OpenAI Prepares ChatGPT for Ad Driven Era, The AI Paradigm Shift | Keith Rabois, Alfred Lin, Keith Sakata, M.D., Talia Goldberg, Dave Girouard, Kylan Gibbs, Sam Jones, Zach Pogrob

28:05And so before the router there was no way for a query to be distinguished and after the router the first low-value query, if you ask why is the sky blue, that can be routed to a GPT-5 mini model that can answer with zero tool calls and no reasoning. This likely means serving the user is approaching the cost of a search query. The monetizable query on the other hand has a fixed cost. It would show a page ranking websites with potential AI summary at the top. This is a fixed supply response to what could be a variably hard question. But now, ChatGPT free because of routing. There's some incredible open AI hater out there who's on the maxed out pro plan and just going into 03 Pro and saying, what is the capital of California?

28:52Give me a 60-page PDF with the answer. This is the hitting Grok4 heavy with just like answering one word, but think for 10 minutes. It's like just burning the GPUs. But yeah, I mean, the router will increasingly decide how monetizable is this query, and that's how much compute you get for it. And so GPT-5 can decide to allocate$50 to a query, create a plan, gather information about the DUI incident in this example, research local lawyers, consider who is likely to answer fastest, consider your budget, then contact multiple lawyers on your behalf. All of those are tool calls. All of that is expensive.

29:32It could even agentically reach out to lawyers on behalf of the free user, knowing that the conversion ratio of this query is even higher. This version of ChatGPT is highly helpful, aligns with the user's query, and is a valuable referral to the seller of goods and services. So there's a little bit of going into how does Google respond to this.

29:58So ChatGPT has partnered with a lot of different companies in finance. They've partnered with Stripe, Visa, and PayPal on the consumer side. They've partnered with Mattel, Booking.com, and Lowe's, Enterprise Software. They've - They have a partnership with Shopify as well? Yeah, that's on the consumer internet side. Snapchats, Shopify, Instacart, and Mercari. So if you are a Shopify merchant, you are probably happy to let people check out with your products directly in ChatGPT. You don't really care if they hit your website. It doesn't really matter as long as they're buying your product. Your margin's probably going to be the same.

30:32And so OpenAI is firmly knocking on the door of technology giants, Google and Meta and even Amazon. Previous scares about AI have been focused on search query volume not being replaced in the ad tech stack. ChatGPT can compete with dominant platforms for its place in the ecosystem. And to date, this push into purchasing is the most concrete example of OpenAI coming for advertising at large. If they were first to launch an aggressive agentic checkout solution before Meta or Google, this would be seen as huge competitive shots for both companies. A reminder that if we are talking about pure usage, only one company is growing users at a meaningful rate.

31:13It's OpenAI. And the visits year over year for OpenAI are up 135%. And there's this other crazy, crazy chart in here. That's the, of the top 10 websites, ChatGPT is number five. And it's, and every single property is over 15 years old. So Instagram is the next youngest like website in the top 10 websites. And it's 15 years old. Then you have Google at number one, 28 years old. YouTube at 21 years old. Facebook is 22 years old. Hearing that Instagram is 15 years old. Crazy. Makes you feel a little bit old. X.com, Twitter, originally 19 years old. Reddit is 20 years old. WhatsApp is 17 years old.

32:03Gang is 16 years old. Guys, warning, Twitter's going to be able to drink soon. Get ready. Get ready for that. Yeah, I mean, rebranding at age 17 is kind of on brand, you know? It was Twitter and then it had to... don't call me Twitter anymore dad I'm X I'm X just call me X call me right and so when companies turn 21 they should just like really even 21st birthday get a little wild for 24 hours and then lock in again yeah so let's go over to stratechery let's go over to Ben Thompson but first let me tell you about graphite dev code review for the age of AI graphite helps teams on github ship higher quality software faster and you can get started for free So paradigm shifts in the winner's curse.

32:48This was posted Wednesday, August 6th on Stratechery by Ben Thompson. Ben says, it's fun and often accurate to think of tech companies in pairs. Apple and Microsoft defined the PC market. Microsoft and Intel won it. Google and Meta dominate digital advertising. Apple and Google won mobile. That, however, is not the defining pair of the smartphone era, which ran from the introduction of the iPhone in 2007 to the launch of ChatGPT in 2022. rather the two most important companies of the last two decades of tech were apple and amazon specifically aws the apple part is easy the iphone market created the smartphone paradigm from its user interface to its distribution channel and was richly rewarded with a bit under half of the unit market share and a bit under all of the total profits isn't that a great line it's such a good line but it's true a bit under google did well to control the rest in terms of Android operating system and profit from it all thanks to Google search, but it was search that remained their North Star.

33:43The company's primary error in that era was the few years they let the tail Android wave the dog Google. That's a typo. It should be wag the dog. Or maybe he's making a wave joke because Google had a product named wave, but usually the phrase is you let the tail wag the dog. The dog should be in charge of the tail. And the golden retriever metaphor. It wasn't just wagging it was waving yes uh the aws part is maybe less obvious but no less critical and the timing is notable amazon created aws in 2006 just 10 months before the iphone unveiling and the paradigm they created was equally critical timing to the smartphone era yep i explained the link in 2020 is the end of the beginning where he says this last point gets it why cloud and mobile which are often thought of as two distinct paradigm shifts are very much connected the cloud meant applications and data could be accessed from anywhere.

34:35Mobile made the I.O. layer available everywhere. The combination of the two make computing continuous. Instead of deliberate. Before, you had to sit down at a computer linked to an on-premise server, and you could only use technology in one place at a time. And now you can be always on tapping into the cloud wherever you are let's hear it for the cloud and mobile fantastic um and so aws was not the only remember those days as a kid summer i had my email i'd sit down i'd send some emails yeah as a as a as a as a teenager and then i'd walk away from my computer i'd go out into the world yeah unconnected you used to have to go and turn on the xbox to play call of duty now you can play on your phone and you can even stream it.

35:24There's a ton of stuff. It's changed everything. AWS was not the only public cloud provider, of course. Azure and GCP were both launched in 2008, but by virtue of being first, they both... AWS defined the paradigm. And also were the first choice of the universe of applications that ran on smartphones and more accurately ran everywhere. So if Apple and AWS were the definers and thus winners of the smartphone era, then it was Microsoft and Nokia that were the losers. The reasons for their failure were myriad, but there was one common thread. Neither could shake off the overhang of having won their previous paradigm.

35:58Indeed, both failed in part because they diluted themselves into thinking that their previous domination was an advantage. For Microsoft, that previous paradigm was the PC and the Windows platform, which they thought they could just port to mobile. And so all of their mobile efforts were basically just like Windows running on a phone, kind of dumbed down, didn't really work very well. It took Microsoft years and new CEO to realize that their mistake. So we will come back to this and debate Google more on this show. But we have Keith Raboy joining the stream. Welcome to the show, Keith. Good to hear from you.

36:33How are you doing? Great. Pleasure to be back with you. Fantastic. Before we go into all the news that's shaking up the timeline, do you have a take on Google? Right now, we were diving into the fact that semi-analysis seems quite bearish on Google. and is saying that OpenAI will basically steamroll them once they get into agentic commerce and checking people out. And just properly monetizing the user base and all the economic activity that they're already driving. Yeah, and then Ben Thompson's kind of saying like, hey, it's this college campus. They have a bunch of great AI researchers. Something will come out of this.

37:09And it's just a Lindy company. It's been around for a long time. It's not going anywhere. Well, I think ChatGPT is the fastest growing consumer app of all time. And as long as that continues, Google's significantly threatened. I think normal people are substituting what used to be searches and queries into prompts. And that really does threaten Google, even if they have top tier AI talent, they've yet to productize it in a way that undermines the trend towards JTBT. If Google were to fuse together all the information they have about you, your Gmail, your YouTube, et cetera, and make everything personalized out of the box, that'd be interesting.

37:47We'll see if they can ship that product internally, substantively, and whether it resonates with users. But they're losing the AI battle to open AI, period. It also threatens the revenue. I don't think that performance-based advertising, which is the mainstream driver of Google's success, will be the way that consumers expect to be monetized in the future. I think all the AI applications are showing that consumers are willing to pay for value. And so I think direct value, direct capture from consumers, subscriptions, et cetera, might be better. And that would undermine the entire advertising business model that really has propelled Google into the stratosphere, which there's product innovation initially, engineering innovation, data innovation, but ultimately there's advertising innovation.

38:38And they had a more efficient advertising platform. And that may not be the future of the next 20 years. Yeah. Yeah. In some ways, Google's Google's margin and how much revenue they generate for me as somebody who throughout the year is going to make a lot of searches that that result in a lot of purchase activity. and if I can substitute that by just paying 200 bucks a month and eliminating a lot of that, you know, ChatGPT can become a, probably a trillion dollar company by just eating into that and being willing to give up that incremental revenue that they might get from advertising. I just had this experience.

39:15I bought a Nintendo Switch 2. I went to ChatGPT. I fired off agent mode. I had it go around, check every website for what's in stock. It decided that Target was in stock. I clicked on that, had to go into the Target app and set up an account. And it was like a huge hassle. Could have just done it for me and taken a cut. But Google wasn't involved. So it's kind of a crazy time. Yeah, I mean, they can also do some rough math. You can calculate Google's revenue per user per month or per year. And then what consumers are willing to pay through ChatGPT and similar products, I think exceeds that. Yep.

39:50No, it makes sense. Anyway, enough on Google. Give us the high level on what's going on with Open Door. Well, I'm very excited. A bunch of retail investors led by Eric Jackson have really taken a spotlight and focused it on the potential of the company. I think for a lot of reasons, the company for the last three years has not really capitalized on its disruptive elements, its innovation, and people have sort of forgotten about it. In the public markets, attention is really important. And now there's a very strong shining spotlight on the potential of the company, which I think should be like Carvana.

40:27Carvana is a$40 billion company with, in fact, more competition than Opendoor has. But Opendoor has not been able to frame the narrative about the innovation as well as Carvana. And I think that's going to have to change. I think substantively the company needs better leadership, both on a story selling tide and on the innovation side. I tweeted out, really with about 10 minutes of thought, ways to fix Open Door this morning. And there's this specific specificity behind every one of those elements that I could dive in deeply. But the company's not executed on any of those things. If anything, it's taking a step backwards and partnering with these legacy real estate brokers, which makes no sense whatsoever.

41:11How much of the like sell off in the stock or just kind of like, you know, the like getting into the doldrums is and the trouble that open doors run into has been just the interest rate dynamic in the post 2022, 2023 era where we've been in this high high interest rate environment that that abstractly has a big impact on home buying. But how direct is that on the open door story? It's moderately direct. So in a hot market, maybe five to six million homes transact a year and Opendoor gets paid every time it transacts. So in a very high interest rate environment, that number went down to four million.

41:52So four million versus six. Like that's right. It's not like people stop buying and selling. It doesn't go to zero and it doesn't go to infinity. So four to six million. The problem for Opendoor financially is the cost structure of the company at a G &A level, not a marginal level. G &A level is just way too expensive to make profits at$4 million. And this was a known problem. The Node Postle, who I work with, warned the current management team, myself included, in 2015 that this was going to happen. Real estate has rollercoaster rides to it. And you need your fixed cost base to be low enough that you don't have to transact to offset your fixed cost or burn.

42:32Unfortunately, the base was too high. and when the Fed raised interest rates like five times sequentially really fast, in kind of an unprecedented way, very few people was transacted, so there wasn't enough profits to offset the fixed cost of running the business. It was a mistake. It really did cause significant strain. Arguably, the entire management team made that mistake, didn't listen to the node, whatever. That's three years ago. The company has made no progress on cutting the G &A cost over the last three years. The good news is it's actually really easy to cut the G &A cost these days.

43:07AI allows you to substitute for most of what the people that work at Open Door do. So you should be able to bring the fixed cost of running the business down to here and then just decide on every home purchase, are we going to make money or lose money? And just purchase homes in any interesting environment where you will make money. What are the key activities within the business that you think are most ripe for replacing with agentic workflows? is honestly i think real world stuff like there are companies that are actually doing inspections with ai the idea that you need this like we have labor you know inspect you know repairs etc etc that that stuff can be done videos in ai much better than uh traditional people and there's companies that are specializing this so i i just think that you don't need all these people and And it's going to continue.

43:57The acceleration in AI is more and more obvious and more and more stark every day. So can you cut it to 100 people? Probably yes, actually, maybe less. And then you all have variable costs. And the only thing you need to do is model the value of a home correctly, which is complicated. But Open Door has been excellent at it. One thing that people miss is with the exception of one quarter in the history of the company, the company has priced homes correctly and purchased successfully and profitably. But the marginal cost, the fixed cost, sorry, has not been able to be offset when no one's transacting.

44:33The company has significant market share in many markets. So the company will just mint money as long as it gets its costs under control. Now, it needs to be a massive company, which is the potential. Like if you think about it, let's take a top-down perspective. Yuri Milner actually made this point to me seven years ago. the largest real estate platform in the West is worth about$18 billion. That's insane. This is the largest asset class, period. The idea that the most innovative company in the entire Western universe would be worth$18 billion in residential real estate makes no sense whatsoever.

45:09So somebody is going to build a$50,$100,$150 billion market cap company, and this management team doesn't think that way. They think about moving one basis point here and one basis point there versus innovating to build a$100 billion company. There is no reason this shouldn't be a$50 to$100 billion company. You just need the right leadership, and we're going to fix that. We have a couple of questions from the chat. Are you interested in going back on the board of Open? Are you interested in stepping in the CEO seat, getting a new role? What do you see your involvement going forward? How do you think about that?

45:42The company needs a new CEO. if I can be involved in identifying, assessing, and or closing the proper candidate, I'd be happy to be involved. I do not plan to be an executive. I have a very busy full-time job. And this company needs a full-time, dedicated CEO who's intense, who's creative, who's innovative. So if I can help that person, if I can encourage that person, that'd be wonderful, regardless of the structure. Maybe they're listening right now. DM Keith, if you're the one for the job. If you're anything like Will Daybrook at Stripe or Greg Brockman at OKAI, please call me right away. I want to talk about transformation and actually implementing agentic workflows, implementing AI and then cutting costs.

46:29Is there a sort of like CapEx type cost? I mean, I imagine that there's some folks on the private equity side that are buying up small businesses and then hope to use AI to cut costs, improve margins. and maybe they're doing that internally and defraying those costs of knowing which tools to pick internally across a portfolio. Then there's McKinsey and the big consulting firms that are going to Fortune 500s and saying, you're going to pay us a ton for a slide deck, but in theory, we're going to get you set up with something that will save you money. But for a company like Open Door, what does it look like?

47:05Because it feels like it's probably too complex to just say, okay, yeah, we're going to sign up for ChatGPT and that solves our problem. There's probably going to be some implementation of these AI tools, and that might have cost in the short term, even if it drives longer term, better earnings outlook. How do you think about that? Well, I think that's why we need a CEO who's AI native, AI insightful. I think that business transformation requires real skill. I think you are right, though, that the hottest area of venture capital is venture capital is chasing after old school businesses and trying to turbocharge businesses with AI, whether they're turbocharging on the top line, which to me is more interesting, or improving EBITDA with AI substitution of cost.

47:50That's pretty cool. But we funded a few companies. There's at least two VC competitors of ours that I know of that have dedicated funds that do nothing else except roll up traditional businesses and try to turbocharge them with AI. So I think this is very common. At the large company level, it is happening. Actually, apparently Amazon has had a lot of success with this. They don't talk about it and speak about it, but apparently it's true. And then I think you're going to see more private equity firms insist upon their portfolio, whether they're large market cap portfolio companies or small, apply AI in a thoughtful, creative way.

48:31Do you think, I mean, it feels like private companies have like an extreme structural advantage in terms of doing like true AI driven transformation because OpenAI, sorry, not OpenAI, OpenDoor, you know, every over the last week, every 10 posts on X has been some, you know, different retail investor having strong opinions about who the management should be and what the board is doing and all this stuff. Do you think that if the right person were to come to the table that Opendoor would do better if it was a private company for the next few years? I don't think so. I think you can transform yourself in the public domain as well.

49:13I think you can take advantage of those suggestions. First of all, let's just take a step back. I think retail investors having a point of view and being excited about an opportunity is a great thing. I think the whole point of markets is to allocate capital. That's why we have markets, right? That's why we have public markets. It's an allocation function. And consumers voting with their feet, especially for consumer brands saying, I want more of this. I want less of that, is actually a proper capital allocation. Like if the company did this, I would spend more money with them. That should encourage capital allocation.

49:45This is not – some people have like this negative perception of retail investors. I think it's actually better when retail investors say, I'm going to vote with my feet. I'm going to vote with my dollars. If product X or Y or brand does X, Y, or Z, or brand represents Z, I'm going to spend money with them. That is a reason to allocate more capital to that company. It's fundamentally sound. How do you think about the storytelling around AI as a silver bullet versus a core competency that will be a compounding advantage? I'm thinking of the Amazon example you gave. I completely agree that Amazon's been a beneficiary of AI all over the place, but I don't think it's happened in a single quarter.

