Marc Andreessen on M&A, AI Ads & His Advice for Young VCs, Shopify's Harley Post-Earnings, Google's Genie 3 Potential & More | Marc Andreessen, Harley Finkelstein, Anton Osika, Thomas Dohmke, Alex Jacobson, Nicolas Kopp

28:05And it's like, well, for that, you just need a robotic arm with scripted motion. You need level zero autonomy, actually. Like you haven't, like you're not demoing it in the way that would actually necessitate that. And so even if you did it, and even if you are successful, it's a waste of money. Because you'd be better off using a simpler robot for that. And the analogy here is that like LLMs are clearly incredible to the point where I believe the OpenAI IMO model was purely text-based. Like it didn't have access to Python. It didn't have tools, right? And so, but at the same time, no one cares.

28:42Like, why not give an LLM tools? Like, obviously, ChatGPT is better when it has a browser, when it has a Python REPL, when it has, you know, access to a database, when it has just things that it can actually look up a calculator. Like, it should, there's no reason to artificially constrain it just because, like, oh, that's more impressive from an AI research perspective. And so in the same way, a humanoid robot should also have access to a standard robotic arm if it needs to. And if you're running a factory, you should say, hey, for this task, we don't want to use the humanoid robot. In the near term, John, potential job opportunity for humanoid robots to just turn the regular robot arm on and off.

29:23Just be the guy that presses the button. You're joking, but it's real. It's 100 % real. Just like the LLM could try and memorize everything on the web. that was the first version of ChatGPT, didn't have access to a web browser. Now, if I ask it, how much sodium in a can of Diet Coke, it probably has that memorized, but also it can just Google it and look at the results. Well, maybe not Google it, maybe Google it. We don't know, we don't know how they use it. I don't think they're Googling it. I think Google does not allow other people to use Google search as an API, but who knows? Big question.

30:01You never know. I can use Google. I can use ChatGPT. Why can't I tell ChatGPT to use Google? Yeah. Open up Google.com, ChatGPT. ChatGPT agent. Go to Google.com. Download. Hit Query Gemini for me. Search this for me. Search this for me. And so there are other levels. And I think these other levels from two to four are going to become increasingly more important because these are the ones that are more on the frontier and they require more and more AI, more and more end-to-end machine learning. So level two is autonomous mobility, scene understanding, higher order planning, long horizon reasoning, agile movement, capabilities are open world navigation and traversal.

30:49So these are like the Boston Dynamics robots. So when you have that like Boston Dynamics dog that runs around that dog is very useful for let me see this so level two is autonomous mobility robots that can understand the open world navigate and traverse various trains and so early production phases for inspection and data collection rules you send a drone out somewhere construction sites oil and gas refineries critical infrastructure the the default example is like you got the nuclear power plant and you want the robot dog to run around and take images of everything. But there's a bunch of different places and there are a bunch of different companies that essentially offer level two autonomously mobile robots now.

31:37And it's real. It's like, it's a real thing. It's just a narrow use case. They can't do everything. But if you want to send the dog out on patrol, you can. And of course, occasionally you'll want a humanoid, not a dog for certain things but this is not it can't do everything but it can get over rough terrain it can climb stairs it can do things that aren't pre-programmed where it has to understand okay there's a stair coming i gotta move my paul chinese company that's been showing off a robot that can crawl swim and fly they're gonna just like walk it can walk around like it's like a spider and then it can jump into the water and and swim through the water like actually go under and then come up to the surface and actually take off in the air.

32:19Can it do sales tax or does it need to use numeralhq.com? It will have to use numeral. Okay. Well, we'll tell the robot, put your sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. Go to numeralhq.com. So that's level two, autonomous mobility, the robot dog. Level three is low skill manipulation. These are getting more humanoid-like robots that can perform basic, non-critical, low skill tasks. The unlock here is generalizable manipulation, advanced pick and place is a capability in mobile manipulation. So you want a robot to go and pick up a box and move it across.

32:55It's not a defined zone where the pick and place robot is gonna sit. You can kind of set it up anywhere, give it some basic rules, but you're still gonna be somewhat piloting it, giving it general overview of what it needs to be doing. And so this is actually already deployed in some pilot stages in kitchens, laundromats, manufacturing and logistics. And these are like bipedal humanoid robots. Now, they don't have five fingers, five toes. They don't look perfectly human. Yeah. But they can actually. Yeah. And the big thing is even a remotely operated humanoid that had the ability that had fingers that could do traditional, you know, activities that were more complicated.

33:40Yep. Even a remotely operated humanoid could be completely valuable. Right. Because you could have you could have somebody somewhere else say, like, pick up every single leaf leaf in my backyard and put it in the green bin. And there's and there's like a bunch of like a bunch of use cases you can think of. I mean, the big debate is around what is the level of human involvement in Waymo's. Right. That allegedly there's there's at least one person kind of overseeing every active Waymo. remotely? I think that number is blended across the entire org. So like at a given time, there's probably like one human looking at a screen with four Waymo viewpoints on it and they can kind of jump back and forth.

34:29But then there are other people like monitoring the network and checking on the tires. I guess my point is that like having somebody remotely observe the activity of a robot while we're trying to get to the point of full autonomy is totally worthwhile and is what people should expect. This should be pretty searchable. Tyler, can you look up the number of employees at Waymo and then the number of Waymos on the road and get the ratio there? Because the real test of robotic leverage should be more vehicles on the road than employees at the company. But it seems like it might be more. So there's 2 ,500 employees around and there's only 1 ,500 Waymo's.

35:15Yeah. So that's the number that we're hearing. When people say like 1.4, 1.5, I think that's it. I'm sorry. These could easily be contractors that aren't technically employees that are hired to work around the clock for every single active Waymo. But still, you would expect – I mean, the bottom line is that – It's still a massive step up from not having somebody that's just sitting in the vehicle observing it real time. Yeah. But even if we assume that there are zero contractors in there, like the job displacement narrative, at least at this moment in time, is completely debunked because we put 1 ,500 taxis on the road and it took 2 ,500 people to do that.

36:00Right? Like now, obviously, the technological vision is that you'll have 2 ,000 employees and 200 ,000. Yeah. Yeah, yeah, just like you don't need, you don't need, just like you used to have one paper boy delivering a newspaper to every city block. Now you have a number of engineers that serve social networks and they just kind of go out and they're distributed across the internet. But that is an interesting benchmark. And something that should be, like the ratio of vehicles on the road for Waymo to employees at Waymo is an interesting stat to follow. I agree that the contractor thing is important.

36:40Anyway, let me tell you about Profound. Get your brand mentioned by ChatGPT. Reach millions of consumers who are using AI to discover new products and brands. Profound is our latest sponsor, and we're very happy to tell you about Profound today. Get on it if you're running a business or a fund or anything like it. You should probably know how people are understanding your business through LLMs. Profound makes it super easy. So the last level of robotic autonomy. Level four, force-dependent tasks. These are things that must be done very precisely. Robots can perform delicate tasks at this level that require force and weight understanding, i.e., finding a phone in a pocket.

37:24Sounds easy. Very difficult if you're a robot. Doesn't sound that easy. I think everybody here is experienced. Yeah, and you actually drop your phone a bunch. It's one of the harder things you do. Driving a screw in on the correct threads. So this is purely in the research phase The capabilities that this will unlock are delicate force-dependent tasks fine-grain manipulation, and this is purely in the research So there are different And one of the examples that they give is like praise it place the soft bread on a plate So you can imagine that being valuable in the kitchen context But you're just like the robots just crushing the bread every time that's like a word.

37:59Another example of trying to pass steak to your friends that are sitting in a different part of the plane, that's a force-dependent task. Definitely, because you might get tackled. And when the flight attendant comes up to you, you have to put your hand on their chest, not fully threateningly so that you get on the no-fly list, just gently. But you want to touch them. You want to place your hand on their chest, just a little bit, just to let them know. This could go one of two ways. Probably shoulder. Yeah, probably shoulder is more respectful. But you want to let them know that you're ready to die.

38:30I took custody of that stake. Yeah. Yeah. This is happening one way or the other. This can go down one or two ways, but you don't want to actually cross the threshold. So, you know, if you're passing stake to your buddies in economy, don't use a level three robot. And have a tough time. Because the robot will just shove right through them. Other examples include unstacking single plastic cups from a stack. any fraternity member should be familiar with that, but the robot is still working. So there's still full employment for the Solo Cup distributor. Fraternity brothers out there saying, I'd love to see a robot on Stack Solo Cups.

39:12It's the beer pong, yeah. Robots, not gonna be able to set up beer pong for a while, but they're researching it, yeah. Place an egg in a pot, place a bag of chips on a plate, twist and lift a bottle cap, literally like open a bottle of medicine. actually one of the more useful things that a robot can do. Very hard for children. Very hard for children. They're working on it. Yeah. Yeah, what's the arc AGI of robotic tasks? That's what we need. Maybe it's taking the phone out of the pocket, something that anyone can do, even a child, but it'll be the last task solved by a humanoid robot. But, I mean, you can imagine, like, twisting a bottle cap is actually, you know, we have an aging population.

39:54we need more help in the elder care market in hospitals and nursing contexts. And if you have a robot that can dispense medicine effectively, you can imagine that being very valuable. But right now that would require an entire rebuild of the way we distribute medicine because we distribute it in child safe and also robot safe bottles. So anyway, let me tell you about Linear. Linear is a purpose built tool for planning and building products. All of these companies that are going to develop level four force dependent task robots, they're going to need to be on linear. They probably already are. The system for modern software development, it allows you to streamline issues, projects, and product roadmaps.

40:36So, moving on to the next story. There's a lot going on. Well, the big thing, we should talk about Cerebrus because this was a company that was kind of dogged for a while. Are you familiar with this company? Yeah. So Cerebrus makes a wafer scale GPU, a wafer scale chip. When semiconductors are made, you go and you want an Apple, you know, Apple silicon chip or an NVIDIA GPU. There is a wafer that is grown of silicon. And then the wafer is etched with all the different transistors on there. The three nanometer, the four nanometer, the six nanometer transistors are put onto the chip. And then the chip is, the wafer is sliced up into individual chips.

41:20And the benefit of that is that if one of the chips is bad, one of the transistors is off, that chip's not working, you can dump that one and the rest are going to be fine. But with wafer scale computing, with wafer scale chip manufacturing, if there's even one defect anywhere on that wafer, you got to throw the whole thing out. So everyone was very worried that the yields would never get high enough. And they were saying, cerebrus. Also, there's other trade-offs with when you're at wafer scale with memory and inference. But what we've heard and what Andrew Feldman, the CEO, is saying is that a lot of the crazy bets that they placed, they're paying off and it's working very well.

41:59So Andrew Feldman says, in 2016, Sam Altman and Andrew met. OpenAI was a vision. Cerebra Systems was a PowerPoint. Sam and the OpenAI founders became one of the early investors in Cerebra Systems. Good to see Sam getting a markup. He needs it. He needed that. He needed that. He really needed that. Badly, badly. In the following years, the Cerebus and OpenAI frequently met, the teams frequently met, to explore working together, but the timing was too early. Large language models hadn't been invented yet. This is what being early looks like. Truly. Like developing a foundational technology for a trend that has - That's dependent on another foundational technology that doesn't exist yet.

42:41Yeah, insane. Today, the story comes full circle. OpenAI just released its most powerful open-weight reasoning model, and it runs fastest on Cerebrus systems. Not a little bit faster than the competition. It smokes the competition. Running on our third-generation wafer-scale engine, GPT-OSS-120B, runs at up to 3 ,000 tokens per second, the fastest speed achieved by an OpenAI model in production. Reasoning that takes minutes on NVIDIA GPUs can take a single second on Cerebris systems. Good things take time. Congratulations to the Cerebris team. An overnight success. Been in the trenches for a while.

43:22But I think this is interesting. We've talked to some folks who have started using Cerebris to speed up inference for specific use cases within larger AI systems. I think that's very interesting. And I think that it's very easy to collapse the narrative of AI into, you know, there's going to be one single technology, one single path, one single implementation. But as we're seeing with the development of the new GPT models and the new OpenAI, ChatGPT functionality, it's like you squeeze out performance in a bunch of different ways. is you give it a browser, you give it reasoning, you give it a Python REPL, you give it the ability to write code, and you add all that up and you get something great, and it's the same thing on the inference side.

44:10Sometimes you want to do things on device. Apple's kind of steering towards doing that with Apple Intelligence. Sometimes you want to do it on a really big cluster of Nvidia H100s or big GPU cluster, and sometimes you need to just run something extremely fast, and that's what cerebrus is powering so i'm interested to understand what 3 000 tokens a second on the locks yeah because i was thinking about it in the context of that that famous uh amazon well i mean an example being like right now if you want to use like if i open up chat gpt and i want to use it as functionally like knowledge retrieval google search then doing 4.0 and just getting something like relatively instantly makes sense and then but I know I would get a better result with O3 Pro and but if you're using using O3 Pro for like raw knowledge retrieval in terms of like I want to understand this fact or this person is just not a great experience right because I don't want to figure it out in like a few minutes I want to figure it out now right and so theoretically you could get to the point where you could get O3 Pro quality answers Yep, relatively instantly.

45:25I want two things The first thing is I want you to sign up for fin.ai the number one agent for customer service number one in performance Ben's marks number one in competitive bake-offs number one ranking on G2 The second thing I want is I want when I go to chat GPT and I type in a query I've been extremely frustrated by the the model picker because I'm constantly going back and forth between 40 and 03 Pro and one takes you know five seconds the other takes 15 minutes and And sometimes I accidentally hit something with 03 that I should have gone to 04 with. And then I have to open a new one. And then I copy my prompt over and put it there.

46:01And then I'm like, actually, yeah, that's a great one. Like this was Googleable. And so it just pulled it into the nice format. What I would love is a system where I can hit it with a prompt. And it goes to Cerebrus. And it gives me just, hey, off the top of my head, here's what I know. here's the basics of what I'm pretty confident about, but I'm going to keep working on it. So I kicked off an 03 Pro heavy duty reasoning. I'm searching. I'm collecting data. I'm going to get you the best possible answer on this. But while you're waiting, here's the thing that I can turn over in two seconds. Here's what I know right now.

46:39And I think that that would be amazing. Yeah. And that's the same experience you might have working with somebody where you ask them a question and they're like, I'm 90 % sure it's this, give me 30 minutes. I'll come back to you with confirmation. We'll figure out the plan from there. Exactly. Exactly. And that also allows you, if somebody says, I'm 90 % sure that it's this direction, that allows the person that you're interacting with to go and think about that path. And now there's a 90 % chance that the work that they do - Without necessarily doing something mission critical that you can't make mistakes.

47:09Yeah. And then if they need to adjust course, they haven't burned a bunch of time. So So I'm excited for more advanced model routing. We've talked about the mixture of experts. Tyler, what was the Grok of evolution? It was like a mixture of models. A mixture of models of experts. Well, yeah. What was the latest Grok-heavy architecture? It was something else. It was a mixture of something on top of a mix. It was a bunch of mixture of experts models. And then it was a bunch of mixture of models. And then we were going to do a mixture of models on top of models. mixture of companies, mixture of. Oh yeah.

47:44Yeah. Because we're going to make a router on top of that, which would prompt. Every time you prompt, it prompts all of them. Yeah. And then and then there's a mixture of models of models of experts. Yeah. And then and then it and then and then there's a scoring that gives you the final best. OK, I think apparently people I mean, this is all like leaked stuff on Twitter. So it's like probably not true. So people are saying like GPT-5 is like supposed to be kind of what I described. Yeah. Yeah. Some kind of routing thing. Let's go. Put me on the team. I just predicted it two days before it comes out or something.

48:15I'm good. Yeah. It took me a while to get there, but I think I'm excited for that. Yeah. I'm excited. Anyway, let me tell you about Adio. Customer relationship magic. Adio is the AI native CRM that builds, scales, and grows your company to the next level. Get it on. Adio. Did you see this Hunter Biden clip? Yeah, can we pull up the video? We stay away from politics. Can we pull up the video? We should pull up this video. This was very, very insightful as to how people think about artificial intelligence and automation. So this is from Channel 5, Hunter Biden on AI automation and whether or not you should tip it in and out.

48:51And Growing Daniel has a very insightful post here, says when he says AI, he really means software and simple robotics. But still, I'm actually very surprised by how smart Hunter Biden is. Like, my friends are smarter, but I thought he'd be way dumber after all the crack. but listen to what he has to say. In and out is fine. You don't tip at an in and out. I do. You tip at an in and out? Yeah, they have to wear those hats. You know what that feels like? Did you, serious conversation? I met somebody that is in the, you know, owns fast food franchises. His McDonald's employs 55 people. Okay? He went all AI.

49:30Oh, man. It's about a$2 million investment. And they just show you a humanoid robot. It's like... he only employs five people now. So his margins go up by like 27%. It'll make back the$2 million investment in under like 18 months. Think about this. There's about like 13 ,500 McDonald's in the United States of America. I did the math. If every one of them went down to five from 55, lost 50, on average 50 jobs, it's 670 ,000 jobs in America. And that's like, it's a certainty. And that's just McDonald's. You think that Burger King, Wendy's, Taco Bell, I mean, across the board, you're talking, what, like, probably three and a half million jobs in the fast food industry alone that will AI easily within the next five years, if not three years.

