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28:44And so, you know, the the lack of infrastructure and the lack of reliable infrastructure with, you know, uptime was a huge Achilles heel for the EV industry and only Tesla figured this out early. And so I looking at Cannonball Baker I'm like, well, why couldn't I be the Cannonball Baker of EVs and AVs eventually? So in 2014-15 started doing electric records. Tesla was the only vehicle at the time capable of setting these records because of the charging network. And recently, I began looking at, you know, Lucids and Porsche Taycans. And those are the only vehicles that could break the Tesla record.

29:23And recently, a Porsche Taycan second generation became the first car to break the Tesla electric record in 39-something, 39, 30s. And what goes into a great EV for breaking a cannonball record? Is it just total capacity of the battery or ability to sustain high speeds for a long time? Or battery swapping. Battery swapping seems logical, but none of the cars have that stock. So I don't know how you do that. A fuel cell is common in a gas car, but is there an equivalent? Yeah, I'm also curious, what other tech would you use today? Would you use a network of drones? I can imagine you could potentially have thousands of drones spread out.

30:06Well, this is where cannonball history and record-breaking overlaps with investing in defense. Because if you understand the history of radar detection and laser speed measurement and laser jamming, it's all analogous and they are literally parallel tech in defense. And so the electric records up until recently, because the power density of the batteries is less than a fuel tank full of gas, your speeds were basically limited to the optimal cruising speed of an EV, which is in the 70s. And then you have the issue of the charging networks. So there's nothing you can really do to a pure EV today.

30:48there's not much you can do to increase their efficiency and you certainly can't increase their speed without eating into the into your battery state of charge but everything comes down to the charging networks so when tesla you know when their network was 150 kilowatt across the board your maximum your minimum time cross-country was x when they went to 250 you cut a little time off that uh what's so fascinating about the recent porsche tycon record is the tycon's epa battery EPA range is less than a Model S long range, which is what I drive. However, the Electrify America network, which was a terrible charge network for years, went through upgrades recently.

31:29And if you buy the cheapest Porsche Taycan with a big battery option in its lightest weight configuration, rear wheel drive only, and you can charge at Electrify America at speeds that are faster than any Tesla, the cliff in the Porsche battery will let you go at the max charge rate slightly beyond 50%, whereas the Tesla, the first cliff is at 20%. So that's how the Taycan did it. Less battery range, faster charging, deeper into the battery. That's the trick. Elusive today is the longest range EV you can buy, but its battery chemistry is not designed for what the Porsche is. And so for the time being, Porsche will hold the record.

32:14I think the next generation Tesla or Lucid could take it. Talk about the state of EV charging networks today, coverage, you know, are networks holding back EVs at all? We live in California. There seems to be plenty of EV chargers around. Doesn't seem to be any type of bottleneck, but I'm curious nationally. Well, I think that the non-Tesla charging network, regardless of its ubiquity, has a lot of issues with handshaking and seamless payments and just hook up to your car. Tesla figured this out, you know, out of the gate. Like it has to be frictionless or people are not going to want to do it.

32:54And so the American EV charging industry still has a lot of work to do. And even if they do, the non-Teslas on the road, I mean, we have Rivian, Lucid, and the Porsche Taycan those are all great great models but other than that there aren't there isn't like an amazing EV product from any other American OEM I mean some of the Honda some of the Hyundai's are good and so you need both half the equation this is where the Chinese is so strong because the vehicle hardware and software and infrastructure is all very good dangerously good can you talk about it it's it's kind of surprising to meet someone who's taken traditional combustion engine car so seriously, to the limit, and then be interested in EVs?

33:41I feel like a lot of the traditional car guys, I would never. They're purists. So what excites you about EVs broadly? And then what do you think about the current state, the change to the EV incentives that are going on right now? How does the outlook look with Elon? like the Tesla sales are kind of dropping, but that's for a variety of reasons from everything from like political to exports to China to their late refresh cycle. There's so many different things going on. So what excites you about EVs and where do you see it going?

34:16Well, I think I'm very American in that. Like I'm totally agnostic on technology. Like what is the coolest, best, newest thing? Are we making it? Let's try it. And if someone else is making it, we should make it. Like that's it. But this country became great by innovating and exporting. So I don't care how something works as long as it's really great product. So, you know, the EV tax credit expiring, I think it's September. Yep, September 30th. It's not awesome if you're an American car company selling EVs. And it's going to certainly slow rate of adoption because prices will go up. but the real question is you know how do we depoliticize technologies from our internal american discourse such that the united states long term can compete in export markets i don't really care like about the political opinions of who developed a certain technology because we need to create jobs here and be exporting stuff outside the u.s and the chinese are going to kill us long term in the EV market if we don't get on board.

35:20So the EV tax credit expiring sucks, but it's a minor piece in the holistic system that we need to be debating and executing on. And I recently met a woman, Elaine Duzinski, from the Foundation for American Democracy. She said, we need a Pentagon for industrial policy. There doesn't need to be a verticalized, monolithic you know, command economy, but it needs to be a little less chaotic and more focused than we've been. And I think that's really essential, really, really essential. How do we solve the depreciation problem with EVs? I think it's for the consumer frustration of like, let's say you buy a Model Y, drive it for nine months, and suddenly it's worth half of what you paid.

36:06I, well, I don't know if there is a solution to that. You know, I just, I probably the best solution is we need to be investing in EVs and supply chain such that we can bring costs down such that there isn't such a huge delta between the new cost and the depreciation. And it's, I mean, all cars depreciate to some extent, EVs more so. I mean, the great news for a lot of Americans is that used EVs are really cheap and a lot of them are great. I mean, used Teslas are fantastic. I mean, it's super expensive. assuming you, well, don't buy an old Model S, but everything else is fantastic. Yeah. Where are you seeing opportunities to invest in or alongside the EV trend?

36:46There's so many different parts in the supply chain. There's so many different adjacent products that an EV buyer, if you're not going and funding like the next Rivian or the next Lucid, where do you see opportunities for founders? Well, you know, automotive is a very small part of my fund new industry capital uh i mean a lot of the the biggest bets mostly had been taken and they're very expensive you know the i think most opportunities are in in manufacturing and in energy uh however um there is i mean we only do deep tech but outside deep tech there are a lot of opportunities adjacent to transportation and evs and especially avs when people talk about job loss due to driverless vehicles, I think they are missing the big long-term picture.

37:36There is a universe of startups that don't exist yet, barely even conversation over dinner, for providing services for passengers in autonomous vehicles. My mother, she's older and she has some issues with shopping. She would love to have an attendant or someone just to go with her on trips to go shopping. like where where is the uber for elder elder care that would it's a startup that's adjacent to uber and waymo that figures out how to connect them and has a supply of people who can do that most people who are driving ubers probably shouldn't be just from a safety standpoint but they'd probably be very good at helping people and there's a much better long-term opportunity in an employment opportunity for that role than there was for driving cars yeah Now, I'd also add that the fear and concern and the politicization of driverless tech doesn't track with the history of automation and other verticals.

38:34We used to have 100 % penetration of elevator operators in this country. And we went from 100 % in 1946 to 1 % in about 1970. But the total number of people employed by the elevator industry is bigger today than it was ever. Interesting. Because elevators will always be a business, but there's other roles around the elevator industry. That's true of transportation. So I just don't buy any of the panic and doom that companies do tech at all. What about go to markets, the race between Waymo and Tesla, obviously very different approaches in terms of fleet development, but I'm curious how you're seeing that race.

39:17So the race, I mean, I used to like to say there isn't a race in AV because there'll be multiple winners. There's no one can name an elevator company other than Otis, but there are the big five elevator companies on earth. They're all big. So in AV, Waymo and Tesla are both going to have products. And the people who claim one will win and those are destroyed, it's absurd. But the real race is, you know, can Waymo develop a business model outside of robo taxis before Tesla, can generate a business at scale in robo taxis because waymo is not in the personal ownership business and and tesla is barely in robo taxi at all so waymo needs to get into the licensing business and probably miniaturize their hardware such that it can conform to and become invisible on passenger cars if ford or anyone else had waymo tech inside if they could do that now i mean tesla's in a tight spot uh but tesla's got the opposite problem they've got to deploy a i would to say perceptibly safe system because no one knows safety needs and get into the robotaxi business at scale with all the friction unique to their business model before Waymo can invade their space.

40:33But ultimately, you're going to have three, four or five companies competing in AV tech. We're just seeing growing pains in both companies executing on different business models, and that's going to play out. They'll both have their place. Last question for me, at least. I'm interested in you compared the Cannonball run to building a startup business plan. What do you think about the actual activity of racing in a Cannonball, that idea of risk-taking, of the stress on your body and founding a company? Have you found any analogies between the two? Well, you know, when you actually, years of planning going to a cannonball drive and then it's over in sub 30 hours.

41:19I don't know of anything in, except maybe like an emergency product deployment that is stressful, physically stressful, but every other component of it is similar. And in that way, the cannonball is more similar to say a deployment of a prototype in a defense scenario for the first time. And you have, you got to deploy it. It may not be ready. You don't know. You spent years developing it and it's go time. That's the closest analog. And I spent a lot of time with law enforcement and defense folks today. And I'm constantly amazed that they find what I did so interesting, because to me, it's nowhere near as interesting as what they do.

41:59But then when you start talking about laser jamming and communications and mapping, spoofing aircraft transponders to mask your location and then i'm like yes conceptually it is all the same thing uh i would also remark that um there's something profoundly um american about the cannonball which i think points to like the spirit of innovation it is unique to the united states but that drives american dynamism which is that whatever the rules are how far beyond them can we go successfully without hurting anyone. Let's find out. And that is the opposite mindset of a lot of founders from other countries and sadly, Europe.

42:44Yep. No, it makes no sense. Makes sense. Last question from me, the CEO of Ford was recently making some comments. One, basically talking about white collar work broadly, which felt more like he was just parroting, you know, maybe Dario or something like that. But on the other side, he's been very outspoken about how innovative, you know, Chinese EV manufacturers have been at multiple different kind of touch points. Do you think that American car manufacturers outside of Tesla have the will to start to innovate at the level of some of these Chinese EVs? Well, I know Farley, and to his credit, after I set my last electric cannonball record in a Tesla, he invited me to dinner and sat next to me and grilled me on everything about Tesla Model 3.

43:35So he's on it. He's on it. And the Mach-E reflects some of those lessons. Yeah, the Mach-E, my buddy, my neighbor has a Mach-E rally, and it's a great, wild car. Good. Look, you know, the Chinese car market has been there for anyone to see who wanted to go over there and do competitive intelligence for years. And the same thing's happening now. It's happened in the 70s when the Japanese arrived in the United States People weren't paying attention because like oh they can't these foreign they can't innovate They don't know what they're doing. It's y &z. Well, guess what they did and the cars are great and friends of mine Kevin Williamson's a journalist who went to China and has driven everything He's like the cars are better than anything sold here Even Tesla because they're built better than Tesla's so we've got a problem The only companies that are really have an opportunity in the near to midterm are Lucid and Rivian and Tesla from the United States.