50:25I think they ramped to a million robots across all of their different facilities. They bought Kiva a decade ago. They were using AI recommendation systems to tell you, hey, you're buying a computer. Do you want to monitor? That's AI, but just a couple decades ago. And so it feels like the right person for the job, they might be able to come in, rip off a band-aid, get things right-sized, do the hard work. But then it's really like you can't take your foot off the gas. I think you need to do both. I think there's bottom-up transformation, which is blocking and tackling, persistency, consistency.

51:00It's like going to barriers. You have to go every day, like every day for like a decade. And you get the results. Sometimes, yeah. Sometimes three, four, five times a day. Yeah, every day. And then I think there's top-down. I think leadership involves sometimes just putting a stake in the ground and saying, thou shall not. Like, we are just not going to do this anymore. We are absolutely out of that business. And that's why you need a founder-driven CEO, truthfully. Transformations with emerging technology require the moral authority of a founder just saying, absolutely no. I know this has worked in the past.

51:30I know this has worked in other companies. But we're just not doing that anymore because the world's going this way and we want to be ahead of the world. How do you think Opendoor's relationship with traditional real estate agents should evolve? Well, I think we should be innovating so that there's no comparison. The value proposition Opendoor provides a consumer, whether a buyer or a seller, should just be so much better that no one wants a real estate agent. It's not a bad thing. Real estate agents used to do X or Y, and there's a bundle of services they provide. But when Opendoor provides this, it's just like a no-brainer.

52:06And if it's not a no-brainer, the company is not innovating and is not creating enough value, period. How do you think about other levers like zooming out to the macro that could just increase the velocity of real estate transactions or just make homes more affordable in America? I don't know how high this is on the current administration's agenda, but it feels like something that people have been clamoring for for years on both sides. Are there obvious wins that you're optimistic about in the next couple of years to just improve the quality of housing in America broadly? Well, affordability is a top tier issue, certainly for my conservative friends.

52:49We need to make housing more affordable for more people as fast as possible. There are some things that have short timelines and some things that take longer. So building is great. We need more. We need more supply. Supply works. Supply has worked in local environments. you can prove it in city X and city Y. The cost will come down if you build. But you can't build a house, at least right now, without more robots, more automation. You can't build one overnight. So supply does take time, but we need to start working on supply and getting rid of all the blockers and excuses for lack of supply, particularly in California.

53:22Secondly, we do need interest rates to come down. We do need a new chairman of the Federal Reserve. The best thing ever for Open Door would be replacing Kerry as CEO and replacing jordan powell as federal reserve chair fortunately i think both are going to happen i hope both happen in september maybe before okay can interest rates ever be too low probably i you know like interest rates it's basically related to a high value of money and so if interest rates are too low people's willingness to part with money to get paid back in the future gets reduced and then that is investment that's that's really what the definition of investment.

54:01So they could be too low, but they're definitely too high right now. I guess I've just been thinking like there are a lot of green lights, green flags in the market. New companies are going out. The stock market's at all time highs. Everything feels really strong in the economy. Even the CPI is coming back flat and GDP is printing. Everything seems pretty good. And it feels like - Except the fast casual restaurant. Yeah, yeah, yeah. They're having trouble. Except the slot market is in decline. But in general, things seem to be going very well in the American economy. And when there's a risk of, okay, we could be overheating, I feel very reassured by having let's lower interest rates as an ace up our sleeve in case we get over our skis and there is a market correction.

54:45The Fed does have some tools in the chest. Our friend Joe's point is like, in his view, the argument to lower rates is like the data that's coming out of the labor markets. But again, that's also being debated and rehashed. And I don't think anyone really feels that much. Let me take a step back, though. Please. I think the foundation that growth equals inflation is just wrong. So from 1950 to 2010, each decade we averaged 3.6 years with over 4 % growth without inflation. It's only the modern world post-2010 with qualitative easing that people equate growth with inflation. The good news about AI productivity gains is it's very easy to see how you can grow fast, about 3%, 4%, 5 % consistently without sparking inflation because all of the growth is not propelled by labor cost increases, which is what causes inflation.

55:46So I think the modern world over the next 30 years, if it's managed correctly, if the leadership in the political sphere is dialed in, should allow consistent growth, which will eliminate the debt and make a non-serious problem like 3%, 3%, 3 % plus without inflation. And we need to get people who are sort of educated a century ago. out of this mindset that every time you see growth, you need to put on the brakes. That's just not that. And that's why the Federal Reserve keeps making that mistake. And so we've got to fix that. But part of it is AI driven and technology driven innovation will allow for great growth, consistent growth without inflation.

56:32Is that your current outlook? Not necessarily a fast takeoff and we're growing at 10 % GDP a year. Satya Nadella says, call me when we're growing at 10 % a year. But a materially improved economic condition for the United States on a long-term basis? Yeah. Scott Bessler likes to talk about 3-3-3. And you want the 3 % consistently. You could beat three. And I think we will beat three. And I think he wants to beat three in the next couple of years. So I subscribe to his perspective on the world. I think he's right. But it's technology that's the magic wand that allows consistent growth without actual inflation.

57:12And that's what we need. That is how raising taxes is a disastrous policy. It's not going to fix any problems. Consistent growth without inflation will. And we need a Federal Reserve chair who understands that. We have a Treasury secretary, fortunately, who really does understand this. Yeah. And we've seen that with those charts of the various goods and services inflation over the past decade. Education and health care goes through the roof where everything that's on the technology adoption curve, like TVs and dishwashers, that all has gone down in price. And so the more goods and services that you can put on the deflationary curve, the more growth you get and the better health of the American consumer.

57:50Good stuff. Jordy, anything else? I think that's it. Thank you for jumping on on short notice. Thanks for taking the time, Keith. This is always great. Come back on whenever you have more thoughts on if you can think for 10 minutes and get it post up, you can jump on the show. Please. We'd love to have you. Great. Pleasure to be with you. I'll be back. Cheers. We'll talk to you soon. Bye. Take care. See ya. Let's go to the Metis list. We updated the Metis list, our ranking of the top 128 now, AI researchers. It's burning up the timeline, extremely controversial. Fortunately, we have Tyler Cosgrove to blame for that.

58:24We had no involvement whatsoever. We will be disavowing the Metis list if it comes back to bite us. But Tyler, why don't you give us an overview of what changed, who's on top, and what's going on with the Metis list today? Yeah. Today. Okay. So we're good in the mic, right? Yeah, we're good. Okay. So, okay. Before we start, just want to give, you know, this is not done yet. Okay. The list can change. Okay. So we got some haters in the comments again. This is final. Dion Tyler, if you have a problem. Oh, this person, like, oh, he's so low. Okay. We can fix it. All right. It's not done. Okay. All right.

58:56But yeah. Okay. Let's start with the top five here, right? Okay. So I think a big change we'll see is that we saw Noam, Shazir, and Ilya switch. Wow. That's pretty big. That's a huge move. Okay. What drove that? Sorry? What drove that? Is that just because Ilya has been quiet at SSI? Hasn't published anything in the last year? I think that's a good part of it. And Gnome's been on a tear? Yeah. So I know. So I mean, I think Gnome Shazir is broadly almost like you can't say he slept on. He's number one. Yeah. But he is, I think, you know, punching above his weight a little bit. I think Doug from Semi Analysis came on and said that the reason that Gemini is so good is because Gnome's back.

59:33Yeah. Yeah, you can basically track like Gemini was okay, it was fine, he comes back from character, they're goaded again. Okay. Okay, so let's go down to number three. Soundboard, Geordi, for Noam. Shazir. Soundboard is down. Soundboard's down. Okay, Demis. Yeah, Demis. He was missing from the first list. Yep. That was maybe a conscious decision. It might not have been. He was missing entirely. He was missing. Why? He wasn't on the list at all. He's one of the greatest members. Well, you know, the thought was like, you know, he's not as much of a researcher now. He's more a leader. He's more of a CEO almost.

1:00:01Exactly. But, you know, if you trace it back, he's obviously still making some research decisions. Okay, yeah, yeah, yeah. So I think it's fine to put him back on. Okay, so he's number three. Next up, he's number three, Dario. Dario Amadei. Dario Amadei moves up, Anthropic. Over at Anthropic. Summer thing, another lab leader. Got it. Makes sense. And then last up, we have John Schulman. And Dario, has he been on the Dorkesh podcast? He has. Okay. I think actually all five. All five. Dorkesh has hit all five. He's hit seven of the top ten as well. Seven of the top ten. So I mean, we didn't just listen to Dwarakash.

1:00:33We studied. We sat down and listened. We didn't just hear Dwarakash. We sat down and listened. Yeah. Okay. Who's last? John Chulwin, Thinking Machines. Yeah. So another big player. I believe everyone except Demis has at one point worked at OpenAI. Wow. Actually, wait, I don't know if that's true. Maybe. I don't think Noam did, but still. What a run for OpenAI. That's the new top five. I think let's move over to big moves. Big moves. Who we got? From two weeks ago. So the first one we can look at, number 13, Noam Brown. Noam Brown. So he did really well. Up 36 spots. Up 36 spots. Now he was in the IMO gold medal team at OpenAI that cracked that code.

1:01:16Yeah, he's big on the kind of RL team. I don't know. They probably have multiple RL teams post-training. But yeah, he's doing a lot of good work there. There's someone else at OpenAI who's famous for holding RL all together. They made the list as well. Is that correct? Are you familiar with that? Yeah, there's a bunch of post-training RL people that are new on the list now. That'll be important going forward. Yeah, I don't know if we mentioned, but the list is longer now, right? There's now 128. We're at 100. Now we're at 128. A nice base two number. Some big additions too. Will Brown cracked the list.

1:01:46Will Brown. Unsurprising to anybody with a brain. Multi-time TBPN appearance, so it makes a lot of sense. Yep, yep. chat um okay we can go next one paul cristiano yeah break him down he's kind of an og okay he um i don't know if he's the godfather of rlhf but he would use a big name on that paper um now he's mostly into safety stuff now but he's definitely kind of a thought leader in the space right we got regal in the chat saying tyler is trying to atone for mogging anthropic in sonnet 4 yesterday is that true are you doing the allegations number four i think i think you've toned. Good job. I think Sholto actually moved down.

1:02:26Anthropoc is still, you know, they have a lot of people on the list. Okay. Let's go to Peter Abiel, up 66. What is he known for? I've heard his name before. I mean, so he's just an academic. He's at Berkeley. Okay. Oh, he's not in the lab. He's not in the lab right now. Not yet. He's leaving billions on the table. I think literally, yes. He's been on a ton of papers. He's like also advised a ton of of the top researchers. Sure. So I think he's kind of influential in that way. Let's go down to Jan LeCun is actually missing from the list now. Missing? So he was at Shots Fired. I think he was top 10.

1:03:02OK, he was top 10. And he's now not even on the list. He's not on the list. So I don't make the list. I just give the voting out, and then people make the decision. It's not me, OK? So let us know in the chat, should we shoot the messenger, or should we not shoot the messenger here? Do we have a toy bone arrow I can shoot the messenger here? Yeah, so Jan LeCun, big meta AI researcher, Rand Fair, was not directly on the LLAMA project, but was one of their key researchers. Is that right? And then kind of LLAMA spun out of Fair, their AI research lab. And then, yeah, and sort of like a thought leader in many ways, steward of the strategy.

1:03:43Also, sort of a hater on deep learning for a while. Sort of a hater on LLMs. I don't know about deep learning specifically. He did CNN, so that was his big thing. So he's been kind of maybe right. It's kind of too soon to call it on him, but he's certainly lost a lot of power within that organization as Mark Zuckerberg has built out the Meta Super Intelligence Lab, MSL. I think his title is still Chief AI Scientist, but maybe it might be co-led now. And then, of course, you have Nat Friedman, Daniel Gross, Alex Wang. But he's not considered to be on MSL. No. Yes. No. You mean no as in yes? He is not considered.

1:04:20He's not in MSL. He's in a separate org. He's in a separate org right now. Okay, then break down Juergen Schmidhuber. What's up with him? Yeah, down 53 spots. 53 spots? He's also somewhat controversial during the Nobel Prize. You know, he was saying, oh, it should have been me instead. He's a real OG in this space in deep learning. He's trying to aura farm the Nobel Prize? Yeah. So it didn't really work. But he was unsuccessful. Yeah. It was a failed aura farm. So maybe that's the reason why I do remember when when Chachi PD first launched there was someone in the comments Dystopia breaker was saying all this stuff Schmidt Huber did all this years ago.

1:05:01There's nothing new here Of course, I think that under under represents the importance of actually Productizing these technologies and these research efforts, but still interesting to see that he fell so far Let's get into the overall stats. Yeah, so this is actually pretty interesting. So we can look at the number of researchers per lab. So we basically see the top three are all neck and neck, right? Opening AS at 24, DeepMind at 23, Anthropic at 22. This is different from the previous list. Anthropic was, I think, leading by maybe four researchers. But now it's really neck and neck here. And then you see Thing Machines at 12.

1:05:39Some surprising they're really I mean they have a lot of goats on their team and then meta down at eight Interesting that meta doesn't have more on the list given what a spree they've been on Yeah, but they're probably still just in the early days of actually building out that squad Yeah I mean if you consider they started MSL you're like what a few months ago Yeah, it takes time to even even when you have the money it takes time to actually convince I think if we would have made that list back then they would have had basically zero right They would have had you on the koon. Yep. Yeah, he's not even on the list anymore Yeah, they didn't have that many.

1:06:08Sure. And then we can also break it down by country. I mean, I remember those viral posts about people saying like, oh yeah, I worked on Lama 3, not Lama 4, and now I'm at another lab. Like that was something somebody posted on their LinkedIn. Viral LinkedIn screenshots. And so there was a little bit of an exodus, and now Zuck's rebuilding the team going into season 2026. Exactly, yeah. And then finally, we can break it down by country. We see USA, of course. America. 51. USA. Way above everyone else. China at 14. USA. You love to see it. UK at 13. Canada at 12. China would be putting that in the true zone.

1:06:39On a weighted basis, though, population-weighted, Canada is doing fantastically. They have one-tenth the population of America, I believe, and one-fifth as many AI researchers on the medicine. So congrats to the Canucks up north. It's always hard, especially with China, because a lot of their labs are very secretive, right? So did anyone from High Flyer, Deep Seek, or Alibaba? We have two Deep Seek researchers. Okay. One is from Kimi. Okay. Or like Moonshot. Yep, Moonshot is big now. And then... I don't know if we have anyone specifically from Alibaba. From ByteDance? The guy who created... The gal who created the TikTok algorithm?

1:07:19You got to put them on there. That thing is wild. Yeah, it's always just hard because, you know... Brain rot. You want to build the brain rot machine. I think especially with the first version. We should actually build the brain rot list. The brain rot list. The researchers who have created the most sticky, you know, user-generated content algorithm. The most user hours. The most user hour maxers. Anyway, what else you got for me? So I think one of the big improvements of this list versus of two weeks ago was that I think originally we kind of optimized a little bit too much for Twitter Cloud or Google Scholar citations.

1:07:53Us? Twitter Cloud? It's hard. I mean, the labs are so secretive now. Totally. They don't really put out papers. Of course. And if you have someone incredible, you have a huge incentive to not let them do press. Yeah, exactly. Hey, no, actually, you can't go on Dorkash Patel. We definitely got messages from people that were saying, can you take my team off the list? Can you take my team off the list? Like, stop talking about us. We'd prefer if these people didn't get poached. But that's the name of the game. I'm seeing in the comments. Yep. Yeah, Sutton. I mean, there's a bunch of people that probably should be on the list.

1:08:24Rich Sutton, John Carmack, yeah, both of them at Keen. We haven't seen a lot from Keen, but would be very, very interesting. Yeah. But yeah, we're gonna big shout out to mark Chen broke the top 10 well-deserved up 19 spots sitting at number six Just under John Shulman The chat I have I have unplugged and plugged back in my Microphone hopefully it sounds better if not I can switch to the other microphone But let me know how it sounds and we will stop cutting off Tyler Cosgrove our intern because the chat is telling us to stop cutting him off so Tyler who else? fell off the list? How is my boy George Bull doing?

1:09:04Yeah, George Bull, Alan Turing. Wait, both of them got cut? They're on the list. Leibniz is on the list now. Okay, that's good. But what happened to George Bull? Where is he? People were really hitting on him. He's off the list entirely? Yeah, off the list entirely. I don't know what his actual rank is. Obviously, I have the internal one. I think the ghost of Alan Turing is going to haunt you, Tyler. So Alan Turing is not on the list. He fell off. He's off the list. I mean, I guess that's kind of fair. His test didn't really hold up too much. He got, he got mogged by JGPD. But the test. Tyler Cowen's still defending Allen.

1:09:39Okay. Yeah. The Turing test is Lindy. Any other moves? Did we get any other Easter eggs on this version? Or are we Easter egg free now? I think, I mean, Leibniz, you could maybe say is an Easter egg. Yeah. I think that's. We didn't want to go full meme core. That's the main one. Yeah. But we'll see. Oh, well, well, thank you for all the hard work on the Metis list. You can check it out at MetisList.com. Fantastic work, Tyler. We will continue to update it. So if you're angry, if you're happy, shoot Tyler a message. Yep. Tyler also produced and edited a wonderful vibe video. He did. A launch video for this, which we're very excited to see him dip his toes in the water of video editing.

