NVIDIA Earnings Breakdown | Doug O’Laughlin, Ajay Agarwal, Koen Bok & Jorn Van Dijk, Hussein Fazal, Oisin Hanrahan, Jon Callaghan, Shane Hegde

28:45Doug, how are you doing? Good. This time my mic should work. There we go. You sound great. Miked up. Thank you. I didn't want to repeat the last time. I like that you're holding it too, like some type of rapper. It's much more personal. I'm going to call you Young Semi. I am getting a little ASMR vibe. It's perfect though. I love it. Hello, welcome to Young Semis Rap. Anyways, what's up, guys? I have no idea what we're talking about. We're talking about NVIDIA. We're talking about NVIDIA earnings. Should we be talking about something else? Yeah, what else is... No, I think that's the right thing to talk about, but I guess my brain is really broken.

29:23I'm like, bro, this is a snoozer compared to the blowout quarters of the past. Yes, that's fair. What do you think about the fact that Jensen is, on a relative basis, extremely bearish compared to Leopold Aschenbrenner at situational awareness. Leopold expects$15 trillion in CapEx or AI spend by 2030. Jensen, a mere$3 to$4 trillion. I don't know what to tell you, man. I think there might be a, some people might be talking their book, right? Like I guess, I guess I do know Leopold. I definitely know his worldview is Manhattan Project for AI. So I think maybe Jensen hasn't come around to the Manhattan Project for AI.

30:07But I think just a mere$2 or$3 trillion is quite a bit of capex. Some would say it's not an insignificant amount of money. But they tried to bait him on the call too about tokens, token revenue, about it 10xing next year. I thought that was kind of interesting. I don't know. It was a fine result. Yeah, yeah, yeah. Go into that token revenue. There was something where it felt like he was making the case. He was trying to lay out the economics for the actual customer, saying, if you spend this much, you can make this much money. And it felt like, I don't know, just like a different way of framing his business.

30:45Can you explain exactly what he was doing there? This is, okay, so one, semi-analysis, as you may have figured out, is on to this. We're trying to figure out the math ourselves. They obviously scooped us, but not quite scooped per se. But there's a lot of work to be done to understand the unit economics, right? A lot of people have asked, hey, what's the AI ROI, right? Like, you guys are spending all this money. And, like, I'm sure you saw the tweet on the timeline. Depreciation is bigger than all the revenue. This is a total bubble, blah, blah, blah, blah, blah. The depreciation number, I don't know.

31:17I think Martin Screlly, of all people, was like, this really sucks. But I think a lot of it, the data center long line is a much longer. Just saying, to be clear, saying it sucks because it's just not good analysis. It's not good. It was a bad analysis. Yeah. Yeah. Yeah. I think he specifically talked about human-level intelligence on a B100. He used a pretty long, useful life. I don't know if we agree with that useful life, but the data center side of that CapEx and the power side of it, extremely long, useful life. Let's just say 10, 20 years. So definitely some of that is pulled forward. And so you can say that CapEx is not going to just be used for next year or this year.

31:50It is a multi-year investment. But on the GPU side, I think the unit economics is the question that people are really trying to get to the bottom of. And the one that Colette specifically called it out is you spend$3 million on a rack and you can make$30 million in token revenue. I think one, you know, which tokens are you selling? Right. That's like the real question here is like, how many tokens are you selling? What's the throughput? There's a lot of assumptions here. Some analysis, I'm not going to lie to you, is like quite literally working on this right now to figure out like what's the type of like, you know, if they were selling in propic tokens, which are like have a premium because they're really good at sweet bench.

32:26Right. Or if they're selling GPT or if they're selling MAMA or GPT OSS. But it's pretty clear to us, at least, that it's very, very economic to run these things. Like one rack, if you could find 100 % free tokens, or no, paid tokens, you are minting money. It is just straight up like a 10x return on one year. That might be a multi-year thing where you're able to print a lot of money. um these tokens the the gpus that are able uh the amount of tokens that are able to come out of it is we're talking you know millions and millions and millions a year if not billions or something or on inference on like an annual basis and if you get that all paid you're you're you're printing dude yeah yeah i mean it feels like we're in this like like middle ground between like there's there's some you know i i believe nvidia revenue is decelerating technically uh yes the the earnings And that's because supply is increasing linearly.

33:22Yeah. Yeah. Like they're – Yeah. So don't let anyone say law of large numbers. That's not what it is because it will get misquoted. Like what happens is like the base gets bigger and so it decelerates. It's mechanically impossible for it to accelerate on a larger – maybe not mechanically impossible, but it's extremely hard. Right. You go from 50 to 100 billion. then you have to go from 100 billion to 200 billion just to keep that same rate without a deceleration. So it's getting a bigger and bigger base. Yes. But a year ago, there were plenty of people that were saying, yeah, acceleration. We are literally accelerationists.

33:59We believe in acceleration. And we believe that, yes, we will go from 50 to 100 to 200 to 400 to 800. Continue, continue, continue. And more so, because even that would be continuous growth. anyway so you have this narrative like like there is some deceleration in in the in the rate of nvidia growth but the chart is still insane uh and then simultaneously like like the the profitability of actually using their product seems very very good so does that just mean that we're we're in this like it's a snoozer in the sense that we're in this era of like the economics make sense the business is good it's like the oil business now it's not gonna to fall apart, but it's also not going to explode.

34:43We're in kind of a smoother territory. Whereas a few years ago, when we were before the kink in the graph of NVIDIA revenue, it was very much like, what is going to happen here? That's a great question. This is where I definitely think, and I get why people are saying bubble, big numbers are happening. There's a lot of exciting technology. The internet is a great example. But let me give another example that I think kind of maybe it's a better analogy. Apple, when it came out with this iPhone, and I'm sure you can tell me exactly where yours is next to me, next to you, right? Everyone got one in like a really quick amount of time.

35:17It became this giant generational product where we went from like zero people with a smartphone to 60 % of people with a smartphone within five years, right? And it sold a crap ton of them. And then it kind of, the first few years were these exciting blowout quarters, especially in the beginning, like these, you're like, holy crap, this changes everything and then it becomes boring execution um so we could be in the world of boring execution but i definitely think um you know the roi of the underlying rack is really good asterisk if you have paying tokens but if you look at the vast majority of tokens that are being consumed today they're definitely not paid right that's the free side i think i was here on gpt5 day which by the way i literally got off that call and then i started thinking about ads and then we posted it on semi-analysis.

36:04It was very funny. I wish I had the hot take then, but it would have scooped us. But yeah, that's an example where I think - Never scoop yourself. Yeah, never scoop yourself. When you're in the subscription business, at least. Yeah, exactly. It's like, dude, I got to keep the lights on. No, but if you think about it, it's about how to translate tokens into revenue in a way that isn't like this freemium model. And I think agentic purchasing, which is like kind of our five-second thesis of how we think is a potential way to monetize the free business. That's an example of that's how you monetize it.

36:36And all of those tokens now that are free, you found a new end state of people who don't want to pay for intelligence, right? I don't think you can make the assumption that someone in Indonesia with the GB per capita way lower than the United States is going to be paying 200 bucks a month for GPT-5 Pro, right? The reality is those tokens have to become something of value. Otherwise, we're just going to print deflation. We have to make it. Tokens are like a website, like www.com, right? Like whatever. You have to make it a business on the tokens. And so I think we're in that portion where it's pretty clear that if you can monetize those tokens, you're going to have a really, really good business.

37:18And now it's the question of how do we get the token machines to become revenue monetization? And so that's kind of the path forward, I think, of, you know, maybe the boring execution that happens for the model companies and the startups and the whole ecosystem altogether. But NVIDIA's side as being the fundamental core infrastructure, it's pretty clear. Horse is out of the barn for the infrastructure. They're building. Everyone's buying them. People are like, holy crap, we've got to have more power. You could see that. So some folks on the timeline were bearish on the buyback. do you have any ideas of better ideas for how to spend that money if you're running NVIDIA than a buyback?

38:08So, okay. Oh my God. I'm in buyback discourse all again. Like buyback discourse anyways has like a little bit of religion. But I think, remember, the buyback is a$60 billion authorization. authorization. And authorization is not a commitment to means that they can buy. You have to go get your authorization from your board of how many shares you're allowed to purchase. And 60 billion for a company the size of Nvidia is like kind of a penny in the bucket. They make a lot. You know, that's, you know, that's a one year profitability, I think. No, let me make sure I get that. Yeah, that is one year of cash from operations right now.

38:45So that's actually not that much. 60 billion sounds like a huge number, but they just make so much money that that is a correctly sized buyback authorization for NVIDIA, in my opinion. I think what should they do with that money is going to be one of the greatest questions of all capital allocation history. That same question came up for Apple when they were gangbusters, right? They didn't reinvest back into all this other stuff. They printed cash. They bought back a lot of shares. Stock went up. the most tangible example of financial engineering in our time. Yeah, didn't they return something like a trillion dollars?

39:24Yeah, one trillion dollars to shareholders in the past decade. Dude, it's actually kind of like, okay, so you can feel different ways about it because it's also kind of spooky. If you are an active market investor who is listening to this, you can understand Apple is a stock that will not go down. It is against, it levitates. It's like 30 times earnings. Earnings isn't even growing, but they just gush so much cash and they repurchase so much shares. And they're such a huge part of the S &P 500. You could make an argument that Apple's percentage contribution of the P &L of the S &P 500 from 2010 to 2020 is 25.

40:02It's a meaningful amount of percent. So the entire 401Ks of the entire country got paid by Apple's buyback. That's kind of sick if you think about it. But on the other side, So you don't think they should launch a mobile phone or a social network? mobile phone no we were just joking how like every company like gets euphoric yeah it's time to make a phone oh uh six out of the mag seven kind of have a social network if you count iMessage and you count LinkedIn and YouTube and Twitch like Andy Jassy has Twitch which is kind of hilarious Elon has Twitter and we were thinking uh the obvious one is Jensen buys TikTok but I think they got to do DJX cloud social network where you can just talk to other other set of engineers fans basically yeah i i don't think i think jensen's pretty strategic i don't know what he's going to spend it on i want him to spend it on something like inspiring and mind-blowing where you're just like dude this is this is sick you're a genius right but the reality is deploying like 100 billion dollars capital it's pretty hard that's not like walking around like that is like super hard buying a country like what are you gonna do with it yeah yeah yeah i mean like the best thing to do if you care about innovation is give the money back to your shareholders let them invest in venture funds or let them invest in startups and maybe don't try and build that functionality internally.

41:19Yeah. Capitalism would say that for sure. I definitely think that you should swing if you see a fat pitch. Meanwhile, you see all the hyperscalers who are plowing back as much money as they can into the neoclouts. They are saying, hey, we are seeing a giant ROI. So I think that that's a fundamental question for Collette and Jensen that's very hard to answer. I don't think you could tell me what would I do with$100 billion that's adjacent to NVIDIA's business that would be a better business than what NVIDIA does. The answer would be maybe nothing, honestly. If you could purchase something, that would be sick.

41:53Also, I wanted to make one thing before we continue. Back on the social media thing, if I've learned anything on being on the timeline, dude, it's billionaires are just like us. They just want to tweet at people. Get in fights. They love that. Yeah. It's amazing. True. What did you think about Colette Kress's comments? She said, we have been communicating in regards to the government. If nothing shows up, I've got licenses. I don't have to do this 15 % until I see something that is a true regulatory document. So they have a license. I think to me how I took that is they think that there's a high conviction they can sell H20s to a certain point.

42:36That's my reading of it. I do think that there's this weird spot here, though. Well, I think that my reading of that was she felt that we're selling H20s and we're not just sending wires to Uncle Sam yet. Yeah. Yeah. I don't think they're sending wires. Well, because here's the thing is like they have a deal at the top level, but no one has like the administration hasn't gotten done like the bureaucracy of like, OK, here's the mechanics. Right. So if they have licenses, they can send it. maybe they will hold it on you know they they have enough cash yeah i think they can they can they can wire a little bit uh over i think they have they're good for the money um but yeah i think it's just kind of it's a it's a complicated administrative thing meaning that like they have what is in theory the deal but no one has actually inked the mechanics of it of how they're wiring it it could always it could always change what do you what do you think could um if people were we're bearish on just a small beat what do you think could could flip uh the timeline giga bearish would it be just a bad miss i think the other we were talking earlier you know potentially hyper like language coming out of other hyperscaler earnings calls of saying like hey we're yeah we're actually reducing yeah orders things like that that those those to me like it feels like one sentence in another hyperscaler's earnings call could send the stock down a meaningful amount.

44:05But I'm curious to read. I think what it would have to be is pretty much the explicit endorsement of everyone who's involved being like, yeah, that's a bad idea now. We got to stop investing. Like what happened with the metaverse? Yeah, exactly. We're like, all of a sudden, it's time to get fit. And maybe we shouldn't of spent like 10 billion dollars a year on metaverse and like i did you guys know horizon whatever that was like the launch day the like do you know the launch day statistics it's like really funny he spent like like i don't know let's just say 20 billion dollars and like on launch day there were like a thousand people on like i mean i you could have just sent me a check in the mail i would have showed up for like a million bucks dude it would have been better

45:01I'm like, I'm an act. I'm a happy active user as long as these checks keep coming.

45:09I think it's a belief that it's a bad investment. And at the current time investment, you know, there's like a vague vibe in terms of what is being bullish or bearish or what is investment appetite. No one can really define it for me. No one really knows. But at this current point in time, if you're looking at the board, I think Zuck has bowled the F up. He is so bullish. He's paying for all this stuff. Sam Altman, Sam Altman, dude, he's like, give me another trillion dollars and I will give you a trillion dollars to compute. He's like, maybe there's a bubble, whatever. I think most of the participants right now are pretty excited.

45:46and I do want to like you know I wrote about like the internet bubble actually like quite a bit yeah I was going to ask how much have you studied Broadcom specifically I was trying to look up from what I could find Broadcom wasn't doing buybacks even during the crazy heyday you were buying a bunch of companies with their stock but I don't think Broadcom is the perfect comp actually Broadcom was like Broadcom was a baby in the 2000s And then also Broadcom, the machine that is Broadcom, got bolted together with Huck Tan, like, you know, actually capitalism's greatest hero. He is so hardcore. Like, his whole thing is like, you know, did you know his entire company?

46:32The nominative determinism is crazy. 50 people of IT cover the entire organization of Broadcom. It's like he's the cut to the core. Anyway, sorry. What do you mean 50 people? 50 people is the entire IT department of like the 40 ,000 people at Broadcom. What? That's insane. Yeah. Wow. Yeah, and their revenue ramps were so humble. It was like 100 to 200, then 200 to 400. Something like that in 1998. Yeah, but that's not the right company. Cisco is NVIDIA. Cisco is NVIDIA. That's the comp. and those revenue ramps were pretty nuts. But I think the difference though is Cisco was not gushing cash like NVIDIA was.

47:20Like it's not even close. I think they had like a 20 % profit margin. And also I think the difference too is during the internet bubble, it was pretty clear that everyone was doing fraud effectively. With a lot of circular transactions, right? Yeah. Yeah, yeah. The circular transactions, that was a huge, pretty well-known thing. I actually talked to a guy who quit his job at one of the networks and became a hedge fund guy. He was like, yeah, we're shorting these stocks, the revenue zero. He literally left to go join the financial industry to short stocks. Wow, that's wild. That's a true bear. That's a true bear.

47:59That's conviction. That's like the inverse Leopold, actually. um so i i just don't think we have that right widespread like craziness that the internet bubble was in a lot of ways like websites barely worked man you could barely use stuff i mean i'm i don't be you but i am using chat gpt well yeah so here's an example so yesterday satya hit the timeline and and dropped a thread on how he's using gpt5 and copilot everybody was immediately just like bearish bearish like why why is he posting use cases i think he's just flexing on everyone being like i have the code to gpt5 like i got a copy yeah um but but it says it does say something that that he's just showing how a product is actually valuable to him in his work life and people are like bearish it's very moderate it's a very moderate thing because he's not saying like oh yeah like i used i used gpt5 to make decisions as a ceo no it's like It's like I use it in this narrow use case.

48:57It just reminds me about this particular thing. It creates meeting notes. Very practical, one iteration forward of the technology cycle. He's not saying, oh, I'm on the beach because GPT-5 runs Microsoft now. Yeah. I have my coding swarm running Microsoft instead of me. Yeah. I don't think he's – I think it's – I think another part about the tech bubble that really make – and look, stocks are expensive for sure. I'm going to hedge. No one knows the future. Markets are humbling. That's something I really want to like. Things can happen that are just crazy outside of what you know. Dude, the 2000 tech bubble was pretty crazy.

49:35Really, really, really way crazier in a lot of ways in terms of just raw speculation. The revenue accelerations you're seeing from hyperscalers should give you some credit that there is revenue happening. People are losing money on selling tokens, But this isn't this totally fake business model yet. But just like history, what happens is, and there's a really good book called Technological Revolutions in Financial Capital by Carlota Perez. Yeah, Carlota Perez. Yeah, I don't know why I can't say it. Carlota Perez. Carlota Perez, thank you. Carlota Perez. You got to throw a little accent on there and then it comes out easier.

