Sama's BG2 Appearance, Ilya Sutskever Deposition, Porsche 911 Turbo S Reactions | Mark Gurman, Daniel Roberts, Erica Brescia, Benjamin Witte

32:04That's kind of a funny outcome. Yeah. That's the risk. That's one risk. That's why people want to know about this. Sure, sure, sure. it's it's what how real is the backlog right sure sure like is is is this oracle 300 billion commitment how much actually comes through i mean no one knows it's predicting the future like i know but usually when companies would come together yeah and announce a deal like this yeah there is is is a lot more like you could have done a few of these press release press releases and there wouldn't have been as many questions. Like there's a lot of big numbers that you could throw out.

32:50Sure. Before people would say, like, OpenAI's revenue ramp is insane. They have the biggest consumer product created in the last 10 years. Yeah. Everyone, people love this product, right? It is entirely mainstream. It is magical. It's the first real thing that can compete with search. And I just think that it's still like when you announce a$100 billion deal, a$200 billion deal, another$100 billion, a$50 billion deal, and then less than 72 hours after this interview releases, there's another$38 billion deal announced. And now is an appropriate time, I think, for people to just press them harder on this because the joke of like OpenAI is holding up the stock market is incredibly real right now.

33:48I mean, I don't know what more people want, though. Like, it is, like, the logic is there, which is just like, we've been growing 3X every year. We project that we're going to continue to grow 3X. The quadrillion number is a joke, but clearly they back out the envelope to being a hyperscaler. So say that. Don't say we're automating science. Sell your shares. Yeah. You didn't have to answer. I think that the fact of the matter is Elon does very similar things, right? Yeah, totally. We're going to go Mars and we're going to have a flying car. And we're going to do data centers in space. The difference is that Elon is probably 10 to 50 times more likable than Sam.

34:43And I'm just saying that based on the timeline. like it is elon's app but yeah like i i think in general yeah people like you know yeah yeah i mean it's hard to tell like you could go to the comments of the rogan episodes because they both done rogan i mean rogan clearly likes elon more than sam like if you listen to the rogan interview with elon elon's been on a bunch and he's like he's he's he's echoing that sentiment um there are certainly people that like sam more than elon but sure sure sure sure i'm just saying like yeah in general yeah elon is more likable and so people give him the benefit of the doubt he also has a longer yeah like longer track record of delivering on you know there's the there's a thing of like elon you know gets the timing wrong but he delivers yeah yeah yeah and so i don't know it's weird because like i i do feel like there's a benefit to uh not going like private equity guy mode on this answer and actually doing the Elon mode and saying like curing cancer and new hardware device.

35:52And we have these really grand ambitions. There is a different flip on this, which is just like, like, yes, like, like revenue has been growing. We expect that it'll compound at, you know, 50 % and then 40 % and 30%. And so we projected our revenues and we projected our cogs. And it looks like in five years, our revenues will be 500 billion and our cogs will be 300 billion. And so where are we going to get the cogs from? We're going to get the cost of goods sold from Amazon and Oracle and, and AWS and Azure. And so we went and did deals to supply, you know, our infrastructure for those, like, like that's a totally reasonable, like spreadsheet answer, but like, it's just going to be.

36:31Yeah. I just think, I just think that we're, we're going to cure cancer answer. We're automating science answer. Yeah. Isn't good enough anymore at this scale when there's this many trillions of dollars on the line? I mean, yeah, it does feel like a pivot away from just like, hey, we're just going to make a ton of money off of ChatGPT. Because I feel like there's a world where it's like, hey, yeah, actually, ChatGPT is going to make the same amount of money as Google search. It's going to be at that tier, in that league. And that justifies the investments. Google spent a ton of money on capex i mean google's spending all the hyperscalers are spending 60 70 80 billion a year so he could have just like there is a world where he just says hey look uh the reason you're seeing all these numbers is because we're building a hyperscaler and our our products are going to make the same amount of money and get the same amount of attention have the same amount of users as facebook and family of apps and google and all the different microsoft products and so we need servers to serve those up.

37:35And so we went around and got all of those. And you know how all of those other hyperscalers spend, you know, 50, 60, 70, 80 billion a year. Yeah, we're going to do that too. And so you add that all up and you get to 1.4 trillion over the next decade. And that's the plan. But he's projecting more spend than that. 1.4 over the next five years, something like that. We don't even know. So he's growing faster, much lower revenue base. I mean, it's like how much are they on the hook for some of these like i was looking at the uh i was looking at one of the breakdowns that's the thing included included in the 1.4 trillion is stargate which is like straight up not on open ai's balance sheet yeah it's like just a new it's an entirely new company new thing new project like open ai has some some yeah some loose structure to it counting counting yeah but basically it's like we are at we are at a like i i agree with you on on the assessment of the timeline but we are definitely in a moment where every single time one of these deals gets announced you they just everyone mentally just takes the headline number and puts it as liability on opening ice balance sheet yeah and that's just like not the way these things are structured because they can be like they can have get out of jail free clauses i think it's i think so so here's one thing it's certainly yeah going private equity guy answer and just laying out all the numbers yeah then there's the kind of more product oriented answer not the hand wavy like we're automating science and we're going to have a hit consumer product but there's like hey like agentic commerce we think is going to be is a multi-trillion dollar opportunity and we're not monetizing there yet but we will be soon that kind of asks the follow-up question of like okay well like what if it doesn't pan out and I'm not betting against Agenda Commerce.

39:22Like I think that people are going to buy a lot of products through ChatGPT. But it opens up a follow-up question of like, okay, well, what if that doesn't happen? Are you on the hook for all this spend? And then Sam can say like, if he answered honestly, he'd have to say, well, I imagine it would be something to the effect of like, we have certain minimums that we have to hit, but we're not on the hook for, you know, the full deal sizes. That's what people want. nukes that i'm just saying like every every hyperscaler involved every company yeah yeah because you don't get credit for fake pr for fake press releases right well yeah so the amazon deal amazon amazon announced a deal it's 38 billion dollars over seven years yeah stock went up 150 billion what so that's the press release yeah wow okay so uh i don't know uh it's yeah It's odd because it's like these games are clearly working in the public markets.

40:20There are investors. The marginal investor on Wall Street apparently thinks the value of$1 of OpenAI revenue is$10 or something like that. What was the ratio you said? It went up$130 or something for$40? So they're applying like a three or four times multiple on$1 of OpenAI revenue, which again is only 30 % margin. It's only 30 % margin. It's not 99 % margin. I think it's like 30, maybe 40. So it is very weird to apply. Pull up this post from Grant Hawkins. How can a company with$13 billion in revenues make$1.4 trillion of spend commitments? Brad, if you want to sell your shares, I'll find you a buyer.

41:05A low-tam banger, 13 likes. I'm going to throw a like on that. Good stuff, Grant. 12. We're liking it. Hey, man, how are you going to pay for the$1.4 trillion of spend you promised? Proceeds to crash out. I mean, the timeline, the memes are fantastic. They're impeccable today. You know what else is impeccable? Vanta, automate compliance, manage risk, and accelerate trust with AI. Vanta helps you get compliant fast. And we don't stop there. Our AI and automation power everything from evidence collection to continuous monitoring. Compound 248 was just going off. Oh, yeah. Can we afford it? Who knows?

41:41But what I do know is you can sell your shares. It's so ridiculous. What a bizarre, what a bizarre clip. Yeah. I don't know. Les Shrub says, I'm sorry, Brad, but if CEO of one of my holdings spoke to me like that, I wouldn't be a, quote, buyer. I would be a seller of all my shares. That's a weird, like, vibes-based analysis. Yeah. I don't like that one. I've invested in a lot of companies. Yep. Post-investment, I have realized that some of the CEOs. Yep. I don't like, but that doesn't mean I'm actually bearish on the company. Sometimes it's just like kind of a personal judgment. And I think it's okay to be invested in a company with a management team you're not necessarily a fan of.

42:24But I don't think Brad was offended by how Sam answered the question. Not at all. I think they were kind of, I don't know, they're trying to have a public conversation about the relationship of a CEO with an investor. Like, and they're, it's almost like they're, they're like, there's some realness there, but then there's also some, like, we're trying to show what our, what our perception of each other is. It's a very complicated dynamic. It's an very, it's very, it's, it's, it's ultra neo media. It's neo corporate media. I don't know. There's something weird. It's a very, it's unprecedented. It's a very interesting, interesting piece of content.

43:06Do you want to read any of Brad's breakdown? It's pretty interesting. He says, people are reading too much into Sam being feisty. Yeah. Who would spend 30 minutes on a show talking about this? It's like not that big of a deal. I love that about him and our founders. We laughed about it afterwards. If you listen to his words, here's what he said. A lot more than 13 billion revs in 2025, which is insane considering they were doing less than four last year. They're going to quadruple revenue, quintuple revenue, half of a$4 billion base. Like that is crazy. But so are the spend commitments. $100 billion revs sooner than people expect.

43:47So they got to get there pretty quick because once they get to$100 billion, that's still, they have to do 14 years at$100 billion to pay for$1.4 trillion, if that's what they were actually on the hook for. Spending commitments aligned with revenue expectations. risk of too little compute far greater than risk of too much at that growth rate could be 200 billion revs in 2030 match that against 200 billion of capex and you have an absolute juggernaut agree if revenues come in slower okay tyler we need to map these against uh our our different projection our different timelines so so we need the brad gerstner tab of the spreadsheet uh next to Leopold Aschenbrenner's projections, next to what we've heard from OpenAI in the past.

44:36You know what I'm talking about? Yeah, yeah. EGI 2027 has that too. Yeah. I think we also need a quick exchange rate between dollars of CapEx to gigawatts to flops and be able to exchange rate between all of them to really understand in apples to apples. Like, is this more bullish than what we were hearing before? Because I feel like the general vibe is a deleveraging of the bullishness in the AI economy. Every time I hear a new number, it's always like pushed out a year and like a little bit less than the previous projection. And so we're getting, and we saw this first with like the, we could reach super intelligence in a few thousand days, soft singularity, right?

45:23Like that felt like a stepping back in the aggression. Right. And so, so I feel like there's a lot of these things where, where the actual read on this could be, oh yeah, like they're going to hit, they're going to hit 200 billion revs in 2030. Like that could be way off of the previous projections based on like exponential fast takeoff. Right. What do you think? So EGI 2027 has a hundred billion dollar revenue by June of 2027. Let's make it happen. It's got to happen. Wait, a hundred billion across all the labs. Uh, no, that's just like, well, that's like the big, it's like open brain or a hundred billion.

