take you 20 years to learn how to make a mold anymore right it's like a year uh so yeah how much so taking people uh you know forklift operator and pretty soon he's like just cncing stuff it's cool yeah i uh how can you can you break down i'll give you an example i saw somebody take they were working on their irrigation in their backyard seemingly the very complicated system that like one person had kind of designed a long time ago.

2:41:41They were able to take a picture of it, plug it into Grok or 4.0. And the model was able to spit out like a completely on point analysis of the situation. Aaron's about to put you in the truth zone. It's impossible. And so is that, you know, clearly for a simple consumer application, it works. Are we going to see that in manufacturing in the same way where an individual might not have that? You're talking about ingraining tribal manufacturing knowledge into AI. How bullish are you on that or what's the timeline? So again, just go back to the mental model of like how much precision and accuracy do you need to accomplish the end task, right?

2:42:23So like in manufacturing, there's some room for error depending on the process. So ultimately, I'm super bullish on this, right? Yeah. But Factories have to be rebuilt, literally from the ground up with a software nervous system. And AI will play a huge part, not in just the SG &A kind of stuff, doing invoicing or whatever. Get rid of that. The actual skill encoding is the thing that becomes this weird physics-driven deterministic model. If you need to engineer something, that's a really out-of-distribution problem. you need to understand the physics behind it does a trades person? no, but they sit there and do it for 20 years they've done it 10 ,000 times their brain is a physics simulator how close are we getting there with each task as it gets more and more refined and accurate I think we'll let you get back to it, thanks so much for stopping by thank you excited for re-industrialized good luck Good work on being ahead of a massive wave.

2:43:30For sure. For sure. Thank you, bud. Awesome. Well, we have Sam Preeti coming on from Navier. Aaron, would you mind grabbing her? Navier, we're talking boats, talking maritime. She is a roboticist. She was formerly at NASA. Okay. And she also was working on subcritical nuclear reactors at Fermilab. And fun fact, I filmed a two-person podcast with Jason Carman where Jason Carman was on one of your boats. Welcome. Sit down. Sit down. Here you go. Great to have you. I'd love to start with a quick one. I was just reading off your bio. Absolutely cracked. MIT mechanical engineering, PhD. You're screwed in so you can be as close as possible.

2:44:11Yeah, and you can grab the microphone. It's a little bit heavy, but you can hold it. Okay. Great to have you on. This will be fantastic. Thank you. How's your hill and valley been so far? It's been great. It's really incredible people. This is the first one? This is my first one. Yeah. Yeah. Are you hoping to be a beneficiary of all the momentum around shipbuilding broadly, or is this more just about meeting folks in Silicon Valley and the Hill as well? I think this is an incredible time to build hard things. I mean, something that I feel like for years people were holding back, and suddenly you see the momentum everywhere, and you feel it here.

2:44:47They have done an incredible job. I don't think I've been in any conference where you're seeing builders, policymakers, everyone coming together and just saying, let's build, let's do it now. And it's awesome to see that energy. Speaking of building, can you describe exactly what you're building, what design trade-offs you made that put your product standing out from the pack? Correct. So, you know, the foundation behind building Navier is building next-generation maritime vessels. And when we are thinking of next generation marine vessels, you have to think about why suddenly now, right? So America is number 11 in maritime and a very small number of vessels.

2:45:32China is putting out thousands of them. So the goal is just not to think about, okay, how do we outnumber China? To really win, you have to out-innovate China. So that means when you think of building marine vessels, what does out-innovating mean? means that how do you build vessels that are just not a little bit better, but a step function better? What that means is not just automation, software, and all that. How do you reduce per unit mile, right? Per unit payload cost of moving things on water. The world moves, the whole world, right? It moves on the terms of, you know, what is the cost and speed at which goods and people move?

2:46:16If you tap into that economy, if you tap into that problem, suddenly you're controlling how the world economy moves. That's a trillion-dollar market. And functionally, in terms of the actual design of the vehicle, is it a hydrofoil that makes you stand out? It's an electric hydrofoil. Electric hydrofoil. Yes. I mean, the one that is out in the market is electric. We build more than just electric. So, yeah, what were some of the design trade-offs? What are the specs? And how do you pitch that to the eventual customer? Who is the customer? Well, so the focus, as I say, is to build a maritime company.

2:46:54When I started this company, we were amidst COVID, actually, right? And, you know, no VC was interested in maritime, and there was no excitement around it. I'm just going around and saying, I'm going to build maritime. And now it's like the hottest segment possible. What? That's not venture-backable. and then the first application when you think about goods and people and you're thinking electric the first application is moving people in coastal cities I mean that's a good demonstration of the use case operational efficiency and cost right but this COVID everybody is like working from home and no VC would believe that people will ever ever take a ride and go to work but people have commuted across the bay for years yeah but suddenly during COVID People thought that, no, what, again, remote work is forever, right?

2:47:42Sure, sure, sure. So to do that, but for me, it was important, let's get the tech out. And let's get money to get the tech out. So what we did is that, well, you know what? The first problem we had, water doesn't have a brand. Let's build something that gives that awe-inspiring magic, you know, that emotion. And put it out in the water. Like you feel when you see a rocket. So that's why we started with this super cool, sexy, high-tech Navier 30 and 30 Pioneer edition. And the initial customers who backed us are like tech entrepreneurs and whatnot. I mean, recreational boat buyers bought these boats.

2:48:20Then we also had hospitality and so on. But now we have the recreational part is a small segment. Our major customers are defense and culture. So we work with our control systems, our technologies with U.S. Navy vessels right now. How does the DoD think about maritime kind of fuel sources long term? Are EVs a part of how they're thinking, or is it more traditional sort of fuel sources? It all depends on your use case, right? So EV, when you make it all electric boat, it has certain use cases. So some of when you're thinking of low heat signature, certain kind of like noise. And there are certain applications where you're looking at electric, all electric application.

2:49:06But, you know, the other ones that you're really looking, I mean, what is the process of a hydrofoiling boat, right? Forget electric or gas, like compared to a conventional piling hull, you're taking out the hydrodynamic drag. As a result, you're getting like three times longer the range. So when you're thinking of long-range, a little platform, so you're putting a payload that you don't want to be bouncing around. You want a steady platform. So so far, you would need large platform, gimbals, and whatnot, right? So that's for payload, but also for crew, because crew, you know, CTB, crew transfer vessels, people can get injured when you're always slamming against them.

2:49:45Yeah, makes sense. Last question, or should we move on to Jared? I know he's waiting out there. No, I'm just curious how, like, talk about what it's like being in Washington today versus even a couple years ago. I imagine the response has just been completely different in so many ways. It feels like the ocean is becoming, I think in a year it'll be overheated. Right now it seems like it's getting the right amount of investment. It's 70 % of the world, and I hope there are more and more maritime companies. I mean, we need to build, you know, and I mean, it's a huge economy. I mean, people are, you know, all of this talks about jobs getting taken over and we won't have jobs.

2:50:29And I'm thinking, wow, we are going to unlock a whole new kind of economic opportunity. I mean, there will be so much jobs, so many things that will spin out and the secondary effects of it. That, to me, is exciting. I mean, there's a whole industrial revolution that will happen around maritime. And I think it's awesome to be a part of it. amazing amazing well thank you so much for coming on the show yeah thank you we have to record a stream from the boat yeah yeah jason already filmed on one it was extremely cinematic yeah we can be nice and stable yeah no he actually was really stable he was on the phone and we recorded the whole thing it was amazing we did 20 degree banking turn and the champagne doesn't spill that's amazing uh if you if you don't mind can you grab jared he's out there in the in the suit with the Marlboro pin, I think.

2:51:12But yes, fantastic. Jared, welcome to the stream. Come on, man. Look at that. He's normally in a racing jacket, but you look fantastic in his suit. He dressed up first time since last Hill and Valley, or you throw on the suit every once in a while? I wore a talk at the inauguration. Okay, that's about it. That's great. Well, what's top of mind for you? I want to hear about stable coins. I want to hear about the stuff that's less about re-industrialization and manufacturing, maybe more on the crypto side. What's most interesting to you today? Yeah, so the crypto industry obviously showed out extremely heavy for the...

2:51:49You can hold it. For the incoming, yeah, the current administration. Yes. Crypto ball and like... $250 million donated. Like lots of crazy stuff, but also lots of reasonable stuff. Yep, so since then, we effectively have a few pieces of legislation that is going to be delivered. Yeah. So there's currently two stable coin bills, one in the Congress and one in the Senate. One in the House, one in the Senate. Yep. One is called Stable. That's the one in the House. Okay. And Genius is the one in the Senate. So the main difference between the two appears to be the treatment of non-U.S. issuers. Okay.

2:52:20Now, there's only one significant non-U.S. issuer. Is that Binance? It's Tether. Tether. Okay. Yeah. So Tether has roughly, God, I'm going to butcher the number. But it's over$150 billion issued. Yeah. Circle is number two. Isn't it the most profitable on a per-employee basis? Something like that? I mean, I don't know how many people work on the Medallion Fund at Rentech, but it's not that. Like, this has got to be it. They claim they've made over$20 billion in profit over the past two years. Wow. It's an absolute monster of a company. It's crazy that you can make, I mean, Medallion Fund makes sense because they're doing such complex stuff.