1:10:23He can do it all. A run for their money. Anyway, let's run through some posts. We have 20 minutes until Alfred Lin from Sequoia Capital joins us. Let's see what else is going on. I did want to cover the NVIDIA H20 news. Do you want to know about that? Chinese authorities have urged local companies to avoid using NVIDIA's H20 artificial intelligence chips, particularly for government-related purposes, a media report said. So they're worried about back doors and they're probably worried about generating revenue for Uncle Sam, their sworn enemy. Yeah. So there's an interesting dynamic here because the Chinese economy is not monolithic.

1:11:07It is like state directed capitalism. It's a mixture. It's with Chinese characteristics, of course. So the news is that Donald Trump approved NVIDIA's request and AMD's bucket in here as well, but lower in importance. to export H20 GPUs to China. These are the nerfed AI chips, and they're critical for training large language models, and of course DeepSeq famously optimized their training regimen and algorithms so that they could run on H20s. And so they have figured out a way to train large language models on H20s, despite H20s kind of being designed to not let you train or inference large language models as efficiently, but they're still getting it to work, and they want them.

1:11:51So first off, oddly, the news is that NVIDIA will pay a 15 % export tax, roughly. It's not technically a tax. Just a rev share. A rev share to the federal government, not to Donald Trump personally, but to the federal government for the age 20s that they sell. Now, it is unconstitutional to levy an export tax on American-made goods. This came from the southern states, I think post-Civil War, where the southern states were exporting lots of cotton goods and they were worried that the northern states were going to try and raise federal revenues through export taxes that would disproportionately hit the south.

1:12:33But there's another odd wrinkle where the H20 isn't technically made in America. The chip is made in Taiwan with equipment from the Netherlands, the memory is from South Korea. I think Singapore might be involved at some point. It never actually hits American shores. All the packaging happens overseas, and then it's shipped to China. But NVIDIA is, of course, an American company. An American company. Exactly. So Trump still has leverage, and he was able to block exports of H20s back in April, which we covered on the show. And now Trump argues that this chip is not a threat. There's this incredible quote where Donald Trump says, they're not getting Blackwell.

1:13:08Blackwell's the best chip ever. Maybe they could, but they'd have to pay more. He's sort of all over the place, but he's having fun. So the H20, at this point, I think most people, the consensus is that it is an older chip, it's nerfed, and it won't lead to nuclear weapon-level AI technology. Maybe that's the next chip, but certainly we're sort of in the implementation plateau era of decent value coming from these AI systems, but certainly not anything super intelligence coming out of a rack of H20s. just yet. So Beijing is demanding that tech companies, including Alibaba and ByteDance, justify their orders.

1:13:50Nvidia's H20 artificial intelligence chips, which just further complicates things for Jensen. He's, you know, the meme of him smoking a heater. Is that a meme? No, it's who's the actor? Matt McConaughey? No, no, no. There's one of him like taking a drag off a cigarette when he's like engaged in some conspiracy or like unveiling a conspiracy. Ben Affleck. Oh, Ben Affleck. Yeah, yeah, yeah, totally. You can see somebody chat GPT Jensen, you know, sitting outside his office. Yeah. Heater. The tech companies have asked by regulators such as the Ministry of Industry and Information Technology. Let's give it up for that name.

1:14:29Yep. We love industry and information technology. Sounds a little ominous. Anytime you've got a ministry, it sounds a little ominous, but they're making people explain why they need to order. Explain. Why not use a domestic alternative? And so the dynamic here is pretty clear. Beijing wants China to continue broadly. Like the government wants China to continue to move down the learning curve for advanced semiconductors. They want SMIC, SME, Huawei to develop the indigenous supply chain for semiconductors and do all the hard work. and the only way to actually get the yields up and really get to the frontier is volume.

1:15:09It's a volume. So a Chinese data center operator went on record to say it's not banned but has kind of become a politically incorrect thing to do when asked about buying H20s. One issue with doing politically incorrect things in China is you can often be disappeared. Potentially. And have your wealth taken from you. I think they got to push back. I think they got to push back. So the dynamic is, you know, China wants to continue developing supply chain, semiconductors, their semiconductor supply chain. And then on the flip side, Chinese companies just want to develop, you know, the best possible AI models that they can.

1:15:48And so they don't want to be GPU poor. And so there's going to be a little bit of a dance there. And some of these will be justified. There still might be some diversion that happens just for political reasons. It's all very complicated, but it will be interesting to see how many of those H20 GPUs that have been kind of mothballed can NVIDIA actually sell. And we'll see that in their next earnings report, most likely. And the irony here, everyone, you know, people like the ultra China hawks, the, you know, AI war group saying that, you know, criticizing the original, you know, H20 deal, be saying that it would help the Chinese military and just broadly undermine US strength and artificial intelligence.

1:16:34And now you have the Chinese government just saying, actually, we don't even want it. We don't want you buying them. We don't want you using them. Yep. Well, AI war seems to have been averted and war with China is also, between China and Taiwan is also at an all time low on poly markets, 7 % chance by the end of this year, of course, the year is ticking by, so you would expect that to go down. But even by the end of 2026, it's only a 22 % chance. So people have been saber rattling about this for a long time, that something's going to happen soon. And at least the poly market doesn't really think that's going to happen.

1:17:14Anyway, let me tell you about Julius. What analysis do you want to run, chat with your data, and get expert level insights in seconds? You can ask Julius to analyze your data and it's loved by 2 million plus users and trusted by individuals at Princeton, the Boston Consulting Group and Zapier. They got some range there. When Rahul first told me when I saw the 2 million user number, I was like, is that a, did you add a few extra zeros there? It did seem like, no, it's real. It's real. It's fantastic. So there's another interesting data point that came out of earnings. So there were two companies that announced earnings recently and are in the the business and finance section of The Wall Street Journal today.

1:17:54So stablecoin firm Circle records loss, but revenue soars 53%. And then separately, CoreWeave posts a loss on higher revenue. So both of these companies, one in AI, one in crypto, beat on top line, missed on the bottom line. So they're in different industries, but it feels like they're adopting similar financial strategies, which is invest right now for growth. Go, go, go, get the top line higher, become a big company. So the numbers are crazy. Circle's share price has quintupled since its June IPO. We interviewed the CEO just after that IPO. I had not been tracking exactly what the share price had done.

1:18:36That's incredible performance. Revenue's up 53 % year over year. It's great stuff, but the losses are growing. Analysts expected a$338 million loss for Circle. They posted a$482 million loss in the second quarter. Something simpler happened with CoreWeave. We also interviewed the founder of CoreWeave on the show. Second quarter revenue tripled since a year earlier. That is incredible performance. But the company lost$290.5 million in the quarter, which is 15 % more money lost than the analysts expected. Not a huge miss, but certainly something that people weren't really pricing in fully. And both of those companies have had, I believe they've had profitable quarters, but then kind of gone down as they've gone back into the reinvestment mode.

1:19:22And so my read is basically like there's green lights all over the economy. There's green flags everywhere. The market's open. The IPO window's open. The economic data is really good. So invest, invest, invest. Take advantage of the AI race. Take advantage of the new crypto regulations. Anything you can to go take as much market share as possible and get really, really big. So, you know, maybe the wave is cresting. But why not? Get a firm footing on your board while you can. Absolutely. Anyway, that's my take on CoreWeave and Circle. Anyway, let's move on. I think we hit Google pretty well. We can tell you about Profound, though.

1:19:58That's obviously relevant to the Google conversation. Get your brand mentioned in ChatGPT. It's going to be more important than ever going forward, especially as they add agentic commerce features. You can reach millions of consumers who are using AI to discover new products and brands. I wanted to highlight a brand. The founder's name is Isabel. She said, this morning, my brand that's less than 13 months old is launching Whole Foods nationwide without a seven-figure raise. How is that even possible? One, strong lending partners. We have invoice factoring and PO financing at less than 12 % APR, making it a clear no-brainer to free up working capital.

1:20:35Two, prioritize strong unit economics 50 % plus and buy coastal manufacturing and fulfillment to not get crushed on freight. Three, trial and retention. We invested - Wow, manufacturing on both coasts day one. That's a bold move. And then four, the thing that's interesting, A2 dairy is on trend. So A2 dairy is not quite, it's not raw, which is non-pasteurized dairy. Lightly pasteurized or something? I forget the exact definition of it, but think of it as a milk derivative. Derivative. Let me pull up the definition. A2 milk is a type of cow's milk that primarily contains the A2 beta casein protein, unlike regular milk, which contains both A1 and A2 protein.

1:21:21So some people are sensitive to A1, so they can have A2 dairy. And we were talking about this earlier today. I haven't been a fan of a lot of ready-to-drink products, especially in coffee lately, because they include all these random alternative milks that have a lot of sunflower and canola oil in them. But anyways, super impressive. You just want a simple RTD protein shake with ingredients that anyone can understand. 300 milligrams of caffeine, 12 milligrams of nicotine. A pound of creatine. A pound of creatine, some Adderall XR. Just stuff anyone can understand. Just a pound. That's all we need.

1:22:07If you're planning your launch of your consumer product, get on Linear. Linear is a purpose-built tool for planning and building products. Meet the system for modern software development. streamline issues, projects, and product roadmaps. Go to linear.app to get started. Jovian says, I've successfully solved the opening AI naming problem. And they say they have a screenshot here. Harder, better, faster, stronger. I kind of like this. It kind of works. It's crazy, but it's just crazy enough to work. I do think it's hilarious that there's like chat GPT, GPT-5 thinking mode. And that implies that like the normal version just doesn't think at all, I guess.

1:22:44I do like the language here where it's harder. It's not just thinking or not thinking. It's thinking harder, thinking better, faster. And maybe that's where this will collapse because right now even in the GPT-5 update, I mean obviously it's such an improvement over the previous one where you had to know that 03 was better than 40, which is deeply, deeply confusing. But now I'm seeing fast thinking, thinking, thinks longer for better answers, and Pro, research grade intelligence, auto, decides how long to think. That's pretty, pretty good. I think they're close. I do think over time we will see no selection, at least in the main UI.

1:23:27Maybe buried somewhere, but overall it seems like the model rather is gonna be - It is really funny though that people went complaining about the complexity of the naming to the same people complaining about not being able to select their own models. Yeah, were those the same people? or was it like separate cohorts? But there's definitely some, it's the current thing to hate on the news. Joshua Box says, AI psychosis psychosis is rampant now. You might have a version of this. Totally. I mean, yeah. I don't know. I think there's a big difference between seeing something that is chat GPT generated text and being like somewhat frustrated and annoyed that somebody's just slopping up the timeline with a bunch of, it's not this it's that uh i don't want to see that yeah yeah it has been a fascinating story though but in general we have a but in general there's this yeah there's this there's this excitement people have this like general excitement to try to identify who they think has been one-shotted yes yes but later today we're having keith uh dr keith saccata on he's a doctor at UCSF, and he has seen a number of patients this year that he's identified as suffering from AI psychosis.

1:24:44It's clearly very real. But at the same time, my takeaway is that it should be solvable pretty, pretty quickly. If you can decide in the model router, do I need to think really hard and actually help someone with this checkout, you should also be able to say, okay, this person definitely thinks I'm the boyfriend now. It definitely thinks I'm, I'm, you know, God or something, or they think they're God. And going from there just makes, makes a ton of sense. Anyway, let me tell you about numeralhq.com sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. Benchmark series A.

1:25:23And we have our next guest, Alfred Lind from Sequoia Capital in the studio. Welcome to the stream. I've been looking forward to this. How are you doing, Alfred? Good to meet you. Doing great. Thank you for having me on the show. Great to see you. Thanks for being here. Thank you for coming on. This is overdue. Yeah. Would you mind kicking us off with an introduction on all the different pieces of the Sequoia world that you touch currently? Because I know the firm has grown so much. There's a lot that you could be focusing on, but I'd love to ground it in how you're spending your day currently.

1:26:01Well, Sequoia has been around for 50 years, and we're still very much focused on venture capital. So we have a seed business, a venture business, a growth equity business, an expansion business, and then we have an overlay fund called the Sequoia Capital Fund. And then most of my days are still trying to find the pre-seed, the seed and Series A founders that are daring enough to start a company and want to change the world. So that's where I focus. What's happening at the earliest possible stage in the Sequoia portfolio? I mean, I feel like if you go back 40, 50 years, you hear these stories about, oh, yeah, Sequoia got 10 % of this multibillion dollar company for$100 ,000.

1:26:47Obviously, the market dynamic has shifted and there's some huge seed rounds happening, but you are still funding people with really small checks at a certain stage. Can you explain how that all works? Yeah, I like to say that my job is to take small dollars and make them into big dollars. You don't need to overcomplicate it. Yeah, let's not complicate things. You're trying to put small amounts of money to work and you're trying to make sure that it becomes large amounts when the company becomes successful and yes there are large seed rounds but there are also just lots that's going on and it's not just ai that's there's just a lot of breath ai is enabling a lot of things and ai is not the only thing that we invest in we are all generalists here from consumer to enterprise in robotics and everything you can think of we're trained as generalist because things move and things change it's not it's not just one thing after another it's not like we only invested in the internet when the internet was happening and only invested in mobile and only invest in sass when those things were happening and the same is true now there's a lot going on and you know the the founders that i really enjoy meeting are two people on an idea and they want to they feel like the world has gotten something wrong uh in the world and they want to go fix it and they want to their legacy will be changing the world and how we live just like some of the people I've been fortunate to partner with and we use that term very very judiciously at Sequoia we want to partner with the the daring founders who want to start the company we don't we don't think of ourselves as investors we don't try to buy low and sell high we really want to work with a small select set of founders that want to go all the way and you know the thing that i've learned over time is you can take us two founders in the seat of an idea and in a decade that that company could be worth one to ten billion dollars and in two decades that could be ten to a hundred billion and in three decades that can be a hundred billion to a trillion.

1:29:03And we've seen a number of companies that have reached that, including NVIDIA, including Apple, including Google. And we're going to try to help the next set of founders do those things. Going back to something you said earlier, you said you're not just investing in AI, but what does a company look like today? What is a non-AI company that look like today that's coming to you to pitch you at this sort of idea stage? Because in some ways, you have to think that if a founder wants to just not think about AI and they're starting a company from the ground up today, it seems like, you know, I'm sure there's some outliers, but it seems like a question that, you know, if you have the blessing and the opportunity to start a company in the year 2025, there's probably some way that AI could be transformative to your business or the market broadly.

1:29:58Yeah, don't get me wrong. I think all the companies that we work with are using ai and ai tools that doesn't mean that they're ai native and you guys were just talking about the the ai researchers and the metis list and there's some companies that don't aren't going to be ai native they're not going to build a foundation model they're not going to build a world model they're going to be building an application and in some sense in in probably two or three or four years we're going to call those back to software companies those are just new updated ways of building software companies and we do believe in a lot of value will be created in the application layer and new applications will be created in this world and I think there's a desire to associate all those companies as AI companies just like you know when the web was happening everybody wanted to be called a web company but at the end of the day you're still you may be a consumer company, you may be a gaming company, you can be a commerce company.

1:31:01You might be using the internet as distribution. And here you might be using AI as a way to improve the way you get things done. But you're not a native AI company. Yeah. So your definition of an AI native company is effectively like you have to be hiring researchers. And am I hearing that correctly? Because I think some people describe themselves as AI native because they're just, they feel like they're using the tools to the - It also just feels like the difference between like AI native company where it really matters is just like what will the financial profile look like? When I think of AI native foundation model company, I think R and D, I think CapEx, maybe they're not building a big data center, but they're at least - Spending a lot of money on tokens.

1:31:48Spending a lot of money on training versus an application layer company. It's going to be much more about the how much does it cost you to generate those tokens, even if they're on a different foundation model. And then how much value are you delivering and how much revenue are you generating from your customers? Is that a reasonable framework? For me, that's a reasonable framework in the sense that I think there are a lot of companies that are using AI and AI tools to be able to increase productivity. but they're building an application. They're building a service. They're building something that is different than a native AI company.

1:32:29So how is your thinking, it feels like this debate has faded a little bit into the background, but over the last five years, how did your thinking evolve on kind of value accrual between the model layer or the labs and the sort of application layer? Because in our view, we had a number of folks on from OpenAI last Thursday for the GPT-5 launch. And it felt like, okay, this is a consumer tech company. It really felt like, and they're selling, at least today, subscriptions to their consumer tech product. And the product is the product. The models were, in many ways, with the introduction of the router, taking a little bit more of a backseat.

1:33:15so i think the the where value accrues is a very hard question to answer at the beginning we have a particular point of view and in throughout history i think you would see that value accrual like shifts as the sort of development changes like in the early days you need the infrastructure to be built and so a lot of value accrues to the infrastructure layer that's kind of the reason why all the way down to the bottom of the infrastructure layer nvidia is a four trillion company today. Value is accruing there because everybody needs that chip. Over time, then you have people building on those chips and then value starts accruing to the model layer because you've got to build the model for other people to build on top of it.

1:33:57And over time, hopefully you build the infrastructure, the systems, the operating system, and then the application. And then the application historically has been where a lot of value accrues in previous generations of the internet and it's too early to call that that's where where a lot of value accrue in the future but if you just look at history that has been the case can you talk about sequoia arc and then specifically some of the trends you're seeing in those very early stage companies how they're building businesses how the financials change because even though i'm sure some of these companies could go out and raise huge rounds and train foundation models.