44:34The other, the legacy OEMs have individual models that are okay, Mach-E, you know, okay. I don't know what GM's got, but the real question is what could be exported to any other country to compete with a Chinese car in that market? And the answer right now is other than Tesla, basically nothing. Lucid stands alone because it's a luxury model and it's really good. And Rivian's are very cool because the products are great. But we are in a tight spot. And, you know, we need to, whatever your politics are, the United States needs to have national champions that are exporting. We shouldn't be talking about Tesla versus Waymo.

45:12We should be talking about Tesla and Waymo and exporting the hell out of anything we can that employs Americans here that are great products that then support the American soft power narrative for the rest of the century. Yeah, that's great. Great answer. I completely agree. Thank you so much for stopping by. Yeah, we got to do this again soon. This is super fun. Anytime, guys. Love you. Thanks so much for hopping on. Cheers, Alex. Well, if you have an opinion about a public car company, get on public.com. Investing for those who take it seriously. They got multi-asset investing, industry-leading yields.

45:43I still remember the day when Figure was allegedly getting valued north of Ford Motors. Well, yeah. If you want to rotate into Ford, you can do it on public. If you want to rotate out of Ford, you can also do that on public. This isn't financial advice here on the show. We just give you the facts. And the next fact is that Ryan Peterson from Flexport is joining the stream in any minute. Now, Ryan, how are you doing? You just threw me in here. I'm eating food. I didn't realize I was on. Yeah, it's okay. Surprise. Surprise. What are you having for lunch? We've been under attack today, so the stream's been late.

46:17It looks like Chinese food, but it's a fancy salad. Ooh. Nice. Oh, is that Blue Barn? Yes. Oh, Blue Barn's fantastic. Great spot. Anyway, what is new in your world? Can you give us the update? We lived through the tariffs. We checked in with you a few times. Give us the temperature check on where we are with tariffs, global trade broadly in your business. There's no strategy with the tariffs. They're purely to torture Ryan Peterson. Unsolved. All caps. We're learning how to read and write in all caps all over again. Someone said the art of letter writing was dead, and then Trump just proved us all wrong.

46:54You know, he's writing letters to national, to countries with really amazing capitalization standards. But he's dictating. He would just call you Mr. Flexport. The best part is that he's dictating because he doesn't type himself. So he's telling them, no, like capitalize tariff and capitalize country. Yeah. And all caps for trade. Certainly has a certain aesthetic to it. It's a, yeah, whether there's a strategy to it or not is a really good open question. in because we got new tariffs that are at above like on our allies Japan and Japan and 25 % tariff I don't know I couldn't tell you what what the plan is there but it's uh everyday new things basically yeah what about uh what about just the general mood of customers the flow of shipments I I mean, initially it was like, you know, the boats are sitting at the port not moving because people are just terrified.

47:53We heard about, you know, iPhones going in the bellies of 747s on rush flights to get out of the airport like minutes before the tariffs went into effect. Has there been any more clarity? Are we in some sort of return to normalcy where at least CEOs can feel like they can plan ahead for what's coming? or is it just as much uncertainty it's um you know today's the day so the terrorists are the the 90-day reciprocal tariffs came out and they were paused for 90 days 90 days ago today um so they are going unless something is announced which he announced like six or eight countries yesterday with their new tariff rate but everybody else um that's happening today they'll go back to the 90 day to the original rates from April 2nd that freaked everybody out tonight at midnight.

48:47Now, then I believe he tweeted earlier today or true social that it'll be on August 1st that those new duties are due. So there probably will be a bit of a race here for the next three weeks to try to get stuff in at the 10 percent rate instead of the higher rates that's coming back. The thing that freaked everybody out 90 days ago was more the China rate, which was 145 percent. and that's come back down to 30 and people are kind of like okay with it. I don't know. We'll take the temperature here and we'll see what happens with freight bookings. But things seem kind of normal with the customer base, but we haven't got enough data yet.

49:26I mean, there's brand new information, the new rates that came out yesterday that are going to go into effect in the next couple weeks. Just as a little extra data. Right now, the S &P and NASDAQ are basically flat, but copper prices have hit all-time high on this planned 50 % tariff. I am interested in China. I remember when you were explaining the nature of the tariff, there were a few different elements. You were talking about the energy prices into China basically being passed through. I believe that was a tariff on oil that then was getting passed through to the cost of goods in some way.

49:58How are you thinking about the, you said 35%, is that all in or is that just a piece of the overall tariff picture if you're considering doing business in China? going forward? It'll depend on your product. Tariffs are driven by three things. One is the country of origin and that is something that actually Trump is changing the rules around in real time with this idea of transshipment that he said goods that are trans shipped through Vietnam will pay a higher duty but like very odd. I mean those of us in the industry think of transshipments has no effect on duty rate whatsoever because it's still the original country.

50:39If you ship goods from China to Vietnam and then from Vietnam to the U.S., unless you did what's called substantial transformation, you changed them into a product of Vietnam, they still pay the Chinese duty rate. Whereas he's kind of changing those rules in real time and have not yet published something in the Code of Federal Regulations that we can actually understand what he means. So remind everybody that true social is not how laws and regulations get published. We're waiting to see what really comes out. Yeah. So, okay. So you have the country of origin, you have the classification, which is, okay, what type of goods are they that, that drives and do they have the components of steel and aluminum that sets a different duty rate or what is the thing actually classified as?

51:24And then the third one is valuation. How are they valued? And those are the three kind of key drivers of what your duty rate is. And right now on the, there's just a lot of uncertainty that we're waiting to see what this transshipment thing means. The world will find ways to minimize their duty rate, hopefully in legal ways. Don't make sure you work with an attorney and don't just go do this. But it'll be very interesting to see, like, can you actually save duty by shipping from China to Vietnam somehow in this world? Like, I don't know. I don't know what the definition of transshipment is going to be.

51:58The other interesting thing here is that from a trade perspective, logistics and customs companies are kind of happy about this stuff because it adds complexity you need leader you need partnership from experts more and you're doubling the amount of trade because there's going to be um if there's incentive now to move goods from one country to another transform them and ship them onward that's two shipments one from china to vietnam and one from vietnam to the u.s um or like you know one of the sad ones that came about here is we have a customer long-time customer that makes bicycles in the United States and they import components and assemble them in the U S and sell them.

52:37Well, bicycles got an exemption. They're duty free, but the components did not. Oh, interesting. So these guys are actually better off shipping their manufacturing offshore now. And that's what this is going to happen. That's very odd. Have there been, yeah, you feel like it feels like there's a little bit of this like game theoretic dynamic where Trump puts these blanket tariffs all over the place, but there's potentially an incentive for some country to just jump headfirst and say, hey, we're playing ball. Give us the lowest rate possible because we want to grab as much manufacturing capacity over here and be as friendly as possible.

53:12Have there been any, like, I mean, I know that the situation with Japan has been more difficult than expected. Have there been any countries that have popped out as, like, new favorite trading partners of American companies? in your feeling. Well, the companies-wise is different from the government, probably. Sure, yeah, yeah. The government, it looks like the UK so far, but the UK's got a 10 % duty rate and some nice exemptions that they got on auto, which I guess is like Land Rovers and Bentleys, maybe Asset Martin. Yeah, those ones. They don't make a lot of those, but Jaguar? Is that how they are?

53:54Yeah, Jaguar. I don't think they've been making many cars. No, no, Jaguar actually took a year off. They skipped a year producing cars. We're taking a year off business. We're just going to sell down our inventory. Oh, okay. It wasn't just because the commercials were that bad? No, no. Then they launched the rebrand after they had announced that, hey, we're not producing any new cars, which was like your job as a car company is to make cars. You belong in a Jaguar commercial. Look at you, too. You belong in the north of England. I actually didn't understand the hate on the actual cars. actual silhouette of the new Jaguar.

54:28It was beautiful. I thought it was cool. It was very cool. I mean, it was one of those prototype cars that didn't have like mirrors or anything. So they clearly needed a lot to do to make it a real one. Yeah. But yeah, I mean, a lot of cool. But so come back to your question. The UK is interesting because they actually have a trade. We have a trade surplus with the UK and they still got a 10 % duty rate. So that told everyone, oh, the best you could possibly do is 10%. Even if you have a trade, even if we may attain a trade surplus. Vietnam is probably the best example of someone that tried to play ball.

54:55And they said, hey, we're going to do everything duty free on American products being imported. And they ended up with, what was it? 25, 20%. And then this weird transshipment thing that I already got to that we don't understand yet. So that's probably the thing that Trump would like to get is that transshipment. What he would like to have is that these countries put duties on China and Chinese goods coming into Vietnam. They want them to get hit with high duties so that you're not effectively laundering, washing Chinese goods through that country, doing some minimal transformation and then shipping them to the U.S.

55:32They want to make it so like it's a, you know, like create this coalition of the willing against China. That's my that's my read on it. Yeah. It's kind of hard for them. Yeah. There's kind of two narratives. One's like Trump likes tariffs. He wants to throw tariffs all over the place. Make us a high tariff country. on the flip side there's like this is about a trade war with a rising near peer competitor and the entire narrative is really just u.s versus china and everything else is in service of that is is that a reasonable narrative that you think people should it's one of those two probably yeah maybe some balance and i'm not sure they know and there might be different factions within the u.s government that want different ones of those and it's it's it's pretty hard to get a read on it But from a...

56:18From a company perspective, they're just looking for whoever makes the cheapest stuff that's high quality that they can sell. I mean, I don't think these countries, there's not that many companies, they might on the surface like claim to be patriotic or have some views or something. But that's not what companies are meant to do. They're meant to make money. And so they're going to route, you know, they're going to wait until the rules get set and then they're going to, water flows downstream. They're going to, downhill, they're going to go figure out where the best place to make stuff is. Yeah, we saw this with NVIDIA where there were chip bands and NVIDIA, it is, hey, the speed limit's 65, I'm going 64 miles an hour.

56:52And so I'm gonna make a specific chip that is as good as possible while not breaking that regulation And it's like that's not the spirit of the law and it's like yeah, yeah I'm a three trillion dollar company. My job is not to adhere to the spirit of the law I got to adhere to the letter of the law. You got to make as much money as possible And so that's what that is what companies are Government needs to set the rules and then we all figure out how to make money giving those rules The problem right now is that the rules change so you can't make any decisions in the next I I advise people wait.

57:18Yeah. At least tomorrow. I mean, we'll see what new trade deals drop tonight. But I think every few weeks. No, no. If history is a guide, as soon as you leave this Zoom, there will be news. Yep. Someone check Twitter right now. What's the – how cooked are Timu and Sheen right now? Oh, yeah. That's interesting. There have been some reporting last week around people based – you know, US shoppers ditching them because of the loophole. I didn't know how real that was. I haven't seen the latest data. I think they're both back live. You can buy stuff on their apps again. So I think they're set up in a way that lets them transact and just pay the customs duties.

57:59And I think they're, I don't know how the consumer is responding to it all. It's already so cheap. They had to stop selling for a couple of weeks. So that probably hurts you pretty significantly. um but if it's a 30 couch and then you're paying 90 or whatever it's like well it's only 30 on their on their wholesale price not on the price that you pay oh right right right so i think they may be fine it's all but i have heard that um apparel companies who is who most directly competes with sheen at least actually sales are up quite a bit despite the tariffs and having to raise prices. And that's probably in part because Sheen's volumes have come down and the consumer is shifting their spend on to other brands.