2:52:48But stable coins seems simple to me. I don't know. Maybe I'm underselling them. I need to talk to the founder. Look, if you're someone in a country like Nigeria, you have double-digit inflation rates. Yeah, yeah, yeah. Your country desperately does not want you to be able to access U.S. capital markets or even, like, you know, things to hedge against inflation. You want dollars. And so the demand for dollars has been so strong that people all over the world go through a bunch of extremely complicated UI processes. They use random blockchains. Who will use a bunch of these swapping functions? Who would possibly do this?

2:53:17Not an American consumer. Well, it doesn't matter. And it's like most stable coins from Tether issued on a blockchain called Tron. Most people here have probably never heard of Tron. So it's a very international user base. The pull of the market, we talked about product market fit. The product market fit of stable coins is so insane. and the fact that there's a debate between the sections of the house on should we write legislation that potentially kneecaps the one group that is doing the most to export the dollar abroad I think is extremely interesting. Yes, interesting. And this is on the heels of Circle's trying to IPO right now.

2:53:46We saw that prospectus. So compared to the $20 billion in profit over the past few years I believe the EBIT on Circle's$62 billion issuance was like$258 million. People did not like the S1. It was not... It just felt like they were leading along on the table. Their distribution costs are high due to the Coinbase relationship, I think. Yeah. But yeah, that makes sense. It's like the T-bill is arguably America's greatest export, right? Like if you count the T-bill into trade deficits, it would be like a much very generalized way. Different story at that point. Different story. but yeah I think your point on hey we're you know Tether regardless of your opinion of them is exporting the dollar and getting more people on ramp to the dollar which does have some benefits for sure yeah so we'll see who ends up winning out in the reconciliation progress I think enough people are going to recognize that Tether's probably doing that good for the US like Genius will probably win out a little bit overstable but I mean it's still the early days We'll see.

2:54:52Who on the hill are the biggest proponents of crypto? Who are the names that crypto founders need to be following? Who's the one politician with the laser eyes? Is that based Mike Lee? Yeah, yeah. Mike... That's his account, I think. No, based Mike Lee is... When he goes by online. Extremely based. Ted Cruz was one of the first guys to understand how Bitcoin mining can actually help secure energy grids. Sure. He was extremely early to that. Of course, Gillenbrand, alumnus, and the House of French Hill, the chair of the Financial Services Committee. These are all people you need to pay attention to.

2:55:24And then there's a whole crop of new freshmen congressmen and senators. Richie Torres is extremely on the money, and he's not even on the right. So this is very much a bipartisan issue. Almost every single person has brought up Richie Torres. Yeah, yeah, lots of people like him. How much time, have you been spending a lot of time in Washington the last few months? I've been spending a little bit of time in Washington. Look, so much money was given by so many different groups in crypto that there are a lot of us on the ground. So the people actually writing the language, working with the White House, that is extremely saturated.

2:55:56Where I have been spending a bit of my time is I'll meet with junior staffers. You know, I don't have any face to lose. So I'm happy to sit down with, you know, the lowest of the low. Everyone's actually really fantastic. But no, I'll go and I'll make sure that everyone around a certain elected official knows at least what are the range of opinions that they should probably have. I'm not going to say, hey, you should think this, but it's, you know, these are the arguments for one thing. These are the arguments against it. Is the crypto industry in somewhat of a, what was the example you gave with tech?

2:56:26It's like the dog that caught the car. Yeah. Is that a good analogy here? That's the very negative take on tech's relationship with DC right now is that like tech kind of came in, you know, made a lot of connections, but now it doesn't really know what to do. Yeah, look, I think you're seeing a lot of headlines saying things like Coinbase is trying to tank the stablecoin regulation, the fourth market structure bill. I think it's, of course, going to be more nuanced than that. I think that there are groups that say, hey, we've won huge. We want to be able to go really hard. Let's get everything we asked for.

2:56:57And then there's others that want incremental wins. I will say that Sachs and Bo Hines, who is kind of his deputy helping run many of the crypto operations out of the White House, they're incredible. Like Sachs was a direct crypto investor. He was an LP in a bunch of crypto funds. Founders that know him, love him. And Bo Hines, not a lot of people knew him from before. But I mean, he like, in law school, he wrote, I believe, one of his theses on crypto regulation. He was a big investor. He worked with a lot of companies. So they're really on the money. And yes, maybe the dog caught the car, caught its own tail.

2:57:30But I'm actually extremely optimistic. And then, you know, out of treasury, Besant and Commerce, Lutnik, you know, both these guys are extremely pro-Bitcoin, pro-crypto. So, yeah. What are you seeing in terms of US-based or sort of crypto companies generally feeling more comfortable coming back to America? Are we seeing that now or are we seeing more offices being spun up or is it a little bit more like, well, we already did the work to set up infrastructure internationally. We want to wait to see how this stuff plays out. Yeah, there's a few things. So the first is if companies don't come back, the founders are starting to.

2:58:04There was a class founders that wouldn't step foot in the US. Yeah. So like Paolo, the CEO of Tether, he literally would not come to the US because he didn't know. Like, yeah, maybe he just gets seized at the airport. Yeah. So the fact that one, they're coming back, they're being public about it and they're showing their face, they're meeting with people, that's big. Other things that like you might not think of, crypto conferences, companies would be scared to sponsor US based crypto conferences. Because they're like, oh, if we sponsor this conference in New York, maybe we'll get the attention of the wrong regulator.

2:58:28That's over. If you talk to the conference organizers, they'll be like, OK, no, our business is back better than ever. So I think, you know, the next stage is offices open up, headquarters open up, and the market structure bill that hopefully will come later this year will be a real catalyst for that. And the other thing that's really important is a lot of trading activity has moved to the international offerings of these exchanges. When you look at spot volume, which is just, you know, if I buy Bitcoin directly versus perpetual futures volumes, which are derivative products, the majority of crypto trading volume is all in perps.

2:58:57And perps are not really clear if they're legal in the U.S. Yeah. There's some guidance that will hopefully come from the CFTC. They just did a request for information a few days ago earlier this month. CoinMIS has said that they plan to offer futures contracts with a settlement date very far in the future. So you can theoretically do like a hundred year future contract and live rebalances and it fills the role of the perps without new regulation. It's illegal for futures contracts to not have settlement dates in the U.S. Sure, sure. Yeah. So hopefully that all gets addressed and we can move the liquidity back to the U.S.

2:59:25because every U.S.-based crypto hedge fund has to set up offshore accounts to be able to trade their profits. Are you expecting any legislation around real-world assets? I mean, stablecoins in some way are taking a real-world asset, even if it's a number in a database, and bringing them on chain. What do you expect on that front over the next couple of years? A lot of people will get really excited about real-world assets. RWA is a horrible name for something. I mean, RWAs in finance is another thing. But I think that the way that the stablecoin bill is written is that if something is directly redeemable as a receipt, you might be able to issue a tokenized version of it.

3:00:06There's some specific language around, okay, if it's a payment coin or a payment dollar issuer, these are the reserve requirements, but you could extrapolate that and issue some other things. Interesting. Most of the time when people talk about real-world assets, they talk about it in the lens of either, A, we want to bring more liquidity to an asset class, or we want to be able to use something as collateral. I am far more interested in something being used as collateral, which in a sense is bringing liquidity to it. The problem is if I was to tokenize a share of, you know, if we start a company tomorrow, we raise a 10 at 50 round, and I want to tokenize that and say, oh, I want this to trade at 50, there's no buyer for that, right?

3:00:41Sure, sure, sure. You need a buyer of last resort, right? No, and that's the interesting thing. I think the lending aspect is fascinating, but illiquidity is such a feature of private markets, and everybody's realized that at this point, right? You don't want a company to be on chain. They have a bad news cycle, and then suddenly it's trading at 90 % less. Yeah, totally. And I think there's some companies that I imagine will see get tokenized in some form. Maybe it's out of trust in Switzerland, or maybe UAE, or maybe even the US. And the ones to expect are, did you see that Yahoo Finance has secondaries tickers?

3:01:18No. Yeah, they have charts now where they show where secondary transactions are reported to have traded. We need to add that. We do. Well, this has been fantastic. Thanks so much for stopping by. It's great to see you. Come on the show again. Yeah, we'll have to have you back for a deep dive. Crypto day. Yeah, we're doing crypto day. Can we bring in Kesar Yunus when we have a second? How are you doing, Christian? Okay, yeah, yeah, yeah. Let's bring you in next, if you don't mind waiting 10 minutes. Thank you so much for stopping by. I know you have a crazy schedule, so we really appreciate it.

3:01:46Thanks for coming on. Yeah, let's go. Thank you, and congratulations on all the success. First off, would you mind introducing yourself for those who might not be familiar with you? I'm a short man. You can actually hold the mic. It'll be more comfortable. Whatever works. Some people are just doing this. Those are pros. Whatever is best for you. I am clearly not. So my name is Kastor Yunus. I'm the co-founder and CEO of a company called Applied Intuition, late-stage company based in Silicon Valley. We do vehicle intelligence, broadly speaking. Let me explain a little bit of what that is. Sometimes people think we only do autonomy, but as I was just talking on stage at Hill and Valley, like imagine you work on a mine and there's these giant dirt movers that move like the size of a house.

3:02:24Your mining operator, you go up to it. That machine should be intelligent enough to understand who you are, what you're trying to do as you get into it. You talk to it. This is teaming concept. We think about AI as like on your screen, literally on your phone. Maybe you talk in chat box. We're the next kind of generation of AI, which is this AI that's all around you, but specifically on moving machines. Cars, trucks, tanks, planes, and that human AI teaming, that's the company. Can you talk about the path to full autonomy and what AI means in the context of just, I guess, vehicles broadly? We've seen teleoperation.