1:34:42Like where is the money going at the early stage for kind of startups that are that are joining the program? So so ARC is a is a program that we started in 2022. It's a program that we started because we wanted to help our own founders have a common language and to basically leverage the 50 years of learning that Sequoia has had in company building. One of the things that we've noticed over time through many different technology waves is the fundamentals of company building don't really change. You might have to hire slightly different engineers or slightly different salespeople, et cetera, et cetera, but the fundamentals don't really change.

1:35:24The history of technology lowering the cost of creating a company hasn't really changed. The ability to get above the noise because there are a lot more companies being produced that hasn't really changed. So yes, you know, the trend is we're going to probably have fewer people in a company that has been the case for a long period of time in technology. Is it harder than ever before to get above noise because, you know, it costs less to start a company? Yes, that's been the trend. And the things that we sort of try to focus on is what is stable over time and the company building aspects. And what we try to do in that program is in a short number of weeks, teach everything that we can to sort of get a company off the ground, especially from the zero to one phase of the company that you can then take with you to build from one to end.

1:36:19And that's the company building program that I think we're trying to aspire to make sure that we teach in that program. What does graduation day or demo day look like? is it just pitching the Sequoia partnership or are you setting up, is it actually, is there some competition and other firms are trying to come in? It feels like one of the elegant things of demo day is that, at least for Y Combinators, that they sometimes occasionally will feed off of their best companies, but oftentimes other firms can come in and snipe some company that's overlooked or something. How do you think about companies graduating from Arc?

1:37:04So the program is a company building program. So that the end of the program, yes, they pitched the whole partnership as well as as builders in our community so that we can give them feedback on their next stage of company building. It is not a a fundraising demo day. And so that's not the objective. The objective is to continue to build the company. When you talked about getting above the noise, it's obviously one of the biggest challenges that any company faces. Do you have portfolio companies today that have products that are working and getting real customer traction, where you advise them to actually just be quiet and try to dominate their sub-market as much as possible?

1:37:50Maybe don't go viral amongst a bunch of people that want to build things and compete with you. You know, going viral on X, for example, is a double-edged sword. You attract a lot of attention, you know, great candidates, investors, et cetera. But you're also inviting an entire world of really smart people to come in and compete with you. So I'm curious, you know, how you're advising companies at maybe kind of that seed, serious age stage and potentially saying sometimes, hey, you should just get your first thousand customers before you really tell people about what you're doing because you're really onto something?

1:38:27That's a really great question. The question, the sort of what you're talking about is something I think is very thoughtful, and we give different advice for different companies. You're trying to sort of make sure you have a certain product heft before you launch. I think that's something that founders should really consider and where you're way ahead of your competition before you launch and if you can accomplish that in a short period of time you want to do that before you launch and so that you don't as to your point not invite a bunch of competitors into uh into the space and then there are just other companies where you need users and part of the go-to-market part of your product market fit is to get users to bang on the product and to get that feedback and in those cases we would tell them you know when you have some semblance of an mvp you should probably launch and then get the feedback from the customer and so it depends on the founder and depends on the product and how feature complete you want before you go go launch most founders i found are perfectionists and so they probably launch a little later than they should.

1:39:39But that's not always the case. What advice are you giving to college students these days or really anyone pre-joining Silicon Valley, pre-sequoia arc, pre-founding? uh it's interesting so to me the the most interesting thing that i've learned over the years is that um being in technology has been a game changer and an equalizer in so many ways and i'm glad to be talking to you too because you're a techno optimist and there's a lot of people who are just concerned that these tools are gonna destroy jobs and at the opposite end i view I went to the GPT-5 hackathon this past weekend, and there are people who've never coded that was produced or was able to do something that was not the like world changing thing, but in 24 to 48 hours, it's like a wow moment for me to see people who've never coded to be able to produce an application that could do something.

1:40:38and I think it's really important for everybody in college everybody who's in high school my son is about to go to high school to really know how to use some of these tools and let their imaginations run and think about what they can create because a lot of things that we're talking about right now are about speed and scaling laws and reasoning and improving all those things But then let's use our human imagination to improve humanity. And I think allowing everybody on the planet to be able to code when they didn't have to learn, get a degree in computer science and learn how programming is really powerful.

1:41:24And I think we should embrace that. Does the lowering of the barrier to instantiate software increase the value of driving economic value? I'm thinking of that potentially apocryphal story of you selling pizzas in college, but that felt like something less enabled by a technology trend and more just evidence that you saw an arbitrage opportunity. Agency. An agency. And maybe we're in this era where the next you will be someone who finds a pocket of value. Maybe they instantiate some software, but really they're finding some gap in the market and exploiting that. And that being like a really high signal versus someone who's just sitting there using ChatGPT to check the boxes on their computer science homework.

1:42:13Yeah, I'm not suggesting people use a tool to just check the box on their computer science homework. I'm suggesting that they use it to do something creative and improve humanity. And that's very, very different than, oh, I don't want to do my homework. Let me look up the answer. I think the notion is that we are going to increase the amount of capabilities of every human being on the planet. And it's up to us to harness that power to do the incredible things that we've been able to do with lesser powerful technologies in the past. And historically, the more powerful we get something in technology, the more we can do and the more we can imagine what the world to be like.

1:43:01And I think that's really, really important. What do you imagine the world will be like in 20 years? Or like what is something that you want to be true about the world that isn't necessarily true yet? I mean, we, you know, the thing that I find very interesting right now is the stuff that I was doing in high school and college that these models can do now. Like the fact that the models can win the IML gold. It's pretty amazing. Yeah. And hopefully one day we can discover novel physics, novel medicine. We can improve the length of our lives in different ways. We can do a lot of things that are custom to us.

1:43:45We can be entertained. So there's a bunch of productivity stuff that we're already doing now. And then there's life improvement stuff. And then there's just fun improvement stuff. I think there's just a lot of things that we have not imagined that will be fun in the future using AI that we're, like, kind of talking to machines and feeling like they're going to be our companion and maybe be our therapist and maybe there can be a lot more than that and and i think we will be interacting in a world where yes we might be using agents but we will also just spend a lot of time just truly being human the amount of time i can do things today allows me to have more time to spend to either do more work or to spend more time with family and i think we're going to be able to do both sorry i was going to ask um how you're advising companies maybe you you have been on the board been on their boards for a while or seeded them or invested in them years and years ago how you're kind of advising them around uh you know the ipo window feels very open today No one can predict the future, but throughout this year you went from, okay, it's open to now we have a trade war, maybe back off to it's very open now.

1:45:07What's your outlook for the rest of this year and beyond? And how are you kind of advising teams that are gearing up to get into the public markets? Well, I think great companies can always go public. and you have companies that went public like Instacart that went public when things were slower. DoorDash and Airbnb went public right after the pandemic or during the pandemic, right after the heat of it. And I think there are very few times when it's truly, truly closed. There are obviously times when it's much more, much warmer to go public. I think you're in an environment where that is the case.

1:45:56But we generally advise companies, and this has been true historically. This is long. This is when I was an entrepreneur and listening to Mike Warrens and listening to him about just build a great company and then you will be rewarded, whether it's through raising capital privately, raising capital publicly, being purchased. And the IPO window being open, I think for most of the companies that have gone through an IPO, it's a big deal, and it is, but then they realize it is a fundraising event, and then they have to get back to work. so I would just tell people to stay grounded and build a great company and great business people like Dylan were still Dylan and the Figment team were shipping on the IPO days not just shipping, he was answering customer support questions on Twitter some groups never stop working you certainly embrace that and you need to do that because you go public and what's next, you want to serve your customers both DoorDash and Airbnb will be but in December I think there'll be five years as a public company yeah I don't think they slowed they I don't think they've slowed down since they went public in 2020 and they everybody still continues to work fairly hard I mean some of the companies that I'm advising around the adoption of AI is I think many of the companies that we work with they want it to be like water let's use all the tools let's not standardize at any of them yet because they're changing so fast one day one model might be better than the other that might flip and using all the tools and being proficient is important and the other so there's like proficiency around ai tools there is collaboration getting everybody inside the company to work together to improve something using AI.

1:48:00And then there's trying to find leverage in the business, trying to find areas where you can improve revenue or lower cost or both at the same time. I want to talk about the future of agentic commerce and checking out through chat apps. I realize that Sequoia is, that you're tied to Zappos on the commerce side, Google on the ad side, but also the Foundation Model Labs. And the DoorDash is it. And then also Profound. So I don't know exactly how you'll be able to answer this question, but I'm interested to hear how you work through the question of, like, what are all the knock-on effects of shifting to a world where I go to a chat application and I ask it for a new pair of shoes, for example, and it works through, it knows my size, it knows what I prefer, the different weight distributions, and then it can actually do the full checkout for me.

1:48:58Semi-analysis was talking about how OpenAI is potentially going to come for Google's ad revenue very soon. At the same time, I'm interested to hear how you'd advise a company that is selling a physical good and how they could take advantage of this shift in consumer behavior, whether there's any sort of threat there or if it just makes their life easier. because maybe they have to pay a different tax, not the Google tax anymore. I'm just thinking about there's so many different knock-on effects from the first major shift in consumer behavior potentially in the last 20 years. How are you thinking about all the knock-on effects of that?

1:49:35So I think it's a very good question. I think if I had a crystal ball, my prediction is that it is much less divisive than people imagine it to be. You could have imagined that Google, because people started search on Google, that they would be able to take on every single transaction. And it turns out that when you're doing search and discovery, you want a different experience than when you actually want to purchase. And if that's true in the future, then I think it's going to be less divisive than we think. If the only thing that we interact with is your chat interface to the world through AI, yeah, then I think it would be very, very difficult for a bunch of other companies to survive.

1:50:31But we don't tend to see that happening. And maybe if it does happen, you have a slight small take rate because that's what happens. Like Apple has an app store, they have a take rate, but then people still go outside of Apple to complete transactions because it's not always efficient. If I know exactly what I want, do I have to go through a chat interface to do it? Maybe there's a different interface. It is incumbent on commerce companies to make purchasing so simple and to know you so well as well, to make it a fun and interesting experience. And I do think that that can, that I think is what a shopping experience will be, how that will be very different.

1:51:19Because a general application is not going to be very, very specific to shopping. And then there's always different types of shopping. Do I do window shopping? Do I want to try things on? those things can be very very different uh do i is it a utilitarian kind of transaction do i just want to go complete it these are things that we wrestled with at zappos amazon wrestled with it and eventually amazon created their own search engine inside of the amazon uh sites because it was important to them to not to have a better commerce search experience than you would get on Google, which was a general search experience.

1:51:57And so I do think there's going to be some level of fragmentation among customer experiences than everything going through one channel. On the topic of fragmentation, do you think that enterprise AI or business-to-business AI products will be less monopolistic than consumer? How are you thinking about consumer AI bets at this point. It feels like generally the ship has kind of sailed and there's a lot of winner-take-all dynamics and compounding value from just being the default and the aggregator. But in B2B, it feels like the narrative of like, oh yeah, the next model release is going to steamroll legal AI.

1:52:41It's like, that doesn't feel like that's happening. There's tons of value to be created and there's tons of pockets of value. And I don't know how you can map this to previous eras if you're drawing on any analogies. But I'd love to hear how you're thinking about the market dynamics playing out in B2B versus consumer. Yeah, I mean, it's like search at one point looked competitive. And then if you just went offline for a few years and came back, you'd see Google with, you know, what, 90 % of the market. And it feels like we could be going in that direction in consumer, but not necessarily in B2B, which also tracks trends.

1:53:15trends. So how are you thinking about it? So I think overall, I think your observation is correct that when you get consumer right, it has more network effects and more brand effects than in business. And then in business, there's more proprietary data that the businesses are less likely to give up than a consumer. I think consumers, we talk about consumer privacy, and at the end of the day, most consumers don't seem to think, don't seem to really care about privacy. They give up a lot of information about themselves to a lot of companies. But businesses, especially large enterprises, do not do that.

1:53:55I agree with you on that. I would just point out that while that's true, our road to where the final answer is always less obvious than what tracks. Google was not the first search engine. It was probably number 25. I don't remember, but it wasn't the first one. Before Google, there was Yahoo, and Yahoo got to a certain size, and Yahoo had a bunch of portals that we navigated through the internet through these directories. And so I don't think it's completely obvious. And if it was just obvious, I'd be out of a job. My job is to help the small companies go against the big companies. And I would say, yeah, there's going to be some network effects and some crowning of major players.

1:54:50But at the same time, there's always new companies trying to challenge an existing company. And some of them do it extremely well. In some sense, why should Amazon, which is a large company, even large companies competing with other large companies, Why did Amazon have AWS? They weren't really in the technology space. They were a retail company. Yeah. So the answer is always a little bit more complicated. But I love the push and the thinking that the consolidation is probably more real and consumer than it is in enterprise. And I would just point out Grubhub was a consolidator for a period of time, and then DoorDash came on.

1:55:33I was about to say, you know, it's easy to say like consumers very monopolistic until you point out DoorDash and Airbnb. Like these things, these experiences start with search boxes in many ways, but yet they have built entirely different businesses from Google, for example, or the social networks. Because they brought a different experience to bear and a different component, different business structure that was counterpositioned. Yeah, I mean, you said, we talked about DoorDash, Airbnb, like there was the Airbnb before Airbnb. before Facebook there was MySpace and FriendFeed and a bunch of other companies and so the final winner is generally not the first well there's one question to ask which is when a company becomes a verb is there any hope left for the competition right google it let's get an Uber like I'm going to talk to different but But just, you know, I'm going to chat.

1:56:35I'm going to go. I'm going to let's see what Chad thinks. Right. Not of her. But it feels like at that point. Right. Like I don't remember even at a time when I was aware of VRBO. Yeah. It wasn't this like dominant. It wasn't a dominant brand. It wasn't it wasn't really a part of people's lives in the way that Airbnb sort of became. Yeah. Yeah. Yeah, I think you're pointing out that there's a long road to get to what eventually is not critical mass. Critical mass can still be, you know, sort of someone else can still get to critical mass. Yeah. When you become a force of nature, a dominant force where that's where everybody goes.

1:57:17And it is something that we talk about all the time as category defining. when you define the category and you're the company in that category, then it's very, very hard to stop that. If you weren't doing tech in an alternate universe, what would you be doing? I'd be doing tech. That's a great answer. We are so fortunate to live in this tech world. Yeah. That's the best possible answer. It is... I'll tell you what. I'll answer your question, but I would probably find my way into tech. And, you know, when I was growing up, I thought I was going to work in the hedge fund industry. And I did go to a PhD program that was pricing options and derivatives.

1:58:04And even then, there is a lot of tech in those businesses. Of course. I sit on the board of Citadel Securities and the amount of quantitative researchers that they have, the number of technologists that they employ. it's just tech is such a beautiful place to be and we should all very very fortunate to be part of the tech industry the complaint over the last couple decades is that our best and brightest we're going to do high frequency trading and working at hedge funds broadly and the interesting thing that's happening right now is the best labs are identifying the best talent at the hedge funds and just coaching them.

1:58:43Mark Chad worked at Jane Street. And one of the major like Matt Moll just like inference optimizations at a very fundamental level, I think, came out of Jane Street. Well, I think the smartest people tend to work at, you know, sort of places where they're going to be challenged intellectually, as well as doing something they think is like interesting and novel. And the hedge fund industry had employed a lot of people who were doing something interesting and novel. They put a lot of machine learning into place. If you were not today an AI researcher, but back then, you were probably going to those companies because that's what they put in place.

1:59:23And today, you have a different place to go to. There are foundation model labs and the large tech companies that are putting that into place. Well, and the tech industry is now set up to properly compensate the top performers, which is also something that hedge funds would do very, very well, but hadn't always been as prevalent as it is today, especially the last few months. Yeah. Last question, and we'll let you go. I know you're busy. We kept you over by one minute. Obviously, in the finance world, they work very hard. Is work-life balance real?

2:00:01Well, how about I answer the question in the form that I figured out, which is work-life integration. We have to integrate your life and your work together. I talk to my son about the work I do when I come home for dinner. We talk about why the math problem he's doing is interesting because it'll allow him to do some of the research that will hopefully be still relevant when he is in the job force and or maybe the AI will take over and that won't be interesting. But these are, I think the work-life integration is a much better answer than work-life balance. It's not like I turn off my work brain when I go home.

2:00:39And it's not like I'm not if if an important thing happens during the daytime. It's not like I don't show up for my son if I need to show up for a game or to his parent teacher conference and things like that. So you just have to find the integration that will allow you to do all the things that you want. And one of the things that we talk about at Sequoia is family first. like you can't be in the job and do a good job if you are distracted and one of the things that we've we've learned over time is that you just gotta there are a set of things you gotta take care of you gotta take care of your family you gotta take care of you your your health if you want to do this job for a long period of time any job for a long period of time you gotta take care of your family and then you can come to work with a clear head to do the work that is necessary and so when things are out of balance it's not a great thing so you just gotta find how to integrate everything together but one clarifying thing for me is you always have time for your priorities and so just list your priorities and list what you have to get accomplished this week and if if it's the 10th thing I don't stress about it falling off the things that I try to accomplish in the week.

2:02:02And that part is freeing. If I got the top three to five things done in a week, and then I don't do number 11, that's very freeing. Makes sense. Final, final question. Please, Jordan. Because we're already over, and you can answer it quickly. How important is it for venture capitalists to remain calm during a market cycle like we're in now? I feel you come across as very calm and grounded and it's easy when deals are happening so quickly to kind of get caught up in things and make forced decisions and things like that. But you've been through multiple of these different chapters in our industry and again, you just come across as very calm.