58:44So we've seen that a little bit in our customer data and our fulfillment business where customers are exceeding their forecasts. So the world is not all doom and gloom from an e-com perspective, which it's a big departure from 90 days ago where I was screaming everyone's going to go bankrupt and companies were screaming that to me. I think that relaxing the Chinese tariffs made a big difference. But again, we're going to figure out what happens the next 24 hours of with these new duties and how people respond to that over the next few weeks. It's gonna be exciting. What about some of the smaller players in the market, like just the broad like drop shipping economy?

59:21Jordi and I were talking about this this morning, how it feels like and Sean Frank from Ridge was talking about how like the default road to entrepreneurship a few a few years ago was like, spin up a Shopify store, white label some stuff, get a business up and running and then it shifted to courses and influencer stuff and AI and... Info products. Info products and now it's WAP and Clue Lee and these other things that they're kind of talking about like the modern first time entrepreneur track. Are these like small, lean, drop shipping operations still going, do you think? Do you ever run into any of these people?

1:00:03Do you ever see them kind of like, you used to hear about like, oh, someone just found this really interesting niche on ads and they scaled this like very simple business to like tens of millions of dollars. Are you still seeing that? Or do you think that's kind of like - I think you mostly see it in China and Vietnam, but selling into the US. Yeah, okay. So they're entrepreneurs. They're entrepreneurs are figuring out how to do marketing and branding. The more that - That was something I predicted would happen 20 years ago, that it would take a generation because they have to speak English, they have to know enough about, they have to have enough humility to go, hey, I speak English, but not that well.

1:00:40I should probably hire an American to do the writing instead of like, I'll do the writing myself and have it be English, but terrible. On Sunday, I wanted to get a new hose, not a spigot, but one of those things that you can like control the flow. Nozzle or whatever. So I go on Amazon, I search hose nozzle, and I went five pages without finding a legacy U.S. brand that would sell me one. And they're all these names that are basically some five, six-letter combination of English letters that doesn't even read well. Amazon has a real problem in that regard. Yeah, and I would happily, like, I want to check a box that's just only buy from brands that have been around for 50 years.

1:01:26And I would just happily, like, those are the products that I want to buy. I don't want to buy the$6 product that's going to break in a year, and I got to buy another one. I just want to buy the thing that, you know, it's not. And the thing to watch on this front, those companies don't, 60 % of all the sellers on Amazon don't even have a U.S. entity. they're being they're like the goods are actually imported from abroad interesting and there's a there's a bipartisan movement in dc to block this policy to block this law to make it so that you have to have a u.s entity you can't just import as a chinese company or whatever country country company you can't just import stuff into the u.s like without someone here who can be held accountable to following the customs law to whatever other child safety laws you know other stuff that's downstream that can happen um and i think amazon has business exposure there that people like you are gonna at some point i i started gravitating towards shopify and like the shop app where you're like i don't know there's something higher quality about people trying to build a brand on shopify today anyways um and then they have political exposure i mean what did trump call them a treasonous i forget what that is for passing through the the tariffs yeah i called him a tree yeah for me for me as a consumer it's not like i want my hose nozzle it's not like i need an american-made hose nozzle it's just like this this commitment to like this this relationship that you have when you're buying a product which is i want to trust that this company put in a real effort to design a product that is going to be effective and durable and I'm happy to pay four or five times what the entry ticket price is.

1:03:13So Lindyism, I like it. Yeah, I mean, people are clamoring for this on Pinterest. Like they want to search Pinterest from like any image that's posted on Pinterest before 2023, like before the AI images came. Because you search for anything and it's just a lot of like sneaky AI stuff stuck in there. And if you're looking for something very specific, You're like, I don't necessarily want an AI image. And there's no real good filter other than just like, is it in the Pinterest database with date created before 2023? Like that is the provenance of that image. And it's kind of the same thing, like on Amazon being able to filter for, did this company exist, you know, 10 years ago?

1:03:52What was the post-mortem on the conflict in the Middle East from a trade standpoint? I remember there was one night that - Straight to her moves. Well, it looked like two tankers had been blown up, and I was seeing that open source intel on it being like, oh, I just was feeling bad for you. I didn't send you a message or anything, but I was like, oh, this is the last thing that global trade needs right now. But we seem to get out of it. Yeah, the straight-up-board moves is much more important for the wider economy than just for – certainly not for containerized trade. It's pretty small. Only about 2 % of containers go in and out of the – Oh, interesting.

1:04:32Straight up Hormuz. And that's basically going to Dubai, Jebel Ali port, it's called. It's a top 10 port in the world, but it's mostly a transshipment port, meaning cargo comes in there, gets unloaded. Think of it like a packet switch, or the cargo comes on and gets rerouted. It's not that important of a port in the wider scheme of things. The big thing, obviously, is oil. It's like 20-something, 5 % of the oil in the world flows out of there. And it's fascinating. Look, if you look at the oil prices, look at the price of diesel. So there's no sign that anything ever happened in the Middle East at all.

1:05:02Like you don't even see a blip upward. Wow. And when Iran threatened to close the Strait of Hormuz, the oil price went down 6 % instead of spiking. Yeah, weird. Why? My read is like no one thinks that's a credible threat. Because if they close it, China gets all their oil out of there. Yeah. And China is like kind of necessary to keep – if Iran stops – If Iran screws with China, what's left? Are you going to be against China and the US? This is probably a bad strategy. I thought that would maybe – when I saw that they might do that, I was like, this is kind of some 4D chess by Trump. If he gets Iran to shut down the Strait of Hormuz, we don't need it in the United States.

1:05:44We produce our own oil, basically. Sure. It's an overstatement. But when the oil price goes up, America does better now, right? We're the number one oil producer in the world. That might be good for us as a country. That is a crazy story. Like there's the idea of us. I mean, I grew up with the idea of like energy independence and the idea of America needs oil. And we got to go to these wars to get the oil and oil drives everything. And now, you know, we're a net exporter. Yeah. There is. It's not like purely that we produce it. We can just keep it here and be self-sufficient. Right. Isn't it that we're producing it?

1:06:18Like it has to be. There's different grades of oil in our refinery capacity is like different. Yeah, sure. There's some of that. But that's nonetheless, a higher price of oil would benefit American companies. Now, yeah, like normal people, you and me, you know, our energy bills will go up and it'd be bad. But on that for this for the country, it probably income inequality goes up or something. But with high price of oil is good for the number one oil producer in the world. How how do you think retails broadly are thinking about interest rates in the next 12 months? There's certainly pressure on that front.

1:06:54On Powell, retailers have had to get used to high rates. And if you're financing inventory and things like that, it is meaningful cost. I've heard rumors of aggregators shutting down that were heavily debt-fueled, probably can't sustain in this type of environment. I assume like everybody else. I don't think we're that sophisticated in our business. But cheaper interest rates would definitely help consumers buy more stuff and drive a lot of growth. I think most of us would realize, okay, we kind of took it for granted for too long. We probably should have borrowed more money when it was 2 % and bought more stuff and done capital investments.

1:07:43And the next time around, I think it'll be a massive spending splurge or investment splurge if they drop interest rates back down. People won't take it for granted. Totally. You're up in SF. There's been a bunch of massive trade deals in SF AI engineers going to Meta. What's been the mood on the ground? Do you have any advice for the folks picking up nine-figure checks these days? First of all, I love asking people because if you didn't get an offer, what's wrong with you? No, and if there's not whispers that people from your company are being post, you're probably not at the right lab. Oh, man, maybe I should make some posts about this getting angry at Zuck for taking my best people.

1:08:30Oh, yeah. Yeah, the psyops need to continue. The rumors are true. He's been personally dialing the entire engineering team. The advice would be, you should go read the most important business book ever written. It's called The Prince by Machiavelli. Oh, sure. And Machiavelli's rule number one is never hire mercenaries. He says it over and over again. It's the whole theme of the book. Mercenaries are useless. They will run away when the time, they'll take your money and then run away when it actually comes to fight. And that is really dangerous out here in this world of AI poaching, people paying this much money.

1:09:18You know, I'd be very worried if I was, how do you build a culture out of that? It's going to be challenging. They should all go read the book and figure out what are they going to do about that. How do you think about the sports analogy? A lot of people are kind of comparing the current trade deals to sports. No one thinks about Otani as a mercenary, you know? Yeah. Yeah, it's an interesting question. Sports, you have a fixed size of your team, so you can only have so many players. So maybe there's something to be said for that. I'm like, okay, you've got, therefore it bids up the price of the players.

1:09:51Also, if you look at the, you know, we know nothing about sports, but growing up in the Bay Area, watching the Warriors go on this very dominant run, I'm sure at any point, many of those players could have increased their... Well, not at any point, because they have contracts that are multiple years. And so it's like, it is a good point. You know, the ultimate is Tom Brady because Tom Brady, his secret was marrying a supermodel wife who made so much money that he could work below market price and they could build out a great team. So maybe you need to hire engineers who have rich spouses. There we go.

1:10:26There we go. Take. Yeah. Yeah. That's going to be the next, the next bull signal. Yeah. I don't, I don't do it for the money. Okay. You're getting poached. You're going to the top team. the holiday party was popping. But it's, yeah, I don't know. I'm fascinated by seeing how this plays out. And it is, you know, at the end of the day, you got to hire the best talent. And Zuck's kind of smart. He's got the war chest. And OpenAI did this before. I mean, they were hiring everybody. I love seeing them whine about it because all my friends have had their engineers poached by OpenAI who are overpaying by 2X.

1:11:01So a front-end engineer was making$350K just HTML and CSS. Yeah. And it's kind of crazy. Well, yeah,$350 and then tens of millions of dollars and probably stock options. Hopefully not for the front-end engineers. This isn't even people who are doing anything with their eye. Hey, no slander for front-end engineers. I mean, it depends on when they got in, right? If they got in a couple years ago, it could have 10xed in terms of net value. You know, it's one of those, it's like trying to be the toughest fighter or something at some point. You know, you can beat up everyone on your block, but you eventually run into Mike Tyson and you're going to lose.

1:11:38That's exactly what's happened. Yeah. I mean, it's maybe better not to try to fight. Yeah, it's so interesting because like the last, the last like big, like the, I mean, we've had, we've had a few like big hyperscale, like really fast growing, super hot, like ordained as like winner companies, like SpaceX, Tesla, Uber. And those companies were not seen as a direct threat to Google or Microsoft or Apple. And so it's not like there was ever, I mean, Google was kind of thinking about Waymo as a counter to Uber, but it was never like our core business might disappear. So we have to spend unlimited money to protect that, what we have.

1:12:18People are starting to talk about how the competitive dynamic between meta and open AI being that if you're spending three hours a day talking with chat, that's three hours a day that you're not putting comments on your friend's Instagram posts or hitting reels or things like that. So we all have 24 hours of the day. We're making more humans, but, you know. Yeah, yeah, especially. I want to see what ideas they have because, you know, the way to compete with Google was not make a better search engine like 10 years ago, 20 years ago. You know, a lot of people tried that and you couldn't do it. So I don't know that the way to compete with open AI is to make a better chat bot.