46:05Wait, a hundred billion rev 2027. Yeah. That actually seems pretty doable. It's totally reasonable. Yeah, I know. You're bullish. Yeah. Because, because wait, if they're tripling, if they're tripling this and they're going to close 25 at 20, and then they're going going to close they're going to close 20 26 at 60 they're going to be at 180 yeah extremely bullish yeah it's i mean it's pretty take 500 days off the singularity clock the singularity is only 2 000 days away now yeah i mean what it comes down to is that whether or not like whether or not brad like brad obviously is is yeah like from what i know about brad he's not he's not he's like i can't it would we would be in such a dark place if brad was trying to offload open ai shares pre-ipo like things would be so bad right uh yeah yeah i do think this but this but it has nothing to do with but the question is not again the question is for people that are not invested in open ai but invested in all the companies that they're partnered with sure yeah yeah yeah so yeah all your shares is just not a good game of musical chairs uh yeah that would have been an interesting way to flip it around would be like hey sam i'm still bullish at 500 on open ai i'm still a buyer but should i be bullish on broadcom or oracle like yeah uh this just goes back to my overbuild thesis of like who's a beneficiary of the overbuild yes the jordy hayes overbuild thesis trademarked right now when it happens.

47:43We're glutton. We're taking a bit. We're glutton. We're also going to tell you about graphite.dev. Code review for the age of AI. Graphite helps teams on GitHub ship higher quality software faster. Not going to lie. If a CEO's response to, hey, how are you going to pay for all this stuff you don't have cash for is, you're welcome to sell your shares. You should probably take them up on that offer. Lots of the timeline is just going crazy. Got to give it to Altman. Very forward thinker. Itching to go public for the sole purpose of crushing the hypothetical short sellers. that don't exist yet. Can't wait for the S1.

48:12I love that. I mean, I thought the short seller thing was fine. It was a good point. People, this Wojak, this is so crazy. Who is this kind of dread? So you're doing$13 billion in revenue but making$1.4 trillion in spending commitments. How does that work? First of all, we're making$13.1 billion in revenue. And second of all, short seller. That's hilarious. is the time. Yeah. There was not, there was not, no one came to Sam's defense. Yeah. Okay. Okay. So from a media perspective, I am interested in this because, uh, uh, do I have this right? That, that altimeter is a hedge fund. They are, they're not like long only buy back the founder, like never sell your shares, hold forever.

48:58Like, like it is a different type of fund. And so there is if you do a podcast with a portfolio company and you're a Series A founder and you walk into a podcast that's run by a venture capital firm, there's no scenario where they walk out of that podcast and they're like, we got to sell this. I mean, maybe a little bit, but there isn't that tension. In general, the critique of fund media is that they're long only. And so they'll never, they're only - They'll never give you an accurate view into the company. Exactly. Because they're just always, they're always, they're turbo bulls or turbo longs or whatever the word, permabulls.

49:41They're permabulls. But altimeter is not, right? And so you could wind up in a situation where you're doing a podcast and you actually walk out of that meeting and you're like, oh, wow, like he's sold after that. Like figure that out. So altimeter and many other funds. It's making me so bullish on BG2. There's going to, yeah, so I love Brad. I love Altimeter. And there is a class of funds right now that, like there are going to be plenty of funds that don't make it through the AI CapEx trade. Like we're in the midst of the AI CapEx trade. If you get this wrong and you get this wrong enough, you just won't, you'll, there will be funds that shut down over being long into a correction.

50:32And so I view this question, in my view, is more so for the hedge fund community to try to get a sense of like, okay, what actually happened? And obviously they have other sources besides listening to a podcast. But what happens in a scenario where OpenAI can't meet the kind of soft commitments it's made to all these partners. Like if OpenAI growth, like - So I believe that if OpenAI came out and said, hey guys, actually everything, all of our special bets, we're not gonna do the hardware device. We don't like that. Sora's not really working. We're taking it out of the app store. We're doing the$200 a month plan, the$20 a month plan.

51:19We're basically guidance for next year. we're going to do 15 billion and then maybe next year we'll do 16 and then 17. And like, it's going to be like an eight, 20 billion run rate business. And so we're canceling all the spend commitments. I believe that the market would just retrade right back to where it was. And I believe that, that Amazon, if they got 130 billion of credit, they just lose that. And we just see exactly what happened at liberation day. Yeah. Or so Oracle traded up 30%. Yep. And I, and I think it trades down 30%. I don't think it trades down 60%. But now they have 5x the debt.

51:52They don't have 5x the debt. That's just not true. They didn't actually go issue that. Okay, maybe it's not 5x, but they have significantly more. No, no, no, no. No, it's not even significantly more yet. Like, it will be like a little, a drip of debt, like every quarter, more and more and more. It's not just going to pop up all of a sudden. Like, it's not just, like, if you go and you have$300 billion in subspecments, you're not just getting it, like, overnight. Right. Like, I mean, there's this news about, about Meta, like Meta is also doing this and, and they, uh, and, and like they, so they Meta increased, uh, spending on CapEx 71 billion up from 69 billion previously.

52:33And their guidance is that they will be notably larger in 26 than 20, than 25. And so like, yes, that's like a couple more billion. That's significant, but it's a big company. And so they're doing this bond deal. It's 30 billion. That sounds huge. It's a$2 trillion company. It's like 10 AI researchers. Exactly. It's like nothing. It really is like not that big. Bank of America tallies 75 billion of AI-related public debt offerings in the past two months. So in the past two months, 75 billion of AI-related debt offerings. Total. Like it's a lot, but it's not like destroy the global economy yet.

53:10It's just not there. AI, Morgan Stanley had an AI, AI CapEx related debt is already between like one and five trillion. So there's, there's over a trillion dollars of debt already tied to. I think, I think people are reclassified. It's like, it's like when people change their.com to.ai and they're like, oh, okay, I'm an AI company. It's like, actually, this is an AI loan. This is an AI debt instrument. This is an AI, this is an AI debt instrument. Okay. I have, I have a few more things. One, I got some bad news from Polymarket. There's a 36 % chance of a U.S. recession by the end of 2026. So we could be looking, basically 36 % chance that it's 1999 right now, which I don't like.

53:56What's the definition of recession? Yeah, what's their definition? It's seasonally adjusted. So you have two consecutive quarters of negative economic growth. So less than 0.0 GDP growth. So GDP goes negative in real GDP terms. So not inflation adjusted. So inflation adjusted, basically. So you're taking economic growth for two consecutive quarters in real terms, not in nominal terms. It needs to be negative for two quarters. And it also is seasonally adjusted. So you don't get like a little Christmas bump. And this data will come from the National Bureau of Economic Research. And they will publicly announce that a recession has occurred in the United States at any point during 2025 or 2026 with the announcement made.

54:54So the NBER, they call it when they call it, but it's based on economic contraction, basically. And you can't contract for just one quarter. You get one free one before you get called a recession. So you can have a little blip in your economy for one quarter. As long as you make it back the next quarter, you double down, you parlay, you do something crazy to get out of the hole, then you're good. but if you go down two quarters in a row you got a gambling addiction and you're putting the recession hole you got to get back in uh anyway um i wanted to share that then i wanted to talk about buco capital blokes assessment of this sam breaks people's brains just like elon there's a b in the chat says don't believe the recession hype until the price of a nautilus drops to sub 100k i think that is that's a great analysis ab welcome to the stream new name but It fits right in here, honestly.

55:51Thank you for chiming in. Also, if you're looking for a Nautilus for under 100K, you've got to go over to getbezel.com. Your Bezel concierge is available now, source of your underwatch on the planet. Seriously, underwatch. Might be able to get a boy's size Nautilus for under 100K. A lady's Nautilus, that could go. Yeah. So Sam breaks people's brains just like Elon. There's a thin line between grifter and visionary, and creating true believers to harvest their capital requires rhetoric Rick that makes non-believers recoil. Sam hates, Elon hates Sam, not just because he stole his company, but he stole his whole playbook.

56:27And so I always like this idea of, is Elon Barnum and Bailey the circus man, or is he Thomas Edison or Nikola Tesla? Well, he's both. And why he has such a power loss, such an incredible impact on the economy is that not Not only is he the inventor and not only can he lead engineers to invent the thing and build the thing, but then he can also promote it. And he can promote it really, really well. And so he's both the grifter and the visionary. He's both the real deal and the fake guru. And when you put those together, it's really, really powerful. Sam seems to be doing something similar. The question is, in the Tesla and in the – this is my question for you.

57:08Maybe it is different. I know that your position is that it is different, but in the build-out of Tesla, in the build-out of SpaceX, there was never a moment where it was like, if Elon goes bust, everything is dead, right? It was never like, if Tesla doesn't hit earnings or continue to grow, like Ford and all these different supply chain companies will be out. The global economy will collapse. Yeah, exactly. Elon has never really held up the global economy. The other big difference between the two is, one, going back to the likability thing. Not saying this from speaking generally. It's a timeline assessment.

57:50Elon is more likable than Sam. He has also made tens of thousands of retail investors so much money for believing in him. That's true. And so not only is he just generally people listen to him and they like listening to Elon talk more. but so many people believed in the elon crazy vision and a lot of it has come true some of it hasn't but at least tens of thousands maybe a hundred thousands of people have like made money because of elon's vision and and believing in him and so sam doesn't have the benefit of having like there's no retail army defending sam even the v even even that the thing that was notable is Brad is a one-man retail army.

58:35He's a one-man retail army. And so there was not a single other VC that I saw that stood up and said, no, actually, they're good for their$1.4 trillion. Here's how they're going to hit it. Yes. Like nobody put their... So Sam actually did say that one of the reasons why he maybe wants to go public is to actually have a retail army to basically... Was that what you were going to say? Yeah, yeah. Yeah, yeah. Bring it down. Yeah, I mean, basically, they were talking about IPOs, And then because there was that thing, I think, from Reuters about how they were maybe planning on IPOing mid-2027 or late-2027.

59:08And then Sam was like, oh, that's just like maybe in the future. But one of the reasons we would want to IPO. He said, I don't know why people write those pieces. And it's like, dude, everyone knows where they write them. It's amazing. It's so entertaining. Yeah, but basically he says like one of the reasons he would want to IPO is so that he could basically bring, you know, not just venture capitalists, but the entire economy with him. Yes, yes. So he wants the retail army. Yeah, I mean, it is UBI. Everyone should get one share of OpenAI. If the IPO gets priced too high, he'll get it. Yeah, everyone just needs to be riding with him.