3:03:02Full autonomy, even the right thing to be aiming for when teaming is clearly like, you know, like the more natural way to collaborate. So within vehicle intelligence, the broad umbrella, their sub group is autonomy. and within autonomy, you can break that up into kind of two subgroups in itself. Just for a simplification, because yes, they're not autonomy engineers, right? We're broadcasters. All right, all right. We won't bust out any software tests for you. But most of the audience, they're much better than we are. Okay. Dumb it down for us, not them. Exactly, exactly. Thank you. So instead of talking about like Society of Automotive Engineers, like autonomy levels, just think about autonomy as, is there a person in the driver's seat or not?

3:03:43Sure, yeah. The Waymo, there's nobody in the driver's seat. In a Tesla, there's somebody in the driver's seat. And that rough analogy applies all the way to tanks, to planes, to drones, whatever. Is there a human sitting there, a human not sitting there? So in the human sitting there, that's the assistance version. And really, in the warfighter example, that can be one-to-many machines. It's collaborative autonomy. It's multi-mode. There's no human in the Waymo example. Then it's a pure level four autonomous system, and that's the robo-taxi. Both of those things exist. So then the question is, well, why would you use one versus the other?

3:04:19The Waymo version, broadly speaking, is way more expensive. Tesla is already a functioning business model. You can go buy a production Tesla that has FSD and it works pretty damn well. And it's profitable. Yeah, and it's profitable. Waymo hasn't figured that out. And it will. And just the nature of the actual machine, it's more expensive. The compute is way more expensive. The sensors are more. the entire operations are more expensive. But what you get is you get that last 5 % of scenarios that Waymo will take care of that the Tesla requires your intervention. Because I can't do this. And so then you can take that into other domains like let's say construction.

3:04:56To get that last 5 % is generally not possible right now because in those domains they're more let's say open than something like a road. And so then you need a human teaming. take for example uh you're in a fighter jet or you're in a tank and you have to make a lethal decision yeah that's where teaming becomes really important the beauty of a car is a car can just stop right it's not like it's not like moving something that's very heavy and it could be damaging um how uh how much has your but the answer autonomy is here it is here and it's just like a lot of times people ask us like oh when is self-driving going to be a thing it exists yeah It's like mobile phones.

3:05:38When did mobile phones happen? Let's ask that simple question. Between the 80s and 2007 when we had the iPhone moment. But even then, it's not like everyone got an iPhone. It was really expensive. It took a long time. And even then, the iPhone actually isn't the thing that consumers care about. They care about Instagram. Yeah, the app store. What's that? They care about Uber. And if you try to think about an Instagram, you can't even think about Instagram on an iPhone. No, not at all. But the first iPhone, by the way, no app store. No app store. No front-facing camera. Yeah. So you couldn't even, there's no such thing as Instagram.

3:06:06No selfies. So the macro point is autonomy is the spectrum. Yep. Yeah. You should think about autonomy as like, it's going to come in drips and it's going to be, it's unevenly like the old Peter Thiel saying, technology is unevenly distributed. How much has your vision expanded? Right. I imagine early on, you know, even the last few years, I'm assuming that people came out seeing your success being like, oh, we're going to do applied intuition for XYZ. And you're probably sitting there being like, well, applied intuition is applied intuition. Or XYZ. I think that's the normal competitive situation.

3:06:41But has your vision always been the same? I pity our competitive. We're not a meek company. We're like street fighters. How long have you been doing this? Don't let the suit... I come from Detroit. You're a brawler. Yeah, exactly. Eight years. Overnight success. I'm assuming your vision always was massive, but now seeing the technological advancement, are you discovering new markets every month? Yeah, I think the core hypothesis that we had, the core quantum of idea that we had was, we saw Tesla emerging. This is 2016, 2017. And it was like, oh, the car is going to be a software thing. And we just don't know what that means.

3:07:26But we ultimately want to participate in that. So I grew up in Detroit. My co-founder grew up in Detroit. We're a family of automotive folks. My parents in factories. His parents in engineers. I went to the General Motors Institute. so we saw you know i worked in factories a bunch of years and so you just you just see the car business and you're like this business is going to change yeah i think that was the very vague rough idea yeah and then the product strategy over eight years has been let's build all these products to make cars more intelligent yeah we got into defense about a year after we started so now okay so early yeah yeah you know it's not random like general dynamics and general motors yeah their their technical headquarters are like you know five minutes from each other i worry so you You were dual use from almost early.

3:08:12How worried do you get for founders that are here that aren't dual use, given your experience working with the government? I'm just trying to eat. I don't know about their businesses, man. Yeah, yeah, yeah. No, no, but I'm good luck. That's good. But I imagine if you had started out and you were just doing defense and you was autonomy and it was whatever, eight years ago, you may not have made it. We were just automotive. We're doing just automotive. I think it's, you know, there's a, our company values, these values that run the company, but they can all be reduced to two words, radical pragmatism.

3:08:44Automotive, specifically, and defense are anticyclical. Sure. So, you know, it helps. Like, that's not random. So I think it's positive. I think just for us, the problem space in a car and a tank are actually surprisingly similar. Yeah. They're both human operated. They both are large machines that are electromechanical and then now are becoming more software. I think if I'm a defense-only company, I think it might be easier to be a commercial company to come in defense than a defense company to go out to commercial. The main reason is in the commercial ecosystem, you've got to fight the globe.

3:09:18You've got to fight everybody. And it's not about I know the DOD procurement methodology and therefore I get a big contract. It's like I have to have the best product and it has to be priced the cheapest that it can be bought globally. Because otherwise I'm not going to win. I think for us, the transition into defense, being from Michigan, I mean, take home, you know, the tank and automotive, where they built tanks and the Detroit arsenal. Yeah. Literally a mile from where I grew up. Wow. Crazy. General dynamics, three, four miles. I mean, Detroit is a defense ecosystem. It's the building. How do you, so you're clearly much more focused on existing form factors, right?

3:09:52Cars, tanks, things like that. Drones. Drones. When, I'm sure you've been approached by humanoid robotic companies. Yeah, we have. Look at this, this guy. Are you a plant by one of our investors? No. Who is it, Josh Wolf? Or who? We have Josh on earlier. No, but I'm curious to hear about how you're thinking about these new form factors. We don't know at all how they're going to play out. We have been approached by, I would say, three humanoid companies now who've said, hey, can we use the tooling? Can we use some of the technology? I think for us, we like to enter markets where there's a bit stability and maturity.

3:10:31Because you don't want to build a bespoke thing for company A, and then it's a bespoke company B. We're a product company. We're a services company. Humanoids will get to that. The macro thing that you're tugging on is actually this abstraction from hardware or software. There is a company, actually, that's applied in the past, which is Microsoft. Microsoft started as a tooling company, then got into operating systems, then got into applications. But they did it all on the PC in the 80s. We're doing it on the vehicles in the 2020s, but it's the same thing. It's you're abstracting away from the hardware that exists in a car or whatever truck, commercial truck.

3:11:07The humanoid is similar. There's a hardware, software bifurcation that's going to happen. How do you balance then wanting to be a part of the evolution of these new form factors but not over-invest too early? That's the challenge, right? That's a billion-dollar question. I think most companies, we have Mark Andreessen, our first investor and our largest shareholder. he's our sole official board member. Oh, nice. So Mark's been with the company a long time. And Mark has this great line, which is companies are almost always too early. Yeah. And that's super counterintuitive because you always think, don't be late, don't be late.

3:11:45Don't be late. Actually, the mantra everyone should be saying is, don't be early. Don't be too early. Interesting. Don't be early. And so I think, I say like right now is the best time to get into self-driving. Interesting. Interesting. Yeah. Because all the technology is kind of figured out. Yeah, yeah, yeah. So now you're going to enter against a Waymo or against a Tesla with none of the cost of the 15 years. And you have to take all of these engineers who are at Cruise and Argo and a Waymo and a Tesla and you recruit them and you build sub-drugs. Zoox and Cruise. With all the tribal knowledge of what works, what doesn't work.

3:12:16And they get to work with you. Yeah, and tribal knowledge, it's like actual hard tech. And so they now know, it's like building the first web application in the mid-90s, that's a miracle. Today, junior high kids build web apps as a part of their class project. Autonomy is going to be the same way. Human and robots are going to be the same way. It's just the time factor we're looking at. So if you're trying to monetize, that's the business we're in. That's what commercial of the world is, private business. You have to find where's that meniscus line. And as soon as something becomes mature enough, because you also can't be too late.

3:12:50If you're too late, then there's a bunch of players in the ecosystem. Actually, you talk about defense tech. My actual fear for a young defense tech company isn't can you make it in a commercial? I think you can build a very viable, vibrant, defense-only company. It's just there's a lot of defense-only companies now. And suddenly, the pricing pressure goes down because you're the fourth company that's doing the same thing. I can't wait for the next season of BattleBots. I'm sure kids will be building all sorts of crazy autonomous solutions because there's so many open-source packages that they can piece together.

