Ryan Petersen, James Cadwallader, Quaid Walker, Sarah Guo, Nicholas Harris, Raunaq Singh, Deel Spy Scheme, Tesla Deliveries Drop

39:01And so you got to dig into it. And I was always wondering if there was going to be, you know, obviously there's a decline in interest from Democrats. Would that be offset by Republicans who now like the brand? Well, we kind of have the answer, at least right now, that demand has not. The issue is the average Republican that has switched and said, I'm a, you know, turned to an Elon fanboy, loves Ford Raptors. And that's the big challenge yeah it's like no matter you know even if they they think they're on team elon now the ford raptor is still probably you know the greatest i still think that's an opportunity though because there's no reason why elon and tesla couldn't build something like a ford raptor ford raptor are like a lifted truck well it's not the cyber truck no not the cyber truck because it needs to have uh it needs to have an internal combustion engine for sure yeah and it needs to have you know you need to have an option on the tesla configurator to say like i want to check I'm rolling coal button.

40:02And then it just has the massive smokestacks out the back. It needs to have a really aggressive engine note. These things are important to the new customers of Tesla. And I think Tesla needs to adapt. But let's dig into it at Wall Street Journal. There's further evidence that a growing consumer backlash against the brand is hurting Tesla's business. The analysts were expecting 396 ,000 shipments. It came in at 336, much lower. Tesla shares were up 4 % in midday trading Wednesday following the release of its latest delivery figures. Fascinating that it went up, but I guess the market was expecting even more of a sell-off.

40:40Musk's active role in the Trump administration and vocal support for far-right parties in Europe has made Tesla a target of political protests and boycotts in recent months, including in some cases by once loyal Tesla owners. Yeah, it's... Yvonne's probably looking around like now, watching the stock pop 5%, being like interesting uh but it's possible this is more of a reaction to uh china no no the news that that he may be leaving the white house oh sure so if he goes which if he goes deeper into just like i'm back in just the tech world that would certainly offset things yeah it seems clear that there's a limit to his, there's some sort of limit to how much he can multitask.

41:27And I would imagine that Tesla shareholders will benefit from him shifting focus out of the government and back on to. Yeah. So we saw this from Joe Weisenthal. He took a picture of a computer showing Bloomberg and there's an article in Politico that says Trump tells inner circle that Musk will leave soon uh obviously just kind of rumor mill at this point but um but interesting if true and unclear what that would mean for tesla could the democrats who have been buying tesla's kind of forgive and forget and move on and yeah come back to the to the uh to the brand i certainly i certainly think it's possible if elon wanted that he could go on he's very he's a very good communicator he could go on a press tour and say you know like hey like yeah i'm actually just really focused on cars right now and you know i was thinking about this like tesla should be the most non-partisan vehicle in the world because it's it's electric so it appeals to democrats and it's built in america and so it appeals to republicans and he could if he was purely focused on that and didn't care about the politics stuff he could have he probably could have gotten the Tesla brand to a position where it was loved by everyone in the same way that like Nike is loved by both Apple.

42:47These are very bipartisan brands, nonpartisan brands. But I think he really did think that this, he was a true believer in the, in this idea that the 2024 election was deeply important and it was worth him coming off the sidelines, risking everything to move Washington in a different direction. And he did that. Now he kind of, you know, there's going to be some, like we were talking to, I think we were talking to center about this like like what is the net effect of elon's going political like will it be good or bad for him like and it's like okay what are we talking about here like aggregate net worth like some of his companies might do better some of his companies might do work worse we have to like i think i think if he was running the calculus would be like this is probably short term bad yep but if i can be effective and sort of change the course of history with the country yep then it will be net good in the long run.

43:39Yeah. But certainly it would have been hard to argue that going in short term was just going to be default good for everything. Yeah. I mean, you could even imagine it's like, okay, so what if the work that he does winds up streamlining the FDA, speeding up Neuralink development and Neuralink, every single person winds up getting one and they cost$50 ,000 and all of a sudden that's a bigger... There's Neuralink news today too, by the way. Oh, really? They're opening up a patient registry. Fantastic. But there's two polymarkets I want to look at. So right now, Elon out of Trump administration before July is sitting at 50%.

44:1350%. And then out of the admin in 2025, you know, sort of basically by the end of the year is at a 76 % chance. Wow. So. I also wonder what that will mean because it's totally possible that, so people have been predicting like the Trump and Elon relationship is going to dissolve and blow up. It's going to blow up. Like they're too, they're, they're both too hard charging, aggressive figures. It doesn't make sense. They just can't last. That's been the narrative. Right. Yeah. But it's possible that they, that Elon is no longer a member of the staff of the White House. Like he doesn't have a.gov email, but they're still friends.

44:54Yeah. That is a, that is a possibility. I don't know if that's where it's going. I really can't predict any of this. I got really tapped in in DC. It would be very short-sighted for both of them to blow up the relationship. Yeah. I think so. It seems like it's been pretty mutually beneficial. I don't know. I mean, no one expected them to win and then they did. So, you know, it seems like it's good. Sales from China, which exports to foreign markets, fell 49 % in February, but fared better in March after it started delivering the refreshed Model Y. I saw the first refreshed Model Y on the street the other day.

45:25It looks great in China. According to China Passenger Car Association, the company sold 78 ,000 China-made vehicles in the month, down 11 % in the same period last year. Despite the decline, Tesla climbed back to third place in sales in the Chinese car market after dropping out of the top five in February. And they have some stiff competition that I'm actually very excited about. I think just from a consumer perspective, seeing some of the demos of the cars and the way the Chinese car companies are pushing things forward is awesome. Have you seen that demo of the adaptive suspension so you're going around a corner super hard and it's and it's tilting the car so you're it's perfectly flat and they have a wine glass on the center console it's not spilling amazing or like going over bumps and and the car is like adapting to the bumps so it's just perfectly smooth there's all these like they do all these like weird features like there's a car that floats we talked about that now there's there's a bunch of simple features that just makes sense yep they have hand tracking so you can be like this yep and then it'll pull down there's even like this led bar on the back of some of these cars so you can send a message to someone before in front of you or behind you being like like sorry like i i was on my phone that's why i didn't go when it was green like you could send that i think it's all these funny weird things there's this explosion of innovation and like testing weird things and i like that tesla puts pressure on our catalyze that totally yeah tesla did the same thing with the noise Yeah, the part features.

46:52Yeah, or like playing video games or playing all these different things. Tesla very much did that. And while I absolutely want American companies to win, I do like the idea that there's now pressure to say, okay, we really need to step it up. Innovation is good. Innovation is good. I want to see Mercedes execs look at these videos of these Chinese manufacturers and be like, okay, they're way ahead of us on so many dimensions. Yeah. We need to catch up. I mean, I'm pretty sure that, I don't know if it's a Yang Wang U8, but the CEO of Ford was driving a Chinese car daily for weeks because he was like, I need to understand what's going on over here, and we need to figure this out at this company.

47:30Yeah, a little bit of that. So in Germany, home to Tesla's European factory, new vehicle registrations fell 76 % in February compared with the same period last year according to the country's Motor Transport Authority. In the U.S., sales fell 2 % in the first months of the year, according to research from firm Wards Intelligence. And so that's not that much of a drop, considering that I think of Elon as being more politically controversial in America than, I mean, maybe in China, maybe in Germany. But it seems like it's a little bit more distant there. But I don't know. I think people make car, I think these purchases are super considered outside of somebody's home.

48:13It's one of the most expensive decisions that they make and, you know, are costly sort of products that they buy. And if you're looking at buying a car, you're looking at the cost. If it's an EV, you're looking at the range, you're looking at the features. Yeah, maybe you care a bit about the founder, but that's only one factor, right? And so right now, Tesla is basically giving away these cars. You can get a Tesla Model Y for$300 a month. Your phone bill. yeah it's it's not far off from your phone bill so it's an extreme and who knows if that's at all profitable yeah but it's an extremely solid offer in the market and the reason for the sales decline is despite these sort of massive incentives every other manufacturer has overproduced evs so they're also giving these things away you could get a rivian pickup truck last year for like 500 bucks like it's like it's like it's great they're giving these things away yeah um and uh and so yeah it's a amazing time to be a buyer in the car market you have a lot of options and the sales decline decline like i'm sure was anticipated by analysts right tesla basically had a monopoly on on quality cheap evs for a period of time it also felt like they were reaching saturation like every car on the road in LA is a Tesla.

49:33Like at a certain point, like I understand the monopoly power that accrues to the iPhone and the integration there. And everyone wants the blue bubbles and everyone, it's nice. If I have an iPhone, you have an iPhone, we can do airdrop cars. It's a little bit less so. And I feel like cars are still a little bit more of like the status symbol, what it says about you, the difference of the Ford Raptor driver versus the Audi R8 versus the Lamborghini, like they all say slightly different things. And at a certain point, if every single person is driving a Tesla, which is like this appliance car, there's just going to be some people in the world that say, you know what?

50:10I will accept a lower quality of car, even on a price per power or horsepower, any ratio that you want to measure, like quantitatively a worst car just to express myself and actually say something about myself and say, Hey, I have a convertible. Like, and that says something about me or I, I, I have a, I have a truck and even if I don't need that space, I have it because like it, it makes me feel like a cowboy and I like that. And like, if Tesla's not offering that brand feel that will drive cars are so emotional. totally people use them it's like a handbag for women or a watch guys as a way to express yourself some people still just say i'm gonna be practical i'm gonna buy the cheapest best option other people you know do what i did at one point and bought a lifted ford raptor because i just like wanted to live out my childhood dreams exactly exactly i had a great time with it and then i it was so funny driving a raptor because i felt like i'd go to a meeting and if if the person i was meeting with saw me pull up in the raptor i had to like explain like well i'm actually like driving it like kind of ironically i'm kind of driving this more for like my like 10 year old self more than my current self i just want you to know that i'm not like really a raptor guy but i kind of respect completely murdered out and it's tinted and um yeah anyways yeah that's great uh so in california where teslas are among the best-selling vehicles the new vehicle registration of teslas fell 11.6 percent in the state obviously california is like a d plus 30 state and so very democratic, maybe more affected there.

51:45But also there's just saturation happening. The market cap of Tesla reached a high of 1.5 trillion in mid-December in the weeks after the inauguration. The price per share returned to pre-election levels. And so there's also been vandalization. That was their all-time high? Yeah. And so now Musk is trying to refocus of investor attention away from car sales and onto its driver assistance software, which it calls full self-driving supervised, and its optimist humanoid robot technologies he has claimed could one day boost the automaker's market value to as high as$30 trillion. You'll love to see it.

52:30The humanoid robot market, it's also fascinating because everyone is so skeptical about it. The the anti-elon people are like it's tele-operated it's a guy in a suit like it's nowhere near any commercial scale and like that's probably true like the like the optimist does not seem to be something that's going to be shipping anytime soon but at the same time like we've seen the chinese humanoid robots like they work you can just buy one like it can't do everything but like it's out there it exists it's not some sci-fi we have no idea how to do time travel and it's like people are writing academic papers about how one day you might be able to make a humanoid robot it's like boston dynamics exists you can see the atlas robot running around you can see the uh the and you can actually get a unit robot dog for under three grand on amazon yeah and so and so like unitree is shipping these things they're not great but it's like can can tesla copy that and just copy paste that absolutely can even figure red adcock like like can they just set up a plant that copies unitary like that doesn't seem that crazy uh even the legacy car makers were eventually able to make electric cars that were in the same ballpark as tesla's like the ford mach e is like it has similar range similar performance like a tesla fan would say like oh it's like you know too expensive for the power and you don't get the self-driving stuff and it's like yeah that's all true it's it's but it's 80 of the way there 90 of the way there and there are some electric cars that give you a better experience than tesla in certain yeah in certain categories like the rivian the rivian has a full-size suv tesla does not like they they have the crossover and so and and even like uh the the tycon the tycon comes in a in a wagon configuration like tesla just doesn't have a wagon which i think looks fantastic i like it a lot and and also like tesla doesn't sell a convertible like if you want a convertible electric car like you're out of luck with tesla and so there's all these ways where where where you could kind of like slice up the market figure something out but like you know these uh these humanoid robots like they do exist and so even though it feels silly to think about tesla as like oh yeah they're gonna win in humanoid robots it's like well they're probably going to do something there and they're probably going to make it yeah they're probably going to make something work uh and so i'm i'm i'm very interested to follow it uh it's it's it's fascinating to see how this pencils out it'll be interesting to see how elon kind of reintroduces the company or if he does he had trump you know pushing like hey go buy a tesla there was those note cards you saw that yeah i'm like the tesla costs sixty thousand dollars this and that um is there a way that he can beat the ford raptor at its own game without putting an ice engine which i think might you might need to do that would that would go crazy cyber truck yeah internal combustion engine he needs a hellcat competitor he needs a dodge charger competitor he needs something that trades uh i mean one of the problems with tesla

55:49I'm sure one of the problems with Tesla is like, is like there's too much technology in that. So you can't really like trade it on Facebook marketplace. Just like here are the keys. Like I don't have a title because like whoever actually, actually owns it will be able to just like, it has low jack basically because it's so connected and they can just disable the car. But if you, if they take some of that stuff out, they put in a V8 and maybe throw some superchargers in there. Yeah. Really get the secondary market pumping, Get the secondary market pumping. Get the thieves involved. Anyway, we're having some fun.

56:21That was always a good bit of ours. Yeah, yeah. Well, Tesla sells products online. They sell cars, but they also sell stuff like merch. They'll sell tequila from time to time. A bunch of hats, things like that. And what should they use for sales tax compliance and automation? Numeral baby. They should go to numeralhq.com. Benchmark Series A. Sales tax on autopilot. Spend less than five minutes per month on sales tax compliance. They work with thousands of high growth companies. And if you were selling products online or you're a SaaS business, go sign up for Numeral. And just for old time's sake, tell them the Technology Brothers sent you.

57:03They'll know what you mean. And this is really cool. There's 25 states that are taxing software sales. and if you have any type of scale with your SaaS business, I'm sure you're dealing with this already. So go check out Numeral. And this monitoring feature is actually genuinely very interesting if you're a startup and you're growing because oftentimes you don't have to pay sales tax until you hit some sort of threshold. And so their example here is like, they're monitoring your sales in New Mexico. When you hit$100 ,000, you're going to need to register and start paying. But as long as you're under that, the state doesn't care, which is great because the state, it's cumbersome to file these new tax, these new sales tax reports.

57:44So they're going to, they're going to, you know, track that and then help you file that as soon as you need to. So I mean, I've been caught so many times that like, I can't even count where it's like, oh, I, you know, we, we hit the threshold. Then we had to go pay a lawyer to figure it out and like do all those things. Like this is a, a really great product. So go check it out. Numeral HQ. you anyway uh let's move on to uh um some watch news some big watch news so we got quaid coming on co-founder of bezel he's calling in today we're gonna be breaking down what's happening in the world of watches and wonders basically every watch company launched new uh watches uh the one that i wanted to highlight here is uh vacheron constanton uh has released the most complicated wristwatch ever created.