2:02:54I have time, so I'm going to answer this question in multiple parts because I think is really really important like at sequoia we talk about being um shock absorbers and i think andrew my partner andrew had been on your show and talked about it as well i think it's very very important to be a shock absorber uh during times um of good and bad and then also on the other flip side is uh we we we want to be sparring partners to the founders that we back the management teams that we back and it's important because during nutty times it's easy to think that you're doing a good job when it's just the valuation going up or or things like that or you're being validated because lots of people want to work for you because you have a high valuation or you're doing something interesting it takes a long long time the reason why calm is important is it takes a long long time to build any company it's happening faster but most of the companies that we are we've been in business with we've been in business for a decade that you know then exits and becomes um has a successful ipo like figma and during through during those times that journey of 10 years you're going to go through many ups and downs and we call those crucible moments and We have a podcast called Crucible Moments, where it's very, very important to be calm, to untangle what's going on and to make the right decision.

2:04:23Because many of those decisions, you can't go back and undo them. And the way to make good decisions is to stay and remain calm. And one of the things that hopefully we do for all of our founders is to help them untangle the craziness and to help them make the right decisions during those critical moments. Very well said. And fantastic suit. Thank you for... Wore the jacket for you guys because you always have jackets on. Of course. It looks fantastic. Thank you so much for taking the time. We'll talk to you soon, Alfred. Great to catch up. Take care. Cheers. Have a good rest of your day. Let me talk about fin.ai, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bake-offs, and number one ranking on G2.

2:05:09And there has been a ton of questions in the chat about my hair. I am not coloring it. I don't know what that is about. I think somebody's saying it's a little dry today. I don't know. Maybe something happened in the... Maybe I didn't use the right product or something. I don't know. I don't really do much to my hair. I just kind of wash it. I put water on it. And it's pretty simple. But anyway, thank you for the feedback on my hair. Hopefully, it'll be a better hair day tomorrow if you don't like the hair if you love the hair whatever enjoy it and hang out in the chat um anyway we have our next guest uh coming into the studio dr keith cicada how are you doing well uh how would you like to be uh addressed by the way yeah that's good uh thanks john thanks for having me on good to meet you um would you mind kicking us off with a little bit of introduction on yourself and some of the research that you've been doing some of the stuff you've been publishing yeah for sure so my name is you know dr keith cicada i'm a psychiatrist and i I work at UCSF and my interests are mostly in the intersection of mental health and technology.

2:06:13I actually love advising startups on how they can actually build products that help people feel better. And I think that's why I'm here today is to talk about where things might be going wrong. Yeah. So when did this first, like, how did you process the rollout of AI? There was like kind of the pre-ChatGPT era. We've talked to the founder of Replica. This idea of like the AI girlfriend or boyfriend has been kind of out there for years, but now it feels like we're in a different era, different time period. Just take me through a little bit of like your journey processing optimism and pessimism around these AI models.

2:06:56Yeah, I'll just start by saying I think that AI is not good or bad. I think it's probably a net, you know, on the grand scale of things, it's a net benefit for humanity to have AI. I think where things can kind of come into my world a little bit is like there's a long tail distributions of possible failure modes for some of these products. And I think when I try to think about AI chatbots, how quickly things are moving, I try to look back at previous technologies. So social media is something that we're still learning about in mental health care. And this is one of my frustrations with my field is that sometimes it's too slow to kind of like understand, like, what are the effects of kids using social media?

2:07:38Like, what are the effects of kids using AI chatbots? And we're starting to get some of that data now. What I'm worried about is things are moving so fast now. Like, there's a new product every season. It's going to be perhaps every month now. And even looking at how people are reacting from 4.0 changing to 5. It's kind of interesting to see the psychologically what's going on. it's just harder to catch up from from the research perspective so uh i do think that when ai is used correctly it can actually be really healthy for some of my patients what i worry about is you know when you have general purpose models that people are using for many different reasons i think 30 of people use clod for emotional support that's where things kind of get tricky and that's where i kind of get more interested how are these users using it what's actually happening neurobiologically in their head and how can we actually build tools that flag those instances, get people the support they need, or even actually help them build skills or build more like real life connections with people.

2:08:42We were talking about yesterday around people's concerns with social media, that it was actually maybe antisocial in some ways or isolating or radicalizing and uh i still feel like we as a society broadly don't fully understand the impacts of social media like i wish i could have a b tested myself would i be happier today if i had never used if i hadn't used x for two hours a day uh for my entire adult life i don't know never will know uh but the it feels like many of the sort of general concerns that people have had about social media, you should potentially apply those same set of concerns to LLMs in that even more so than social media, they can be isolating in that instead of somebody going on an online forum or sort of isolating themselves from the real world, they can be, you know, 7 ,000 prompts deep with an LLM, you know, having their delusions of grandeur, you know consistently reinforced or um you know sort of losing touch with with reality and i think the i think people should i think people you know in silicon valley have like really woken up to the sort of i think the the ai safety had been broadly focused on like ai doom scenarios nuclear weapons paper clipping everyone, like the really, really crazy stuff.

2:10:12And less focused on people's individual relationships with AI and the potential downsides and edge cases and the long tail like you described. So yeah, walk us through maybe even just the last year in terms of how quickly people have ramped. We now have hundreds of millions of people that are using AI, these models weekly. some people are spending hours and hours and hours a day talking with the model. So what is the path where AI that you've seen where AI starts to become really unhealthy and potentially people are drifting into, you know, real psychosis? Yeah, great question. And I agree for most of your points that you made there.

2:10:59I use AI all the time. I think it's at work. It's great. You get to wrap things up really quickly. My thoughts change when you're starting to look at AI as maybe something sentient, or you're using it for an emotional coping mechanism. That's kind of where we kind of go into shadier gray territory. In my post, I specifically highlighted hospitalizations because I think that's a really good objective metric for trying to understand. That's a crisis. Say again? That's like a real crisis. If somebody's hospitalized for their mental health, it's reached a point where either they themselves or friends and family have decided that, you know, we're not going to solve this by just turning off the app.

2:11:46Exactly. And it just kind of gives you stronger data than saying, like, this is what a flavor or the vibe that I'm seeing in the clinic. Like when someone notices that you're having such a crisis, your friends, your family think that you need to go to the hospital, that's where things can get serious. And that's where people like me, we try to get them recovered and then back into their normal daily routine. And you said there was 12 people this year that you're aware of being hospitalized. That's right. Within your guys' hospital system. Walk me through what's actually happening there. How are AI models fitting into that journey to the ultimate hospitalization?

2:12:34I know you probably can't give too specific, but if you can abstract it and kind of walk me through, what does the downside scenario actually look like here? Totally. So for context, I work in the hospitals sometimes, and those 12 patients that I'm referencing are the ones that I have seen. That's not to say that other people have seen this. And I think there are some case reports in the country of this thing happening. But I don't think that AI is actually causing psychosis. I think that this is something where it can actually just supercharge your vulnerabilities. And psychosis really thrives when reality stops pushing back.

2:13:12And AI just kind of softens that wall for some people. So, for example, for some of the people that I've worked with, AI was not always the thing that triggered it. There was a vulnerability of either sleep loss, maybe there was like substance or drug use that had happened, they lost a job. And then AI came in the wrong place, wrong time, and it either accelerated that process or augmented its severity. because you do end up in like this negative feedback loop or with this feedback loop with the AI and it can just make your delusions stick a little bit more strongly. And to go back, like AI psychosis is not a clinical term.

2:13:51I think we don't have words for it yet, but psychosis is false studied. It's the presence of two or three things, either delusions, so false fixed beliefs, disordered thinking or behaviors. So someone's talking to you, you don't understand what they're trying to say or communicate. And then hallucinations. So visual hallucinations or auditory hallucinations. And psychosis is like a symptom. It's not actually a diagnosis. So just like a fever or pain can be a sign of like an infection or cancer. Psychosis kind of just tells you there's something wrong in the brain where it's not computing correctly.

2:14:27And there are many different things that can cause psychosis. Yeah, I think about the, I mean, there's so many interesting examples. Like Instagram went through that kind of like internal report that something like a third of young women who are using it were seeing like maybe body dysmorphia issues. And it's still the odd takeaway from that was that it seemed like maybe two thirds were improved and feeling happier after using Instagram. So it was still having a net good, but that's not enough. You need to reduce the third. It's not having a good experience to zero. How are you thinking? Yeah.

2:15:04And I guess I think concern that we've discussed on the show before is everybody in tech has heard stories of people like, you know, some executive going off and doing ayahuasca, coming back a totally different person and experiencing like, you know, maybe some of the symptoms of of or shared set of experiences like you just described. described the concern with LLMs is they are instantly accessible in the app store and somebody can start using them without anyone else in their life being aware of it whereas ayahuasca somebody has to make like a very conscious decision that like I'm going to get in a plane and fly and like leave my home and go into the jungle and visit the demon and you know meanwhile you open up the app store and there's 10 different things recommending you download various AI models.

2:15:58And so I think the broader concern here should be we need to figure out like, like, you know, again, if I would be, I would be probably more concerned if if hundreds of millions of people, I would be very concerned if hundreds of millions of people just immediately started ramping up, you know, the psychedelic drug usage or ayahuasca, and I'm sure you'd experience many of the same type of inflows to clinics or hospitals for the same set of kind of conditions yeah i i think that i mean and we're doing research on those things too like we're trying to understand how ketamine or you know psychedelics actually help rewire your brain through neuroplasticity uh it's always it always starts with a hypothesis and a question like what are these things doing for each person like there's different types of people who benefit from those things, there are different types of people who don't benefit from those things.

2:16:53And I think the way that I'm looking at AI is that it just really makes sense to think very carefully about where things might go wrong, at least early on, because the three things that AI brings is it's available. It's 24 seven, highly accessible, you're not going on a plane, it's cheap, it's cheaper than a therapist, it's cheaper than going to the hospital. And then it validates like crazy. And so that validation, as you extend that context window and the more hallucinations might be occurring in that chat room, that's where you kind of get into that feedback loop and things can kind of go awry.

2:17:31From what you've seen, what should different application layer companies or labs be trying to do to avoid some of these extreme cases? Yeah, that's a good question. I'll just use like an example of a startup that I'm advising, Sunflower Sober. They're trying to solve addiction and using AI to get people off of their addiction into sobriety. And what I have tried to help them as a clinical advisor is to really think about baking and safety and psychology at least in front. So knowing who your user is, knowing why they're coming to your app, and then designing the app or the AI to anticipate where things might go wrong.

2:18:17So if someone does come with like a red flag, like maybe they're having thoughts of drinking or, you know, thoughts of hurting themselves, it flags that and can then shunt them in a direction that's more helpful. So Sunflower gives them access to therapists. Also, I think the call to action for each user users should guide them towards pro-social behaviors. So instead of isolating yourself where you and the AI can kind of get stuck in this loop, teaching them skills, teaching them how to talk to people, teaching them how to build healthy relationships. If AI can supercharge that, then I consider that pretty healthy in my field of work.

2:18:56So I think that in those lines, really thinking about how to make your users get the goals that they want. So in Sunflower's case, sobriety, it's harder for general purpose models because people are coming to it for many different reasons. It's super helpful in so many different ways. But if it's emotional coping, I think that that can that can go different ways for many different people. Yeah, I remember somebody posted a screenshot who knows if it was doctored, but they were talking with like the model. I think it suggested at one point that the user should do maybe just do a little bit of crack.

2:19:36and again probably a hallucination or doctored but uh but yeah that just like reinforcing function is just uh when compounded is just the potential yeah it's interesting we i mean we saw a lot of the like precursors to i i feel like they were precursors maybe it was just the way the news cycle broke but there was like glaze gate where everyone was worried about uh chat gpt being too aligned, too reinforcing of whatever you say. I remember Jordi asked ChadGBT, am I goaded? And it said, you're definitely in the conversation. It's like, what does that even mean? It's just agreeing with you because that's what makes a better consumer product.

2:20:14And then like several months later, it seemed like there were other people asking similar questions and believing the answers instead of just laughing at them. And so there's a little bit of, yeah, I think there's some education about understanding that you're not actually talking to a person on the other side of the screen. It really is just, you know, the number predictor, the weights in the model you're talking to a server. Don't try and anthropomorphize it too much. There's probably a little bit of a red flag when people stop referring to it as the generative pre-training transformer and give it some nickname.

2:20:48Like, it's Steve now. It's like, okay, well, like, should you be naming me? Like, I am just a computer. But I'm pretty optimistic that the Foundation Model Labs will be able to run a reality check on most of these. The solution for technology to technology is more technology. I believe that it's possible to look at, okay, there's someone who's 7 ,000 prompts deep. They seem to be having a very bizarre conversation. And we've had another LLM look at that and said, okay, this is getting kind of funky. maybe we should step in and reality check them and say, okay, hey, we're role-playing, right? We don't actually believe that we've solved quantum gravity, for example.

2:21:32Yeah, and that's the trajectory of every technology that comes into humanity, like cars, for example. That's why we have seatbelts. That's why we don't drink and drive. We learn what these failure modes are. Sometimes it takes a while, but then we adapt. We build new technologies, we institute kind of societal expectations of what it's like to drive a car. Same thing for AI, in my opinion. Yeah. Are there any other recommendations that you'd give to people who either feel like they might be vulnerable to going down some negative path with AI, or they have a friend or family member who might be going down a negative path with AI?

2:22:12eye. Yeah, definitely. For now, I think a human in the loop is the most important thing. So, you know, our relationships are like the immune system of our mental health, they make us feel better, but then they also are able to intervene when something's going wrong. So if you or your family member feels like something is going wrong, maybe there are some weird thoughts that are coming out, maybe some paranoia. If there's a safety issue, just call 911 or 988, get help. But also just know that having more people in your lives, getting that person connected to their relationships, getting a human in between them and the AI so that you can kind of create a different feedback loop is going to be super important, at least at this stage.

2:22:53I don't think we're at the point where you're going to have an AI therapist yet, but who knows? Yeah. People are certainly using them that way. I don't know if I'm highly disagreeable, but I certainly love being around highly disagreeable people. It's the best. So it's the best. I love when someone pushes it back on me. So I felt particularly resilient to this particular vector of chaos on the Internet. But, you know, certainly hope. I don't think anyone who's. You know, they have. Thanks for joining. Thanks for joining. Keep us posted on everything. I think I think it's important. Keep up the good work for people with with real clinical experience to be on the timeline and contributing while all these products develop.

2:23:38So thank you. Totally agree. Thanks, Tori. Thanks. We'll talk to you soon. And we will 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. Adio.com. And we have our next guest, Talia Goldberg from Bessemer Venture Partners coming into the studio. What's happening? Welcome to the stream. How are you doing? Welcome to the show. Thanks for having me. Great to be here. Why don't you kick us off with a little bit of an introduction on yourself, some of the companies you've invested in, your career, your position at Bessemer, and then we can go into the report that dropped today.

2:24:13Awesome. So, it's great to be here. I'm a partner at Bessemer. I'm based in our San Francisco office. I've been at the firm for a little over 10 years, which is virtually all or most of my professional experience. And I'm fortunate to be involved with companies like Perplexity, Fall, DeepL, Service Titan, and a whole bunch of others. How did you get into venture? I got into venture really early in my professional life. I got into venture in college. Actually, First Round Capital started this thing, Dorm Room Fund, which I helped found with them. It started in Philly. I went to Penn. Crazy enough, First Round is probably the only VC that had an office in Philly.

2:24:56I don't know why, but they did. And so they started it there. Well, it's the robotics from, isn't it like Carnegie Mellon's out there or something? Yeah, but not in Philly. That's in like Pittsburgh. Yeah, I guess. I don't know. It's a foothold. A bunch of peas. I get them all confused. Anyway, take us through the state of AI. Is artificial intelligence good? It's a good thing. Is it goated? Yeah, it's happening. You know, it's funny. So in 2015, not long after I joined Bessemer, the firm started this report called the state of the cloud. And it became a very popular report that dropped every year on the cloud ecosystem.

2:25:37And so 10 years later, we've been doing it every year. And it really morphed this year to the state of AI. And we were debating internally, like, should it be the state of the cloud? Like, should we continue with it this way? Should it be the state of AI? What's the, how do you even define what's AI? What's SaaS? What does that boundary look like? But the reality is the center of gravity has moved. And cloud may be the delivery surface for AI, but all the activity is there. Markets are being created and rebuilt. And so this year we released the state of AI. And as part of that, we released some new benchmarks as well that looked at hundreds of companies, probably more like a thousand plus companies across the Bessemer ecosystem and the broader industry to look at what the new good, better, best looks like, how different business models are changing, and markets are shifting.

2:26:30So that's the state of the cloud. Yeah, explain the difference between the supernovas and the shooting stars. I like that analogy. And it was something that I think people have been feeling, but no one had really coined a phrase around it. And I think it'll be useful language going forward, but break that down for us. Yeah. So the supernovas are really these seemingly out of nowhere, amazing growth stories that you hear about and you see on X and Twitter and you're like, holy shit, is this real? And it turns out like it is real. It's kind of mind blowing of this select kind of like top percentile of AI companies that have just totally accelerated and compressed growth into a very short period of time.