3:13:18Were you surprised, by the way, that the new spending bill allowed for like$500 million of autonomous systems? A lot of people said that felt low. But we had Sean McGuire on the show earlier, and he was like, well, it's not low if that's the starting point, and we go up from there, which is what people would imagine. I don't generally use dollars as a proxy for importance. The DeepSeek outcome is a very clear example that you can do a lot with limited resources. I think the more important message, broadly speaking, is autonomy is where, you know, AI meets the warfighter. I keep saying that again and again, you know, trademark copyright, whatever it is.

3:14:03But the point being is like, it's the thing, the teaming aspect of the warfighter with the machine, that's the future. How we get there, that's all details. But we all have to agree that that's what we got to get to. If we agree to it, then we can figure out the, you know, reconciliation and this specific bit. Well, all that will get shaken up. Totally. I don't think enough people still agree that that vision of the future. Yeah, it really does feel like of the other, there's probably 20 other line items where autonomy will be stuffed in, but it won't be headline autonomy spent. Yeah, exactly.

3:14:34And I think, like, you know, even applied for our company, we don't cast ourselves as an autonomy company. We cast ourselves as an intelligence company. Sure, sure, sure. A vehicle intelligence company, right? And so, like, why do we do that? Because autonomy is a component. It's a component. Yeah, of course. It's a component. It's kind of like saying that, you know, is the government funding enough engines? It's like, well, the car business that we're really talking about. The engine is a very important aspect of the car, but you're funding actually the larger industry. Well, thanks so much for stopping by.

3:15:02We'll let you guys see the next thing I know you've got to run. This was a lot of fun. We'd love to have you back for a much deeper dive on the company. This was great. This was great. We'll reach out. Cheers. Talk to you soon. Bring in our next guest. Welcome to the TVPN live stream. How are you doing? How has your Hill and Valley experience been? You've got some good entertainment, Val. Hey, what's going on? What's the latest? Welcome to the show. Nice to meet you. John, pleasure. Would you mind introducing yourself for the stream, for the viewers who are watching? Justin Fisher-Wolfson, one of the founders of 137 Ventures.

3:15:35Fantastic. Happy to be here. How would you describe your fund, what you do for anyone at home? So, I mean, we started the business back in 2011. I used to be a founder's fund. Yep. left when we sort of had this belief that companies were going to stay private longer. Yep. And that if that happened, you know, founders, executives, all the early employees, we're going to end up wanting some liquidity. Yeah. Because, you know, your life is different when you're 35, when you're 25. Yep. When you're 45, like people's needs change. And so we kind of built the business on that premise. And we've continued to expand.

3:16:06Like once you've got great relationships with the founders, you can do some primary investing, help people run tender processes for all the employees. and kind of where we built it. Hot take is... It's finance with a deep understanding of venture and the founder. Absolutely, right? I mean, venture is finance. I mean, I'm not sure all the venture people necessarily... Yeah, but it's not... It's sort of... It's a different product in the sense of like, okay, we're going to give this entrepreneur money, set and forget, you know, kind of bet on them versus like running like a firm and like built...

3:16:37Like it's financial services in some way. I think you're right. Like we're trying to build long-term relationships with people, right? Like we were early investors in SpaceX and like we've continued to invest with them for the last 15 years, right? I mean, we've done something similar with Andrel, right? Like we're just, we're trying to build long-term relationships with great companies and continue to invest in whatever way we can. So a bit of a hot take is, is the Lena Kahn effect on M &A markets good for your firm because it leads to companies staying private longer because they don't get acquired?

3:17:08I think, well, so I think there's this like misperception that U.S. government policy is the thing that drives the M &A markets. It definitely is part of it. But like, go back. It was a good excuse for the last few years. That wasn't what blocked the Figma deal, right? That was the Europeans. So just because America is like, great, anyone can buy anything. The companies that are buying other companies are global and they're regulated globally. And so just solving it in the US is not going to actually solve the M &A problem that you're describing. So like, do I think less M &A is sort of good for us?

3:17:41On the margin, sure. Right? I mean, like it's, you know, like it's, it's, but even the IPO market's kind of closed. So companies staying private ultimately means they, they end up taking more investment in the private markets. And I think at some point the great companies, I mean, they get cashflow positive. They don't need primary capital anymore. So that leads you to these liquidity events, tender events for employees. And like, that's how we've scaled over time. Do you buy that idea that like Elon Musk kind of ran the A-B test with Tesla and SpaceX, had a great experience at SpaceX, didn't have a really great experience in the public markets at Tesla.

3:18:13I mean, fantastic stock performance, but like headaches. And so the takeaway was, hey, maybe stay private longer. And then other founders kind of learned that lesson as well. Is that reasonable? I mean, I certainly think Elon had a better experience in the private markets than the public markets. But I mean, personally, I think, I don't want to speak for him, but I get the impression that he really appreciated all of the retail investors who supported him and the company and his vision of where the company could come from. That's actually an incredible thing. There's so many small investors across the country who believed in the company, and then because of that, actually made huge sums of money by being an investor.

3:18:50So I think he actually really does care about those people because they were there for him when in SummerSacks other people weren't. In the private markets. In many ways, your guys' model is not, you're not like, oh, I'm so annoyed this company that was in our portfolio went public. It's like you win in kind of either situation. Yeah, I mean, look, ultimately, I think LPs do need dollars back, right? Like, you can't have a system where, like, all you do is take money from people, give it to other people, and then, like, it's worth a lot more, but no one ever gets any money back. Like, that system will ultimately break.

3:19:17But, you know, I think if you're right about the companies and you're compounding over a long period of time, like, that's ultimately the goal. So you get a little more leeway when that happens. Yeah, yeah. Do you have a take on the new permanent capital vehicle that Thrive put together? It's kind of an interesting story that we haven't seen a lot of VCs do that. But obviously, Warren Buffett's famous for it. There's a lot of other folks that have built these holding companies. We're seeing more just different strategies in venture, I would say. You have continuation vehicles. You have growth stage, almost private equity type deals happening.

3:19:50What is exciting about the new era of VC in 2025? I mean, we've looked at some of these permanent capital vehicles. I think they're interesting. I think they solve certain problems. I think they create other problems. Going back to the liquidity point, it's permanent capital. So it makes it hard to get the money out. But they do solve certain issues. And I think it's really nice as an investor to be able to take a really long-term view on things and not get caught up in the market cycles. The trick is just, even your conversation about applied intuition, it's like if you can just be in this company for a really long period of time, who cares what multiples are today?

3:20:26I care whether or not the fundamentals of the business 100x over the next 10 years. who cares even the multiples are terrible then it won't matter right like so that's it does seem like there's a shift i mean the the i don't know who came up with the idea of a 10-year life cycle for a fund it seems arbitrary it seems like they were just like yeah like make it double digits make it a round nice round number but now it does feel like vcs are starting to think oh well like there's extension periods there's continuation vehicles maybe we should be thinking in 20-year cycles 25 look it turns out everything is historical and structural yeah right the reason it was 10 years is that the so so you go back to like when we started a business in 2011 right yeah the first company that really kind of stayed private for a really long time was like facebook yeah yeah right like that was sort of the that was sort of that wasn't even that long it wasn't the time but back then right the average time with google and and like these companies went public so early time for liquidity was like you know i think probably four or five years back then when we started uh 137 and 11 it was like six or seven years yeah it's now like 12 or 13 at this point yeah so like people pick 10 because they couldn't conceptualize that companies would still be private 10 and they like they like doubled it and round it up yeah yeah right and so now what's happening is like no way this company is gonna be private 10 years this is super safe exactly and then and that's and that obviously that broke the system yeah how how early do you uh you try to identify these companies right because once you have a a generational company in the portfolio and you plan to help support all the shareholders over numerous years, it doesn't matter exactly when you get in.

3:22:00But I'm assuming that other now even growth stage investors are looking for you guys for signal in some way or another to kind of just given the track record of 137. And for us, I think we're looking at companies that are kind of post-product market fit and that are scaling the business. And the thing that's sort of changed, if you look at the last 20 years or so, is that there's really no cap, right? Like, it used to be that a billion-dollar company was, like, an incredibly huge outcome. And, like, honestly, there's hundreds of those companies in the private markets now. And so, like, for us, it's really just this question about what, you know, can the investment hit our cost of capital?

3:22:41And if you have, you know, you have an opportunity to invest, even like take SpaceX at 350. It's like, if you can believe that's a trillion dollar company, like that can still be a great investment. It's like, sure, it's a big number or whatever, but like, it doesn't really matter where you are. It matters where you're going. And that's, I think, the thing that is different in the private markets or really even the public markets. I mean, look at the valuations on NVIDIA. I mean, that's an incredible growth story in the public markets. Yeah, you don't see that at that scale usually. I mean, look at Google, look at Apple, right?

3:23:09Look at all of the major tech companies. The opportunity is much bigger than people imagined. Yeah, that's true. Any other questions? No, this is fantastic. We'll let you get out of here. Thank you so much for putting this whole thing on. We're happy to help make this thing possible. You guys have done quite the job this year. I hope you make it back next year. Oh, absolutely. We'll be back. Perfect. Thank you so much. This is great. Cheers. Thanks so much. Let's get Ryan Peterson in. Yeah, we have Zellerfeld. I think we should bring in Cornelius real quickly. do five minutes. We need to go into lightning round, folks.

3:23:41You want to text Ryan and just say come in five minutes? Yeah, yeah. Lightning round, Cornelius. We got to talk about... Let's talk about the chain real quick and the fit because it is one of one. Every time I see him, he's dressed fantastically. Here, pull this up. This is happening, Zellerfeld. Thanks. Yeah, obviously, as I'm from Zellerfeld... You can put your shoes on the desk if you want, if you want to put it up for the audience since you are in the shoe business. There we go. There we go. Right on the desk. Look at this. 3D printed shoes. Yes, in the US. So far we have done most of our production in Hamburg, Germany.