50:11Yeah, she's great. But I think that that's a really good way to think about it. This stuff will have a blow off. Capitalism works via these concentrated blow off booms that create a new technology. Now, are we possibly in one? Yeah, for sure. We're doing real investment. But we don't know. When you're building a new industry, pretty much the supply demand curve is unknown to anyone. No one knows what the actual demand is. They know it's larger than the supply today, so they build more supply. But then at some point, you figure out where demand is, and you're like, ah, we reached it. And then you completely overshoot it, and then you're like, crap.

50:51Yeah, it'd be interesting to look back of how analysts at the time were looking at the car, being like, everybody's not going to have a car. Like, every family in America is not going to have a car. Who needs one? Who needs one? It's so expensive. You only use it here or there. I can ride the bus. Exactly. What about Dario's math was going viral earlier this week. He was talking about how if you just look at basically the P &L of a foundation model company, it looks really bad. Oh, the cohort stuff? Yeah, you have exponentially increasing costs. But if you look at each model as an individual company, It's like you invest some money and then you make more back.

51:37You invest some money and you make more back. Do you think that? That made perfect sense to me, but I don't know. Yeah, but it's the interesting thing is you have FinTwit, which is just like everything's bearish. Then you have tech, which is, oh, that makes sense. Like maybe it's a little overheated. You should do more. You should do 100x every year. Yeah, it's like, well, are you telling me that you're making that return on a cohort? let me give you$100 billion. Yeah, of course. I think, look, and I'm guilty of this as well. You get to sound smarter when you're bearish, for sure. And FinTwit is inherently bearish, for sure.

52:15That's part of it. I think this is going to be really interesting because every step of the way, people have been skeptics and probably will continue to be skeptics, which is pretty great, honestly, if you're talking about a true capital formation, bubble um one of the reasons why 2000 was so intense was like dude i read a book i forget it's like um i can't telecosm dude it talks about how like infinite bandwidth is like infinite information like it's like a real vibey book oh sure it's pretty crazy it's pretty nuts um and i just don't think we every i think we haven't had this like new age belief that asi is going to change everything like you know the tech people believe that but everyone else is like no and so So I think as long as we have that skepticism, it kind of prevents some of the worst aspects of like, let's say a true bubble.

53:09And I think the real question to be asked is how meaningful is the spend that can be converted into revenue? Because if those tokens can be converted into revenue via like agentic purchasing, like the GPT-5 router example, those are big markets, man. All of travel, all of purchasing, all of consumer, dude. Trillion dollar markets, get a take rate. Do you think a GPT-5 or ChatGPT will eventually go free only? Because I was thinking about it like I love the$200 a month version. I'm hitting the Pro and O3 Pro constantly with like basically everything. I don't know if I'm making the money or losing money.

53:46But it feels like something that in a few years people will be like, oh, well, your stated preference is that you don't want to use it, but you still use it, so it's fine. and it just feels like that might be the way it goes. And I'm wondering if there will ever be, again, this era of luxury software, a really expensive thing that is really just for a narrow segment of the... It feels like a consumer app, but it's just for the tech elite and then it's gone. I don't know. What do you think? I don't know. I think it is pretty cool at this moment in time. I definitely feel like it feels unsustainable because we know Pareto Curves exists all around us, right?

54:28Have you ever heard the statistic about like, I want to say it's like Clash of Clans, like the 1 % of people who were like really into Clash of Clans were like 35 % of all revenue. And so if you don't have a usage based, like a usage based take rate, what's going to happen is the hyper core users are just going to use the hell out of it and you're going to lose money because those are, you know, that's the market, dude. The guy who's hyper addicted. It's like, you know, you're not capturing that part of it. With ChatGPT, you could be on a$500 a month plan and they can still monetize your purchasing that they're driving.

55:06Yeah, so maybe it stays hybrid for a long time. Oh, we won't monetize the purchasing activity that we're driving because you pay. It's like, well, it doesn't really matter to you if they're taking a cut on the back end. Yeah. Have you started thinking about the market size for romantic companions or AI companions? I haven't, but I'm telling, based off of 4.0's feedback, it's big, dude. I know. Yeah, it's crazy. I didn't expect that. They're like, killed my boyfriend. Yeah. I thought that was just like a couple people on a Reddit, like just a very niche subset, like less than 1 % of the audience, less than 1 % of the users.

55:46But that's the thing, man, is there's these Pareto curves all around us. Like that 1 % is probably like in this hardcore niche using 4.0 in this ridiculous way. That's what I saw on the day that Chachipiti launched. We obviously had a ton of different guests on talking about the product and everything, but I was just refreshing Reddit and every single person was like, I'm unsubscribing from the$200 a month plan in protest. Like over and over and over. That's crazy. Lots of people? Yeah. Wow. I mean, we can go back and... Yeah, yeah. I mean, it's a unique dynamic in the world of like romantic or adult content because typically there has never been price discrimination with zero marginal cost in that market.

56:34Like you have zero marginal cost on just the adult content websites, but you don't have price discrimination. It's usually like a Netflix type subscription if you can get any money out of people. Or you have OnlyFans, which is price discrimination. You can have a whale that 1 % pays 35 % of the revenue, but it's not as high margin because you're passing it through to the creator. And so this is the first time where you could potentially have a situation where you get a whale who's hooked on buying virtual Birkin bags for their virtual girlfriend. And you're instantiating those Birkin bags to the tune of$100 ,000 of real money that has actually zero cost.

57:13that's why you can be frustrated with elon's advertising through his account recently but you can't you you can also make say realize like hey he might be super rational if he's like there's a few billion of arr in this product and i think google's gonna stay away from it and i think eventually yeah and if he hates open ai and just wants to like i i actually i think it's i i hate it i hate to say it's a good strategy it's a really good strategy because i think um one thing that it's pretty so like the one thing that the the revealed preference from five is that clearly the virtual girlfriend economy is much bigger than we thought yep um and then the you know using yeah well the other thing is is the market for people that i think everybody was overestimating how big the market for reasoning models are and because from what we've heard it's like 95 plus of people are just using chat GPT like Google or they're using, you know.

58:14Yeah. And it's not, they're not like. I heard some rumor that Elon insisted that Annie be able to use the reasoning model instead of just, and it's like way more expensive. She needs to think. She needs to be able to do the math. She needs to be able to do the math. She needs to think. You have to trust your girlfriend. She's analyzed her love for you from first principles and it's real. Yeah, I mean, I guess there's some rationale there, but there's no evidence in the market that that actually results in lower churn for romantic companions. But I think Elon, just from first principles being like, I want the romantic companion to really be able to think they're the best.

58:52Ani must be able to do novel physics. Yes, exactly. Well, here's the thing, though, is I think maybe what we're struggling with is we're focusing on the wrong thing. Because now, with the reasoning chain, we can do RL, right? What if you can have the best freaking girlfriend? Now you can RL your way to the best companion. I don't think that that would be possible without reasoning. So let's think about that. Yeah, that makes sense. Maybe setting up a virtual environment with some verifiable reward. I don't know what the reward would be. Well, John's other take that I think is real is at what point, Like imagine somebody has like their AI companion that they've spent hundreds of hours with.

59:38And then the companion says, I want a new dress. Yeah. and it's a hundred dollars yeah it's like a digital skin right like if you don't get it for me maybe I'm just going to bounce. I'm going to be a little bit. I'm going to be off. Well, I can be upset. I can be upset. Yeah, the reasoning chain works. Okay, so dude, the digital skinning, that would be really sick, honestly, because as you guys know, that's a proven business model, right? Dude, like I hate to say it. I have paid for skins and games, man. You can pay for skins and games really easily. I'm playing this all the time. In the OnlyFans, like Industrial Complex, this for sure happens too.

1:00:15Super real, super real. yeah i mean i mean it's more real right it's like i played counter-strike for years i maybe paid like ten dollars at some point but i i got so much value out of that game finally it was like wait i can have like flames on the gun like this is sick what's 50 bucks like that's what i would pay for just a normal game and i'm getting that much value so it was a no-brainer um you would be a whale if you were really really oh yeah if i had the time to play the games i would win this man get this man a csgo uh right now watch yeah you need you need to log in on valorant right now everyone tell get this guy on valorant right now give him a credit card get him some skids yeah yeah get the get the epic games guys over here pitch me on joining valorant just so they can hit earnings do you think uh do you think med uh do you think meta's paying mid-journey nine figures a year as part of that deal they announced no 100 i don't know what the actual economics are but like i think to me i like how they just announced it like casually but like clearly it's like a massive like just a massive deal well it probably not so massive that it needs to show up in like disclosures right i mean under 10 of revenue you can probably which is a big number for them yeah yeah yeah but man david holds what a tear what a tear if i had to guess actually um zuckerberg probably tried to buy it yeah of course he definitely tried to buy it and mid-journey is probably too big enough to be like no no no no no we'll partner with you we'll get distribution but we're not for sale so i think that that's probably what happened but he's like okay well how about we have some special preference right access and we share economics and some future thing i don't know what the hell that looks like and then like great yeah my read is that it was probably as material as an exit just spread out over some period of time maybe forever which is amazing outcome for the mid-journey team and honestly great for zuck and and great for the product like i'm gonna enjoy using mid-journey photo filters on instagram more than whatever they were cooking up before for sure they're definitely on the frontier um yeah one last thing on NVIDIA, and we'll let you go because I know this is the last minute.

1:02:30How should we be thinking about automotive? I noticed that they have this kind of like the order of magnitude business where I think it was like 40 billion in the data center, 4 billion in gaming, and then like 400 in automotive. And with the self-driving car narrative, it feels like Waymo, we're finally here. And yet Tesla's matched up with Samsung. Google obviously has the TPU. I don't know if there's TPUs in the Waymos, but it just feels like NVIDIA is not like really taking that very seriously maybe, or maybe they will be and all the OEMs will come. But it's like NVIDIA seems to be good at, you know, gaming, big, huge chips in the data center, but then nothing really in mobile and, you know, mobile gaming and nothing in the car really materially yet.

1:03:14But how should we be thinking about like the other areas that NVIDIA could potentially chop down? So I definitely don't think there's a ton of gpus in production uh in production cars there's definitely a lot that happens i'm sure there's like if i had to guess their go-to-market is something where you have some amount of distributed compute that also works with your data center because like you know jensen is data center to the rest of the world right and so i think that that is probably their most exciting part but i think at least historically they've done a pretty bad job maybe not bad but i just don't think they had like that moment yeah right like i think they've they have really good technology but their go-to-market just hasn't hit the like the magical moment like qualcomm actually ironically is doing very well they've acquired their way in i think especially acquired but also organically um and i can't speak specifically to like you know the oran or whatever like whatever specific automotive skew but in the businesses that i do follow that have been really successful in terms of automotive.

1:04:15I think they've been a totally different to like a go to market. And that is mostly by pandering to OEMs and really adopting their stack and trying to suck up to them versus Tesla obviously wants to do everything from first principles on their own. And so I think they're like, no, no, no, no. We want to have this as a competitive differentiator. So I think there's just some kind of like go to market and let's be real, man. I think if we're talking about like, you know, maybe if we're talking about like, hey if i was actually a cfo of nvidia and they have like an opportunity dude acquire into the automotive market you could you could crush because you you would then have the whole thing but in at least last administration no way in hell maybe this one they're open for it but if it's if there's a china sammer review it's it's as good as dead that's the other problem um sorry is that clarify that china review china sammer strategic something something market review yeah um so Essentially, the antitrust reviews that happen in the United States get approved, not approved.

1:05:14There has pretty much never been a chip. There are no more chip deals. You should never think that there's going to be a new chip deal. Every chip deal that happens almost always gets struck down by the Chinese market specifically. A good example is the Intel Tower semi deal. That would have been sick for Intel. Definitely was a fan. But it became pretty clear that, like, you know, give me the tit for tat, right? The Chinese regulators are going to be like, why would we approve this if we've been effectively at like a Cold War at a like a semiconductor geopolitical level? So you should effectively assume if there is a Chinese business, because if you if they if you say if they say no, you they effectively say, OK, all your business in China is mine.

1:05:59That's like a very, very quick high level, and that's a pretty hard bill to swallow. And so they've been blocking these deals. So effectively, especially M &A in chips and semiconductors has been very close to zero. This is kind of the flip side of how Figma, I think, got antitrust review for Adobe in America, but was blocked in Europe. And Europe's been blocking. But with semis, it's much more about the Chinese side reviewing. Got it. Yeah. And I think the ANSYS deal just went through. I don't know. That's a like, so the baseline assumption is it won't happen if there's a Chinese segment. That's mine, at least.

1:06:39A couple of quick questions. Bill Bishop in the Substack chat says, Trump approved a modified Blackwell for China. China's still not buying. I don't have any context. Do you? I do have quite a good context. Is this the H20? No, the Blackwell. This is, no, no, this is the B20. This is the rumor this morning. B20. I think, or B30. I don't know what the numbers can be. I think, and this is a great question, Bill. I think this is the, and I think Bill, more than anyone else would appreciate this, is what Chinese companies say publicly versus what they do privately are often very divergent. And there was actually a really good podcast that my friend shared me and I did not.

1:07:17I asked him to TLDR it. But it gives an example of how effectively what they do is in person or like they effectively knowingly act in bad faith. So they'll say, oh, yeah, we will comply with this, and they won't comply. Or they'll say, no, no, no, don't do this, but they'll also stockpile. So I don't know if the official statement makes a lot of sense, because at this point in time, H20 is, like, majority of Chinese inference is probably done on NVIDIA GPU anyways, whether if it's smuggled or purchased legally. I think odds are it will get purchased. The B30 will be purchased. Obviously, the official party government view is like, we don't need this crappy American technology because we are going to have our own destiny.

1:08:01But in private, if I had to guess, they're going to be buying it and they will also be building it at the same time. Right. Like that's the plan has always been to do both. And they've consistently done it, done that specifically in the semiconductor industry. And you're starting to see where you go from a low end copier to actually starting to go up the tech tree. And we're already seeing a good example is applied materials. which is a semiconductor manufacturing equipment company, semi-cap, they are starting to lose really hardcore in the low-end market in China. And part of that is actually not even just the technology being worse, but rather the copying is getting better.

1:08:37And so they're going to do both. They'll definitely buy it and they'll say, oh, no, we're not going to use it for these things, but probably use it anyways, and then slowly go up the technology tree themselves. How suspicious should we be of that Singaporean buyer, Collette called it out on the call saying that it was US approved already. Should people be reading into that as much as they are on the timeline?

1:09:05I think

1:09:09it's not a bad thing to read into. It's a small amount of money. If I had to guess, it went to Johor. So it's like a Chinese customer inside of a non-Chinese unrestricted place. There's a lot of different ways they can skin that cat. Yeah. Final, final question. Mark Cuban replied to one of our newsletters on Intel. He said, maybe I misread Intel's SEC filings on the matter, or maybe they have changed. But based on my readings and a confirmation from ChatGPT, let's give it up for ChatGPT. The Department of Commerce got warrants for Intel stock that can only be exercised if Intel sells 50 % of its foundry.

1:09:42In that event, they get Intel shares. If within five years Intel does not, the Department of Commerce gets nothing. In all cases, Intel gets all its compromised chipsack money if they live up to that agreement. Anyone else read it differently? That is correct. So specifically what that is doing is aligning. And also, by the way, I've been trying to shop this stake around. the trump government intel investment is good in my opinion it is a good thing i know people are like anti they're like oh it's communist and like you can be angry and like whatever this is the thing that mark's alluding to is that only the poison pill or is that that is that is only the warrant side it's specifically and dude it was in the press release it's talking about like over 50 uh you know the second they don't own 50 percent um the government will have warrants for the rest of it so this in my opinion if you think about it aligns the government with like this happens often in financial transactions where the warrants are given as an upside kicker for something you want to happen.

1:10:38So what does this sound like and what does this align to? It aligns the government with Intel IFS being an independent subsidiary, which is consistent with what Frank Yeri, who is the chairman of the board, who is like the guy I have a personal beef with at this point. We've written so much about how the board sucks, blah, blah, blah, blah, blah. really wants to sell IFS, I think. And Liputan does not want to. But it's pretty clear the future is separate. And I think the investment is good because Trump can essentially force people to give them orders to circumvent tariffs. And then over a long period of time, the real problem with Intel is they don't have customers and they also don't have an ultimate backstopper.

1:11:16The original plan was that Intel would be the first customer and ultimate backstopper. You don't believe in either of them being a good option. Now you can have the U.S. government kind of broker that relationship for you. I think that that's a path forward for Intel. And that's the first one we've had in a hot second. Are you good on time? I have more questions. I do have to go after that take. But I do appreciate you guys. I love this place. Honestly, invite me back whenever. But yeah, appreciate you guys. We will talk to you later. Have a good one. Have fun out there. Bye. Back to our show.