50:26So I flip my thinking about this whole AI thing. you're either going to have a massive extinction event or it's going to be really good with a rough patch in the middle. Because if between supercomputing power, which we're there already, okay, like quantum computer, and DePoing. We're not quite there on quantum computer. Put that in the truth zone. How is it that we don't figure out the commercialization of nuclear fusion within the next five years? And if we do that, a limitless source of power. I have some friends that work on Fusion. I've seen enough. Give him a hard tech fund. Yeah. Oh, no.

51:08Yeah. Yeah, yeah. Well, he doesn't even need to be in the private markets. There's plenty of public names he could get into if he's bullish. Fusion, Quantum. Yeah, I'm sure that'll work out great for him. It'll be rough. Anyway, the interesting thing here, yeah, he's talking about automation. I actually know an entrepreneur who built a, you know, you take a TV, you turn it horizontally, you touch screen and you can order at McDonald's. I don't know if he actually had McDonald's as a client, but he had a number of those types of customers where you shop on a screen and check out on the screen. And that's something that, we had the slowest takeoff ever for that technology.

51:46Truly. Like when do you think it would have been capable from, you know, from first principles, just the capability of software and hardware to show up, click buttons, pay, and then send the order to a human cook who's still cooking. Yeah, it's so interesting. Even at grocery store checkout. 2005 level technology, in my opinion. A lot of grocery, I mean, Air One still doesn't have self-checkout. But I just actively avoid self-checkout. and you wonder, you know, I think a lot of people feel the exact same way. It's like being able to sort of outsource the scanning of items. Well, people do the self-checkout because it's a thrill because it's this negotiation, like, will they catch you for how much you're stealing?

52:35Because they're not really watching, but there's someone that's kind of watching and you could get into an altercation. And so it's about getting your pulse up. It's about going risk on. Exactly. It's about going risk on. Yeah, it's like the girls that steal from Sephora. Grocery stores to encourage thrill seekers should actually start having, like, armed security there. Yeah, it needs to be high stakes. Standing there like this. Exactly, high stakes. And so if you mess up and they catch you, you're getting tackled. It is hilarious how, yeah, they kind of got rid of, like, the scanner, but they definitely need to watch that stuff because people will just, like, fake scan and then check out.

53:09I don't endorse doing that. Chris from Pace has good takes here where it's, like, in areas where there is, And Aaron Giddin too. Yeah, basically this idea that I think that 20 years from now, I will still go to restaurants and have a human waiter because a great human waiter improves the experience. It's enjoyable to have somebody that understands the restaurant you're hanging out with across. But the person will look more like an educator and an entertainer than like a plate carrier. so I wonder if anybody by the way I wonder if anybody's busboy you will be someone who talks about the food it gives you advice you know here's something I wonder if anybody's building like a friend pendant style device for waiters you just walk up to the table have a conversation but it's just actively like submitting them through like the restaurants like order management system so the waiter's just hanging out there they don't have to be like writing down stuff or in a phone and they can just have a conversation and be like, you want this?

54:13No cheese. You want fries with that? You want a side salad? Great, great, great. And that's just automatically in the system and starts getting made. You might like this idea. Usually when consumer hardware goes to the enterprise, it's like where it goes to die, like the original HoloLens and the Google Glass, as soon as they said like, hey, we're actually going to be focusing on niche enterprise use cases, usually a bad sign, but that could be kind of like a toast type you know vertical sass outcome I don't know that I'm more bullish on that idea than At least hearing it for 10 seconds But I don't know at the same time if you get a really nice restaurant I would I would be leaning even more in the pure human world and being like I would like to go to the restaurant That doesn't even have phones And there's actually a great post in here by hip city Reggie We will read through because I want your take on this so Reggie James friend of the show says screenshot essay on wearable AI Will all AIs leave the room?

55:12Sitting down at breakfast, Yatu reveals he's wearing an AI pendant product on me. I've never heard of that one. Very cool. There's a bunch. Sean and Jackson freeze. A couple days later, I'm wearing a friend necklace. Shout out Avi. And talking to my wife and I stopped to look at it, wondering if it should be included in the goings on of my home life. I think it's clear that we will start to create a set of social norms around AI that's extremely explicit. We will state things like, can all AIs leave the room? Spaces will have machinery running that renders connected electronics useless. So yeah, we should have a Faraday cage that we can go hang out in.

55:51At the core, it's a question of which mind's authority and priority in a given space. It's probably a good idea to assert the human ones. What do you think? So Jackson Dahl had a review of Friend. I guess he got an early one from Avi. The review was generally positive. He said clearly feels different to talk to a thing you're wearing and must touch to get a response from. With Friend you put voice in and text out which is like kind of an interesting feature. So you're it's just hanging out with you but then it's messaging you on your phone about your day which is kind of a new it's just a new format um he uh he says all said feels like avi have built something truly different a hardware device that embodies a new set of values i suspect they will find it an especially young group of people uh who quickly find themselves in daily communion with their new friend and again uh this seems to just continue to be incredibly controversial and i'm sure it will for a while daniel says how do you feel about recording everyone you meet without their consent.

56:58Jackson says bad. Lots to figure out societally with these types of things. Yeah, the voice in text out thing is interesting. I feel like there's a ton of different surface area to explore outside of just give someone a blank text box. Like that worked for Google with the 10 blue links. It works for chat GPT. But I think now the new surface area is figure out how to push stuff to the user and this is a way to do that you're just ambiently recording and then I feel like the retention is gonna be way higher than other devices because as long as you put it on it's going to be sending you messages yeah and so I think that's gonna be really really good for retention yeah there's this there's do you get push notifications from chat GPT at all only if only post prompt yeah so if I fire off deep research it will give me a push notification telling me hey hey, we're done with that.

57:54But I've never just. But there's a world in the future, for example, where ChatGPT has access to your calendar and is like, hey, I saw your meeting with this person this morning. Do you want me to run a deep research report on what they've been up to in the last few months? And it's like, oh, they shared this update on LinkedIn and they were in this article and they went on this podcast and talked about this thing. Right, getting to the point more proactive. If you go to the ChatGPT app, it will actually populate ideas for prompts. And so for me right now, it tells you a lot about me. It says Hollywood movies, AI and filmmaking, clearly because I was searching about Disney.

58:30Stock market, MAG7 performance. I can just click that and get an update. And it says, how have the MAG7 stocks performed over the past decade? What factors have driven their growth? And it just, boom, pulls that prompt up. Media industry, luxury watches, automotive industry, F1 schedule, venture capital, tech business. And so some of those, if there was something triggering in the system that, you know, hey, there's this interesting thing going on, we should just generate this prompt and send it to John. That's probably an interesting feature that they'll probably explore at some point. But friend seems to have at least be, at least seem to be exploring this type of thing.

59:10But voice in, text out, very exciting. Sleep in, rest out, also exciting. 8sleep.com, pod five, five-year warranty, 30-night risk-free trial, Free returns, free shipping. Go check it out. I was riding a high Monday night. I put up a 95. Let's go. And I'm down in the dumps again, John. I got a little cocky going on last night. Well, you know what's not in the dumps? The future of nuclear uranium enrichment because General Matter is bringing uranium enrichments back to the United States, starting at the site where the U.S. enrichment industry was born. We've signed a lease with the Department of Energy to establish the nation's first U.S.-owned, and privately developed uranium enrichment facility at the former Paducah gaseous diffusion plant.

59:5375 years ago, the US Atomic Energy Commission selected Paducah to help lead the nation's original enrichment efforts. Today, we are proud to return to and rebuild this historic site to power a new era of energy independence. This is Scott Nolan's company. I hung out with him while I was at Founders Fund. He's an absolute dog. An absolute dog. One of the greatest to ever do it. And he's been on absolute tear. where spent I think over a decade at Founders Fund, helped Peter Thiel with the original zero to one lectures while at Stanford, helped ideate and bounce ideas around for that book, then invested at Founders Fund for a decade and was kind of thinking about maybe starting a company but didn't want to force it and just waited, waited, waited until the perfect opportunity came around and really put together the perfect team, perfect partners, and has accelerated way faster than I think he expected.

1:00:50When General Matter first announced, my first reaction, which is always a positive reaction, is nobody, I haven't seen a pitch for this anywhere, but it's incredibly obvious that this company needs to exist. Yep, yep. And so it seems like it's working. They won a contract with the government very early, earlier than they expected. And so they are moving timelines up and now they say we will enrich uranium by the end of the decade. U.S. leadership and enrichment will allow us to lead once again in nuclear energy. This lets us lead in everything downstream of safe, clean, baseload power, AI manufacturing economy.

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1:02:09Not financial advice. And they're trusted by millions, not for casuals. Taking investing seriously is not financial advice. Let's go to Adam, person of swag. He says he started a startup to impress a girl, starts seeing product market fit, gets more compliments from male users. Girls don't care. Keep trying to get more MRR. Now I spend every day in a dark room coding with four men. What is even the point of this? And the best photo you could imagine. Well, I would love to see Adam hit the gong with us at the New York Stock Exchange and say, Adam, why did you start this company? And he just says, I just did it to impress.

1:02:48You know what's funny about this? This is the apocryphal tale of the founding of Facebook. Like in the Aaron Sorkin Social Network movie, the whole premise, I know you haven't seen the movie. I have seen that one. What? What? Jordy Hayes has seen a movie? Incredible. But the story that Aaron Sorkin decided to tell was basically that Mark Zuckerberg started Facebook as like, you know, a way to get a date or something like that. And then Mark was like, fact check, false. Like I was dating Priscilla happily for years before starting Facebook. So your whole plot is fake. But he was kind of just like, whatever.

1:03:38You know, people like telling stories and maybe a better story that way. But The Social Network 2 will be dropping soon. If you have a way to get us in that movie, make it happen, Hollywood. You're listening. We're ready to be extras. Get Tyler in this movie. I think it'd be so good if we could be extras just in the background. I think it's pretty doable. We're in Hollywood already. Make some calls. This is my number one, like, manifest it, put it on the vision board. Because it's a very small crew of people. Those of you in the chat, Azar, DaGame, you guys would see the movie, you'd see us, and be like, wow, they pulled it off.

1:04:12So we'll have to make that happen. And then we'll have to buy a billboard on adquick.com. Out-of-home advertising made easy and measurable. Say goodbye to the headaches of out-of-home advertising. Only Adquick combines technology, out-of-home expertise, and data to enable efficient, seamless ad buying. Adam D 'Angelo says, because I love the fact that all the billboards on 101 are for AI products, and certainly many of them are for regular enterprise SaaS companies announcing AI products. What is this? Oh, interesting. Hmm. Do you see this response from Jasper? he is advertising and he says cheap on-demand gpu clusters hyperbolic.ai hyperbolic is an on-trend term right now a hyperbolic can refer to several different concepts in language it means exaggerated in geometry it's related to a hyperbola or hyperbolic space and in functions it's related to hyperbolic curves the irony here that hyperbolic ai you could read it as exaggerated AI and then every billboard on the 101 is just it's just very funny yeah yeah yeah the nominative determinism is that they're over promising but I think in this case it's like a neo-love Jasper no hate on Jasper good luck to him I hope I hope he can deliver and I hope he can go this feels like something that can be delivered quite well today yes but but a hyperbolic function is something that goes up into the right and and reaches an asymptote and goes to infinity essentially.

1:05:44So it is a good example and it is something that is important in AI as we scale to infinity and beyond. David George has a post. He says, what do Roblox, Anderol, CrowdStrike, and Apple all have in common? None of them look like obvious winners from the start, but they built something far bigger than anyone expected. We call these companies model busters. Great. Name model busters either reveal a market that's much larger than anticipated or expand into new product lines so effectively that they break out of their original category entirely. We're talking about Model Busters now because we believe AI is creating many more of them.

1:06:19AI may be the defining platform shift of our time. It's changing how products are built, how they're distributed, and how buying decisions get made. It's creating new consumer experiences, new workflows, and entirely new business models. Platform shifts often create new winners. AI is no exception. today's most ambitious companies will grow faster and become bigger than anything we've seen before. Example here, if you were an investor modeling out Figma in the early days and you thought it would always be a design tool, again, this is not how Dylan was pitching the business, but if you thought it was going to be a design tool, you could simply look and see, all right, how many designers are in the world?

1:06:59And if you could get 5%, 10%, 20 % of them, using it, would this be a big company? Still would have been a big company, but wouldn't have been a$50 billion public company, most likely, and it ultimately kind of broke out of that TAM by being a collaboration tool across entire companies. We should have David back on. I really enjoyed talking to him during Andreessen LP Day. I do wonder, is it a tautology that a Model Buster cannot be modeled? Are we talking about an ineffable quality that cannot be defined? Like, is there a pattern for finding model busters? Because, like, definitionally, the model busters are things that cannot be modeled.

1:07:45It's funny because he's also on the growth team and probably does, like, the most modeling of anyone at Anderson. Well, Roblox is an example. So Roblox has 20.6 million DAUs in the U.S. and Canada last quarter. Yeah. And there's, I think that, I don't know how many people, young people under 18 there are in Canada, but in the U.S. it's like something like 70 million. And so that is like a meaning, like if you were evaluating Roblox and saying like more than a quarter of people under the age of 18 are going to be playing this game every single day by 2025, you would have sounded a little bit crazy because I don't know that there's that many video games that I don't know how many video games have ever achieved that level of daily active usage in a cohort like that.

1:08:34Video games in general have been like a model buster in the sense that people were expecting it to be comped to the film industry. And I believe the video game industry is like an order of magnitude bigger than the film and television industry. It is a significant expansion of growth. But my question about how much time should you spend trying to codify model busters, or should it just be something that we refer to looking backwards? Because my question is, if you go back and you look at Danny Reimer in the seed series A of Figma, or Mamoon at KP doing the B, or Andrew Reid doing the C, At what point did it become important to win that deal to identify Figma as a model buster versus just say the metrics are really good, Dylan Fields a killer, I'm investing on that.

1:09:30And then yes, maybe there's a second act, but if I get a bunch of those ultra high quality entrepreneur, ultra high quality product, ultra high quality KPIs, I'm good enough and I don't even need to really predict that this will have a second act or expand out and the TAM will moon. And you could see the same thing about Anduril, Palmer, Lucky, you just look at the team and the market's big enough to justify the investment at that phase, and then you just keep doubling down, and then it busts your model, but you're in it for different reasons. You're not in it because you predicted the model would be bust.

1:10:09So I wonder what it teaches you about the philosophy of early stage investing. Yeah, I mean, I think you could have underwrote SpaceX for a long time, ignoring the opportunity for Starlink, right? And it still would probably be, it'd be interesting to see, you know, how SpaceX would be valued. When that made it into its first deck. Yeah, or its first model. Yeah, probably 10 years into the business. I have to imagine it was not in any of the Series A through C decks. People are like, I thought I was investing in a rocket ship company, accidentally invested in an internet company. Internet company.

1:10:48The accidental internet company again and again and again. The internet is the, it is the category and that every company makes money. Yeah, and I still remember as a kid when I grew up in an Apple household, I never had a, like, I never used Microsoft products really ever as a kid. And I remember it was still at a time where you were kind of like weird if you didn't have like a traditional PC at home. And then 10 years later, everybody has an iPhone, right? So it was impossible to like underwrite having a breakout product of that caliber. Kind of like luxury watches. Not many people wear them right now, but in the future, it'll be weird if you don't have one.

1:11:32So you got to go to getbezel.com. Your bezel concierge is available now to source you any watch on the planet. Seriously, any watch. Someone in the chat yesterday said they got a moon swatch. No way. No way. Yeah. Amazing. Yeah. I didn't even know that those would be on there. That's amazing. Moonwatch or moon swatch? They've had different variations. Okay, cool. Very cool. Well, congrats to them. Hope they enjoy it. Send us a picture. We have some breaking news about SiriusXM. They are canceling the Howard Stern Show. Can you call it a cancellation when the guy's 71 years old and he's been doing it for 20 years?

1:12:06they say it's no longer worth the investment. They've been paying him$100 million a year. That is a huge salary. And that's, what, three, four times Colbert? Wow, that's big. That's the power. Power of radio, power of, you know, the power of law. He's done fantastically. So congrats to him. Howard, if you're looking for a new gig, you're welcome to come and hang out at the Ultra Dome. You can sit at the intern table next to Tyler. and we'll bounce ideas off you. Yeah, it's wild. I really wonder where SiriusXM business goes. I know where this goes. Post-AGI, you're going to listen to every hour of Howard Stern.

1:12:49I know you've listened to zero hours, but there's probably 20 ,000 hours in the catalog or something like that of Howard Stern content. You could listen to it from the beginning. Do people listen to the back catalog ever? Absolutely not. But in the future - Sirius XM is still a$7 billion company. Wow. That's bigger than I would have thought. I wonder, yeah, revenue, like how much of that cost? I mean, it makes sense to give him a huge slice of that. It is a talent-driven business and he could go to Spotify. He could go somewhere else. My question is like, he is old. Will he retire or will he do a podcast or do something independent?