58:34The Solaria Ultra Grand Complication featuring 41 complications and 1 ,521 components, eight years of research and development, 13 patent applications. And it tells you everything like, you know, sunrise, sunset, moon phase, day, month, year, time, set alarms, like all these different things on it. And the funniest thing is I'm sure this thing costs like a million dollars but i was looking at this and i was like yeah like that's actually like really useful stuff like i need this that was my reaction was like yeah this is like totally justifiable like this is this is just like this is just practically yeah just high high output you know podcasting live streaming you just kind of need this level of performance yeah i was like i'm sure they charge a lot but like look at all the complications like you kind of need this i need to know where the tides are on my wrist at any minute with a mechanical device i can't use my phone for that.

59:29But I mean, this is a fantastic watch and it looks very cool. And it's also pretty huge. And on the back, they have constellation charts. Do you see this? It's insane. You can see what the night sky looks like. We've been saying this, but Vacheron is, we believe, going to go on a generational run. We think so. It's already on the run. It is. It's fantastic. Well, I'm excited to have Ryan on. He is going on with Kramer later today. And so I think we should help him workshop some just crazy takes. Crazy bangers, crazy bits. Yeah, you just want to go big. You want to go extreme when you're on there.

1:00:07I mean, we should set the table a little bit. Basically, Trump is giving a press conference today at 4 p.m. Eastern. So in exactly one hour, this should start. this should start. Tariffs are looming, but Trump has called it Liberation Day. But the stock market is up, maybe calming fears that there will be really, really aggressive tariffs. The yield on the 10-year Treasury note ticked up as well, on pace to snap a three-day streak of declines. Gold prices rallied, sending the precious metals towards another all-time high. Trump has declared April 2nd Liberation Day for U.S. trade policy. He is due to announce the contours of a sweeping tariff plan at 4 p.m.

1:00:52Eastern in a Rose Garden address. The Wall Street Journal will stream the president's tariff comments live. The tariff fight has ignited worries about a slowdown in economic growth, driving a steep sell-off in shares of small companies after weeks of unease about how Trump's tariff plan will shake out and which industries they will reshape. Investors and business leaders around the globe are hoping for more clarity. And that's the big deal here is just clarity. People want to know what to expect. You can't move a whole factory in a day. It takes years to reshore manufacturing capacity. And the bigger the company, the harder it is to do.

1:01:29Yeah, this was Sean Frank's big point, which was, you know, even if I want to react to tariffs, it's going to be damaging to my business and every other e-commerce business in the short term. And so Trump clearly wants to make big, quick change. But there's still, you know, a lot of companies caught in the crossfires in the short term. Cool. We got Ryan in the studio. Welcome, Ryan. Ding, ding, ding, ding, ding, ding, ding, ding. Are you not traveling? Was yesterday. I'm back. You're back. Congratulations. Enjoy. Home sweet home. First, I mean, we got to ask you, are there any spies? How are you dealing with counterintelligence, counterespionage these days?

1:02:16Oh, there's always spies. Yeah. We're good. We try to make sure that our code base is super buggy. So if you steal it, it doesn't work. That's my tactics. Do you think this is a symptom of like just zooming out from, you know, the deal rippling thing and anything that's happening at Flexport? Do you think this is a symptom of tech becoming a little bit less greenfield, a little bit less positive sum? There's two or three major backed companies in the exact same category now. And it's less of the anointed power law winner who's going up against some company that's so sclerotic that you're just stealing billions of market cap all day long and it never really matters.

1:03:00It's not so much of a knockout, dragout fight. Like, how do you think about this in the context of like the history of Silicon Valley and like your career? Oh, I don't know. I mean, you know, our issue was like, I think very different than deals. Like that was like two arch rivals going at each other and like someone, you know, that that was that's crazy. I just read the deposition. That's crazy, right? Really crazy. Our issue is very different. It was a couple of employees who just like making bad decisions. down a lot of stuff on their way out and the company they started is pretty insignificant my general is never never punched down but when you see someone committing ultimately a crime yeah uh yeah there's a sense of moral righteousness that needs to happen some justice in the world so yeah but it's quite different i mean we're not this company's not a threat to flexport the way maybe deal is to rippling or vice versa i don't know oh yeah yeah yeah it's very different uh so So yeah, I mean, on tariffs, like what are you expecting?

1:03:57What are you looking for? How do you think it's going to go down in an hour? Yeah, I don't know what to expect. I feel a little bit like, you know, maybe you're in Florida waiting for a hurricane and it's about to hit. Florida, man, I don't know. We should get our American flag out and stand in the wind and enjoy the show or be horrified and go, you know, get in your car and try to drive a thousand miles away. There's no escaping in your business. Yeah, there's no escaping. It's going to hit hard. It's really ugly for our customers already. I mean, they've already on the China tariffs. It's hard to imagine how they go much higher, really.

1:04:36Because they added 20 % to what was already 25%. And then the Venezuela stuff hit today, I think, which is another 25 % on top of that because China imports Venezuelan oil. what am i 45 plus 25 70 tariff and then if you do steel or aluminum which if you have that component you're you're pushing into 80 to these go a little bit higher i mean at some point you're just like oh okay so i don't know how much worse china can get it can get worse they can they can do whatever they want i suppose um the tariffs on other countries is the big wild card here what other countries get, you know, you've already seen Israel and Vietnam both went to duty free on American imports.

1:05:22So we'll see. My impression from having talked to a cabinet secretary last week, that what he told me was that this would be April 2nd today is the start or not the end process. And he means that I think in a positive way for companies that they're going to come out with a big bang today. It's going to be ugly. And then he would expect that countries will come to the negotiating table and make deals to bring the tariffs back down. But they want to show, send a very clear message that they're dead serious about, you know, that they mean business. And then he expects countries will come to the table.

1:06:05But some may read it the wrong way and kind of retaliate with their own tariffs. And then the administration may escalate further. We've seen that as a pattern. So my advice to all the presidents of the world is to go read the art of the deal. And it's not that hard to figure out how these guys work. It's like similar to FF. It's like, how does FF make investments? You know, read zero to one. That's basically it. It's all out there. They're still doing the playbook. Are you, do you think, is this already happening or is it going to happen? companies sort of dying before they can onshore manufacturing?

1:06:42Is that something that you're super worried about? Or are people just battening down the hatches, like you said, Florida style, and just figuring out a way to, you know, obviously everybody wants to survive. But are we seeing sort of like an extinction level event within e-commerce yet, specifically? Certainly not yet. It's very hard to say. I mean, the reality is tariffs alone won't bring most of these industries back to the U.S. The U.S. dollar is just too strong. I was talking with a company yesterday that imports garlic. I was like, wait, I thought California has the best farmland in the world for growing garlic.

1:07:21Why do we need to import it from China? But even with the tariffs, it's cheaper to import the stuff from China. And it's, you know, our soil is better than there. It's like California is the Gilroy is like the garlic festival. I mean, it's the best place in the world to grow garlic. So, but the U.S. dollar just being so strong as the reserve currency makes it like no matter what you do almost with tariffs, it's still cheaper to buy from another country. So I think that tariffs alone won't do it. And nobody, there's no political will to make the dollar cheaper. But if you want manufacturing to come in the U.S., the U.S.

1:07:57just can't it just can't be that we're that much richer than everybody else on a dollar basis because it's kind of fake. Yeah. But haven't haven't some people argued that with extreme enough tariffs, it would, you know, get people to, you know, try to just move off the dollar. Maybe it's impossible. There's got to be a number. Yeah. It might move off the dollar, which might actually cause their problem not the way they intended to. Yeah. I'm not like I've always been a macroeconomic skeptic. Like it was, I'm either too smart or too dumb for macroeconomics. I'm not sure which. I couldn't figure it out.

1:08:29They'd have all these advanced, it all seemed more complicated than they were making it out to be. You never studied ISLM, all the different charts and graphs. The only class I ever got a bad grade in in college was macroeconomics. Yeah. Yeah. Is there hope that, I mean, it seems like obviously there's like the micro, like what is the actual tariff rate in the country that I'm operating in? But then the real hope from the market, at least in companies, seems to be give me a framework and a real understanding of what the future is going to look like. and does is there a chance i mean it sounds like we're maybe even just starting that process of really understanding how the business community can respond to like a larger trade policy strategy and like is that what people are pushing for is that is it really is it really more about um just clarity over the long term for sure business needs certainty and clarity and it's really hard these supply chains are multi-year maybe yeah ideally decade plus investments that you're you're making and how you're going to set up your supply chain and if you if it's changing every single week like you're just paralyzed you can't make any decision at all um i think canada stuff's pretty harmful in that way because if there's going to be tariffs on canada then there's going to be tariffs on malaysia vietnam india and everybody else like so it makes it really hard to make any decision let's say a company finally says okay it's very clear we're gonna have to to move our manufacturing out of China, this administration.

1:10:08And the Biden administration, by the way, it was also ratcheted up the first Trump administration's tariffs on China. They didn't lower them at all. So both parties are aligned on that. So if that's clear and you're ready to make that move, then you go, okay, where do we move it to? Unless you're ready to move to the US, there's no ability to make a decision at all right now. Do you think it'd be better to take a more gradual approach to implementing these tariffs? I'm just thinking like, instead of saying, hey, there's a 24 % tariff coming in on this country. It's like, no, we're going to raise the tariff 1 % per month for the next two years.

1:10:44And so you know exactly where it's going. It's not going to just destroy your profit margin today. But if you don't figure it out in two years, like you probably will be done. And so you're signaling to the market exactly where it's going to go. But it seems like I've never seen a policy like that rolled out. Yeah, they were talking about that. I mean, I think that was one of the things that Trump or Lighthizer or one of the people close to the administration said they were going to do during the campaign. No, I think it was Besson who said that, Treasury Secretary. That would make sense to me.

1:11:15Or even just giving people, you know, six months notice of this is coming, a year notice. Like some of the policies they've enacted have said, OK, this kicks in tomorrow or next week. And you're just like, oh, my God. like i have a friend who's importing uh stuffed animals and he bought a hundred thousand dollars worth of stuffed animals and while the container was on the water the duty rate went up and he got hit with this twenty thousand dollar billy didn't plan no like brutal you know and so you need some notice period that they haven't done that this time around i think yeah gradual ratcheting it But ultimately, just providing clarity, like, where are we going to be?

1:11:57It's also the ultimate challenge of the U.S. system is, you know, here at least the two parties are mostly aligned. When it comes to China, we'll see about other, we'll see what policies they actually roll out. But the two parties are mostly aligned on trade. They both hate trade right now. And so at least you have some longer term view of what it's going to look like. But in the U.S. system where it can totally flip overnight, it makes us very hard to deal with as a country. I mean, I think this is one of the things that has made it difficult for a deal like with Russia, for example. I mean, the two parties are just polar opposite policy.

1:12:35So how can they make a deal with either party when it might just flip in four years to someone who won't hold up the deal? Yeah, I've seen the Flexport 747. There's one right behind you. if onshoring really happens and there's major, major production shifting to the United States, what does that look like for Flexport? Are you going to get into like more rail, more trucking? Is the market even big? How would you think about that? I would imagine there would be an expansion of the U.S. opportunity, but like what does that look like for Flexport specifically? Yeah, winners and losers in different parts of our business, for sure.

1:13:11The air freight business, a lot of our, we do a lot of e-commerce products from China to the U.S., of course. That's about 50 % of all the air freight in the world now is coming out of the Chinese e-commerce. And so that is at major risk and the price of air freight will probably collapse. That would be bad for our air freight business. Our customs business is already booming as we help. We provide a lot of advisory services to help companies figure out what this means for them, how to mitigate, minimize duties, be compliant, get refunds on duties. every year even before all these new tariffs seven billion dollars is going unclaimed in refunds that people are owed right that's right so we we got people 140 million dollars worth of that uh last year or no that's our goal for this year um but that's still a big market you know it should be 10 times bigger or even more than that um so that part of our business is booming trucking we do about 200 000 truckloads a year domestically moving trucks uh would they have nothing to do with the international freight that would probably grow uh we'd want to get more we will be getting more into kind of trade with us and latin america us and other parts of the world i i i don't really worry too much about the macro like we're still pretty small we estimate our market share is about 0.25 percent wow um right now so like okay even if the market shrunk in half yeah we've we okay now we're 0.5 you know hold on to the we have but if we don't do all of it so i i i'm too worried i have a question about a uh market i'm sure you've thought about so we've been having a bunch of you know there's a bunch of new defense tech companies emerging uh you know they have to move big, expensive, flammable things around all the time.

1:15:04Is that a vertical that you guys have looked at at all? Because I think it's obviously a bunch of compliance issues. Yeah, a little bit. I think you tend to want to be more, those guys want to work with people who own the assets. More tighter control, security wise. Actually, I heard about this company that does trucking for the DOD or for big defense contractors and they ship missiles as like a very lucrative business, but they own all the trucks and we don't, we're trying not to own any assets. Sure. Very hard to maintain, to provide the kind of like ultimate security that one of those companies needs if you're not asset heavy.

1:15:42So they'll, it's a, it's a, it's a cool space, but probably not one that we're best suited to play in right now. Yeah. What about, What about self-driving trucks? I feel like we're seeing so many, just like the Studio Ghibli moment, the ChatGPT moment, like AI feels so big. And yet the self-driving trucks aren't really here. What are the dynamics? And do you have a timeline for that actually affecting the market? What's kind of the impact? it'll be huge i mean it's um the way most here my tesla i mostly drives itself now um and tesla's making a truck so but i don't know how many of those tesla semis they've really shipped and there's two different problems of the electric truck and the self-driving truck that maybe didn't have been conflated like because i think the electric truck actually has more problems than the self-driving truck it seems like yeah um just because of like charging and range and different things that don't make that much sense for a, from what I've heard, I'm not, I'm not that close to the physics of it, but the recharging network has just like not been there for it.

1:16:49It's going to be really huge though. And a massive impact on a lot of things, you know, right now transit time, even like a truck that drives 24 hours a day can cross the country. I think the loss is you can only drive eight hours a day. So across the three, three times faster where today you would need three drivers and they charge you a huge premium for that uh team trucking it's called where you have multiple drivers running shifts and sure and like it's a shitty lifestyle like riding overnight like never getting out of the truck as you cross the country that is crazy and but you could it would be very competitive you can i once drove across the country in 53 hours with four friends just taking turns were you doing a cannonball being hardcore for broke college kids.