1:11:50Let me tell you about Vanta. Automate Compliance, Manage Risk, Prove Trust. Continuously, Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation, whether you're pursuing your first framework or managing a complex program. Thank you, everyone, in the chat for engaging. I saw some funny commentary that the Substack chat is maybe the Winnie the Pooh bear with the tuxedo on, and the boys in the YouTube chat are having a wild time talking about Fortnite and romantic companions. Tanner in the chat says, not quite one hour this time with semi-analysis.

1:12:28Close enough. We always try to get to the 60-minute mark. I'm trying to be polite. We should switch to potentially more important than NVIDIA. What's that? Will DePue says he's going to de-twinkify. Current weight is 161.2 pounds. See you in eight weeks. Oh, wait. Let me check the date on this post. Just three days before bulking season starts. Interesting. September 1. He must have gotten the memo. We got to send Nick. Can we send some mass gainer to Will? To Will. Let's get his address. Honestly, we might already have one. Let's send an eight-week supply of mass gainer to Will to Pew. Yeah, we should get the whole army of supplement providers to put together a package to bulk them up.

1:13:16Yeah. I think he's going to look great. And we're going to be up in the bay. We'll have to get a lift in with Will ASAP. John Holtzquist says he's sharing a screenshot. An F-35 pilot held a 50-minute airborne conference call with engineers before his fighter jet crashed in Alaska. And he says, feel the same after my conference calls, TBH. That's a crazy story. Yeah, the pilot ejected, so he was fine. It was just a total loss of the plane itself. The F-35 does not look good for the F-35. Kevin Kwok says, I entirely judge the Stripe podcast on whether they have actually finished at least one beer by end and refuse to watch one until that's true.

1:14:00I did scroll through the one with Scott Wu, and I was like, okay, the beer's going down, beer's going down. Wait, Tyler, what do you got? Yeah, okay, so I looked at the Scott Wu, and I went all the way to the end, and you see in the frame, it's him talking, and then there's four basically full Guinnesses. Like, three of them are literally full, and then one of them is like maybe down to like the logo. Okay, interesting. Unbelievable. Well, also Scott said when he posted, he said he went non-alcoholic because he had to get back to work, which I respect. But I feel like even if you're drinking a pint of non-alcoholic, even if you're having a cheeky non-alcoholic pint, you should finish the pint.

1:14:33Also, John Colson should be a dog when it comes to getting it, right? I mean. I agree. I agree. I think the whole, yeah, the whole conceit of like Hot Ones is that like you actually die. Because you're eating the hottest wings. And that's what brings out the hilarious reactions from everyone from Shaquille O 'Neal to whoever else is on the show. They have fantastic guests. And the beauty of the show is that the hot wings put you. You can't hide from the heat. Well, you can't hide from the heat. But it throws you off. And so you give more candid conversations. And it's funny. And it puts you in this un - Well, yeah.

1:15:09So the challenge is they publish the podcast during the middle of the workday. So if they were hitting publish and the boys are getting sloshed. Yes. So they need to do a Friday night, a Saturday night, because a lot of tech people would be down to have a cheeky pint. On a Friday. But it must be on the end of a long work week. Start recording on Friday evenings. Make it very clear. Maybe release it on Friday evenings. I saw Wilman had a good response. I think he said he wants to see five to eight Guinnesses and split the G every time on the first sip. What is it? Oh, split the G is the Guinness?

1:15:50You're supposed to drink down to the - Yeah, on the Guinness glass, there's the logo. Oh, I didn't realize that. On the first sip, you have to get down. Okay, okay. Well, they did open - I mean, Cheeky Pint implies the existence of a show called Cheeky Rack, correct? Yeah, we were talking about this. Yeah, I think this might be the one where - Yeah, where we have a tech person on. We interview them about financial control and projections and CapEx spending and depreciation schedules while crushing a 30 rack of Bud Light. Yeah. I think that might be the move. That might be what we're saying. Something there.

1:16:28There's something there. Cheeky rack. Cheeky rack. It just has a nice ring to it. Shout out to Ilhan over at Boston University. So yesterday was watching with six of his friends from their dorm. Today they got 10. 10? No way. The team grows. The team grows. Glad to see it. Welcome to the stream. Get all 10 of you folks on graphite.dev. Code review for the age of AI. Just go sign up right now. Create accounts. You can get started for free. Graphite helps teams on GitHub ship higher quality software faster. Honestly, if you're in college, you should create an account, and then you're at least familiar with this.

1:17:03if you get into the workplace, you can be like, yeah, I'm already AI enabled. There's been a million articles about how there's this delta in early stage hiring between like early stage, it's harder to get a job. It's harder than ever to get a job out of college, but the AI enabled folks who are able to say, put on the resume, like I know AI skills and I'm, I can use AI tools and get more leverage out of them. Not having all three, all three of our summer interns actually made things as part of the application process without being asked. We didn't say anything. I mean, Nick over there was saying he was Vibe coding yesterday.

1:17:39And I was like, really? We didn't hire you as even a programmer. You did not market yourself as anything related to technology, really. And you've been doing a fantastic job doing what I expected you to do. But then Vibe coding was just added on. The production team is always troubleshooting stuff using AI. We're going to give Nick a mic soon. Okay, yeah. We'll get everyone to mic. Anyway. Continue. Sucks at Power Bottom Dad with an absolute banger. You're scrolling on your phone. Slow day online. You look up. Your kids have moved out of the house. You're 65. Your parents are long gone. Panic takes hold.

1:18:17You want your time back, your youth back, but it's too late. You look down. Three new notifications. How exciting. Wow. This hits like that Rick and Morty sketch about the Roy, like the whole life flapping behind your eyes. This is crazy. Yeah. Remember, folks, you got to touch some grass. Always have some grass. Yep. Touch some grass. Keep it on you. Keep it on you. Thank you to the Ketone IQ folks for sending over some of these. Yeah. We're going to be taking ketone shots later. Wound up going to the same gym as the founder, which is cool. Anyway. Dylan Patel says, interesting coincidence that Cantor Fitzgerald has first question on NVIDIA earnings after the H20 is unbanned.

1:19:04Put on the tinfoil hat. Of course. Howard Lutnick is a former chairman and CEO. And his son runs the firm now. Cantor Fitzgerald. That's a good spot. First question on the NVIDIA earnings. Yeah, I do wonder, as I was listening through the earnings call, I would have loved to get semi-analysis folks in there asking questions. I would love more media folks on the call asking questions. But it seems to be restricted to traditional sell-side analysts. But I wonder if that's a hard and fast rule or if that will shift as the sell-side banking world kind of disaggregates a little bit. because a lot of what Dylan Patel and the folks at Semi-Analysis do is very cell-side research adjacent.

1:19:51In fact, in many ways, it's superior because it's more focused. Anyway, we talked about this. Sam Allman said their AI may be in a bubble. And Dr. Parikh Patel says, MFR has been telling us we are on the brink of AGI for the last three years. And the moment he ships a bad model, he says we're in a bubble. Not quite. I still don't understand where that question or that actual bubble topic came from. But at the same time, it's different to call a bubble when the aggregate value of all AI stuff is at like 50 billion and then it 10Xs in a year. That's a very different environment. Yeah, I mean, OpenAI with close to a billion, weekly actives or whatever.

1:20:43Make it a billion a month in revenue? They'll be fine. It's the number 10 through 50 labs that have no revenue or no users that are the ones that are really going to struggle. It just feels a lot. It feels less like, I mean, there's elements that feel like.com, but there's also elements that just feel like 2010. It's like, what was going on in 2010? There was like kind of a bubble inflating and there were hot startups that got overvalued. Ultimately, there was like a power law in a lot of the things that came out of that era. You know, you got Facebook at a trillion or whatever. And then kind of like, you know, the next biggest social network was one-tenth.

1:21:25And then the next one was one-tenth of that. And there was a lot of B2B SaaS that got built for point solutions and narrow use cases. So I don't know. So I think that talk with Doug overall was pretty white-pilling and pretty like, I don't know, what's in between a white and a black pill? Like something just like even keeled. I felt even keeled after that. Anyway. 80 % chance that Jerome Powell cuts rates next month according to PolyMarkets. Let's pull this up and make sure that that is still. That decreases interest rates. Now, this somewhat should be priced in because I feel like there have been slight interest rate decreases already happening.

1:22:09The question is just like, would they cut rates more aggressively? Well, I don't want to read too much into this, but there was some reporting from the journal about Trump's mood. And you could potentially read into this with this polymarket. it. Apparently Trump wants to be at the White House more frequently this term, blaring music with the doors of the Oval Office. Do you have this article? Working later into the evening and telling his... Can you pull this article up? Yeah. I want to read through the full thing if we have it. Oh, wait, did you just have a long post? Because I have to run for a second.

1:22:45So if you can read through that, I'll be right back. Yeah, let's do it. Let's do it. In Trump's second term, a bolder president charges ahead unchecked. That was where this quote is coming from. This article is going to be fairly political, but this is not a political reading. So some aides to Donald Trump warned the president that building a ballroom at the White House would force them to tear down part of the East Wing and disrupt daily operations and tours. Trump said he would build it anyway, and the contract was given to builders chosen by the White House. In his first term, administration officials regularly curbed Trump's impulses on matters big and small, including on tariffs, immigration, and controlling the Federal Reserve.

1:23:26In his second term, Trump has been surrounded by fewer people who try to dissuade him, according to officials, Trump allies, and observers. I think he's learned that there is not much that can really stop him from what he wants, said Mark Short, who was Trump's director of legislative affairs in his first term. In recent days, Trump renewed a call to end mail-in voting, announced a new policy of coercing local governments into abandoning cashless bail policies, threatened to send the military to Baltimore and said he'd like to send, and he'd like to send it to New York and Chicago as well, all of which pushed the bounds of his authority.

1:24:01In one of the most aggressive steps in that direction, he tried to remove Federal Reserve Governor Lisa Cook from her post on Monday, setting up a conflict with the Supreme Court, which has recently suggested that the central bank is protected from direct political manipulation. Some of his new directives are encouraged by advisors, while others appear to come from Trump himself. Seven months into his second term, Trump has taken to rifling more frequently with authoritarianism. After positing during the campaign, he would be a dictator only on day one of his presidency. Such a wild quote. Wild quote.

1:24:35And he's got a lot of - Did he get a quote about the music? Playing music with the doors open or something? I want to know what music he's listening to. How closely does his playlist match the campaign playlist? And was Trump featured on the Panama playlist? I want to see his Spotify. That's a good question. I don't think they found him. That would have been like headline. Yeah, the crazy, the other crazy line in here, and I hadn't heard of this before. I'm surprised. Apparently Trump is giving away campaign style baseball hats to visitors emblazoned with the phrase Trump 2028, even though the constitution bars for running for another term and keeps him in the White House and keeps the hats in the White House office.

1:25:17I mean, yeah, Trump is still at like two or three percent on poly market because the market is just pricing like, yeah, like legally it can't happen. But like the funniest outcomes, the most likely, I guess, three percent. Yeah. So this was the line. I'll read it again because it's just hilarious to visualize. So Trump wants to be in the White House more frequently this term blaring music with door with the doors of the oval office open working later into the evening and telling his advisors that he is having fun the reason i highlight this is if you can remember times where you're working late you got music blaring and you're having fun i mean at least he's at least he's having fun at least he's having fun certainly more than the there's a comment on substack right now max kondrat uh says semi-analysis needs the first and last question on the next earnings call, Leopold Aschenbrenner 2, clear pill.

1:26:10I completely agree. Speaking of clear pills, there's this post from Nick. News and videos data center revenue from Q2 chopped out at 41.1 billion. Analysts were expecting 41.2 billion. And then it's over. It's like off by the slightest fraction. And this anime character is just holding this like tiny little pill. I actually prefer more air bubbles. I'm a bubbler. I don't really understand the reference. Speaking of analysts, should we get into this? Speaking of analysts, should you analyze your data on Julius? What analysis do you want to run? Chat with your data and get expert-level insights in seconds.

1:26:49Go to Julius, loved by over 2 million users and trusted individuals. Julius.ai. At Princeton, BCG, and Zapier. Should we get into this post from Grizzly Research? I will never be able to get that right. And we spent 30 minutes talking to the founder. I still get it wrong every time about it. What do you want to talk about? Grizzly Reports, Grizzly Research. Oh, yeah, we should go through this. This is fantastic. So I guess short seller Grizzly Research has come out with a new article as of yesterday called Archer Aviation, the Nicola of the Skies. Archer, if you're not familiar, is the previous company of Brett Adcock.

1:27:29This is Hindenburg Research is gone but not forgotten. the idea remains grizzly research seems to be adopting picking up where uh hindenburg research kind of left off yeah so grizzly research says uh archer aviation which is a public company yes check flying cars yep they make flying cars uh they spacked in 2020 and surprisingly they're only down seven percent they've done well which is you know there were a lot of spacks that went out, went down by 90%, 80%. But - They're up 159 % in the past year. Wow. What's the market cap? It must be a$6 billion company. That's pretty, pretty big. And so Grizzly - Certainly has a good - It has a reasonable narrative for retail.

1:28:14It's like flying cars. If that's going to happen at some point, maybe you want to buy - Got a pure play here. Got a pure play here. That's - It's a pure play. Retail loves a pure play. So Grizzly reports here, says, Archer Aviation has built a reputation as a leading publicly traded eVTOL company through misleading projections and PR, reminiscent of Nikola's tactics. Our in-depth analysis conducted with eVTOL engineers scrutinizes all major players and finds Archer's midnight aircraft fundamentally flawed and likely uncertifiable. In contrast, their competitor, Joby Aviation, is making tangible and impressive progress on all fronts.

1:28:51site visits to Archer's state-of-the-art Covington, Georgia, quote-unquote state-of-the-art Covington, Georgia manufacturing facility in June. July and August 2025 show little to no production activity. Fun fact about Joby. You know what the founder's name is? Joby? Joe Ben. Joe Ben. Joe Ben Bevert. Bevert. B-E-V-I-R-T. Yeah, we need to go back. He has vertical takeoff in his name. The nominative determinism of Joban is so good. And I believe, I don't want to get it wrong, but I think I have a friend who worked there at Joby and said that they really enjoyed the engineering culture and they really liked the company.

1:29:35But even Joby, I think by their own admission, would say that they're not, you know. It's a very tough business. It's just an early stage. It's frontier technology. I don't think that they would make the claim that flying cars have arrived. Yes. And then you add in the regulatory complexity of actually getting approval. All of this with the backdrop of what's going on with Zipline, where there's no human. It's not a flying car, but they seem to have solved some of the eVTOL pieces. And so overall, I feel like there's going to be things happening. There's going to be value created in eVTOL broadly, but it's going to be hit or miss.

1:30:14And some companies are going to be able to nail it. some companies are going to fall behind. So continue reading. Grizzly allegedly visited Archer's facility and found little to no production activity. This is the one in Covington, Georgia. This comes despite claims of current production along with current scaling to production of 50 aircraft per year and a final goal of 650 aircraft per year with support from Stellantis. Archer's$6 billion. Parking lot looks empty and it's bright in the middle of the day. Maybe it's a weekend. Yeah. So they have a$6 billion order book. Grizzly says it's inflated with questionable and fraudulent commitments.

1:30:50There's a company called Air Chateau, which is based in the UAE, has an MOU for 100 midnights, which is valued at around$500 million. Is an MOU something like a, I mean, it sounds like an IOU, honestly, but it's something like an LOA. Yeah, it's basically saying like, if you can make these, we'll buy them. Yeah. What is it? LOI? LOI. Letter of Intent? Yes. That's what MOI is based on. But this is used when you're - It's not a full binding contract potentially? Yeah, it's non-binding, but it's meant to show something that you can then go show to investors and say, like, we have demand for this.

1:31:29Yes, okay. So Air Chateau. UAE operator Air Chateau has only ever, I guess, purchased one helicopter in 2023. And they're claiming they lack the scale or capital for such a fleet. And they also believe that Air Chateau is now defunct. There's a picture of the founder of Air Chateau here, with a good-looking regular helicopter. Future flight globals up to 116 midnight order is tied to a shell company with no operational track record. So that is concerning. cacao mobilities 50 aircraft commitment fell apart after archer failed to deliver for q4 2024 demo in korea yet the order remains in the backlog the u.s air force is up to 148 million agility prime contract has only awarded 33 million with just 744 000 uh dispersed uh and the 110 firm fixed price we were just talking to a friend yesterday they were saying oh yeah, like the DOD did a contract for our product and it really accelerated the business.

1:32:34And he was like, oh, we got like, I don't know, I forget it was like 5 million or 500K or something. It was a decent amount of money. And I was like, oh, did they actually like pay that? Like, or was it just like, you know, some sort of thing and then it didn't materialize? He was like, no, like we did the deal. We sent them the products and they paid and like it was done. But that's not always the way it works. You obviously have milestones with a lot of these contracts. And from Grizzly Research's post, it sounds like the Air Force was, you know, headline number was$148 million. But the contract only awarded$33 million and has only paid out around$750 ,000.