1:13:24Is there news? No, they - What? They apparently did how much? Okay, you look that up while I tell you about Wander, find your happy place, book a Wander with inspiring views, hotel-grade amenities, dreamy beds, top tier cleaning, 24 seven concierge service. It's a vacation home, but better. Now enjoy the update on - So they did 8.6 billion in 2024 revenue. So they're trading at less than one X revenue, which says when you have a shrinking business, it is a rough place to be in. Not a growth stock, I suppose. Yeah, I wonder how much of that is getting eaten up by talent. This is a trillion dollar stock if they have - Yeah, I wonder how much, I wonder what percent of Sirius XM content is like power, law, celebrity, host, red, high salary contract versus essentially programmatic or AI content.

1:14:14Because it's probably not even AI, but if you're just like, there's a station on Sirius XM that's just the Grateful Dead. And it just plays them the whole time. Like, I don't think you need someone making$100 million to like randomly play Grateful Dead tracks. Like there's probably some Grateful Dead fan who manages that and picks the songs and orders them. But like that could essentially be pseudo random. Maybe one day you go through the back catalog and then the new stuff and then you mix it up and then you play the hits or something. I don't even know if they have hits in that way. I know it's kind of a jam band.

1:14:49But I wonder of their content, of their tonnage, is that the term? Tonnage is like the amount of content on the network. I wonder how much of it is driven by these high dollar deals. And I wonder if they'll get a new host in the seat. I wonder who this generation's Howard Stern is. Maybe it's like Tim Dillon or something, some irreverent comic essentially. I think the thing is, as content is on demand, fewer and fewer people are just turning on the radio or turning on the television and listening to whatever just happens to be playing. And so if you take people that were subscribed to Howard Stern, and were like, you liked Howard Stern.

1:15:34We're now just going to play this other person through his channel. They're just going to ask, what's going on here? Yeah, I mean, certainly if you have a specific car that has Sirius XM and it doesn't have Spotify and Howard Stern's new show is on Spotify because it's a podcast, you might stick around on Sirius. Maybe they get someone new in the seat who's, you know, almost as good or can build a relationship. But it does seem like a challenge to fill that. But also, you know, it's a lot of money to pay. So clearly it wasn't penciling out. So they had to move on. Anyway, X is now noticing when you take screenshots.

1:16:13Do you see this? I've seen this in other apps. It's usually pretty annoying, honestly, but when you take a screenshot, it triggers a UI element that says, hey, do you want to actually just copy the link to this post instead of taking our content elsewhere? So it's a little bit of a retention hack. I don't know if Nikita Beer's involved in this, but it's just like a classic UI thing. I wonder what the actual It makes sense. So many people still just screenshot a post and share it in like a group. Well, yeah, because posts get deleted and then posts. It's like, oh, that person blocked me or that person is a locked account.

1:16:47And so the screenshot is just the universal language of like, you know, sharing information and content and a lot of people still share links. But the like the screenshot is super Lindy and I don't see it going anywhere. So I mean, the good thing is that this doesn't block your screenshot, like your screenshot is still added to your camera roll, but then you're prompted to, hey, do you want to actually show the link. I haven't actually run into this. I don't, I take a lot of screenshots of posts, but I do it on my computer, not on my phone. So anyway, and Preston continues and says, Nikita is going to look like a hero for putting features on Twitter that have existed on TikTok for a decade.

1:17:21I don't know enough about TikTok features to know what he would port over, but I know he's a student of algorithms and student of social apps. So I'm sure he'll find something. TikTok is very smart about all the different ways that people are diverting attention and hacking it. It would make a lot of sense to just copy best practices from there. So I think this is a good take. Yeah. Well, we have Mark Andreessen joining in about 10 minutes. If you have questions for Mark, throw them in the chat and we'll try and get to them during our interview with him. Ray Sullivan says, once the summer is over and Mistral is back to work, I'm sure they're gonna be dropping some cool stuff 1.6 K legs how do you even fight that it's that's so rough just Europe is is down bad the meme in the memetic war I would be very interested to to actually understand we should have somebody on for mr.

1:18:17all talk about it there are that the meme that that European founders and teams take off eight weeks in the summer is is extremely real and it's not always I mean a full eight weeks we have taken this summer we've taken one day off July 4th yeah and it's like extremely evident to what's going on over here in America we run a media company and it's like you're in the most you're there yeah you're in the most uh aggressive fight ever not not to say that Mr. roles taking days off. I actually don't know about that company specifically, but, but I have seen some, some friends on the show proudly take time off.

1:18:57I know I have, I have friends that are European founders that have massive companies that are very successful and they, their businesses allow them to take time off. They can go, they can have a nice vacation with family, friends, whatever it is. They can maybe just dial down meetings quite a lot and their businesses are going to be fine. They're probably still going to have great quarters. They're going to put up great numbers. The issue with Mistral is you are competing with the entire world, an entire world where if you're not at the frontier, you're not going to get usage. And so I wouldn't be surprised if Mistral said, hey, no, no, you're a summer.

1:19:34Yeah, summer. But we don't know. I mean, we don't know that they took a summer. We don't know. That's what I'm saying. Mistral took time off. I'm just saying I wouldn't. But yeah, I mean, there's also like the, so there's the, there's the facts of the matter. like you probably shouldn't take a huge vacation in the middle of the biggest fight over new technology in the past decade or two. Not that they are, but the other interesting thing is like the vibes and the aura farming that comes from doing things that show that you're working extra hard. So this is the Elon, you know, taking a meeting really late at night with a journalist in the room and then that gets out and you see that, oh, he really was sleeping, the picture the sleeping bag team having tents tents in the office another example is mark zuckerberg uh meta dropped llama on a saturday or a sunday or something and somebody asked mark why'd you drop it on a sunday is it because that's when it was ready and it was a little bit rough because llama wasn't like fully ready to the full extent but it just showed that they were trying to move as fast as possible very clearly and then uh similarly sam altman and the open ai team they dropped that IMO stuff at like 2 a.m.

1:20:38on a Saturday and it was like okay there's like all this debate over you know were they inside the stadium were they running in the parking lot outside you know was it signed off or whatever but you can't say that they weren't up late working like that's the one thing you can't say you can't say they didn't have that dog yeah yeah exactly you can't say they didn't have that dog with them they might not have been nice with it but they definitely had the dog in them right that's true like it wasn't very nice with it to you know kind Avi Krishna here says the irony is that Mistral, the meteorological event the company was named after, mostly occurs in the winter and spring.

1:21:14That's wild. The nominative determinism strikes again. TJ Parker says the best Amazon leadership principle is right a lot and it's not particularly close. Quote, leaders are right a lot. They have strong judgment and good instincts. They seek diverse perspectives and work to disconfirm their beliefs. I thought this was interesting. I thought it was a typo. Because Amazon famously writes a lot, W-R. But this is R-I-G-H-T. They are correct a lot. Interesting. Stuart says, kind of true with VCs too. Feels like the best ones just have good sense broadly and pick really well. TJ says, yep. TJ has been right a lot himself.

1:21:56Created PillPack, sold it to Amazon for a billion dollars. So pays to be right. He's also been right a lot about his selection of timepieces. He's a fantastic collection of watches. Some of them are on display from time to time. Every now and then. Yeah. Andrew Reid says, sector-focused VC firm called specific catalysts. Okay. Andrew's been, you know, yeah, yeah. Yeah, he took Figma out, IPO. He's been on a generational run. He's backed like a dozen Decacorns, potentially greatest allocator of this generation, doing very great. Getting a little cocky on the timeline. Coming for General Catalyst, making fun of their name.

1:22:38Coming for A16Z. You remember this? He said, A16Z, the 16 doesn't count the space in the middle. So he's taking shots from his high perch. Heavy is the head that wears the crown, Andrew. be careful or else people are going to start asking questions about why you don't own sequoia.com and you don't want that to happen whoa you know this yes yeah but i think he's having fun i don't think across the lines but it is funny because he's just he's just like hmm i'm i'm having a good time let me just let me just fire off some some some jokes at the expense of my competitors but he's having he's having this is this is fun i I love this.

1:23:20Yep, there's certainly plenty of VC firms formed to capitalize on a specific technological trend. For sure, but specific catalysts would be good. And maybe one of them should be called highly specific catalyst capital. And maybe we'll ask Mark to settle the debate, is it A16Z or is it A17Z? Or is it like Wilmer Hale, where Wilmer Hale, the law firm, two names, there's no space in between Wilmer and Hale. And so if Wilmer Hale were to do the A16Z thing and abbreviate it, they would be correct. So you never know. Maybe Andreessen Horowitz doesn't have a space in the middle. Post here from Dan Toomey, quote, I don't do drugs.

1:23:55Lame, weak, beta, childish. I don't touch the stuff. Refined, respectable, aged, wise. It does sound like, yeah, you have experience. I don't touch the stuff. Trump's line has never been big into that whole world. Yeah, yeah, yeah. It just really, really hits way, way differently when you say that. So yeah, kids, just say no. Just say you don't touch the stuff. It's great. Post here from Carl Rivera over at Shopify. Being an angel investor is just a different way of subscribing to extremely expensive email newsletters. Yeah, you're oftentimes, you know, basically giving somebody 25K for five to 10 years of monthly sends.

1:24:33Don't we know an angel investor that writes like$1 ,000 checks to get the email updates? Just to get the updates. And he LPs and funds too. And then gets all of that information. He's just like a master of information collection. We do. We certainly do. I had a portfolio company that I hadn't heard from for years. I got updates for a while after I invested and I got pinged to sign some docs and they and I assume that the company was shutting, shutting down and they got a massive acquisition. Oh, acquisition. That's great. Yeah. It was an extremely pleasant surprise. Normally, if you just look at the updates, trail off, things aren't going that well.

1:25:27But every once in a while, you get a really nice surprise. That's great. Reads with Ravi says, Great leaders think like farmers. Think like a farmer. Don't shout at the crops. Don't blame the crops for not growing fast enough. Don't uproot crops before they've had a chance to grow. So choose the best plants for the soil. Irrigate and fertilize. Remove weeds. Remember, you will have good seasons and bad seasons. You can't control the weather. Only be prepared for it. Good philosophy. Think like a farmer. I wonder where this is from. Think like an aura farmer. Think like an aura farmer. Don't shout at the aura.

1:26:04We still need to have this debate with Tyler around aura farming. Well, I'm trying to get him to coin it Cosgrove's Law. I'm still writing it. You're still writing the post? I've got to get it perfect. Okay, yeah. Because the tweet in and of itself is ore farming. Exactly. It is. Kind of recursive in that way. Same with Coogan's Law. Coogan's Law is a recursive coinage. Yeah. I think this could do really well. This has 1K likes written all over it. It's happening. And endless citations of Cosgrove's Law. So we will work on that. Merrill from Graphite says it's a massive week for his customers.

1:26:38Figma IPO'd at$36.3 billion. Ramp raised at$22 billion, and Clay raised at$3.1 billion. The future is being built with Graphite. Congratulations to all those companies. Congratulations to Graphite. You got an absolute murderer's row of clients. Congratulations. Insane lineup. Well, we have Marc Andreessen joining us. He's live from the TBPN Ultra Drum. Welcome to the stream. How are you doing, Marc? Hey, what's happening? Great to see you. Yeah, you too. A lot. It's a little bit of a slow news day, but exciting stuff with GPT, open source. It's not a slow August. It's not a slow August. We're glad.

1:27:16We were just reflecting that we've taken exactly one day off this summer. That was July 4th. And we're showing the Europeans how American companies work. We're setting an example. And we have proof of work because we exist on the internet. And you can see us live every day. So we're setting an example. How are you doing? How's your summer going? Fantastic. Going really well. So how long is it going to be until you guys put up avatars that make claims that you're working hard all through the summer when it turns out you're on the beach? You might have caught us. I think you'll know better than us as to when the technology gets there.

1:27:50We've been demoing some of the stuff. People have been doing a lot of deep fakes of us. And fortunately, all of them have been clockable. So it doesn't feel like a brand risk. But they're getting closer and closer. And I know that there's going to be a moment where we have to say, hey, that's actually using our name and likeness to endorse something that we don't necessarily endorse can you please take that down so we're we're approaching the the the touring test the the uncanny valley we're escaping i think a question like looking back over the you know maybe 10 or 10 or 15 years was was what moments did you feel like there just was not a lot of action happening because this summer is just the pace uh from so many different teams has been absolutely insane everybody's like trying to keep up and it didn't used to feel that way at least from my point of view so my my view of it always is there's like these there's this these disconnected you know kind of patterns or trends there's there's sort of the the sort of day-to-day phenomenon where like engineers show up every day and they make things a little bit better and then every once in a while you know you get a technical breakthrough or a new platform and and and that process kind of this you know kind of sawtooth kind of up to the right kind of process kind of plays out over time kind of regardless of what else is happening in the world.

1:29:02And so it keeps happening through recessions and depressions and wars and like all kinds of crazy, crazy, crazy stuff that's happening. But basically, you know, the technology keeps getting better. So there's, there's kind of that curve. And then there's the sort of enthusiasm curve and the, and then the adoption curve, you know, which is basically like, when do these things actually show up in the world? And then by the way, when are people actually ready, you know, for the new thing? Like if you talk to the people who worked on, I'm sure you guys have talked to people who work on language models, they will tell you that they were surprised the chat GPT was the breakthrough moment because they thought everybody already knew what these models could do for, you know, three years before that.

1:29:35And so they were, you know, they were shocked that it was the chatbot interface that made the thing go. And so there's somewhat of a sort of arbitrary disconnection between what's actually happening in the substance and then what people are seeing and feeling. And so it's just, it's really hard to predict when these things pop. But also if you're in this day to day, it's really hard to tell, you know, when things are going to be hot or not, because it doesn't necessarily map to how much the technology is improving. Yeah, we were just talking about that in the context of Google's new world model.

1:30:04It's this like generative video game that you can kind of move around in. And it feels like DeepMind is just absolutely crushing at the AI research frontier. They have the best world model simulator that you can walk around in. The question is like, if they let another lab do the ChatGPT thing and just get it out into the consumer three months earlier, they might wind up kind of chasing and trying to catch up if somebody actually figures out how to make it like a dominant consumer product. Now, in the enterprise, it's more oligopolistic, but consumer seems to be winner take all. I guess the question is like, how much value do you place right now in the AI race to just like moving fast, breaking things, you know, dealing, having like the thick skin to deal with like the safety constraints and all of the different stuff, obviously not being irresponsible, but just speeding up the organization as much as possible.

1:30:56it feels like now is the time to really push on that. Yeah, well, first of all, I need to correct you. It's moving fast and making things. I don't know where that is. That's right. I don't even know where that is. I have no idea. Never heard of it. I think ChatGPT didn't really break anything. I think that's a good point. It really did just move fast and make things. The first things it made were weird, but that was fine. And it failed and it hallucinated a ton, but it didn't really break anything. I don't know. Yeah, I believe in this case, total deaths attributable to ChatGPT are still zero.

1:31:25Zero. So notwithstanding all of it, notwithstanding all of the, all the caterwauling, but yeah. So look, I think the AI industry in particular has a very acute version of the, of the, of the sort of challenge that you identified with. And, and, you know, and I don't say this negatively, just an observation, which is that they're, you know, like in sort of a normal technology company, you've kind of got engineers who make products and then you've got, you know, kind of salespeople or marketing people who sell them, you know, in the, in the AI companies, you have this third tier of, you know, the quote unquote researchers.

1:31:52Yeah. Right. And so, you know, which is, which has worked out incredibly well. I mean, the researchers have done, you know, they've just done like amazing breakthroughs at these companies. But, you know, the handoff, you know, there's not necessarily a clean handoff from the researchers to the market. And so it kind of raises this question of like, OK, like, is there are these companies therefore kind of three, you know, kind of three segment companies where they have research and then they have product development and then they have go to market. And I think that's a really open issue. I mean, if you, you know, Google's kind of a case study of this, you know, you alluded to DeepMind.

1:32:21But even more broadly, Google developed the Transformer in 2017. And then they basically let it sit on the shelf, right, because it was a research project. They didn't productize it. They were very worried about, you know, from people I've talked to, they were very worried about the brand issues and safety issues. You know, kind of all these, they had all these reasons to not productize it. I talked to somebody senior who was there at the time, and I asked them, you know, when could you have had ChatGPT with GPT-4 level output if you had just gone flat out starting in 2017? And they said by 2019.

1:32:50Yeah. You know, they already knew how to do it. And then, you know, they've now caught up, but it took an extra five years to catch up. And so I think a lot of these companies kind of have that challenge. Elon, as usual, of course, is provoking this question, as I'm sure you guys talked about. But, you know, he has now, you know, with NXAI, he's now collapsed. You know, he's eliminated the distinction between research and product. And so, you know, of course, you know, he's pushing this as hard as he can. And I think it's a good question for a lot of these other companies, kind of how hard they want to push on actually getting these things in fully productized form out to the market.

1:33:21market. Yeah, yeah. On Elon's like distinction, it feels like there is more research to be done, but it feels like we're entering like a new cycle of, you know, just focus on the engineering, focus on the deployment, the applications. Let's get all this technology out into the world. Let's reap all that benefit. And yes, there will be a different track of fundamental research that's happening somewhere, but it's really, really hard to predict. And so if you have something that's working, just double down and just go really aggressive on it. I'm wondering more on that, but also on Apple's strategy.