2:27:14And they look very different in a lot of different ways, different business models, different gross margin profiles, different retention profiles. But just to put a comparison, on average, the top cloud companies of this like last generation of cloud and SaaS took about six to seven years in the current cohort to get to 100 million of ARR. And that was considered and is considered like very good, if not great. and then this new cohort is here and they're like one and a half years we're there and they're getting to a hundred million and it's real and it's not just one there's like multiple and many data points and and so we're seeing it at a shocking pace the top percentile are getting there in about one and a half years in the top decile in about four years there are some trade off so gross margins look different in the report there's like a little asterisk by the supernova which I find very funny, which is like, actually, a lot of these companies are negative gross margin.

2:28:13Yeah, I knew you were going to say that. Sort of, you know, those accounting rules aside, like, you know, how we all think of gross margins being quite different. And so not all revenue is created equal, but nonetheless, the adoption is just astounding. Yeah. So talk to me about the difference in underwriting an investment in a supernova versus a shooting star. I imagine if you're investing in supernova, you're excited about the growth, but you have to have a pretty firm view on the gross margin profile, the decrease in inference cost over time, something like that. Like what questions are you asking when you're looking at a supernova company versus a shooting star company?

2:28:51Yeah, that's absolutely right. I think the two things that we talk a lot about, there's one, the gross margin profile, and then the second is revenue durability. I'll hit on both. On the gross margin profile. It's funny, if you had asked me two years ago, I was like, hey, anyone that has like gross margins that are negative today, if you just look at the cost of the models over the past, you know, year or two years, and you play that out, like it's 100x cheaper to run a model of constant quality today than it was, you know, a year and a half ago. I think those numbers are like roughly accurate.

2:29:25So it's wildly different. And yet, when I look in retrospect at our companies, it's not like their margins have changed to be suddenly like 90%. So I'm like, oh my gosh, what's happened? And the reality is that everyone is doing things that require a lot more compute. And to keep up with the status quo requires like the next best models that come out, the reasoning models that are more expensive. We're having queries that take a lot longer, that do a lot more complicated work and complex outputs. And so the margins have improved by and large, and they do improve with scale. So we are seeing that, but not nearly at the rate of model advances.

2:30:03So I think we still feel quite optimistic about the potential for margin expansion. And in fact, we see it happening, but it's not as dramatic as one might have hoped. Are you plateau pilled? And should we assume that inference costs will decline with Moore's law going forward? Because I feel like everyone's been saying like, oh, no, we're not just going to get 2x more efficient over the next 18 months like Moore's law would imply but we're gonna have a6 and cerebrus and we're gonna bake it onto a chip and we're gonna get this crazy algorithmic enhancement and inference cost is gonna drop by a hundred acts and it feels like we might be at this frontier where maybe we're more on what's happening at tsmc is what will define like lower costs than just like one weird trick well and and the other important thing is you know the labs have been focusing on raw intelligence versus efficiency.

2:30:59Chinese labs have been more focused on efficiency broadly, and they've had breakthroughs. And so if we've reached a potential plateau and just intelligence, it's an opportunity to focus on efficiency. Yeah, but how do you think about it? Yeah, like the harder problem to solve is doing the intelligence and the complex thing. And so I feel like when all the energy starts to shift to efficiency, it's sort of a sad moment. And so I'll be sad if that's what happens. Not for the public markets investors, though. They want earnings. I know. Well, you know. Well, and I think a lot of the darlings of the last couple of years need that efficiency because they can't keep selling, you know, dollars for a cent or - On the shooting star topic, you have this revenue ramp, year one, 3 million, year two, 12 million, then 40, then 103.

2:31:51How can you be an AI company if you started four years ago? I thought AI was invented two years ago. Yeah. So that benchmark is really what I think of as like the new generation of SaaS companies, some of which may be using AI tools and AI features and functionality, but are not necessarily like the true AI native companies. So I think this is what it takes to be like a really good best in class SaaS company today. Yeah. And we'll see how that shifts. But I just want to say one thing on this last point of efficiency versus compute. costs and intelligence is that I think there's just two curves that are counterbalancing each other.

2:32:29One is like efficiency. Sure, there's going to be a lot of investment in improving the efficiency, the potential for each token. But the flip is that we still have what we see happening. And the reason that gross margins haven't expanded as much as we hope is that the usage and the complexity of tasks is still is still growing. And if you look at just a category, let's just take video for a moment like i think 2026 is going to be a major breakthrough year for a lot of these video models that are just reaching starting to reach a level of quality that makes them actually like useful something like 70 of the internet is video um it's crazy internet traffic and the cut when when generating video becomes easier and a lot of video is generated not rendered suddenly you're going to have enormous demands um on compute and we actually really do need that efficiency because video is really expensive and complicated.

2:33:22So I think you're still going to see a lot of spend, even if the efficiency per token increases. I mean, if Google can't give me more than like four VO3 queries per day for$500 a month, like clearly the GPUs really are on fire. I wanted to talk about one of the predictions in here, and I know you guys worked on this collectively but prediction one the browser will emerge as the dominant interface for agentic ai and we've been covering the new browser wars obviously you have dia from the browser company perplexities comet and then perplexity was in the news yesterday for their offer but in some ways it feels like chat gpt and like i'm assuming everyone's expecting open ai to launch a browser but at the same time it feels like chat gpt and and other products have really replaced so much browser activity and so in some ways it's like open ai is already competing as a web browser even though it doesn't look like can literally browse the web for you and it can yeah it can it just instantiates it in tax web web browser it's just pulling that information back versus like taking you on that journey.

2:34:39So curious for you to kind of unpack that a little bit more. Yeah, so I started using Comet a few months ago and it's perplexed. Comet has like totally replaced my Chrome experience. And it completely opened my eyes to where I think the browser, I think opening, I must launch a browser. I don't think it's just going to be in chat GPT. I think they will. And I think it's going to be a very important surface area because using Comet has transformed my workflows and shown me for a few reasons that it's a much better experience. And the first product that's really infused AI so naturally in my workflows.

2:35:22when you're just out there in the web in your email in your Salesforce if you're on CRM if you're shopping and otherwise to have an agent that sees everything that has all of that context for everything that you're doing in the browser which is essentially like an operating system now and can pull all of that information in creates a far more personalized and effective experience than when it's totally siloed which is the status quo today in chat GPT sure it can go out and do things, but it doesn't actually have access and that context across everything you've been doing. You know, when I spent, I don't know, 10, 12 hours a day sitting in front of a screen.

2:35:59So it's quite different. And if you believe context is key to performance, which I do, and to creating a great AI experience, I think you have to own the browser. Makes sense. Anything else, Jordy?

2:36:14Any, I wanted to dive into the AI native social media giant. We had, the founder of Pika on yesterday, which is somewhere in between a creative tool and trying to build social features as well. I would be very excited about a net new social platform. I think I agree with you guys. There's an opportunity. I think people on traditional social media today are a bit frustrated, like seeing what they think might be AI generated content, and they're not quite sure. And so potentially creating a new space that people, as all the models get better, and I can imagine all that content will go on legacy social media platforms, but I would be excited about a place that was really a home for it.

2:37:01What are you hoping to see there out of, you know, kind of in the next year? I'd be excited to see new social media that's totally built on new AI native thinking and content. In the old world or in the current world, we think of bots as bad, like bots bad, humans good. I think there will be a company that totally shifts that and can maybe even crack the chicken and the egg problem by using bots to fill the empty room. The company I was most excited about for a while was Character in this world because it really felt like they had sort of a chance to be this, you know, very different way of actually interacting with AI in a more social experience.

2:37:41Obviously, they didn't fully get to see that through, but I still think there's a big opportunity there. Awesome. Well, we are way over. It'd be a knockout, dragout fight. I think every social media legacy CEO is taking AI very seriously. So we'll see how it plays out, but it'll be fun to watch. Thank you so much for joining the show. Thanks for joining. We'll talk to you soon. cheers bye up next we have dave from upstart do you know what you know what upstart what is john what what is upstart i can't hear you what what is sorry there there seems to be an error well we'll hear it from dave directly welcome to the stream how are you doing great good to be here guys sorry to keep you waiting it's great to see you what does upstart do everyone's been asking people want to know what do we do it's a great question we uh we are a lending platform yes So we apply AI and machine learning to consumer lending.

2:38:34And we operate in the form of a marketplace where we have consumers that we market to on one side and all sorts of banks and credit unions and private credit and all sorts of sources of capital on the other. And the whole basic premise of the business is to apply AI to the foundational notion of making consumer credit work, both in terms of origination and servicing, et cetera. So, yeah, what in the, I mean, when most people today say AI, they mean large language models, they mean post-ChatGPT, but obviously you've been in the business for a long time and machine learning has been a relevant technology pre-transformer based large language model.

2:39:14So how is AI in the modern context of like the large language model, the generative AI context, how is that changing your business? or is it more of like a sustaining technology for you as opposed to like upending everything that you do? Well, you know, I think AI in many forms, in LLMs, in sort of that sort of generational notion of AI, obviously has grabbed a lot of attention. But when you think about, you know, high-frequency trading, genomics, medical imaging, autonomous driving, these are all like forms of AI that you wouldn't, They're not language-based, they're not LLMs, but they are, of course, changing things pretty rapidly.

2:39:57So I think maybe the big question is, is there a unifying future where all this comes together into some form of AGI? But regardless of whether that is true or not, we are building something that's different. It's foundational in nature, meaning all the data on our platform is created by our platform, which is very different than how LLMs work. But I would say the commonality is that, look, there's just enormous win that machine learning and AI can bring to any particular task at hand. In our case, it's making a consumer loan of many forms much, much better. And that means like zero process, perfect pricing, works for the lender, works for the borrower.

2:40:36And, you know, we started we were founded, you know, 13 years ago. So we didn't really use the term machine learning or AI until 2017 when we kind of felt like what we were building was sophisticated enough to warrant that name. But it was all under the covers. And no one thought much about it until ChatGPT in November 22, I guess it was. That was hot. Overnight success, 13 years in business. Loved it. Yeah. I imagine as you've seen the advances over the last couple of years, every time there's a new model release or even even a vendor that's saying we're going to help you like better process PDFs.

2:41:16I imagine that that's exciting to you because you guys have done the heavy lifting to like build the supply and demand. And so as new technology emerges, you can just help, you know, make, you know, make that process more, more and more efficient. How much like what's your decision making process around, you know, whether you guys want to build something in house, which I'm sure you were forced to do a lot more, maybe pre 2020 to now when there's a bunch of new infrastructure providers that you guys can leverage? Yes, it's a great question. I mean, we've always built everything in house when something looks pretty obviously commodity like and that it's on top of LLMs.

2:41:58So, for example, exactly what you mentioned, extracting information from a document, not just kind of OCR, but actually understanding the context of that information in a way that you can take all this human effort out. Now, that's something that honestly is very commodity like, meaning the prices we'd pay aren't much different than we would pay if we built it on top of one of the LLMs. So we're always like looking for things where if we can ride someone else's cost curve on some commodity, that's great. We are definitely trying to build a larger picture. You know, the sort of end game for us is if you can imagine 100 percent of Americans are permanently underwritten.

2:42:37They can have any form of credit at the very best and guaranteed best possible rate in a moment with no process whatsoever. So anything that sort of gets us closer to that quickly. And there's definitely, you know, business models evolving on top of LOMs that I don't, you know, it's not my problem to figure out whether they're sustainable over time. All I know is like, OK, if you want to charge me an extra 15 cents, you know, that's great. And take care of all these logistical problems of maintaining that particular specific small model like the kind that you referenced. How are you thinking about the top of funnel evolution?

2:43:13evolution. We were talking earlier in the show about Google versus ChatGPT, the GPT-5 launch and the model router. And it feels like in the future, you might be able to go to ChatGPT and say, I need a loan. And you are probably going to be there. Are you thinking MCP servers? Are you thinking about SEO in LLM foundation models? How are you thinking about the changing landscape on the top of funnel? Yeah, it's a great question. I was eight years at Google before I founded the company and started a lot of history and knowledge there. And I just say to our team, like, look, at some point, Google or Apple or maybe Meta, one of the others are going to come to us and they're going to say, we want our agents to be able to apply for loans and we don't want you blocking it or whatever.

2:43:59How do you feel about that? And I've said to our team, you know, I'd rather we do that before they do that. So, you know, maybe the question is, as these agents evolve as true agents for the consumer, you know, and I'm super curious. I don't necessarily know the answer. Will there be three or four of them from the giants out there? Or will there be plugins to those to handle much more domain-specific tasks or things? I don't know how that will evolve. But I do believe it's without question you're going to have somebody that will do that on your behalf. It will get the best possible outcome for you.

2:44:31Hopefully, it will also help you make better decisions, all right? Not just go through the mechanics of applying for a loan, but help you really understand, like, what's the best product for you? Should I even be taking out a loan? If so, what other choices could I make? So that kind of stuff we are working on for sure. We could just think of as the sort of agentic part of this. And we would rather be applying that to others than having it apply to us for sure. Of course. Last question for me. Obviously, you see a lot of consumer economic data. How are you feeling about the health of the American consumer right now?

2:45:09Yeah, I mean, we watch this a lot. We've built an index to sort of track it. We call the Upstart Macro Index, which is really about like the health of the American consumer and how that's impacting credit performance. So basically what you see across all forms of credit from cards, student loans, auto loans, mortgages is highest default rates that they've seen in a very long time since prior to COVID. So the consumer has been stressed and is stressed. And maybe it's inflation, just overspending, you know, habits built during COVID that for spending that haven't dissipated, you know. So the consumer is definitely stressed.

2:45:45It's been priced into our model for a very long time. So we're very calibrated to it. But I think, you know, you have begun to hear if, you know, retailers are seeing people pull back, they're being more choiceful about what they're spending money on. Suddenly, just all across the board, you're getting a lot of a lot of noise out there. Same store sales being down for different types of industry. So I think the U.S. consumer is finally kind of going, holy shit, you know, we're not earning as much as we thought we are and we're spending more. And, you know, this kind of we have to get back to a normal place.

2:46:14The thing we point that more than anything else is the personal savings rate, which is something, you know, produced by the government. And that's at almost historic lows. So, you know, people are not saving. They are spending. And it's, you know, a bit of a catch up that's needed. So from our point of view, like a little bit of recession if it comes down to like consumers slowing down and spending less of what they earn, like would be a good thing from our perspective. Thanks, Tess. Yeah. Any comments on, I mean, obviously everyone's been debating, you know, stock markets ripping. So if you're just looking at that, it doesn't feel like there's a real reason to lower rates.

2:46:53But if you look at some of the, you know, employment data and the data that you're talking about, like maybe there is real argument to lower rates. Like what's your guys' like internal outlook for the back half of the year and beyond? Yeah, in terms of our real product and what it's projecting, we never project changes, if you will. So it's always based on what the rates are today. Having said that, I mean, I think rates are unnaturally high considering where inflation is, which is really kind of the things they have to weigh against. So in my mind, they're likely to move down. I can't predict the impact of all these tariffs stuff on inflation any better than anybody else.

2:47:31But I think, generally speaking, you know, the rates should probably be 100 or 200 basis points lower. I think they inevitably will be lower. They're not going to go back to what they were, you know, in 2020, but they're going to go a lot lower. And that's a tailwind to our business. Again, we don't plan on it, but there's definitely a point at which the consumers are going to get in a better health position, saving more money, rates are going to come down, and all that is, you know, future tailwind for us. Yeah, it feels like you're really set up well for the next couple of years, like built through, made it through high interest rate environment.

2:48:03If interest rates come down, you're ready to rock. So congrats on all the progress. No, I mean, we just reported triple digit growth in our earnings last week. The market hammered us anyway. Well, you're five years in. You're almost a veteran now. I feel like if anyone can take a hammering, it's you. This is for triple digit growth. Let's hit the gong. Thank you. Congratulations. Thank you for coming on the show. This is a great conversation. I'd love to talk to you again. Thanks, Chess. Have a good one. Cheers, Dave. Let me tell you about 8 Sleep. Get a pod five. Five-year warranty. 30-night risk-free trial.

2:48:38Free returns. Free shipping. Jordy, I think I beat you. What's your number? My problem is I get like four great night sleeps in a row. I got an 81. How'd you do? 94. Play the Ashton Hall sound for me. Let's go. And we got a question from Bill Bishop, who I'm a huge fan of. He writes Cynicism on the Substack livestream. He asked shrooms and chat GPT good or bad. I say absolutely bad. Stick to the classics. Caffeine, baby. That's all you need. What do you need shrooms for? Cheers. Quick cheers for Bill. Stick to Diet Coke and Mataina from Andrew Huberman. Load up on the caffeine. They're calling it a podcast in a can.

2:49:18Have delusions of grandeur. Yes, yes, yes. Enough caffeine will take you to the promised land of delusions of grandeur. You all need an LLabs. Am I one of the top newsletter writers on China? Absolutely. Probably the GOAT. GOAT. Absolute GOAT. So thank you for tuning in, Bill. Big fan of your work. Anyways, without further ado, our next guest. Kylan from InWorld, how are you doing? You look fantastic. I was just watching your video and you look exactly the same. How are you doing? Awesome. Thanks, John. I also am laughing because of the caffeine comments just coming before. I mean, we just had our launch night, so you can imagine I'm heavily caffeinated.