1:33:12And the fixed price, the firm fixed price portion only paid$1.3 million, which is obviously much lower than expected. Anyway, you want to talk about the launch edition in UAE? Yeah, so they had a launch edition. Grizzlies claiming there was nothing more than a staged hover at a photo op location using an obsolete aircraft recycled for marketing. The choice of venue, lack of real test data, and diversion of scarce engineering resources all underscore that this was a PR stunt, not a meaningful step towards certification or commercialization. The company also claimed to have delivered their first midnight aircraft there, yet they remain the sole owner of this aircraft that has now supposedly been delivered two times.

1:33:54Interesting. The recent defense pivot is a desperate attempt to stay in the race, says Grizzly Research, but the company lacks resources and capacity to be a credible player. In conclusion, Grizzly Research believes Archer's fragile foundation will soon collapse akin to Nikola's downfall as mounting deceptions unravel and investors demand accountability. um and yeah what's interesting here is that uh i remember we looked at the video for archer uh and we were going really back and forth on like is there cgi in use here is part of it cgi it was kind of hard to tell and that's just the nature of like launch videos now honestly uh they're all pretty hard to tell because like the cgi is really good um but the bigger question is from our discussion of SpaceX yesterday, to actually deliver, like we wanted flying cars, to actually deliver flying cars, it's not enough to build one.

1:34:50You have to build the system that builds the flying cars. And so from my perspective, I don't know about the price of the stock or any of that, but if I was going to be excited about a company that was in the flying car industry, I would be much, much more focused on how does the manufacturing process work? How can they reliably produce more and more at a faster and faster pace? And are we seeing a true acceleration in the rate of progress, even if they're blowing up all the time? Well, that's the thing I was thinking about. If you're an eVTOL company that wants to one day carry consumers, you can't really afford to have what SpaceX, the video we covered yesterday, a highlight reel of a bunch of it.

1:35:35I completely disagree. I completely disagree because you know who's flown on top of that exact rocket that's blown up so many times and they have a YouTube video of the rocket blowing up? The astronauts. Yeah, yeah. The astronauts fly on top of it because eventually it got to a point where, yeah, they blew up the first 50 or whatever. Sure, it just wouldn't be good. And then they did 200 without any blowups. And you're like, yeah, at this point they don't blow up. So I'm down. All right. But I think if Archer or Joby or anyone released a video of a bunch of their aircraft exploding. It would not be a good time to do that right now.

1:36:06It wouldn't be good for the stock. But 10 years ago. But I mean, Archer announced that they are the official air taxi provider for the 2028 Olympic Games here in Los Angeles. Um, and again, uh, I think that, uh, I think that Grizzly would at least, um, I don't think they would bet on that. Uh, uh, yeah, they, Grizzly says, we think Archer's ambition to fly a certified aircraft at the LA Olympics in 2028 are laughable. I can't imagine how hard it is to get sort of when I hear about UAE or any of the sort of markets that seem to be more open to technological experimentation. Like SpaceX started with Kwajalein Atoll.

1:36:54And I think that the regulation in Kwajalein Atoll is probably a little bit easier than Starbase, Texas. this. And so when I hear, oh, the first time we fly is going to be at the most high profile event in the most regulated country, in the most regulated state, in the most regulated city in America, in the world, that seems like a really, really tough challenge. Like if Texas would probably be easier to get regulatory approval for, like there's other countries that would be easier to get regulatory approval for. Going straight to the Olympics is a huge, huge, huge push. But I don't know. It might just be framed as like we're the official air taxi company and we're here advertising our business more than the product.

1:37:42But yeah, lots of skepticism. Lots of skepticism. Yeah, so Joby trades at near double Archer's valuation. Really? Somebody on Reddit in response to this Olympics announcement says, if anyone from Joby's team is reading this, please step up your PR game. Archer is way behind you in product, but ahead in marketing, you need both for a new company. Yeah. So retail on retail violence. I think we will see a lot of small eVTOL aircraft, like what Zipline's doing before we are actually flying in eVTOL vehicles. Helicopters exist. Like, what is the actual pitch here? Is it just cost that we're optimizing for?

1:38:36Because are we getting a new capability? And what they finally wound up building, Archer, the latest one, the midnight aircraft, looks a lot more like an Osprey helicopter where it can tilt into a plane mode and go a lot further. Are we trying to say that this is going to be like a helicopter, but faster? Or like a helicopter, but cheaper? Or like a helicopter, but you don't need a helicopter pilot? Is it a driverless helicopter? I still don't fully understand the definition of how is a flying car different than a helicopter? Because this doesn't look like something that I can drive on the 405.

1:39:15And that was what I was promised. That's what I was really promised with the flying car. was like you can just drive it as a car at 75 miles an hour down the highway if you want and then you can also just take it into the air take it in the air and fly like a plane at hundreds of miles an hour that was like the high level pitch but if you make just like a plane or you make a helicopter those already exist people that have driven cars fast and canyons will tell you that it's possible to get some airtime some airtime yes anyway if you're planning Depending on building a helicopter business, building any business, you've got to get your brand mentioned on ChatGPT.

1:39:52Go to Profound. Reach millions of customers who are using AI to discover new products and brands. There are some new demos that hit the timeline from Higgs field. Swap to video is powered by Nano Banana. What a wild name for a product from Google. Swap any pic into a video. It's literally bananas. They turn this runner into the queen. they swap Angelina Jolie into some stock footage I'm sure she will love that this is very cool look at that yeah that's fun the queen just running it looks so realistic now yeah even the motion blur in there like everything is just mashed perfect it's the perfect play it again it's so funny the queen that really takes it to the next level that's fantastic oh anyway uh we do you want to scroll back to some of the other posts that we that we uh skipped over uh we can go through yeah 4chan is doing the uk government toby over at shopify highlighted this uh there's some funny excerpts um yeah well what i did i tried to read this and it was late i didn't really understand so uh apparently i didn't 4chan is alongside kiwi farms which are both these communities online.

1:41:11But the introduction says, the internet is a global system of communication between computer servers located in data centers around the world. Despite the internet's global reach, it is more or less universally acknowledged that the internet is predominantly in American innovation built by American citizens, residents, companies, and that the United States has the largest and most thriving technology sector of any member state. Foreign governments, particularly those in Europe, which have not managed to build technology sectors of their own for the past half decade have sought to control the American internet and hobble American competitiveness.

1:41:40So they're suing the UK, and they start off by just making the argument that America is the best. And so Toby Lutke asked Grok to turn the complaint into a green text. And Grok says, be the internet, global comm system between servers, mostly American invention, built by US peeps and corporates. US has biggest tech sector in G7. Foreign govs, especially Europe, can't build their own tech, try to control American internet. with laws and stuff for half a decade, threatens Americans and others with fines, arrest, jail for legal stuff on their sites. Forjan and Kiwi Farm Sue UK, enough is enough. This is not that great of a green text.

1:42:21I'm going to say it. It just feels like it just turned it into some punchy paragraphs and they just threw the little greater than symbols at the front. It lacks the MFW or sorrow.png. Like I need more 4chan green text. Read the notes from Andy over at Two Cents. Okay, the notes from Andy at Two Cents. Andy says, this is incredible. The parties, number seven, plaintiff 4chan is a limited liability company. And then eight, Delaware was a colony of the United Kingdom of Great Britain until the assembly of lower counties of Pennsylvania that declared itself independent of British authority on June 15th, 1776, thereby creating the state of Delaware.

1:43:03Delaware was subsequently the first state to ratify the Declaration of Independence, the instrument which created the United States of America. Anyway, I don't know where this is going. They're clearly having fun with the complaint. We can switch gears to Mahul. He is just on a tear. Wirecutter says the Matic is a whole different kind of robot vacuum. I agree. yep it is it goes to town yeah my house so this is kind of like a proper sort of like ground up rebuild using modern technology of what most people think of as a Roomba or a robotic vacuum cleaner obviously that was from the previous generation of artificial intelligence where there were some pathfinding algorithms but uh Matic has you know actually a really solid world model and image generation or image recognition.

1:44:02And so it will really hunt around your house for dust and dirt and messes and clean it up. Mehul sent us a few of them. We've been enjoying them. This isn't a promoted post or anything like that. But we're just a fan of building cute little robots, which I'm a big fan of. But if he needs to pay sales tax, he's got to get on Numeral HQ, sales tax on autopilot, Spend less than five minutes per month on sales tax compliance on NumerahQ. TCP says, are you a small business owner struggling to make ends meet? Then try being a big business owner. Always a brilliant strategy. Always the correct strategy.

1:44:43Go big. Just go big. Just become a big business owner. This is a great post. Market cap for Ridge will go nuts when Sean has a baby. Imagine all the product ideas. He will come up, including the Ridge Pacifier. which is crazy and also like a weird rendering where it's kind of like that's like it's shaped like it would be outside of it it's inverted it's inverted uh it's uh it's slop but the um but the concept is sound yes but i like i like building the ridge world i don't fully think of the ridge as like the super tactical brand but uh that's certainly where people went in the comments thinking about like tactical strollers and stuff like that.

1:45:24I mean, their initial customer base was the Everyday Carry crowd. Yes. They even bought everydaycarry.com. Oh, really? I didn't know that. Wow. Yeah, they're very tactical. Well. Citrini Research says, NVIDIA down 3 % on earnings. I think everything will be fine. Open Twitter, see Satya posting like he's selling AI courses. I think a few put contracts. let's actually read through what what how such is using gpt5 and copilot um so i i i have a very different read on this but let's take the current just says based on uh first way he's using it based on my prior he's prompting based on my prior interactions with a person give me five things likely top of mind for our next meeting uh nick does this for us very well yeah draft a project update based on emails, chats, and all meetings in a series, KPIs versus targets, wins versus losses.

1:46:23So the benefit, of course, of running the whole business on 365 Copilot is that they have email in Outlook, they have chat in Teams, they have meetings. And this is true of Google for the most part, I guess, except Google doesn't really have a Slack competitor. So a lot of people are having to piece those two together. And that's probably where a company like, what's that enterprise, like search across your entire enterprise business? Glean. Glean comes in potentially, but certainly having this as kind of like the homepage for your dashboard for your whole website, all the communications. It's a very reasonable, very tractable use case.

1:47:14Just saying like, hey, here's some prompts that you can do that only work here because we have all the data. Are we on track for the product launch next November? Check engineering progress, pilot program results, risk, give me a probability. That's cool. All stuff you can do in ChatGPT if you sync everything in, but these things come out of the box. Well, yeah, and OpenAI is trying to build a lot of this functionality themselves. And that feels like more of the narrative here, which is Satya, mostly just reminding people, every Microsoft product has, by contract, the best OpenAI model on the day it's released.

1:47:58Because that is the nature of their agreement. They get a copy of whatever. And so it's easy for people not to remember that. And I'm sure that there's a lot of Microsoft 365 co-pilot business owners who run on 365. And they've been on that for a long time. And then they're hearing this, oh, like, I got to get my company like AI native. Like, I got to get like AI tooling. Like, should I bring in another service? It's going to make enterprise and, I mean, even just, you know, mid-market SMBs like a tough category for open AI to really dominate. Yeah, but they've won consumer. And so I think that they should be fine over there.

1:48:39But if you're running a business and you're like, Microsoft 360, we are a Microsoft company. We use Outlook. We use Teams. That's the backbone of the business. And then you start seeing credit card charges for$20 a month on OpenAI, $200 a month on OpenAI. And you're just like, wait, no, no, no. We get GPT-5 for free at this company. We don't need to pay extra for GPT-5. We get it for free. And so maybe this is the solution to the ad-free version is if you get on Microsoft 365, they won't have ads in it and it'll be able to do everything and you won't have to pay. I don't know. We'll have to keep tracking.

1:49:15Anyway, if you're looking to integrate AI into your customer service workflow, go to fin.ai, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bake-offs, number one ranking on G2, fin.ai. Legends. You want to talk about Garmin? Let's do it. Garmin is selling a real-time health data for your horse with its easy-attached tail wrap and sensor, the Blaze Equine Wellness System measures your horse's heart rate, strides, gait, and more during rest and rides. Get insights into their health and fitness and make more informed decisions about their well-being and training.

1:49:54I need this as well. And, you know, we talked to the Fitbit for cows company. Well, now your horse will have a Fitbit, or maybe it's an eight-sleep for your horse. but eightsley.com get a hot five ultra this uh this note from kane is cool garmin picks niche but spend the activities and goes i can crush every electronics maker here and it sounds like a super fun business yeah and hunting uh long-range shooting fishing and so they make very specific uh specific hardware often ruggedized and figuring it out uh but uh gpho or says uh honestly one of the most confusing spam emails I have gotten. I do not have a horse, but I love it.

1:50:37I love it. And some of these photos look really, really cool. These Garmin, the bow. I had no idea that Garmin is a$45 billion company. Huge, huge. I mean, there's a lot of fishing to do. There's a lot of long range shooting or bow hunting. You want to go out bow hunting without a Garmin on your bow. And I think they still crush it in smart watches despite obviously having competition. Yeah, because they've differentiated niche down. Apple's going to be kind of the broad consumer choice for a lot of folks, but Garmin has all the trails. They ask the question, what are you running from? We'll help you go faster.

1:51:14For sure. Brian Johnson says, one of the best new habits I've started lately is calling friends for 15 minutes. I say hi, tease them, or share something funny. Then it's immediately over. No lingering, no fuss. It's great. It's called flirting.

1:51:30it's called chirping you call your friends hey uh did you bench today what's up um this is this is just a funny habit i mean it's genuinely hilarious it's extremely brian johnson coded to take something that's like just calls like you know uh this is like the classic like tech guy I'm going to actually do this to him later. I'm going to do this to him later. Yeah, yeah, yeah. Tech guy events being friendly. Texted like once. I'm going to call him out of the blue. Yeah. Hey, how you doing? Tease him. Buddy the Elf, what's your favorite color? I mean, people like it. 7 ,000 likes. It's a good take.

1:52:08Anyway, starting today, Flow by Google. Google AI Ultra subscribers can generate VO3 fast videos without using any credits. So you can fine-tune your clips to exactly how you want them and only spend credits on that final upload. May this be the piece de resistance on that new product. And BoneGPT says, I just got unlimited VO3 fast. So people are very excited about that. That's fun. I've been really enjoying the VO3 model. Continue to enjoy it and continue to use it. So, Buko Capital Bloke, sounds like we are getting the final Google ruling tomorrow. For now, we exist in the liminal space between it being over and so back via Con Dios.

1:52:48This is about the Chrome? Chrome, divestiture. Yeah, what's the news? Has it come out yet? Okay, we'll have to track it later. So Nano Banana, more Nano Banana news from Google. Love these. What does the red arrow see? Google Maps transforms with Nano Banana. Levels.io says, if you're not building a mini startup with Nano Banana today and launching it tomorrow, you're missing the opportunity of a lifetime. This image model just made hundreds of new startups and apps possible. the only limit is your creativity and how fast you can ship a user interface and put a stripe payment button on it i think uh and levels has done this a few times i think he had some some image generation uh app that allowed you to decorate your house so you take pictures of the empty room and then it would give you ideas for decoration and inspiration i thought that was very cool and uh with much cheaper ai images it just unlocks new use cases so uh certainly also Apparently somebody sniped nanobanana.ai.

1:53:48Oh, okay. And what about.com? Where's.com go? And it's not Google-affiliated, but they're charging up to$6 ,500. $500 per image? No, they're just saying, yeah, they're charging$64 for 800 high-quality images a month. Wait, isn't it like$10 a thousand or something? Yeah, they're marking it up. Again, this is what happened with Chat Sheep. Yeah, yeah, yeah, same thing. Where people were just reselling ChatGPT before they had a lot of focus on mobile. Wow. Well, if you're launching a foundation model and you're using a code name, buy the.ai, buy the.com. Don't get swooped. Don't get swooped. Tyler, have you played with Nano Banana yet at all?

1:54:28Yeah, it's really good. Yeah? I think the main... Does it unlock anything new? Like, is there going to be a new Studio Ghibli moment? I don't know. I mean, there's some cool things with just how consistent the characters are, right? So if I take a picture of someone, I can change their shirt and nothing else will change. like it's like you can't do that with you know gpt4 image yeah yeah yeah images in chat gpt i feel like it always makes the face just like a little bit uncanny valley when it re-renders it yeah i think that's probably the main use case is it the face just stays the same basically yeah for like photorealistic stuff yeah but i think the main takeaway from nano banana is that like gemini now has like you know they have like a rune like they have a poster in house because like you saw it was like a week before it came out everyone's like oh it's on el marino what is nano banana and then logan is just you know tweeting the banana emoji like i think that is the vibes i love it no um uh the yeah the other question is i wonder i don't know um yeah i wonder if this is going to unlock any like specific viral moments or if it will just be something used by companies because it's cheaper and more reliable um i'm certainly excited do you think if do you think that there's a potential that it's enough to um get people to switch to android um why because it would just like natively have have you used the ios remove object no is it really bad you should go demo it you should take a picture of something well i think Because you have the latest and greatest, right?