1:33:57It feels like Apple's been kind of like, you know, people have been maligning them for not for missing the opportunity. And Tim Cook's just there on the earnings call being like, look, we acquired a couple of small companies and seven this year, seven companies. But then it seems like they're taking more of like an American dynamism approach. Like there was news today in the journal that they're investing$100 million in American manufacturing. They're certainly doing stuff. They're just not chasing the shiny tennis ball. The headline$100 billion CapEx. So I'm wondering about your thoughts on when you have a platform, how hard is it to resist chasing the new shiny object?

1:34:40Is that the right move? Or are there any other things that you think Apple should be, you know, changing their strategy on? Yeah. So, look, Apple's always had this, you know, very clearly defined strategy that, you know, Steve and Tim, you know, working together figured out a long time ago, which is, you know, I forget the exact term, but it's something like basically they invest deeply into the core of what they do. You know, they'll basically work internally on things for many years. They only actually release things when they feel like they're kind of fully baked. Yeah. Right. And so as a consequence, they have this thing where, and Tim says this, right?

1:35:10They're rarely first to market with new technologies. They're more often in the category of what Peter Thiel calls last to market. They'll come out whatever three years later, whatever, five years later. There were tablets for years before the iPad. There were smartphones for years before the iPhone. Folding phones. They're about to do a folding phone. It's like 10 years into that technology. I'm sure if they do it, they'll hit it. The last mover. Yeah, yeah, yeah. Sorry. The last mover. I guess, yeah, what I would say is, look, that clearly works if you're Apple, right? And so it clearly works if you're Apple.

1:35:41But I would say there's a fine line between that strategy and simply becoming obsolete, right? And so the problem is, if you're not Apple and you don't have all the other kind of super strengths and kind of now the market position that Apple has, do you really want to be a company? If you're not Apple, do you really want to be a company that basically sits there and says, yeah, the world's moving and we're very deliberately not going to lean as hard as we can into it? and so I think there's a lot of survivorship bias in these kinds of strategy discussions where people look at the one company that's able to pull this off and they don't look at the 50 other companies that are in the graveyard because they didn't adapt.

1:36:13I mean all the other smartphone companies when the iPhone came out they were like oh yeah well we can do touch too right we'll get to it right and you know they're gone What do you think Blackberry Bold I remember it was like an iPhone knockoff What do you think right now people are or variety of, you know, shareholders are annoyed at Apple around their reaction to AI, LLMs. John's annoyed around just like transcription generally, just like super basic stuff. But it doesn't feel like the core business is immediately threatened today. It feels like it's still on the horizon around these sort of like, you know, eyewear based computing, you know, potentially net new devices that we're that that we'll see from, you know, companies like OpenAI over time.

1:36:59but where do you like like how how real is the threat you know this year versus 10 years from today and and kind of what's your framework yeah well look I mean I think the biggest ultimate danger I mean the biggest ultimate danger is very clear which is just like at what point do you not carry around a pane of glass in your hand you know called a phone you know because other things have superseded it and you know look everything you know everything becomes obsolete at this point so there will there will come some time to make sure when we're not you know carrying phones around and we'll watch movies where people have phones and we'll be like, yeah, look at how primitive they were, right?

1:37:31Because we'll have moved on to other things and whether those things are eye-based or, you know, other kinds of wearables or whether it's just kind of, you know, computing happening in the environment or just, you know, entirely voice-based or, you know, who knows what it is, but, you know, there will come a time when that happens. You know, is that time three years from now because there's like some, you know, huge breakthrough, you know, from some company that figures out the product that obsoleses the phone right away or is that 20 years from now because the phone is just you know such a standard platform for everything that we do in our lives and everything else you know kind of remains the peripheral of the phone i mean that you know that's you know that that's the game of elephants that's playing out there um you know obviously i think you know i think it's highly likely that we'll have a phone for a very long time having said that it is exciting that there are companies that are going directly at that challenge um and you know whoever cracks the code on that will be that will be the next apple and by the way that that may in the fullness of time be apple itself you know they may be the company that figures that out.

1:38:24Yeah, I remember being at a board meeting at Andrews and Horowitz, maybe a decade ago or something. And Chris Dixon showed me the hollow lens. And I was like, okay, we're one year away from this being everywhere. And I feel like today I'm still in the like, yeah, VR, it's definitely one year away. The next Quest I'm going to be wearing daily. And it feels like we're always there, but it does feel like Apple did a lot of work on the fundamental, you know, pixel density of the resolution of the display. And then Meta has been doing a ton of work on just getting it light and affordable. Like it feels closer than ever, but you always gotta wait until you see the churn numbers until you really call the game, right?

1:39:04Well, here's the other thing, but I think that's true, but you'd also say, I'm on the Meta board, so I'm kind of a dog hunting this one, but like the Meta Ray-Ban glasses are a big hit. Oh, totally. They're a big, so I think we now have a form factor that we know works for iBase wearables. You know, there's not VR and then VR, you know, on top of that. But, you know, just the, you know, the glasses and, you know, and then the glasses of camera, you know, sort of integrated camera, integrated microphone, integrated speaker. You know, that's a very interesting platform. You know, the watch clearly works, by the way, which Apple, of course, you know, has played a significant role in making happen.

1:39:35You know, that now sells in huge volume. You know, so that's the second data point. And then, you know, like I think these, you know, these, these, I think some form of AI pin is going to work. I also think, you know, headphones are going to get a lot more sophisticated, which is already happening. And so, you know, you do have these, you know, kind of data points coming out. And then, yeah, look, the trillion dollar question ultimately is, are these are these peripherals to the phone, you know, which is what they are today? Or are these replacements for the phone? And, you know, we yeah, I would say we, you know, we have we allow it.

1:40:03We I think we have a lot of invention coming both from new companies and from the incumbents who are going to try to figure that out. Yeah, I always think about the value of like narrowing the aperture on these new technologies like with with the the meta Ray Bans. I feel like the fact that they aren't also trying to be a screen is actually a feature, not a bug. And I always go back to the iPhone. Like, it was first and foremost a phone. And people bought it because it could make calls. And then it could make text messages. And then it was an iPod. But do you disagree with that? Please. Well, you guys might be too young.

1:40:33The first iPhone actually was a bad phone. How so? For the first two years, it couldn't reliably make phone calls. I had like the third one and a friend had one. but I feel like it was still like people were carrying cell phones and that was the at least of the expectation but yeah I mean I guess you're right uh so for the for the first year it was a classic apple story because the first for the first two years the thing couldn't make fun reliably make phone calls and then it turned out there was an issue with the antenna and with how you held it and there was a email yeah you heard it and you would and you would disconnect it you could basically break the device yeah based on how you held it and somebody emailed this is when Steve would respond to emails from random people and somebody emailed Steve saying if I you don't hold the phone this way it doesn't make phone calls and he's like well don't hold it that way yeah right yeah so so even there it was like yeah okay and people you know people forget it took like five years for the iphone to find its footing it took like two years to get the they remember also the original iphone didn't have it didn't have broadband uh data it was on it was on the old 2g uh it was called the at &t edge network so it didn't have broadband data and then of course it didn't have an app store right it was completely locked out right the challenges The challenges for Apple now is that people are so used to perfection with the device that launching a product that isn't perfect is embarrassing.

1:41:45You look at the Vision Pro and it's like, well, the battery's big. Steve would have hated this. He never would have shipped this. and that being constrained and not being able to innovate because you're tied to this impossible standard of being on whatever generation 17 of the iPhone and perfecting every element is a real challenge. So I would say there's a corollary to that. One of the things I've observed over the years is I think Algae products become obsolete at the precise moment they become perfect. And what I mean by perfect basically is like, yeah, it's like the perfect idealized complete product.

1:42:21Like it does everything you could possibly ever imagine, everything a customer could imagine, everything you as the technology developer can imagine. It's absolutely perfect. And there's been tons of examples of this over the last 50 years where it's like the absolute perfect, it seems to be the permanent version of that product. And then it just turns out that's actually the point of obsolescence because it means creativity is no longer being applied right into that platform. You're just like, there's just nothing else to do. You're just like, you're done. The product has been realized. And then the cycle is what happens to your point.

1:42:49the cycle is other people come in with completely different approaches, completely different kinds of products that are broken and weird in all kinds of ways, you know, but are fundamentally different. And so, you know, that is one of the time-honored traditions. And, you know, one of the, you know, one of the, you know, things you could say about, you know, Tim is, you know, his willingness to kind of break the mold of Apple only shifts perfect products, but, you know, being willing to ship the, you know, the Vision Pro, you know, you know, shows a level of determination to kind of stay in the innovation game, which I think is very positive.

1:43:15Yeah, Yeah, yeah, yeah, yeah. That's great. Updated thinking on open source. Since we last talked, there's a lot that's been happening. OpenAI is an open source company again. Yes, OpenAI is open again. Yes. Yeah. Yeah, look, very encouraging. You know, a year ago, I was getting very distressed about whether open source say I was going to be allowed. It was even going to be legal. And so I think we're basically through that at this point. We're through that in the U.S. We'll see about the rest of the world. And then, look, the U.S.-China thing is obviously a big deal, but I think it's been net positive for the world that China has been so enthusiastic about open source AI coming out of China, which has been great.

1:43:55And then, yeah, look, OpenAI leaning hard into this and releasing what they did is, I think, fantastic, both because of what they released, which is great, but also just the fact that they are now willing to do that. And then Elon reconfirmed overnight that he's going to start open sourcing previous versions of Grok. And so, yeah, so we, you know, we seem to be in the timeline where open source AI is going to happen. You know, right now, you know, I think what you would say is it kind of lags the leading edge proprietary implementations by, you know, six months or something like that. But I think that, you know, that's a good, if that's the status quo that continues, I think that would be a very good status quo.

1:44:29What are the rough edges that we need to kind of sand down when we're thinking about Chinese open source models specifically? Is it we need to do some fine-tuning on top of them to add back free speech or do we need to watch for back doors? It's phone and home if it runs into this specific thing like the Chinese open source thing It was remarkable because I feel like it really does accelerate the pace of innovation because everyone gets to see oh This is how reasoning works. I think that's great at the same time It made me very it made me much more appreciative of AI safety research and capability research and actually being able to interpret what's going on and say definitively this model is going to behave weird in this weird way, like the Manchurian candidate problem.

1:45:09We haven't found any of that, but it certainly seems like something we'd want to keep an eye on. But from your perspective, what are the risks that we need to be aware of going into a world where China is really pushing hard into open source? Yeah, there's two, and you identified them, but let's talk about both of them. So the phone home thing is the easy one, which is you can packet sniff a network and you can tell when the thing is doing that. And plus, you can go in the code and you can see what is doing that. And so you can validate that that's either happening or not happening. And I think that's important.

1:45:41But I think people are going to figure that out. You can kind of gate that problem practically. The bigger issue is we have this term in the field right now called open waits. And open waits is a loaded term. It uses the open term from open source. But of course, with open source, the thing is you can actually read the code. With open weights, you have just a giant file full of numbers, as you said, that you can't really interpret. And then what you don't have, what most of the open weights models don't have, including DeepSeq specifically, what they don't have is they don't have open data or open corpus.

1:46:19So you can't actually see the training data that went into them. And of course, most of the people building models are kind of obscuring what that training data is in various ways. And so when you get an open weight model, the good news is the software source is open. The good news is you can run it on your machine. You can verify that it doesn't phone home, but you don't actually know what's happening inside the weights. And so I think that that is going to be a bigger and bigger issue, which is like, okay, how the thing behaves, like, yeah, what has it actually been trained to do? And what restrictions or directives has it been given in the training that are embedded in the weights that you need to be able to see?

1:46:54you know this is I would say this is coming up as sort of I would say a global issue you know which you know we worry about when these models come from China other countries worry when these models come from the U.S. right which is right so one of the phrases you'll hear when you talk to people kind of outside the U.S. is kind of this phrase people are kicking around which is not my weights not my culture okay right right or by the way for that matter not my weights not my laws yeah right which is like okay like what actually is this thing going to do right and And to your point, the Chinese models, for example, might never criticize communism or something.

1:47:26I can tell you, the American models have all kinds of constraints also, right, implemented usually by a very specific kind of person in a very specific location in the U.S. And so, you know, I think that this is a general issue. And we're going to have to see basically people's tolerance levels being willing to run open weights models where they don't fundamentally have access to the data. And then correspondingly, I think what we'll see is more open source developers also doing open data so you can see what's actually in them. Yeah. Obviously, open source is very important in terms of just distributing intelligence broadly, giving people the ability to run their own models and really fine tune them and have control.

1:48:04There's also the big push just to make frontier models and high capability models free. One model is you charge for the premium, you give the free away. It's a freemium model. That's what we're seeing at most of the labs right now. There's also this kind of specter on the horizon of potentially putting ads in LLMs and what that would do to the world. Jordi got in a little dust up with Mark Cuban on the timeline, deciding whether or not it would be a net good to put advertising in LLMs. What might happen that might be bad there? Yeah, my point broadly was that ads have been an incredible way to make a variety of products and services online free.

1:48:45And just saying like default, just no ads would potentially be incredibly destructive. But yeah, curious your framework. Yeah, so I should start by saying like whenever I personally use an internet service, I always try to buy the premium version of it that doesn't have ads. Right. And so if I can, like, live personally inside an ad for universe and pay for it, like, that's great. And I'll freely admit, you know, whatever level of, you know, hypocrisy or incongruence, you know, kind of kind of kind of results from that. But the point is choice. The point is choice. Well, the point is exactly what you said.

1:49:19It's affordability. So the problem is if you really want to get to if you want to get to a billion and then five billion people, you can't do that with a paid offering. Like it just at any sort of reasonable price point. It's just not possible. The global per capita GDP is not high enough for that. People don't have enough income for that, at least today. And so if you want to get to, if you want the Google search engine or the Facebook social app or the whatever frontier AI model to be available to 5 billion people for free, you need to have a business model. You need to have an indirect business model, and ads is the obvious one.

1:49:54And so I do think if you take some principle stand against ads, I think you unfortunately are also taking a stand against broad access just in the way the world works today. And then, look, the other really salient question is the same question that the companies like Google and Facebook have been dealing with for a long time, which is, are ads purely destructive or negative to the user experience? Or are they actually, if done properly, are they actually either neutral or even positive? And this was something that Google, I think, to their credit, figured out very early, which is a well-targeted ad at a specifically relevant point in time is actually content.

1:50:28It actually enhances the experience. It's an obvious case. You're searching on a product. There's an ad. You can buy the product. You click to buy the product. That was actually a useful piece of functionality. Can you have ads or other things that are like ads or look like ads, different kinds of referrals, mechanisms or whatever, can you have them in such a way that they're actually additive to the product experience? Just like with searching with social networking, you could imagine lots of examples of that. People will, you know, the people will, you know, they'll whine around in lots of different ways.

1:50:57But I think, you know, I think that hasn't been a bad outcome overall. And I think that I think it's entirely possible that that's what happens with these models as well. Yeah. So kind of similar kind of question, what should be legal, kind of trying to create legal frameworks on a number of issues with AI. There's been a number of IP cases that have been working their way through the courts, what can labs use to train models, etc. There's been some good outcomes recently. Sam also was talking about how a lot of people are using AI as like a confidant, like a friend, things like that. And he mentioned that currently your chats are not privileged.

1:51:38They can be used in a lawsuit or other situations. How optimistic are you that our sort of legal system in the U.S. can get some of these issues right where maybe it can't just be, you know, total free markets, kind of lawless, whatever goes. Yeah. So in the case of training data, I think that there I mean, there's a bunch of these copyright, you know, kind of lawsuits happening right now. There's, you know, the big New York Times opening, I want and there's been a bunch of others. I think in that for that particular problem, my guess is that problem ultimately has to be solved through legislation.

1:52:14It's ultimately a legislative question. The reason is because it goes to the nature of copyright law itself, you know, which is legislation. And of course, you know, the content industry is already claiming that, of course, you know, using copyrighted data to train, you know, without permission, without paying is sort of, you know, they believe illegal on its face, you know, due to violation copyright law. The counter argument to that, which, you know, which we believe is, well, it's not copying, right? There's a distinction between training and copying, just like in the real world, there's a distinction between reading a book and copying the book, you know, as a person.

1:52:44And so there's going to need, I think, you know, the courts are trying to grapple with that. There's a whole bunch of cases, there's jurisdictional questions, you know, probably ultimately Congress is going to have to figure out a, you know, figure out an answer on that. And by the way, the president is kind of, you know, thrown down that gauntlet in his, I think the speech he gave last week or two weeks ago, you know, where he said that, you know, Washington probably needs to deal with that as an issue. So that's one on the privacy thing. I think that one feels like it's a Supreme Court thing.

1:53:12To me, it feels like that's the kind of issues had the Supreme Court. And in other words, like whether, for example, your transcripts are considered your property and whether they're protected against warrantless search and seizure. And the observation I would make there is if you look at the march of technology over time. So the Constitution has like very clear, you know, Fourth, Fifth Amendments, you know, very specific rights around the things that are yours, you know, such as, you know, your home, you know, being in your home. You know, by the way, the thoughts in your head. Right. that the government can't just come in and take.

1:53:43They can't just come in and search your house without a warrant. They can't put you in a jail cell and beat you until you fess up. We have constitutional protections against the government being able to basically take information fundamentally as well as possessions. And then basically what happens is every time there's a new technology that creates a new kind of sort of thing that you own, thing that's yours, thing that you would consider to be private, thing that you wouldn't want the government to be able to take without a warrant, out of the gate, law enforcement agencies just naturally go try to get those things because there are ways to solve crimes.