1:13:01I completely agree. Like they got to come up with some new ideas here. And I don't know what they are. I don't know what they have in mind. Maybe they, maybe. I want a new, I want a new thing at the bottom of the Instagram app that's just dopamine. And it's just a perpetual loop. You don't have to scroll. Yeah. Yeah. Something there. The whole app might be that eventually. Just surfacing content you want to see would be a win. Yeah. Anyway, this has been fantastic, Ryan. Thanks so much for hopping on. And send us a note when new truce hit the timeline. We would love your reaction. I don't think you guys can handle the speed at which this is going to happen every day.

1:13:38We might need you back on the show tomorrow. Who knows? Yeah, I don't think you need that. All right, take care, guys. We'll talk to you later. Great to see you, Ryan. Cheers. Bye. Let me tell you about 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 across the globe. It's billboard time. And we have our next guest in the studio already, Jonathan from Air Garage, talking about parking. How are you doing, Jonathan? It's time to talk about parking.

1:14:10Everybody's favorite topic, parking. I'm just glad I finished my lunch before I got let in. So I'm a little more prepared than he is. It's a bit of a random stream today. Great hearth. Great hearth. Is that a TV? That looks like a TV. Yeah, I wish it was a real hearth. You know, in San Francisco, it's June or it's July now, I guess. But it's pretty much always cold. So you've got to try to stay warm however you can. I think the real hearth comes after the next round. That's right. Once there's some major liquidity in the business, maybe then you can upgrade. But give us the news. What's the latest from you?

1:14:42Yeah, very exciting news today. We just announced that we raised our Series B from and was led by headline growth and participation from some of our existing investors and customers and all that jazz. So very exciting. $23 million Series B and hit that gong. Great contact. Great contact. Great contact. Sounded very full from this end. Yes. It's fantastic. So give us an update on where the business is today. Kind of introduce the business and yourself, and then we'll kind of dig into some questions. Yeah, definitely. So Air Garage, for people that haven't heard of us before, basically we work with real estate owners that own parking lots and parking garages, and we help them manage and monetize their parking assets.

1:15:24So, you know, if you've ever parked your car in the United States or really just anywhere, you know that it's a pretty terrible experience. There's signs that are confusing. It's like a five paragraph essay on a sign. The machines are broken. They eat your credit card. They eat your ticket, all that sort of stuff. And, you know, I think a lot of people when they first experience that or if they've thought about it at all, it's kind of like one of those schlep blindness problems that most people you experience it, but you just kind of ignore it when it happens in your daily life. If you've thought about it, you're kind of like thinking, OK, maybe it's like this because, you know, that's how real estate owners like it.

1:15:54They want to scam me. They want to like rob me blind. A lot of people, you know, they have it out for real estate owners, but it's not that way at all. Real estate owners hate it too. And so we work with those real estate owners. We've built this basically vertically integrated operating system for parking real estate. It combines everything involved in taking it from being a piece of asphalt with stripes on it to a full fledged parking operation that generates income using technology. So it's the technology you would expect in any other industry, but it's just completely new to the parking industry.

1:16:22So we do payments, we do advertising, enforcement, we build hardware, we build software. Basically, what we're trying to do is bring as much data and visibility to these assets as possible to generate more income for real estate owners to create a better experience for driver at the same time. And so, you know, the net result is we can increase net operating income by 20 to 50 % for real estate owners. And for a real estate owner, that's huge because your asset is valued on NOI and you want to make as much as as much as possible. So that is how we've managed to grow as much as we have. So we've grown 10x since we raised our series A.

1:16:53We're actually cashflow positive as business, which is awesome. Congratulations. You know, just trying to get as many locations across the country as possible. So now we have 300 plus locations in 38 states across the United States. Fantastic. I have two funny stories about parking. One, once was I started, I stopped carrying a wallet because I was like, Apple Pay is so good. I'm fine. I don't need a wallet. And I got locked in a parking garage that didn't take Apple Pay once. And I had to talk my way out of it and hit the security guard and be like, sorry, I literally have no money of any kind.

1:17:27I can't do anything. And then the other time I was parking in a garage going to a restaurant. And like, it's very confusing how to pay for this garage because there's no like, there's no like gate. So you just go in and there's a ticket attendant. and the guy comes up to me in like a security vest or whatever and says like, here, yeah, you pay me. And I pay him and I go into the restaurant and the restaurant owner is like, yeah, that guy doesn't work there. And it was just like an enterprising homeless man, I think. And so, you know, good on him, but not the best user experience. So yeah, I have a ton of questions.

1:18:03I want to know, I mean, so hardware, like that seems actually pretty hard to solve. I mean, taking cash, credit cards, Apple Pay, like the demands are pretty wild. Do you white label stuff? Do you actually develop everything? Do you have manufacturers for this stuff? Is it commoditized? Like what is that? What is the shape of that side of your business? Yeah. So the hardware that we do is all basically cameras and sensors. So it's mostly license plate reading cameras that sit at the entrance and exit of the garage. And they track every vehicle that goes in and goes out. that gives us real-time occupancy data, gives us enforcement data, but then it also can actually enable these magical experiences where I park in our, down near our headquarters in downtown San Francisco.

1:18:45We have a garage right near there. My account, because I'm already registered with Air Garage, when I drive into that garage, it automatically starts a session for me. When I drive out, it automatically ends my session. I never have to touch my phone. So to your point, you wouldn't have to carry a wallet anymore. And it bills me for exactly the time I use, right? And it's like, that's when you think about it, like that's just how parking should be. Yeah, it's not that way. Right. It's like so old school. And that's because basically real estate owners, they hire a parking operator, which is basically a property manager to run their property.

1:19:13Those parking operators, they're 50 to 100 years old. They've been doing things the same way since the 1980s. They use cash and machines and attendance. And yeah, they all use basically parking machines in their locations. And it turns out the parking machines are just kind of the wrong way to run a parking facility. You have those gate arms. People more often than you would think people drive through those gate arms. A lot of owners when they're switching to air garage, they're telling us about, you know, 15 times a month. Somebody breaks their gate arm and it's like four thousand dollars to fix it every single time.

1:19:40And that's on top of you spent one hundred two hundred thousand dollars to buy the gate arm in the first place. And then you just need an attendant to sit there and like babysit it. So one of the things we do differently at air garages, we're in entirely a gateless system, which means you remove that entire huge sort of headache and expense of maintaining and keeping these gate arms in your facility. And so when you're a driver, that's also a better experience. You drive in, you drive out the license, we're reading cameras, track your car. We get real time data. You get a better experience and you have a lot less expense and sort of maintenance issues to deal with the gate arm.

1:20:13Because I think a lot of people can relate to the experience as well of like, especially after a big, you know, sporting event or event that you've been to. You're trying to get out of a parking garage. You're sitting there for an hour because people are taking so long to go through that gate one at a time. You get rid of those, you entirely get rid of the bottleneck, and it's a way better driver experience. So our hardware, the way we build hardware, we build it all actually in-house, which is very unique for any parking company. Most parking companies, they don't even build their software in-house.

1:20:39We build software and hardware in-house to give us the best control and visibility. But the critical thing is you don't make the hardware a dependency, right? If a camera goes down for some reason, people can still drive in, still drive out, they can still pay. We still have a functioning system through the software. So you remove that dependency and it makes it a way better experience. And also you just get a better experience as a driver and as an owner. Okay, I got to ask two VC coded questions. Yeah. I'm sure you got in the raise, but I'm curious. So we had the CEO of Metropolis on. I'm sure you guys were competing maybe at some point in a more intense way.

1:21:17They've taken the more roll-up approach in terms of - Asset heavy? Very asset heavy. They raised$1.7 billion to buy - And not technically asset heavy because they're not purchasing the assets themselves, but they did basically just go acquire operators. So they just took, yeah, to your point, they took an inorganic growth strategy, which, yeah, I certainly have lots of thoughts on, but finish your question. Sorry. Yeah, no. Oh, and I'm just curious, like I'm sure every, you know, investor meeting leading to this B, people were like, have you thought about raising a billion and doing this strategy?

1:21:49And you did not. So I'm curious kind of the how you how you evaluate those two approaches. Yeah, I think that there's a lot of different ways to build a company. And, you know, basically the thesis that they're working on is actually the same thesis that there's another company called Reef Parking. I don't know if you've heard of them, but they took the same approach. And what they did is they raised about a billion dollars from SoftBank in 2018, 2019. That was right as we were raising our seed round. So a lot of people were looking at that saying like, oh, they beat you to it. Sorry, you're out of luck.

1:22:21But the thesis is basically, OK, we have this technology. We have this platform. We're going to raise a bunch of money. We're going to acquire this old school operator that has all of these locations and contracts already. And of course, we're going to, you know, it's going to look beautiful in a spreadsheet. We're going to replace all of this G &A or this overhead or this cost of goods sold of human labor. We're going to replace it with this technology and our margins are going to look great. And there's going to be a bunch of upside. It's kind of like classic private equity playbook. You know, it's a very like investor obsessed spreadsheet driven way of building a business.

1:22:54And the critical ingredient that has to be true in that is like we have the technology. And that's what wasn't true really for reef parking. And that's why that whole thing sort of went sideways. and they're no longer really a business. I mean, they're working through restructuring. Mubadala has taken over that business and is trying to sell it, last I heard. And that's the question for Metropolis, is do they have that technology? And we're taking a very, at Air Garage from day one, we started by taking over one parking lot, working from first principles, figuring out how do you run this parking lot using the technology that we have available to us.

1:23:24We didn't know what a parking company was. We didn't know what a parking operator was. We knew nothing. We were just completely making it up from scratch, which is a huge advantage compared to doing things the way they've always been done. And so we've built the platform as we've gone along to actually truly do what we say it does. Right. And that's the question for them is as they're going through their portfolio and trying to transition people, are those people actually going to transition to the platform? Does the platform actually work? And the thing is, real estate owners have been burned so many times in the last 20, 30 years by vaporware software and people saying like, oh, we have technology and you real estate people are so old school and you don't get it.

1:23:58And like, we're going to change your life and make things, everything great with this technology. And it hasn't played out many times. And so it's very hard to earn that trust with real estate owners. And so if you start taking over locations and you don't have that technology and it doesn't work out, then you sort of quickly fall out of favor. And so they're making that bet. And that's the question is, do they have it remains to be seen? I, you know, I have an opinion on that. Of course, I won't comment directly on that. But yeah, it's just a different vision for how to build that end state. And then, you know, do we go and do roll ups in the future as well?

1:24:27Potentially, because we do actually have the technology. Mm-hmm. George, you have a second question. Second VC-coded question. We had Alex Roy on, famous Cannonball Driver, wrote The Driver, and we were talking a lot about autonomous vehicles. I'm curious how you think AVs will impact the parking industry. Interesting. People have had this sense of, oh, there's so much parking in cities, and when we have AVs, we won't need them. that's never fully tracked for me because gotta charge them you have to maintain them you have to store them it there's there's way more demand during rush hour than there is you know during um you know and and i don't want to send my my av you know if i have an av that i personally own i don't want to put a bunch of miles on it driving it way out of the city to then circle back so it's never fully tracked to me that some people just like parking lots more than parks like public parks, you can't really do a lot of car spotting in them.