59:42Anyway, let me tell you about Julius, the AI data analyst. Connect your data, ask questions in plain English, and get insights in seconds. No coding required. The undefeated king of the application layer, Rahul from Julius. Go use it. They have a Slack agent, so you can ask your data questions in Slack. Highly recommend, Julius. Elon and Sam were also beefing on the timeline. This is interesting. So Elon says, you stole a nonprofit. Sam Altman says, I helped turn the thing you left for dead into what should be the largest nonprofit ever. You know as well as anyone a structure like what OpenAI has now is required to make that happen.

1:00:26you also wanted tesla to take over open ai no non-profit at all and you said we had a zero percent chance of success now you have a great ai company and so do we can't we all just move on uh somebody was giving uh pushing back a little bit of the can't we all just move on because sam like a day earlier oh yeah was posting this was saying a tale and the next post yeah uh Vittorio posted 9-11, I'd like to report a murder. And it's Sam basically giving shit to Tesla and not being able to do a refund. And so the follow-up to you stole a non-profit and you forgot to mention Act 4 where this issue was fixed and you received a refund within 24 hours, but that is in your nature.

1:01:10So again - Elon refunded him. Refund confirmed. Yeah, so Sam obviously keeps poking the air. We need the Dark Souls overlay refund granted. of Elon paying Sam. No, why this was interesting to me was that the nonprofit, I was told that OpenAI was going to convert from a nonprofit to a for-profit. And I feel lied to because what we actually got was the nonprofit is still in existence and there's now a new for-profit and they're actually separate. I wanted the nonprofit to fully convert. And now you have this nonprofit that's sitting there with$136 billion of OpenAI shares. I want to finish the job.

1:02:01Let's go back to the nonprofit. Let's convert it to a for-profit. Let's take that public as an OpenAI holdco. So you have$136 billion in the treasury. Let's get that ripping in the public markets while we wait for the real OpenAI IPO. What do you think? Two IPOs. Two IPOs. You can have two companies and then they can demerge. it is interesting uh it was a bigger number yeah than one so there's this funny thing that like numbers sam keeps saying like oh the non-profit is like going to be so well funded like uh it's the you know it's the largest non-profit ever but he hasn't really unpacked like will it be a what kind of non-profit will it be will it be a good non-profit or bad non-profit there's some bad non-profits out there i i don't i i really think that people are skeptical of non-profits now like Like people do not just assume, oh, it's a nonprofit.

1:02:53Everything's going to go perfectly for sure. 100%. Oh, good. It's a nonprofit. Nothing bad can happen. It's ridiculous. I think the best case for the nonprofit is they kind of create some sort of like research arm and then they start making products and then, you know, maybe it'll become like a consumer product. Yes. Yes. Just the nonprofit. I love it. I love it. And then they can turn into a for-profit. Yes. The nonprofit is basically just spinning out endless for-profit companies. This is - That could be the greatest nonprofit of all time. That would be the greatest nonprofit of all time. Yeah, a lot of, I mean, there's so many.

1:03:26But they really should wind it down. Like, I was promised a for-profit conversion. I feel lied to. Anyway, get over to Fall, the generative media platform for developers. The world's best generative image, video, and audio models all in one place. Develop and fine-tune models with serverless GPUs and on-demand clusters. um there oh speaking of cars there's a review for the new porsche 911 it's a hybrid and the review in the wall street journal in off duty uh says yes it and it's the fastest most powerful best handling 911 yet and jordy hayes as a former uh porsche 911 turbo s owner i want your review of this review and i'll read you some of this so it's a hybrid 911 review of the review Still seething, now smoother, more refined.

1:04:16A few days before I left Spain, I got a note from my friend Dave Scrivener, a producer for the television show Motor Week. Did I want to share a car on Porsche's 911 Turbo S test drive? I'd love to. I knew from past outings that not only is Dave excellent company, he's a father of 12. funny as hell, but a superb driver. Let's hear it for Dave. And on this trip, he'd put on a masterclass with me in the right seat, looking like Chewbacca in the asteroid field. Dave utterly thrashed the Porsche 911 Turbo S Cabriolet assigned to us, attacking the granite tooth switchbacks of the Andalusian hill country.

1:05:08Like he hated them. We actually went faster and harder getting to the circuito Ascari racetrack than we did when we were on it. I have pretty good car control. I can generally keep it together on a racetrack. Yeah, it's crazy. But Dave, the senior driver for the television show, Motor Week and pro-level road racer is fearless, death-defying even. I might have preferred not to test the Turbo S's biggest ever carbon ceramic brakes while pointed over a cliff at 100 miles per hour. Dave reasons, when else would they matter? To the untrained eye, the Turbo S might look just like another 911, one of dozens of variants with inscrutable nomenclature, GT2, Carrera 4S, Cabriolet.

1:05:56But this, dear friends, is the big one. The quickest, most powerful, most versatile, most luxurious car in the 911 lineup. The legend, the proverbial gorilla in a tuxedo. Did you ever refer to your car as a gorilla in a tuxedo? So maybe what it was black on black on black. We never introduced it as the gorilla in the tuxedo. And that's why you were like, I got to get out of this thing. Now it's a hybrid. Notwithstanding the 200 mile an hour top speed, the goal. I'm actually about to crash out. You are. Okay. Because I was not aware until we were reading this that they were making the Turbo S a hybrid.

1:06:32Okay. And why are you crashing out? Why don't you like that? I thought they were going to have it. I mean, no Porsche owner is sitting there being like, I want them to make the cars heavier and I want them to depreciate. They hold their values so well, I want them to depreciate. I want you to make it a hybrid. Okay.

1:06:55Anyways, continue and then I'll give more thoughts. So I can give you some more details on the actual impact of this move. So it still has a twin turbocharged, 3.6 liter flat six, and it's a brand new engine. It has fuel injectors all the way up. With no belt-driven accessories, the unit is a few inches more compact. The turbos themselves are also smaller. These adjustments make just enough room on top of the engine for the pulse inverter and the DC-DC converter. I don't know enough about engines to understand what's going on there. But I will tell you that Porsche invented an entirely new flat six, different bore diameters and everything just to clear 11 centimeters under the engine cover.

1:07:42But it's not like the engineers had a choice. Nobody was going to tinker with the Turbo S's silhouette, were they? Likewise, the eight-speed PDK transmission is totally changed. Wrapped inside the transmission housing is an electric motor, 80 horsepower, 139 pound-feet of torque, connected to the crankshaft via a dual-mass flywheel. There's some more information here. These can add up to, there's also electrically powered turbochargers. These add 38 horsepower of electric boost on their own, as well as recovery energy from engine braking. The car's 590 pound-feet of electrified torque is sustained from 2 ,300 RPM to 6 ,000 RPM.

1:08:21The acceleration is terrifying. It can get up to 701 horsepower, shaking its fist at the sky. The e-turbos. So this is the point that I want you to react to. Purists, that sounds like you, Jordy. Are you a purist? Purists may sniff that the hybrid Turbo S weighs 187 pounds more. Fair point. But what is also staggering, it's 14 seconds faster around the Nürburgring. And they say, hell, the audio system probably weighs more than 187 pounds. So what do you think? You get 14 seconds faster around the track, but you get 187 pounds heavier. Why is this so upsetting to you? I think you just feel the weight as a driver.

1:09:10It doesn't matter if it's like slightly faster in a straight line or improved in a number of different ways like driving a super heavy car fast yeah is just i don't know it's less it's less enjoyable i it's hard because this this is the most dentist coated car i've ever seen in my life a white turbo s with pulling the top down while you're driving though that's pretty sick so i mean i i i really dislike the i i really dislike cabriolets in general if this is the car that getting a dentist gets you no no no shade to dentist but this is a great car if you were if you're buying a sports car to drive to work at your dentist's office this is a great option but in general i it would have been cool to see them test something um dude if i pull up to the office my issue here cab i'm like i'm this is gonna be a good teeth so yeah i guess true but my issue here is that this is not what customers want well we'll see how it sells we'll see the depreciation i don't i i think i disagree with you in that like the depreciation shouldn't be nearly as extreme as it with like the fully electric cars like yeah but but we've already seen that hybrids depreciate horribly compared to true sf90 true yeah good point yeah i mean yeah it does feel like it's uh it is is the is the rationale here some sort of uh blended uh emission standard i've heard i've heard that's a big thing in in europe where you need to have a variety of cars do you see that like so it's like 10 percent of your cars that are on sale need to be electric or or 30 need to have better than 20 miles per gallon something like that so like no they are certainly getting and it's regulators have a gun to their head yeah and they're saying ruin take away everything so you realize that this is just an option like like the the 911 is not a hybrid now the 911 has a hybrid option the turbo s you can just get it i'm pretty sure you can just get a normal to refresh 99 2.2 introduces a hybrid powertrain so you cannot get it without one is hybrid the new turbo s is hybrid only oh that's not so this is not an option you're forced into doing this and so i'm sure it's still going to be amazing driving experience yeah like it's one it's probably the greatest car in history that's all around but uh it's not what customers want and it's unfortunate that uh you know what customers do want they really want turbo puffer they want to search every byte they want serverless vector and full text search built from first principles and object storage they want it fast they want it 10x cheaper and they want it extremely scalable we that's why they go to turbo puffer uh yeah we will we'll see on this front we were we were at the track yesterday yes and seeing there was there was a there was an interesting group that was also at the track uh taking a different approach to their track day they would go out it seemed like they were i mean they were having fun uh but watching that turbo s go around the track yeah it made me never want to buy a turbo s again interesting it just didn't look it was somebody had a red turbo s that they were tracking and it just was the most i mean it was one of the craziest like okay i i have put i've put a decent amount of value on like sports cars and just like having a fun car to drive daily or on the weekends and seeing a track car truly was like there is no value in sports cars at all actually track cars are the only thing that matters yeah they are 100 the only thing that you should ever get if you want a fast car or have a fast car experience yeah the just just comparing there was a there was also gt4 rs that was going around at at at some of the same times as the turbo s and it And it looked and sounded remarkably better.

1:13:16Such a half measure. Even the, I was talking to our new friend about the Formula Mazda series, where Mazda makes the engines. And he was saying, you can get one of these race cars for, I think it was like 20K. And the entire season is like 10K to run or something like that. And just the speed, the actual handling, the track times are just way better than any street car. Yeah. It's just night and day. So, yeah. But speaking of cars that might be able to do well on the track, I want your review. YMWLM says, play a clip of a GT3 RS for the Jintani exhaust. I would love to. I think it might blow out everyone's ears.