1:54:19And it feels like that's a legal thing to do. And then basically the courts come in later and they rule one way or the other and basically say, no, that actually is also a thing that is protected against, for example, warrantless search, warrantless wiretapping. And so I feel like this is the latest of probably, I don't know, 20 of those over the last 100 years. And, you know, I don't know which way it'll go. But I think it's going to be a key thing. Because as you know, people are already telling these models, you know, lots of things that they're, you know, that are very personal. Okay, lightning round, quick questions.

1:54:49We're letting you get out of here in a couple minutes. We're in this age of spiky intelligence. Models are great at some things and then terrible at others. Where are you actually getting value out of AI right now? Where is it falling down for you? How are you using AI day to day? Yeah, so I have two kind of, I don't know, barbell approach. One is for serious stuff. I love the deep research capabilities. And so, and I'm doing this in a bunch of models, but like the ability to basically say, I'm interested in this topic. And then what I just, I just don't like write me a book. And I, you know, I'm kind of hoping for the longest book I can get.

1:55:21I always tell it like, go longer, go longer, more sophisticated. You know, but the leading edge models now, they're getting up to like 30 page PDFs, that are completely well-formulated, basically long-form essays. It's just incredible richness and depth. And if it's 30 pages today, I'm sort of crossing my fingers that it'll get to 300 pages coming up here in the next few years. And so I'm able to basically have the thing generate enormous amounts of reading material with just, I think, incredible richness and depth and complexity. And then on the other side of the barbell is humor. And I've posted some of these to my ex-feed over the last couple of years.

1:55:55But I think these models are already much funnier than people give them credit for. Really? Yeah. I think they're actually quite highly entertaining. A while ago, I posted. Is it specific formats? Like prompts or is it just chatting back and forth? Be me, be Mark Andreessen. You know, that format. Take a dip in my pool, in my office. They're really good. So they're really good at green text. That works really well. But for some reason, the ones I find hysterical are the, I haven't write screenplays, you you know, for like TV shows or plays or movies. And I posted, I had it right, a new season of the HBO Silicon Valley, you know, set 10 years later.

1:56:33And I had it right like an entire, I had it right like 10 scripts for a complete season. And of course I just said, you know, make it like Silicon Valley, except, you know, it's happening in 2021. It kind of peak woke. And I thought it was just, I think it's just, you know, I'll sit there at two in the morning and just like laughing my ass off at how funny this thing is. And so I think these things are actually, are actually already like extremely funny. They're extremely entertaining when they're used in that way. And I do enjoy that a lot. And I generate a lot of those that I don't post. Stay in the group chats.

1:57:04It's probably a good idea. They're your property. Yeah. Hopefully, the Fourth Amendment holds on these. Yeah. That's great. I have one last question. Go for it, and then I've got one more. How do you get a job as a venture capitalist in 2025? So I mean, look, the best way to do it is to have a track record early as somebody who is in the loop specifically on new product development. And so somebody who, you know, be like deeply in the trenches at one of these new companies in one of these spaces, you know, participate in the creation of a great new product and a great new company and, you know, really demonstrate that you know how to do that.

1:57:36You know, there's there, you know, there are great VCs who have not done that. But, you know, I think that is sort of a foundational skill set, you know, for working with the kinds of founders that you want to work with who are going to want you to have, you know, kind of very interesting things to say on that, as I think, you know, still the best way to do it. Yeah, like feel the growth, immerse yourself in the growth, the aggressive growth environment, and then you'll be able to identify it when you see it from afar. Yeah, that's right. Last question for me, state of M &A in your mind, how are you advising companies where you're on the board or just the portfolio broadly around what they should expect now and in the near future?

1:58:15You mean in terms of whether you can get things approved? Basically, yeah. Yeah, yes. So look, approval is not a slam dunk. I just saw there was a medical device company this morning where the acquisition was not allowed by the FTC. So there is still scrutiny. It's obviously a very different political regime in Washington, but by their own statements, this is not an administration that believes in total laissez-faire M &A. And it definitely wants to, in their view, maintain a very healthy level of market competition. Yeah, how many do you expect do you expect certain companies to be negatively impacted by the Figma story?

1:58:52Right. You have this deal gets blocked, successful, you know, IPO. Lena Khan is taking a victory lap. You know, many people are responding and joking, saying, you know, someone Lena cuts off the arm of a pianist and they endure and create a masterpiece. And then you look at the example with Roomba, I think it was, where Roomba had a deal with Amazon. It was blocked and the company has been in shambles ever since. So my concern is that people look at Figma and say, you should be independent. You just figure it out. Nothing can go wrong. Yes. Yeah, and it's kind of taking a victory lap. It was very disconcerting.

1:59:32And for exactly the reason you said, which is survivorship bias, which is you pick the one that worked out. And then, you know, it's the airplane, the red dots, the airplane, you know, you ignore the 50 that are in the ground that you've never heard of. And so that was very disconcerting because, you know, it's sort of the central planning fallacy, which is like we make centrally planned economic decisions. We have one example. You know, it's like in Europe. It's like, yeah, well, the bottle caps actually don't fall off the bottle. Right. Like, you know, it works. Right. It's like, OK, but do you want to live it?

2:00:05you want to live in an economic regime in which the government has dictated bottle cap design. The answer is clearly no, because the downside consequences are thousands of weight. Even looking at the Chinese model, which is people can say they're picking winners, but to get to maybe picking a winner, you have this intense bloodbath of competition where teams need to rise to the top and prove themselves before they get any of that real meaningful state benefit. Yeah, that's right. And so you just you just yeah, you just you just have this adverse selection survivorship bias thing where you just you don't pay attention to all the collateral damage.

2:00:41So I do think that mentality is like super, super dangerous. And so, yeah, look, I think companies just have to be very thoughtful about this, both acquirers and inquiries. You know, and the big thing is if you're selling a company like you just need to anticipate that you might you might not get it through. And if you don't, they're sort of like, OK, number one, is there like a big enough breakup fee? right are you going to get you know paid for the you know paid for the the you know the damage that you're going through um you know is and how is that structured on the one hand and then two is yeah look do you have the kind of company culture that's going to be able to withstand that um and and is your business you know strong strong enough to be able to be able to get through that and it's it it is a real risk and something worth you know taking very seriously yeah and that's that that's why it felt emotion we were at nicey last week it felt emotional this that that the the figma team was able to effectively just restart the business and say, we're taking this all the way.

2:01:32If you talk to any really successful company, what they'll tell you is, yeah, over the years, we had these crucible moments in which we almost died. But we pulled together and we pulled it off. And then that became one of these central mythical events in the history of the company that we always refer to. And I'm like, my God, we got through that. And we're so strong and tough. And we've been forged in fire. And now we can do anything. And it's like, yeah, that's great. and then there are 50 other companies that hit those crystal moments blew up and died

2:02:00so yeah it's all of the quote lessons learned on this stuff they're all conditional on life survival um and so they these things need to be taken incredibly seriously um you know which which the great ceos do yeah well thanks so much for joining we'll let you get back to your day we already give you five minutes over next time we have to book five hours because this is fantastic i got let's do the first 24 hour tv yeah we would love to have you again It was a lot of fun. Enjoy the rest of your day. We'll talk to you soon, Mark. Have a good day. Bye. Thank you, guys. Thank you. Up next, we have Harley from Shopify coming in the temple of technology, the fortress of finance, the capital of capital.

2:02:35Welcome to the stream. Harley, get that gong ready, Jordy. What happened? Give us the update, Harley. How are you doing? The update's good. I just finished watching you guys with Mark. It was an amazing interview. It was really great. He's fantastic. You know, before I get into Shopify, you guys mentioned the emotion of being at the NICU with Figma yesterday, I think, right? Yeah. So we are 41 quarters now and maybe 42 quarters post-IPO. I think it's emotional for anybody. I mean, obviously, that story is incredibly emotional because of what happened with Adobe and all that. But I think it's emotional for anyone who goes there.

2:03:14Although I do think, you know, you'd said that is that going to, you know, create some momentum for more companies to do it independently. I don't know if that's going to be the main catalyst or not. But I said this last time when I was on your show. I want to say it again. For those companies that are out there, there is this perception that, like, the public markets are something to avoid as much as possible. I, you know, 42 quarters in, let me just say, like, one of the best things Shopify did was go public. It's made us a better company. it's allowed us to be a lot more transparent. I think there's like this hygiene thing that these quarterly reports do.

2:03:50So I don't know where else to do this other than a show like this, but this is my endorsement that if your company is ready, the team is ready, the business is ready, accessing the public markets should not be this thing that is like, if I don't get acquired, I guess I'll have to take the IPO route. It's been an amazing experience for us. That's awesome. 41 quarters. Yeah, amazing run. And advice for Dylan Field. How can he make the first 41 quarters of Figma, their public debut, a success? Oh, wow. I know Dylan. He's an amazing founder, a great entrepreneur. So I don't know if I much need to teach him.

2:04:25Other than to say that, you know, we looked at the IPO as sort of like we actually called it game day. Like we were graduating from the minor leagues to the major leagues. And I actually think that type of – that metaphor actually works really well. It's not like you're done. In fact, you're just sort of graduating to the next step. The thing that I think, on the earnings call today, I spent a lot of time talking about this and get into the results in a moment. This idea of providing these breadcrumbs to the public, to the street, to your, you have this huge book of investors, including retail, but you have these 10 or 20 funds that if you're lucky, and we've been lucky, I assume Dylan will have the same fate, they kind of hold your stock for a very long time.

2:05:08and making sure you leave enough breadcrumbs so that they can anticipate where things are going to provide some consistency, I think is really, really important. So, I don't know, like becoming a trusted version of Figma in the public markets is a much better way to, I think, do things than just becoming like a different version of Figma. I think the reason that Figma is so successful is because they understand their culture, their product, their customer base. I think this is just sort of the next phase for them as opposed to like, Like, okay, we're done. Let's now change the company and become something different.

2:05:39And in sort of this era of founder-led companies and founders being allowed and permissible to run their companies over the long period of time, I think that works much better. One thing that stood out to me is Figma was launching new features on the day of the IPO. It was very cool. Which to me just sent this signal that we're still the same company that care. Dylan was replying to customer support posts on the IPO day. It's amazing. I mean look, that is like, we do the same thing. There is something different about founder-led companies. And with that, less about Figma, more about Shopify. Okay, so obviously, you know, we had our results this morning.

2:06:17Give us the news. The news is Q2 GMV was$87 billion. That's up 31%. Let's go. Revenue was$2.7 billion. Free cash flow was$422 million, which is 60 % of revenue. So back to the consistency point. we've now had 11 consecutive quarters of positive free cash flow, eight consecutive quarters of double-digit free cash flow. And this is Shopify operating on all cylinders. And yeah, I think that it was a really good quarter. I think there was a bunch of these interesting uncertainties that the street had. Tariffs, de minimis, macro. But our merchants did disproportionately better than the overall e-commerce market, which is really cool.

2:07:01And then I got to announce some amazing brands, Michael Kors, Canada Goose, Starbucks, these incredible companies that are now coming to Shopify. Burton came, Melee came. So really cool to also be able to talk about some of the big brands that are now joining Shopify, too. Break down some of those concerns kind of one by one. I'm sure you did. But tariffs, de minimis, the market broadly. How have you guys been kind of approaching that? and and yeah how did you how do you think you got through it is it just that it was always you know kind of like a lot of these a lot of these political changes it feels like really crazy and then it rolls back and it's actually fine is that the right narrative or is it the actual like adaptation and agility of both Shopify and the merchants to actually work around a changing environment I mean it's a team effort too because each individual brand has to say hey we're facing some headwinds here and we have to figure this out.

2:07:57We have to navigate this and just find a way. Yeah. It actually carries all the way to the consumer because the consumer also is like, well, what if I lose my job? What if I have less disposable income? Now do I have to select, do I have to make choices and trade-offs of what I buy, what I don't? I mean, just to kind of at the high level, we are not seeing signs of a slowdown. I'll just start with that. We can look at data actually through early August. We're August 6th today. So obviously not half the month, but certainly the first week of August. And generally, we're not seeing any slowdown.

2:08:30The factors we monitor at Shopify are consumer spending, household savings, tariffs, foreign exchange trends, and then supply chains. And generally, we're not seeing nearly what I think a lot of us were concerned about. The other thing that I think is interesting is that I mentioned like, you know, Starbucks and Burton Canaguse joining Shopify. One of the interesting things that happen that I don't think we fully, I didn't certainly didn't anticipate this, is that because of this uncertainty, a lot of these bigger companies were beginning to be like, they were rethinking whether or not their tech stack was future proof.

2:09:07Like, am I spending too much money on technology? Is my technology partner and commerce, in our case, platform, are they future proofed? Like, I'm hearing all, but you know, you think about like, you know, think about like a metaphorical board meeting at one of these very large retailers. Someone is going to raise around and say, how are you guys thinking about AI inside the company? And what about like agentic commerce? And so I think one of the neat parts for us as a tailwind has been that a lot of the big brands that historically said, our stack is not great, but we're fine with it, are now looking and saying like, all right, this is ridiculous.

2:09:39It's like duct taped together. It's not future-proofed. We're not able to, you know, we don't even like our provider doesn't even know what agentic commerce is. And that's leading a lot of brands to come to Shopify. Shopify. The thing that we've, I think, you know, we were around in 2010. And so sort of at the tail end of the global financial crisis, certainly pandemic obviously had a lot of changes too. What we try to do is not necessarily, you know, forecast what any organization, any administration is going to do from a policy perspective, but rather figure out, okay, if any of these things happen how do we set up merchants on shopify so that they're better off than merchants that are not so in the pandemic for example like immediately we didn't know how long the pandemic was going to last but we immediately were like okay there's a bunch of these like restaurants for example that are now going to have to do some sort of like delivery service we're not we don't restaurants is not one of the core uh verticals that shopify has ever been in but like let's just make sure that we help them and perhaps they end up going to accessories later on and they'll eventually stay with shopify or you know a bunch of physical retailers now have to move online very quickly, what can we do to actually help them do so at this incredible clip?

2:10:48So that's kind of how we look at these times of uncertainty, which is just simply prepare merchants on Shopify. So maybe they don't want to do a tariff calculator. Maybe they don't need to do a tariff calculator, but if they decide to do so and it's valuable to them, let's make sure it's embedded in the product and they can simply just opt into it. So that's kind of the way we do that as opposed to, you know, you can read as much information, you can read every paper and listen to every interview from the administration as possible, you still may not know what's happening. And so rather than do that, let's just anticipate all these things could happen.

2:11:19Let's just make sure our merchants are prepared. I'm not sure if I'm like over storytelling here, but Burton, is that a full circle moment for the company? Tell me about that. Tell me about the significance of that. The significance of it is that, you know, why did it take them so long? What were they doing? Oh, man. Okay. So Canada Goose, Danny, who's an incredible, you guys know Canada Goose, right? Yeah, yeah. Okay, so Danny Reese, an incredible, incredible entrepreneur, one of the greatest retail entrepreneurs on the planet. He's a friend of mine. He's a Canadian guy. Canada Goose and Shopify are two Canadian stories, success stories.

2:11:55And I've been trying to get them on for a while. They finally came on, too. But Burden is really relevant because the history of Shopify is that when Toby moved to Canada in 2004, he couldn't get a job because he was a new immigrant and no one would hire him. So he ended up deciding to start a business, which was, you know, if you're an immigrant, that's okay. And he decided he would sell snowboards on the Internet because he was in Canada and he left to snowboard. And he couldn't find any good software. And so he wrote the software to sell these snowboards. The store was called Snow Devil. And that software that he wrote for Snow Devil would become what is now Shopify.

2:12:31And so the fact that Burton, one of the most important snowboard companies on the planet, is now using Shopify is really, really cool. uh and um but i i love you i mean i i spend if you listen to the earnings calls i spend quite a bit of time on these calls talking about some of the larger brands coming on part of it is that i'm very excited by these brands like you know i i love the fact that these it's weird but like hunter douglas uh birkenstock mattel these are brands hunter douglas was created i think in 1919 birkenstock was created in the 1700s uh and uh and and i think yeah so mattel was created in 1945.

2:13:03I like that these very large, iconic retailers are selecting Shopify. The other reason I like to talk about these brands - And it's significant, too, because there's certainly some people living under a rock, and early on, Shopify was loved by small merchants that were just starting out. And I'm sure you went through a bunch of calls with investors and things like that over the years, which was, yeah, it's great, but you guys just have the long tail of enterprise. you're never going to really dominate with the retailers that matter. And clearly that hasn't been true for a while. But you still kind of have to just say it over and over and over and over again.

2:13:42Yeah, so I'm just repeating it over and over again. The other thing that we announced today was that we now have 12 % of e-commerce market share in the U.S. So if you think about it from a checkout perspective, yeah, that's... That's really good advice for entrepreneurs over there. Just go get 12 % of the entire market. You'll probably be good. A lot of people say, all I want is 1%. No, aim a little bit higher. Go for 12%. 12 % is pretty good. Go for 12%. I think makes us the second largest checkout in the US on the internet after Amazon. Congratulations. How do you think about sales cycles? Because for someone like a Burton, I imagine the first conversations there, that feels like this whale that is just a natural fit for the product, but it's not the kind of thing that was closed in a quarter.