1:25:28That's right. You can't walk around hunting for the Lamborghini. You can't do cars and coffees in a public park. You've got to have a parking lot. No way. That would be fun, though. On the grass. You know what's funny is this was a question I got all the time in our series, like our Seed Rays, and that was like at the peak of the autonomous vehicle hype wave, like the classic hype wave that autonomous vehicles has followed. And this was every VC in the Seed Round was, of course, asking about this. And that was actually like why. What did you say? I'm saying I'm six years behind. You're six years behind.

1:25:59Well, yeah, the funny thing to me was that during this most recent fundraise, basically nobody asked us about that. And that's while at the same time I'm in San Francisco riding in Waymos and cruise cars constantly. And so it's like actually real now versus six years ago it wasn't actually real. You know, I think I have a lot of thoughts on this. One of the reasons we chose Floodgate actually to lead our seed round at the time was because they saw without us, They independently came to the same conclusion that we did that, you know, basically parking is going to be this really interesting asset class over the next 10 to 15 years at the time based on what they were seeing.

1:26:32Because and the partner at Floodgate is on the board of Lyft or was on the board of Lyft at the time. And so she was seeing the changes even before autonomous vehicles with just the Uber and Lyft trend over the last 10 years. And so what they saw was somebody is going to need to basically figure out what to do with all this space in our cities. Like 26 % of the median urban core by land area, median urban core over 500 ,000 people, 26 % by land area is dedicated to parking. So that doesn't even account for garages under a building. That is dedicated surface area in the urban core of our cities, not looking at the suburbs, which is even more parking.

1:27:08That's a massive amount of space in our cities. There's eight parking spaces for every car in the United States. I think the stat is there's enough parking surface area in the United States, and eight is the low end. The estimate is actually eight to 11 parking spaces for every car. There's, I think, one stat that I saw that basically there's enough parking space in the United States to cover the entire state of West Virginia with asphalt. And so regardless of how you look at it, there's going to be some repurposing that needs to happen. And in order to do that over time, you first need to understand how that space is being used today.

1:27:38And that's the thing is like that just doesn't exist. Like the parking operators that are running these facilities right now, they're so old school. they're doing things manually with paper and like they don't have any real time visibility about like how many spaces are actually filled right now and like what's our busiest day of the week these like basic insights that you know if you were a real estate owner and you called your hotel general manager and said hey what's our busiest day this month and your hotel general manager couldn't tell you the answer to that question like you would fire them on the spot because that's like basic information you need to run an asset but that's the state of the parking industry is like literally we took over an asset actually last week massive garage very large asset in in a sort of tier two market.

1:28:16But, you know, the way they were tracking validations is literally a paper spreadsheet in a binder, you know, tracking who gets a validation for going to the retail shops on site. That's the state of the parking industry. And so our mindset has always been, you know, if someone's going to bring this online, we're going to bring it online and be able to more flexibly use this space in our cities. Maybe that's autonomous vehicles in the future where they're parking in our facilities and they need to be able to pay for their parking in an API driven way that doesn't exist right now. There is no default online way to purchase parking or no operating system or no sort of system of record for where the space is used in our cities.

1:28:50And then the other thing that's really interesting from our perspective, too, is we've taken a lot of things in the parking industry that traditionally were fixed cost parts of your business and turn them into variable costs because we're a software company, we're a technology company instead of a basically a staffing company, which is what these traditional companies are. So if like parking revenue starts to trend downward, that actually squeezes all of our competitors in a really helpful way for us, where like our cost of goods sold is entirely marginal instead of being this fixed cost, which then means that we can survive and thrive in an environment where parking supply continues to decrease because parking demand is decreasing.

1:29:22And actually, parking supply being constrained is great for our business, because that's the time when you actually can charge for parking. Yeah, I mean, I can see how this becomes a major catalyst for you guys. If I drive into a city center in an autonomous vehicle, it drops me off and then I I want my vehicle to park nearby. Imagine imagining the interaction right now between the average city center parking garage and autonomous vehicle. Just not going to happen. Yeah. Anyway, so great, great. Congratulations again. Thank you so much for stopping by. Looking forward to the next 10X. Yeah. Get on it.

1:29:56Get on it. We'll talk to you soon. We'll work on it. Thank you both. Awesome. Have a good one. Bye. Next up, we have Jonathan from Grok. We actually are going to reschedule that one. so we can jump into some timeline okay cool um yeah oh okay okay we're pushing him to 155 great um cool uh yeah let's do some timeline well uh aliano over at palantir received an airdrop matina our favorite energy drink that i drink four of every show basically delicious congratulations that is that is 480 milligrams of caffeine I mean, it's an adult amount. It's an adult amount. It's a horse amount. It's great. Love to see it.

1:30:41Shout out to Rob for dropping those off at Palantir. Wonderful. And I think he's enjoying them. Let's tell you about Wander. Find your happy place. Find your happy place. Book a Wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning, and 24-7 concierge service. It's a vacation home, but better. And you go to Wander.com to go check out sponsors. Everybody thought our ad was AI, and I think that's a great compliment to Wander, the property that we were at, the Wander property we were at in Malibu. It looks almost too good to be true, but it's very real, and you can go stay there today.

1:31:17Yeah. Let's see here. Ahmad had the post that I was referencing earlier. He said, why is Meta scared of OpenAI? This graph says ChatGPT is not just a productivity app. People are spending hours on it to talk to AI, write poetry, et cetera. Meta needs attention to drive ads. If this trend line continues, AI will eat social app time. So this is mobile minutes per daily active users per day. And ChatGPT is at 29 minutes. Now, the question is, like, we're not seeing a drop off from any of the other apps. So it might be that ChatGPT is cannibalizing something else in people's life, maybe talking to other people.

1:31:58But it could also be books. It could be time spent reading the newspaper, researching, or doing anything else. It's not exactly showing up in the Instagram data there. That would be really, really. When you see ChatGPT going up and Instagram going down, then you get really worried. But still, ChatGPT is on a generational run. Pretty crazy going from five minutes, what, a year ago to 29 minutes today. So 6x growth in a year. people love it. I spend a lot of time on it. I'm always doing stuff. It's fun. It's just super interactive. Just dictate something. Get the response. Read it out. It's just so much more efficient way to learn for so many different things.

1:32:40Totally. I would love to see what these other actual proper AI companion apps like Replica, what their usage per DAU looks like because I would expect that at least for paid users, it's significantly higher than that. Well, let's tell you about get bezel.com. Your bezel concierge is available now to source you any watch on the planet. Seriously, any watch go check them out. We love missed opportunity to ask Alex Roy about the right watch for the for the cannonball. Oh, yeah, he'd probably say an Apple watch today. Yeah, he's very technology pilled. Very, very modern answer. We have a trade deal.

1:33:19Trade deal. Summer you, she says, today is my first day at Meta Super Intelligence Labs. I'll be focusing on alignment and safety, building on my time at Scale Research and SEAL. Grateful to keep working with Alexander Wang. No one more committed, clear-eyed, or mission-driven. Excited for what's ahead. Congratulations to Summer. I would imagine this was a maxed-out contract. Good to keep the team together. It's interesting because Alex was moved over to Meta, but Scale is still an independent entity. but it seems like some folks from scale are now moving over to meta and Meta is probably looking through seeing who makes sense where and the businesses will kind of diverge It feels like the true like super intelligence research and the hardcore AI research of training new models that llama V5 I guess is happening gonna be happening over at meta but scale obviously still has business in in data generation.

1:34:18And so if you were kind of on the research side at scale, you're probably gonna be moving over at some point, but this is probably the first of a few of announcements. We'll see. Totally, so she was the VP of research at Scale.ai. Prior to that was in research at Google DeepMind for almost six years. Got it. An absolute killer. Yep. Who do we have? We have a few people in the waiting room. Fun. Jacob, I don't know Jacob. We'll have to figure that out. People might just be joining. The link might have leaked. The link is leaked. This is the thing we use. We shouldn't leak this, but we use the same thing.

1:34:51We can highlight. So WAP announced. Oh, yeah. They had an ad yesterday. Can we pull this ad up? Is that possible? Yeah, let's pull it up. Let's play it. The WAP ad. It's in the Bangers tab. Riley at L-A-M-X-N-T says, First off, banger. Second off, this video means as soon as VO3 slash insert new AI video generation model drop, WAP immediately assign hands to diving headfirst into it, seeing what they can do. This is the biggest ball signal for new companies, having the human resources capital to be able to actively chase staying on the bleeding edge of new tech and innovation the second it drops.

1:35:21Massive, massive, massive. You simply cannot beat a team that is hellbent on being first. I thought this ad was very cool. Yeah, we should watch it. It's really crazy because they're really doing a great job of solving all the key problems with generative AI, which is like character consistency. It's not fully photo real. And so very clearly in the prompt, they said, make it look like Grand Theft Auto. And then all of a sudden it's like a Ghibli moment. And I feel like this is kind of the first video that we've seen that's really dominated like a new style that I think you'll see a lot more people be making them.

1:36:02Well, it's perfect too, because WAP can make a GTA themed ad, whereas like very few brands can do that. Yeah. But yeah, I mean, I imagine that this will be as simple as gibblify this image pretty soon. Just, hey, take the trailer for F1 and make it GTA style and it'll look amazing. And people will do that for all sorts of videos. It'll be very slow and expensive first, but then it'll be very cool. Let's play the WAP ad. Our parents told us to get real jobs, get off our phones, go to college. A completely different route. there's something different about kids who make money online

1:36:47huge influx and kids dropping out of school Shot Morsi.

1:36:57U.A.

1:37:03Lee. See that? Bunch of great cameos in here. There's no going back. Was that Blake Anderson there? No, I think that's another guy, but it does look like Blake. How much of that do you think was AI? I think it felt close to 100%. I think some of it might have been actual game footage. I'm not exactly sure, but some of that could have been just generated in GTA 5. Yeah, it's possible. Yeah, it's possible just to actually go shoot some of this. Yeah, the interesting thing here is it feels like WAP is, you know, 10 years ago, we talked about this earlier with Ryan. And 10 years ago, the online entrepreneur meta was dropshipping.

1:37:47And Shopify had kind of a crazy flywheel of different types of influencers online promising mostly young men that they could make millions of dollars selling products online. and that uh that that by the time people i think were making a bunch of courses about it i think it had become incredibly difficult to actually arb uh and and like buy a product from a traditional you know u.s brand and sell it on amazon and make any kind of money and so that whole industry um like effectively has shifted over the last um over the last uh i want to call it five years into what are now like info products. And so WAP has this effectively an economy of people selling info products and then armies of young people that basically do like bounty style work for them.

1:38:42So clipping for a musician or clipping for a live streamer, things like that. It is a cool way for somebody in high school to make their first money online. And I think that is like a formative moment to have real dollars hit your Stripe account. But, you know, that kind of meta is constantly evolving. I think they have over a billion dollars in transaction volume. So we got to have the founder on again. He had some interesting takes. Are we ready for our next guest or should we keep doing? Extremely tapped in. We have Jake. We're flipping the schedule a little bit. Let's bring in Jake and then we'll go to Craig.