1:17:36There's something about that that sounds like amazing with your boys once, but I take your point on maybe as a lifestyle. We've been talking about it. Yeah, we want to do a race, try and get across the country. I think the record is something like 22 hours, which is crazy. Yeah, over 100 miles an hour the entire time. Very illegal, very controversial. From Maryland, where I'm from, to Oklahoma. And actually, the only reason we stopped, a car broke down. We were going to go the whole way without stopping. Yeah. So the 53 hours, actually, there was a stint while the car was in the mechanic. Okay.

1:18:10I'm ignoring that part. Okay. Yeah. Yeah. You cut that out. Yeah. Yeah. And then we talked to the Green Canyon and like looked around for a while. Yeah. Yeah. Yeah. The real Cannonball is from the Red Ball Garage in Manhattan to the Portofino Hotel in California. And it's been done for years. Alex Roy was the famous guy who did it originally. and then Ed Bolian destroyed the record during COVID when there was no one on the streets. It's a fascinating story. You should go check it out. Yeah, this will be big in trucking. Jobs aside, I think truck driving is the most number one profession in 34 states by a number of people doing the job.

1:18:45So that'll be massively impactful. And yeah, I think there's a lot of positives for the industry and productivity and stuff, but certainly it's an interesting problem for the for the society yeah speaking on ai you know something we've talked about on the show is like you had this ghibli moment last week where something that was historically super time intensive and expensive and costly like if you wanted this sort of like beautiful hand-drawn animation style yeah you could go on upwork or fiverr and get that kind of thing done it's not going to cost a ton most people wouldn't even bother to do it and i think that we are racing towards like the ghibliification of like all goods right on like a long enough time horizon like automation robots will just you'll have sort of an idea for something that you want and in theory like you know you just you know something could be made with no human involvement and that could really drive the cost down now if the cost of a lot of goods goes down over time then in theory there would also be a lot more sort of like a Jevons paradox dynamic where like if things get cheaper, people want more of them, which means that like we there's a scenario where like we're ordering 10 times as much stuff from China in, you know, 10, 20 years.

1:20:06How do you think about just AI? Like it's easy to see how AI is going to make Flexport a better business by rolling sort of systems out internally and building these sort of customer facing experiences. But have you thought at all about like, how automation broadly can actually sort of like, impact, like the flow of goods around the world? It's sort of a more macro level? Well, actually, just coming back to the amplification of everything. So I'm a, I'm a, I'm a published children's book author, you guys may know. Yeah. I wrote this myself. It was not written by chat CPT. It was not illustrated.

1:20:47I didn't know it's right. I just wrote it. So you can write a children's book about 45 minutes. I love it. But the design took a long time. My designer who used to work at Flexport did this. Yeah. It looks great. It's a wonderful story. Took him like, man, the better part of like six or eight weeks to do that. Yeah. When ChatGPT released their new image model last week, I was like, oh, I'm going to write a new children's book. And I did it in an hour. And on my phone, I could have done it faster if I would have been on desktop and had parallel tabs open or whatever. But on the phone, the GVT app didn't let me.

1:21:25But in one hour, I was able to create a really cool book. And I think I could publish it and be done. It's also so cool, the customization, being able to make it about a little more kid. I make these really cool, iconic Flexport posters. We have 40 offices around the world and one for each office. Oh, that's super cool. well yeah so using like iconic from the golden age of like yeah ocean travel liner tunnel it's amazing good prop for that and it i asked the same designer to do it for me i wanted these posters like you know i asked him six months ago and he quoted me something i couldn't afford

1:22:04and now i made them all last night in like an hour and i'm yeah so let's use a children's book as an example my son is obsessed with reading he's three years old he could easily burn through five, six books a day. Like he would happily read, he'd probably read 20 new books a day if we had 20 new books available in the house. And he'll read, I bet you he'll read even more if he's the protagonist of the story. Yeah, exactly. So if like he's a protagonist, it's customized to his interest. It's perfectly matching his level, but I also don't want him on screen. So like there's a world where if like the cost of producing the books drops, books are, you know, 80 % less because there's, it's just generated.

1:22:39There's a world where I'd order five times as much. And that means that you're going to be shipping, in theory, like a lot more goods. And that's just like for one category, right? Could be. Yeah. And there'll be categories like that. I, you know, if I wasn't so busy, I would definitely try to set the Guinness Book of World Records right now for whoever wrote the most children's books in the world. Right now, in a 24 hour period. Yeah. 2 ,000 children's books. can we hear a little history of the flexport lion and the generative ai stuff and is the flexport lion coming back or yeah yeah well when dolly first came out i you know i think every company should have a mascot yeah ours is the lion because it's king of the jungle um you know lion probably kill any other animal in the world so that should be but i you know i wanted to claim that and make it really clear we're the lion you can be something else like we're the lion uh and so yeah i probably i like went a little crazy on dolly when it first came out making lion in a shipping container in port whatever yeah um yeah so you should expect to see more flexport lions out there yeah i remember you got me every time you should have a children's book for your marketing it's great marketing kids love it and parents love it and then uh and you should have a mascot The best at this is, by the way, Duolingo.

1:23:59Like apparently their owl is like. Oh, yeah. Their owl has like 50 million followers on a different app. That's amazing. Yeah, we need to instantiate the Flexport lion with its own. Yeah, I need to make people know about it. Yeah, it can be posting. It's not an obvious shipping reference. I don't even know if lions are good at swimming or anything. Well, I mean, you do shipping over land as well. But, yeah, it's not a pack animal. No, but it's more just a king of the seas. I would expect, you know, an octopus. tentacles everywhere who knows are there any uh transportation platforms is probably not the right way to think about it but things like airships you know drones that you're excited about we had a founder on earlier this week who's building uh sort of conoplans yeah it's like a seaplane drone for like short-term transport you know if you that's the one that went viral are they like five guys unmated in their living room or whatever yeah yeah yeah david david co-founder that thing seems sweet if you like forgot something at home and you lived by a body of water yeah yeah why it's myself i don't know yeah but yeah like i've been pitched airships you know there's been a bunch of attempts you know at that uh i'd be curious to think as you think about the future 10 years out what's what's exciting to you and and are there and is there a white space that definitely they um actually that uh man i'm forgetting the name is eli dorado as a backer over to this airships company.

1:25:27Yep. Yeah, I know that one. Pretty high potential. I met with the founder recently and I originally was very skeptical. I'm like, I don't think anyone needs this and sounds really complicated, whatever. But you walk me through it, it can carry the same volume as a 747. Take three days to cross the ocean instead of 15 hours. But like three days is pretty fast compared to a ship container. So if you get to a price point in between air freight and ocean freight, um that's very compelling it's just a new tier and so some people opt into it for a certain class of goods that will be very compelling as a replacement for air freight that'd be cool does that kind of unblock the port system because we have a new new set of ports we could go automated from day one what's really cool about his model is that his idea anyways is that it would just go straight to your warehouse not go to a port at all that's amazing land at your wherever your warehouse is and not need trucking or any you know just like laying on it's pretty cool um hopefully somebody awesome funds it because it's not cheap to go launch these things and uh yeah that's what real venture capital should be right take some risk and do some badass stuff like that so um rooting for them yeah um i think the self-driving ship i see that all the time it's really stupid idea just because there's only these ships are like 20 000 containers with 20 guys, there's just not that much labor savings here.

1:26:49And most of those guys are doing maintenance. They're painting it and doing engine maintenance. You still need them even if it's self-drive. There's one guy driving the ship. Well, yeah, we've had pretty good autopilot and boats. Yeah, it kind of drives itself anyway. Right. So I think the self-painting ship is kind of interesting. Oh, that's cool. Just kind of painting itself as it goes. What about those crazy ships that have sails or nuclear power? different different modes of power for ships yeah the nuclear power i think is going to be probably regulatory problem more than anything else like nobody really wants that your nuke uh sailing into their harbor has been probably the problem there um i've seen some cool ideas where like the ship the mother ship would stay offshore like 200 miles and then deploy like little baby ships that would bring the cargo to support uh so that it never had to get within your coastline but still a ways away what about the sales um yeah so i've also seen there's a really cool company called clipper ship a really tiny seed round company so but with a big vision of little autonomous drone sales sailboats that would carry like five or six containers worth of stuff and again like sale not to your warehouse but to like a little tiny port up river or something and set their own network of ports they're they're trying to go live soon i all of this stuff's pretty cool and i have no idea you know it requires venture capital and it's it's very interesting you know founders one's the obvious one but like it's really interesting to see when do they get excited about something it's not everything can be the next spacex and spacex was a crazy vision until it worked right uh and could have lost a lot of money if it didn't yeah what about spacex point point to point um yeah uh i mean obviously the first the the first like beachhead is like the most expensive like private jet traveler needs to get to tokyo in like an hour from new york and so they're like yeah 50k no problem uh but but where do you see that technology going over the long term uh the problem is like flying in the can it can spacex launch like in bad weather and it's raining or something like you're no not really i think they need pretty clear skies but they're in in Florida and Texas, it's pretty clear most of the time.

1:29:13You don't scratch too many. I think from a cargo standpoint, it's probably not worth any premium because cargo, if you care that much, if it gets there in 15 hours or in 30 minutes, it's basically the same for most everything. For military, those are very big differences. Like if you need to get supplies to some soldiers on the ground in 30 minutes, that can be life or death versus 15 hours or whatever. So military applications are huge. rich people yeah care a lot more about their time um so yeah i would be certainly bullish on that but it's just like hard the cargo doesn't care that much if it takes 15 hours very rarely you would spend that much extra for something to get it there that fast i mean maybe it would shorten down your trips which would be nice one that i'm very excited about is zip line oh yeah um which is i can't figure out if they launched or didn't launch yet they're supposed to launch any day now in dallas and you'll be able to buy anything that's for sale in a Walmart on a drone delivery.

1:30:09Wow. Uh, in less than five minutes, there's 25 ,000 items in a typical Walmart and 24 ,000 of them are small enough to fit inside their drone. Wow. Uh, and then I understand they're going to go live. I don't want to reveal anything. I'm not supposed to, but they're going to go live with some restaurant chains. Oh, cool. Like a burrito in five minutes. This is one of those things like, you know, they, they had the early hype where like everybody was like oh this is the future and then like they had to do the thing and like actually like make it work about the hype like dies down and then suddenly like a burrito lands in your backyard in five minutes and you're like we are so back uh last last question for you uh how do you think about sort of managing like the team and the company at a time when you're running a business that's you know most companies have the benefit like you know if you're running like payroll software you can be like let's ignore sort of like politics and like what's going out Just buy on each other?

1:31:05Yeah. Let's ignore the world and just focus on our business and our customers. But you're in a business where in 30 minutes they're going to announce some news that's going to be very impactful to your customers. How have you messaged everything with the team? Are you going to be doing a war room as the news breaks out? What does that look like? I'm curious. We always... We do. We have war rooms, as we call it, too. and their Slack channels basically where we get people together to go run UDA loops and observe what's happening in the world, orient ourselves. Who needs to know about this? Make decisions, take action.

1:31:42And our ultimate, you know, my message to the team is what my dad used to tell us when we go camping. It's you don't have to outrun the bear. You just have to outrun the campers in the next site over. That's great. And our competition, we've just got to be better. we can't outrun this bear of tariffs or geopolitics terrorists blowing up ships in the red sea or yeah yeah where it might be uh but we have we can be better at responding to this than any other competitor and uh it's a moment for us to actually double down on being the most customer centric you know like and tech gives us a huge advantage here when when the new tariffs hit we will be ingesting that into our databases and publishing it to our customers uh within minutes Right.

1:32:29And our account management teams within the hour will have a plan and script and start calling down and letting people know what it means for them, how much it would have cost them, like start setting up advisory appointments to talk through, you know, things like you're in tariffs. It's your value of your goods times the tariff rate times the duty rate. Well, there are a lot of perfectly legal compliance strategies you can do to reduce the valuation of your goods that nobody bothered with when it was time zero. and you can get refunds as I was saying before. So it's all about how do you respond to these things?

1:33:05And yeah, we think we have a big advantage there. So it's fun. It's why Flexport's the most fun business in the world. I don't want to sit there and run payroll or other companies. It's boring. Get out there and see what's happening. Hey, it's an entertaining time to be in payroll. You picked a bad day for that analogy because it is high stakes. It's James Bond out here. It was my analogy. It was my analogy. We got the guns in the studio straight from China. The team. Oh, wow. Pistols. they're water pistols but we're having a lot of fun today uh we got james bond on the soundboard we're having a great time but thanks for stopping by this was fantastic always great talking to you good luck thank you so much tonight what happens with these arrows maybe i'll need to come back and talk through when we actually have yeah yeah that'd be great we'll have you back of course yeah have fun later we'll talk to you later great to see you fantastic always an entertaining interview uh thanks to an absolute dog by so we got an absolute lion we got james from profound calling in we are going to be talking about uh i spoke with james yesterday for the first time what he's doing is absolutely fascinating yeah he's helping uh companies understand how they are appearing in llms okay yeah let's bring him in james how you doing boom what's going on

1:34:21uh you live can you hear us yeah i can hear you yeah there we go fantastic we're live what's going on cool how are you we're good uh can you uh start with just like a brief introduction of yourself your company what you're doing yeah i'm james co-founder ceo here at profound uh we're new york city based startup um yeah we're we're building a marketing platform that helps brands understand and control how they show up in ai responses um we launched in august august 17th of 2024 and kind of like came sprinting out the gate uh we we raised a three and a half million dollar seed round that It was co-lived by Keith Raboy, Coastal Adventures, with Saga, sort of co-leading.

1:35:10And yeah, we've been growing pretty fast, pretty quick. We have built this platform that's relied on by brands like MongoDB, Indeed, Mercury, Rippling, Ramp. Ramp. Yeah. We love Ramp here. Yeah, talk about the genesis of the idea, because I think what you're doing, and we'll get more into how it works, but what you're doing is now blatantly obvious. It's a blatantly obvious idea, right? Because all you have to do is kind of compare. As search became a big market and companies sort of rapidly realized we need to understand and control how we're showing up in results, there's a lot of parallels to now.

1:35:52but I thought your backstory of kind of like how you guys discovered the opportunity in the first place at the beginning of last year was cool yeah I mean it's you know it myself and my co-founder Dylan we were at South Park Commons which is like a VC incubator accelerator that one in SF one in New York we were lingering around the one in New York spending our time trying to figure out what business we wanted to work on and there was this kind of sort of ironic moment where as we were thinking about other businesses to work on we kind of realized that we had just been using perplexity all day every day for weeks or months on end without actually going you know and doing traditional blue link search um and yeah that it's again it's one of those ones where you know it seems more obvious now but this is back then but even at the start of last year chat gpt didn't have web retrieval uh so it was no good at search perplexity it felt like this streaming to cds type moment and uh we just went all in on that inflection point we said hey you know either perplexity is just going to take everything here because this is so good and this makes ai answers makes so much more sense than blue link search um or everyone else is going to jump on board and do the same thing and probably closer to the latter is the way it unfolded um chat gpt introduced it where it introduced web retrieval um i mean adobe did this huge study that they released like a couple of weeks ago uh it's based on a trillion web visits on american retail um and it's like i I think 40 % of consumers now are trying AI search for shopping, for commercial products.