3:24:16So that's where we started. But obviously a huge part of our market right now is the US. So we're just bringing that back. We had 200 printers in Hamburg, Germany. And now we're bringing 2 ,000 printers here to the US. Printing millions of pairs a year. Amazing. Insane. Insane. Where is the demand coming from outside of the tech community? It's mostly fashion guys. I don't know if you have seen, but we are printing shoes now for Nike, for Louis Vuitton, for Leclerc, even like lots of celebrities are wearing our shoes. Drake did a huge cowboy boot with us because he just bought a Texas ranch. Sure, there we go.

3:24:59And he made some cowboy boots. Just make it, make it. What have you learned from, I mean we read a story in the Wall Street Journal recently that Nike was having trouble using robotic automation to assemble shoes and meld the upper with the soles because there's so many different sizes. It feels like a unique case for 3D printing, but is there any hope to iterate on your product to a point where there are multiple materials? Yes, also multiple colors. I think previous experiments often failed, mostly because everybody is trying to make the same product as before, just assembled by robots, kind of.

3:25:38Yeah, yeah, yeah. You need to think about it from first principles. A hundred percent. That makes sense. And then you can do even crazier stuff that traditionally wasn't done in performance football. So all of a sudden with 3D printing, every shoe can be custom made. So when you think of performance, you know, everybody talks about, I don't know, I think Nike's mission statement goes something like making every athlete's dream come true. But if you think about it, lots of those brands, like they have custom fitted shoes for those performance athletes but what about the kid on the on the school schoolyard that just wants to kick uh some soccer for example and all of a sudden with 3d printing you can get those kids the same custom fitted experience like a pro soccer player and when you think of not just performance footwear but even anyone i i think what will happen is i mean i wear this is happening, Cap, because printed shoes will be on every foot.

3:26:34And a big reason is because all of a sudden you can do stuff like, I don't know, every shoe fits, whatever design. So talk about the time. Today, shoes are made in factories far away from the end consumer. They get made, they get sent. Eventually they get to the consumer, whether it's retail or online. And talk about kind of like what is the actual activity? You know, where is the printing going to happen long term? Could we get to a point where Nike? It's fully decentralized. Yeah, could Nike in a retail store, could somebody design a shoe and print it in real time? Is that where we're going?

3:27:09So basically, basically what's going to happen is you will have farms all over the world, maybe a little bit like Coca-Cola has bottling plants all over the world. Sure, sure, sure. And then what's going to happen is you buy a shoe, for example, on Zellefeld.com and depending on where the end consumer is, that's where the production job is going to get to. And then what I fucking love is that people are now buying shoes on Zellerfeld.com and basically a few seconds later, the printer starts printing and you can have a custom fitted shoe, I don't know, two days later. And that is completely changing the game.

3:27:46And without, you know, usually in footwear, you have cycles, production cycles and marketing cycles of 18 months and longer. So you need to make the commitment in the factory in Asia 18 months before, but you don't even know how many will sell. So what's great here is that on-demand production basically changes that completely, and it can still be as quick as Amazon. It's such an interesting story, just given we've studied how Nike just struggled to bring back shoe production with one of the most advanced manufacturers in the world. But again, it was because they were just taking the traditional way.

3:28:21Shoes has like 14 parts or something like that. trying to make it with a robot. And I think what you're doing with shoes, we can apply to so many other categories in terms of. Thank you for stopping by. We'll let you get back out there. Yeah, yeah. Come back on the show soon. Pull deep dive. Should we bring in Augustus, Ryan Peterson? Let's do Ryan Peterson. Okay. Because I told, unless Ryan, Augustus was on the schedule. Augustus, do you have to go? Or can we do Ryan for five minutes? Okay, wait, hold on for a minute. We got Ryan because I think he has another call. We'll bring you in in 10. Man.

3:28:49Sorry. Yeah, yeah. Oh, yeah. We're still live. Ryan Peterson. Welcome back to the show. Third time. I was treated like cattle. Yes, I know. It's really rough. Sorry about that. We're not A plus. You're still a guest of honor. We're iterating. We're learning. But how has your Hill and Valley experience been? How's your time in D.C. been? That's great. It's great to be in the Capitol. Yeah. I haven't been here since January 6th. No, I'm just kidding. Bad joke. That's real. But, yeah, I mean, you're in a very interesting business, obviously, in the news. Everyone has called you. You've done Mad Money.

3:29:21Wall Street Journal is calling you the most boring business that we need to know about or something like that. What is top of mind? What are you telling lawmakers that could change or could improve to? What does a great outcome here look like in the next couple of years? What's your stump speech right now? Oh, a couple of years. Yeah, yeah. I'm worried about the next couple of days. You're worried about the next couple of weeks. What's on your mind? I don't think anyone cares what I think. I told them tariffs should come way down. Okay. Yeah, yeah. What we've seen in our data is a 60 % decline in freight from China to the U.S.

3:29:54Yeah. Can you unpack that? I heard something about the freight rates are actually high because their ships aren't even moving. Is that right? No, rates are pretty reasonably low right now. There's a risk of it going higher. I think it will be a first-class problem. If they undo the tariffs and a lot of volume comes through, then you'll see this spike. But if you're willing to pay the tariff, you have a really high margin, you can get stuff out of China right now. So you've had a 60 % decline in bookings of ocean freight from China to the U.S. That's resulted in a 25 % decline of sailings. Ocean carriers pull 25 % of the ships they're not sailing.

3:30:32It's a little bit harder to get service because ships are getting canceled. It's actually made Black Sport more valuable because if you're booking directly with an ocean carrier, they might cancel the sailing. We'll find you a different one on a different carrier. We'll solve your problem. That's the value. So on some level, some of this helps us a little bit. But I'm very worried for our customers that those are their businesses. Like 60 % decline. There's a lot of companies just deciding, opting out of the system. Yeah, and they can't necessarily move to a new manufacturer immediately. What about a small business?

3:31:02They didn't spend enough at the inauguration to get the exemption. Yeah, yeah, yeah. That's right. What have you been hearing on the ground in China? It's hard to, 60 % reduction in freight coming out of China is very bad for China, right? Like the sort of, the party can kind of spin that however they want. They have a lot of control over. Very bad for China, you're saying. Yeah, yeah, very bad, very bad for China. In an economy that was already bad, in an economy that had extremely high youth unemployment, uh have you heard anything from the uh you know uh i i you know all the different groups that you interact with on on that side of the pond um definitely yeah i mean it's bad for both parties you know you kind of have a game of chicken and there is an outcome where the cars crash and everybody dies uh and so you hope somebody swerves and gets solved i my view of it i don't have a lot of inside intel here.

3:32:00It's certainly bad for factories. I just think China can withstand a lot more pain than America. Just due to the way the system works. It's like the last hundred years of Chinese history. They would have had a couple percent of GDP decline. Like, oh my god, look at the history they've been through. They're ready for the warlord era. All these different famines and things that... Like pain is built into the culture. Yeah, this will be a pretty small amount of pain for them to bear. the American side were kind of soft. There's a lot more feedback mechanisms here. Trump, I have to say, is like an iron will.

3:32:39A lot of people would have broken. I don't like any of the tariff policy. There's other policies, not what we're going to talk about right now, but I don't like anything about the tariff policy, and yet you've got to have respect for this guy who's like the whole world is, it's everyone against Trump. And he doesn't care. I would have this. power. We've heard rumors that there's obviously just been a constant rumor mill, rumors moving the market trillions of dollars in seconds, but is there any sense of optimism on the ground with the politicians that you've been seeing this week?

3:33:19There's, let's just say there's a sentiment that the tariff with China at 145 is not sustainable it's not where they meant to be, not where they want to be that it will come down but there needs to be renegotiation around that unclear to me what they think the triggers are, so therefore the timeline for when it would come down or what it comes down to because on the day of the reciprocal tariffs on April 2nd when it was announced China was at 54 % and that was already a shocker that was the top of the list and the worst and that's on top of the prior Trump administration And the oil stuff that you mentioned.

3:33:58Venezuela. So like, now that seems queen. You're like, oh, let's get to 54. But 54 was also really bad for companies. If we play this out and there does wind up being a re-industrialization, more American manufacturing, maybe it's an automated facilities, what does the future of Flexport and logistics look like? Is it more trucks and trains and automated trucking? What are you thinking about in like five, 10 years just to power a more efficient logistic system in the domestic lower 48? Oh, and domestic side? Yeah. I mean, we acquired Convoy. Sure. So we have a truckload business. We do about 200 ,000 truckloads a year.

3:34:37Yeah. That is 98 % automated. Really? It's an amazing tag. Wow. 98 % of the loads, nobody does anything on the inside. 2 % need to have an exception managed. Yeah. Yeah. So that is probably going to scale that thing like crazy. But by the way, the truckload business, if the tariffs keep going where they are, that's going to collapse too. I mean, it's not really a challenge. What are you trucking? You're trucking stuff that came off a boat. Yeah, exactly. And this idea that it's going to lead to this manufacturing boom is kind of fake. I heard from a senator yesterday that said they have a lot of auto manufacturing in their state.