1:14:03We'll save that save that for later uh anyway um the uh speaking of cars elon musk teased on the joe rogan experience that the tesla roadster will be a flying car he danced around it he didn't say that exactly but he did say my friend peter teal says we should have flying cars and i think we should give him one which is about as clear an indication let's play the clip i want to hear we got to get better about playing the clips before we just run into it. But let's play the clip from the beginning, full audio. Are you still doing the Roadster? Let's go. Yes. Let's do it. Eventually? Eventually.

1:14:44We're getting close to demonstrating the prototype. It's been seven years. Look at that. Is that a real demo? One thing I can guarantee is that this product demo will be unforgettable. I love it. unforgettable how so whether it's good or bad it could be unforgettable

1:15:15um mistakes for bad or it could be really bad well you know I think about you know once reflected that the future was supposed to have flying cars but we don't have flying cars amazing so you're gonna be able to fly Well, I mean, Joe's face.

1:15:36I think if Peter wants a flying car, we should build a fly one. Okay, pause it right there. It's like the PR team. I don't even know if there is a PR team. But whoever's Andy L. at Orbit is like, please don't leak the full roadmap right now. What if it just actually is a flying car? It could be. It could be. Totally. Okay. I want to keep talking about. Get your brand mentioned in chat GPT. Reach millions of consumers who are using AI, discovering new products and brands. What do you want to talk about, Jordy? We got to talk with Dan, CEO of Iron. Coming in right now. Let's bring him in. Massive deal.

1:16:13Dan, how you doing? What's happening? Welcome to the show. Hi, guys. Good to see you. Thanks for having us on. Great to see you. Massive, massive day today. We saw you announced a pretty big deal. And so we said, what better day to have you on the show? Yeah. Yeah, that was a big weekend. A lot of sleep-deprived iron bodies around, but it's super exciting. Amazing. Give us the headline number. We like to ring the gong around here when there's a big deal that gets inked. All right. Iron and Microsoft, 200 megawatts,$9.7 billion in revenue,$2 billion. Absolutely massive. Absolutely massive. Breakdown the year for us.

1:16:58we've covered Iron's rise a little bit we kind of figured you had some type of deal like this in the works but what catches up to speed on the last sort of six months yeah look it's been super busy so AI popped up really in force probably last April and since then we've been building out our GPU cloud business which basically involves us buying the GPUs and providing access to those via cloud rather than an alternate model, which is co-location where you build the infrastructure and you allow one of these tech giants to lease it back. So we believe in owning the compute and providing that to the end customers.

1:17:42It's been a journey talking to a number of the large global technology companies, but really happy to consummate it with Microsoft. Yeah, I remember it was earlier this year, Satya had a line that's something to the effect of, I'm happy to be a leaser. And so I'm sure you guys picked up on that. Can you give us the... What? Sorry. So, yeah, one thing that Satya's, I guess, been saying over the last couple of years is, maybe not a couple of years, but over the last years, he feels like he's more energy constrained than he is GPU constrained. What kind of advantages has Iron had on the power side that made a deal like this possible.

1:18:28Yeah, that's absolutely right. And I think it's almost a little bit more nuanced than just power constrained. I think it's actually data center constrained as well. But let me come back to that. I think when my brother and I set up this business seven years ago, our underlying thesis was that the real world can't keep pace with the digital world. So the digital world is driving all these exponential demand curves. You know, adoption goes from zero to one overnight, whether it's Bitcoin, nothing 15 years ago to$15 trillion today, whether it was AI, not really spoken about two years ago to the latest humanity defining technology.

1:19:05And at the center of that is these exponential growth and demand. But the ability to service that is constrained and limited by the real world. So when we started this business seven years ago, we explained to people, it sounds simple. You can't plug a computer into a high voltage transmission line. It takes years and years of permits, approvals, dealing with risk-adverse utilities, giving you access to that network. So, yes, having access to power and having put in the groundwork very early is now paying dividends. But it's actually going a step further than that where you might have access to power.

1:19:41But do you have the framework to go and build the data center? Do you have the governance regime and the flexibility of a corporate to give you that decision to go and build and start building ahead of the curve? Do you have the internal know-how on how to build these new generation data centers? Because fundamentally, they're a different asset class. These are not metropolitan data centers providing corporate shared drives, doing cat videos. They're fundamentally different. Sure. How do you think about the predictability about the shape of compute workloads going forward? How important is it for you to project those out?

1:20:22I'd love some history of what was the first compute workload that you were doing? Because I imagine it wasn't LLM inference. There was probably crypto mining in the business. There's all these different workloads that were super valuable at certain times, then changed. Now we're in the reasoning era. We might be in a completely different paradigm. How much do you want to bake onto ASICs? How much do you want to use NVIDIA GPUs, more generalized chips versus flexibility? How do you think about projecting out the future? So I would just bring it back to a really big picture and say, as society, do we believe that we're becoming more digitized?

1:21:01Do we believe that we're going more online? and that's going to grow. And again, during our seed investment round, we quoted movies like The Matrix, like Ready Player One, Wreck-It Ralph. And directionally, I think humanity is heading that way, which is going to drive this appetite for high-performance compute. None of us have a crystal ball. We don't know what's going to be next. We had AI in our seed deck. We also had a whole heap of other stuff that hasn't eventuated. But what it means for us from a business perspective is a number of small-scaled bets along the way creating optionality. To go and pay an option fee on 500 hectares of land in West Texas is a really, really small exposure.

1:21:41To go and pay$10,$20 million to get the grid connection is now a relatively small exposure for our business. So it's right-sizing your bets to a point where you get to sign a Microsoft deal underwriting$9.7 billion of revenue. You go, okay, that justifies more capex yep yep that makes a lot of sense uh what other are are you looking at other opportunities and sites in in other areas or is texas the focus going forward look texas was the focus early on because we did the lap of the world worked out the best place to get power low cost excess renewables lots of land uh cheap power uh ease of grid connections lots of fiber backbones and now the world's there.

1:22:24We do have additional sites. We've publicly announced three gigawatts, but we don't talk about development sites that aren't 100 % secured by virtue of a connection agreement. So there is a multi-gigawatt pipeline behind that outside Texas and globally. Yeah. How do you think about the current playbook for companies that are doing partnerships with hyperscalers or open AI? Like what are the do's and don'ts of announcing a big partnership? Because we're hearing so many of them. And I think a lot of people are in somewhat of a press release economy. Yeah. People are having trouble handicapping them.

1:23:02Like you can just throw out a big number. You could, you could date it a hundred years in the future and get really crazy numbers. Like what does the market actually want to get out? Yeah. And this, this Satya has been so much more conservative than other, let's say, like an Oracle. Totally, totally, totally. Yeah, look, I think it's good to be skeptical, right? The world works in memes and headlines and public markets. I come from a private market background, infrastructure funds management. And going into the public markets, there is a lot of narrative. There is a lot of hype. We've tried to keep it very limited to binding contractual deal announcements.

1:23:42So this is binding. This is real revenue. Sure. just like we don't let's give it up for real revenue that's amazing I honestly think that needs to be clarified but thank you that is very very helpful yeah we're in a there's so much incentive for two parties to announce the biggest possible number without any real underlying commitments and so yeah I was excited to see you guys get this done and announce it with such a great counterparty yep well we'll let you go we know you have a busy day but thank you so much for stopping by the show yeah congrats to the whole team Massive, massive milestone.

1:24:16We'll talk to you soon. Thanks, guys. Bye. Elon Musk says a large solar-powered AI satellite constellation would be able to prevent global warming by making tiny adjustments in how much solar energy reached the Earth. That would be, I wonder how much, how much CapEx does that cost? Yeah, it's interesting that Elon, I don't know. there's just like, um, when he says something like that, it hits just as like sci-fi techno optimism. And it doesn't, it doesn't hit as like, I mean, people still trade the stock off of this, like news. People will look at this and be like, oh, well, like, uh, you know, like, like maybe Tesla will get a piece of that.

1:25:02Right. Uh, and it becomes a little bit of a narrative, but people don't, uh, people don't dig in that far. Um, we have one thing, one thing that was super notable to me, or standout kind of section of the, Elon was on All In Friday, and he was talking about the shareholder vote around his compensation, but also the voting power that he'll have. And one of the things that he said was, I don't want to create a robot army if I can be fired by ISS or any of these voting groups. And I thought that was, I mean, it's just like the most Elon way way to to uh who should control the robot army it's a good question he's like yeah he basically was saying i don't want to be fired for political reasons typically typically armies are controlled by democratically elected leaders like we have a system for electing who is the commander of chief of the army uh very interesting question if you actually wind up with a company that has control over a robot army that's a that's an interesting philosophical question uh also, you know, you're going to need to manage that army.

1:26:13You got to get on linear. Linear is a purpose-built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product roadmaps. So we have Mark Gurman coming on in just a few minutes, but we had a question, a message to us I thought it'd be good to get into, kind of break it down. So here is the question. Advice for my friend's company. He has around 400 million DAU, but he's been diluted by 90 % since the IPO. He still has full control of the company, but he can't sell because of antitrust. Should he bail? I think no. I think stick it out.

1:26:52I don't know. There's nothing about that that's identifiable. I think that you stick with it. I think it's going to be fun to run such a big company with that many DAU. Even if you've been diluted, you're probably rich. You've sold a lot along the way. you're post-economic, but it's better to be post-economic and have control over an interesting organization than post-economic and just kind of retired. That's my take. My mind's just racing on what company could this possibly be. And it feels like at 400 million DAUs, it's gotta be Snap. Maybe, could be somebody else though. Somebody should look into it and see what the dilution has been like over there.

1:27:30I think Snap is a company that, But I think if you read the numbers, it's like every 10 years, they just give away the entire company to the team. It was a billion in stock-based comp last year, something like that. And it's a$10 million company, so giving away 10%. Absolutely crazy. Well, we have the legend, the Germinator, in the waiting room. Welcome to the show. Welcome to the show. Mark Germin, how are you doing? Thanks for having me. thank you so much for joining you know we you know this has been you're kind of like our like this is the guest we've been waiting for since the very beginning the best we you were we were like we've been waiting for this moment for so long so uh we're super excited to have you on yeah here i am thank you so much uh maybe since this is the first time we've actually met uh i'd love to go a little bit back in time just to set the table like how did you land on apple how did you become so focused on Apple?