1:39:22Nice to meet you, Jake. How are you doing? Jake, welcome. Thanks for having us on, lads. Yeah, thanks so much. Good to have you. We're dealing with a bunch of different scheduling stuff today. Would you mind kicking us off with an introduction on yourself and your company? Sure, yeah. So my name is Jacob Glanville. I'm the founder and CEO of Cinevax. Previously at Pfizer, I also founded a company called Distributed Bio. At Cinevax, we focus on universal immunity technologies. That's a universal flu shot that we recently closed a Series A to be in humans in eight months. And then some of you may also have seen some of the news around our universal anti-venom program that's a single anti-venom that can treat all snakes.

1:40:01That's amazing. I hate snakes. I actually am like it's the one thing I'm terrified. John always checks his boots for snakes. I do. Indiana Jones is my hero growing up. You raised a Series A and you're going to have a drug in market in eight months. Yeah. Is that how much how much did you have to raise prior to get to that point? You know, usually we hear about bio companies having to raise, pharma companies having to raise a billion dollars to even have a shot at getting something in market. FDA trials. We're going to be in humans in eight months. So that's the first human trial. So there'll be more to spend.

1:40:35We've raised, prior to this Series A, we brought in about$50 million. Half of that was non-dilutive from like the Gates Foundation, CEPI, the Navy, the Army, the Naval Medical Research Command, and RARE, and a number of other places. because what we work on is a biothreats problem. It's also a global collective goods problem. If you think about how much money has been spent on$90 billion of productivity loss just on flu alone in this country every year. And so in addition to that, we had NFX and the Global Health Investment Corporation that were our backers. And then now we're raising, we've just raised another$45 million.

1:41:11So nearly$100 million raised gets us into humans, which is a really big deal because we show it's safe, but then we also show it's effective. And so we can establish the first universal vaccine and a platform technology that we can make more universal vaccines out of. I definitely feel the productivity loss. Every time I feel myself getting sick, I'm like, this time I'm going to power through it. I'm going to be just as effective. I'm not going to let my email pile up because I just feel terrible. And it's very difficult to overcome. How different is this path from the traditional biotech path?

1:41:44I feel like a lot of biotech companies, they go public really early. it's just a completely different path from like what we typically see in venture are you taking more of like a silicon valley venture path or or do you see yourself as the same kind of strategy as the biotech companies that we've seen like um like the other companies that have just kind of gone through the normal like ipo early then the stocks trading based on the you know the fda uh results and that type of stuff i i historically have always tried to ignore the normal path and what's the best path for this company. So my last company, I actually never raised any venture capital.

1:42:19I built a series of profitable verticals and we exited to Charles River Laboratories without taking venture. Here, I need venture because we're going to go through these very expensive phase trials. And even there, we have accelerated approval and some other tactics that make it much less expensive than some of the ones you described. So what's going to happen for us is human trials. After that, there are sources of potential non-dilutive funding that could give us write really big checks once you're in phase one to potentially cover the phase two and phase three, or we do a series B and then maybe a series C to get the first product out.

1:42:54And the whole idea is to prime the pump. Once you're profitable, then it's a rounding error to run your other programs, which is like so torturously expensive for the first product. Like once you've got something commercialized, then you can go build the other ones. But you know, it's also possible that we get kind of some FOMO going because the current$7 billion flu market, there's four companies that are all competing over that. And all of their vaccines are like 10 to 60 % effective. Like one in three people who got a flu shot last season actually benefited from it. And so I'm imagining those groups are going to be like, I want to work with these guys, otherwise I might lose market share.

1:43:27And so there might be an opportunity there for an acquisition or partnership earlier. Yeah. On the non-dilutive funding side, what has been your take on the NIH discussion publicly? We had Andrew Huberman on the show and he was talking about some of the risks of cutting some of that early stage funding, the number that was being thrown around was around 40 % cuts. I don't know if that affects you directly because you're kind of already running the company, but what's your take on the NIH situation? Well, look, I'm in biotech in general. I think we've benefited and we're able to bring this technology forward because of non-dilutive sources out there.

1:44:01So more is better. Our anti-venom program has been supported by an NIH award. That said, you know, I'm working on a fundamentally new technology. And sometimes we've had a hard time convincing grant agencies to go in at the NIH in particular, where I think some people just didn't get it because it was too different and new. That changes as we have more data. But also, I think a little shakeup sometimes is helpful to be able to have them invest and try new things rather than just reinvesting in the past, because the past technologies just weren't working. I think we need new stuff. So obviously, I think the United States needs to maintain its preeminence in biotechnology.

1:44:37It's one of the 21st century sectors where we have dominance. And you don't want to lose that because, you know, there's China and other organizations out there that are countries that are very happy to try to fill those shoes. And once you lose that, the brain drain goes the opposite direction. And that's part of the reason why we maintain the preeminence is that we have the institutions that are propped up partially by government money to be able to go make all these breakthroughs and have your Jin-Nin techs and so forth. So I think for those reasons, I think the United States should remain the global epicenter of biotechnology because of macroeconomic reasons.

1:45:10Yeah, Genentech, the original VC, what, 100 bagger or something like that? Fantastic return. What are your kind of goals on the efficacy side? Obviously, the goal would be 100%, but if this typical flu vaccine is 10 % to 60 % effective, what are you aiming for? Yeah, we're looking at, like, we'd like to see somewhere between 80 % and 95%. It's hard to get that last 5 % for any vaccine because you have people that have significant, you know, immunosuppression or some sort of deficiency. But what we're seeing in the animals and all the work so far, I think probably 85, 90%, maybe 95 is sort of what we're aiming for.

1:45:50And that's a big deal, right? That suddenly changes the, not just like you get a shot in that Pavlovian thing. I mean, that's a big problem with vaccine skepticism is people like, I got the shot and I still got sick, right? And so you can solve that. I took the shot. I didn't get sick for two years. That's a better outcome. But the more profound thing that happens is that when you start distributing a vaccine like this around the world, the pandemic era is over because you don't go, oh, God, there's an H5N1. It's getting in cows. It's getting in people. There's just like, hey, guys, there's a reminder.

1:46:20We're seeing some H5N1 in people. If you haven't had your SentiFlu shot in the last two years, go get a booster. And then you don't have a pandemic anymore. And so that's a crazy transition compared to how humanity has been operating since the beginning of time.

1:46:34What is the key unlock for the universal antivenom? Yeah, so it's the same biology. It's the idea that there are these little Achilles heels on these proteins that like the viruses, they can change just about anywhere, but they can't mutate a couple key sites. Snake venoms, there's 650 species of venomous snakes around the world. and they all have different venom but they share certain toxins and those toxins have conserved sites the origins of this anti-venom was i found a guy named tim fredy who had for 18 years he'd injected himself with escalating yeah i was about to i was about to ask we covered we covered that story and it was just almost like it's such an example of dudes rock this guy what a hero yeah yeah yeah tell us the full story because it's like it's an incredible story this guy just he He decided he was going to make himself immune to snake venom, but like all of them.

1:47:27And so he started collecting a menagerie of snakes in his basement, like all the gnarliest snakes around the world. And he started off with tiny little doses. I don't know if you guys saw Princess Bride, but it was like the iocane powder of Princess Bride. Starts with tiny little doses and he would slowly increase the dose until he was able to tolerate a full dose. Normally he would kill a person easily. And then he started letting the snakes bite him. And so he had 202 bites and 654 immunizations over 18 years of 16 of the most deadly species from around the world. And so I heard about him and I'm working on universal flu vaccines.

1:48:00And I was like, if anybody has the beating through their veins right now, a universal anti-venom, it's going to be this guy. And so I contacted him. We started doing a research project together and it was phenomenally successful. So it just speaks again to the power of universal immunity to be able to completely change the face of 21st century medicine. what is the what is the distribution of that anti-venom gonna look like i imagine we should put it everywhere right it's always it's always growing up i mean growing up in california like being in the country a lot i it was always in the back of my mind as a kid of this like fear because i'd come across snakes all the time you know this fear of you know you don't necessarily know what bit you and then you don't necessarily you know first of all is it is it venomous or not Hopefully you're not getting bit by snakes a lot, but then you know, you know if a person is getting treatment Are they even gonna have the right, you know?

1:48:55So I'm curious what that kind of go-to-market looks like. How do you get this? Distributed as widely as possible. So I mean the way you described it. That's that's right. It's worse in the developing world So there's a lot more people who die and get permanently messed up by snakes than you might think It's a hundred and forty thousand people who die every year and another three hundred to four hundred thousand that lose a limb which really sucks if you're in a village because then your family's having to take care of an invalid when really they need everybody to be able-bodied. And so, yeah, right now there's 650 venomous species of snake and they make one anti-venom for each snake or sometimes a couple snakes in one bottle.

1:49:30But so you get bit and first off they have to bring you probably multiple hours sometimes to get to a hospital that has IVs. And then they go, oh, I'm sorry, bro, were you bit by like a super venomous snake did you happen to have the presence of mind while you're being bit to ruffle through the grass and grab the snake and bring it in doggy bags so we can take a look at it so we can check did you bring the killer snake that just bit you did you bring it with you otherwise we don't know if if we stock the ant if it even exists and we don't want to give it to you because it's made out of horse antibodies and it can cause a whole bunch of like gnarly side side effects and so that's that's the world that we're trying to replace what this is now is a single, uh, we're halfway through, we've got half the 300 species of neurotoxic snakes and we're working on the other half.

1:50:13That was the cell paper was, but the idea is to have a single product. Um, it's fully human antibodies, so they don't have all the side effects of the horse antibodies. Um, you can lyophilize them, freeze dry them. And so the idea is like an EpiPen for snake antivenom. You have some solution and you have some dry powder. You just, you get bit, you turn a little crank, shooky, shooky, and then you stab it into your leg and you get the antivenom immediately. And that means it can be in backpacks. It can be out in villages outside of refrigeration. There's no multiple hours of waiting and they don't need to know what kind of snake bit you.

1:50:42And that will change a lot of people's lives. That's amazing. Very cool. I'm glad you guys found each other. Yeah. Yeah. Thank you so much for stopping by. We have a slam schedule today, but this is fantastic. And thank you for fighting the good fight against snakes. There's nothing I truly hate more. So I really appreciate it. Making the world one man versus 600 snakes. My literal only phobia. So thank you. I have no problem with spiders, no problem with anything else. I hate snakes. So thank you so much for doing what you do. There's a part of your brain that actually is networked. So if you're shown a bunch of pictures, you'll spot the snake picture first.

1:51:23So there's something deep in our brains that is taught us recognize and fear snakes from primordial times. And so what you're experiencing is not unusual. We've been built to tell these things. And I'll tell, I'll pass on your thanks to Tim because he's the one who really just spread it for this. Yeah, I'm also Irish. So there's probably something about the Pied Piper and wanting to rid the world of snakes. It's in my blood, but we'll get to that. The snake eradication project second. Thank you for making the world safer. Congrats on the race. And congrats on the race. Good luck. We'll talk to you soon.

1:51:53Cheers. Bye. Next up, we have Craig Piggott from Halter. I was very excited for this company. They raised money. This is the most excited you've ever been about a startup. Well, it's an extremely bullish story, and we'll hear it from him. It's about running your ranch the way you've always wanted. Yes. Thank you so much for joining, Craig. How are you doing? I'm doing good. How are you guys doing? You're overseas, correct? I'm in New Zealand, yes. Awesome. Thank you. I think it's early your time, I guess. Is that right? It's like 8.30. It's not too bad. Okay, not too bad. Well, thank you so much for joining.