1:37:45So it's definitely proliferate. We had Aiden from OpenAI on yesterday who said that anytime he wants to buy a product, even if he's just buying hand towels, he just does a deep research report. And he's like, it's worth just waiting five minutes to figure out what's the best product based on my interest. I'm curious, like how aware it makes sense that companies like ramp are using these tools every single day and they start to realize like, hey, this is a product discovery mechanism. We should get on top of sort of understanding how ramp is is appearing in results. But for how aware are legacy companies, you know, sort of like multinational public companies aware of how do they realize this is almost like a hair on fire problem yet?

1:38:27Or do you have to kind of explain to them like, hey, by the way, you know, 20 ,000 people are searching about your products every single day. And like you have no grasp of how you're appearing or what that's causing people to do, etc. They're all over it. I like reject this thing of the I think the incumbents all had their lunch stolen in the early 2000s. And I think that everyone's like wiser now when they can sniff a platform shift. We work with some really big companies. like i know everyone's got the you know the the founder yap but we genuinely work with some of the biggest like fortune 100 companies in the world i just can't say their logos um because they just don't like that um but yeah they're super clued up they're super wise to what's going on um they may be a bit slower in terms of the workflows because understanding is very different to like taking action and like trying to improve the results but i mean as an example to give one One of our customers who I won't say who it is, but that big company, 12 ,000 plus employees.

1:39:26They did like a big global PR push around this new product launch a week or two ago. And they saw a 50 % increase in their visibility in answer engine responses. Without giving away the secret sauce, can you just give us some general guidelines for how a company should think about steering, how they show up in LLM responses? Because you could imagine everything from like, do more SEO stuff, get on Reddit, make sure you're in the next crawl in the pre-training data set. Or you could even go and say, hey, there's some inaccurate information about us. Let's just go directly to OpenAI and say, hey, can you trim this out of the data set?

1:40:13Yeah. So I guess that there's a sort of wide aperture or sort of a philosophical response to this which is i think understanding that this is the the failure mode here is to think this is like traditional search where i mean traditional search was essentially a marketplace system you had uh the website and the end user and the google index just helped the end user you know come into a website maybe top of funnel and you know thumb around in the ecosystem of eventually get pushed down the funnel into a conversion event ai answers that there's three parties acting here where we have the we said the same website and the same end user but sat in the middle is the answer engine the answer engine changes everything because it's not connecting the two it the answer engine is essentially for all intensive purposes stealing the relationship from the end user or stealing the relationship with the end user from the brand.

1:41:15So most brands aren't really grokking this idea yet, but most brands are about to lose the majority of connection they have with their end consumer. Because now when I'm researching a purchase, I go to ChatGPT, and if I need more information, I send a follow-up question to ChatGPT. There's no need to click out. And eventually, I mean, if you read the Stratecary article that came out, the interview with Sam, I think this week or last week, it's obvious that OpenAI are going to go into shopability. So we're going to see like agentic browsing, agentic shopping start to take place. And you will transact within these answer engines.

1:41:54You will consume media within these answer engines. You won't need to go, we're going into a zero click future. So as a brand, the impetus, going back to that sort of philosophical point that your impetus is how do i distribute information to these answer engines in real time accurately the first step is like to just understand what the hell is going on so you know if i'm ramp and i want to show up more in accounts payable cool let's like run a bunch of interrogations let's see how the answer engines respond when we send a huge variety of questions about accounts payable open-ended questions not brand direct ones about ramp let's see where they go where which sources do they go does chat gpt go to or perplexity go to or copilot go to to get that information and then from there we can start building strategies i mean and ramp you know we just published a case study with those guys so it's public information they increased their um visibility by 7x in one of the indices that they were looking at by just looking at what was going on and what they could do about it but then i guess john to give you a more direct response like tactical stuff, llms.txt, our website, tryprofound.com, our llms.txt now is getting as much traffic as our sitemap, which is pretty interesting.

1:43:16We think for rich, extensive websites, websites like Stripe is an example. We have tons of documentation. I think llms4.txt will be very interesting because it's just essentially cramming a huge txt file of everything all onto one page because answer engines don't mind that um i think going you know just cycling through other ideas you know things that we're seeing work are lots of structured data um is very important like you know removal verbosity or creating content essentially for a retrieval agent to pick up not a human um images are useless uh answer engines don't care about images so like kind of ignore them to an extent uh metadata you know needs to be very thoughtful like you can essentially you can you can just spoil the whole article with your metadata and that will often be like pretty effective so i mean i could like i could go through i could cycle yeah what uh i have a couple kind of questions you're sort of building in a what's a new category do you call it a aeo like answer engine optimization do you have you coined it yet obviously you want to own it yeah I think you have to let the kind of market decide what it's going to be called.

1:44:27AEO, AIO, LLMO, GEO gets thrown, a generative engine, optimization gets thrown around a lot. Considering we're all like techno optimists and Silicon Valley is meant to be full of techno optimists, the desire to use heuristic is quite interesting to me. I've seen like so, as human beings, we love to use heuristic. We just want to say this is SEO for AI. But there's all kinds of like new surface areas that just like didn't exist before. Can you talk about, do you have any type of vision of what paid ads in LLMs will look like? I had gotten multiple pitches over the last year of people that were building these sort of like ad networks to fit within different LLMs.

1:45:17And my general read is like, I sort of believed that, you know, paid ads would be heavily integrated into LLMs, but I sort of felt like it might, I wasn't necessarily convinced that in a world where there's, you know, an infinite number of different answer engines that everybody has a different favorite, maybe this sort of global network makes sense. but then if open ai is getting like you know long term or grok or whoever's like the sort of power law winner if if they're getting 80 of the traffic like maybe they end up with more of like a meta style ad network where they just build it you know from scratch um but i'm curious what you think i mean i definitely uh i kind of think well i i believe there will be a more fragmented marketplace this time around i think there's just more everyone knows what's at stake here Google search has been the biggest monopoly in the history of the internet and I think there's more capital, more energy going into trying to ensure that doesn't repeat itself this time around but answering the question, I think it's actually two things I think it's generative advertising in a conversational user experience will be that the convergence of those two things will be one of the most powerful unlocks in the history of marketing language models are really good at language um and being able to synthesize net new ads on the fly that are perfectly tailored to that exact moment in the exact conversation in the exact way yeah it's compelling i think is about to melt marketers brains on and on the efficacy of like how powerful that advertising medium is going to be i mean i i'm we want it to happen we think it's very interesting and we think it will speak perfectly it will be a very obvious next move for our business um i don't know if we're not holding our breath right now i don't think i you know i'm not sure if it if it will unfold like that especially with open ai you know they have that corporate the corporate structuring i think is a bit of a hindrance, just the kind of values of the business.

1:47:31I can't, I don't know. Your speculation is as good as mine, but yeah. Yeah. Well, very cool. I'm sure you're going to be raising a lot in the next few years. So when you're ready to announce anything, come back on. Come back on. Break it down. Keep sending me different learnings and stuff in the meantime. I think we just have a ton of founders in our audience that probably aren't taking LLM optimization seriously enough now. So go DM James or sign up for a demo or whatever. And it's great having you on. Thanks for having me, guys. Yeah, congrats on everything. It's cool. Cheers. Thanks for stopping by.

1:48:08Later. We got Quaid in the waiting room yet. We got Quaid coming in to the Temple of Technology, breaking down watches and wonders, which of course is, it seems like the biggest watch event of the year. Every major watch brand announced new watches, and we're going to get the update from Quaid. I'm very excited for this. We discussed the Vacheron Complications watch that launched, but I want to hear about Patek. I want to hear about Rolex, the Land Dweller. I want to hear about everything Quaid has to say. So break it down for us, Quaid. How you doing? What's going on? It's James Bond day. It's James Bond day.

1:48:47I hope you have your gun because we're all secret agents today. What's going on? What time is it over there for you? It's 9.48 p.m. in Geneva. I'm in a tiny little Geneva hotel, so apologies for the background. But we're on the ground. You look great. Yeah, break it down. What is going on? Why is everyone in Geneva? What's going on in the world of watches? Yeah, it's Watches and Wonders right now. So it's kind of like the biggest year or biggest week in watches for the year typically. It's when the watchful comes together. A lot of the brands come out and they reveal the new models, discontinuations, and everyone comes out here and nerds out together.

1:49:27So what's making a splash? What are the biggest announcements? And then what are the announcements that I might have seen that are kind of overrated? Yeah, so it's typically a time when brands like Rolex and Patek come out and they announce iterative improvements on their models. I'm sure a lot of you folks have started to see a lot of the press coming out of it we got quite a splashy year specifically around Rolex it's not very common for them to come out and release a new model and so they dropped the Land Dweller and it's definitely like penetrating popular culture a little bit more I was in LAX on my way here and a bunch of people who clearly don't talk about watches were talking about the Land Dweller and that excited me but um so that was the big splashy one uh first new model what's what's the hardcore enthusiast collector reaction to the land dweller i look at it i'm like okay you took you know the best of ap and you combined it with uh you know a day date and that seems like probably like it's gonna sell well right i just look at the bracelet but like as as a you know a very much like a hobbyist enthusiast you know i'm curious what the sort of on the ground reaction is to the new model yeah i think there's like the consumerified reaction and then there's like the the nerd reaction i think the consumerified one is like integrated bracelet homage to the late 70s oyster quartz i think geordie you're spot on there like it's the first moment in a long time or maybe ever where i think rolex is building a fully integrated bracelet that like really puts a model directly in the Royal Oak Nautilus category.

1:51:08And so Rolex has been largely dominant without doing that. And, and so now that you have a bracelet where I'm wearing a Royal Oak today, like I haven't put on the land dweller, but does it make sense to have both in my collection? I think it's like, you start to ask that question, which is quite exciting for the watch nerds. They released a new caliber with it, the 71 35, which has a new escapement in it. And so like, for most people, they're going to buy the watch because it's a hype new Rolex. I'm sure every, every AD's line is getting blown up right now. But for the watch nerds, it's just a really efficient new escapement.

1:51:40It's pretty exciting to see it come out for the not watch nerds in the room. Like the escapement regulates the hairspring. The hairspring is what you're winding to power the watch and it's kind of being regulated and releasing and that's what's driving power to the gears. And so super nerdy, but to have a moment where they not just make a new model and make it exciting, but they also invest in kind of the technology and push the innovation forward in the watch perspective and then to have the confidence to drop a new caliber and a new uh uh escapement in like a sport watch uh i think it's just kind of a ballsy rolex move so i think the watch world likes it i think everyone wants to like it that's cool i'm curious how do you guys think about estimating how these things are going to price obviously as soon as an ad releases a land dweller from their hands into a consumer's hands some of them will get listed on bezel immediately do you have any sort of sense of how this is going to price it's a little bit different than seeing a new gmt you know release where it's a different color way but there's it's certainly not a new model yeah it's it's uh it'll be interesting and i think like it's very hyped and it falls like right into the hype stream and everyone's going to want this i'm sure 80s lines are getting absolutely blown up it's also expensive at retail it's a 14 000 watch i think is the the retail on it.

1:53:00So like, you know, it's 1500 bucks more to get a Daytona retail. Granted, those are obviously impossible to get. So it's not even real numbers. Whenever Rolex drops a new model, specifically one that's desired, you pay a premium to wear it first. And so I'm sure if you want to be courtside, you know, wearing your first land dweller, you're going to pay an insane premium on that. I would not be surprised if these things are selling like well over double retail. That probably seems like the entry ticket, even at a stable market, but we'll see. It's like, you know, there's not a lot of hyped Datejusts out there.

1:53:33Even the hyped Datejusts are still trading in the mid-teen. So it's certainly a new market, but I think it's going to be pretty frothy with my guess. Can you talk about some of the other launches and how they've been received either this year or specifically at Watches and Wonders? Yeah. So I think like, It's been interesting. Usually what ends up happening is, like I mentioned, you'll drop a watch. It'll be popular, even if it's a funky watch. We saw the Day-Date with the emoji. I saw a Tetris one that was kind of wild. Yeah, like it's crazy, but because there's inherent scarcity and it's hyped, you end up seeing these things trade for insane figures.

1:54:13I think there's a lot of other really exciting ones that dropped this year. They don't touch the Land Dweller, but it was kind of a theme of really interesting color dials. You had the Sprite get kind of a big brother, the green and black GMT that's a left-handed. I never thought, like I thought they were going to launch that model and then discontinue it because it just inherently was weird in a Deathstroke. but we got a white gold version of it with the first ceramic dial that Rolex ever made it's all green it looks kind of hulky meets the Sprite that's exciting you got this crazy iron stone tiger iron stone dial for the full gold rupier which is like gemology mix of tiger's eye and all these other crazy metal or crazy stones OP colors got some new ones they brought in like a a hyped turquoise dial in the Daytona.

1:55:01So it seems like they're investing in technology, but they're also playing like right into the hype cycle and giving color dials and things that are stronger. How are some of the Holy Trinity brands playing watches and wonders? I saw a launch from Vacheron. I saw some Patek news that you guys broke down on your X account. Can you give me just an overview of like, how big is this year for each of the Holy Trinity? Yeah, it's not quite the level of Rolex, I would say. Like obviously Vacheron's had a big year with the 222s, kind of riding that lightning. As far as Patek goes, we got the 6196P, the newest iteration of the Calatrava.

1:55:39The watch world loves it. It's kind of being hailed as the, you know, best modern Calatrava we've seen in a really long time. It has that amazing salmon dial at the market love. So still active, but I would say like more like a normal year than kind of Rolex having the standout new model. What is the general sentiment, like industry sentiment right now on the ground? We obviously had the COVID ZERP boom and then things crashed. There's a lot of models that are down 50%. They're obviously still trading above retail. but uh is the sentiment good even though we're maybe back to like a new normal but the new normal is just like you know sort of higher than than you know 2019 let's say exactly like i think the the hype models are still hyped they're still trading well above retail you know daytona 15.5 retail is still trading in the low 30s it's not a 55 000 watch anymore but you know it's still trading at a meaningful premium still very hard to get uh and i think you know the correction that we saw over the last two years actually in many ways I think accelerated the market you have a lot of people that were watching the price of a Daytona being$55 ,000 and just feel prohibitive to enter the market there now all of a sudden see the watch at the low 30s and they either feel like they're buying the dip or they just want the watch well enough that they are willing to make that price at that point so we're seeing a lot of energy come back in the market on our side last month was the best month we've ever had ever so you know we continue to grow congratulations we love growth here you have to shout that out it's fantastic congratulations thanks guys but uh yeah so i think the market's still frothy and it's there um a little bit less speculative than it's ever been i think people saw the highs and they saw the drop and now they're you know being more careful but still a lot of watches to be bought we love a little bit of froth not as big on speculation but i love we love a little bit the froth.