1:28:32Was this like a gradual thing? I mean, I know you from your reporting. It's been fantastic for as long as I can remember, but I imagine that there was a time when you had to make a decision. Well, I was an Apple fanboy back in the day. I remember when I was very young, I wanted an MP3 player for the holidays that year. And I was lucky enough that My parents were able to get me one. And the local mall, there was a mall in LA called the West Side Pavilion. It's actually closed now. And Google, I think, actually bought the mall to turn into headquarters in LA. And that whole place fell apart. The whole deal fell apart.

1:29:13But it's neither here nor there. Outside of, I think, Bloomingdale's or Macy's or whatnot, they had a cart, a Dell cart, believe it or not. and they were touting at the time what they called the Dell DJ and that was the mp3 player of uh of note at that time and so I wanted a Dell DJ for Hanukkah that year and so I was gonna get a Dell DJ and so my dad you know went to Best Buy went out he's like I forget the Dell DJ he got me a uh blue iPod mini instead and I got that iPod mini it was my first Apple product and I fell in love with it. So over time, became an Apple family, got an iBook. Then, you know, it became an iMac and MacBook Air and whatnot.

1:29:56And so I just fell in love with Apple. I was a huge Apple fanboy, always glued to the forums and the rumor mill and whatnot. I was a commentator and sort of fell in love with it and started wanting to do my own reporting on it. And I joined a website back in the day called 9to5Mac. It still exists. I left that when I graduated from Michigan in 2016 and joined Bloomberg and I guess the rest is history. That's amazing. How do you think you're perceived by the folks at Apple? Because in one way, you're promoting Apple, you're a real fanboy, but at the same time, it feels like every time you get a scoop, I'm like, oh, they must not be happy.

1:30:35Yeah, it's a hard company to be a critic of, even a critic that wants the best for the company. because I feel like I just have this sense that they're like, they kind of want you to ride with them no matter what. I think they love me personally. I mean, they should love me. I mean, I'm here talking about their products all the time. I think I usually have a pretty good attitude about it. I think I'm balanced and realistic. And I try not to go down the angle of the sky's on fire. Everything is burning. Tim Cook should be out of there as some other news outlets like to do whether it's fair or not.

1:31:17Talking about their products, keeping people interested in their products. Clearly some people there like me because this information just doesn't come off trees, right? So definitely I think it's nuanced. Do you think Tim Cook's underpaid? Do I think Tim Cook is underpaid? So he barely makes about the same amount as this baseball player that plays for the Dodgers annually? Well, maybe the question is, are athletes overpaid, right? I mean, LeBron is getting like 55 million a year on his contract. And then you think about how much money do they bring in from ticket sales because of him? They're probably making, I don't know, two or 300 million a year because of him.

1:31:57So, you know, what's the margin? What should a margin be? Right. And you have Tim Cook. He's, what is he making? 70 million a year? 75. He was making$100 million a year a few years ago. Then everyone flipped out, and he had no choice but to cut his pay because they were kind of sick and tired of the backlash, right? So he was making$100 million. I mean, what is the value that he brings to the company? I mean, obviously, it's multiples of billions. I completely agree. We were very close to taking a break from the show and going and just doing a hunger strike outside in Cupertino until they would get his pay up.

1:32:34because we're on your side. We think he's clearly created. Just the trade war. Just the fact that he's been so masterful in not becoming a target or staying out of politics. That level of statecraft is remarkable. The only real critique you could make, in my view, is the way he waved the F1 flag. It was somewhat lackluster. I saw that. It was just a rough wave. Maybe he's off there thinking about supply chain. Maybe he's focused on work. His mind's at work. He's not focusing on Twitter. He's thinking about how was that flag produced and could have gotten better pricing on it. Exactly.

1:33:19What's your updated take on the new suite of iPhones, John and I? I had a very funny experience because I ordered my phone. I tried to just order a phone online, walk into the store, be able to pick it up immediately. Wasn't able to. I paid, and they said they were going to ship it to me. John, like a week later, just walked into the store and bought one here in LA. I was like, what is going on? And we've both been, we're not really case guys, and we've both just been amazed at how they could release a phone that just gets damaged so intensely, so quickly. Wait, wait. So you have a case. What case is that?

1:33:58It's the Apple Clear case. I rotate between the case and not using case. So here's what happened. So last year, they effed around and found out, launched this terrible AI service, Apple Intelligence, that didn't really work well. And what they found out is that it didn't resonate with customers as much as prior iPhones. This year, they did not F around and find out. They did exactly what customers want. Market research data, man-on-the-street conversations tell you what customers want. They don't want their phone to overheat. They want the camera to be incredible. They want the processing speed to be fantastic.

1:34:42They want battery life to be better. And so what Apple did for the phone this year is they focused on the core competencies. Battery life is through the roof. The phone doesn't require you to use an oven mitt to hold it for extended periods of time. The camera is amazing. I think they hit right on target with the colors. I think the new design is terrific. They did everything the consumers wanted. They did everything customers want in a phone upgrade. It came at the right time, which is five years after the COVID influx. You know, I get a new phone every year. You guys might get a new phone every year.

1:35:20Your viewers may get a new phone every year or two. But the vast majority of people are not getting new phones every four or five years. And so they set themselves up for a pretty nice upgrade cycle. And you're going to see that with their first$140 billion quarter when they report at the end of January, early February. So I think all things considered, it's terrific. What about the iPhone? The iPhone is still at the center. Yeah, what about the iPhone Air? Did you expect it to sell better than it has or were you always kind of bearish? I've been extremely bearish on the iPhone Air. I don't think that there's a significant market for it.

1:35:59See, Apple, because of their large numbers, have reinvented what a significant market is. For Apple, the iPhone Air is not a significant market. If that was a Google phone, I mean, Google would do a lot to sell pixels in the numbers that the iPhone Air is selling. Samsung would be happy if their iPhone Edge sold in the quantities the iPhone Air is selling. It's a beautiful piece of technology, but that's what it is. is it's a technology exercise to really set the stage for an eventual foldable iPhone. They have to create thinner form factors, thinner batteries, more advanced materials like titanium for the casing in order to create something like the foldable phone to compete where Google has been for three years, where Samsung has been for seven years.

1:36:40And so the iPhone Air gets you on that trajectory. But in terms of overall sales, they didn't even really mention the iPhone Air as a key driver, nor is it mentioned in their 10K. That makes sense. I guess the follow-up question would be how important do you think the foldable market is? I think it's TBD. I think they don't know yet. I think Apple is in a position right now where they basically have to pull every lever possible to keep people in the ecosystem. If you somehow have a market of, I don't know, 10, 20 million people who demand foldable phones and they're willing to leave Apple to Google or Samsung because they want a foldable phone, that is a bad thing for Apple.

1:37:23Not because you're losing those 20 million customers on that one device, but because Google has an excellent ecosystem now with all sorts of peripheral products and operating systems. Samsung has the same. The Chinese players have the same. So if you lose a customer because of one product, you risk losing them across the board. You risk losing them for entertainment services. You risk losing them for your laptop, your tablet, your smartwatch. Because everyone has everything now. You kind of need everything. Yeah. How do you think about the change from titanium to its aluminum on the new phones?

1:37:56Does that fit within the framework of like revealed preferences, man on the street interviews? use? People say they wanted an iPhone that doesn't scratch, but in practice, they'll just put on a case or is there more thought to that? It's okay. So people aren't asking for aluminum, but aluminum is tried and true. They've used it on laptops for many years. The benefits of titanium is the durability. If you've seen a bend test of the iPhone air, that thing does not, you can't manipulate that. I have a story. I have a story you'll appreciate. We were having dinner with a group a couple weeks ago and one person in the group had an iPhone Air and was bragging to the whole room of how strong it was.

1:38:40They were saying, this is the most durable iPhone ever made. It's impossible to break. And he's going like this. He's showing the group, he's like, I can't even bend it. He's like, I dare anyone in this room to try to break my phone. And this guy raises his hand and takes the phone and puts it down here and just breaks it in. bridge just actually scatters it in a second and the guy's just sitting there in disbelief saying like i'm gonna i'm gonna email tim cook right now this is this this is ridiculous but well first of all i i love that story um i'm all for stuff like that um but to your point you know aluminum dissipates heat so much better and it was like a big mistake they moved to titanium with the 15 pro and 16 Pro lines a couple of years ago, you could do some interesting color treatments on it.

1:39:30They had some cool colors like the natural titanium, the gold titanium, stuff they're not doing with the aluminum foam. I personally, I like that I could drop it without a case onto cement and it would be barely scratched. It was so durable. It was absolutely incredible. The durability was great. And that's why they used it for the iPhone Air. But if you have to make that trade-off, which clearly there is a trade-off, Titanium, more durable. Aluminum, you know, it's not as durable. You drop this thing, you're going to get a big gash in it. The way the color is anodized, it doesn't stick like it does on titanium.

1:40:04But it's not going to overheat. And as the performance of these things improves, as the chips get better, you need better and better heat dissipation. And so this was a reversal that they had no choice but to make. We had this framework for Apple's strategy right now, which is do nothing, win. with regard to the AI race? Because people have said, yes, they lost. And you mentioned it with Apple Intelligence. And I agree with you. I've taken that. I've been like, ah, Siri doesn't work as well as I want. It doesn't even have whisper APIs. It can't even dictate effectively. The main thing was promising this magical experience and everyone being underwhelmed.

1:40:40The one thing they over-delivered on was humor. They were the first AI company to reliably make people laugh through the summarization of iMessage. Summarization is very funny. But basically, they didn't get over their skis. they didn't invest a trillion dollars in capex and it's a four trillion dollar company now like they've done nothing in ai and they've won basically but is that narrative click with you is that taking hold in cupertino are they happy with the way it's played out i think they recognize that it's been a disaster i mean still the biggest thing to me is they were completely caught off guard by chat GPT Gemini co-pilot back at the end of 22 into 2023 and a company that does this much research a company that has supposedly this kind of understanding of where the world of technology is going to just completely like it's like they had no idea the internet was coming it's completely unbelievable to me it's sacrilegious that a company like Apple could have had that big miss Because Apple Intelligence, they brought it out, and their marketing scheme is always just like, we're the best.

1:41:47We're Apple. We're going to do it better. We're correct. Everyone else is wrong. And that's sort of the message they put out about AI when they launched Apple Intelligence. But it turns out, no, Apple, you are completely wrong. And I think any observer would have understood that people want chatbots. They like chatbots. It is a winning formula. And to date, they have been completely anti-Chatbot, which I think has been a very big mistake. The integration of ChatGPT into Siri is very much subpar. Still, they support all the Chatbot apps, but they really need first-party stuff. The big AI thing for Apple is the revamped Siri coming out in the spring.