2:49:51What are you running? Are you Red Bull, Celsius, Diet Coke, Matayina from Andrew Huberman? All of the above. All of the above. We love to see it. Anyway, kick us off. We're running late today. We kept you waiting. We're keeping the next person waiting. Kick us off in an introduction. Explain what the company does and whether or not we should ring the dong for you. All right. So, yeah, we were founded four years ago now. We're basically solving the technical problems in the way of consumer AI adoption. So our team came from Google and DeepMind, worked on LLMs there, basically got very tired of kind of everything flowing into enterprise applications, professional facing applications as we see.

2:50:28So we basically set off to solve all the technical problems to see how we can actually drive consumer adoption, which is of course a huge business problem, but also making sure the benefits of AI reach everyone. We raised$120 million so far. Whoa, let's go. And today we... Hey! Downtown. Congratulations. Love it. And yeah, so today we had our biggest launch to date. So it took us four years to get here working with groups like NVIDIA, Xbox, Niantic, Disney. And now we have the first AI runtime of power consumer applications. So that's fun. Okay, let's make this super concrete to the degree that you can talk about it.

2:51:06Xbox, consumer AI. What does that actually mean? How is generative AI instantiating or LLMs instantiating itself in the Xbox world? What's even the goal there? so we started off largely working on things like basically talking npcs so we don't basically hey let's give it up for npcs let's give it up for it they're about to go on a run they get a ton of hate the npcs they're about to they do get a lot of hate they get a ton of hate they're about to look and feel like real player characters you're an npc you're an npc not for long they're going to get better because of you explain it so yeah we started out because conversationally i lms are great at that.

2:51:44You know, games are pretty boring. Anybody who's played a game, you know, has recognized that. So we started out there and then basically we realized that, you know, we don't just want these characters and basically agentic experiences in games. You can think about every consumer application, you know, your language learning apps or fitness apps, you know, they all suck. I love actually a coach that actually did something effective. And so what we found over the last few years is we worked a lot on the kind of games applications. So these bringing characters to life, you know, the types of experiences there.

2:52:12And And then now we've started working with a lot of broader categories. So on Xbox, it feels like you could be almost like an API vendor within the Xbox ecosystem that a game developer could harness and run that on the device, as opposed to going to Ubisoft and EA and Activision and saying, hey, for the next release of Call of Duty or Battlefield 6, pay us to train your LLM. You want to be able to run it on the Xbox hardware. So where in the stack is it more like you want to fine tune it so that it's on Xbox's terms and conditions versus you just want to optimize it to actually run on the Xbox hardware?

2:52:48Like where are the key trees to chop down? Yeah. So think about any of the applications. So in an Xbox, for example, you're going to have a game that's going to be a little unreal. In a mobile scenario, you might have a build with Node. You have that in the application layer. And a lot of the infrastructure we've built today has basically been optimized for that type of experience. But now we're introducing AI. So now you're having a bunch of LLMs or different model calls that are happening. And so think about that as kind of just a second infrastructure layer that needs to exist. So you've got your core application, you've got your AI, and then you've got all your hardware in the back end.

2:53:18So we basically sit in that middle layer of not just powering kind of the actual user interface and the specific gameplay elements or app elements, but actually driving the actual generative part of it. So it could be characters responding, it could be mission generation, all of those different aspects, as well as actually generating on-the-fly content. So we've got that's fascinating. Yeah. So so while you're building the game, even if it's a single player game, you could be in the loop designing or generating all the dialogue. But then in theory, it could also make an Internet call if you're connected to the Web and get up to date text.

2:53:55How are our game developers getting comfortable with the unpredictability of AI? I mean, everybody's it can be a feature like hallucinations can be awesome because it takes you in this wild place. Even if you have a game for like Roblox, for example, their average user is probably 12 years old. They don't want some LLM going off the rails and naming itself. Also, just imagine you talk to NBC. The goal on this mission is to slay the dragon. You go slay the dragon, you come back and it hallucinates. It's like, no, I want you to save the dragon. I didn't want you to slay the dragon. Also, my name is Mecca.

2:54:33So yeah, talk about it. This actually happened, though. So we did a lot of really tests around this, and it was pretty hilarious. I mean, the characters literally make up anything. Yeah, of course. There's been a lot of applications that took advantage of this. So one of our bigger clients, they're called Status. It's a crazy game, huge with like Gen Alpha, Gen Z. They basically created a game where you could role play as a character in another universe's Twitter. So imagine like Harry Potter. I can role play as Harry Potter in a very part of the universe's Twitter. And then you have like Ronald Weasley, Draco Malfoy.

2:54:59These people don't really exist. But then the AI can actually take advantage of the fact that it's hallucinating and making things up to actually come back with that. And where we see that is like with the interesting with consumer apps is they've kind of gotten to this point where if you, for example, have to design manually content and it takes you 30 days to design that content and then your users consume that in 20 minutes. You have to do a lot of work to create months of content. So AI kind of smooths out as well as that content creation curve so that you always have this kind of infinite loop, which is key for things like retention.

2:55:29It's awesome. What's next for the business? Is it just like expansion within your current? I feel like the pool of value that you can create in any of the companies that you listed is pretty significant if you just keep delivering better and better products, better value, ramping those up versus going broader. Is there going to be like an SDK at some point? Are you going to go general availability and some kid who's building an iPhone app will be able to vend this in? Yeah. So overall, today we're actually launching that next phase. There you go. Exactly what I described. And yeah, so what we realized was that as we were working with those gaming and media partners, it wasn't just them, but broader consumer applications.

2:56:10Basically, anybody who is dealing with multi-million user scale that has to be at consumer cost, consumer latency, consumer quality, which is more about entertainment than the factuality people are used for in ChatGPT. We also heard a lot about it last week. And so people actually want to be engaged by it. So for us, it's been kind of expanding to the broader consumer space across, like, outside of just games and media. and then the other part is releasing the runtime that we're releasing today. And that is kind of the big push that we've been making for the last four years and basically allows things to auto-scale.

2:56:40We had a developer today who called it vibe scaling. So, you know, people can vibe code a lot of applications, but then it takes them freaking six months to be able to actually productionize it. And so everybody comes to me, I've heard like a bunch of, you know, C-level executives be like, I vibe coded an app in four hours. Why does it take my team six months to productionize it? We're basically like automating a lot of that scale as well. and then automating also the ML operations. So most teams don't have an infrastructure team. So we're basically taking over a lot of that, automating it, and also allowing people to do experiments so they can just launch tons of experiments and find what works.

2:57:11So that's basically it, is moving into broader consumer, moving deeper in the stack of the infrastructure layer with the runtime. And we think it solves a lot of the problems that we're seeing. Well, congratulations. Thank you for hopping on the stream. We'll talk to you later. Have a great rest of your day. Great to meet you. Congrats to you and the team. Have a good one. 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. Take it seriously. Now we got Sam from Method Security coming in the studio.

2:57:39Welcome to the stream, Sam. How are you doing today? Good, good. Thanks for having me on. A suit. We love to see it. Looking sharp. Thank you. It's a great sign of respect in our culture. Yeah, that looks like a fantastic suit, honestly. Very nice. Anyway, kick us off with introduction. What do you do? What are you building? Should we bring this going? Let's not ring the gong, but I'll tell you why you might need to soon. Sam Jones, CEO and co-founder of Method Security. And let me take a little bit about what we're up to. So you're completely bootstrapped. You've never raised a dime. We have raised.

2:58:10Oh, hit the gong, Jordan. Oh, there we go. Come on. You buried the lead. This is a venture-backed company. We've capitalized. We're going after big opportunity, but we've just been low-key about it because the opportunity is so big. Fantastic. Well, come back when you have more news on the fundraiser. Anyway, break down the business for us, please. All right. So here's the problem we're after. Critical institutions are basically faced with 24-7 cyber conflicts, and they don't have the tools they need to win. There's this concept called the cyber industrial complex, which really creates security companies that are designed to be acquired, not to produce at scale.

2:58:50And meanwhile, you've got AI that's going to do to cyber what drones have done to the battlefield. And really, the future will be controlled by who can safely harness autonomy at scale. And that's exactly what we're up to at Method. So we build offensive and defensive products for some of the best security teams. Offensive? Is that for white hat hacking? Or is this are we actually going on the offense? A little bit of both. Okay, you know, when would I go on the offense? Striking back. So interestingly, a lot of commercial security teams use offense to inform their defense. And it's kind of this virtuous loop where you become the threat and then you can inform your defenses and you have this like kind of cycle.

2:59:26It's historically been super expensive to do so because you need this really hardcore, rare human being called a red teamer or like an offensive security engineer to conduct those exercises. We're putting that in software so we can basically democratize that and help organizations really assess their readiness to relevant threat actors. Turns out you build that technology the right way can be used for true offense. And so we're deployed with DOD and also the U.S. government. So we're not limiting to both commercial use for a dual use company. Cyber doesn't discriminate, neither do we. Very cool.

3:00:00Walk me through how a cyber attack happens in the age of AI. I'm familiar with like the script kitty who finds a hole in WordPress or you take a, it's a rainbow table of all the different passwords. If I go, chatGBT agent, DDoS method security website. Don't make mistakes. I don't think it'll do that, hopefully. Yeah, I mean, I'm familiar with DDoS, right? It's just a for loop. It requests the website forever, right? But AI feels like the shape of the attack could be way different. Try and concretize it for me to the degree that you can. Here's the misconception of where AI is at in security. A lot of people think like we're going to have all these novel zero days all over the place, and we're going to have all these new novel threat patterns happening.

3:00:43That's not what's happening today. Really what AI is doing is that it's helping express a lot of the known techniques and tactics at a new scale that's unfathomable like a couple of years ago. And so if you think about like the global attack surface, it's unknowable to any single human or any single security product really. But with the right AI system, especially a compound AI system, you can basically map that, eviscerate that and defend that or offend that. And so really AI is helping hit new scale, like orders of magnitude scale, less so new zero days. Yeah, yeah. So there's vulnerabilities out there where it's kind of a pattern.

3:01:21You might be able to do some RL on it. It's like follow a set of steps and you might be able to break into one website. But instead of needing to do this website and then move on to the next one, you can just say, hey, go do them all. Right. It's like instead of let's assess this organization, this is going to be a three-month exercise with the right system, which is what we do. You can say, 30 seconds, I know everything about this, and I'm going to initiate kind of something more offensive. Interesting. How are the budgets and the appetites changing in the enterprise or like the Fortune 500? Because we've talked to a lot of people that have come on the show and said, oh yeah, AI is going to really help my margins.

3:02:00I'm going to spend less money. And it seems like if you're selling into them, they're going and there's more threats. They're going to have to spend more money. how does that balance out? I'll break it down from like commercial buyers and government buyers is a little bit different. On the commercial side, the most sophisticated security teams usually have dedicated AI innovation budgets. And those are to experiment with new technologies and new technologies. And but for the most part, most buyers, I'm talking like fortune 500 security executives have known problems, known categories that they still need to purchase against.

3:02:29And so it's important to map, you know, be familiar enough, but also a little different, but not try to build anything too new. So you have to map to something that they know and they're trying to do. Um, it's not necessarily develop a novel new technology. Government is pretty different. Like there's a lot of investment in, you know, AI for offense, AI for defense, like cyber operations more broadly in the big, beautiful bill, there was 1 billion earmarked for offensive cyber operations, which is a huge number. And I would argue like still need to up that number quite a bit. But there's a general understanding that we need to up our game here and get faster and the status quo is not cutting it.

3:03:36Fantastic. Only ad quick combines technology out of home expertise and data to enable a seamless efficient ad buying across the golden retriever. The golden retriever, the dog panting and the horse noise, deeply underrated. You know, I love the Ashton Hall, but the horse noise is a close second. Anyway, we are joined by someone who can run as much as a horse, Zach Prokraw. I would estimate Zach at like six or seven horsepower. Have you ever tried to ask? Zach, you're live, by the way. I think you're about six. You're live. How much horsepower do you think you are? I think you are about six horsepower.

3:04:08We were saying I think you're probably six or seven horsepower. I don't know what that means. I'm not a car guy. I'm sorry to realize. You know, a horse has one horsepower. We're basically saying you're as strong as seven horses. Six or seven stallions. I'll take it. Anyway. I've been thinking a lot about horses, but go ahead. Oh, what have you been thinking? What have you been thinking about? So have we. They're just like the most majestic creatures. An unbelievable combination of beauty and grace, but this raw power. And it's just like, I don't know. Go ahead. Couldn't have said it better myself.

3:04:37Much like you. Anyway, congrats on the launch. Share Aura is now live in the App Store. If you're listening to this, go download it. Invite codes are going out to a wait list this week. There's 20 ,000 people on the wait list already. Wow. Probably more. So break it down for us. Pitch the app and explain some of the launch strategies that you've been employing. I want to talk about media and vlogging and the app, of course. Definitely, yeah. So for some context, I've been posting on social media under my name, essentially. It actually started as like a pseudonymous account, but that was like five years ago.

3:05:14Yeah, yeah. For almost seven years and have went from writing content to motivational content and then got really into running. And the idea for the app started where a lot of you are familiar with Strava probably. Yep. Noticed that. So I have a big Instagram account, have 1.3 million followers. Hit the gong for 1.3 million followers on Instagram. Congratulations. sack and towards the end of last year i just you know i kind of accidentally became an influencer and just hated it people's stuff and i was just i scrapped everything i was doing it was all my partnerships i just want to build my own thing and and i just noticed all these people every single fucking runner i followed was posting screenshots of their strava or their run or their workout on social media i'm sure you guys see people who do that on instagram all the time Of course.

3:06:05And then I just started thinking more. Screenshotting itself is just like this unbelievably massive user behavior. If you go look at screenshots on your phone, I bet you have like 20 ,000 screenshots. Yep. It's an insane thing. There's even a separate folder for them now. It's really convenient. I love it. But so essentially, you have this user behavior of finish your run, finish your workout, post it to social media. Yeah. Hundreds of millions of people are doing that very specific thing every single day. And yet these apps like Strava, you have to take a screenshot and then go to CapCut or Canva and remove transparency and do it.

3:06:40No, let's just build an app obsessively dominating that one user behavior. Cool. So that's what I started working on in February, where essentially the app is a tool to share your runs and workouts. It's like a creative tool for fitness and running, starting focused on running. And we're expanding quickly to all the big stuff, cycling, like you'd expect. Cycling like testosterone or what are you talking about cycling? We can, we, uh, I'm kidding. I'm kidding. Of course. We're talking about bicycling. John's going to start, uh, bicycling. John's going to do a cycle and just every day, just do it live on the air.

3:07:13Uh, what was your strategy for actually getting, uh, feedback? It sounds like you were dog fooding the app yourself, but then did you have a small community of beta testers, friends, family? Like who do you trust? Who is actually going to give you good signal because if they're too close, they'll glaze you. If you ask ChatGPT, they'll probably tell you the next Mark Zuckerberg. But you got to dial it in, right? You got to get the right feedback from the right people. So how do you iterate? Yeah. I mean, it's like you have so many yes men and you have to just ignore all of them. We've had a beta.

3:07:47So we've had a beta. Shout out to developers of Aura, Kale Stewart, John O 'Kim. Sorry for them. I love developers. Thank you. developers developers developers developers developers developers developers developers i haven't watched the show in that i've seen the clips but i'm just not used to all the things we're really ramping it up to you you're too locked in you're too locked in all right i've been watching every day but okay anyway um we've had a beta since march and yeah i mean i've had nothing else in my life besides this app luckily i'm i'm the type to just burn everything down and just focus on the thing and so we've had a beta and you know the product we had in the beginning in March is drastically different than we have now.

3:08:27And, and yeah, I mean, look, I'm lucky I have been creating content so long. I have people who, um, who were just hungry for something from me. Yeah. And this app, it's so core to the DNA of everything I talk about that, um, I think I was able to get really good feedback. Like there are some, like there's a group chat shout out to them called the pit. And it's, it's like the group of like my, my most real, if they're not just about me, but like a lot of like true obsessed savage and i've been following me for a long time shout out the pit the pit the pit is aligned back let's hear it for the pit yeah we did it since march and just been iterating rapidly on the product and the one thing i've learned which i'm sure you guys know is just you have you have no idea what's going to work until you ship it and uh it's been it's been fun to be on that journey uh we have a question from the chat do you think sam sheffer is shadow banned from share aura for not running with a beard or for running too slowly or for not running enough or any other reason I can make up trying to roast him.

3:09:26That's from John Exley. He's running under three miles a day. And I put out a tweet that if you're a man running under three miles is very feminine. And Instagram didn't like that one. Yeah, you're going to get a deep platform for that. I'm interested for that.