1:57:33I love the froth. Is there anything else that's been anything surprising from this trip so far? Or is it all kind of expected? It's all what you'd expect. It's always fun to see everyone in Geneva rocking the most fire watches ever, and they're just casually on the street. I had lunch today, and I think I saw two crashes, a bunch of open works, all sitting in the same vicinity. And it's fun to see how this stuff regulates on the secondary market. Like we're already seeing these celebration dials, you know, they're, they used to be trading in the mid teens. We have a seller that's opportunistically listing them in the thirties now trying to get the speculative buyers to be ready to move.

1:58:16But then we're also still selling them, you know, in the low twenties. Right. So like it'll, everything will shoot up immediately and then it'll find its way down. And if it's a hype model, the celebration model or dial is inherently a crazy watch like it's people who rock it hats off to them because it's an impressive watch to be able to pull off but um for the ones that have staying power and they're discontinued and have a lot of demand obviously the price shoots up can you talk about some of the smaller brands what's going on with fp jorn and some of the more challengers the up-and-comers the brands that folks might not have necessarily heard of uh but are making big splashes in the last few years what are they doing at watches wonders and what are they doing generally yeah so i think most of the brands are here um Even some of the big brands tend to be a little bit quiet, even not just the independents.

1:59:01AP didn't participate in Watchers and Wonders, but did some quiet announcements of new ceramic colors and things like that. I went today. There's a small little... Wait, just one step back. Is that interpersonal dynamics? They don't like who runs the show? Why do you decide to not be at the biggest watch event of the year? I don't know if they... I don't have the nuance there. And I don't know if like reps and them are not participating and things like that. But I just know like they're not making as big of a presence as other brands are. And I think that's just like a selective choice. But obviously they announced they love the ceramics and they announced a new blue ceramic that is aligned with the color of a specific sky in a Swiss Valley, which is very AP and super cool of them.

1:59:52So, yeah, they're just doing their thing. And on the independent side, there's a fair actually next to Watches and Wonders. They're in the same little area by the Geneva Airport that is focused on specifically independence. And so after you spent time there today and you're kind of working with, you know, brands like Ming and kind of these like new up and coming brands that are doing really cool stuff. So you get a mix where it's a fun moment where I think a lot of attention is brought into the watch world of Watches and Wonders. And I think, you know, Rising Tide rises all ships in this kind of stage.

2:00:21That's awesome. Love it, dude. Well, thank you for joining it at 10 p.m. Your time. Have a great rest of your trip. And thank you for responding to John and I at all hours of the day. Every time we have watch questions. Ridiculous questions. With like the most obscure wrist checks. Hey, we saw this VC with this watch. Let us know what it is. And you're always on top of it. You guys are the best. We appreciate it. And thank you. If you have watches, I am available 24-7. Thank you. Yeah. It's been fantastic working with you and partnering with you. You're the man. Have a great rest of your trip.

2:00:51Yeah. Safe travels. Talk soon. Bye. Good timing. So much Watch News. I'm glad we were able to have him on as our official Watch correspondent. I love this stuff. Well, next up, we have Sarah Guo coming into the Temple of Technology, talking about, she runs a fantastic AI podcast, if you're not familiar, also a big-time investor. And wasn't she the reason that Andrew Reid joined Sequoia? Wasn't that the story? I think that was it. I think it was about the backstory. Yeah, and she's here now. Welcome to the show. Sarah, good to have you. Hey, hey. Hi. What's going on? Great to have you. It's going.

2:01:26Thanks for having me. What's new in your world? How did you process the Studio Ghibli moment? How are you feeling? I mean, you've been, you know, bullish on it for years now. What's, how has it, like, updated your world model and what's exciting going forward from here? Well, it's super cute, right? Yeah. I have a lot of generated a ton of images of me and my kids and my family, my friends. That's great. So I think not be ignored, like how much people actually do want to create. I think it updates. I think it should update a lot of people's world models in terms of how early we still are in quality.

2:02:08I think the fact that like quality is a very broad term. I think the fact that you had image generators make things that were beautiful or realistic I feel like people kind of thought that, you know, to some degree, like images were solved, like other like other domains were already more well solved. But like what I think the GPT-4-0 Studio Ghibli moment taught us is, first of all, it's like a different technology for image generation, but it allows a lot of controllability. And there's more knowledge of like why the image is the way it is. and so I think we're going to keep seeing a ton of improvements in our ability to create different things that like surprise people have you gotten a chance to dig into how much of the I mean it's clear that like this new model whatever they're doing is much better how much of it is just the design the algorithm the strategy versus like scale and I I really hope that we have almost like a deep seek moment where we're like oh now it now these now it's a filter on instagram and it's just a button and it takes one second and it runs on your phone where you've compressed it down.

2:03:14That seems to be a trend in all of these models. Something comes out, it's really cool, it's really big, it's really expensive. Then it gets really cheap and quick. What are you expecting this year as this evolves? And do you think any of those trends will unlock new use cases? uh i i mean i i think this system can do things that uh were really hard to get right consistently before right um and it is it is different i mean i don't work at open ai but lots of people believe that gpt4o it's not it's not a diffusion-based image generator it's just starting with noise and you like gradually cleaning it up the way like mid-journey um models supposedly work you're building images piece by piece like sequentially like you have tokens in a language model right and um if the image parts are more like words in a sentence um and you're creating the image one element at a time so it's like technology brothers in a cyberpunk city with a blue dragon it's understanding the request with language it's connecting the words to visual concepts it knows and then it's doing it like step by step and this is great because it's more controllable and it's really high quality but requires a lot of compute which is why sam is talking about servers melting and it's still slow, I would take every bet that in general, all types of AI capabilities due to competition and continued investment and technical progress and distillate, it all gets cheaper and faster.

2:04:48So anybody who's building with this stuff or using it should expect that curve to continue the way it has for the last 18 months. And I think a lot of it will be open. I mean, opening, I just said they were committed to this too. And so I definitely think that the data would suggest that we should continue to see new capabilities as the models continue to invest in, or the foundation model companies invest in multimodality and continued scale. how do you uh what advice would you give to somebody that's doing anything around image generation at the app layer i think that prior to last week if you were building like something that generates facebook ads you felt pretty good because you were like well we have great ui and like customers care about workflows and like you know we help with this sort of like effectively like you know baking in prompt engineering to get great outputs and then open ai releases something that like consistently one shots, you know, prompts with like three words and it's like a fantastic output.

2:05:58Yeah. Do you think that, you know, do you think if you're working on like sort of image generation or ad generation SaaS that you need to like pivot to just having like new ideas and like kind of thinking deeper into the stack? Or do you think that there's, you know, do you think that you can still kind of like stay ahead by focusing on workflows um i i definitely think there's a lesson here of like watch what the labs are doing watch what anybody who is doing like core research is working on and you don't want to fly too close to the sun right um uh i i do think one surprise might be what Anthropic and OpenAI explicitly care about is like AGI or ASI, whatever you want to call it, right?

2:06:48And one might have argued that like image generation, voice, like these things are not on the path to AGI, right? They're products you kind of get for free. I think there's like maybe two lessons here for entrepreneurs. One is, well, these companies, they do care about making like end user progress and commercial progress, in part because they need to build a business that requires consumer engagement to keep justifying the training cost and the research cost. Right. And so I think if they feel like there are capabilities that fit into a broader consumer engagement or like productivity platform, they're probably going to pursue them.

2:07:40But I also think that like the at least my experience with creative tools is that people want a huge amount of control and like not one tool will serve everyone. and so like the things that open ai and the labs have produced are very democratizing and yet like that is lowering the floor for if you want something that looks like a decent ad i also think there's a lot of room to like continue working on the last mile and raise the ceiling and we're going to have just like much better content much richer content more diversity higher quality from people spending a lot less money and there is opportunity in that yeah i think last mile is just like an interesting framework where like you know the base models are going to get you to like you know pretty great and then how do you get to excellent and there's like probably a lot of value that you can capture by delivering excellent and i think you can make like reasonable predictions about what the labs care about right like um uh let's just use some examples like do they care about cogeneration yes they care about cogeneration they think it's on the path to better reasoning but do they want to build every workflow for a certain type of code base or migration every workflow and serve it like in customer service or law or finance or accounting or even um i don't know video capture and editing like absolutely not they neither can nor want to do that yeah it seems like there's been this uh trend over the last few years of maybe don't train a foundation model, stick to the application layer, and then go operate on highly protected data sets like legal or finance or investment banking, medical records, et cetera.

2:09:24And I'm wondering if there will be a version of that that relates to image generation. But do you think we're kind of at the end of that trend? Or do you think there's more niches that people can discover if they just think really hard about where the labs aren't building towards and then go find something really cool i actually think we're still like pretty early in quality um like in your like artists and advertisers and communicators like the the specificity that people have for what they want in an image like you know the concept here is controllability yeah like i think the ceiling is really high and to the point at the beginning like i think people thought we were kind of done we're not done.

2:10:08And so I actually think there's still opportunity for large companies here. And then relatedly, like video is much harder than images and requires like different architectural change. And so if images are this expensive and slow to generate today, like I do think also efficiency is going to matter here and workflow is going to matter here and collaboration is. And so I still think there's opportunity for other companies that are not necessarily just training pure text image models. Yeah. Oh, sorry. I was going to take it in a different direction, but I was going to ask, it seems like there's been this evolution of the value will accrue to the foundation model layer.

2:10:49Now it will accrue, at least in the short term, to the application layer. Every foundation model company kind of has a dance partner on the distribution side, whether it's Google, obviously, has their own distribution through their apps and and Meta has all the different social media apps. X and XAI are now partnered and together. Even OpenAI has gotten so many people to install the OpenAI app and the ChatGPT app. Do you think there'll be an increasing trend of, hey, yeah, it's not enough to just be a foundation model company, you gotta find a dance partner on the distribution side if you really want to accelerate over the long term and remain relevant?

2:11:28I certainly don't think it hurts, but the best example would still be OpenAI and ChatGPT. Their distribution is their own, right? So it depends on how novel the capability is. And so I think there's a deeper question in, like maybe that you're implying that in what you just asked of like, well, are people going to build new experiences that are so different that they can create their own distribution? It is fascinating that they have this deep partnership with Microsoft. I've used Outlook for one email inbox for the last two years. Haven't seen any open AI products in there. I don't know if I just haven't clicked the right button, but doesn't seem like Microsoft is really pushing like, hey, we're going to build these models.

2:12:13And although they've talked a lot about co-pilots and different office products, but Jordy, what's your question? Do you think that it almost feels like there's never been more hype for AI, but I almost feel like it's like under hyped. Like you shared an article yesterday or a study that shows like AI therapy, like actually seems to work really well. And the idea that like society broadly, everybody would have free access, infinite access to high quality therapy, like should probably be like the top story in the world because of how transformative it could be. If every individual could understand themselves better and sort of, you know, mature and whatever they're getting out of therapy.

2:12:52it feels to me like just ai broadly is still under hyped even by the cohort of humans that is like you know like fully agi pilled um i think it's i i think it's wrongly hyped maybe that's the the answer um uh like it is still under hyped and the things that people are really excited about are not necessarily the right ones okay um maybe i'll go back to like the microsoft thing for a second this is not like i mean clearly saya has done an amazing job with microsoft but it's still a very large beast and i think it is like kind of impossible to overstate how hard it is to get existing products in existing businesses to move quickly right and all of this shit has happened so quickly um and like should there be intelligence in your email absolutely right like that technical capability exists today but what does anybody who is a traditional email vendor microsoft or google like navigating here they're like oh what does our user agreement say about if we can process our date that data what is like the safety consideration around processing that data what is the user promise around privacy right like there's um how much is it going to cost does like do we even have our infrastructure set up to share that data with model inference um i think it's it's complicated to go deploy this stuff, especially at scale with organizations that by virtue of actually having users and customers are more conservative.

2:14:29And so I think they're like, people can go challenge it by. Yeah. I mean, staying on email, I was setting up a new Gmail inbox and there's Gemini buttons everywhere, but they don't seem to do anything that I want to do. It's just like, oh, give me a two-line summary of this email that I could already kind of skim. It feels like during the mobile era, there was this whole drumbeat of like mailbox. I don't know if you remember that company that got acquired by Dropbox. It like went viral, everyone was using it. It introduced a couple of different UI patterns that were really cool and then eventually adopted.

2:15:04And it was never like a power law outcome, this massive trillion dollar company, but it was like a really cool product. People enjoyed it. It was probably a good outcome for the investors, the founders, the users, everyone had a good time. And I feel like there's a little bit of a meme right now that like, oh, you're just a chat GPT rapper. You shouldn't even go and try and build that. And I've always wondered like, should we be telling founders like, just go build and maybe don't even worry if it's aligned with venture capital necessarily. It's okay to go build something because there's so much opportunity with these new tools.

2:15:39You might become really big, but you also might just build like an okay subscription business and people are paying 20 bucks a month for it for a while. And then maybe you get steamrolled, but maybe you land somewhere great and you get acquired somewhere and it's all worth, and at least we get the product. It just feels like again and again, I think of a product and then I can reason my way out of, that's not a venture bet, but we don't get the product in the interim. And I'm like, I just want the product right now as a consumer. Yeah. I don't think like you can give entrepreneurs advice on things that are really about like personal motivation.

2:16:12Sure. If they want to just build the product, like go build the product. Yeah. If they want to build a hundred billion dollar company, they should think a lot about like what's going to make a hundred billion dollar company yeah um we're explicitly not going to back anything that's going to like be a small outcome that is a tuck in at least that we believe is right but i i also think that um there are spaces that people think of as like very red ocean that people have creative approaches to what does red ocean mean red ocean like just overly complicated your competition the blue ocean yeah the opposite blue ocean yeah exactly like a lot of people are fighting over it it's not like an unknown market like um you know i think i'm pretty excited for notion mail lots of other mail services exist as sure yeah uh have you i'm sure you've looked at a bunch or gotten pitched a bunch have you done any ai roll-ups or do you have a broad thesis there when i when i look at some of these strategies where sort of startup people basically are trying to reinvent the private equity playbook, being like, we're going to buy businesses and make them more efficient.

2:17:18It's sort of the same thing as you can make them more efficient with software and now the narrative is AI. How have you thought about opportunities like that? There's obviously a bunch of them and I'm sure you've probably seen them all. Yeah. We have something still in stealth in the portfolio that you might characterize this way. I'll like talk about what I think the component parts of this thesis are and probably piss a bunch of people off by starting with. I think that there are asset classes where finance people are pretty good at finance. Private equity is a mature asset class. And like a bunch of engineers being like, you know what?