1:52:27Why don't you kick us off with an introduction on yourself and the company? Cool, yeah. Craig, founder and CEO of a company called Holter. Originally from a farm, engineered by training. I did a stunt at Rocket Lab working for Peter Beck, which was kind of my intro to startups. And then, yeah, founded Holter. We're effectively our operating system for ag or for farmers and ranchers. We built a collar. that goes on the cow, that color is solar powered and runs a bunch of ML on the edge to train the animal to respond to cues. So we can then virtually fence and shift these animals from a phone or from the farmer's phone, which means we can run more productive farms.

1:53:09Ag covers about half the planet's admirable land mass. So that's like the goal, I guess, is to lift the productivity of that land. interesting so yeah uh what was the state of the art beforehand uh just cowboys yeah barbed wire it is yeah literally barbed wire fences for hundreds of years have lifted the productivity of land but obviously they're pretty expensive and hard to move a lot of shortcomings and so how do you actually steer animals with just a collar they the collar has cues on it like sound cues out of each side um if you imagine maybe like parking your car and as you like back into a wall it beeps and so it gives you like feedback on how close you are to a virtual fence um so we use sound and vibration and then we train the animals with a low energy pulse it's like a hundred times less than an electric fence that say most cows in new zealand would be used to yeah um and yeah the collar does all that training and and kind of animal guidance what has been the the story around cowboy employment in the context of adoption of tech.

1:54:21I imagine this is the kind of thing where I'm using cowboy sort of as a joke, but I imagine by introducing this technology, you can free up ranch workers to do more important things, like for example, taking care of a sick cow or something like that. Has that been the case? Yeah, like there's been massive labor shortages on farms and ranches for a long long time it's obviously not glamorous work and so i think our tool like halter does automate a bunch of work um but really it also enables you to just be more precise kind of run a like a more productive operation and then you can any extra time you do have you spend on the never-ending kind of to-do list of running a ranch or a farm yeah can you give us the state of the business i mean yeah i want to know about scale i imagine I mean, how many cows are we tracking at this point?

1:55:13I think people don't understand the scale of your business, so I just want to hear from you. Yeah, we're live in New Zealand, which is where we started, Australia and the US. I think we're across like 18-ish states in the US. We're on over a thousand farms, hundreds of thousands of cows, which we fence and shift and track and monitor their health every day. and growing over like 2x year on year at the moment. So it is like, and there's hundreds of millions. Well, you got a lot of room to run. I looked it up. There's one and a half billion cows in the world according to some service. And I'm sure some percentage of that are just relatively wild and not.

1:55:59There's a billion cows? Wait, cows are expensive. I feel like that's like a trillion dollar market then. It must be, yeah. Wow, I had no idea. The funny thing about the TAM is it's like, it's very different to most businesses. It's kind of a function of land mass, not like population. So you do end up with like a very distributed TAM through South America and Europe, like everywhere. So, but the market is huge. So we're trying to remain focused on NZ Australia and the US. Even within that is just a multi-billion dollar opportunity for us. Would you guys ever do health tracking for the animals?

1:56:40Is that something that you already do? I imagine farmers would love to understand metrics around stuff like heart rate, HRV, things like that, steps, et cetera. Yeah, to do the guidance well, you need to understand each cow's behavior and how they respond to the cues and how best to train them. so kind of a byproducts maybe underselling it but as a function of that you then can also do health and fertility and things like that very well as well so um we already that's already part of the product um whether a cow's you're sick or um not healthy for any reason or if they're fertile um which is important for breeding and things like that so yep if you've got the hardware there you know that is just a over there yeah update to a to the collar um and then we kind of turn it on as like an additional sas product so i mean uh is the is the is the business model mostly uh like subscription sas uh structured or is there a hardware component and a fixed cost as well to kind of onboard it is uh the hardware is bundled in the software so it's purely a perk

1:58:19It is like very sass. led by Bond. R &D curve. There we go. I love it. Awesome, awesome firm. And probably two things really, like more expansion in terms of new markets and even just pushing harder into the markets that we're currently in. And then a huge amount of product and R &D work. Like we have kind of for the first time taken a very analog operation and converted it into this like digital farm. like farmers spend two hours a day and the product and they're doing everything from animal health to the fencing and shifting to like measuring their grass and all that so and there's just so much kind of room to run on new product and shipping new products so that's the other kind of half of the of the raise is just doing more kind of building our product engineering teams and doing more r d on that side will we see will we see cow bcis in the next uh 20 years for PCI.

1:59:21Good question. Don't know. Don't know. Yeah, maybe unnecessary. But if you can do something, a caller is potentially more elegant solution than a chip. Probably pretty costly to implant the brain chip. But who knows? Anything's possible. If anybody's going to do it, it'd be you guys. Well, thanks so much for stopping by. there's definitely some benefits to being on the on the outside yeah for sure it's a little bit easier to change it out and clean it off if you need to awesome well congrats on the raise and uh yeah come back on when you have more news yeah thanks so much for stopping on cheers uh up next we have uh jonathan from grok coming into the studio talking about chips hopefully we can uh get him in we've been juggling things how'd you sleep last night jordy go to aidsleep.com absolutely terribly my eight sleep couldn't couldn't save me my you can get a pod five at eightsleep.com slash tbpn uh one of the ish one of the ish we got somebody yeah we have john here it's good how are you welcome thanks so much for stopping by sorry about the little mix-up with the scheduling uh glad you could make it though great to meet you thanks for having me um would you mind uh introducing the company and the and the current state of the products that you sell just for anyone that might not be familiar?

2:00:46Sure. So the company is Grok, GeroQ, and we sell tokens as a service. So very much like you use OpenAI's API or Anthropics API, except we serve mostly open source models. And we've built our own AI chips that allow us to do this much faster than anyone else. Yeah, I remember the initial demos. I believe it was on an early version of Llama, and the inference rate was just so much higher. What were the key decisions that you made to enable faster inference? One of the key ones was we don't use any external memory. Every time you read from memory, the chip just has to wait for it, and it's very slow, and it's like drinking a drink through a martini straw.

2:01:29And so what we've uniquely been able to do is keep the cost down while also being very fast. You can actually get speed off of a GPU, but then it just becomes completely uneconomical to use because you have one user using that at a time. So what are the trade-offs of not having off-chip memory? I imagine there's a big discussion over how important are large context windows. Is that an important factor to kind of how LLMs are scaling? And ultimately, you're somewhat beholden to the decisions that are made by AI researchers at big labs, right? Well, interestingly, we actually support very often the largest context or the largest context that's practically offered by anyone else.

2:02:16And this is a little counterintuitive to most people. The trade-off we have is memory capacity, but GPUs have a memory bandwidth issue. So what the researchers do to improve the memory bandwidth issues always improve the memory capacity issues for us. So we can run all the same models with the same context length. The trade-off is actually something else. You could think of us a little more as a nuclear reactor instead of thinking of us as a diesel generator. Whereas GPUs, you can take just eight GPUs and use them for a model. We need a lot more of our LPUs. But when we're running that model, very much like a nuclear reactor, we get much better cost and it's better for the environment because in our case, we use less energy.

2:02:57Interesting. What does the shifting landscape around different custom silicon look like right now? I feel like every hyperscaler is taking it more seriously. We've heard stories of Microsoft wanting to pull back from NVIDIA chips. It seems like Amazon's kind of doing the same thing with Tranium and Inferentia. Are we going to just be in a world where every hyperscaler has their own chip? Or do you think that the market will fragment in kind of a different way? My background, I'm actually the person who came up with Google's TPU chip. So I started as 20%. No way. Wait, it actually started as a 20 % project?

2:03:36It did. It was unfunded. That's amazing. Yeah, so there are 20%. That's a real thing. But what most people don't realize is that there were actually three different AI chip efforts at Google, and that was the only one that actually survived and was competitive with GPUs. The other two ended up getting canceled. And so when you start looking at the broader and broader world of chips being built, a very small number of them are actually going to be competitive with GPUs. GPUs. So most of those are going to be canceled. But I think where people get really confused is they keep talking about the chips.

2:04:08And so it's not about the chips, it's about the software. There are all these little features like prefix caching, speculative decode, and all sorts of things like that. If you didn't have one of those features, you wouldn't actually be able to be competitive with the latest GPU, no matter how good your chip was. So the thing is you have to first catch up in software and only then do you get to compete on the chip. And so one of the things that we did that was very unusual is we spent the first six months working on a compiler, which makes our software work very easily. So we can actually compete on the software level with NVIDIA.

2:04:49We have the same models running and only then do we get to compete on the chip. So are you talking about a Google that was like the push to break out of like the CUDA ecosystem, essentially? Well, actually, this was at Grok. So at Google, we had these handwritten kernels, which are these sort of assembly routines. And it's the same as with GPUs. Okay. GPUs are actually more similar than what we built here at Grok. Yeah. How do you think about the current AI paradigm and how long, like, the current algorithmic regime will last or how it will change? Because I feel like the narrative around companies that bet on a particular, okay, we're going really long on the transformer or something like that.

2:05:39Then there's always this question of like, will the transformer stick around? Well, it's been around for a long time. It seems really good. Maybe it'll be around forever. Maybe it won't. How do you think about those? Is that the right question to be asking? Yeah. I remember when we were at Google, we hired this really senior person right before we were done designing the TPU. And he came in and he said, you cannot build a generally programmable chip that will out-compete GPUs. It's impossible. Instead, we need to stop what we're doing and just create a chip for a particular model. And we had to walk him through the whiteboard and show him, but we actually ended up proving to him we made a faster chip by making it general.

2:06:16And the counterintuitive part was if you're actually able to optimize some of the circuitry in the chip to be reused for many different things, but you're only designing a couple of those circuits, you can make them much better than if you have a whole bunch of different stuff that's not as optimized. And when you look at one of these models, you can't fit one of these models on a single chip anyway. You have to use multiple chips. So are you going to design a different chip for each part of the model? And it starts to become ridiculous and doesn't make any sense. There's actually been people recently who've been trying to revive that idea.

2:06:53But in the time when they started, since they started, MOEs became a thing, mixture of experts. So if they had already started designing their chip, the chip would be obsolete. And then now we're seeing other sorts of things emerge that are very interesting. And if any of those win, those chips will be obsolete. So we always focus on as general of a programmable chip as we can. Switching gears a little bit, I believe you're in Europe right now. It looks dark outside. And it looks like you're... Thank you for staying up. Thanks for staying up to hang with us. Really appreciate it. Talk about the decision to put the first European data center in Helsinki and kind of everything that went into that.

2:07:31So we were at an event here, an AI event. And about a month ago, we decided it would probably be great if we unveiled a European data center while at this event. And literally a month later, we now have it up and running. Wow. Actually running models. So I think that's a record for time to decide to deploy and getting it up and running. We actually weren't expecting it to happen until the end of this week, which would have been insane in and of itself. But it's actually up and running now. So kudos to the team. The team is probably sweating because they're like, OK, this is the bar now. We actually have to be faster than this.