3:35:13All the auto manufacturers have told them that if they don't get an exemption on parts, they're going to go under. Well, they got an exemption on parts this morning or yesterday. So hopefully these feedback loops are working and we don't just kill. I knew that was going to happen because you're like, they're not going to let all the auto manufacturers. Yeah, yeah, yeah. Yeah. I mean, it's a bad situation. Chaotic time. If you have your team in Washington, you can get stuff done. And even if you employ 100 people, it's hard to get your – you're still a tiny business in the eyes of everyone else.

3:35:47I mean, we were talking, Sean Frank had an interesting kind of policy, you know, recommendation or idea, which was like basically take what I would have to pay in tariffs and make me invest it here in the U.S. Sure. So I can basically buy some time. Don't just come down with a, you know, just absolute hammer because I can't, like I can't set up a factory in three months, even if I wanted to spend, you know, a billion dollars. Yeah. They announced today that they would allow you to expense 100 % of CapEx if you're building a factory. This could be really big, like first year, straight line, depreciate the entire amount of the build out.

3:36:28So, you know, more policies like that might get into industrialization. Can you paint me a picture of who the major power players are in D.C.? Are there trade organizations that are doing stuff here? We've seen some of the different, like the Longshoremen's Union. Do they have a view on this? Are there different organizations and leaders who are championing these causes? Representing business? Yeah. It seems like you are honestly one of the champions of the e-commerce community. Trying to do that on behalf of our customers. Yeah, on behalf of your customers. But are there other more official organizations?

3:37:04I'm sure there are. NRF, National Retail Federation, is typically the main channel. for this. There's a few others I'm not that familiar with. Sure, sure, sure. The big CEOs are going direct. I mean, you've seen they said they were all at the White House. Yeah, yeah, yeah. But yeah, not really much of a voice for small business out there. So we're trying to do that. I'm sure there's all kinds of lobbyists. You mentioned the longshoremen. So the ILWU is the West Coast Sports Union. They came out of post of tariffs last week. ILA endorsed Trump. Yeah. And they have not come out against this yet.

3:37:37So ILA is the East and Gulf Coast Sports Union. Yeah, yeah. The ones that went on strike like last September. Yeah. But much less affected. I would cripple you. Yeah, yeah, yeah. Yeah, but aren't they much less affected because it's not trade with... A lot of trade... No, a lot of East Coast trade comes through the Panama Canal. Yeah, sure. Or through the... It used to be through the Suez, but around the Cape of Africa right now. So, yeah, I mean, they gotta be opposed to this. It's bad for their business, but Trump, you know, helped them get there. Is the talk around the Panama Canal beneficial to trade long-term, if that happens?

3:38:09Whatever Trump was talking about, like taking more control there, not letting China grab it. That is, so, it felt like it kind of fell out of the news because the tariffs are so much bigger. The crazy thing about Trump is that a lot of these stories of things that he's done or said or actions would be like the story of the year for like a normal presidency. And they can't last two days before the next time. No, no, no. Yeah, we have 20 current things at once. Yep. The media can't keep up. Certainly the Democrats definitely can't keep up. None of us can keep up. Yeah, it's wild. So the Panama one, they're trying to get them to the ports on either end.

3:38:45It's not the canal itself, but the ports on either end, owned by Li Ka-Shing, Hong Kong-based billionaire, which is man Hong Kong. He went to sell it. The Chinese blocked the sale. Interesting. which I think I've seen that the Trump administration argued that the very act of the Chinese being able to block the sale is a potential violation of the treaty by which the US handed over the canal zone to Panama now they're threatening maybe we'll invade Panama again and take it over I don't think anyone wants to see that happen I don't think from an efficiency standard that's really relevant I'm sure there's national security reasons.

3:39:26Stuff's going through. What have you heard about even, I saw a story about iPhone suppliers not being able to get equipment out of China. Did you see anything about that? Is that not even surprising to you? I didn't follow it very closely. I'm not sure. No, just kind of an interesting, you know, there's, you know, the idea that we would decouple even the iPhone supply chain from China without sort of inward pressure from China. A couple of things I heard here in D.C. is that they, like senior people, shall not be named, have said that 145 % is a decoupling rate. If they understand that, that at that tariff level, these economies will decouple.

3:40:08And that's evidenced now with the 60 % decline in bookings basically instantly. And that that's not where they want to be. They do not intend to do a decoupling. It's more strategic decoupling. In a dramatic fashion on such a short time scale, et cetera. So I think that that speaks to, like, and Trump has said as much that they're going to lower the tariff rates. It's just a question of when and how low do they go. Those are massive variables. My view is that when it needs to happen almost right away, if they wait a couple months, I think you're going to have huge fallout and damage to the economy and small business getting wiped out and employment and all that stuff, inflation.

3:40:48How low? I don't really have a good read on that. At what level is... No one's going to tell you honestly. Bloomberg asked me this morning, what level? I'm like, 0%. Don't ask me. I'm a free trade guy. You know my business. I don't know what level it needs to be for business. I don't think anyone really knows, though. These models are super complex. Yeah, totally. There's all these second and third order facts. Yeah, it's really hard to predict. We'll have to keep tracking it. And then you have, what's the dynamic by which Trump can walk this back? Sure. I think he needs a scapegoat. Yeah. We should find someone and blame them.

3:41:21Blame them. We should find somebody from the event. There's got to be one guy. There's got to be one guy. They're probably here. Delian, Delian. It's your fault. You got to do something for the country right now. Delian's like, I'm only interested in space, actually. Anyway, thank you so much for coming on. This was fantastic. Thank you so much. I want the tariffs to end so you can get a good night's sleep. Yes. You deserve it. Let's bring in Augustus Dorico. Welcome to the stream, Augustus. third time another third timer on the show augustus how's it going welcome how you doing uh first of all the hair is looking amazing thank you for the weather it's fantastic not too hot not too cold i feel like you pulled some strings pleasure's mine yes exactly we got here and we were like uh i was making a joke i was like wow our politicians the swamp would set up in one of the nicest climates i've been in in a while i was like it's normally terrible We're here on the one nice week of the year.

3:42:16Yeah, yeah, yeah. With big fluffy cumulus clouds, beautiful cumulus clouds. The clouds be seated should we want. Have you been here in DC a lot less than random state legislature? Yeah, yeah. You know, capitals. Yeah, I mean, for those that don't know, there were up to 33 states that opposed to weather modification. 33? Wow. However, 18 of those bills were either dropped, amended to carve out cloud seeding, and still ban chemtrails, which is going to be crazy. Okay. Because those bills will pass, and then people will still see chemtrails. Sure. Yeah, yeah, yeah. Or Montana, great case. We showed up there.

3:42:55We're like, hey, cloud seeding's pretty cool, huh? Yeah. And then they funded a program. Oh, that's great. So, yeah. Okay. We'll be expanding there. But the folks in D.C. that we met with, they all are way more level-headed and just say, like, hey, we're not going to concern ourselves with the whole QAnon thing. Cloud seeding seems like a great water supply tool. We'd love to start working on report language, et cetera, et cetera. Yeah, that makes sense. How much is water scarcity a factor in re-industrialization? we even last week we were talking about how the water demands of oil production and just how absolutely insane they are, not to mention they end up with a bunch of water that they don't really know what to do with, trying to evaporate.

3:43:42But how much is that kind of a factor? And what kind of conversations have you been having here at the event? Yeah. You know, Jensen gave his speech earlier today, right? And I think a lot of people intuitively... Yeah, sorry. A lot of people intuitively talk about how energy is this like fundamental primitive in all industrialization. So are critical minerals. So is now intelligence and human capital. Water, because nobody's Nobody has ever had any ability to like work on it and provide new supply has kind of just been this assumed limitation. It's going to be necessary to produce more. Should we want to build up this industrial base?

3:44:18Should we want to increase ag production? Particularly like the TSMC plant in Arizona. Nobody knows where the water for that's going to come from. Really? Yeah. Yeah. Like you need it to come from either the mountains in Flagstaff or the Colorado River. And the only way to get it, there's cloud seeding. There are crazy stories about the water at TSMC. If it's slightly saltier, it affects the yield of chips and stuff. It's like total alchemy. Oh, yeah. No, it's magic. It's like there's all these aerospace parts. CP talks about this all the time. Oh, yeah? Yeah, like there's some parts made in Michigan.

3:44:48Yeah. Okay. C-3PO. Yeah, C-3PO. Anyway. And it's like, yeah, there's like a little bit more of whatever in the water in Michigan. And without it, then you can't make like the lubricant. Same thing with the tap water. in New York makes the good pizza and bagels, right? Exactly. Jordy won't touch it, but... Oh, the tap water in D.C. is rough. Yeah, he's not a fan. Not a fan. He's not a fan. Anyway, yeah. Yeah, bring us into some of the other conversations that you've been having here at the event. What's exciting? Yeah, walk us through that. Yeah, I mean, I think for one, deepening our collaboration with the Middle East, right?

3:45:29Like, it's no secret people talk about the Trump admin and how close they are to MBS, to the Emirates and otherwise. I think that because that country is very seriously enacting this vision for a crazy future, for greening Saudi Arabia, for billions and billions poured into AI. One, they're a great capital partner for a lot of the tech ecosystem that wants to grow out of its nascency and deploy. But also I think they make us look in the mirror about what's possible. So talking to people that have been doing work there, that's exciting. talking about how we're collaborating in the Middle East. That's a big deal.