2:17:59We're going to be really good at underwriting private equity. I'm like, like, why? Why would you have any alpha in this? Like, I think you seem really smart, like a very good engineer. But but like the component pieces of I think it's really interesting when people just like discover other sectors that have existed for a long time and don't think about what the basis of competition. Well, that's the classic Silicon Valley approach being like, I'm an outsider, like I know how to do this better than you do. And then it's like private equity is like the most optimized asset class ever, where there's people out there that were like, I will buy this knowing that I will only get a 7 % return.

2:18:35but that's okay because like i'm going to do it enough times throughout the fun life cycle that it's going to you know work or whatever so i i i i'm glad we're on the same page here or i'm like i'm pretty skeptical of most of these things that start with like we're just better at finance yeah but being you know i could imagine uh hiring or actually being good at the under like the asset selection and underwriting piece of this as being like a baseline for a roll-up type play working and then the the other premises here are like uh we think that there are a bunch of sectors in the world that would benefit a great deal from technology or ai and benefit being like it shows up in the growth rate or in the ebitda right pretty quickly but they're not um by by uh virtue of the industry structure they're going to like adopt these technologies very slowly they're fragmented they don't invest in technology the um the user base is really far away from silicon valley and like sales is hard right yeah like that's that's kind of the premise and and like it and maybe there's some broader technical thesis about why working across these companies is interesting um i just said there there is something in our portfolio that you would characterize as a play on this and um i would just want to believe that these component pieces are true right that the team can be world-class at finance the team can be world-class at the technology piece and the technology piece is going to translate to something that is not like incremental but fundamental to the quality of the business and your um scalability in an industry or ability to compete.

2:20:20How do you think it's an HVAC roll up for sure plus DocuSign printing money. How do you think about as a GP wanting to constantly learn and learn about new industries and get enough conviction to make bets in areas where maybe you didn't have like a ton of context five years ago, while at the same time sort of like knowing your lane and like having areas that you're super confident in and having a deep bench of sort of like experts, because like the thing that I think is, you know, every VC became an AI investor over the last, you know, year and a half, two years, but also a bunch of people became defense tech investors and a bunch of, and like for us, like we angel invest, it's low stakes.

2:21:02If there's a founder we like, we'll put money in and we want to support them. But then you're running a firm, you kind of have to know your edge and your lane. And I'm curious how you sort of like, sort of balance that, like what, and think about like your sweet spot. Yeah, it's a pretty poor question. I was actually having this discussion with my friend Eric Vistria, who's at Benchmark, and he is like an infrastructure enterprise software person by background, more like me. And we're talking about companies that are out of domain. And his point, which I think is pretty aligned with my view, is if you are too familiar with the status, now I'm going to make fun of myself because I just said all this stuff about the private equity roll-up, But if you are too familiar with the status quo, the experts in the field do not necessarily see the future.

2:21:56Yeah. And especially as you, like, I genuinely, I mean, believe that large models can extend to many domains that were not software before. Like, I was not particularly interested in vertical SaaS or the legal industry before Harpy. But I think Harvey is a really interesting company. I still don't know anything about the legal industry. I know like 1 % of what I should as an investor here. But the point is the TAM has massively expanded because we are not just doing some incremental little productivity thing. We're trying to take huge amounts of the profession and democratize it and raise the bar of expectation for what you get from your lawyers.

2:22:42um and and so like if that opportunity is large enough and i think the hammer is a really good hammer like i am so excited to learn about the legal industry and work on it for 10 years we just got a legal bill like a day or two ago and john was like oh maybe we should have chat gbt'd some of that and i was like i think we're like in the last like maybe like few months before we're gonna have good enough you know uh legal ai i think we're going back to handshakes and uh And smoky back rooms and threats of violence because I can't handle these legal bills anymore. But yeah, going back to your question, you said that I think is an interesting thing to pull out.

2:23:19You said like experts can't see the future, but they absolutely can see today. And it's like sometimes you like, you know, look and you hear a pitch and you're excited about it. And then you talk to a friend who like actually knows the industry really well. And they just point out like, here's like the one reason like why this is not going to work today. It's very different framing. is it just you have to like step back and like almost kind of view things at a macro level and then ultimately make a founder bet um i mean like why do we end up working in areas where we don't have deep domain expertise it tends to start with like we love the founders and there's some first principles view of like it makes sense why like we should be able to restructure the industry or the technology is going to be massively important.

2:24:01The thesis just makes sense. And so at least my personal approach is like, I'm going to try to understand what every expert in the status quo believes. And usually if it's a good thesis, like somebody thinks it's viable, right? And you'll just get mixed opinions back. But I don't want to discover that there were obvious reasons it was not going to work. I would like to understand why everybody else believes it is not going to work. And then like, you know, still believe. Yeah. It seems like there's a lot of, I mean, obviously there's a lot of money sloshing around in the AI deal making space right now, but at the same time, it's, it's easier than ever to test an idea and see, oh, well, we got to a hundred million ARR in three months.

2:24:47Like maybe there's something here. Can you talk about just like the pace of play in AI, both on the deal-making side and then on the actual revenue making side, because it feels very different than the dot-com boom where companies were going public with like$2 million in ARR and they're trading at a billion dollar valuation. Some of these companies, they're at high valuations, but they have a lot of money coming in. Yeah. I mean, if any of you guys are experimenting your way to a hundred million on run rate, please call me. i still think it's pretty hard but uh i maybe to your point like people are doing it very efficiently uh and i think it just speaks to like the technology the magic box is very powerful um and you don't necessarily need it's not like if you just think about the sass world right like i need an army of engineers to implement the business logic of like how does payroll work in slovenia like what like i'm turning the law into code yeah yeah um uh and uh i think that um the experiment like the iterative nature of like i'm trying to make a model produce outputs that are great in these specific workflows but the workflow is so valuable enables some of these companies to grow in an unhinged way like the roi is there i think healthcare is a really interesting example of this because for you know for like a 10-year period i was like oh man like i would be really careful about you know with love to my friends who are healthcare venture capitalists like masochist it's not a super fast moving area huge part of the economy very important but it's just like you know it's not um it's not like an early adopter industry and yeah you have companies that um like abridge and others that like have massive revenue pacing, including in the enterprise.

2:26:36And I think the basic answer is like now people are making things that are worth buying quickly. So that's the fundamental piece is like pretty exciting here. I think the pacing for entrepreneurs and for investors is either also very exciting or very stressful, depending on your personality. Yeah. Do you think do you think some of the sort of bad activity in the space, like is there so much pressure now on like the bar in AI has now been set that like if you're a general access product and you're not like 2xing every single month or like you know not not every single month but like basically growing like extremely quickly uh everybody's seen the charts of like you know whiz and cursor and ramps and and deal and all these companies it just feels like the pressure is now so intense that people are like counting c-a-r-r as like you know uh and the trial like trials all sorts of stuff do you find yourself giving advice to founders of being like you know ignore these sort of like uh ignore the charts and just like focus on your on your customers because if you're too focused on like how do we just grow like best in class then you maybe end up like not building you know building stuff that's not reliable or you know robust yeah i i i think people focus more on uh what's out there instead of what's possible for their business way too much.

2:28:02Right? Like, I think it's a pretty... So there is something fundamental in what you said, which is like the world has become faster and the internet gave us the ability to distribute software products much faster than previously. Like you were not going to go to like 100 million of run rate in a couple of months before you could discover things on the internet. Right? Like what are you going to do? Like call somebody on the phone and be like... Come here with the CD-ROM. That's how SoftBank got started. I mean, or it was it was just like structurally a bit slower. Yeah. Yeah. So so I think the the ambition for the number of connected people in the world, the number you can serve, how quickly things can grow should structurally increase for entrepreneurs.

2:28:48But and like an investor from the outside being like best in class is this company, which has nothing to do with your company is not very useful. If it is like if there is a data point in your customer segment of how quickly something can grow and you are not winning, that is relevant data. Right. Then the bar has actually risen and like you should figure out how to win. But I don't I think there's also like an important question. Like we talk about there's another investor who calls it chicken nugget revenue, but we just talk about revenue durability. right like there there's a big difference between like deep usage multi-year contract enterprise revenue with integrations um and like people trying something with 30 a month churn is that what chicken uh chicken nugget revenue is is trial revenue basically yeah i don't know people like yeah you trial revenue or just like revenue that you know is um perhaps commoditized Yeah.

2:29:51Right. Low switching costs. It's the novelty of people trying new things. Like I can do so many cool new things. Yeah. That makes sense. It's not really changing their day to day. Like it's not like a 3d7 behavior where I'm somehow working better, like playing more, being happier. And so, um, I, I think people should figure out what the bottleneck to growth is in their business for durable revenue. And then anything else they should treat as distribution. Um, And it's like, I don't know what to tell investors about that buyer beware. Buyer beware. Last couple of questions. What introduction have you made that's generated the most enterprise value?

2:30:31Andrew Reed was on the show and said that, like, I think he said that you connected him to Pat. And that's, you know, been a pretty, pretty good intro. Is there anything else that comes to mind that that you're particularly proud of?

2:30:49um uh i don't know i make a i make a lot of introductions yeah i i think rita's a very good investor um no i i think the um i think like probably created the most enterprise value i think there are companies that i've been a part of be it figma or harvey where i'm like giving an investor friend a hard nudge and being like i really think this is gonna work and yeah this guy or gal's like good you should work with them and um that included like andrew reed had the thesis at figma but i was also like you should do this right like to deal with and and Andrew and I think everybody's thrilled about that.

2:31:38I introduced my husband, Pat, to Harvey. I think that is making progress. I introduced a very close friend, Sinky and Zeb, to Harvey at GV and so I think I'm excited about this company, right? Well, I'm excited 20 years from now for the email screenshots from you of all the AI winners being like, yeah, I made that intro, I made that intro. uh last last question i had and then we'll let you go i know we're at time uh were you did you did you ever on intent intend on being a solo gp you hired you know mike i think that got announced last year i'm assuming you just had this like 30-year master plan to like build a real firm uh or or something like that but but how did you think about when are you ipoing i've heard uh andreason's going out when can we expect to buy some shares i um i don't think we have the ambitions for selling equity carrier scale um so i i think i would be much more interested in how high the hit rate can be that's great um and how high the multiple can be and how we are by our entrepreneurs so um master plan no kind of the opposite right i um i i had a very strong instinct that i like wanted to do i wanted to do early stage investing in a concentrated way and i believe in partnership and then also like i was in a big hurry to like get going um we launched in october of 2022 if you'd like seen research previews or yeah played with ai or like thought about it for like it was it was accelerating right and and so i thought that there was a window to go figure out what was going on and try to be in great companies and so um i'm i just figured it would be better to like start figuring it out and, um, and like date very slowly.

2:33:30Right. The idea that the perfect partners would be immediately available right. When I was leaving gray lock seemed like unrealistic. Yeah. And, um, it took me a year to convince Mike that he like wanted to work 110 % and I'm, I'm super thrilled to be working with him. That's awesome. Amazing. Thank you so much for coming on. Yeah. This is a fantastic conversation. We'll have to have you back soon. See you guys. Have a great day. See ya. See ya. Thanks a lot. Coming in next, we got Nick from Light Matter. Going to go deeper on - Nick Light Matter himself. In Interconnect. It's a very interesting company.

2:34:03They raised a ton of money, all focused on how we can improve these huge giga-scale AI training runs. It's a fascinating company. Very deep tech, basically. He's going to have to do a lot of explaining for us because I'm not up to speed on his technology, but I'm excited to talk to him. So Nick, are you here? Yeah, I'm here. Good to meet you guys. Good to meet you too. How are you doing today? Doing great. Yeah, we just had a big launch event yesterday sharing our products and excited to chat and tell you guys what we do. Yeah, yeah. Why don't you just start with a breakdown of yourself, your company and what you announced yesterday.

2:34:41Yeah, I'm Nick. I'm co-founder and CEO of Light Matter. I've been building a company for about eight years now. We're based in California in Mountain View and we're about eight years old, spin out of MIT. and we're looking at the future of computing. So our goal is to continue to make progress on the cost of computation, the scale of computation and the energy efficiency in a time when computer chips are no longer making progress. You know, really principally the only way that chips get better these days is by if I want to double the performance, I double the number of computer chips inside a package.

2:35:19And so you're seeing over the past 10 years, these chips getting absolutely massive. And then the next challenge is around how do you link them together, especially in the context of training these large language models for AI and that sort of thing. And that's what we do is we build these optical links between GPUs to power foundation model training and that sort of thing. So how does that interface with the rest of the products in the market? I mean, NVIDIA is known for NVLink. I used to have two 3090 graphics cards that were how to link together of the PCI slots. I imagine it's much more complicated on your side, but can you give us a couple more concrete examples of how this rolls out, what the timelines are for this type of thing, what kind of performance gains we can expect to see?

2:36:01Yeah, so right now, in terms of timelines, chips are coming out this year. We've got big semiconductor partners that will be releasing products this year based on our technology, Passage. And the way Passage works is it's a silicon photonics engine. So it leverages all the semiconductor manufacturing supply chain that's used to build all modern chips today. So it's built in these big semi-fabs. You hear about companies like TSMC, Global Foundries. That's where we build the stuff. And what we do is we 3D stack GPUs and switches, these really like heavy data center AI products on top of our photonic wafer.

2:36:39And then you cut out the die size that you want, attach optical fibers. and now you can wire up these massive AI data centers. You're hearing about XAI with 100 ,000 GPUs. Elon and team deployed that thing in, what was it, 30 days or something like that? Yeah, that's insane. Which is breakneck speed. We are the wires, the photonic links that connect up these massive data centers. And the speedups are enormous. So we just announced yesterday, 114 trillion bits per second. State of the art is about 1.6 trillion bits per second. So about 100x. Wow. So obviously there's a lot of trade-offs here. I imagine that you're, yes, thank you.

2:37:20The gong goes off when we hear a big number. I imagine that there are trade-offs probably at the early stage cost, but are we just talking about speed or is there also a heat component that's important to think about? I know heat dissipation is super important on these big training runs. Yeah. I mean, on the heat point. So something to notice, like at a global scale, we're building data centers. Humanity is building data centers that use as much power as the biggest cities on the planet. So five gigawatt data centers. New York City is 7.5 gigawatts. LA is 2.5 gigawatts. So if you were to look at planet Earth through a thermal imager, the brightest objects you would see would be the mega cities, the deserts under sunlight, volcanoes, and these new data centers.

2:38:06Fascinating. That's the scale of what's being built. And the real task at this point is how do you wire them up? How do you continue to drive performance and build bigger monolithic computers to train these AI models? Got it. How did you process the sort of deep seek moment? It feels like a decade ago at this point, but the narrative was that they had GPU constraints and so they found more ways to be efficient. Do you think the American tech world just hasn't cared enough about efficiency to date because it's all been about speed and we haven't had that much capital constraints just because of how much investment is pouring into the category?