1:42:24They're using a Google Gemini model to power it, which I think is going to make it pretty top tier. I mean, Gemini's models are pretty excellent, as we know, for anyone who's used the Google AI services. But what really you have to understand is that the brand damage that has been done to the Siri name over the last 15 years, there's a big question of whether or not it's insurmountable. In my viewpoint, if they've gotten Siri to a point where this thing actually meets the promise of this AI voice assistant, they have to change the name. On the other hand, Siri, as damaged as the brand is, it is still a ubiquitous name.

1:43:02So I'd be curious to see. I don't think they're going to make a name change, but they should. So Gemini powering Siri under the hood. Who pays who in that scenario? Apple is paying Google. Do you think it stays that way forever? Because Google provided a wonderful search engine in the Safari iOS browser. and Google paid Apple for the right to do that. Well, it's more of a revenue share for the payments there in the search engine. So this is completely separate. This is like, you're developing something for me. You're my supplier and I am paying you for it. Like I'm paying you for it. Whereas it was revenue share because Google is making a ton of money by getting people through the Apple interface.

1:43:55But won't that be the long-term state of affairs with these models? I don't believe so. You don't think so? This is, no. I think what I know is that this is an under-the-hood, white-labeled model. They've developed the model here. But if it wasn't for my reporting, no one would probably know that this is a Google model. You can be pretty sure that Apple's not going to advertise this as a Google model. You can also bet at some point, they'll probably figure out their own model to replace the Google thing. So I don't think it's a long-term bet. Yeah, how competitive was that process? I remember it was probably your reporting talking about how Anthropic was in the running as well.

1:44:36It was a bake-off. Anthropic wanted a huge number for it. Anthropic wanted multiples of billions. I believe starting in a billion in year one and doubling every year thereafter at least for the next three years OpenAI wanted things like an investment and a stake and all sorts of stuff and so they originally were talking to OpenAI then they were talking to Anthropic then they were talking to Google they did a bake-off of all three I think they kicked OpenAI out of the running pretty early on until about two months ago it was going to be Anthropic and then once they got into the financial terms it quickly pivoted to Google.

1:45:17My belief is that the quality of the Google engine and the Anthropic engine are pretty much on par. So I think the experience should be fine. Is this, in your view, a threat to ChatGPT usage? Is the ChatGPT-Siri integration going to exist after this next release? Are people going to be using this as a replacement for web search and a browser? Because even though the ChatGPT Siri integration is a little weird, if there are people that love that, then you take that away. They're not taking that away. So again, it's an underlying under-the-hood model to enable the existing Siri functionality and the new Siri functionality.

1:46:01So Apple, let's talk about what is the new Siri. Yeah, so the new Siri is what I'm getting at because if I can suddenly use Siri to do deep research and do web searches and stuff like that, that feels pretty significant. So what is the new Siri? Well, the new Siri, so far what Apple's announced, is three things. One is on-screen awareness. So you see something on your screen, you can ask the voice assistant about it. The second thing is personal context. So the ability to ask questions and have it search through your personal data in order to answer those questions, like make an itinerary based on conversations I had with someone who's visiting me in town.

1:46:45And there's a few other bells and whistles related to the new Siri that Apple has previously announced. What they haven't talked about is AI web search. And so the new Siri is also going to have a ChatGPT perplexity competitor for things like deep research and summarizing search. That is going to be an Apple-built, an Apple-powered system. What is that? That's just a little sound effect we use. That feels significant. When there's something super dramatic. Your significant button. Exactly. You play it again. It's like, we're going to war. We're going to war. The companies are fighting. Yeah. So this is Apple going after chat GPT perplexity, at least for web search.

1:47:28Yep. I think it's going to be pretty useful. It's very necessary. It's one of the main use cases. And you'll see them eventually embed things similarly into Safari and other parts of the iPhone operating system. So it's going to be a big year for Apple AI. And that's just the beginning with the rolling out in March, April. Do you think there's any world where Apple wants to monetize commerce off of this assistant? They obviously, because that's, I can see the exact same thing that ChatGPT wants to do. Hey Siri, order me a new pair of shoes. Order me some PicoTel. Yeah, find me, find me, find me.

1:48:05Yeah, exactly. Book me a hotel. Book me a flight, Siri. It's just not good enough. You're not good. So it comes down to this. Will Uber, Postmates, Uber Eats, Amazon, whatever. Right now, you can integrate all of those apps. It's called an extension into Siri. In fact, this has been a feature for 10 years. Nobody uses it because it's unbelievably terrible and unreliable. You cannot trust your iPhone to call you an Uber via Siri. Like you'd have to be out of your mind to need to call an Uber in a pinch and use Siri versus using the app. And so there's really no way for - Take me from point A to point B with Uber.

1:48:43Yes. Taking you to Antarctica. You cannot cancel. So there is really no way for Apple and these companies to come to some sort of financial agreement around that. That's why they haven't yet. Sure. But when this new Siri starts working, when it has those upgraded technologies that mean that I can call an Uber for my phone and know that it's actually going to happen, then they'll be able to come to those financial agreements because people are going to start using it. Right now, there's no point in monetizing zero dollars. But once the real money starts flowing through in Siri, you're talking about a big business for Apple and AI and really what the future of apps and services revenue is for the company.

1:49:22Yeah. I'm pretty bullish on this. Yeah, no, that makes a ton of sense. I guess the question is just like, it feels like Apple, the reason Apple is paying Google is because they don't want a situation where I click the Siri button and say, hey, order me some paper towels. And then Gemini under the hood says, yeah, we'd love to process that through Google payments and Google shopping and all of our under the hood stack. And then they start monetizing. Yeah, that's not what's happening. it's like you guys are really really good at what you do so I'm paying you to to create my podcast for me but you guys have nobody knows I paid you to do it and I'm the presenter and everything pure white label what's your been your read on Apple's kind of M &A strategy they've bought a number of companies this year almost all of them are, I think, to my knowledge, very small companies that are probably talent focused.

1:50:27There had been some rumors that I have to imagine were kind of like leaked by perplexity that Apple was like taking a look at that. That never felt real to me. When you look at Apple's history in M &A, they bought Beats for like one or two times revenue. The only times that I've seen them buy a company for a large price was relatively conservative. They don't just take swings at$20 billion companies with$100 million in ref. With no underlying. Here's what I can tell you. First, on the perplexity when I was the one who broke fit, that was real. That did not come from perplexity. The idea there was Apple was sort of scared out of its mind that it was going to lose this Google search deal.

1:51:13there was a very real possibility the judge was going to tear that thing up and Apple would be out of billions of dollars. And so buying Perplexity when it wasn't as big of a price tag as it is today for that company would have made sense. It could have been a pretty easy plug and play to replace Google Search on the iPhone and have an Apple revenue stream there. That's out of the picture because A, Perplexity doesn't have... Wait, where would the revenue have come from? oh they would just integrate their apple ads in perplexity yeah and so you go to in you go to default search on ios it hits perplexity and then there are a whole bunch of advertisers that are buying to be at the top of those results so similar to the app store yeah yeah you know it would have been a pretty buying perplexity would have been a quick plug and play painless uh replacement for google search but that deal wasn't torn apart giving apple more time to build its own in-house AI web search product.

1:52:10In terms of the M &A strategy, so they really, to your point, have not veered from their strategy. Biggest acquisition to date, even post-inflation, appears to be that$3 billion beats deal back in 2014. I do believe they continue to be on the hunt for smaller AI M &A deals. In addition to perplexity, they looked at Mistral, which developed their own LLMs and related technology out of Europe. But Mistral would never, I can't imagine France would be like, yes, buy our national AI champion. We'd love to sell this. Well, stranger things have happened, but given the situation with the EU, I'd be shocked as well.

1:52:48Yeah. What can you say about their reaction to the new Meta Ray-Bans release and VR broadly? Well, the Apple Vision Pro, have you guys used one? Do you guys have one? I had one for two weeks and then I returned it. but I did find it like it was remarkable in terms of screen fidelity, but content library wasn't there and weight wasn't there. I liked that they put the battery in a pack there. It was a, it was a mixed bag. And at five grand, it was like, why am I doing this? So I got the vision pro on the day it came out back in February of 2024. Yep. Uh, a friend of mine for the first time got one.

1:53:31Does that make sense? It's been a year and a half and finally a friend of mine got one. Totally. And so I had my first Vision Pro to Vision Pro FaceTime experience actually a few nights ago. And we tried out this new Personas thing. You can literally like turn on a movie and sit side by side and see the person sitting next to you watching a movie together. It's freaking unbelievable. Here's the problem. Most people don't want to put a pound and a half helmet on their head, right? And so Apple is limited by a combination of price as well as people just not wanting to use that form factor. I also think they've done a pretty terrible job marketing it because I'm ingrained in this ecosystem more than anyone else I know and probably most people in this world.

1:54:19And despite the fact that I've had a Vision Pro, despite the fact that I'm totally tuned into this, I had no idea what that experience was like that I experienced the other night. And so all that tells me is they've just done a terrible job marketing these features. Obviously, they've done some executive interviews about personas in the last few days or whatnot. People don't really care about that. They care about TV ads and they care about demos and what have you. So they need to up their game. Anyways, long story short, they're full steam ahead on smart glasses. The first version won't have displays like the older metal ray bands or the base level metal ray bands.

1:54:52Those are coming out in 2027. I think they'll be out early enough. Smart glasses without a display will come out in 2027? Yeah, early. And I think it'll be early enough in 27 where there's a possibility, they haven't decided yet, there's a possibility they'll be able to announce it before the end of next year. And people will want to buy that because the Apple Assistant is so good that it's suddenly... Well, I thought you were going to say because of the Apple brand, people are not going to want to buy it because of the Apple Assistant. No, but the Apple Assistant being good unlocks that product.

1:55:25Yeah, because if it's not good, like I don't need to wear a pair of glasses. But it's a picture you don't need to wear AirPods anymore. It's like a substitute for AirPods potentially. It's like AirPods with souped up battery life. And cameras on there. AirPods with cameras. Yeah. You know, they've also been working on AirPods like I'm wearing with cameras in there as well. And so I think there's actually a bake-off going on internally too. Yeah, between the two four factors. Between the four factors or if you need both. I would bet that they'll do both. And then in 2018, they'll see these glasses with a display.