2:14:29So like, how do you how do you kind of even work with the team on that front to understand that, like, we're actually playing and, you know, ideally we close all the customers we want to close next quarter. But realistically, sometimes great partnerships take time to come together. And you guys almost have the luxury of like you're 41 quarters in. You're probably thinking about, you know, you're thinking, you know, actually able to think, you know, long term. but in some cases it's it's it's actually it's not necessarily based on size or like gmv band but we have merchants on shopify that are doing hundreds of millions of dollars of gmv and they have like i'm not joking like they have like 12 employees wow um and then we have merchants that have you know thousands of employees and are doing far less in gmv so it's not necessarily about the size of merchant it has to do i think with two things one is complexity in terms of how much uh you know technical debt and baggage do they have meaning how much duct tape do they have to undo to migrate over and then the second part is like you know what how motivated are they to move over um i remember uh when when emily weiss left glossier uh kyle lahey replaced her um kyle's an incredible ceo uh kyle came in to run glossier and um kyle called and said you know we're a cosmetics company.

2:15:54We have this incredibly, you know, complex technology stack. We have tons of people running e-commerce. Do we need this? And we looked at it and we're like, no, we can help you. And I think the Glossier migration, again, that was a homegrown stack. And we said, no, we can help you. Well, that was at an era where investors. It started as a blog, by the way. Well, yes, but also investors at that time wanted to invest in consumer brands that had an insane CTO. You know, it was like it was a point it was a badge of honor to be like now we're not using off the shelf software Like we have we're running on our own tech stack.

2:16:27We're a technology company. Yeah, give us a technology multiple Well, and exactly you got I mean you said it right. It's a technology multiple. They're like, well, we're not really this word This other thing as well. Like sorry, I can't switch because if we don't have Our own tech stack like my multiple is gonna get I talked to one CTO at a D2C company that they didn't just build their own e-commerce stock, they built their own sales force. They built their own CRM, email management. And the good thing is that everybody realized that you can build your own tech stack and you're still not gonna get a software tech multiple.

2:17:01And your cost is gonna be. Exactly, and not just your cost, just talk about your efficiency. Oh, totally. Back to the 12 % market share in e-commerce. There is no checkout that is more performant than Shopify's checkout, simply because we have more data in which to make better decisions with. So even if you do have the most technical team building the most incredible technology stack, you still don't have the economy of scale that you can get by being part of it. That's the weird part that people miss about Shopify. That's the reason why the 12 % number is, I think, valuable. If you sort of put together, if you were to assume for a second that we were one single retailer instead of millions of individual stores, we would be the second largest online retailer in America.

2:17:39As part of that, you are entitled to incredible economies of scale. So even if you can do it yourself, even if you can do it in a cost-effective way, you're still missing out on, like, you know, we announced the agentic stuff, which we should talk about yesterday. You can go do your own deals with every single agent that's available, or we can just do it for you. We're already doing it for millions of others. Might as well throw in with us. Your point, though, on the multiple is interesting. Something shifted, I think. At some point, I don't know what year it happened, But at some point, the flex of, oh, I built my own e-commerce stack, stop being a flex, and started to look like, well, why did you do that?

2:18:19I mean, why? 2016, you're going to have a write-down. That's what happened. You basically start looking at it. It's like, wait, you're spending$3 million a year on this technology team, and that is cutting, that could be cutting, I don't know, safely, like$30 million off of your ultimate enterprise value. I was running an e-commerce company in that era and I went around and I went and I did, I looked at all the different companies, all the leading DTC companies, looked at their head count on LinkedIn, how many people do they have in their technical organization, what's the average comp, and I found out the amount of money that they were spending as a function of revenue.

2:18:56And some of the companies were spending 10 % of revenue on just building e-commerce software. And I was like, and so at that time I was like, oh, you know, we were on Shopify Plus and I was like benchmarking. I was like, okay, so we're like an order of magnitude more efficient, but we could be even more efficient. We need even less people. Like it was just like, we should be focusing on the marketing. We should be focusing on the brand. And there's this great PE firm. You guys probably know it called L. Catterton. Oh yeah. Yes, L. Catterton is amazing. Michael Chu runs it. It's like Michael Chu and the Arno family.

2:19:27Bernard Arno is involved there too. And Michael is an incredible investor, but he's acquired a bunch of merchants, some on Shopify, some on not. And one of the things he's recently told me is that in some of those meetings where he brings in sort of their first meeting once they've been acquired by them, he says, okay, well now when are you migrating over to Shopify? At some point it flipped from being, oh, I have all this opportunity because I can build everything myself to. I actually think you should be, like do what you do best, which is you're an incredible cosmetics brand, go do that really well.

2:19:59Yep, totally. Did Stables come up on the earnings call at all? I brought them up a lot many times. What's your updated thinking? How do they fit into the kind of Shopify ecosystem in the near term, long term? Sorry, you said Staples or Stablecoins? Sorry, Stablecoins. Oh, I thought you said Staples. Staples is a merchant on Shopify. Oh, yeah. Okay. Yeah. Stablecoins. It feels like we're in the... Stablecoins are legal. There's a public company. They're out there, but when are we going to see people paying for it? I'm sure that there's integrations. I mean, a decade ago, you could do a shopping checkout with Bitcoin, with the Coinbase integration and a couple others.

2:20:40Since 2012, you were able to do that. Since 2012, I remember. Because that was when Coinbase started in YC. Exactly. 50 Cent had SMS by 50. 50 Cent was trying to compete with Beats by Dre. No way. It was a big battle. Anyways, we had both of them on. And 50 Cent actually, I think, was one of the first merchants to actually accept Bitcoin. I don't know if anyone did it. But look, I think in that era, that was really about speculation, not about detail. The way that we think about stablecoins in general, and I'll get into USDC in particular, is that anything we can do that can bring more flexibility to commerce is a very good thing.

2:21:16I think stablecoins, USDC in particular, it just gives merchants more choices, more security, and it offers much faster settlement. Now, the other thing it solves, which is not getting discussed, but it's important, is that it solves a real problem, which is cross-border. Cross-border is now becoming this – it's not becoming a feature of modern retail. Like default global is how most modern – the best merchants, the best companies I know are default global. They don't necessarily look at these geographic physical bounds as different markets. It's like, well, if you sell to the US, why wouldn't you also sell to Canada?

2:21:56It's effectively, you know, it's the same continent. And so I think with stable coins, this idea of offering a payment method that combines, like, the transparency with a blockchain with the speed and a price stability of a major currency is really, really valuable. And then in terms of doing it with a trusted partner with us, it was Coinbase, which we love, it means that you can actually bring all these very familiar commerce features like authorization and refunds, but you don't actually need a new wallet. Part of what I think is scary about this type of stablecoin is like, well, do I have to now create a new account?

2:22:35And what is the friction involved? And I think the way that we're looking at it is that merchants get paid in dollars. There's no new wallet created. There's no added friction. But it's a seamless, flexible, safe transaction. So, again, it is not about speculation. It's more about utility. I think it'll be a slow sort of increase in penetration. And then eventually there'll be a cohort of consumers and a cohort of merchants that are just like this is so much better. Can we shift to AI? I know that you have some stuff that we should review. I also want to ask about shopping in LLMs and then how that flows through.

2:23:20There's the potential of ads and there's potential of the checkout happening, you know, or, you know, I send my agent out to purchase it. Just give me the updated thinking on how AI is changing or how AI is changing commerce. So if you think about it from a sort of a model perspective, think about Shopify as being the hub in the middle. This retail operating system where you have your inventory, you have your analytics, you fulfill orders from there, you have your customer data, everything is sort of at this hub. And you sort of think about the main spoke off that hub has been e-commerce for us.

2:23:55And then a second spoke, obviously, was a point of sale at physical retail, which is one of our largest growing segments. And then you can sort of think about new spokes. Another spoke, for example, is like social commerce. We integrate with like Instagram. We integrate with YouTube. We have a Roblox integration, a Spotify integration. So one of the things that we think a lot about is the future of retail is not going to be this weird binary online versus offline. It's going to be where every surface area where consumers spend their time. And for most merchants, most of the time, you know, the Roblox integration is not going to be their main thing.

2:24:26although Fenty Beauty, one of our brands, is doing really well with this Roblox integration. They have figured out that their consumers are spending time. And there's actually a physical, sorry, like it looks like a physical store inside of the Roblox universe. Roblox, by the way, has like hundreds of millions of monthly actives. It's insane. Yeah, we were talking about it earlier. I think it's, we talked about it earlier, 20 plus million DAUs in the US. And under 18? That's unbelievable. Under 18? Under 18? It's like everyone. OK, so think about it from like, the perspective of a direct-to-consumer cosmetics brand where their core demographic is that age group.

2:25:03Now it's a new place, and there's no competition because no one else is... Fenty created a store inside of Roblox. You look next door, unlike their store in Soho, there's nobody else. So we think about this idea of these different spokes being different channels. We think that agentic commerce is very likely going to be a new one of those spokes. And so in the last 12 months or so, we began to build infrastructure that allows these AI conversations, basically to bring native shopping inside of these AI conversations. So we launched three things. And I'll go through all three because you guys are technical and you have a technical crowd.

2:25:42So the first one is Catalog. We launched it in this past quarter. So Catalog effectively helps agents to search and to sort of surface exactly what customers want in seconds. It looks across all of Shopify's products, every SKU on Shopify. And then it uses large language models to categorize them based on metadata and the types of products they are. It also creates sort of this standard product data at these massive volumes. And then we package it in basically these search APIs. So if you have an agent, you simply can ingest the search API and have the entire catalog of Shopify merchants. And is this tech behind an MCP server or is this an API that's just accessible?

2:26:26So you can do an MCP server with like UI components or you can do it through an API. Okay, got it. The second piece is universal cart. This is new. So it's part of what we call checkout kit, which I'll get into a second. But effectively, it holds items from multiple stores in one single spot. So as you're sort of having a conversation with your agent, let's say you're going on a camping trip, for example. You may want a tent, but you may want a sleeping bag. Those are different stores. You may not be ready to checkout immediately, but you want to hold all these things in one single cart. And then that all feeds back into Checkout Kit, which we launched last year, which lets partners embed merchant's checkout directly in their agent.

2:27:05And it has ShopPay built into it, but it's the best converting checkout on the internet, which is ours. And now we're effectively giving it to these agents. What we announced yesterday was that now partners, any agent can actually theme the Checkout Kit so that it matches the application's look and feel. So it doesn't feel like some weird, you know, iframe that pops out that looks like it's a third party. So it actually looks natively integrated. And then, you know, merchants get the tools that they need. They'll get address verification. They get fulfillment. And actually, in the case of Checkout Kit, Microsoft's co-pilot is already using it.

2:27:41So the benefit is sort of threefold. The first is for consumers, now they can get these personalized, conversation-led shopping experiences. From the merchant perspective, merchants on Shopify are now going to have a new place to get discovered across all these AI platforms. But from the partner perspective, which I think is the most interesting, is that they don't have to build the complex parts of commerce. They get access to millions of these merchants through this MCP catalog, and they also get the best converting checkout. And we think if this does become a place that is a predominant or a popular surface area for commerce, it means that merchants on Shopify will be very well positioned.

2:28:22And what's neat about it is if you think about how a lot of those, you know, like if you were trying to go on a camping trip now, you'd probably do it in some sort of search, Google or something like that. The products you're going to find are likely going to be based on, like a lot of them at least, may be sponsored where the more you pay, the more likely you are to show up. Whereas in sort of the agent world, in sort of agentic commerce world, it's actually more of a relevancy. Like it has all this history of everything you've ever talked to it and said to it. It knows that you're price sensitive for certain things, but not for other things.

2:28:58So it may turn out to be a really new sort of vector for commerce, and we want to be at the center of it. How do you – what's your kind of looking out into the future commerce within LLMs? Are you bullish on paid placements? Are you bullish on referrals? I was obviously like in the same thing as, you know, in the influencer world, like consumers deserve to know what's an ad and what's kind of an organic mention and all that kind of thing. There's been a debate recently around, you know, should ads be banned entirely from LLMs? And I generally don't agree with that just because I think, you know, these tools should be broadly accessible and ads are potentially a way to do that.

2:29:45But the other thing would be ultimately like do LLMs would LLMs at some point earn referral fees from merchants? I mean, all this stuff is like extremely complicated and can have positive effects, negative effects. But what's your framework? That I think is a$64 question. I'm not sure. I don't know exactly because part of the reason that I think agentic shopping is so interesting to so many people is because it feels more democratized. Yeah. It feels more based on it has a great understanding of who you are. Therefore, you know, you guys started the show with me today saying, like, I'm going to have my agent go and buy me a bunch of stuff.

2:30:29I want my agent to go. If that is if that is how I am purchasing in the future, I want my agent to go buy things that I actually really like. not the thing that my agent is getting paid for. Yeah. Yeah. When I, when I think about the use case here is like, I have certain brands and I only buy their t-shirts. And if I could just be in an LLM and say like, Hey, I want to get some new t-shirts. Can you like, and they're like, cool, here's the t-shirts you normally buy. Would you like? And I'll be like, I'll take five white t-shirts and five black t-shirts and it's just done. Like that's amazing. Cause I don't want to be navigating around and you know, it's just like removing that friction, which is kind of the, I mean, has been the history of Shopify.

2:31:08So all these new products. If you think about, you know, I think Toby told me this, that like if you want to look out to where technology is going, look at what like rich people currently do, and then everyone else will be able to get that feature. So you go back to this idea of like personal shoppers. If your personal shopper is constantly selling you the thing or trying to sell you the thing that they make the most commission on, it may work once or twice. Eventually, you'll stop going to that store. You're going to look in the mirror. You're going to look in the mirror. You're like, dude, this is like some gold chain.

2:31:35Like I wear a black t-shirt. You know, like I know you're getting paid more for this gold t-shirt, but like I wear a James Purse black t-shirt every day of my life. And James Purse is a great Shopify merchant and a great entrepreneur himself. Oh, there we go. He doesn't advertise. He doesn't advertise. So like he's not going to participate in that. But if it knows that I really love James Purse black t-shirts, it has to be highly contextualized. So that is a really good question. I think the way that we look at it is like this. There is a decent chance that agentic shopping will become very relevant for some segment of the market.

2:32:12Therefore, if we want to qualify and requalify to be the merchant, the retail operating system for all these incredible brands, we have to be there in the same way that we have to be in social commerce. And social commerce, you know, for some people, it is a really, really important channel for them. You know, my mom is, I don't think my mom has ever bought something on social commerce. She still goes into a physical store. So we're not going to predict, like, our job is to make it so that wherever you want to sell, you should be able to do so really easily. It's going to be absolutely wild when you think about, I mean, this experience where you're chatting with a model and it services you a product and you can ask it, well, what do people like me think about it?

2:32:51And it automatically pulls, you know, reviews from relevant people. It pulls what your favorite influencer thought about the product. It services other brands. like it's going to be incredibly powerful. And I think at best, it's like a personal shopper that's aligned with you, not, you know, trying to maximize every purchase or a great sales rep. Who's if you're working with, you know, a sales rep at a retail store, they're not fixated on like, how do I maximize this? The value of this cart, right? They're thinking about this sort of long term relationship with the customer. So very exciting. I'm excited to see what people build.

2:33:27Well, congratulations. Thank you so much for hopping on and chatting with us. Always fun to be here. Always so much fun. Fantastic work. You guys are the best. I love your show. I love what you guys are doing. And I like that this is becoming a new routine that after everybody's calls, I jump on. We'll see you in three months. Four times a year. We love you too. Thank you. Great work. Cheers, Harley. We'll talk to you soon. Up next, we have Anton from Lovable coming in the studio. Get that gong ready, Jordy. Shopify. Up 20%. 20%. Yeah. I was trying to tell him that on the stream because I wanted the eyebrow raise from the Brian Chesky when he IPO'd and Emily Chang tells him how much the stock is up.

2:34:00And he goes, eh? It's like one of the most iconic moments in tech history. Anyway, we got Anton from Lovable. How are you doing? What's happening? Great. Great to meet you finally. Yeah, great to meet you too. We were going back and forth with folks in and around your orbit. Every time we talked, there was a new massive number. There was a certain amount of people on the platform, certain amount of websites. Give me the latest headline number that's shocking. Isn't it like some insane number of websites on the internet are generated every day? That is true. What are you holding? I'm holding a gong.

2:34:33A mallet to hit the gong to celebrate. I just learned today we have 100 ,000 new projects built every single day. Congratulations.

2:34:45That's fantastic news. How'd you do it? What's the key to success? What are people using Lovable for more than anything else? when you think about just a web page can be anything. It can be everything from Facebook, a billion users, a trillion dollar company to a little homepage for my resume. What are people using it for? Look, lovable. It's the fastest way to go from an idea to a production-ready application. And a lot of people make that into a real business. And that's something that's in our mission to empower much more people to do. But apart from the entrepreneurs, the solopreneurs, like building for the first time or building for the end time by themselves, you have a lot of people in larger companies now.