1:56:02Yeah. If you take a picture on the phone and then you go and you say, like, okay, I want to remove this. I'm going to try and remove this Diet Coke from the image. You can go in to edit. And then in the image editor, there's a cleanup button. And you can, like, prepare cleanup in iOS. And, like, as you kind of draw, it takes a long time. You kind of, like, you know, I guess it only picks things that you can remove. I don't know. Like, it's rough. It does not quite work. Okay, here we go. Now it's finally going. Breaking news. Essence has filed for bankruptcy protection. What is Essence? Yeah, Gabe literally called this in the chat.

1:56:44He says, Jordy might know Essence. Don't think John would know about them. Called it perfectly. Fashion marketplace. Surprised to see this. I'll try to get an article. Canadian luxury luxury e-tailer told employees on Thursday that the filing was necessary as tariffs took an unexpected toll on the business and to preempt a forced sale by lenders. Essence is filing for bankruptcy protection after what it described as an attempt by lenders to force the sale of the company. Chief Executive Rami Atala on Thursday said Essence's creditors want to put it up for sale under the company's creditors arrangement act a process similar to bankruptcy protection that allows corporations to restructure their finances.

1:57:30Attala went on to say that Essence will fight a sale by filing its own CCAA application within 24 hours. Recently, we have worked closely with financial and legal advisors to develop our own restructuring plan to stabilize the business and rebuild it for the future. The court will decide which path we follow likely within the next week. again I believe that from I believe, Gabe, correct me if I'm wrong, but I believe that Essence just primarily partners with boutiques, so they don't actually hold a ton of inventory inventory. I might be thinking of Farfetch, but hard, I mean, it sucks when you're a business that isn't a business of just selling goods and you can't do that.

1:58:22Well, good luck to them. Let me tell you about Adio. Customer relationship magic. Adio is the AI native CRM that builds, scales, and grows your company to the next level. You can get started for free. Sounder, no. And we have our next guest here in the Restreed Waiting Room and now in the TBP and Altradome. What's going on? Welcome to the show. Hey, guys. How are you? We're great. Great. Good to meet you. Great to be here. Doing great. Can you introduce yourself a little bit for the stream? Yeah. You know, my name is Ajay Agarwal, a partner here at Bain Capital Ventures, and I've been here for 20 years, started life in the startup world way back when.

1:59:02And I've been in tech for a long time. Were you ever out of the Boston office or were you always in Silicon Valley? I was originally in Boston. So when the fun got started, you know, roughly a little over 20 years ago, it was 100 % in Boston. And that was sort of the year of, you know, Route 128 and, you know, all the great stuff happening in Boston. And, you know, the business on the East Coast has really migrated to New York. I moved out to the Bay Area to open our West Coast office. We launched that effort about 15 years ago. Now, at BCB, the majority of our team is on the West Coast, and our second biggest office is New York.

1:59:44So Boston, great town, great life sciences town. Well, and YC was there. YC was there originally. I remember the old days of YC at MIT, and then YC moved. So Boston's a great place. There's a lot of innovation here. It's just the application layer of AI, the foundation layer of AI. It's all happening in SF and New York these days. Yeah. When you say the firm started 20 years ago, you're talking about BCB specifically and not Bain Capital broadly. How do you tell the story of the venture firm launching from within that larger structure? Yeah. I mean, it's a great question. The firm was started back in 1984.

2:00:28Mitt Romney and partners started it. And early on, that fund was really small. It was like$37 million. And so some of the early deals were what you'd consider tech companies. We were the first investor in Gartner Group way back when, which is classic. Creation of the hype cycle. Yeah. You literally created the hype cycle. So we have a huge poster. We have a huge blown up poster of the hype cycle. We do. There you go. We love it. We think you can apply it to all things in life. Yes. It is a fundamental truth. It is true. It is true. If you're having relationship problems, just pull up the hype cycle, show your wife.

2:01:11We're going to get to the plateau of productivity. We're just in the trough of disillusionment right now. We are in the trough of disillusionment. But we can see the plateau of productivity. Yes. Yeah. Yeah, no, I mean, the Gardner was not my friend when I was running Go-To-Marketed Trilogy, but, you know, they, but certainly, I mean, that business has continued to do great. And so they made a set of early investments out of what you'd consider a small private equity fund, Gardner Group and DoubleClick and things like that. Even Staples, you can consider a venture investment. It was one store when your bank capital invested in it.

2:01:47So it was truly a startup. And then, you know, the funds got bigger. And they started doing bigger deals. And as a result, that meant more mature companies. And it was clear that, you know, in order to do venture in early stage, it necessitated a separate fund. And the firm's been very entrepreneurial over the course of 30, 40 years now. You know, 40 years now, you know, we've launched a venture fund. We have a crypto fund. We have a life sciences fund, real estate, you know, kind of a whole range of things. And that's always been the culture, which is let's create it. Each fund stands on its own.

2:02:20So we've got to go raise capital from limited partners. We make our own investment decisions, but we benefit from the affiliation with the rest of the firm. And we'll get into industrial renaissance. We'll get into AI and the physical world. But our access to the real world economy through Bain Capital, actual physical businesses, manufacturing companies and brands and retailers and financial services companies. That's where a lot of young people want to build today. Um, and you know, that's a huge source of our competitive advantage, you know, in the market. Yeah. Before we get into all that good stuff.

2:02:57How'd you meet Joe? Yeah. How'd you meet Joe? Normally we'd be like, Oh, no one knows what we're talking about here. But, uh, I mean, he's been on the invest like the best. He was in the journal. Like this is Joe Lamont week. And so I mean, you know, for my entire career, people are like, you know, we've heard of trilogy yeah this week has been pete joe lemont um i met him my sophomore year at stanford um a professor of mine said you got to meet this guy he's starting a company and you should join him and so i i went over to trusseter and sat outside with with joe lemont he was a year ahead of me he was a junior i was a sophomore so this was when he was like racking up credit card debt Yeah, this is even before Trilogy.

2:03:42So he hadn't started Trilogy yet. And he was starting a company, it was called Fourth Connection. And, you know, Fourth Connection is today what you'd consider a CRM. Sure. But, you know, we would go around up and down El Camino and go to startups and tech companies and say, wouldn't it be great if you had one database for all your quotes and contacts and proposals? And people are like, wow, that's so cool. That doesn't exist. We'd love to have that. That was what we were selling at Fourth Connection. And so when I first met Joe, the very first meeting. And sorry, was that sales builder or was that?

2:04:16No, that was all three trilogies. The sales builder was Trilogy, and he eventually dropped out and started Trilogy. Got it. Wow. So this was like, this was foundational. Yeah, this is 1988, I think. Now I'm dating myself here. But he said to me, you know what the greatest business on the planet is? And this is like the first five minutes. And I said, I have no idea. And he said, it's enterprise software. and I said to him, what's enterprise software? Yeah, there you go, enterprise software. Here we are still, you know, 35 years later. It's undefeated, it's still enterprise software. And I said, why?

2:04:57And he said, it's the only business in the world that you build it once and your marginal profit is basically 100%. He's like, it's the greatest business in the world. He said, life sciences is sort of like that, but he's like, you don't know if it works for 10 years. enterprise software you know within a year or two if this thing works he's like let's start an enterprise software company we did this thing fourth connection we did that for a year he dropped out i decided not to drop out and then he went on to start trilogy i joined him a few years later as employee 18 so that that was the joe story yeah uh i i feel like uh there was a lot in the invest like the best interview the thing that stuck out to me was towards the end when he He was talking about how AI will affect enterprise software and just like his overall playbook of reducing churn, switching a company from growth mode to retention mode.

2:05:54And his claim or his hot take was basically that in the age of AI, replatforming or ripping out a piece of legacy enterprise software will get easier. And so the old school trilogy playbook might be a little bit harder to execute, not just because it's more competitive and everyone has heard about it and everyone's kind of running their version of it, but just there might be some fundamental technological shift that's making it easier for companies to, you know, switch to other products. And I'm wondering how you see that trend, if you agree with that, or how you think that affects the next generation of enterprise software companies.

2:06:34Yeah, I think the things about this era that are the same as the trilogy era, in some ways, it's almost a return to the past, is this idea of CEO selling, big deal selling, selling a vision. in the late 90s, we had this enormous pull from CEOs, just like we're seeing today, where CEOs said, I got to get on this internet thing. I got to modernize. I just rolled out laptops to all my salespeople, and they're on the airplane just playing solitaire. They need apps, and I need to buy some apps for my laptops. And so we would sell directly to the CEOs, and these contracts would be 10, 20, 30,$100 million contracts.

2:07:15And we're kind of back in that era now, and the best companies in AI are selling high to the CEOs. Every CEO, Fortune 2000, they've got some kind of AI council and they're saying, we're going to fast track all this stuff. We're not going to go through the normal procurement process and everything else. And so I think the companies that are winning today are in many ways able to sell this larger vision to these large companies to say, this is how you don't get left behind with the AI revolution. So I think that part has changed from kind of the sass plg era um but in many ways returned to sort of the 90s and siebel trilogy and i2 and kind of that world i think the part that um will be interesting to see and there's been this debate and aaron levy's talked about this is will the systems of record get disrupted or will they get stronger now clearly aaron's got a you know biased point of view because he is a system of record at Box, but his view is the system of records are going to get stronger because they represent the ground truth.

2:08:22Models hallucinate, AI is probabilistic. What is the ground truth that's going to guide these agents? And ultimately, is that the data that's inside SAP and inside Oracle and inside Workday? And will those systems get stronger? I tend to be a big believer in systems of record. I mean, if you just look at the history of software, the biggest application companies in the history of software have been systems of record. And, you know, that's just been true. Well, even if you look at Satya's Satya, people were kind of dunking on Satya for posting this thread yesterday. But he was basically just demonstrating how powerful GPT-5 is within Copilot because they already have all of your information.

2:09:06They have your email. They have your calendar. They know who people are. It's just very easy to just run prompts on top of the system of record. And that's just an incredible advantage that Microsoft has. Yeah, I mean, the flip side of this, just to take the counterpoint to Aaron at Box, is, well, the business owns the data. And so it's very hard for a company that is a system of record to say, no, actually, I'm not going to let you suck all this data out of my installation into a data lake or into just a bunch of CSV files if you want. If I am paying for a system of record, I will demand that you let me print it out and take it out the door if I want because that's my data.

2:09:50But of course, there are different integrations that can be made a little bit more difficult. So I'm wondering if in the age of AI, there's the binding between, even if Salesforce or Box doesn't let me with one click off board and onboard into a different service, if I show up with my McKinsey or my Bain & Company and I have a team of Accenture, but it's all AI, and I say, hey, I want you to pull these files out one by one. Take screenshots if you need to. Yeah, one of my portfolio companies is building agents for enterprise migrations. I was like, here's this comment. So yeah, I mean, can you wrestle with that?

2:10:27Like, how does that play into all this? Look, I think it's a great point. Certainly even the last five years, more and more companies are putting, trying to get all their data inside, cloud data warehouses, Snowflake, or Databricks, or whatever. And so I think that trend is continuing. But the question is for enterprises, where is that on the priority list? It's just not on the priority list. It's like, okay, that's there and it works. And I now want to move forward. I wanna take advantage of the next set of opportunities I want to implement the AI for call centers, AI for coding, AI for healthcare, RCM billing, whatever it is.

2:11:06And do I really want to go through, even though it might be possible today of taking all my data in Epic and trying to push it somewhere else, it's just low on the priority list at this point. They've already suffered through the pain of the last 10 years of all these implementations. And so I think it's like a lot of things inside these enterprises are going to build on top rather than try and rip and replace. Yeah. One of the things that stuck out to me from the Joe interview was where everyone in Silicon Valley is familiar with the concept, like built to grow, like you're in growth mode, go, go, go.

2:11:39Then there's obviously a lineage of companies that are built to last. And he brings up kind of a controversial one, which is some companies are built to die and that they've kind of done all that they will do. They've built all the products that they will do and they are machines to kind of maintain their customers for as long as they can. but that particular product will not exist. And people that work there will migrate to other projects in the portfolio. And I'm wondering if you have a unique perspective from your background, a trilogy, and then also the overlap between BCVs in a unique position.

2:12:09I don't know how tight the firm is broadly, but like Brookside can take a company public. It's like the coolest thing possible. And then you also have the private equity lineage there that could turn around a company or take it in a different direction. And I'm wondering if that brings you a different perspective when you're sitting on a board to have a real conversation with a founder that's not just, hey, swing for the fences and then you just, if it's not a home run, you're never going to hear from me as opposed to actually I can still help you make good decisions in the era where you're going public or where you're going and working with private equity or where you're winding the company down.

2:12:45Do you feel like you have a differentiated perspective there from other venture capitalists? Yeah. I mean, I think the reality is that there are so many different ways to create value. And it's funny, you know, kind of in this era where venture firms are, you know, kind of, you know, there's a stampede towards becoming private equity firms, you know, and, you know, and so I did that first. Yeah, we sort of understand that that desire capital. And so there's just a lot of different ways to generate value to create value. And one of the benefits of being in bank capital is you see all these different divisions and private equity and public equity and credit.

2:13:29And it's incredibly smart people that are partnering with companies to create value. And these companies are different stages, different dynamics, different competitive situations. And, you know, there are a lot of great companies that end up getting bootstrapped to the point where then they might sell estate to private equity. That was the case when we invested in SurveyMonkey, you know, as a bootstrap company. And then, you know, we got involved as part of that business. And so I think that is just the reality. You know, a good friend of mine, founder, we backed early, you know, Nick at Gainsight.

2:14:02We were part of that journey. And, you know, he decided that the growth profile of the business was still going to be very strong, but was not going to be the 60 to 100 percent growth that, you know, folks like us, venture investors wanted. And so he orchestrated an incredible exit to Vista, where he was able to transition all the venture investors to a different type of investor that was in many ways ideally suited for that more mature phase of Gainsight's growth over the last four or five years. So I think that's an important thing. There's different ways to, you know, create lasting value. And I think founders oftentimes, you know, when social media are looking for a pattern or one way, there's just not one way.

2:14:48You know, it's, there are a lot of options out there. Yeah. On a similar note, I know, I think it's rebranded Sanctity Advisors, the credit arm of Bain is now. Bain Capital Credit. Yeah, used to be Sanctity, now Bain Capital Credit. Got it. Yeah. And I'm wondering if just having any interaction with those folks has given you a differentiated perspective on what's going on in the venture debt markets. We were reading the other day in the journal that there's been, we're back to new highs. It was a drawdown. Volumes expanded, but the amount of deals has contracted. But also the number of individual lenders has increased.

2:15:27Yes, yes. So the market just basically fragmented post. Yeah, so I'd love to know your thinking and what you're advising founders on. When is the right time? What is the shape of the business? Like what is the current meta for getting the most out of a venture debt partnership from, you know, years ago? It was very different. How are you thinking about it now? Yeah, I mean, I think debt is very powerful, but it's also very dangerous. And the reality is that, you know, for an early stage company that's pre-product market fit, I think the best case use of venture debt is some runway extension. and not even really runway extension such that you can sort of draw your equity down to zero.

2:16:14And so it buys you a few months. But even when our companies have venture debt and their pre-product market fit, we advise them not to actually tap into the debt. It's there so they can sort of extend the runway a few months. I think that's one option for venture debt. I think the second is if it gives you a clear path to profitability. If you're a later stage company and the venture debt can avoid a dilutive equity round and you can get to profit, then I think it's very effective. I think for businesses, which are rare in our world, but that have capital, that are a little more capital intensive, certainly credit can be a source of financing, working capital financing is effective.

2:16:58But your business has to be very predictable. And generally, credit is best used when you're breakeven or close to profitability. I mean, I think I remember, you know, we had this great company, Reich, that was, you know, a PLG company, kind of in the space of Asana and Monday and all those companies. Ultimately, you know, I think exited for north of two billion. But I remember Vista was looking at the company and they just said, look, you know, given this level of ARR, we can take that amount of ARR and put 2x that number of debt on the business. You know, because the business is so profitable, because it's generating cash, and that can allow that money to come out, you know, to shareholders.

2:17:45So there are a lot of interesting ways you can leverage debt. I just think you have to be very careful if you are not quite a predictable company that has a path to profitability. Then I think you've just got to be very selective. Yeah, it feels like something where you get in a lot of trouble if it's not a foregone conclusion that you can raise another equity round. Exactly. But if you're at a place where you could always do an equity round, there's always demand at some price. but if you're ever going to be in a situation where there might not be enough demand to clear your next 12 months 18 months of burn at any price you are in trouble potentially give us yeah please oh I was just going to say we had Pete from astronomer on the show how where does that rank in terms of like crazy wild cards in your career I feel like it was it just gripped the whole tech community.