2:38:47But I'm broadly curious how you and the team processed it. Yeah, on the DeepSeek side, what people are thinking is that you don't need as big of AI clusters to build a frontier quality model. And they had some innovations in how they trained the model. And some people suspect that a lot of that came from using existing LLMs to build the new model. And that's not novel. Think about how we design computer chips. Like the CPU today was designed using the previous CPU. And you're stacking up this ladder. That's how exponentials work. So to me, it's like, yes, obviously that would happen. I don't think it's really slowed things down.

2:39:24And I think that reasoning models are going to require an enormous amount of computation. And they require lots of links, like the kinds of photonic links that we build, so that you can take these models. If you ever tried deep research, it's like 12 minutes to get a result back. What if you could get it back in one minute? And what if the energy cost on communications was one-fifth? That's kind of what would enable. Can you talk about a few of the other paradigms for fighting with Moore's law and improving the speed of these models and inference? There's etched, which is baking the transformer architecture down into silicon.

2:39:58there's, you know, if you look at the history of Bitcoin, they went from CPU to GPU to FPGA to ASIC. Are you excited about data interchange in a world where, you know, the latest and greatest DALI three or four model is baked down into silicon, into an ASIC? Is that still valuable? Well, the past 30 years have been a million X improvement in operations per second for GPUs and for ASICs, a million X in 30 years. Interconnect is only approved by about a thousand X. Today, Interconnect is the bottleneck and the next thousand X in performance for AI training and AI inference will come from Interconnect.

2:40:40And that's fundamentally what we innovate on. So that's the thing that we're excited about. I think if you look at ASICs, it's a spectrum. You start out with a GPU, which is relatively general purpose. And then you go to an ASIC that's like, okay, I'm gonna target AI training or AI inference. When you talk about etch, that's saying like, let's go even further, all the way to the bottom. I'm going to bake one model into this thing. And of course, you should be able to get efficiency gains that way. But these are architectural tricks. You could have built that computer 30 years ago if you wanted to.

2:41:10So it's a one-off sort of hit. What you really need are new scaling laws. And at Light Matter, we're focused on the fundamentals. Like how do you make compute faster and more efficient? Are there new ways to do compute? How do you make the interconnect faster and more efficient? We need new scaling laws. Got it. I don't know if you've been following George Hatz's journey with AMD, but some of the foundation model labs and the folks who are working on these big AI models have been kind of banging the table saying like, the cost per flop should be better with these other chip manufacturers. And yet I'm locked into NVIDIA's ecosystem effectively because of bugs and just go fix the bugs.

2:41:49Do you have any pushback that you have to overcome when you're pitching somebody who's building a big cluster to say, hey, slotting us in is not going to create any extra overhead on your software engineering team? Yeah, that's one of the exciting things. We're not building processors. We're building the interconnects that link them together. It requires no change to any software, and thank God for that. That's amazing. There's no lift. The TAM for this thing is absolutely massive. So the 300 billion a year spend on AI hardware, about 30%, 25 to 30 is networking. And that's where we play. So it's an enormous market that requires no software change.

2:42:31You can run CUDA, whatever you want. It's all fine. So what are the major hurdles or like next milestones for you in terms of scaling up? And do we need new machines? Do we need new machines that make the machines? Is it just, are you demand constrained, supply constrained? How are you thinking about the next roadblocks in the business? So I would say that the ramps are happening now in terms of volumes. So this technology, silicon tectonics attached to GPUs, attached to switches, it's happening now. You're going to see a rollout in 26, 27. Some of these big data centers are going to be using it.

2:43:03And the trick will be, can we make sure that the supply chain can handle it if everybody comes online at the same time? Right now, I don't think that that's possible, but I think you could handle at least half of the world demand. There's about 14 million GPUs or XPUs that are shipping per year. I think you could get at least half of that. And it's not too hard to imagine building out the capacity to get the rest of the way. But the tech's been ready for prime time for a couple of years now with us. And it's been an eight year journey. So it's not exactly overnight. We've been working on all the problems on every front for quite a while.

2:43:40We're still going to call you an overnight success when you go to the public and finally deliver some massive quarter, we're going to say, oh yeah, it just happened all of a sudden. Because we love overnight successes. How skeptical are you when you see new seed stage, anything on the hardware side of AI? People love to come out and sort of make these big promises. And then some companies actually can manage to get public just purely on big promises. Do you think we need more founders coming in and starting to build at the hardware level? Or is it just so hard that, you know, focus on the rappers and, you know, to start an activist short hedge fund?

2:44:21Because he seems like he knows the science here and can probably make some good calls. But I'm sure he's too nice to do any of that. Yeah. So I would say that the pitch early on, so we started in 2017. That was the AI accelerator boom. You think about Graphcore, Samba Nova, like all of these companies, Cerebras all coming out. Largely, that's been a really tough slog. Like it hasn't really worked out. I wish those guys the best. Yeah. You know, to be frank here, I wish them the best. But of course, it's hard. The software moat around NVIDIA, the adoption, the models are designed to fit on NVIDIA GPUs.

2:44:54Yeah. Like that is the moat. Like everything is architected for NVIDIA. And so good luck bringing in something else. So the new pitch, the new like pitch for these guys is everyone did this wrong. I know what they did wrong. If you just do this, it's going to be fine. But my fundamental issue with it is you're all using TSMC in the exact same node with the same packaging technology. You can't tell me you're going to have some breakthrough. It's the exact same tech. That's fascinating. Well, good time to be in the compliments to NVIDIA, not in the substitutes. Love this. I like your strategy. This was a fantastic conversation.

2:45:30I honestly, I didn't know about the business last week, but I'm super excited we got to talk to you and we'd love to have you back. This was fantastic. Thank you so much. Awesome. Yeah. Happy to be on and thank you guys. Yeah. And congratulations. And we'll talk to you soon. Cheers. Yeah. Switching gears. We're going over to an eight year overnight success. An absolute dog. We got to, we got to hit the size gong again for all the big numbers we heard from that. Didn't understand most of them, but liked his attitude. Size gong. I love the size gong. uh well we got Rome Mortgage coming in the temple of technology in just a few minutes uh fascinating business heard about this and the pitch made so much sense you're locked in to a two percent a three percent mortgage fixed you want to move you feel chained to that specific house forever that shouldn't be the way it is so you can move and and and and uh kind of keep your rate or sell your sell your mortgage uh but I want to hear it from the founder so let's bring them in.

2:46:27How are you doing? Hey, John and Jordy. Great to meet you guys. By the way, if you're wondering, I say my name like Ronic. It's like ironic without the I. Ronic. Okay, great. Thanks so much. Would you mind, I tried to give the pitch. I probably botched it. Would you mind giving me the pitch for Rome just from the horse's mouth? Yeah. Basically, you can buy a home with a 2 % rate. The basic problem we're solving is that today there's millions of sellers who are locked up at home because they have this two or 3 % rate. They don't feel like there is a value or ability to be able to move. And 75 million families in the US cannot afford a purchase because of how high rates are.

2:47:06So we help buyers wind back the clock and purchase the home with the seller's mortgage included. That's amazing. Is this a regulatory innovation or a technological innovation? Why didn't this exist a decade ago? Or is it just a function of we didn't need it when rates were low yeah so actually you know these were very popular in 1980-81 when mortgage rates went from two percent to 15 to 17 and at that time all mortgages were assumable actually and so you know for uh other reasons because the savings and loan crisis we ended up regulating and such that all the other homes had to have their loan paid off sure uh when the home was sold so we could avoid you know everyone just purchasing the home with seller's mortgage but what remained were these FHA and VA loans, so the government-backed loans.

2:47:53And there were 1.5 trillion of them, basically, if you think back to the low rate years of 2020 and 2021, whenever it was getting a 2 % or 3 % mortgage, that remained assumable. But the problem was nobody knew how to find them because no seller knows what type of loan they have. And if they know what type of loan they have, they don't think there's a marketing advantage to it. And even if, by the grace of God, you could find one of these loans, it was impossible to transact on them because the banks made less money on it. So we thought we could build a platform that basically vertically integrated all the problems within that, you know, purchase process and give it to consumers as a simple tagline, buy a home with a 2 % rate, come to Rome and, you know, you can find all the homes that are relevant.

2:48:30Yeah. Yeah. So break down, I guess, what, like, the obvious thing is just like for Rome to be, you know, truly, you know, widely just incredible, right? You just need scale, right? You need options, right? When people go and they're looking at a specific, some people want to go down and, you know, I have friends that want to move to where I live and like they're trying to buy one of like 160 homes and like 90 % of them aren't on the market, maybe some are for rent and some are for sale. So how do you think about just getting, it feels like it's a supply problem in terms of just getting the supply on.

2:49:12And then once you have the supply, then the demand is just obviously there. Yeah. So we actually did something pretty scrappy. You know, I think had we waited for every seller to come on board, it's like any other marketplace issue. If you wait for all of the supply to come on board and opt in, then try to aggregate all the demand, it's going to take like five years, you know, by that point, consumers have lost interest. So what we did is we actually, in a pretty novel way, found every home in America and then every mortgage record in America and cross-pollinated it. So we just loaded up all the supply on the site.

2:49:40Technology. Amazing. I love it. Yeah, I'm on board. So you saw the supply side because you can uniquely show all of those homes. And then you just hammer demand. And you're basically like, hey, do you feel priced out? There's nothing wrong with that. All of us feel like we can't afford to purchase a home today. And there's a better way you can actually afford to do it. And it's credible and legitimate and trustworthy. worthy. And in cases where, you know, for instance, like the banks wanted to drag their fee on closing some of these transactions. So, you know, we're like, let's just pay for it.

2:50:09Like, let's say that if it takes longer than 45 days to close, we'll pay for the seller's mortgage until it closes. So it's kind of a combination of using technology to find all of the homes that are relevant, taking advantage of some of the partnership stuff and getting some of the mortgage lenders to come on board and see that there's value in this. And then also just like really pushing on the experience you know like i tell the team every day like if somebody doesn't want to close one of these i will personally call and we will make sure that this gets cold closed you know it's like we'll just ask you uh do people ever realize that that they have an like an assumable mortgage and then try to sell their house for more because they're like look you're carrying your carrying costs is going to be a lot lower you should be able to bond market pay more right uh i know john has a very low uh low mortgage rate and i was like he was like you know if he ever moves he could be like well pay me more yeah pay me more because your carrying costs are going to be lower yeah yeah where does the value actually transfer or accrue so basically an independent group of economists recently studied rome and it's always fun you know when you like start a company you're like okay we have like these set of ideas on like what the seller is going to get what the buyer is going to get and what's going to happen but like independently a group of people who'd never even spoken to me studied rome and what they found was sellers get five percent more for their home sale when they sell their home with low rate mortgage included buyers 700 a month and that if this option was widespread it would remediate basically the lock and effect you see today and one of the reasons i got really excited about starting rome was that i was at open door before this which is how i had a chance to work with eric and keith and i just pulled 50 000 homeowners and asked them what's the interest rate on your mortgage and what's your preference share for selling to open door and like 90 of people who had a seven percent mortgage were willing to do it but if you had two percent mortgage you would only do it like five percent of the time wow so intuitive there was like a large chasm both emotional and functional that they wouldn't be willing to cross but somebody could give that optionality to that that's cool can you take us through the news today what are you announcing how to come together give us the story yeah so uh today we announced that keith and costa led an 11.5 million dollar round into rome with founders fund we actually only had two investors um the whole process happened in like a week so it was really fast but we're thrilled to continue working with Founders Fund and CoSLA.

2:52:23Founders Fund led the pre-seed and the seed round, and it's been great to have a chance to work with Keith in all three investments that we've done. So pre-seed, seed, and Series A, Keith led all three rounds, and then he joined the board alongside Eric, who is the founder of Open Door and Series A. And in terms of the use of those funds, I imagine it's almost entirely R &D. You're not putting up any capital for these mortgages or buying things. It's a very asset-light business. right exactly so we're not taking any capital risk you know i still hold all my open door shares rip and uh you know saw some of the dynamics there but uh basically we help people without putting balance sheet risk on we're like connecting all of the layers through the stack so uh yeah no balance sheet risk in the business that's great uh oh sorry yeah go do you just get frustrated that you know there's millions of people that are you know looking at zillow all day long and you're just like, like, I feel like the big problem in terms of scaling Rome is just like making people aware of it now.

2:53:25Like, do you walk down the street and yell at people and just say like, by the way, have you heard about Rome? Like you can get a 3 % mortgage. Like if I were you, I'd just be screaming it like on the street, like a crazy person, because it would probably be pretty effective, uh, marketing. Uh, but, but I'm curious, like what are the next two years look like? This almost feels like, you know, uh, you know, with the series a, it would be not super practical to spend it entirely on a super bowl ad but this almost feels like the kind of business that you could be doing this just sort of like mass you know at scale marketing and and find results with that yeah exactly i mean i you know i like walking to a bar the first thing i ask people is like do you want to own a home and then do you feel like you can afford a home and like nine of ten people want to be able to own a home but like one of ten people feel like they can so that's immediately like the opportunity to tell everyone about is like we can close that gap and then we think about getting distribution in three ways, basically.

2:54:16So we tell sellers and listing agents who like actually have that inventory with an assumable loan that instead of advertising like everyone else, you got a cozy two bed, two bath garage in Decatur, Georgia, you need to leave with the fact that your home is differentiated compared to everyone else because it comes with a 2 % rate. That's why somebody is going to buy it, you know, because it's not a rate that they can afford. And for buyers, it's, as you mentioned, more mass market, just getting the word out there through media as well as through some now we're trying a few paid channels uh but telling people that they can actually afford a home with a two percent rate and then we're actually getting uh like some other partners you know like mortgage servicers and agents to distribute the product for us to their clients because they see there's value in it now too so so a lot of the distribution you know we had found signs of early on but now we're diversifying that and bringing out really what's going to be super repeatable as we look to get like you know massive scale sorry i'm not distracted i'm just shopping on rome right now there's some absolutely banger mortgages available here i'm seeing uh some potential future and yeah yeah yeah i'm like wait a minute it's way honestly uh i think people what you need to tap into is people's addictive behavior around zillow oh yeah totally and you just need to convert that to because the dopamine of seeing like i see a house that's uh it's it's seeing a number that's like oh two grand a month or three grand a month yeah it's like oh that's like completely like the sticker shot so i'm seeing a house that is almost three times as expensive as my house within a half mile but the mortgage is only like 60 percent more yeah and it's like that is like the dopamine rush for a user to be that sort of like basically take the magic of like look home shopping and then you just make everything like you know whatever whatever the average is 30 cheaper from a carrying cost standpoint because that's what ultimately drives affordability for most people that's why we have this right through visualization everything on rome because you know we didn't even need to make a map if zillow would have done this if you go to zillow and you search for like i don't know like a city like houston and you go in keyword search because that's how you'd have to find it and you just look for sellers you're advertising assumable loan you'll find like literally two results and if you come to rome and search in houston you'll find 2 000 results and it's because sellers don't know they have it and zillow is basically just feeding what the mls gives them which is like you know an uninformed perspective into it and uh you know we raised the capital too we had some investors ask like oh what happens if zilla does it i'd be like great you know like now everyone knows put a button on there that says buy this home with rome and cut your monthly payment in half so it becomes like a firm for home buying oh where it's a button on every listing card in the US to help you cut your monthly payments in half.