2:35:35And we're seeing that use case growing very, very fast, like percentage-wise much faster. And then they go from like, I have this idea, my engineers should build it, but they don't understand me. So I need to create a full working version of it. And then they're going to be like, okay, I get it. It looks great. Let's build it. How are you thinking about tool use right now? I feel like there's so much open source software there. LLMs are incredible. They could probably rewrite Linux from scratch. They could rewrite a database from scratch. But you want to be provisioning and standing on the shoulders of giants.

2:36:07But how often are you focused on allowing to grab different open source projects and tools? Like if you want to build an e-commerce software, you probably don't need to rewrite a catalog from scratch. There's probably a tool for that. Yeah. Now, how we think about making the product as good as possible, we've thought about it for a long time, is we have an agent that can do things. He can browse the web, generate images, but specifically create applications and a website, personal website for you, whatever. We are giving this agent more capabilities. We're adding new things. Okay, so for e-commerce specifically, we're taking the best of breed to build e-commerce as a tool.

2:36:54And I'm spoiling some, I'm teasing some things that are on the e-commerce side, actually. Giving it more tools and then we're making the agent itself smarter. So those are the two things we're doing. Giving it more tools, making it smarter. What's the key to high retention? I feel like there's a world where you use a tool, lovable, you build something, and then you're like, okay, we're ready to go and stand up a whole team of engineers to actually build this thing and take it to the next level? How are you fighting that urge to just use this as a prototyping tool? Yeah. If you have a high-performing engineering team with a large existing system, then there's always this balance of like, do I take this thing I built in Lovable and I connect it to my system?

2:37:41Many people do that. Or do I just use it as a design? And then I know exactly how to build it, it's going to be super fast with my engineers both are fine or do you do i even edit the code as an engineer level also popular um i i think regardless of all of those you can have very very high retention because if you want to just prototype in lovable it's the easiest way to do it you just open the browser and then boom you have your prototype and it has access to your design philosophy it has access to um like integrations and different tools that you might want to use it so there's a high retention there's a very high retention on that use case but um how i think about it going forward is that we want to just build a platform where you never want to leave this platform because it provides you so much value and what large language models have done now is that it's like they generate code really well and but that's just one tiny part of the entire life cycle of building and maintaining and operating and the products and growing a growing a business on top of that.

2:38:42So I'm not sure you know, Elena on our team, she's like, I've been doing growth for 20 years and now I'm so excited to not have to do like the boring growth, just do the innovative growth. And the AI is going to handle all the growth, like all the growth things. So that's on the horizon. And when you have a platform like that, you should be getting so much value that you never want to leave. That makes sense. How do you what do you think is the future state of, you know, what do you think the average startups website will look like five, ten years from today. I feel like right now we're in this era where AI is changing everything, it's changing workflows, it's changing the way we work with software, and yet startups, you know, still buy, they try to buy their one-word dot-com domain and the typical website is like incredibly, you know, static and tries to reach a broad audience and I can imagine a world in the future where websites are being almost generated in real time depending on the user and the type of customer they are.

2:39:41More parallels. We're getting more parallels. Knowing the trend to date, there will be more of that. But I'm curious if you have... I think the websites of the future are going to be better at hacking the human brain and its addictive nature and so on. What that means exactly, I don't know. We were like, we'll let the algorithms figure out partly. But no, I think it's - Anton is going to hack your brain, everybody. Yeah, I mean, do you think that starts with like A-B testing because you can generate more pages quicker that you're just kind of optimizing for retention or conversion and then because you're just generating the entire site instead of just, you know, testing two different headlines, you're testing the entire concept of what the website is.

2:40:32Yeah, I think the algorithm, like there's going to be more and more algorithms that figure out how things should be optimized for us and then I think what like what you're also seeing now already is a bit of counterculture to that where a human coming in and being like no I want it to be much more minimalist to like a new type of yeah this is the Nat Friedman style that Mark Zuckerberg yeah exactly exactly just raw HTML there's a time and a place for both time and yeah so I guess we'll see like some complex evolution of different ways of doing things. And generally, I think the future has always been more and more diverse.

2:41:13There's like many different websites and applications. And I think that trend is going to continue. It's not like it will converge to just one way of doing things. Last question from my side. What's next on the horizon? Are you focused on taking the product that you have? You clearly have product market fit. Are you focused on sales, marketing, ramping up, expanding what you have or expanding the portfolio to different areas and different markets, different products? Yeah. I'll answer it like this. So in the order of the size of the use cases, founders are taking their ideas and they're building real businesses, software businesses.

2:41:53Designers and product managers and others in companies, they're taking their ideas and building concepts to communicate with their team and like 100 times faster than building out the concept in the past. And then everyone else is building their personal or business websites much, much faster. And we're doing all of these things. Lovable does all of these things at the same time. And it becomes, as you use it, it becomes better and better at helping you. Cool. So then that's what we're going for. Amazing. Well, congratulations on all the fantastic growth. Truly staggering daily use numbers. Barely a week goes by without a big Lovable number hitting the timeline.

2:42:37Yeah, another Lovable number has hit the timeline. Congratulations. Thank you so much for stopping by. We'll talk to you soon. Have a great rest of your day. And up next, we're shifting over to Thomas from GitHub, another little post earnings breakdown. Get the update from Microsoft and GitHub. Nat Friedman was running the organization. Thomas has taken over and they've been on absolute tear. Just crossed 20 million users. Its growth is serving 90 % of the Fortune 100. Congratulations. kick us off with an introduction. Thank you so much for having me on the show. Great to be here. Thanks so much for joining.

2:43:16And yeah, I'm Thomas and I've been running GitHub for the last four years. I've been with GitHub for seven years since we acquired it in 2018. And it's been a tremendous run that GitHub had as part of Microsoft. Is it fair to describe the run as growth in overall users or growth in GitHub co-pilot revenue or 90 % of the Fortune 100 is using the product now. Has that been the win case? Has it been a little bit of all of them? Well, the real question is, what's the other 10 % doing? Well, the other 10 % is not putting software, I think. Yeah, this is the Parada principle. The last 10 % is going to take you 10 times as long.

2:44:00We got to figure out the 10 % and short them. I mean, but seriously, if you're a Fortune 500 company and you're not building some software in your organization. There are other companies that provide similar services that do well. We're not going to talk too much trash about the competitors, but we are big fans. But yeah, over your tenure, what have been the big initiatives that you've shipped and then maybe opened a bottle of Dom Perignon champagne or just had a pizza with the team to celebrate? We always keep pushing further, so there's celebrations every now and then. and what's really like about what's next, what's next, what's next.

2:44:38If I look back to 2018 when we did the deal, we really had three principles. Put developers first, and I think we nailed that one. GitHub is still GitHub. We are talking about developers. We are building for developers. We are meeting with them all the time. And we have preserved that spirit of what GitHub is all about. The second one was that Microsoft helps us accelerate. Microsoft, if you will, as an investor into GitHub. And I think that's, you know, the 150 million developers on the platform. Recently, we hit over a billion repositories, both, you know, original repositories and Fox. Congratulations.

2:45:13You mentioned the 20 million Copilot users. Microsoft's Visual Studio family, so VS, the IDE and VS Code together has 50 million active users. So you can also see how much room there is still for Copilot to grow its market share. And a year ago, we passed 2 billion in ARR, annual revenue runner aid. And I think all these metrics show that both the business itself is healthy and keeps growing the network effects that GitHub as a platform has. And then the third one was that GitHub helps to accelerate Microsoft. And the most obvious thing is that, you know, Microsoft developers are using GitHub and are using Copilot.

2:45:49So Microsoft itself benefits from the same productivity gains that our customers benefit from. And we're sharing a lot of the AI knowledge across Microsoft, you know, within the core AI division, Azure AI Foundry and all these tools. I'm hearing glimpses of self-improving artificial intelligence. Microsoft is using GitHub to improve GitHub. I'd love to see it. Where else are people using GitHub Copilot? What are the biggest win conditions or win use cases in those Fortune 100 companies? Where's the biggest value being derived right now? Believe it or not, I think the biggest value is still the core scenario, which is you have your IDE open, you know, VS code or JetBrains, even Apple Xcode, and you have writing code.

2:46:39And instead of switching between the IDE and the browser, where you have, you know, all these tabs open and you watch this show, and there's all the distractions, you know, in your browser, and you try to find the answer to a problem you're trying to solve, you just have it right there where you're building. So whether it's code completions that, you know, predicts to you something that you might not have even thought about in that moment, or whether there is the ability to go into chat and ask the question about that code and find a bug or I was working on my blog on Sunday and I couldn't figure out how I couldn't remember the markdown syntax to embed an image and just like give me that really quick and then all the way to agentic scenarios and I know you talked with Anton right before it's this ability to give it a task and then watch it do these things and call tools and it figures out how to install this npm package and and then it looks at the error message and it sees that there's a test case missing so i think this end-to-end spectrum where i'm still the pilot and i'm still in charge because i think and i strongly believe that the majority of developers actually want to build something they don't want to offload their job to somebody else like an agent or that set of agents they want to use these agents to do what they uh love doing most yeah can you talk to me about where the boundaries of GitHub or Microsoft's agnosticism land.

2:47:58You don't make everyone write C-sharp. You don't make everyone use VS Code. But how are you thinking about integrating different models at Microsoft Build? Satya Nadella was talking about the importance of Azure being a place where you could get everything from GPT-4 to DeepSeq to Lama to it sounds like xai is coming on as well um how are you thinking about uh integration with a broad suite of new tools as they come up choice is crucial for any developer tool to win the market you can't you can't be in in the space of selling developer tools and not offer developers choice because if you don't do that they go somewhere else and they will find the choice somewhere else so since last year we're offering what we call multi-model choice um so we're not only having the open ai models which which are still great and many people use as their default we also have anthropics models we have um uh google's models um we actually have you know bring your own model so you can connect from uh co-pilot uh to open router or lama and and from there you can go to you know every model uh imaginable as long as it has an api and and the key that you have access to and so we think that is crucial and developers will not want us to tell them what model to use like that's just like you know an intrusion in my personal freedom and they know better what's best for them in the same way that at github we wouldn't tell you use this open source library or you know use this programming language like you wouldn't github wouldn't be what it is today if it had only you know one ecosystem let's say javascript right and all its libraries and now obviously there's boundaries there because we have only so many people at github at microsoft that can integrate all these models and there's a new model every single day sometimes multiple times a day yes yesterday there were two new models three i think if you count the two open source ones and all these models need gpu capacity and you know responsible ai testing and red teaming and all that and so we believe it's a mix of we provide models out of the box and you bring your own model um uh through open router or lama and what have you fantastic last question you have over 100 million developers on GitHub.

2:50:15Have you tried to estimate how many of them are not using any AI tools that are just, you know, hanging back saying, I'll make my code by hand, please? Handmade. None of that AI for me. It's over 150 million. I think it's still, you know, less than 50 % that use AI on a daily basis. And that's just the nature of things, right? If you look at what are these 150 million developers, there's lots of students there where the professor may not allow the use of AI or they haven't made that step because they're really just trying to solve that task from their homework or from the test. But at the same time, we see more and more developers making their jump.

2:50:54Software development has always been a spectrum, right? There's those that are still working on COBOL mainframes. In Germany, there are still companies. I think the train system is looking for people that have Windows 95 experience in 2025, right? Like that's the like, any of you new grads know Windows 95 for when from when you were. But believe it or not, even if you are a new grad or post grad and you join a company and you have to work on a COBOL project, as long as you can then also use, you know, GitHub and Copilot and AI tools, that might not be the worst job in the world. Right. Because you can combine modern technology and apply to that old stuff.

2:51:28But what I was going to say is that we have this huge spectrum between the people that are most ahead on the curve, you know, those watching your show and or talking on the show here, and then those that are still having to maintain the systems that power the world. And our mission at GitHub is to cover all these developers and enable them to collaborate between humans and humans and very soon between humans and agents and agents with each other. That's where the platform is going. Well, thank you for your service and congratulations on all the growth. It's been great chatting with you. We'll let you get back to you today.

2:52:02Yeah, thank you for joining. Super insightful. Have a great day. Thanks for having me. Talk to you soon. Bye. Up next, we have Alex Jacobson from 137 Ventures. We've had Christian Garrett on the show many times for 137 Ventures, and we're excited to catch up with Alex. Alex is a friend of ours. I'm excited for this. We had a great conversation with him a couple months ago. Excited to catch up and chat with him about everything in the 137 Ventures profile. How are you doing, Alex? Good to see you. Oh, good. You too. Sorry. Sorry we're running late. Yeah, we ran a little late. We got a bunch of very yappy people.

2:52:34This guy, Mark Andreessen, came on. He was talking a lot. We were asking him a lot of questions, so he put us behind. But good to catch up with you. How are you doing? Good. I was just watching, but I was three minutes behind, so I thought I had a bit more time. Sorry about that. That's amazing. Yeah, we're going to figure out how to feed you the show so that as soon as you join the room, you're seeing it live instead of with the delay. But anyway, thank you so much for joining. What's new in your world? What's the biggest news in the 137 Ventures portfolio? I'd love to just get the general update.

2:53:05Oh. The biggest news. Well, I'll start. I'll start. Christian had like a screenshot. He was on Squawk Box about Palantir. I know, but it basically had the 137 portfolio up. And it basically looked like the top 10 most in-demand private companies. and I was like, oh, that looks like a pretty good portfolio to have. So you guys have been everywhere. Yeah. I mean, we're building this general concept of MAG7 for private. And so there's this idea of there's these companies that grow indefinitely in the public markets, and they've built themselves to do that in the public markets. The strategy for doing that in the private markets is different because you need to do different things in different ways.

2:53:52And so SpaceX has led the way on this because they give employees equity and they then also run tenders regularly so that that equity can become liquidity. And the important bit about that strategy is that the price at which they're providing liquidity is materially lower than what the market would pay in a fully liquid public market. So you can say, oh, that's terrible. The employees aren't getting the right thing. But that's not fair. The actual thing that's happening is when employees are issued equity when they get hired, they know it's going to go up because SpaceX keeps growing. SpaceX is one of all these companies have the property of having a huge amount of power in the market and an even larger TAM.

2:54:48And so you can understand this indefinite growth. And you can talk about it for the public companies or the private companies. But the general thing that you're looking at is this combination of power and large TAM. And so in a private market context, all these companies need to hire people to go capture that TAM. And the value of these companies keeps going up. And the strategy is to give the employees certainty that the equity they've been issued will be worth a lot more in the future. That's harder to do in the public markets because everything's perfectly priced. And so you don't really know if the stock's going to go up.

2:55:27You think so. You hope so. But it's harder to tell. In private markets, the nice thing is you control your price. And if you run your process properly, you can have this very deterministic outcome for your employees, which I think is super powerful. We talked to Harley at Shopify about the benefits of being public. You have a liquid currency for acquisitions. It sets him up. He referred to it as being in the major leagues now. Give me the pitch for staying private as long as possible. I mean, I don't think SpaceX isn't major league. Yes, I agree. So there's... What are the benefits of staying private?

2:56:08I think the big one is hiring. Okay. That's the thing that I think people underestimate, which is that if you can issue people private company stock at your 409A and you control the price, it keeps growing, then this is all a much more deterministic thing and it's super powerful to be in these companies. companies, because the nice thing about these companies, there's this funniness of they're always underpriced. So there's always investor demand for them. So as long as they as long as you just have this positive feedback loop of there's always investor demand for them. So the investors want to buy more.

2:56:54And the stock price keeps going up, which means the employees can look at these companies and go, Oh, this equity is really worth something because they know it's going to go up. If you're getting public company stock, you don't get that. Yeah, yeah, and there's not the volatility that comes with I checked my portfolio today I'm down a little bit just because oh there's some weird tariff thing going on in some foreign country and How does that affect my business? Whereas yeah, if you're in the private market, you don't have to deal with that What about these new what's your take on some of these new initiatives to?

2:57:25give retail investors access to private company shares or put private company shares on on chain and create tokens and SPVs and all these different financial engineering efforts to bring, to give retail traders access to private market company stocks. What's your take on all that? We've been seeing people trying to do this forever. It's an ongoing thing of, oh, we find it inconvenient that these companies are private. So we're going to try to do things to make them seem more like public companies. But one of the big values of being a private company is controlling who your shareholders are and controlling your pricing.

2:58:09And so if you're trying to stop that from happening, maybe that's an opportunity. And maybe you can force one of these companies to be de facto public. But that's not a service. If they want to be public, there's this mechanism called the public markets to do that. Yeah. What about a higher level of abstraction? Like, I believe I believe. I mean, the other big thing is, you know, certain private companies don't want to be public because they don't want to be on this sort of regular reporting cadence. They just don't feel like they're ready for it. But the idea of like taking private companies, putting them on chain, letting private company shares, putting them on chain, and then just letting anybody in the world buy them, but not giving them any of the information that makes the public market so beautiful, which is like anybody can read this information, and you can come up with a decision on your own.

2:59:05And there's like rules and frameworks to make sure that people aren't insider trading and things like that. And so it's like, who's benefiting here? It's like retail has a potential to get even more hosed. And then the companies are having to deal with shareholders that now have an opinion about how they're operating the company, but none of the real rights associated with owning the shares. Let me be charitable to these people. There's a real thing of the only people who get access to these private MAG-7 companies are institutional LPs who invest in our fund or funds like ours. And we don't have retail investors in our fund.