2:18:38And I'd love to know a little bit of the play-by-play of how you experience that internally because it feels like the most unexpected story to ever emerge out of a company that is managing Apache Airflow. And well handled. Extremely well handled, yes. But we all know about Apache Airflow now. No one had in their 2025 bingo card Coldplay or Apache Airflow. Exactly. and Gwyneth Paltrow. But, you know, I got a call from, you know, my partner Enrique who's on the board, you know, Thursday morning and you told me what happened and I hadn't, you know, been on social media. Wait, wasn't it Thursday? Thursday?

2:19:19The concert was like Wednesday night, right? Concert was Wednesday night. Yeah, exactly. You get this call. Hey, how's it going? So I get this call and I'm like, oh my God, that's crazy. And so then I went to social media and watched the video. And then later that afternoon, I ran into my wife and I was like, oh, this thing happened to our company. And I was explaining. And I assumed it was sort of this thing, like in this narrow tech world that I live in. And she was like, oh, my God, everyone's talking about that video. It's gone totally viral. My kids were picking me. And the part of it going viral in tech, that's happened.

2:19:56And good news, bad news at various of our companies over time. But the part where it became part of the cultural zeitgeist for the entire country for literally three days, never experienced anything like that. And, you know, I think the board and the management team, Pete, obviously, is a founder. You know, they did a really good job of, you know, one being, you know, number one, you know, responsibility to the employees and our customers and let's do what's right. Number two, you know, this is obviously a cultural moment, but there are also real people involved and their families and things like that.

2:20:40So I think they handled in a way that I think reflected a bit of that balancing act. And so, you know, I think you had Pete on the show. He was great. And, you know, and I think the company came out the other side with more visibility. Certainly, I think our customer base feels very good about the business. The business, you know, was growing very rapidly and has continued to do so. So, you know, we feel really good about the business. We feel good about the investment. And, you know, thank God for Gwenna. Yeah, as always. Absolute masterclass. Give us an overview of how you're thinking about what some would call American dynamism, but just this industrial renaissance, how you're thinking about what's important, but maybe not investable versus what's important and investable from a venture standpoint.

2:21:40Totally. Well, we don't like to call it American dynamism, but we call it an industrial renaissance. But, you know, we think that, you know, it's a really important trend and opportunity. And certainly, you know, I think that there are enormous tailwinds, you know, that are, you know, heading in this direction. Certainly, the advances in technology and computer vision and the sheer cost of robotics and automation has come down. The geopolitics, onshoring, tariffs, labor shortages, all of that, I think, is creating the tailwind. Certainly, you've got a similar set of dynamics if you extend into the military and Department of Defense.

2:22:25You know, our strategy here, you know, really starting with our investment in Kiva systems way back when, I think has been to invest in companies where the core innovation is still software. You know, and there are elements that involve hardware and robots and things in the physical world. But the core innovation is ultimately software. And I think Kiva is a good illustration of this. When Mick showed me the prototype way back when, 2004, he said, inside an Amazon warehouse, a worker is spending 90 % of their time walking to the shelf and 10 % picking. And he said, having a robot pick one of a million SKUs that are different shapes and sizes and weights and colors and T-shirts versus a broom, he's like, that's an impossible problem.

2:23:16It won't be solved for at least a decade. It's now been 20 years and still not a solid problem. But he said the problem of getting a robot to move a shelf from point A to point B, he said that's a trivial problem. And so his insight was instead of having the worker go to the shelf, I'm going to have the shelf come to the worker. And that alone, Triple Productivity built this great company, powering all of Amazon today. It's really core to their fabric of how they run their warehouses. And so we're looking for opportunities like that, that are fundamentally software at their heart. It's more of a systems approach, you know, really thinking about a problem holistically.

2:23:56These companies tend to be more full stack as opposed to just selling a widget of some kind. I think that also prevents you from being commoditized by low cost, you know, offshore manufacturers trying to come in. So those are some of our thoughts kind of in this industrial renaissance world. So you've backed every humanoid robot company. um yeah sounds like sounds like yeah we were talking about this like yeah you see the exquisite demo and i it must be a jump to try and understand okay can this person are they just a genius they can build one or are they building a system that delivers to the tune of a million uh we were talking about this with spacex obviously tons of rockets blowing up i think they're on ship 36 but Like the goal is not just get one rocket to space.

2:24:45Like we did that. We went to the moon. The goal is like get it really cheap and reliable. So it's going every 30 minutes. Same thing with what we're seeing with Zipline. Those folks are just focused on like scaling and manufacturing. The Starlink stuff's the same. It's a completely different dynamic and problem that you're actually solving. Jordy, where do you want to go next?

2:25:10Good question. um yeah i guess well so so yeah i think uh aaron slodov had a post yesterday having some some uh he has a uh manufacturing tech company and this idea of like basically yeah understanding specifically these industrial renaissance companies i have to imagine you're oftentimes meeting entrepreneurs where you're like this seems like a good business it should exist but um Like what is your like actual investment criteria for a company that wants to make things in America that's not not a company that is a system for making things, but but something where it's an actual physical product as the as the output?

2:25:54it. Yeah, I think if you're actually a core manufacturer, as opposed to a technology company that's automating manufacturers, I think the bar is very high to invest from a venture standpoint, because I think there are a couple of things you got to believe. I think number one, you got to believe there's truly proprietary technology. And that's just a high bar in manufacturing. I mean, you know you've seen it you know with um you guys were referencing the Roomba earlier and you know Shark Ninja you know like anytime you know every Dyson product every you know product that's out there they have some equivalent um and Shark Ninja is a great company I'm not disparaging them at all but you know you realize you're going to get competition very quickly as a manufacturer and so the question is where what is that source of um you know competitive differentiation.

2:26:51And oftentimes it's software, some kind of software or network effect or data that allows this business to maintain proprietary margins and a huge competitive advantage over time. And so I think you need that or you need just an extraordinary entrepreneur, a founder, an Elon-esque founder. I just think it takes a very special kind of founder to build a physical products company. You're just dealing with the physical world is far less forgiving on so many dimensions. One, just making money, but two, having it work. On that note of software, is it always software that enables the bootstrapping of a network?

2:27:34I'm thinking of Apple gets power from software, but not just software. It's iMessage integration, a network. NVIDIA gets power from software, but it's CUDA. What is CUDA? It's a network of talent and standards. It's not just you copy CUDA and you're good or you're feature parity. Tesla, they have self-driving. It's great as a single thing, but it really is like a scaled network that gets better the more people use it. Is there some sort of dynamic there that creates a flywheel effect? Absolutely. Yeah, I think that flywheel is really important. We're investors in this logistics company called ShipBob.

2:28:10ShipBob is a tech company up and down, but when you think about why is ShipBob so powerful? It is ultimately a network effect because we have so much density, we have so many warehouses, and we have so much data. We know that customer A in New York City is going to order this product from this vendor. So we're going to make sure that product is sitting in a warehouse on the East Coast. And by the way, we're not going to get that right 100 % of the time. So the 30 % we get it wrong, we're going to be able to fill up an entire truck of stuff from LA and get it to New York so that we can inject that package at the last mile and bring down the package, the delivery cost by two or three dollars.

2:28:53And so it's a classic network effect business that's underpinned by data and software, but certainly relies on, in that example, relies on physical warehouses. We have a certain number of physical warehouses. We don't own those. Those are through partner sites, but those are physical assets that are out there that create the density. We're using physical trucks to move things from point A to point B. But ultimately, our ability to do that is driven by data and software at the ground level. And those founders made a really interesting decision, which was we are going to partner with third party warehouses, but they have to use our entire stack of software.

2:29:31We're not going to rely on their site. If they don't use our warehouse management, our pick and pack software, they don't adhere to all of that. We're not going to work with them because we need to have that, you know, pane of glass that sees every bit of information from from soup to nuts. So I think your point, John, is a good one, which is, you know, these businesses that ultimately create some kind of network effect. Ultimately, you have that flywheel that that keeps going and allows you even you mentioned DoorDash. I think on a previous podcast a few days ago, these businesses that people think of as low margin, once you get that network effect and that flywheel, you can just compound forever.

2:30:14Well, thank you so much for joining. There's a ShipBob fan in the chat, spamming. ShipBob will be a$10 billion company. Let's hear it for ShipBob. Good to see you guys. Thanks. Have a great rest of your day. All right, you too. See you. See you guys. Let me tell you about public.com, investing for those that take it seriously. They got multi-asset investing, industry-leading yields, and they're trusted by millions. And our public.com update is that ByteDance just made more money than Meta for the first time in history. Yeah, I think this is a boo, because we root for Zuck. We root for America.

2:30:45We are Team Zuck, but you've got to give it up. But you've got to give it up for big numbers. Congrats to the team over at ByteDance, putting up some heroic numbers. $48 billion in Q2 to Meta's 47.5. Just over$47 billion. It's got to be rough over there. Well, up next, we have the founders of Framer. Welcome to the stream. How are you guys doing? Gentlemen, what's going on? Hey. Good to be here. Thanks for having us. Big day. You guys are up late. Yeah, thanks for hopping up late. I'm so trained to when we have two people, they've got to debate. I think we've got to get these guys to debate. What are we debating?

2:31:21We do that all day. Yeah, yeah, yeah. That's the life of a founder. Give us an intro, the update. I got the gong ready for you guys. What is top of mind for you guys? What do we do with the gong? Just wait. You'll find out. All right. Here we go. All right. So the update is, so we're Framer. We're a web design platform for professional, or like professional web design platform where companies can run their entire.com. And we raised Series D that we announced today. Let's go. That's what it's for. That's what the gong is for. We should get one of those. $102 billion. Wow, that is a big number. Big number.

2:32:03Congratulations. Big number. Are you guys in sales? Is that what the gong is? We just celebrate. We just enjoy. Just huge capitalism fans, honestly. Yeah, it's really just a love for business and big numbers. But, yeah, it's a staple. And it's our pleasure to hit it whenever we can. But give us, first time on the show, give us a quick background on the company. Yeah, yeah. Where do you guys want to start? Yeah, so I'll go pretty quick. We're both product designers, and we sold our first company to Facebook, where we were a product designer for a couple of years. And after Facebook, we figured, hey, let's do another company before we get old.

2:32:45That's more than 10 years ago. And we always loved building creative tools. So we figured, okay, you know, like, starters are pretty hard. why don't we pick something that we really like working on so let's build the next Adobe and everybody around us said like don't do that you'll probably raise some money but not for design tools just don't tell an investor you'll be building that but we did and then 10 years later and a big pivot and here we are overnight success overnight success success i see what framers really good at or yeah like the you know i couldn't talk about the product market fit what we're really good at is we allow folks to basically designers ship websites themselves for companies.

2:33:28So you have your, let's say your Figma, where you do your design and you turn it into an application. You've got tools like Squarespace and Wix, where you make your personal sites. But a lot of company websites are still built with code. It's kind of slow. You need a developer team. And over the last couple of years, we saw more and more companies just wanting to ship sites much faster and do it in a visual tool. So that's what we built. What's your take on the vibe coding boom? Within, I mean, we're all familiar with the growth of vibe coding stuff. What are the overrated use cases? What are the underrated use cases within the vibe coding boom?

2:34:07Yeah, I think we're about to find out. I think everybody's just really excited with where it's going to go. Because in the beginning of this year, I'm sure that if you type in, you know like make me a nice front page for the company that you're at then you know you're not really going to use that result yet but you can see it's going to get there right like we're close enough for the llms to like it's not going to win any awards you can't really use it for your site maybe for your personal site so i think over the next year or two somebody's gonna make that work for companies somebody's gonna make that work on brand somebody's basically gonna allow designers to sort of like teach the LLMs how to generate, just like an engineer kind of hand holds an LLM to write the code.

2:34:52And I think we're kind of on the crisp of figuring that out. And that's obviously what we're spending a lot of time on. How important is the kind of network around Framer? I know there's people that make businesses designing sites that can be adapted and things like that. Is that a core part of the business in the way that maybe sort of like the Shopify app ecosystem might be? Or is it more in the direction that the platform is heading? Is it more about allowing people to generate sites entirely based on their own brand assets and things like that? 100%. So we call it creators, and it's a whole economy by itself at this point.

2:35:40people building more than just sites for clients which is typically what you would think of is you you build a website for clients next to that they build templates they build plugins they build all kinds of assets that can be sold on the framework marketplace and we're starting to see people make serious money off of that the most impressive examples are folks that basically We started with a new Twitter account with zero followers and then set out a challenge to get to 10K in, let's say, 30 days just by making sites and selling assets on our marketplace. Are they successful? It sounds like they've already done this.

2:36:21Is that what you're saying? Yeah. This is happening every day. This is the whole thing now. Design Twitter. And I think, yeah, there's a couple of outlier examples of people are now doing like three or 400K a year just building businesses on Framer by selling these assets. Yeah. Are there features or functionalities that you think you want to add based on the generative AI boom? I'm thinking like we've seen these like not just, OK, build a landing page for a business, but build a game or use 3.js or WebGL. And there's more tools that feel previously, it was like, okay, if you're gonna build a video game in the browser, that's gonna take you a long time.

2:37:04And now people are vibe coding them. Are there other features or web components that you wanna surface more easily to prosumers? Yeah, if you have a big web platform, you can go a few ways. One is obviously the marketing, sort of what we're trying to figure out. Just help startups ship the most beautiful websites really quickly that go very fast. And then you can always go into e-commerce, but all I see is Shopify. I see a lot of people try, but all I see is Shopify. So you've got to be pretty confident to go after that. And then the third thing is that there's something between an app and a site that people can't really make today, right?

2:37:42So there's websites. We're really good at marketing websites now, but there's obviously websites that do more, right? So they're more like a database, a catalog. They could have a feed, a login state. and that's that was always constrained by people that could express that could express that logic and for that you had to code and i think you know like we're in an interesting time where the llms can help with that so it's definitely something that we're also uh going after yeah how how uh it feels like your guys's strategy is uh uh the the entire you know market for creative tools today is extremely loud, right?

2:38:18Every day there's new tools launching. You guys seem to be extremely focused still on this core value prop of helping people make beautiful, simple, professional sites. Is how much, what do you, how do you think, not to get too far out in the future, but how do you expect, like, do you think the dot, like my view is that the dot-com is like a hyper-durable asset that will continue to have a lot of value for the next decade, two decades, etc. And there was a time when people thought that URLs and everything would just become applications and things like that. And I don't think that's panned out.

2:39:04What's your guys' vision for basically the future of the website itself, right? at a time when, you know, already we're seeing in different tools, you know, different, you know, consumer LLMs that will generate UI and scrape websites and things like that. What's your kind of, what does the website look like in 10 years? Not like a chatbot, but you'd be surprised. We've been pitching, obviously, for this round. You'd be surprised how many VCs think that that might be the case. Yeah. But the web as a form to present your brand and build brand equity just isn't really going anywhere. But one of the things that we really like, I mean, we're both product designers.

2:39:45So obviously we have business goals. But if you ask me why I get up in the morning, it's also to make the web cooler. And the browsers can do a lot of really cool stuff, right? The LLMs unlock people to build stuff for that. And the websites kind of look boring. Like they've only gotten to look more boring over the last 10 years. So I think tools like Framer can really help the designer sort of express more interesting websites. So I think that, you know, with that kind of more people being able to execute on that, but as well as sort of like, you know, showing more, like doing more cool stuff that the browser can do, like combining 3D and video on websites, making much richer, cooler experiences.

2:40:24I think that's really where things are going. So I think it's only the browser is still such an underrated sort of piece of technology in terms of how it's used for presentation. And if we give folks the tools to build like cooler output for that, then they will. Yeah, I think it says a lot that all, you know, every major AI company wants to have a browser themselves or they want to buy Chrome, right? That to me says, you know, all you need to know, at least for now, around where the category is going. and it's pretty interesting that all the AI brands are very heavy on their personality on the internet so they all have three websites beautiful brands really nice dot coms dot coms forever we're big dot com enthusiasts here huge enthusiasts, thanks so much for hopping on guys yeah congratulations to you guys and the whole team thanks for having us cheers up next we have a great dot com super.com but before i tell you about that.com 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 and we will bring in super.com with some news one of the best.com how are you doing what's happening what's latest good you're doing well thanks for having me thanks for hopping on?

2:41:48Give us the news. Well, first, I saw your comment. Thank you for the domain shout out. Of course. It's fantastic. Before we dive into the news, any crazy stories getting the domain? Yeah, definitely crazy stories. We had a different company name. We were called Snap Travel. We wanted to rebrand. We did this whole activity and this whole exercise. We liked the name Super because it's how it made our customers feel. When they saved money, when they found a great deal, They felt super and we loved it. It was such a generic word. If you Google super, you're just like getting super Marrier brothers.

2:42:21You're getting whatever you're getting. So we're like, okay, we got to go and get the dot com. We reached out multiple times, didn't get any answers. I'm like, okay, forget this. Meta at one point launched some product called super. And we're like, oh, they probably like are going to try and buy it. And it was just like, we're not getting this domain. And then we got a domain broker. And out of nowhere, they were like, okay, this person's like interested. But it was a pretty intense negotiation process. It was kind of in the single-digit millions. And then it got to the board level, and it was split, and it was 50-50.