1:56:00If you need glasses, like for your vision, a pair of smart glasses that have a speaker built in, you can do phone calls, you have a camera, and you have prescription lenses, there's over a billion people that need prescription eyewear. And those people will probably be like, this is amazing. I get to fix my vision, and I get all these added features. I'm already wearing glasses. I'll pay the$2 ,000 to have another device on my person. And the bet is that the Apple brand is stronger than the Ray-Ban brand. And I would guess the Apple brand is stronger. And if you had to choose between Ray-Ban glasses and Apple glasses, especially with the context that Apple has severely limited the ability for the Meta glasses to sync with your iPhone and the iPhone and the Apple glasses will sync perfectly I think most people are going to lean in the Apple direction but Meta deserves so much credit for creating a category and making a category so terrific I have the Ray-Ban displays that Meta gave me to test out those are amazing and they're like two, three years ahead of whatever Apple's got Yeah, do you, so I was, with the Ray-Ban displays, I could imagine that being having like pretty real product market fit for people in the world that are dependent on WhatsApp and already need glasses.

1:57:31Like they need to wear glasses for their eyesight. Because if you have those two things and you can get WhatsApp messages just like popping up, you can do phone calls, like that feels like pretty compelling. and so I can imagine the kind of person that is maybe it's a European executive or some Gen Z person in Europe that's just a WhatsApp power user

1:57:55but what's your read on it? I know it's not your kind of cover Well, they feel like a prototype No, I cover all hardware too They feel like a prototype if I'm being honest but like a good prototype I think they're priced perfectly I think$800 is totally reasonable for what their features are. You give it a generation or two, they're going to be amazing. The trick for meta is beating Apple by a year on something that's a bit lighter and better displays and what have you. See, the current metas, they have one screen in them. The second generation version will have displays in both eyes, maybe making them a little bit more expensive.

1:58:34But meta's onto something. They have a multi-year head start. what you're going to see is Google come into this space too. They're going to launch, you know, their smart glasses with Samsung in a few months, their glasses with Warby Parker and a few other glasses brands in a few months. And there's going to be a lot of competition in this space. I think this is going to be really hot across 26 to 28. We have a question from the chat. Could you get us up to speed on the John Prosser situation? uh this one i'm not this one i'm not terribly read up on okay yeah well we'll we'll need to revisit at some other point.

1:59:09How about this? Put it this way. I lied. I'm very red up on it. I don't want to get into it. It's not my problem to deal with. That's totally fine. That makes sense. What did you read into? Maybe this was your reporting. This is why we were so excited to have you on the show. It's been so many stories that you've originated. But Evan Spiegel and Snap were saying that they might be spinning out specs and raising capital for it. I was a bit surprised to see that given that I haven't seen a pair of specs out in the wild in years. And if I'm an investor kind of looking at this category and you can get exposure to smart glasses through Meta, Google, and Apple, it would be hard to kind of underwrite.

2:00:00But I'm curious if you're more up to speed on what they've been cooking on. I like Evan a lot. I'll just tell you that. And I think that they're trying some pretty cool stuff. And their big differentiator there is what these glasses are going to be used for in the social integrations. In my mind, they might be just better off sort of lowering their R &D on these things by focusing on their hardware, partnering with a company like Google and putting their own social layer over Android XR. but obviously they have their own snap os they're trying to get this consumer version of the glasses out on the market uh next year they look quite a bit different than what you've seen from meta and apple and some of the google prototypes uh so we'll see what happens it's going to be a multi-horse race here is true vr just kind of dying or something because you have like camera glasses at snap it seems like all the focus is on camera glasses at meta and then apple maybe pivoting away from Apple Vision Pro.

2:00:57And then Google's really focused on the Samsung glasses that are again, see-through with a camera on there, maybe a little overlay, a little HUD. But is there anything exciting going on in just like vanilla VR? I want to watch an IMAX movie on my face. Well, vanilla VR is just incredible. Like there's no better video watching experience than what you get on Apple Vision Pro. I've tried all the VR headsets. I've had all of them. I have all of them. It's just a remarkable category, but it's only a remarkable category for the people who want it. I mean, there's very few people where VR, I think works.

2:01:33I'm out and about all day. I have a family. I go to an office too. And when do I have time to put this thing on my head to watch a movie? The answer is almost never because I have people in my life. I have needs around me. I have things I need to do, and it just does not fit into my life. For people who can put on a headset and be secluded from the world for two hours, there's nothing better. Glasses, you can wear them and use them throughout your day, really, no matter what you're doing. That's the big difference. So there's nothing wrong with VR. It's just the use cases and the people who could use them is just quite a bit more limited.

2:02:13Last question. I know we're over time, But do you think Apple thinks about OpenAI and their hardware ambitions a lot? Sam was pressed pretty hard on his spend commitments on Friday. And one of the justifications that he gave for basically how they were going to be able to spend that kind of dollars was something to the effect of, like, we have a consumer device coming up and we need a lot of compute for that. I'm kind of botching the exact language that he used, but he was seeming to imply like we have a hit consumer device coming and just kind of be like, I can't say more, but he certainly is telling the market that they're really cooking.

2:03:01But I wonder what Apple's read on it is. Based on what he's saying, this device has to be so amazing that he's confident that they're really going to need that compute. And to date, we have not seen a single AI device that has either not been a failure or has needed the kind of compute that these dollar numbers are talking about. That's exactly what I said earlier. I'm like, every single crack at this so far has not managed to be remotely as good of an experience as an iPhone with even a physical headset. Like I use wired earphones. All right, that's ridiculous. But the metaglasses are far and away the most successful AI device brought to market in this era over the last two or three years.

2:03:53And in terms of the users, probably is using, what, 1 % of the amount of compute that Sam Altman is talking about here. So we will see. In terms of Apple worried, I think Apple looks at this as something where they can be a fast follower. I think there are hardware products that OpenAI can bring to market that are innovative before Apple, but I don't think there's a product out there that if Apple wanted to copy that it can't copy. So let's see. It's fascinating. Well, this has been a fantastic conversation. Thank you so much for taking the time. We would love to have you back to the show soon.

2:04:29Anytime. We could have spent another 25 hours talking about this. This is fascinating. I hope you have a great rest of your day. Yeah, I really enjoyed it, Mark. and thank you for all your hard work. Tireless work. Yeah. Thank you. Yeah. Do you guys do in person? If you do in person, maybe we can. Are you in LA? I'm in LA. Come by. Yeah. Let's get where we're. You guys are in LA? We're in LA. We're in Hollywood. Yeah. Oh, great. Okay. Next time. Yeah. Come by next time. We have a seat here. I'll get the center seat. Yeah. Yeah. Can't wait. All right. Okay. We'll talk to you soon. Mark Gurman. All right.

2:05:01See you guys. Equivalent yappers. We love it. Love it. Thank you. Talk soon. We'll talk to you soon. Let me tell you about numeralhq.com. Sales tax and autopilot. Spend less than five minutes per month on sales tax compliance. You can get started for free. Up next, we have Erica from Redpoint Ventures. Very excited for this. Welcome to the show, Erica. How are you doing? What's happening? Welcome. Hey. Happy Monday. Thanks, guys. Same to you. I have to tell you, I was watching the show from Friday this morning, and I can't. And see your costumes. They're rocking. like very impressive having the hairline back is what was your read did you think that john looked much more like ilia than i look like mark because that was our read i kept john so i think so but i saw it start to crinkle up over time and i'm like starting after that is very i wasn't just falling off it's a very weird thing to be under like 10 layers of just stuff crazy and just be inside this Think about wearing makeup every day as a woman.

2:06:01What must that feel like? No, this is a level beyond that. We were in the chair for like three and a half hours where they applied. It was like they basically had spray paint. They were spraying, doing a layer, doing another layer. Literally spray painting. Anyway, thank you so much for hopping on the show. Could you give us a little bit of backstory on how you wound up at Red Point? And then I have a bunch of particular questions about Red Point and the current markets. I call myself an accidental VC. I do think venture is the best job in the world, but I actually had no interest in being a venture capitalist.

2:06:37I met my partner Satish Dharmaraj like 17 years ago. He was building this company called Zimbra. I had a startup that was trying to sell or trying to close him as a customer. It was like our first year of sales and he was the only customer we didn't close, which really pissed me off. and we became friends, stayed in touch. Funny enough, he introduced me to Satya Nadella, who I know you had on last week, who was awesome too. And that changed their trajectory of my company years and years ago. And then he called me and said, hey, I want you to come to Redpoint. And I was like, no, no, no, that seems like a terrible idea.

2:07:15And he'd done so much for me. He convinced me to come and hang out with the team. I fell in love. I left GitHub. I was COO there for a couple of years and never looked back. You were COO at GitHub like right around Copilot launching, right before you saw glimmers of Copilot. Oh, yeah, I was there when we launched. Yeah, I so I came in following the Microsoft acquisition. I was there with Friedman, was there through launching Copilot and then specifically to to join Redpoint and had a couple of saw what was happening internally. and you were like the big tech approach is doomed to fail. I got to go fund startups instead.

2:07:54Is that what happened? It was amazing to be part of Copilot. Everything here is a zero. I'm going out into the private markets. Startups are so much more fun. So much easier. Notoriously easy too. I was saying, I still think Copilot is so, I was saying this on the show, it's under hyped because they're not announcing a fundraiser every six months. You don't realize how big the business is. People have no idea of when Carpathia was on Dwarf Cash and saying this isn't the year of agents. One argument against that point was that you see this explosive growth of products like Copilot and in many ways agents are working even if it's primarily in a coding capacity.

2:08:46It probably doesn't get the credit it really deserves for the reason that you mentioned. But I also think there's just been so much innovation in the ecosystem since then. A lot of changes on the GitHub side too. But it was a pretty remarkable thing to be a part of. And honestly, after we shipped it, I went through like a little bit of a darkness. I have a son who's 12, who's like super into coding. And I'm like, what is my son going to do? Like, what are his jobs going to look like in the future? It's been really transformative. It was very cool to get to be a part of like the early days. Yeah.

2:09:20We were spending the early part of the show reflecting on Sam Oldman and Sacha on Brad Gerstner's show. And just this question of the$1.4 trillion in spending commitments versus$14 billion. And I'm wondering... Yeah, what did you think of Sam's answer? Yeah. I mean, that's a great place to start. But I do have more questions about impact for startups. But yes. Yeah. Do you want to... I was looking for just one person besides Brad and the altimeter team to defend Sam's answer. What are you talking about? John defended it. He put the steel man helmet. Yeah, I mean. I have a steel man helmet. I can defend anything.