2:59:49There is a sort of in the manager class, there's something we refer to as retail, which is there's a longer tail of wealth that is now trying to play and invest in these things. So that is in some sense a longer tail. but there isn't the people who are public markets players. There aren't non-institutional players in the game, really. And there's something real about giving people access to the growth that these companies are going to have. And it's unfair in some general sense that these retail investors don't have access to this growth. And so I think there is some amount of institutional design around how do we give them access to this growth, but turning these private companies into public companies is not necessarily the way to do that.

3:00:39Yeah, it's almost like what if the Yale endowment was publicly traded? It's like then I'd have broad exposure to a bunch of venture capital firms, which have exposure to a bunch of private companies, and it still just rolls up to just a few line items on the cap table. I'm not, you know, this random retail trader doesn't isn't actually. And it's also it's also disingenuous to say that, like, everyday people don't benefit from the private Mag seven, as you've described it, because, you know, a lot of venture capitalists raised from pension funds. Sure, sure, sure. Teachers and firefighters and things like that who are actually benefiting from the performance.

3:01:20I mean, I think there's a pension. We're definitely in the pension funds are definitely beneficiaries. And that's very real. But I don't know how much of the like, there's definitely these, you know, those types of pension funds that are out there. But there's lots of people who aren't in these sorts of pension funds. I think you're right. There's there's definitely that sort of universe is taken care of. But I think there's plenty of people who aren't in that type of pension fund either.

3:01:53and generically they're in the pension, it's in a pension fund, they're not able to say, oh, I would like more exposure to privates. Yeah. Right? So at the, I understand the feeling of that these people are underserved in some way. It's not, they're not my customers, but I get the feeling. I just think we need to design some institutions for it. It is funny to think about if a bunch of Stripe shares were dropped on Solana, like what Stripe would actually trade at? Because I would guess that it would look like, it would look like it would be like the most insane pop and then suddenly it's like, okay, if you wanna buy Stripe on chain, you gotta pay like$400 billion or something.

3:02:38Or a trillion dollars, right? And for some of the even bigger, like potentially like meme-y private companies, it could be even crazier. Yeah. I mean, there's the whole Elon universe of companies. We have a sample of one of them that's public. Yep, we know what happens there. Speaking of that, I mean, he was talking loosely about taking Tesla private at one point. That, you know, obviously didn't materialize. But is there a world where the private markets evolve to such a point and it becomes so elusive that you see a take private of a company specifically to get back on that track or once you IPO has the ship sailed and it's gone forever.

3:03:23I mean, I live in the private markets. I like the private markets. I think there's a huge amount of value of being here in the private markets. And so I'm definitely talking my book. But the big thing that has changed over the past some number of years is how big the private markets now are. So how much we can invest in SpaceX or Anderle or Augusta or any of these companies has gotten to be large numbers. And so, you know, there's this argument of when you're public, you have this currency that you didn't have because the public markets have more money. And I don't think that's as true anymore.

3:04:05I think that there's this real chance that you could decide, I just want more control. I don't want to deal with this regulatory nonsense and be private. There is this, they're both, it's a regulatory ritual, but it's not actually a different company and you might want to just have a different regulatory environment. Yeah, I'm thinking specifically about Snap. Snap had earnings. They're down 17 % today. They live and die by the earnings call. Meanwhile, Apple's up 5 % and Meta Platform's up 1%. Amazon's up 4%. And it's only a$13 billion company. The capital exists and there's always been this narrative like it's easier to turn the cruise ship when you're in the private markets.

3:04:44You go to just a few investors, you say, hey, we're going to miss earnings really bad for a couple quarters, but then we're going to build something new. I don't know. It's a wild idea. You're going to have three snaps or one perplexity. Wow. I think it's... I mean, the hard part is these things are now priced. And so you're going to take it private, and you now have to go resell this to the private capital markets who have looked at this in public markets and gone, well, that didn't look right. And so I think there's a hard sell of going to the private markets and selling Snap in the private markets.

3:05:25I think it's entirely possible that it could do better. But they have to go. They have to sell it. There's a founder-led story. I mean, I think we can sit here and script it, and maybe we can make it work. It would be a super exciting story. I think the best example is probably Dell, which went through TakePrivate and then later went back public at a much higher price. But, I mean, these stories are extremely few and far between. Well, switching gears, we had Dan on from Armada earlier this week. Super exciting company. I know you guys have been involved from probably before the company was created.

3:06:06wanted to get your view on the opportunity and what made you so bullish?

3:06:15Now or back then? I mean, both. I mean, we got, last time we talked, I think we got a good overview, but it was kind of hearing the kind of landscape and the initial catalyst was interesting. I mean, the original version of this is if you think about what a data center is, A data center is trying to maximize the value of a point source of connectivity and power. That's structurally what it is. And so power is available at different prices in different places, fiber is available at different levels of reliability. How many fiber points do you have? Are they really one or two? It's doing the underwriting of what, it's actually a lot of work to make a data center.

3:07:05But the whole premise is that you have sufficiently reliable and large power and sufficiently reliable and large connectivity. SpaceX changes that. So SpaceX says, actually, there is no longer this concept of a point source of connectivity. It's available everywhere. And in any one point, it's not as good as fiber, but the world's pretty big. And so the aggregate bandwidth of Starlink is huge, even if the availability in the square foot you're in is not as big as holding a fiber in your hand. And so the insight is, OK, well, SpaceX gives us this opportunity to rethink how we do connectivity. So does that mean we can rethink how we think about power?

3:07:59And the interesting thing is, if you're looser about connectivity, now you can look at power in a bunch of different places and you can say, hey, there's solar everywhere. So now you just simply put a solar panel and a dish and you're live. And is the solar panel enough for the amount of compute you want to do? Maybe, maybe not. But that's the beginning of the conversation. And then, you know, so in the original design for this, I sketched out a shipping container that unfolds solar panels on a roof. And I figured out that you need a lot of solar panels to power a rack, but you can do it. And so that's, but that, but you know, the math on that actually worked.

3:08:41So it was like a 3 % IRR when you did the model and the 3 % IRR isn't glorious, but it was just a model. And then you have the testing. So we say, oh, this is sufficiently interesting that it's worth testing. And then we got Dan, and Dan has a phenomenal network, has phenomenal sales. And his solution wasn't, hey, let's build it and sell cloud. His solution was calling people he knows and asking them, what do you think? Because that's how he works. And so we get on the phone with the CTO of Aramco, somewhat of a surprise to me. So I'm suddenly on the phone with this guy who is San Francisco, San Francisco company.

3:09:23Yeah. Founded in San Francisco. Right. West Coast Tech wins again. Yes. And so I'm suddenly pitching this to this guy. And the insight is, well, there's this other problem. You know, the underlying story that I just told you is about stranded energy. There's stranded energy all over the place. Let's use stranded energy. but the thing that's happening on an oil platform is there's stranded data and so these data these these oil platforms produce huge amounts of data that get effectively dropped on the floor and they have some amount of compute that is in in a closet somewhere that some guy on the platform manages uh yeah and haliburton support and haliburton sells in the software it's like the The actual architecture of that market's crazy.

3:10:15Yeah. And so it's like, oh, wait, we could do better. Yep. And so if we provide a cloud at this locus of stranded data and stranded energy and a global communications, we can create a lot of value. That's great. Very exciting. Well, next time you join, we'll have you on for an hour. Yeah. Yeah, we can go so much deeper. Thank you so much for stopping by. We'll talk to you soon. Great to see you. All right. Good to see you. Hang out soon. Bye. Up next, we have Nick from Rillit coming into the studio. I think we got to get the mallet ready. We got to get the gong ready. Jordy, you want to take this one?

3:10:59I'll take this one happily. I think I hit the last one, but let's bring him in. Let's play some music. Let's play some soundboard. Let's bring in Rillit. How you doing? Welcome to the stream. Thanks so much for joining. Sorry we're a little bit late. How you doing? Hey, check, check. Do you hear me okay? Oh, yeah. We're live. Is it Nicholas? Is it roulette or relay? Roulette. Roulette. So the American spelling. Yeah. There we go. Okay. I wasn't sure if it was French. Anyway, give me the update. Give me the news. Give me the overview of what you're building. Awesome. Yeah. Excited to be here, guys.

3:11:32Thanks for having me on. Thanks so much. Today we're announcing our$70 million Series B, co-led by Andreessen Horowitz and Iconic. Congratulations. Oh, that was good timing. Good timing. Congratulations. Boom. Thank you. Give us a little prehistory on the company. When did it start? How's the growth been? And key customers, how you're building and how you're thinking about solving AI native ERP? Yeah. So we've, so quick, quick backstory also myself. So deeply accounting and finance, averse sort of full background there. started this company roughly three and a half or so years ago. Very much in stealth for a very long time.

3:12:15As you can imagine, a full-on accounting system or ERP is not a small feat to build. A lot of surface area. These are very entrenched systems, traditionally dominated by NetSuite, Oracle, SAP, these type of names. So we're very fortunate to have had a stellar team of accountants and engineers building and building. And then we came out of stealth last summer, roughly a year ago. And things have gone vertical since then. So it's been an awesome journey. Race hour Series A here just a couple of months ago, three months ago, 12 weeks back. And yeah, back to back here with a B. What does it take to get a company to rip out their existing ERP and bet on a new company, right?

3:12:57Like that's the real challenge. I was about to ask, are people ripping out Oracle and SAP and NetSuite or is it I'm upgrading from a spreadsheet? Yeah, great question. So we are getting 70 % of our customers today coming from softwares called QuickBooks and Xero. Sure. And then 30 % of our customers coming from NetSuite and Sage Intact. Okay. So it's very much a mid-market focused ERP software. Key reasons why people use Rillet or want to buy Rillet, despite us being newer to the market over a legacy player, is number one, we have super strong native integrations that really suck in all that key upstream information that you need for AI automation.

3:13:38really seamlessly into our platform. And then our automations on top produce reporting that's just unmatched in the market. And that would, yeah, lead us eventually to getting customers like Windsurf, one of the fastest growing AI companies in recent history has mined. And others to trust Rillit over their current systems. Rillit now used by Google and Cognition, potentially. That's the best part about a zombie acquisition. You get potentially two new customers. Maybe. Anyway, I want to know about, do you want to put a chat box in your product? Or do you want to use AI behind the scenes and not surface that to the customer?

3:14:17Whenever I see tools like this, I think, I love the idea that you're using AI, but I don't want to open it up every day and prompt, hey, clean up my ERP. I want you just to do that. And then when I show up, I want it to look like a nice groomed garden. Yeah, love it. hopefully a bit of both actually. So very important for our controllers, accountants, and CFOs, having a human in the loop on some of their AI processes is actually really important and a positive. So yes, these are background processes, but always with a human in the loop for the most critical ones there. And then for you as a business owner specifically, or a strategic CFO or investor, you want none of that detail, right?

3:14:59You want to go in in a clean box, ask a question, get the information you need, move on. So we're building to both ends of these spectrums. And you really need both to be successful here. And I guess my question is, a lot of people want to go, a lot of CFOs, a lot of investors want to go into the ERP, the accounting suite and get information. But I feel like 99 % of the time they're asking for the same thing. They want a really clean balance sheet, a really clean income statement, a really clean cash flow statement. And they don't want to think of a prompt like, oh, I want, let me describe to you what a balance sheet is.

3:15:32It's like, I want a balance sheet. I just want it to be accurate and I want everything to be tagged correctly. My prompt is don't make mistakes. So talk to me about the trade off there. Yeah. Great question. So definitely there are these pre-canned reports. You don't want to be teaching an AI to rebuild your income statement every single fucking, sorry, that's right. Every single time, every single time the same way. And so 100 % agree there. There are a lot of more custom analyses, though, that you want if you're a professional, like specific for your business, maybe track also some non-GAAP metrics and non-accounting metrics on the financial side.

3:16:08That is really handy to just describe it in natural language and get what you need. Yeah. And then the other question is like, I feel like one shot prompting in this context is even less relevant because if I'm designing a new non-gap metric, I probably want to say like set up a workflow. So we produce this every month and that it's just on. Like vibe adjusted EBITDA. Exactly. I want to vibe code and adjusted EBITDA. But then I want it to be the same every month because when I've reported non-gap metrics in the past, like churn, I mean, even Dow now, that's a non-gap metric. But like you want it to be accurate and you want it to be classified the same way because there's often these times where you change one underlying thing in your product.

3:16:54And then that flows to a complete change in the non-gap metric. And then you're going, hey, it was non-gap the whole time. Don't worry. Don't get mad at me, investors. I know you thought that that was never going to change, but the metric changed. And it's actually not that different for the, we're just looking at the business in a different way now. But talk to me about like how AI can improve the development and ongoing maintenance of non-gap metrics. Yeah, great question. So there is definitely an element of like repetitive adjustments, certain things that can even be codified outside of AI in terms of certain customizations of your non-gap metrics.

3:17:30ARR is a very prominent one for software AI businesses, recurring revenue businesses, for example. And so there, yes, it is definitely something you can do basically in the UI, customize your metrics the way you want it in a repeatable fashion. But there is definitely also an element of certain workflows and I almost call it openness to human interpretation where you need these more like LLM driven workflows that help interpret. Maybe look at each other accounts, look at historical transactions, what happened there and try and make sense of things. And that's where AI today is very powerful. But again, you do need usually a human in the loop to do these repeatedly and reliably, just given the mission criticality of the workflows.

3:18:12What's next? What's more important for you? You're in the mid-market. Do you want to go downward, upward? Do you want to expand and offer, go multi-product? What's most interesting to you? Yeah. So for us, more of the same. The opportunity that we have in the mid-market is insane. the amount of customer love we're getting and product quality that we have with the reviews that we have combined with like really entrenched and frankly universally disliked ERP systems. You'll be hard pressed to find someone that truly enjoys using their accounting system or ERP creates a huge influx of just demand on the product and the company.

3:18:53So what we're going to do with the money that we're raising is double down on product, build more of the same additional features, go up market from here with the money that we've raised. We have a stronger balance sheet to capture even bigger names and logos that can work with us. And then the other piece is just investing heavily into our customer success and onboarding motions. We're just like, we work with very talented accountants in these teams to help onboard their Reload platform into their systems. And we're massively expanding these teams to just absorb the demand that we have. It's awesome.

3:19:26What an opportunity. It's great. Congratulations and good luck. Many people have tried and failed to rebuild the new ERP. There was a gap in the pre-AI era where there were a lot of people that took a run at it, and it was a little rough. Finally. The mind share is there. The opportunity is here. It's really exciting. Amazing. Well, congratulations. Congratulations. We'll talk to you soon. Have a good day. Cheers. Thanks for having us. Bye. What else should we cover ERP? I didn't like the way he was talking about NetSuite. I would die for NetSuite. I would die for SAP. I love all ERP systems equally, like my children.

3:20:07I like them all equally. Anyway, Perplexity, you mentioned it briefly. It's now worth almost 15 times JetBlue. They raised another$200 million. One and a half snaps. A little under, yeah. They think snaps at 13. But Perplexity is now at$20 billion. It's unreported, but it's been leaked by R4Rock, Who knows if it's true, but he usually gets it right. So we're chatting about it here. 138 ,000 people saw the news. I'm sure Arvind will comment if it's fake news. But in other news, what else do we have? We wanted to send our regards to the Doge staffer who was assaulted or gotten a dust up with someone who was attacked.

3:20:53He stepped in. Real dust up. and fortunately we saw another picture that he has been cleaned up and healed and seems like he is on the mend and so sending our best to Mr. Balls. Really rough, but it sounds like he acted with, as this poster would say, bravery and courage. Yes, and that's pretty much everything, Jordy. I don't know if there's anything else you want to cover. other than maybe leave us five stars on apple podcast and spotify maybe thank you if you've been in the chat today i like this post from aiden belt skis says timeline not in turmoil john and jordy pulled off some s-tier handshakes during the figma ipo live stream this is what it's all about boys keep it up thank you from the chat that's on the x chat and mark is live handshakes laughing high stakes nothing high stakes we've seen some we've seen some viral botched handshake slash dap ups you gotta have a shared language stick to the default handshake it's lindy is not going anywhere do you think it's better to look at the person's eyes or the hand coming in because i think it might be more about like a like kind of you don't actually you want to keep the i think it's kind of coming in it's kind of like a game of rock paper scissors and so it's a high stakes game but but but the optimal the optimal strategy is to just stick with the handshake and never deviate never never uh never doubt yourself with one of these make it very clear from early on you're coming in with the handshake and you're not blinking it's a game of chicken so if you come in with it doesn't matter if you come in with knox or you come in with with the i'm gonna hit you here doesn't matter as long as you stay here forever they will see that you're not backing down they'll conform yeah and you'll assert your dominance yeah so go out into the world and uh practice yes practice live yeah i mean it is tough because i hit people with all sorts of different things every time i go to the bathroom ben hits me with the knuckles on the way back it pumps me up gets me back on the stream back in the game anyway thank you to john axley for moderating the chat fantastic work today thank you to gabe for chiming in with hilarious comments all stream thank you for mark for watching and enjoying the stream and we will We will see you guys tomorrow.

3:23:11Tomorrow's going to be an absolutely insane day. We can't say why, but it's going to be insane. Something's going to happen tomorrow. And I cannot wait. I'm pumped. It's a stacked lineup. We will announce it soon. See you tomorrow. Bye. Cheers.