2:57:00Yeah, that's very cool. I mean, speaking of customer acquisition, like what is working? And what do you think the next year of customer acquisition will look like? Yeah, so right now, what's really worked super well, you know, pre-seed, seed, series A, like when we did the pre-seed, you know, and we're like, okay, like, is this a real problem? Like, let's announce it. It was like the front page of the Wall Street Journal, you know, which like blew me away. And that's not because of me or anything that I've done, like nobody even knows who I am. It's mostly about like the fact that it resonates with so many people that they feel like they can't afford to buy a home.

2:57:30And so we saw that continue for like the last 18 months, basically that there's just, you know, quarter million buyers that come to the site and we didn't pay for any of them. And they're just like looking to be able to buy a home. Now it's like, okay, how do you really deepen that penetration and get to work within each of the local markets? And so now we're finding ways to work with agents, which like for listing agents, hey, let's help you win more sellers because you can actually show them why you can get them to move, kind of relating to that study I've done at Opendoor. And for buyer's agents, it's like, hey, you got like 10 ,000 contacts in your CRM that basically said, no, I'm not interested because insurance is high, taxes are high, prices are high, rates are high.

2:58:08Go and re-engage all of them. Be like, hey, if I got you in a home with a 2 % rate, you might find that you don't get qualified for$325K, but now you get qualified for$475K. So maybe that makes you interested in buying a home now. Have you seen investors using Rome to buy homes with the intention of just leasing them out? Because I imagine I'm just scanning the marketplace around LA. There's rental units that I'm... I'm seeing three bedrooms that are whatever for four grand. I'm like, I know where that is. It's probably a seven, eight K a month rental. And if you're an investor looking at this i don't do anything in real estate i prefer highly liquid private shares my friends companies but uh there's a lot of opportunity i imagine just like in kind of like you know potentially alpha on on rome yeah totally so we actually launched a page just for that i think if you go to the home page there's a tab called investors so it shows you all of the homes that have an underlying ba loan those don't require primary residency and so any investor can purchase that you can put in the cash and you can take over that loan and you know go on to lease it out so facilitate those all the time.

2:59:16And most people don't even know that's possible. You know, there's so much misinformation about this stuff because if you think about it, nobody's really incentivized for it to succeed. Um, most people are incentivized to originate new mortgages at 7%, not like recycle the cash to purchase your friend's mortgage at 2%. Yeah. That makes a lot of sense. That makes a ton of sense. It's very exciting. Uh, well now we know you, we know how to pronounce your name and, uh, we, yeah, we really appreciate you stopping by. This was fantastic. and congratulations on the series a congratulations stacks uh stack lineup too on the round size going for you so enjoy it i appreciate that guys and then if there's anyone listening who is interested i think of it as like the manhattan project for housing affordability and we're actively hiring this is going to be the most important and i think only solution to affordability in the next five years fantastic the politicians talk about like oh we'll increase permits or something like that that's just not going to take impact to like 2035 sure you want to contribute to making it more affordable today email me i respond to every single email i'm ronick at with rome.com r-a-u-n-a-q up with rome.com so amazing well thanks for coming on fantastic domain to hit this yeah yeah oh it's with with rome sorry uh hopefully you're getting rome.com soon soon soon that's series b money yeah we will have you back as soon as the series b drops and anytime there's housing news we'd love to chat with you about it um but have a great rest of your day Thanks so much for stopping by.

3:00:35Great to meet. We'll talk to you soon. See ya. Bye. Well, you know, if you're looking for a new house and you're roaming around, you're trying to see if you want to live in a community, go on Wander. Find your happy place. Test it out. Rent a luxury home and then get on Rome and buy a house next door. Book a Wander with inspiring views. Hotel-grade events. Dreamy beds. Top-tier cleaning in 24-7. And what do we say about Wander? We say, find your happy place. Find your happy place. And we also... We're getting better every day at that. Yeah, we are. We're getting good. Well, let's go through some news and some timeline.

3:01:07This is an exciting story. So the co-founder of Robinhood has started a company called Aetherflux, and Chad Byers was posting about it. Baiju co-founded Robinhood and helped scale it to a$40 billion company. He's back with a new company to help deliver energy from space. Excited to be a small angel to work on space lasers. So they're putting solar panels in space, as I understand it. I got like a pizza with him like a long time ago. I think he'll be able to come on the show in a few days. And I think they're putting solar panels in space and then beaming the energy down with lasers to a receptacle that takes the energy.

3:01:45And it's all very sci-fi and futuristic. But I'm excited to hear how he built out that model because that feels like something that lives and dies by the Excel spreadsheet of like what a launch cost, what do the cost of the solar panels cost. And if you play it out, there's a bunch of controversial things about like, are we going to black out the sun? Like we'll be able to see the sky. There's, there's a space trash based junk questions. Uh, there's also a ton of hard tech engineering stuff. We've talked to Delian a bunch about how hard it is to actually manufacture something, getting, get it into orbit quickly.

3:02:13And so lots of challenges, but I love that he made a bunch of money in finance and then is taking it into hard tech. This is what we saw with Elon. This is what we saw with a lot of folks who had, this is what everybody says. They say, I'm going to, I'm going to, I'm going to get the bag and then I'm going to change the world. And he's doing it. A few actually get there. So yeah, happy to support. And I'm sure we're going to see a lot more from his company in the near future. I wanted to cover the Circle IPO filing. They filed their S1 yesterday. We have a post from Omar, who I believe is over at Dragonfly.

3:02:42He says, nothing to love in the Circle IPO filing and no idea how it prices at$5 billion. Gross margins getting crushed with distribution costs. For those that don't know, Circle pays coinbase as an example a lot to effectively distribute the stablecoin um uh omar says core u.s market being deregulated and banks and financial institutions about to crash the private party spending over 250 year in compensation another another 140 million in gna core income driver which is rates already topped and heading lower 90 chance of two cuts this year um and it They're pricing it at 32 times 24 earnings for a business that just lost its mini monopoly and facing several headwinds.

3:03:30And it's expensive when growth is structurally challenged. TLDR feels like a Hail Mary for some liquidity before the squad rolls in. Who is the squad in this case? Oh, it's just all the banks and other financial institutions that will launch their own equally stable coins. Sure, sure. Yeah, that makes sense. I heard a take from a crypto investor I was texting with. She said, you know, there's no real crazy take here, but it's the first stablecoin IPO, which is just a cool way for public markets to have a clearer way to be long stablecoins generally. And so that's a product that really hasn't existed.

3:04:03Prior, you had to go into the private markets and invest in something like Bridge, which Sequoia did, or you had to go on chain and do all this more manual stuff and get some like leverage and do all these crazy DeFi things. And now you'll just be able to buy it on public.com. So if you are invested in Circle and waiting for the IPO and you're stressed out, what kind of bed should you sleep on? I need sleep for sure. Absolutely. No doubt. Go to aidsleep.com. Nights and fuel your best days. How'd you do last night? I think I did poorly because I woke up so early because of the rippling deal spy news.

3:04:35We had to get up early to talk about that story. Dig in. Let me see how I did. I imagine I'm a little low on total time. I was right, I got a 79, I was asleep for six hours and 31 minutes, what'd you do? We were. we were scooping yeah in our defense what'd you do i did a 97 97 that's great in comparison to uh A friend of mine and listener of the show, Bailey Barrow, put up 100 last night. Congratulations to Bailey. Congratulations to Bailey. Give him a little gong for that. A little gong moment. But go to eatsleep.com slash tbpn and get yourself a pod. You will not regret it and your body will thank you.

3:05:19Who else should we talk about? Oh, big news from Patrick O'Shaughnessy. He's launching issue number two of Colossus Review. We did a whole deep dive on the first edition of Colossus Review. It was a fantastic interview and really a lot of content in that magazine. Not light on content at all. Great layout. It will be free for everyone online. The print is magic. You've got to get the print edition. That's a good strategy, by the way. And I feel like one of my friends had, his parents had a subscription to National Geographic since like the 80s or something. and so he has a collection of every single magazine of National Geographic and so when you go over to his house he'll kind of say oh like what month and year were you born in you'll pull out the National Geographic from that year you can kind of see what's going on in the world at that time it's kind of a fun like party trick and it's not every day that you get a chance to actually say okay I think this will be I think Colossus Review will be around for a long time if I order the first one and then stay subscribed forever I could wind up with a library full of these things and actually have a complete collection.

3:06:24And I'm not saying that that's going to be like wildly valuable. It'll just be a cool artifact to put in your library one day. And a way to understand history from the lens of Patrick himself. I'm just excited about this piece. Because of the topic. Yeah, because of the topic. Green Oaks is one of those firms that is intentionally... Goated. You know, there are many ways under the radar. You don't see them on the timeline a lot, but then every time there's a, you know,$10 billion plus exit, it's like they're way in there. Snuck in. Very excited. Yeah, so they're covering Neil Mehta and Green Oaks.

3:06:58It's written by Jeremy Stern, and you really won't want to miss it. So check back tomorrow to get a copy of Colossus Review. Can't wait. I mean, I think Colossus Review, I'm super bullish, super long. I wish, you know, Patrick obviously posts about it, and he talks about it on his show, but I think he should buy some billboards. And I think you should go to adquick.com and I think you should make, you know, focus on - Put Neil on the 101. Yes, 100%. I'm sure you'd love that. I'm sure, yeah. I'm sure Green X would love that. I mean, AdQuick would allow Patrick to tackle out-of-home advertising in an easy and measurable way.

3:07:34Yeah. You know, Patrick and Colossus, they'd be able to say goodbye to the headaches of out-of-home advertising because only AdQuick combines technology, out-of-home expertise, and data to enable efficient, seamless ad buying across the globe. And so it's kind of a no-brainer for Patrick. I'd love to text him and let him know. Should we go over to this fun story that people were generating AI-generated receipts trying to fool the expense management softwares? Ramp's on the case. They solved it within 24 hours. Within 24 hours, Eric Lyman posts, spec'd, designed, and widely shipped to production in under 24 hours by Will Yee and the applied AI team at Ramp.

3:08:11And he shares the Michael Jordan meme of, I took that personally. chat tpt's new image generator is really good at faking receipts well you're gonna have to try harder good luck to sneak it by your ramp expense policy because ramps on the case what what's the scenario where somebody's generating a fake receipt they uh didn't catch a picture of the receipt no no no i i think it would be you you you know your boss says hey yes you can go and take people out but you can't get a bunch of drinks and so you go and you say yeah we were at the, we went to this restaurant and we bought salads and we weren't buying liquor, basically.

3:08:47Something like that. That is wrong. You know, you could change that. No power lunches. Because you're not going to be able to change the name of the swipe on the credit card, but you could fake the items that you purchased. So you could say, yeah, I went to Best Buy boss. I got a new office chair, but really you got an iPad and you like sold it or something like that. So like that type of fraud, I think is what, not to give you any ideas, but that's the type of fraud you want to avoid and that's the reason why why why ramp like is all built around like take a picture of your of your receipt so you know actually what people are are are buying on the corporate cards yep anyway um speaking of ramp go to ramp.com a lot of people say oh wanders where you find your happy place but when it comes to corporate cards expense management and bill pay ramp is where i find my happy place yeah Every day of the week.

3:09:36Use corporate cards, bill payments, accounting, and a whole lot more all in one place. What else would be good to go to before we wrap it up? We got... I liked to round it out. Yeah. Chris Backy's post on... Summary. Quote, he said, the plan, you're James Bond, but it's at a global payroll company, and you only get 5 ,000 euros a month. And when you get caught, you'll lock yourself in the bathrooms and delete your LinkedIn account. And immediately confess. Break your phone with an axe and immediately confess and join the enemy. It's such a bizarre story. It's really entertaining. The truth is stranger than fiction.

3:10:20You really can't write this. It is. The new season of Silicon Valley. What a wild day. But yeah. and yeah thank you to all the sponsors uh we show's been really fun go to public.com investing for those who take it seriously and check out polymarket adquick eight sleep wander bezel numeral all of our sponsors we're really thankful to them do it all in time we got to get a new we got to get a new so i was looking on polymarket there's a lot of stuff on who will acquire tiktok apparently app lovin and amazon emerge as tiktok bidders ahead of the deadline so right now uh perplexity larry ellison oracle etc i don't know if app lovin i don't think is even listed or or people yeah we're not seeing it up there so we're going to get this update or we're going to get this market updated uh because app lovin is in the race and last i checked i'm going look on public.

3:11:25Apple actually had the market cap to potentially absorb something like this. And they have, you know, the... Also, I mean, just the last thing we should cover today, because it is news today, the tariff announcement did happen. Trump gave the speech at the Rose Garden for Liberation Day. And the result is that the US will impose 10 % tariffs on all imports and even higher rates for some nations. The president opened his remarks Wednesday by saying new tariff policies would make America wealthy again. He said he would be announcing reciprocal tariffs on countries across the world. It can't get any simpler than that.

3:12:00You tariff us, we tariff you. Later, Trump held up a chart with a list of countries saying it was too windy to put on an easel, which is kind of funny. There's a funny image going around. He began to read off the list with tariffs of the countries imposed on the United States. And then the tariff, he said the U.S. would levy in response. He said that the U.S. was going to be charging a discounted reciprocal tariff because the U.S. is kind. For China, the U.S. is levying a 34 % tariff. Then for Europe, we're going to charge them 20%. Japan, 24%. He is going down the list. 31 % tariff on Switzerland, meaning that the price of your existing watches just went up.

3:12:40And in general, the market seems to like it. The Dow Jones is up half a percent. The S &P 500 is up 0.6 and the nasdaq is up 0.8 percent today and so not a not a bloodbath in the markets um people were expecting some stuff they got some stuff they got some they met their expectations and so things move forward the march of capitalism marches on we should have joe on tomorrow sure be fun i don't know if we have time oh yeah stack lineup tomorrow yeah great One of the top posters in the world. But wait, we got to give away. So let's give away the Dom tomorrow. I realize we didn't prep and pull all the reviews and everything.

3:13:22But yes, a little bit of an update. We are giving instead of drinking a bottle of Dom Perignon, we are re-gifting a bottle of Dom Perignon. And so leave us a review on Apple Podcasts or Spotify. Send us a screenshot of your review and you will be entered to win this wonderful bottle of Dom Perignon. It is a 2015 vintage if you care. But we think it all tastes pretty good. Everybody cares. Thank you, folks. Thanks for watching. Excited for tomorrow. Have a great rest of your Wednesday. Bye.