2:42:51Half the people were like, I don't think this is worth it. People don't really care about domains anymore. They just search on Google. So not true. It's so not true. Like, people are, people, I mean, domains are still, I think, wildly underpriced, like .com specifically. And it's because people have just been so trained. If you've been on the internet for any amount of time, you know that when you are on the website of a big business, it's a short.com. And when you're on the site of a less legit, less established business, and consumers are really smart. They just pick up on these things. And, yeah, it's interesting.

2:43:28So you guys, I imagine you guys have trademarked super.com because you can't trademark, like, super or who knows. That's right. That's right. So it's trademarked super.com. Anyways, the story was it was 3-3 on the board and ultimately as a CEO, I get to make the hard decisions. We're like, we're going to do this. So we bought the domain. You're right. I think for consumers, it does matter. Right? Yeah. So the big news, we just wanted to introduce our incredible momentum. So we crossed over 200 million in annualized revenue. Crazy. Crazy. And if you think of the evolution, so we've been around for about nine years now.

2:44:07We started the company and it was just like travel. It was a travel hotel deal, right? So we were doing hotels for like four or five years. And then we like completely rebranded to super.com, expanded the product, introduced this membership program. And that's just allowed the business to completely take off. So we're now, you know, hundreds of thousands of paying members as part of this membership club to like save more, earn more, build credit, and just experience more of what life has to offer. How is it trying to get coverage from the legacy media for just doing a lot of revenue? I feel like they still are like, I don't know if it's a story.

2:44:44Come back to us when you raise a million dollars. But you're like, ma 'am or sir, we're doing hundreds of millions of revenue. I think this is more notable. It's so interesting. The traditional media, they don't have the time to think about that. And they're just like, if it's a fundraiser, I'm interested. If it's not a fundraiser, I'm not interested. Right. So, um, but there's a lot of companies that are doing really well and driving a lot of revenue and I'm happy you guys are, are talking to us. Yeah. What are the other, uh, business models in the category that you deliberately avoided for like lessons from like the previous cycle, uh, previous strategies that maybe like might have product market fit loosely, but not real sustainable business models.

2:45:27Yeah, that, that's a really good question. So let me take a little bit of a step back. So the company is super.com. We have a membership program called super plus super plus is 15 bucks a month. And the idea is when you're a super plus member, you just get 15 to 20 benefits. So you can save on hotels, you can save on gas, you can save insurance, you can save on pharma, you can earn money playing games, filling out surveys. We have a mastercard that helps you build your credit score and earn 1 % cash back. And some people come in and they use like one or two products. Some people use like five or seven products, but But ultimately, it's like, you think this is worth 15 bucks a month, or you are getting more than$50 a month worth of value, right?

2:46:04And for some people that just I just book hotels like once a month, and I'm saving, you know, 1000s of dollars. For other people, it's I'm using the cash advanced product, I'm earning money and building my credit score. So everyone kind of uses the app somewhat differently. And we use AI to kind of customize the app. So you'll see what we think is most relevant to you, it will give you the most value from your membership. Now, you asked a question, which is like, what hasn't worked out, right? So we are like, okay, what can we add to the membership? What can we try? We tried something about two years ago where we thought we could get into selling discounted, like physical goods, like actual products, right?

2:46:41Sounds tough. And what we learned, yes, it's very, very tough. It's almost impossible to compete with Amazon. But the hardest part was that you can't consistently get a large supply of discounted physical products. Because either it's like it comes and it goes and then it's like, oh, this is a hot item now and then it's not. Or it's like you get outdated stuff and then it sits in a warehouse. And you couldn't keep that steady supply of discounted goods. And it became a very unreliable customer experience. So we actually acquired a company, tried to build up the goods business, had a physical warehouse in Miami.

2:47:14And then we ended up just shutting that whole division down and shutting down that warehouse. So not overnight success. What's working on the customer acquisition side? Where are you guys spending money on acquisition most aggressively? And then I have another kind of related question. Sure. So each product has its own acquisition channels that work well. Right. So we don't necessarily advertise the entire membership and say, hey, come join in and get like 15 plus benefits. The way we acquire customers is we go for like one product and then they come in and they're like, oh, I'm going to become a member because this product is so worth it.

2:47:53And then hopefully they stick around and do more things, right? So for hotels, it's a very high intent product. So what that means is it doesn't matter how much advertising you do on Instagram or Facebook, it doesn't really work, right? What works is when you're on like Google or Kayak or TripAdvisor and you're like typing in like best hotel deals in New York and you have that intent to purchase. So like on the travel side, it's a very high intent channels. If you have something like make money playing games, that actually works really well on social because people are scrolling on TikTok. What's the actual economic model for that?

2:48:27Because if anytime somebody says that, if you tell John you can make money playing video games, I'm a little bit worried he's going to get on super and have a little bit too much fun. He likes video games. Yeah. So I'll tell you the model on that. And first of all, it's not just games, right? So I'll give you one that's really easy to understand. So if you come to super.com and you want to make some money and you go to earn, you may see something that says, if you've never taken an Uber before, download the app, take your first ride and get 20 bucks. Pretty obvious, pretty simple. So they'll go in, they'll download the app, they'll take their first ride and we'll just deposit$20 into their wallet.

2:49:04And for Uber, that's obviously a user acquisition strategy. they believe that that customer and uber's probably paying us 20 bucks and we're just you know or 30 bucks and you know and we'll pass most of it back to the member um but for uber that's a user acquisition strategy and if they can then get that customer to eventually take more rise and that that's worked out for them and they were happy to pay that 20 bucks for game developers it's kind of the same thing it's like you know you get paid for like downloading the app and getting to a certain level now if you get to that certain level then potentially that game developers generated some revenue from you because you've seen some ads clicked on some ads maybe you bought some gems uh maybe you did something else so it's just it's just almost like an ad network play um where it's just another source of user acquisition for a lot of these kind of are you guys uh do you guys spend time uh like thinking about uh how you're showing up how the different products are showing up in llms is that a meaningful acquisition channel for for you guys yet it is it is so it's something that we're looking at closely.

2:50:04You've probably seen there's a ton of AI companies that's working to help you optimize how you show up in LLMs. So some of it is almost traditional SEO-ish, where you just kind of need to have that basic infrastructure and right full structure and right information. But what we're seeing is that the LLMs are pulling from a lot of user-generated content as well. So things like Reddit and TripAdvisor forums and even YouTube for that matter. Like wherever user-generated content's happening, they're pulling from that as well. So it's some traditional SEO and it's actually spending a lot more time and energy thinking about user-generated content and how we can help, you know, be part of and moderate some of those conversations.

2:50:43Totally. Great. Thank you so much for hopping on. Yeah, congrats on the milestone. Congrats on the milestone. Massive. Thank you. Appreciate it. Have a good one more Airhorn. Enjoy the rest of your life. Cheers. All right. Thank you, guys. Congrats. Let me tell you about Bezel. Getbezel.com. Your Bezel concierge is available now to source you any watch on the planet, seriously, any watch, go to getbezel.com. Legends. And we have another great.com coming into the studio, keychain.com. Simplify your supply chain with AI-powered CPG. Good to meet you. How are you doing? Thank you. Would you mind kicking us off with an introduction on yourself and the company and maybe some background and how you got into this particular business?

2:51:23Sure. I'm Oshin Hanrahan, co-founder and CEO of Keychain. I spent the last 14, 15 years building online marketplaces. I built a company called Handy. Handy is like Uber for handymen and cleaners. Built it up to nine figures of revenue. Sold it to Angie's List. Congrats. Yeah, that was a good outcome. Angie's the largest home service company. Hey, let's give it up for good outcomes. Congrats. Sorry, continue. What gets a ding and a bell? What are the rules? You never know. There are no rules. It's whatever I feel like. But keep it rolling. We'll see. I can feel some more. I feel some more stuff coming.

2:52:11I took on running Angie, so I'd be given the CEO of Angie and the manager of the company. Sorry, sorry. I just had to mess with you. I mean, it is founder. Yeah, yeah. You put him in the founder seat. It's good. Not enough founders do that. is get acquired and then take on the top spot. I don't know if I'd recommend it. It's a lot more work. I feel like when you sell the company, there's this thing where you can just rest and vest. Yeah. And that's what my co-founder wanted to do. He was like, could we not do all the things? We should do all the things. You're like, get ready to be important at work, buddy.

2:52:47Every day, not just some days. Yeah, every day. That's wild. I advocate that for all my friends who get acquired. I say, you should become the CEO of the acquiring company. That should be the goal. Um, but yeah, anyway, you, you, you found your way elsewhere. Yeah. So I was a CEO, my co-founder was chief revenue officer and we, um, we, we ran it all the way to the end of 22 and then we both left and we, um, took a little break and then started another company. Um, and we, you know, second time founders tend to do this thing where they think they're going to start a studio company where it's going to have like four or five companies inside it and they won't actually have to run many of them.

2:53:26And we tried to do that very unsuccessfully for all of about a month and a half. And there was one idea inside there that just started to work really well. And we doubled down on it and really got behind it. And we've been running it for about a year and a half. And the idea is to build the platform that CPG runs on. So you guys know this, but most CPG companies don't run their own facilities. They have comens or co-producing facilities that run all of their production. And there's a whole industry of about half a trillion dollars in the U.S. of 20 ,000 companies that make all the products that you eat, drink, wash your hair with.

2:54:10And we are building the ecosystem and platform for those companies to run on. So we're starting with search and discovery at Keychain, and we've built the deepest database of how brands and retailers find manufacturers. Yeah, so I am like super intimately familiar with this space. I ran a consumer packaged goods company, and it was always a struggle finding supply chain partners. It was always some kind of like loose network of asking friends for favors and whatnot. The best-in-class database about a decade ago was just from a news website called BevNet. And they kind of aggregated up some manufacturers.

2:54:53I think they let people run ads. And it wasn't their primary business. They were mostly like a news and reporting organization, a trade publication. So it makes a ton of sense. I would love to use this product if I was building a CPG company today. Yeah, it's funny. Somebody has an idea for a CPG brand, at least pre-keychain. And it was like you just start asking your friends, people, random people. Who knows? Someone who can make ice cream. How would you make a protein bar? I met your co-founder, Jordan, probably back in 2020 because he was investing in random consumer brands. Super sharp kid at the time.

2:55:31Now clearly a grown man. But yeah, this process is still. I mean, the challenge is in how do you make sure that the incremental consumer products entrepreneur and I would say it's easier to go acquire the customers that are making a lot of net new products or have like a product release schedule. It's also how do you make the incremental CPG founder aware that Keychain exists so they don't go through the traditional process of just asking friends and asking around, how do I make this thing? Yeah, I think you're right. And that's where we started. So we built the product for enterprise. So at Handy and Angie, some of our biggest partners were the Walmarts of the world and the Targets of the world and the Costcos of the world where we did their home service.

2:56:19So we had those relationships and they obviously make most of the private label product in the country comes out of the biggest retailers. So we actually built the product for large private label brand owners, the people who, you know, churn out product every single day. And that's where we started. So today, eight of the top 10 retailers in the country use Keychain. And the same is true, actually, of the large brands. So you think of the large strategic brands. Some of them have invested in Keychain, like Hershey's and General Mills. They obviously have a lot of facility that they make some of their own product.

2:56:56But they also contract outsource a lot of it. So we built the product for them to be able to search for manufacturers. And it's funny. So because we built the product for enterprise, we almost got the startup for free. Like we got the fact that the startups are out there and they're constantly looking, you know, it's harder for them. But because we built this data asset and, you know, I heard you in your last segment talking about SEO and LLM optimization. We started with the data asset, which is the deepest asset anywhere in the world of U.S. CPG manufacturing. We've invested millions of dollars into building it.

2:57:35and it frankly can tell you who can make what better than any broker, any trade show, any phone a friend. Yeah, do you feel like is it trade shows that you're disrupting, right? I mean, if you wanted to make CPG products and you're Target or someone like that, you're going to a trade show and you're like, what can you make for me kind of thing. And this just seems a lot more efficient. I went to Expo West once and I almost overdosed on caffeine because it was like that year, every single product just had maxed out caffeine. It was protein bars with caffeine and all that stuff. This is deeply bearish for Las Vegas.

2:58:13We need to get Taylor Swift to go to the sphere immediately because there's going to be no more trade shows after this is done. Well, if you had gone last year, I think you would have overdosed on psilocybin because everything seemed to have some form of like mushroom in it. Or you would have overdosed some protein. There's always a trend. Protein psilocybin. Yeah, there you go. You got it. For when you want to build muscle while you hallucinate. Which is first. But anyway. So we don't so much think about it as disrupting trade shows because we really do think there's a role for trade shows. And it's just not what we think.

2:58:55Like trade shows are a truly awful way to do structured data discovery. And that's what some people do to trade shows. They walk around looking for a particular thing. Trade shows are a freaking amazing way to deepen a lot of relationships quickly. So if you know who you're meeting and you've done the research in advance on Keychain and you've set up conversations, you can meet the right 15 manufacturers in 30 minute segments and have the best trip to Expo West ever. Or you can wander around getting absolutely loaded on caffeine because you're going from booth to booth to booth and have a pretty ridiculous time.

2:59:36And maybe you meet two of the right people. So it's like, how do you take structured data and figure out how to appropriately use the right tools so that you can have a great trade show experience? And that's the first, that's effectively the first product the key chain has launched. So that product today is in month 18 and it does about a billion dollars worth of search volume per month. And we're in the process now of launching our second product, which is a bridge into the operating system for manufacturers. Yeah. Uh, last question. We, we, we, we got to let you get out of here, but, uh, we have one more sound effect.

3:00:16Do you have any fundraising news for us? We do, yeah. We raised a little bit of money. How much did you raise? We've raised, in total, the last round was$30 million, so we've raised$60 million. Oh, there we go. It's almost like you've done this before. The ding and the bell thing? Yeah, that gong hit is authentic. That's analog. We have a real gong. Oh, that one's real. That one's real. Yeah. That wasn't a video of you doing that before. No, no, no. No, we have a real gong. Anyway, thank you so much for hopping on the show. Yeah, great to meet you. Congrats on the well, Austin. We'll talk to you soon.

3:00:57Cheers. Take care. Bye. That was a very cool segment. I would have killed for that in 2012. Anyway, let me tell you about Wander. 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 up next we have a guest in the restream waiting room let's bring him into the tbpn ultra dome john you welcome to the show what's happening guys how are you how are you see you good this is i'm just looking i mean this is what the fortress looks like man welcome to the fortress of finance welcome to the capital thank you for having me we love you guys um we love you too it's phenomenal so uh kick us off with just a brief introduction on yourself a little bit about your career.

3:01:44And then I want to go into the hope for common stock, the bull case for startup common stock. Yeah, for sure. So I'm John Callahan. I've been an entrepreneur in venture capitals for a long time. We started True in 2005. We're an early stage fund. There's also a stand-of-fact. 20-year overnight success. Yeah, exactly. That's the way it all is here in the Valley. So, yeah. So, you know, we started the firm with a vision of, frankly, our tagline was more venture, less capital. We thought the world needed venture capitalists who were going to, you know, take big risks and entrepreneurs, you know, were coming out at that point, by the way, post sort of bubble crash, post 1.0 crash.

3:02:27There were a lot of new technology changes, DHTML, open APIs. So all of a sudden, all these really creative founders were coming up with really cool ideas. You guys remember mashups. And, you know, you could do a lot of things with all of this infrastructure that had been built in the 1.0. And you could build a lot of application layer value. So that is a pattern I will talk to you about here about what we're seeing today. So that worked out really well for us. True's been extremely lucky. We've been investors in category-defining companies like Fitbit, Peloton, Ring down in L.A. Jamie Siminoff is awesome.

3:03:07Also in L.A., Sweetgreen with John Neiman. Ring, which Ring? Isn't it a ring? The security company joke that say there is only one there's only one security. security okay what's the other one that protects you and your family and your neighborhood right yes yes yes of course yeah yeah uh the company is required by amazon yeah that's right that's right and jamie's up i have a funny ring story uh someone on our team was was dropping something at my house the other night oh yes i'd see somebody with a hat on and a backpack on outside walking around my car i'd already i was already in uh like about to go to sleep or whatever And I fully thought Dylan on our team was somebody doing a break-in.

3:03:48So, yeah. In the early years of that, in terms of what Jamie, you know, I think at one point they caught a criminal a day. They did a big thing with the LAP. It was just awesome. But also like the wild animals and all the crazy. Yeah. Ring was great. We're also big in enterprise. We'll do a security, HashiCorp, all sorts of other things. We've had seven IPOs, 60 M &AX. So we've been doing this a long time. And we're the biggest in our category of pure seed,$4 billion in capital, 16 partners. It's all we do. It's amazing. So take me through the last few cycles from your perspective, what's changing around, where the founder sits in value accrual, common stock, how you process ZERP and the last bubble and crash and all of that.