2:08:12The previous bar was 51 days when we deployed about 20 ,000 chips in Saudi Arabia. It was 51 days from signing before we set it up. Oh, I remember that deal, yeah. Now it's like a month and three days or something. So what makes that possible? Is it the energy efficiency? Is that a huge part of it? We're best friends with Morris Chang. We don't use TSMC to make our chips. Okay. Yeah. In our case, we've actually simplified the architecture pretty significantly. We don't use any external switches as part of our core interconnect, only to move data in and out from the system. It's pretty simple cabling.

2:08:51Air-cooled still, we're not liquid-cooled. We like to stay a generation behind on all of the technology and just compete on the architecture and the software. And so that allows us to use these highly proven technologies where everyone's already debugged them and we're not debugging them as we deploy. But also because we don't use that external memory. So that external memory tends to lead to a lot of chips that fail in field. and so as you're bringing them up a lot of them fail you have to fix them and some there was a recent model that we ran that required 4 000 chips the first time we ran that model on the 4 000 chips it worked and we would have never been able to do that if it was 4 000 gpus the first time you run something at 4 000 gpus you have to replace a bunch of them yeah because it's well so everywhere um there's been there's been some rumors that you've operated the token business, the API at a loss.

2:09:47That feels like a completely rational strategy in many ways. Nothing wrong with that. But can you comment on that as a strategy? Is that just a misconception? Is that deliberate? How do you think about just investing for adoption broadly? Because it's really important as a business to grow. and there's a whole bunch of different strategies and tools in the tool chest. What do you think is valuable? What's been the strategy to date and how's it evolving? Let's get even more specific than at a loss because when you're running a service, you can claim you're not at a loss because you have an infinite amortization time on your CapEx and your chips.

2:10:26And that's what a lot of the Neo clouds are doing. So we actually aim for a more aggressive payback period than anyone does with GPUs. And part of the way we can get away with this is, first of all, our electricity cost is about one third per token versus a GPU. So our OpEx is already lower. And that's sort of the flat. You have to beat your OpEx. Otherwise, you are losing money, period. There's no accounting tricks you can do. And then on top of that, the question is, how quickly can you pay back? For us, everything we run is above our OpEx costs. So we're not losing money. But different models have different payback periods.

2:11:04Some of them as quick as two years on our v1 silicon some take you know four years and it's a blend right okay and that overall blend is what we're happy with makes sense yeah on that note there's one world where you know the models are getting better everyone just wants the best model for every single task and they're just willing to pay for the latest and greatest constantly there's this other interesting model where I feel like we get a new capability whether it's just the ability to convert, you know, CSV to JSON or something really, or like raw text to JSON or data extraction or, you know, censoring, you know, bad words and a whole huge transcript.

2:11:44And like the problem is completely solved by the LLM. And you don't need to throw a more advanced model at it in the future, even if one comes down the pipe, you just need speed and reliability and eventually cost. And so do you see, is there an important part of your business where you can be the baseline provider for a current capability that will continue for decades potentially, even as a newer model comes online? Or do you want to try and shift the business towards being constantly on the most aggressive side of the frontier? And is there actually a trade-off there? Can you just do both? So a very common usage pattern we see is that people will develop their systems on the latest and greatest model.

2:12:33And they will optimize it for two things. One is they'll optimize it for speed and the other is they'll optimize it for cost. Very often, the most successful AI startups are spending almost as much per month on token as a service as their total revenue. They'll lose money on paying employees and things like that, but they're trying to keep those balanced. We can bring the cost per token down. Interestingly enough, the general inclination is that they want to spend the same amount, they just want more tokens. Because those tokens can actually turn into more quality if you can iterate, if you can do more in parallel.

2:13:08The speed thing is super important because that's engagement. So if you think about it, every time you increase the performance of a model or any service by about 100 milliseconds, your engagement rate or your conversion rate tends to improve about by 8%. That's on desktop. On mobile, it's over 30%. And so no patience on mobile whatsoever. And so what we see is people get stuff working. They prove that it's possible on the most capable model. And then they'll try and find one of the models that we run, all the open source models. and then when they're able to find one that works for them because they have to try a couple, then they're very happy and then they don't change things.

2:13:54And so there are a couple of models which are actually quite old, quite terrible that we would love to deprecate, but there's a bunch of users because their system works and they don't want to touch it. The other thing is, and this one's interesting, so we had one of our engineers try solving a bunch of math theorems and they were using this thing called Lean, which is a formal theorem prover. And they would use different LLMs in the background to solve, and then they would use Lean to test. Every single time, Claude Opus would actually solve it in the fewest iterations. However, Quen 332B running on our chips, because they're so fast, always solved the theorems faster.

2:14:38It may be more iterations, but it was able to go through them faster. And so less expensive model running on Grok. Interesting. It's been a crazy year so far. We're about halfway through. What are you excited about in the next six months on the Grok side? And then what are you excited about in the broader open source ecosystem? Well, on the Grok side, we're continuing to scale up. We're going to add a bunch of new data centers and new continents. After this, I'm going somewhere else in the world. I'm not going to tell you where, where we're working on getting another data center deal done. But also there are some rumors that we might have some new improved systems or chips or something coming later this year.

2:15:23And there's allegations, allegations of massive advancements. Rumors of breakthrough, a major breakthrough. Yeah, I love that. Can you give me your retrospective, but also your current take on just Moore's law, broadly? Yeah, I think Moore's law is true, but I don't think it's the most important part. And people miss this. So Moore's law, for those who don't know, every 18 to 24 months, the number of transistors on a chip doubles. That translates to the economics get better. That translates to the chips get faster and you can trade that off. What's really been happening in the last five to 10 years and I don't know what to call this law.

2:16:08But like when I left to start Grok, one of the observations was every 18 to 24 months, not only did the transistors double, but the number of chips doubled. The transistors doubled and the number of chips doubled. And so when we started, we actually asked ourselves the question, what would happen if we assume there were an infinite number of chips? How would you design the system differently? And that's one of the reasons we decided to get rid of the memory altogether because the memory just holds bits that are doing nothing waiting for an active chip to do something with them. We're like, let's just make everything active and do everything all at once.

2:16:40And so that was a very important observation for us. And I think people are going to focus more on the number of chips doubling over the next couple of years than how much each chip improved. Can you, we'll let you go. This is my last question, unless Jordy has something. But can you tell us a little bit about broadly what international leaders in other countries generally are thinking or what's driving their motivation to spin up token factories, these AI factories, new data centers, the sovereign AI efforts? And because I'm thinking back to the development of the original cloud computing revolution, and it felt like there wasn't as much of an incentive or narrative around, well, we can't possibly just let AWS come over here and set up shop.

2:17:39This feels different. What are the motivations? Is it economic? Is it freedom of speech? like what what what are the what are the shape of the conversations that you're having that get an international leader excited about setting up an ai factory a token factory a data center so it's a little bit less about um fear and control and it's actually more about they're not getting enough compute so think of it this way um gpus are expensive and there's only a finite number of them being built not because they wouldn't build more gpus but because they rely on that external memory, which is a real bottleneck in the supply chain.

2:18:19And so NVIDIA is going to build every single GPU that they can physically build this year. AMD is going to build every single GPU that they can physically build this year, and then they're going to sell every single one of them. If they could build more, they would sell more. That means that there's an allocation problem. Countries aren't getting all of the chips they need for what they're doing internally. So for example, when we built that data center in Saudi Arabia, there were a bunch of people who've been waiting over a year to get GPU orders filled, and they had no idea when it was going to happen.

2:18:50And so they switched over to us because they could immediately get access to compute. So what you're seeing is a lot of these sovereign plays are more about making sure they get the compute. It's as if we're entering the industrial age, and all of a sudden, everyone realizes if I plug something into an electric socket, I make all of my workers more efficient. Well, if everyone else in the world is getting that, or it feels like that's the case, and you're not getting that, You're not getting the efficiency. You're not getting the compute to augment your workforce and make them more capable. You're at risk of falling behind.

2:19:21And so for them, it's as if all the power companies are focusing on some other really rich regions of the world. And they want to get that power as well so that they can start running their AI models. So is that more like the 5G rollout, the idea of just bringing mobile to your country versus Google search, I suppose? is that the more accurate analogy maybe? That would be fair. That makes a lot of sense. Jordy, do you have anything else? Any expectations around OpenAI's alleged new open source model? Is that something that you guys are going to be integrating heavily with? If OpenAI open sources their model, we will immediately launch it.

2:20:06Amazing. Awesome. Well, that's great news. Well, thank you so much for taking the time. I appreciate you staying up late. we'll talk thank you and congrats on the new and the new data center your record cheers all right bye and let's tell you about graphite.dev graphite.dev code review for the age of ai graphite helps teams on github ship higher quality software faster the best teams in the world including TBPN, of course. Use graphite.

2:20:39What else? We have some timeline. We have some timeline we can go through. We got to get out of here soon. Yoni Rickman says he wants to get long mold. Did you see this? Yeah, so I threw this in here. Request for startups. I want to get long mold. Basically, he says mold is super hot right now. It's like the protein of environmental contaminants. It's in everything with no signs of going away. It's in the air. and this stood out to me because I once rented a house that ended up having mold in it it was a huge disaster took a lot of time was making me sick and I think a lot of people suffer from mold exposure or mold related illnesses and don't realize it at all so there's a bunch of different ways that you can solve this I don't necessarily know what they all look like I mean one of the biggest yeah yeah he mold testing eight sleep of mold smart air purifiers and testing that makes a lot of sense then he says mold insurance i maybe that's genius i don't know that that's not what i would have thought of but yeah and then mold resistant building materials that's kind of cool yeah so there's a bunch of different categories so i wanted to throw this in here if you are long mold yourself and your business go reach out to yoni i would love to see more solutions here In other news, tomorrow night, there will be a Grok 4 release live stream Wednesday, 8 p.m.

2:21:57Pacific. They're staying up late. I love how they always do their streams after everyone else has left the office and gone home. They're like, we're still here. We're going to go into our tents, come out of our tents and do a stream. So I'm excited for this. I mean, this is going to say a lot about the new Memphis data center. It feels like it hasn't been that long since Grok 3. So yeah, there will be a big question about where this hits. Also, we hit this pre-training while it feels like a lot of people are saying we need new algorithms, we need new ideas. And I'm sure they'll be able to... The question is not like can XAI build a big data center and get to the frontier.

2:22:38The question now is like can they push past the frontier with some actual completely unthought of innovation. So that'll be interesting to track. But either way, I'm sure there's a time to see what they're doing on the image side video side the video side would be very interesting I mean X has a lot of video data because you know X has been uploading video You know certainly not as much as YouTube but a lot of YouTube videos get uploaded to X in yeah Imagine imagine if you can tag rock under like a meme and say yeah

2:23:1122nd GTA probably be very expensive on the different side, but you know maybe worth it should we close with this Audi ad beautiful let's do it Advantage Audi beautiful ad I couldn't tell if this was a real ad 10 out of 10 no notes I couldn't tell if this was actually live if it is it's fantastic if it's not in the shape of the Audi logo fantastic fantastic well thank you so much for tuning in today we will be back tomorrow a little bit chaotic start 40-ish minutes late a startup and they didn't want us to podcast but they couldn't stop us they couldn't stop us they'll never stop us so we will see you tomorrow have a great afternoon Wednesday evening see you soon cheers bye