3:46:04What's the name of that regulatory portal? You submit a paragraph and it's like, get rid of this regulation, please. Doge.Bitcoin or something? It's like the FTC has something. And you just go like, get rid of this. And if they accept your... You just tweet it at Elon, actually, if you want to. Yeah, yeah. Please fix Gary Tan. Please fix Gary Tan. I think that does it usually. Exactly. If you get it approved, though, They named the new regulation after you. Okay, so you want to do that. That's good. Speaking of national regulation, is there any, obviously, the first time we met, you talked about China planting trees and terraforming the Gobi Desert.

3:46:44Is there any world where that becomes a national policy, or do you still need to go state by state? No, dude. So Secretary Burgum gave us these great remarks this morning about how all of our federal lands should be considered a national asset. That makes sense. Totally makes sense. And we probably have, I think of federal lands as like the forests and like, you know, Yosemite. But there's probably federal land that's desert, right? Yeah. No, there's tons. Tons. Tons. Yeah. Millions upon millions of acres. Why don't we just convert this into the next Yellowstone? Exactly. Create a Yellowstone club.

3:47:14Dude, like next Yellowstone, which would be sweet, or also more timberlands, which you can harvest. Or farmland. Yeah, exactly. So like all of that, or just give it to Teddy and have him tear it all up and strip mine it or something. That's also fine with me, as long as you have a proportionate amount of new Yellowstones. Wait, who's Teddy? Feldman. Oh, Feldman. Okay, yeah, yeah. Yeah, from Durant. Yeah, that makes sense. Sorry, Gundobrain. Yeah, yeah. Everyone's on first name basis. CP Teddy. Yeah, yeah, yeah. Really not doing a lot for the listeners at home. Might not be familiar with the inner workings of the Gundob politics.

3:47:44Where are you headed next? Back to the Gundob? I get on a midnight flight back to Gundob. I'm going to interview a bunch of scientists. And then I get on a midnight flight tomorrow to Florida. And then on Sunday, I go... By the way, most brutal flying midnight. You land at like 3 a.m. It's the worst. And then you're back on an overnight. And the overnight to Florida is terrible because it's only five hours. So you can't even get a full night's sleep. You get cooked. I did Salt Lake to D.C. this morning. First of all, flew into Dulles. Huge mistake. But on the flip side, my row was empty. So I laid down and slept like a baby.

3:48:17That's great. Okay. Good. Well, hopefully you can get some sleep. Hopefully you can make it through those flights. We appreciate you stopping by. Thanks for coming on. Thanks so much. Great to see you. Always good to have you on. um sure of course thank you you can take this whole tin there you go man what a guy anyway should we bring in the next guest who do we have i know we got a couple folks here let's bring them down how you doing i met you the last hill and valley uh welcome welcome to the stream would you mind uh doing an intro for the for the viewers uh introduce yourself the company What do you do?

3:48:55How are you enjoying feeling? Yeah, grab the microphone at Hill and Valley. Yeah, grab it like this and then just hold it like you're giving a speech at the most important event at Hill and Valley. Awesome. Well, thanks again for having me. Good to see you again. So I'm JC Ptache. I'm the founder and CEO of Fuse. Yeah. Our fusion company working to accelerate the worst transition to fusion energy. Yes. While also safeguarding humankind. So it turns out if you try to create an artificial sun on Earth in a bottle and use a lightning bolt to implode a pellet of fuel, that's really useful also to ensuring the safety, reliability of our nuclear arsenal.

3:49:30And so we're very committed to continuing to help the U.S. modernize its nuclear arsenal and offering radiation as a service. Yeah, when we talked, it was fascinating because you were much more commercialized than most other nuclear founders that you talked to who are more in the, let's get all these approvals, let's build a big thing. What has that commercialization been like and can you concretize the actual product that you're selling and to who? Yeah, yeah. So we have customers both in the U.S. government and two public companies. Sure. And we've built two machines that are operating today.

3:50:06one is the world's highest power energy delivery system we call it Titan and we publish it's one terawatt but for a billionth of a second one terawatt, wow but for a billionth of a second it's 20 % of the whole world power production but it's just for a billionth of a second and it's not a fusion machine it's just an energy delivery system but it creates pulses of radiation that are so intense and then you can expose electronics or material and see how they behave. So you're creating hostile environments similar to what would happen in human-made hostile environments and expose electronics, materials to those types of radiation, whether it's X-ray, neutrons, and see how they would behave.

3:50:52That's really critical to ensuring reliability, safety of critical assets in space. Interesting. As well as now conventional systems. Okay. And I don't know if you saw last week, but there was an announcement that the U.S. will be spending$946 billion over the next 10 years to modernize the arsenal, and it's a 25 % increase in budget since 2023. So it's a big deal. And by producing this radiation and reducing the dollar per rad and the availability of radiation, we can save taxpayers billions of dollars while offering radiation as a service. Yeah, talk about the energy requirements of re-industrialization, which is the theme of Hill and Valley.

3:51:36I think a big question is like, okay, where's the power going to come from, even if you're not looking at AI? Or a lot of the conversations that you're having here around with some of these bigger companies that want to come back to the U.S. but want to make sure that they're able to have the energy and infrastructure to actually thrive here. Yeah, it's a really challenging problem. I love the quote from Jensen today where one gigawatt is like$60 billion and it's the annual revenue of Boeing. That's clearly not going to work out very well. The good thing about fusion, the first thing I'll say, which may be a bit controversial, but fusion is still like we're still far from commercializing it.

3:52:19So it's still probably going to take a decade or two to actually put electrons on the grid. But it's still really important and we can't afford for another country to get there first. but the good thing about fusion is that it's location independent so you can put it anywhere you want right yeah the fuel is hydrogen which can be found in seawater yeah so you can literally take a data center yeah and build a fusion plant right next to it and not have to integrate with the grid yeah and i think fusion being you know safe clean abundant on demand makes a really appealing case for industrials because you can build a power plant right next to your industrial plant, whether it's data center, steel factory, glass factory, et cetera.

3:53:02And when you think about the changes that have happened over industrialization, there's been no new nuclear facility built in decades. So the workforce that actually knows how to build is gone. Whereas China is building dozens of plants and we've seen satellite imagery recently that's become open source on exactly our footprint of our facility being built. And so we just cannot afford for China to become for fusion what Saudi Arabia has become for oil. So is that the long-term business plan for you? Like find commercial applications today that advances the R &D pipeline for ultimately Q greater than one fusion production that can be grid scale?

3:53:46Yeah, great. So you know Q greater than one, all this stuff, it's great, like pat on the back. Good for you. you may do it, but ultimately it's how much does it cost? Yes, Q engineering or any of those terms. Q commercial. Q commercial, I guess. Right, and also reliability. Like if fusion is not a base load power, which means it's running 99.9 % of the time, how is it really competitive with other sources? So you're doing one billionth of a second now and you need to get to 24 seven. Yeah, which means - You're just 10 doubles away, I guess. Well, we just need to increase the rep rate. So we'll still be pulse, but just increasing the repetition rate.

3:54:20And that's the thing with fusion because even helium is like pulsed, right? Correct. That's the idea. And our pulsar today actually operates at 0.1 hertz frequency. Okay. But we still blow up the chamber and that's still something to work on. But the good thing is, you know, the way we say it is radiation as a service. As we're getting paid today to produce more radiation, the cheaper the radiation, the higher our margins. And the more we fire, the more money we make. So we're getting paid to optimize our radiation service. And radiation is ultimately energy. Yeah. And so we're building a sustainable business to get to the sustainable future that we all want.

3:54:55And there's a massive multi-billion dollar business to be built along the way, which is what a lot of our investors underwrote. That makes sense. Where is the business now? How many employees? How big? Yeah, so we have around 50 people now. Okay, wow. We've got a couple millions in revenue. Awesome. We're on active contracts supporting. It's very rare for fusion companies. Congrats. Yeah. It's very cool. Yeah, thinking outside the box. and we're still humming. Well, good luck to you. Thank you so much for stopping by. I hope you have a fantastic rest of Hill and Valley. We'll see you out on the floor.

3:55:27Yeah, we'll see you later. You got anyone else? Yeah, Eric Torenberg wants to stop by. Eric, get in here. Get over here. I have a bone to pick with you. I saw you. You posted that you started a new group chat and I'm not in it. Oh, don't worry. I was so looking forward to getting added to something where a bunch of people are yapping and I have to put it on mute I wanted to be one of the smart people. Yeah, no, I learned my lesson. The next one, I'm yapping so egregiously that I definitely get in the hit piece. You will be invited. They can kill Chatham House, but they can't kill the idea. It's going to resurge again.

3:56:02Of course, it's still running. Even if the world had a nuclear war, Mark Cuban and Brian Goldberg would still be there every day. Yes, yes, yes. Do get it out. Do get it out. Have we gotten to the bottom of who Ben Smith is? It sounds like a generic name. It sounds like a fake alias. It's something that you see on a lot of fake IDs from high school students that are trying to buy beer. I'm not a big fan of doxing, but I'd love to get to the bottom of who this man really is. Ben Smith, who doxed the group chat. That doesn't mean that we should dox him, but I want to know personally. I'm not going to share it.

3:56:35I want to know who is Ben Smith really. I think he's saying a non for now. I want to respect that. That's very kind. I follow the paradoxical commandments. you know even if people don't even if people dox you don't dox them so we'll keep his identity uh private but i do know that as an anon he did publish the steel dossier oh yeah while he was at buzz uh buzzfeed and i also know that he apologizes okay or he almost regrets it okay um which to me is as good as an apology and i believe that people can grow and change and so i'm proud of him okay um because yeah so uh yeah any other lessons from the from the story from group chats where's the future?