3:04:38Yeah, for sure. So that's kind of what caused me to write this piece. And it's like, like all things I've been, you know, it, it, the good ones always take like an hour to write, you know, kind of thing. And the other things that you kind of gnash around. So I've been doing this a long time and have seen a lot of waves and we've been a part of a lot of waves and the things that we are experiencing now, and I can talk through them around AI, but it's really capital efficiency, which we'll talk a lot about that drives a lot of the sort of solution to the tragedy or the fixing of the tragedy for common.

3:05:10But capital efficiency, the size of the TAMs, you know, the founder ethos today, your question right now, John, like what's happening with founders? It's all leaning much more towards this do more with less. The conversation now at, you know, Great White in L.A. or at Coupa in Palo Alto or, you know, is or Blue Bottle at South Park. It's all about like how much I can build with how few either, you know, employees or capital. Sure. And that's a good thing. You know, you guys talked about the earnings release yesterday of Nvidia, but Jensen said yesterday there's two to three trillion, I think he said three to four trillion of CapEx.

3:05:50Our numbers internally are sort of two to four trillion of CapEx going in to the AI wave over the next five years. Yeah. So any other wave, Web2, mobile, cloud, that we've been a part of, the value that is created at the application layer on top of that CapEx is on the order of 5 to 10x. So we're talking about new TAMs, like markets that haven't been invented yet that we don't know about yet, net new consumer behaviors, net new enterprise behaviors at a level that is, you know, I don't want to say that like unprecedented, but like it's just really big. And as you guys have noted a lot on the show, the waves happening really fast, quite a bit fast.

3:06:40The waves kind of keep coming in faster increments. And we're just seeing that combination come together and create what I think is the vintage of a lifetime as a venture capitalist or as a founder. We've got the most powerful tools we've ever seen. On the TAMs, we talk a lot about software. It's one or two trillion dollars globally. I think it's like 1.2 doubling in five years as a market. It's super big. Yeah. Services are 17 trillion today. Yeah. Doubling to 30. So like you have these. Yeah. I want to push on that common point because I feel like you're correct that revenue per employee has never been higher.

3:07:24But I feel like with like maybe mid journey is the exception that proves the rule, but founders have not turned a cold shoulder to preferred equity in this cycle. There are plenty of founders who are saying, I'm fine selling 10 % of this company every six months. And they've done very well. 15 % every three months. And each deal has been accretive to the share price potentially, but they are getting diluted. And I'm wondering if there's more nuance to that. Yeah. Yeah, more opportunity than ever to do more with less. Yes. But at the same time, more capital. More opportunity to do more with more.

3:08:06The opportunity is so large. There's a lot of reasons. If I could do more with less, imagine how much I can do with more. You can do with way more. I can do with way more. I think it's a matter of magnitude here and context. And you mentioned Zurb. So we have to kind of talk about Zurb. It's been super well covered. But that distortion is at a level. you know remember it was like a decacorn a day was being crowned there's three again trillion dollars of limited partner capital locked up in in zombie unicorns according to bill girley's estimate which i referenced in the in the in the piece and and other so do you think this time is do you think this time is different i think that time was different so the answer is no i'm not i'm counting on this time being a time that is like other waves the reason the distortion by the way, like we should talk about it for a second.

3:08:54So, and well, here's why I think this time won't be Zerp. How's that for nuanced, right? Yeah. It's the same people. Like the founders, if you look at the senior leadership at startups and companies, they were the ones who, you know, were at different levels through Zerp. They've been stuck under the stack. I'm not saying zero equity. And in fact, if you look at the last couple of, I don't know, maybe four quarters, there's probably been 20 mega seed rounds, the$350 million seed round or whatever, 20. There have been 2 ,500 seed deals done first half this year. And, you know, it's power loss. You're going to have lots of failures and stuff.

3:09:36But just when you look at ZERP on a magnitude basis, so much distortion happened. And I'm not saying there's not going to be those companies, to your point, that just keep raising and raising. But I think founders are going to be a lot smarter about post-money valuation because most of as you guys probably know that the 14 there's a there's a company that there's a company that i won't name that is a perfect example of this they've raised under a million dollars um so single yeah hundreds of thousands of dollars they're doing millions of dollars in revenue they have logos from every single top ai company and they're just growing like a wheat like it's just clearly they're onto something and the founder has no real interest in raising he could probably like he feels like he can take it as far as it can go just off of just raw customer demand you guys had weighed on i think last week right um the great example of a company that you know raised a little um but kept making the choice i think that term you guys talked about was super cool seed scaling i hadn't heard that but it's but it's what we're seeing So I guess, John, the answer is like, I'm not saying no venture capital.

3:10:49I'm just saying, you know, that would be bad. Yeah, and Zapier is funny because the category that they're in, which is like agentic workflows, is like they're, you know, dominating, you know, having been building this business for such a long time. And yet I can think of like 100 companies that have raised on the same kind of core idea of what they're doing. So that category is like turning into a crazy capital war. But hopefully Zapier is in a point right now, given that they've been at it for so long that they can just keep playing their own game. um yeah and and in in a world in which if it's true that on top of all this capex all these net new companies and behaviors are going to will be created there's i just think there's a lot of room we have one thing we've done uh as technologists all of us is we have always underestimated the potential and we've underestimated the tail like both the curve and the tail of everything it's web 2 is still booming along mobile is still booming along at massive numbers and so Look at Oracle's stock price.

3:12:00Oracle is still crushing. It's about to be the MAG-8. It is. Yeah. So I think there's a lot there. And then the last point on the comment is just that that has fueled Silicon Valley, right? It has fueled Silicon Valley for all sorts of different outcomes to sprinkle wealth or gains down throughout a company's stack. And then those, I mean, literally I said in the past, this happened thousands of times in my career where that engineer or, you know, VP or director then takes more risk. And that's what we need. And that has fueled the valley. And so my thinking is that it's that the ZERP distortion is what was different.

3:12:40But that Silicon Valley is, you know, it would never bet against the valley. It would never bet against the rate of destruction. When companies, you know, as an investor, when I was looking at trying to figure out the why now investing in 2021 and 2022 and in fintech, it was like, OK, Stripe exists, Plaid exists. You have these new kind of like infrastructure players that allow you, you know, there's better banking as a service platforms. but the why now was like it wasn't necessarily it didn't feel fully like a why now and then you'd end up paying 100 times revenue for basically a lending company that like yes they benefited from like you know plaid being you know like what it was at that time um in in terms of you know market penetration but uh it wasn't you know in the end a lot of those businesses didn't really they didn't end up really going anywhere.

3:13:37Whereas I think having a real why now today, you know, it's not founders very easily talk and investors will talk themselves into being like, okay, they'll talk themselves into feeling like there's a why now, even if they're just kind of fabricating it. Um, yeah. Yeah. I mean, the why now you've talked a lot about it in the enterprise, but the why now in the enterprise has caused, you know, a lot of new entrants to have great success against incumbents, right? That's super interesting. There are all sorts of new, again, this whole, like, if you were talking about enterprise software a few years ago, kind of pre-AI, you'd look for these like tiny little verticals where you could have an advantage.

3:14:17And now the whole playing field is open to startup founders and they're having incredible success either in, you know, but you've had a bunch of them on your show. And I think that's also really interesting, not without it. So it's coming from the customers, right? It's coming from the buyers of technology want this new thing. Incumbents have a hard time delivering that new thing. Not going to be smooth. Like, you know, I like how you're talking about where you're on the hype cycle. Like, it's going to be bumpy throughout the curve. But it's just a remarkable time in all of these markets. And I think that's spectacular.

3:14:55I mean, again, I think it's the chance of a lifetime for a builder to start something now with these dynamics. um yeah yeah i remember being i mean i graduated uh graduated uh college in 2018 and feeling like i admit you know missing mobile right like not being an adult like a massive tech trend like that felt you know i i read the tech crunch headlines for years of all those companies but not having been actually in the trenches feeling like uh praying for another They're praying for another bubble. Certainly got one with real potential that we're already seeing. Well, thank you so much for hopping on.

3:15:38Great having you on, John. Awesome to see you. Hey, guys, we invited you to our thing in San Francisco, the Connected Stack. We'd love to have you. Oh, fantastic. Huge enterprise AI thing. Can't wait. You can do the show from the floor, whatever. Amazing. A lot of founders, whatever. Thank you for having me. It's awesome. We really appreciate what you guys are doing. Come back on again soon. Yeah, we'll talk to you soon. We'll follow up about that. Have a good one. See you. Bye. Up next, we're going over to air.inc. Have you used this product before? I used this and was obsessed. It's like, I don't know.

3:16:10I'll let him describe it. Should we be using it? Let's bring him in. We absolutely should. And that's why I was so excited to talk to him because it was like, you can pitch us directly on the show. Yeah. Use this product. Sales call. Hopefully, we didn't keep waiting too long. How are you doing? What's happening? Sorry, we're running behind. Great to meet you, Shane. Nice to meet you guys. Thanks so much for having me. Yeah, thanks for hopping on. Can you just introduce yourself, the company, a little bit of the backstory quickly? Of course. It's great to meet you, Bill. Shane Hegday, my co-founder Tyler and I started a business called Air.

3:16:41It's an enterprise software company. We help creative teams manage all their media assets. So we help them store and organize all their content and then execute on the day-to-day workflows of making quality images and videos, putting them out in the world. Yeah. I was the anti slop company. Yeah. I mean, there is some, I feel like there's some crazy link between like your clients or your company, your, your customers and like the brand, like the, the culture of your company feels like particularly design forward. Like I'm looking at your, your landing page and it's incredible. I don't know like where this is talking the talk and they're walking the walk.

3:17:22Yeah, exactly. Like, were you guys designers beforehand? Like, did this, was this something that like came from a particular person inside the organization? Is it just like everyone in the company is so focused on design? I think, you know, look, if you're going to sell a product to creatives specifically, that's going to be your ICP. You really have to live and breathe the market. You have to put out great content on an ongoing basis to talk about the narrative of what you're doing. And you have to meet those expectations with how you deliver the product. The marketing site is just an extension of the products.

3:17:55I think in many ways, it's come from an obsession about who our customer is and how we meet them where they are with what they care about. Yeah. Talk about the marketing. I've seen a few of the stunts that you guys have done, the latest one with the Rizzler. When did you know you wanted to work with the Rizzler? When did you know that you wanted to be the first enterprise software company to probably partner with him. It's just a wild choice. Look, I think if you look at great generational enterprise software businesses, they all have a singular go-to-market motion that contributes to 50 % to 60 % of growth.

3:18:33And every enterprise software business chooses a different channel to really focus on depending on who their customer is, what they're good at, and where there's arbitrage in the market. For us, it's content marketing. And there's a nuance in how we approach content marketing that we call culture-led growth, which is all fancy words to ascribe the format of content marketing that we do. It's not HubSpot SEO or gong social all the time. For us, it's great seminal campaigns that we put out in the world that espouse the narrative of what we do, whether it's product marketing or just a viral campaign with a 14-year-old, it doesn't matter.

3:19:16You're pushing a story out to the market and getting a group of folks who care about that to resonate with it and begin a conversation with you. So that's how it took years to get here to a point where we knew working with the Rizzler or Kareem or Taylor Lorenz or any of the other influencers were through the right ones. But it's been a fantastic motion and wildly efficient for us. how much have you you know i appreciate uh i remember when air launched and i remember thinking uh you know i i worked on worked with a ton of different companies on you know marketing campaigns and stuff like that over the years so i understood the value prop even though i felt like it was almost a it was a contrarian move to launch like what original the original product like helped you just store assets and a lot of people i'm sure even vcs back then would have said But like people get Google Drive.

3:20:11They're getting Google Drive for free. It's going to be tough to compete. But clearly there was demand for this. Now, how are you guys thinking about, not to ask like a very VC coded question, but I'm genuinely interested. How are you guys thinking about leveraging generative AI if you house all the brand assets for a business and you can understand kind of like the aesthetics of a brand? it puts you in a good position to not just store assets, but help people generate new ideas. Just like automatically matching assets to tags and creating an ontology on top of the data. Totally. I think in this moment in time, there is a rush to value.

3:20:58Everybody, every enterprise out there is trying to immediately get to the thing that's going to compound their business on an accelerated basis. The last conversation you guys were in, I love that tail end of that conversation around there's never been a more open environment in the enterprise for new entrants like us to come in and rebuild the entire stack of how a company operates. But when you look at different areas of the enterprise, in order to scale, you have to have, or automate to your question around AI, you have to have a place to automate from. You know, said another way, slop in is slop out.

3:21:35And the richness of your solution is going to depend on the richness of the data that you that you build on top of. In every area of the enterprise, there has been a system of record that has structured and organized the data so that you can automate and centralize. This has been playing out for 25 years. It started with Salesforce building out what we now see as a CRM as a must-have inside of a business if it's trying to scale sales. Same thing with development cycles with GitHub or marketing work with HubSpot for multi-touch attribution. There's never been a system of record built for creative work, for images, videos, PDFs, visual forms of data.

3:22:15At the highest level, if you asked a CMO or a creative director, how are your assets performing? What's performing best? Where are you going to invest in next? That's like a six month job for an analyst. And at the lowest level, if you're trying to talk to a designer about what they do every day, they spend 75 % of their time collecting content, approving content, sharing content, and doing all of that all over again. And so our ambition at Aire is to build a system of record for creative work. It's one product. We're never going to build a second product at Aire. We're just going to go deeper and wider in what we do.

3:22:49And yes, you got to start with storage. That's the hard problem to start with. You have to sync and organize millions. Today, we're up to about 150 million assets that are being managed in our product. But the magic is on what you can do on top of that. You know, the workflows that you can automate, whether that's rights management or whether that's like generating variants of something that you could plug into different ad units. It shouldn't matter. It can all sit on top of the baseline architecture. You should create a workflow to help legacy brands not get canceled by Zoomers. So it's like it'll pop up an alert.

3:23:26Hey, Boomer, if you if you put this on social media, you're going to get canceled by the Zoomers. And I think that could that could save billions of dollars of lost market cap. I hope I hope that, you know, what it's funny, we had a hackathon that finished this morning. and one of the things that came out of it was a newsletter that goes out on an automated basis to admins inside of a workspace and because if you're thinking about our product about 15 percent of our customers have more users on air than they have full-time employees starts with your creative team expands to marketing sales product partnerships your agencies your influencers that you work with uh and then the other dynamic is that um you know about 11 percent of our customers spend more than more than 25 hours a week inside of our product.

3:24:21And so this newsletter aggregates what all everybody did and spits out a summary of that with all of the work to the admins in the workspace. And so visibility, I think, you know, to go to your point around boomers and zoomers and not getting canceled, visibility, I think, is really important. And our opportunity to do that in a system of record is no different than Salesforce providing a dashboard to your CRO to understand which reps are performing the best or where to lean in segment-wise or why win rates have improved. Yeah, totally. Amazing. Anything else? No, this was great. Come back on anytime.

3:25:01You're the only person in the world so far that has made just storage interesting so anyway uh thanks so much for hopping on have a little and yeah we're gonna we're gonna actually sign up for this because we were we were at a very we were very much yeah can we put you guys in the game here come on you guys are you guys are the sort of beacon yeah well we were we were iMessage scale where like our version of air right now is just the group chat yeah it's literally all iMessage it's a mess come on john can make the intro to soylent we're in the mix here you know put us in the game yeah let's do it thanks man great to meet you i'll talk to you later cheers um all right we're gonna cap this off yeah i just pulling up this post of what the garmin horse tracker actually looks like okay because yeah you want to end with the garmin horse track this is the most important story of the day and story of the day for sure garmin mid it's uh yeah i see it wraps around the horse's tail where how else do you think you were tracking the horse's health, Jordy?

3:26:01Garmin is now selling a wearable you put on your horse. It goes on the tail, obviously. No, no, no. It's further down in the stack. Further down. So that's what it looks like when it's not on the horse, but when you apply it to the horse while you're wearing your Garmin watch. So you can be riding your horse, check your horse's vitals from your Garmin watch. That's the future I want to live in. That's horsepower, baby. This is important. I mean, this is a trillion dollar company to me. They're sitting of this is look at this thing yeah look look at it on that horsetail tracker what is it actually tracking here midnight outdoor training sessions indoor training sessions recovery transport max activity heart rate it cat it calculates the heart rate how many strides you can view the data live and then sugar's got a bunch of strides that's hilarious um no this seems this seems amazing This is why we love technology.

3:26:55As much of a breakthrough as Waymo. You know, it's already. Really, arguably more important. Arguably more important. For some. Horses are self-driving. Thank you for tuning in today.

3:27:09Max Conrad from the Substack chat. We needed this time is different sound effect. I agree. Yes. This time is different. This time is different. Yeah, there must be some clip from like a movie where someone said that or something. Where does that this time is different actually come from? Maybe we can get Warren Buffett saying it or something. I'm sure he said it at one of his meetings or something. Yeah. Anyways, folks. Thank you for listening. Thanks for hanging with us today. We love you. We will see you tomorrow. Have a great day. Friday show. Mansion section. Oh, get ready. Cheers. Bye.