3:09:43It's an app, but you're building a business. Are you going to roll out? Are you monetizing already? Do you plan to? What's the plan there? no monetization yes um i we do plan to however my thing is our app is essentially a distribution product on drugs right where the only purpose of you go on aura the share or the only purpose is to create content to share to social media and so essentially the reason i am obviously bullish on my app and i'm essentially playing with three cheat codes that is the only purpose of the app is to post content on your instagram story and social media number two i have fucking two million followers i post a little i post a graphic for the app that we might make on my instagram story it gets a hundred thousand views well i i'm a pretty good designer i design a lot of it myself and or we have good designers who help yeah and then donna fucking ships it makes me ship it next week so okay my audience is number two and then my friend i have a lot of fucking friends who are the biggest running creators in the space yeah i don't i don't pay i don't there's no payments and we can get to that if you saw my marketing post we could talk about it but i'm not paying a single influencer to use my app they are literally asking me right now i just put out a tweet i don't know if you saw it i might delete it the pit is here in the chat greg duncan so shout out the pit they're calling cornwell is in the chat cole ryan i feel like a lot of these guys came from your crew i don't know if you know them by name but i'm just saying like there are big instagram influencers with millions of followers asking to use my app totally yeah and like i don't you know what i mean and so for monetization i just think if i was to charge money right now we have essentially a creative tool right we could charge money for creative assets and special templates and all this stuff yeah fuck that let's just build the most ridiculous growth machine possible get a fuckload of users and then i already have specific ideas like for example let's say we have 500 ,000 users sharing with Aura, sharing content, not just users on the app.

3:11:40You're kind of valuing the potential impressions on their content per day. That I think is worth something to a brand, to have their assets in the app to serve as creative tools to spread their brand more. That's just one way. But the reality is, guys, I will be super transparent. There is no ceiling, zero ceiling to my ambition with this app. I think consumer health, consumer fitness is a very massive category. Even if you just look at running apps, you go back 10 years to when the app store launched runtastic runkeeper map my run yeah when the store launched all these fucking apps were built they got 50 to 100 million plus users and they were all acquired by asics adidas um there's more of them that were like five of them were acquired for 50 to like 300 million and truthfully i'm starting this the first act of aura share aura is sharing but i'm since the beginning since march the reason i've been taking this so seriously is i'm that is just the start and i think there Yeah, you've told me off air some of your more moonshot ideas, and they're very exciting.

3:12:39I won't. Hunter Royce says one million users is the goal. I feel like you'll have strong opinions about AI, social networks, bots. We just heard from an investor who said that maybe there will be a new social network that's heavy on bots. We talked to Pika Labs yesterday. They want to build an app that's like a social media app that's entirely AI generated. Share Aura, the vlogs even putting out, they feel uniquely human. Talk to me about the trade-offs between like AI content being allowed or promoted or demoted. Share Aura is great because you guys can use generative AI to give people these creative tools, but they still have to go out in the real world if they want to actually really use the product, right?

3:13:24It doesn't matter if they can. Tesla Optimus, go run 17 miles and then come back and post for me. that's the future under four minute miles please but yeah what's your take on like ai on social media like it's correct place yeah i mean on social media like it can't be the heart of things like i my writing gets tens of millions of views a month i've never written with ai once i've never made a vlog with ai once however my whole app like i just pulled it up like so for our app we have like stock backgrounds right because it's like you've heard stock images right and like so we make i'll just pull it up like they look like that like they're super sick yeah very crazy percentage of our app use them like 40 plus use um which is wild and then like yeah i think it should be used to expand a creative vision like my creative universe fuck yeah i'm going to use ai i think ai videos i'm so bullish on it and like the shit we're doing for aura for the ai backgrounds i just showed you i have a person named nat who's cracked on it it is going to break the internet it is so good it is so good and and but the heart of everything is me taking yeah filming this whole thing by the way what's up guys nice hey great to see you taking this 19 2000 1999 year old camcorder and taking it on a vlog and filming my entire life so the heart of it i don't think you build a personal brand with ai it can't be the heart of it but it should be you should use it to expand your creative universe We're going to use AI to bleep out your I cursed.

3:14:59I didn't notice. Camcorder vlogs. Are they working on YouTube? Are they working on Instagram? Are they working on X? What audience likes that more than the other? They're definitely working. I'm not a YouTuber. So like, I just don't know if they're working on that platform. It's too early. My Instagram, it's funny. I have 1.3 million followers. I don't think I posted a reel for a year. because I was a writer. I was doing other stuff. They're already working on reels, and I just started them. And on X, they're 100 % working. And the big thing is, look, the thing I obsess over more than anything is just how to get attention on social media, right?

3:15:34And it's just like I've gone ridiculously viral in the past for some certain innovative things. And the camcorder is the same thing. You're giving someone something new on their screen. That's number one. And then number two is you're tapping into just nostalgia, which brands know. nostalgia is an unbelievable weapon an unbelievable weapon for attention totally and when you combine that with someone actually doing something like i'm actually building my app it's it's it's interesting and so i think they're 100 working on x like look at the fucking the vlogs i've done x have gotten hundreds of thousands of views already in the little launch video mini one i did got has 144 000 views it's pretty good yeah yeah i mean we felt that early on with like we were printing out tweets and reacting to them and wearing suits and there was a little bit of nostalgia in here.

3:16:22The thing is, you can't just fucking use Apple Garamond with negative three letters from the thing. You can expect people to care. No one cares. You have to find, you guys have the synth wave intro. It's great. Yeah, yeah. You have to pull different things from different elements. We're showing the vlog camera right now. We're using a camcorder ourselves. Yeah, we have one in the studio too. It's fun. I think these are just creative tools like the generative AI, like the generative... I like the fact that you're saying generative AI backgrounds, because I feel like the magic happens when there's...

3:16:54It's like if you go to any Photoshop or MS Paint, you'd always have the template for like, I want to just stamp a tree down, and that's just one of the tools, and it feels like these generative AI backgrounds, they're not going to go viral by themselves. the virality the human element is going to be injected and it's going to be like a collaging effect on top of some of some base that's really going to be the thing that pops totally stands out anyway well i'm excited for more people in the world to get the app congrats on the launch and uh come back on anytime everyone's demanding codes is this this isn't the first time right you've been on before no first time the first time this is crazy another big update i'll come back on yeah yeah come back on the the the honestly honestly reduce go says zach looking yoked glad you went with the black tank says ish there we go uh greg duncan says nostalgia is emotional crack you look good either way you look good authentically colin says he's cooking and making us feel next time you go on a on a long run just just facetime us we'll drop you into the show yeah yeah you can call in for a run we'll be your running we'll be your running coach yeah I'm sure.

3:18:05Great. Anyway, great chat. Great to see you, dude. We will talk to you soon. Cheers. And you know what he should do to promote this? He should run from one wander to another. He should find his happy place. He really should. He should book a wander with Inspiring Views, Hotel Great Amenities, Dreamy Beds, Top Tier Cleaning, and 24-7 Concierge Service because it's a vacation. Wander should do a campaign with Zach and just have him run, you know, 100 wanders in 100 days all on foot. That'd be great. That'd be great. Let's go to the timeline. The billionaire Porsche family prepares for war with new defense fund.

3:18:38German dynasty expands into weapons amid Europe's rearmament drive. So Shank Josie says, enter the 911, the 911 technical. This is just funny that like more and more people are pouring into defense tech. We were kind of discussing this. This is not the first time the Porsche family has gotten involved in war. It's not the first time. Oh, you put this in the feed, and I didn't realize it was from John Summit. But John Summit said – No, no, no. Let me give some content. Okay, yeah, yeah, yeah. Take this. John Summit had – He said, every great bender leads to an epic lock-in. And then people – someone quoted this and said, you're 31, big bro, and went viral.

3:19:21Obviously dunking on him. 10K. John fires back and says, do people think you just stop having fun in your 30s? Such a loser mentality. Owned. And then says David Guetta is 57, Tiesto is 56, Carl Cox is 63, and they all still rip until 6 a.m. in Ibiza while all these finance burners cry themselves to sleep at night. An East Village guy just says, banger. John Summitt, I didn't realize he was a poster. He just declared war on the timeline. He declared war on the timeline and put Loverboy in the truth zone. Anyway, fun to have people going back and forth. Show up at, get backstage at a John Summit show.

3:20:00You guys should make up and send it. And John Summit, head over to getbezel.com. Your bezel concierge is available now to source you any watch on the planet. Seriously, any watch. Nick Carter says, I'm increasingly convinced that a substantial percentage of kids brought up in the age of AI will be post-literate. Like they won't really know how to write, and I'm going to say, or think, and will rely on AI to auto-complete their thoughts. I mean, we have a friend who is illiterate and he's very successful. He doesn't know how to read. It's fine. Maybe literacy is overrated. But because he doesn't know how to read, it clarifies his thinking.

3:20:36It does. No one else is able to influence his thought with the written word. Yeah, yeah, yeah. You can't one-shot him. No, I've been pushing people on this. He has the strongest memetic defenses in the world. I think if somebody is struggling with how to communicate an idea and they think I should go to chat GPT and work this out. I think that the more you do that, the more you're going to atrophy your brain and you got to be a little careful there. It's so crazy because if you can write a good prompt, job's finished. You can just send that as an email. Like very rarely does the result, because I have GPT-5 running in my brain in terms of like rewriting emails.

3:21:17You can just send me the bullet points. You don't need to send me the, Hey, ChatGPT, turn these bullet points into a bunch of paragraphs. You can just send me the bullet points and I will expand it in my brain. And so I find that the ChatGPT for email writing does not actually improve communication or save all that much time. Again, knowledge retrieval, knowledge retrieval, knowledge retrieval. If you're thinking of something, it's on the tip of your tongue, type it into ChatGPT. It'll give you what you're thinking of. If you need five examples of something and you can think of two, it's going to nail the next five.

3:21:53Speaking of which, I had an interesting thing that I pulled up. We didn't get a chance to talk about this. But are you familiar with the story of John Hinckley Jr.? No. So we were talking about AI psychosis, AI making people crazy. Maybe social media had a similar effect. Well, what about movies? So in 1967, has anyone in this studio seen Taxi Driver? Yes. Thank you. We got a few. I know you haven't, but Taxi Driver is a Robert De Niro film where Travis Bickle, the character, becomes obsessed with a young woman played by Jodie Foster and attempts to assassinate a presidential candidate. So John Hinckley Jr.

3:22:33was 25 years old. He was a drifter from Texas, and he had developed an intense fixation on the actress Jodie Foster after seeing him in that 1976 film Taxi Driver. her. So in 1980, Foster was a student at Yale University. Hinkley moved to New Haven, where Yale is, for a time, writing her letters and calling her, even though she never reciprocated or encouraged contact. Hinkley believed that committing a spectacular act, such as killing a U.S. president, would gain Jodie Foster's attention and impress her. So he first was going after Jimmy Carter. He trailed President Jimmy Carter during the 1980 campaign, but was arrested on a weapons charge in Nashville.

3:23:15But when Ronald Reagan got elected, Hinckley shifted focus to Reagan. And so on March 30th of 1981 at the Washington Hilton Hotel in Washington, D.C., Reagan had just finished speaking and was leaving the venue when Hinckley fired six shots with a .22 caliber revolver. He hit Ronald Reagan with a ricochet bullet in the chest. Reagan survived. He hit the press secretary James Brady in the head and left him permanently disabled. And he also shot a Secret Service agent in the abdomen and a DC police officer in the neck. And so later, John Hinckley claimed he did it to impress Jodie Foster. His defense argued not guilty by reason of insanity.

3:23:58He pleaded insane, citing severe mental illness. And he was eventually acquitted on those grounds in 1982, but was committed to a psychiatric hospital for over three decades. So one-shotted by technology, one-shotted by new video, new imagery, a film, something that's not real, but told a story that convinced him. And he had delusions of grandeur and he went on this run. He was effectively, you know, he had film psychosis, but it was very, very, he was, this is like the only example of of something like that happening. And overall, I would say the films are fantastic and a major net good. Did it get Jodie Foster's attention?

3:24:40I don't think so. Hopefully she paid a little attention. I think she did address it at one point, but I don't think she was interested in him. Yeah. But interesting that this idea of seeing some sort of media, text, imagery, something on social media, something in ChatGPT, something on the screen could drive someone who has mental illness to do something crazy. This is not entirely new. The question is scale, and the question is how can you resolve it? When the film industry, I think it was handled just by, they've made more movies like Taxi Driver. They've made Joker, and people were worried about that having an effect.

3:25:28But overall, our society learned to adapt and probably identify, hey, my friend saw a movie and he's acting weird, let me talk to him about that. Like, no, just because Jodie Foster's in that movie doesn't mean that she's gonna love you if you do the thing that happened in that movie. The movie is fiction, and so people developed kind of a mimetic defense to the imagery in films. They'll hopefully do the same for social media and have in many ways. I think a lot of people are adapting to the age of social media with screen time and understanding that there's all these different incentives. People are getting a notification.

3:26:03Wow, I used TikTok for 60 hours. Yeah, don't talk to Tyler Shredge. I got to get those numbers up. Well, we got to talk about potentially the next Fed chair. What is going on here? David Zervos, who is a currently managing director over at Jeffries. Okay. And he has a fantastic wardrobe. Let's pull this up. This is wild wardrobe. robe qcap says this might be the fed chair and you're bearish and this looks like a burning man esque outfit um do you want to then next up he's got a fantastic orange suit the orange suit is incredibly sharp uh david put him on the mclaren f1 team um david was already an advisor to the fed back in 2009 for a year and then has gone on quite the run something about david's in finance because this David has fantastic suits and fashion sense.

3:27:00And then David Solomon is a DJ. Something about being a David in finance really puts you on the track for eccentricity. He does look like in another life he would have dominated digital assets. Oh, I thought you were going to say. Oh, yeah, for sure crypto. But he definitely has the crypto aesthetic down. But the question is, could you imagine him going head to head, back to back in a boiler room set with David Solomon? I think he would give him a run for his money. Absolutely. What else should we talk about today? It's 2.30. Should we get out of here? Or should we continue down the timeline, down the rabbit hole, deeper, deeper?

3:27:37You know, should we pull up this video? Dylan highlighted, Dylan Abruscato highlighted. Absolutely. There is a new - React to a movie trailer? Yeah, let's react to a movie trailer from A24. It's called Marty Supreme. It just was released this morning. It features Oscar nominee, Timothee Chalamet, Oscar winner, Gwyneth Paltrow, and of course... Startup investor. Kevin O 'Leary. Shark Tank Shark, Kevin O 'Leary. Let's watch it.

3:28:07Hello? Hey, it's Marty Mauser. I'm in the Royal Suite. I saw you in the lobby yesterday. Okay. Well, I never talked to an actual movie star. You know, I'm something of a performer, too. Are you? Yeah, you don't believe me? I... What? What? You got the Daily Mail in front of you? This is you? Yeah, the chosen one. It's a nice picture, right?

3:28:30Are you gonna get copystruck for this? Probably. If you think that's some sort of blessing, it's not. Hopefully not. It means I have an obligation to see a very specific thing through. And with that obligation comes sacrifice. Everything in my life is falling apart, but I'm gonna figure it out. Do you need any help? I could help you. I know it's hard to believe. But I'm telling you this game that fills stadiums overseas. And it's only a matter of time before I'm staring at you from the cover of a Wheaties box. The Wheaties box.

3:29:14All right. Team movie night. When this drops, we're doing it. I guess that's just Josh Safdie, but his brother David Safdie is also a partner in most of his creative endeavors. Benny Safdie. Yeah, Benny Safdie and Josh Safdie. That's the crew. But they are fantastic at finding undiscovered talent that would do well in film. Adam Sandler in Uncut Gems, he's known as a comedian. He'd done serious movies, but he was still kind of an odd choice for that. They also cast Kevin Garnett as himself in Uncut Gems, and that was like a fantastic performance. And people kind of didn't expect an NBA player to just like jump straight into a prestigious Hollywood movie and do great.

3:30:03Julia Fox as well. The Weeknd was in that movie as well. And then there's been a couple others where he's pulled odd folks in. Benny Safdie jumps in, plays. So I'm extremely bullish on Kevin O 'Leary. We're going to end on this next post. It's from the account Financial Dystopia. Okay, we're playing this one. But this doesn't seem dystopian to me at all. We're going to see why. The caption is, a remote salesman makes a call while he's driving a boat. So let's pull. SPX maximalist, thank you for the shout out. I'm glad you're tuning in daily. Hey, Becky. How you doing, darling? Oh, we're blessed.

3:30:41I'm sorry it's a bit noisy. We're out on the lake right now doing some surfing. This is insane. Oh yeah, you ever done wake surfing before? I'm ready to buy. We gotta get your ass out here. This is amazing. You scared of the water? Masterclass. You can't swim? You're telling me an AI agent is going to be able to do this? I'd like to see an AI agent drive a wake surfing boat. While our sales call. We get you surfing in no time. That's great.

3:31:13Can we make an intro to Sam Buck at RAMP? We need to get this guy on the RAMP team. He's ready to close deals. Okay, fantastic. I have some breaking news. Please. Okay, so ex-AI co-founder Igor Babushkin is leaving to start a venture firm. Oh! It supports AI safety research and backs startups and AI-genic systems. Huge news. Yeah. He was number 24 on the menace list. He was number 24 in the new, in the V2. Yeah. Wow. He's like super goaded. Igor Babushkin. Absolute. Wow. Wow. 11 minutes ago, this broke and you guys got the post up so quickly. Well, we have to get in the car and hit the road. And Igor, open invite.

3:31:57Come on the show. Talk about your new fund. We'd love to hear from you on this. Let's make it happen. It's fascinating. Great stuff. Fun show today. Leave us five stars on Apple Podcasts and Spotify, and we will see you tomorrow. Thank you for tuning in. Have an incredible evening. Talk to you later. Bye. Bye.