3:57:13What's next? Well, I think, you know, I got a lot of people emailing me being like, you know, people like I play pickup basketball with, or don't even know being like, how could you platform Tucker Carlson? Oh yeah. How could you do it? Like how, and I'm like, I'm sorry. You know, first off, I regret to inform you that Tucker Carlson is pretty big already. And also it's a private group chat. So I'm not sure exactly how I'm platforming Tucker Carlson. But so a lot of people are angry that people are getting together and having conversations. But, you know, we're going to keep doing it. We're going to keep doing it.

3:57:45I'm not leaving. The goal was to have a left-right exchange and we're going to keep trying to make it together. I invite more of my friends on the left and the right to be a part of it. You haven't gotten any emails? How could you platform Mark Cuban? I didn't get emails that, but I got DMs every day while Chatham House was going of like, why is Mark Cuban here? It's good. It's an anti-echo chamber. And how does he have so much time to chat every day? And my theory is that the pinnacle of Maslow's hierarchy of needs is being a poster. Yes. Once you've truly made it, then you could just post all day.

3:58:21Yes. We have this ongoing fight with Antonio Garcia Martinez, who now we should call Antonio Gracias, the valor guy, because he's always getting mistaken for him. Oh, yeah. I know. It is. It is funny. He should just own it. Just rename Antonio Gracias. because they're like great speech today when he did the doge thing oh he's like what talk to him yeah you should have him on and just like talk about that yeah we should have them both on yeah you know you get both of the you know both apologies on both the three roms there's four kevin jangs we're gonna get all that yeah so we have this bit with antonio where he's like as soon as i'm rich i'm getting out of this yeah like as soon as i'm richer and he just as soon as i'm like you know much richer i'm getting out of uh group chats i'm getting out of twitter talking and of course you know mark adreson's in the group all these other people who have done phenomenally well and are just posting all day and he's like enjoy they're like you'll never leave this is the best in fact you'll step it up you'll step it up so i think the demand is there i think the supply is there and we're gonna we're gonna keep doing it yeah do you think it's so i have to say i mean i think people don't realize like how much work everybody whatever four years ago was like everybody you should have a community and then you had companies making slacks and discords or things like that and it just takes like a massive amount of work to sustain chats like not we talked about last time you're on the show this sort of like admin lift like there's a software solution but then there's like cultivating and there's like selecting like who should be in a group and all these different things and it's actually makes so much sense to have a third party like do that not have it just be on one member who one day they might wake up and they don't want to do it anymore but should the group die it's like no the group should be able to live on and so having a what's What's the ideal size?

3:59:59Are you, Dave Morin had Path, it was 150. What's that Dunbar's number? I think Chatham House got up to like 330. Yeah, yeah. Chatham got too big. What are your best practices? Chatham got too big. I think dozens of spinoff groups have formed. Sure. And it's like 10, 20, 30. Yeah. I think it's a good question. I will say I'm a bit of a street group chatter. Shriram and ACC, these are academic. They have a rigorous operation. They have community managers. I'm excited to co-lead this opportunity with Anish now that Shreeram has left. And so I'm excited to get support on the moderation side and to come back out.

4:00:38This is a blow to Chatham House, but we will be back. We're rebuilding. We will rebuild. It's still there. It's still there. You still see Mark. You still see Brian. They pop up. They pop up. Yeah, yeah. I'm doing the show. I'm like, what are they fighting about? We should probably talk about it on the show. Exactly. I'm willing to say publicly that nobody killed, except this Anand guy, Ben Smith, who I - We got to the bottom of it. Yeah, exactly. We got to the bottom of it at some point. But outside of that, but I will say even before that, it was getting too big. You sure? And I will also say that on the record that nobody killed Chatham House, but Brian Goldberg did kill Chatham House.

4:01:14A little bit. I love Brian Goldberg. Yeah, I actually learned a lot from him. But he's very active. Kind of sharing his business experience. and I was unaware of him as a founder or a business operator before and the other names were kind of, okay, I already know their bit and I know their shtick. I love how outspoken he is. He's also a media tycoon in the women's space. Yeah, I own fashion magazines. I own fashion magazines. I don't know. I was like, how did Tara respect your business? He's like, well, we have some advertisers. I'm like, oh, yeah. Yeah, yeah, yeah, yeah. He broke that down very interestingly.

4:01:43He's brought a lot to it and yeah. Very cool. Anything else? What are you, what's exciting? so far about Hill and Valley? Is it nice to, it must be nice to be in an event or like a social community thing that you didn't put together yourself. Yeah, yeah, yeah. And I was just at the American Dynamite Summit last month and that was fantastic too. And this is also fantastic. I mean, I think it's just amazing how big this space is. I will say it's like, and you guys have covered on this show, but it's like, this is like the new Silicon Valley. And I feel like when Paul Graham made that Palantir tweet, it was like a clash between sort of old Silicon Valley and new Silicon Valley.

4:02:18And it's interesting to just sort of see not just the new people that have emerged, but sort of the new ideas around building companies. Like it's not just sort of make something people want and just talk to customers and just build something in a day. Maybe he's right. Maybe there'll be a cracked founding team ex-Andrel, ex-Palantir, digital ads. Digital ad startup. One thing that comes to mind, we had Mike Solana earlier on the show and he was basically talking about how like Ezra Klein's whole abundance theory and ideas, is like a lot of the stuff that he had, you know, was like... Oh, these were Silicon Valley ideas.

4:02:54Five years ago, right? Like this idea of charter cities and, you know, energy production and all these things. So I think we're all on the same team. That's what I just appreciate about Hill and Valley. Like the number one... The next person on the Hill side of the event that gets brought up is Richie Torres. He's a Democrat, and I think people associate a lot of these different characters with the right, but so many of these issues are just American issues altogether. Matt Iglesias, who was a Chatham House member for, I think, a week before he decided to leave, and I'm a fan of him, he tweeted a platform for the Democratic Party, and David Sachs co-tweeted and said, this is conservatism.

4:03:35So there does seem to be a lot of convergence. I love what Derek and Ezra are doing with Abundance, sort of bringing free market economics to the left in a way that is palatable and accessible. It's more nuanced than that, of course, but yeah, there seems to be a convergence happening. And if we have sort of both parties, you know, being more moderate, moving to the middle, you know, all that. I think the future of American politics is something I'm calling like far centrism or alt center. I like that. Just the most extreme centrism. This is the future. Just being really extreme about it. Unless there's representation by both houses, we have a split House and Senate, I'm not happy.

4:04:17Yeah, it is really interesting. How much time are you expecting personally to stay in Washington? A lot of places you're spending time. Well, it's my second week on the job. We have a robust DC operation, and I want us to tell that story a bit more and help. So we're going to do a policy podcast, and so I want to spend more time here. And also bring on people who are really at the intersection of DC and tech. It does seem like it fits. We were talking about this lobbying adjacent VC activity, introductions to people on Capitol Hill. That feels like it definitely fits into the Andreessen machinery.

4:04:57Totally. Of like, hey, if you're doing enterprise sales, they'll set you up with a bunch of people. PR was often something we were very good at. Even hiring, find your VP of engineering, doing some light lobbying, maybe not being a lobbying firm, but introducing to the right things, making sure if there's a government relations organization, you know how to build it. And I love that we're all so collaborative on this because it just moves the whole industry forward. We have same crypto policy, same AI policy, same policy. It just helps everybody. So that's a place where we all get to bring them together.

4:05:25One thing I also just want to say is, Gavin Newsom's another example of somebody trying to move to the center and bringing on Charlie Kirk and other people on his podcast. Let's make that a thing. Bar center. Bar centrist. And I hope that it works out. I hope that it helps him in the primary. Yeah, it seems like he's better off for every American if there's more unity across the aisle. I just want to know what is he pointing next? Yeah, the next point is leak it. Announce it on TV. Always be coining. Always be coining. The law is very important. No, but I mean, I think American dynamism is no longer contrarian.

4:06:02Yeah. We saw this. Remember, Hereticon this year was like the least contrarian person I saw was wearing a, like, make America great again. Yeah. Beyond that, everybody was doing nuclear. That was like no longer contrarian. And so it's just like a big thing I'm trying to figure out while we're here is like, you know, what is the thing that nobody's talking about today that will be, you know, maybe the entire subject matter of the Hill and Valley or the next American Dynamism Summit in a couple of years? 100%. Just chat with yourself. Group chat dynamism. Exactly. Well, whenever Catherine or whoever on the team has it, we'll be on TBPN.

4:06:41You know, my last thought here is it feels like group chats with people that you don't know that have differing beliefs are the antidote to GPT-4-0 agreeing to whatever you're going to say. It's like you go on chat GPT, it's like, you know what, boss, you're 100 % right. Everyone else is wrong. You are right. And then you go to group chat and it's a way to get real. It's like, fuck you. Yeah, yeah, yeah, exactly. You're wrong. No, no, yeah. make disagreements great again and hopefully we can continue to be in these spaces. That's a great place to end the show. Thank you for watching. Thank you for tuning in.

4:07:21We hope you enjoyed the stream. We'll be posting a ton of clips and we will see you tomorrow or Friday depending on when we get back to LA. Talk to you soon. Bye.