2:09:56Look, we are going through such an extraordinary period in human history. I think with every other shift we've ever seen, we tend to overestimate how quickly it will change things and then underestimate the long-term impact that it will have on society. I think there's a bunch we don't understand. I'm certainly not betting against Sam right now as being one of the major players in this space. And I guarantee you there's so much detail in these contracts about like, you know, outs and rolling things back and everything. I've seen what these things look like. I just thought the question was not you could ask that question without being bearish on OpenAI.

2:10:36and like I look at that as I if I'm an investor in any of the company any of the counterparties to open AI yeah I want to know like how how are you how are you going to do how are you going to do this let me reformulate this so if if if the if there is like risk of open AI not hitting 1.4 trillion uh there's tactics that you could do if you're a hyperscaler who's on the other end right? Like the outs of the contracts. Maybe you don't build as aggressively if you don't think that the demand's actually going to materialize, even though you have a contract. There's a bunch of strategies that you could do if you're running those companies.

2:11:13What's less clear to me is, what are you talking to folks in your portfolio about? What advice do you have for founders where you say, hey, the future's a little hard to predict how this compute build out. There might be this big glut. You don't want to get caught in front of the steamroller. You want to be drafting and riding the big wave and catching the wave at the right time. How are you thinking about that with founders in the portfolio? Because we've interviewed some folks that you've backed. Lagora came on. It's incredible. The growth rates are so fast. Yeah. Yeah. Look, I don't believe there's going to be any kind of material glut.

2:11:51I think there's just too much happening. I mean, look at what Poolside is doing, right? Building out their own data center. This was like a plan from the day zero. You know, a lot of people think those guys just like got caught off guard. Oh, we need to go build this to get, you know, control over our own destiny. That's totally not true. Like they have seen this coming for a long time. I think, you know, if you're at the model layer, the smartest thing to do is to have control over the full stack. And the reason I believe that's to be, that's true is because people, uh, there's going to be so much demand and it's so hard to get access to not just the chips but the power that you need like i am just not worried that we're going to run into any kind of a glut and at the application layer what we're telling people generally is like i know this is such a c cliche i don't care about margins at all right now like i care about winning in the market the time let's give it up for not caring let's give it up for growth let's give it up for i know i never i never i never thought i would be that person but i i i genuinely believe that i think like it's very clear that we're at like day zero and figuring out how to wield these super powerful instruments the costs of inference are going to come way down we're getting better at building more efficient models for like task specific models.

2:13:17I think what you need to do is figure out like, what is the UX? Like, how are humans going to get work done? What does that look like? How can you build some kind of defensibility in your product? And I think we're seeing a lot of kingmaking happening across the market in different categories where companies are just getting out in front of the market, raising a bunch of money, building their brand and being seen as the winner, even if the product is really early. And, you know, I know there's a lot of folks that are talking about the recklessness that's happening across VC. And on the one hand, I get it.

2:13:50But on the other hand, I think in a market shift like this, you've got to play to win. And like, you know, some of these are going to flame out. But if you get one or two that really makes it, all of your crazy wild bets are going to have paid off. Yeah, the CEO of Fireworks AI I came on the show last week and said she was worried some people were going to scale into bankruptcy. Scaling into bankruptcy was the quote, which is hilarious. It's probably a skill issue. Yeah. I mean, yeah, let's keep it focused on the advice for founders. I've been interested in this question of like in the previous era of Silicon Valley, like the founder archetype that you were looking for was somebody who could find a problem, build a solution, learn to code.

2:14:34And it feels like increasingly one of the skills, maybe not the only skill, but one of the skills that we need to add to the portfolio of great founders is deal maker, is deal guy, deal girl, like becoming really good at aligning incentives. We see this with Sam Altman, but we see this up and down the stack. Are you seeing that in your portfolio, in the founders that are seeing breakout success, just the ability for them to walk into a much bigger company or much bigger, you know, financier and marshal capital or resources, get people around a table and get everyone to say yes to whatever the plan is?

2:15:10I mean, yes, to some degree. I think it depends on the category. I think go-to-market muscle and just sheer velocity matters a lot. And so from that perspective, the folks that can go out and start closing customers and like the storytelling behind it and the trust building, I think is super important. For most people above the model layer, like I don't know that like deal making in the at least in the Altman sense of like, hey, we have to go secure data centers and chips and like control our own supply chain. I think that's less important for most people. But I will tell you, we are more likely to back like really young, just insanely like high velocity founders that we think will like run through walls to win that just have such dogged determination and are willing to go at it so hard that they might not even have like the founder market fit that we we used to look for pretty consistently in founders.

2:16:12And we're seeing these crazy 20-something founders who have never really had a job before that are building these companies that are scaling like crazy just because they're in at the right time. They can tell the right story. And they just ship so fast. Yeah. And it's always been to me. You guys, I've always enjoyed RedPoint's reporting on SaaS specifically and multiples and at times a disconnect between multiples in the public markets versus the private markets. how are you uh how are you what's your view on that with with uh like how much you guys read into uh you know traditional sass companies in the public markets being i think it's like the average right now is like a 7x revenue multiple versus private markets obviously if you're an ai native company you're getting you know some some you know massive multiple on top of that um does that Is that nerve wracking?

2:17:12Does that make sense? Not to me, but I mean, I'm on the early side. And so we're not looking at multiples as much as perhaps the growth folks that are coming in at later rounds. But I think the really key difference here is most of the companies that we're investing in are doing like direct labor replacement, right? This is no longer just like SaaS software that's going to make people X times more efficient. it's literally you know replacing an entire chunk of your workforce and i think that uh those companies are able to grow so much more quickly because of the value that they can capture that um that like the velocity of the businesses ends up priced into the rounds and they're just growing to your earlier point so much faster than a traditional sass company i think that's justified You know, we try to be like very first principle thinkers and just in terms of like, how big can this business get and how quickly do we think it can get there?

2:18:12And, you know, we value companies based on that, not based on what's happening right now in the private markets with like legacy SaaS companies. we have to ask red point has been accused of manning the anonymous x account r for rock is it true are you behind are you personally behind the r for rock account maybe we're all r for rock no it is not somebody at red point i we would not someone at red point we would not take kindly to that but yeah the uh the conspiracy theory yeah i i would i would appreciate it. I think it's a compliment to be accused of having that much insight into the whole market.

2:18:55It could be a shared account, right? It's like a handful of partners. It's got to be junior folks. It has to be associates because nobody's senior would be that stupid and reckless. And I will tell you one thing that has shocked me getting into venture from the builder side is there's almost perfect information spread. Everybody knows everything instantaneously. It's absolutely wild. I don't know if we've ever been surprised by something that ended up on our for rock, but we have been quite irritated when things have been leaked when they weren't supposed to be. Yeah, it does feel like it's a little bit of a hassle if you're a founder and you're planning and planning to do like a specific PR push.

2:19:39But also there's this weird dynamic where it kind of takes some of the energy or some of the leverage out of the existing scoopers in the tech ecosystem. Yeah. Because if they're losing scoops to R for Rock, then they don't have as much cachet or power, soft power in the ecosystem. It might inspire some media companies to try to basically plant spies. Maybe. Like plant a spy at each tier one, and then you can just leak every single round. Yes. I don't know. That might be against like - Probably extremely illegal. I think it'd be better off like hosting a party. and spice and punch or whatever.

2:20:18Yeah, yeah. Just grab some drinks with some people, get them to open up, and you'll have a scoop in no time. Something else left, yeah. Well, thank you so much for hopping on the show. Yeah, great to meet you. This was fantastic. We'd love to talk to you again soon. And yeah, we'll talk soon. Have a great Monday. Wait, wait, before you leave, before you leave, you haven't hung up yet. What, are you in like a tower in a castle? Like, what is this? Yeah, what is this? Whoa, this is awesome. What is this? My home office. Home office. It is not a turret, though. People think it's a yurt or a turret.

2:20:48It is neither. It's just the corner of a castle. I just live in a castle. I am a venture capitalist. I've done very well. And I live in a castle. It's somewhat of a dome, so it makes sense to call in. Oh, it's a great sign of respect. We also record the show from a dome, the ultra dome. There you go. I did this in deference to you guys. Yes, yes. That makes perfect sense. I've just been waiting for this moment. Fantastic. Amazing. Well, so great to hang in. Everyone in the chat loves the background. Yeah, come back on again soon. We'll talk to you soon. Have a good one. Good seeing you guys. Take care.

2:21:19Let me tell you about fin.ai, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bake-offs, number one ranking on G2. Don't get in a bake-off with fin. And we have Benjamin Witte from Recess coming in the studio. How you doing? Good to see you. What's happening? Welcome to the show. We don't have audio from your side. Let's check in with the production team. Let's check in. Could be our fault. Let's tell you about Adio, customer relationship magic. Adio is the AI native CRM that builds, scales, and grows your company to the next level.

2:21:50You can get started for free at Adio. Good opportunity to tell Ben about Adio. Yes, we got to tell him. He's got a$30 million Series B. He needs a CRM. Let's get him on that. Maybe he needs an 8sleep, too. I believe Coca-Cola, another beverage company, uses Adio. Wait, really? That's awesome. Okay. 8sleep.com. Are we now? We can hear you, though. Yes, we can. How did you sleep last night? You sleep well? I slept well, but I could sleep better with an eight sleep. That's right. Thank you. There we go. Great to finally meet. We share the day job, guys. Fun fact. This is our second podcast together.

2:22:25Your first time on TVPN. Didn't we do a podcast together like 10 years ago? Yes, but I forgot. It was like Lucy. Me and David were in town and hung out with you. We did like five episodes of this thing. It was a total flop. That's right. No way. I was early to the neocorporate media strategy. Never stopped podcasting. It didn't work. But yes, we have to be sure. Yeah, great to hang on the show. Why don't you give a quick intro on kind of yourself and the company, if anybody's been living under a rock? Yeah, so I'll start myself. So I didn't come from the food or beverage industry. I actually started my career in Silicon Valley.

2:23:02So I was in San Francisco in the early stage tech world from 2010 to 2016. but I kind of knew I wanted to start a company in the consumer space. And so I went on to my own and around that time and kind of was led to the, the origin of recess and kind of my observation in that 2016 era was, you know, we were entering this new period in history driven by technology and was going to leave us all kind of stressed out and anxious. And so I had this thesis that kind of led to recess that, you know, in the future that we were entering, kind of people would be prioritizing their mental wellness and looking for healthier ways to reduce stress and relax.

2:23:36and I kind of saw the rise of these new types of functional ingredients such as magnesium, adaptogenic herbs, CBD at the time, even THC. And kind of my conclusion was that they were going to kind of serve as the inputs into this fundamentally new space of products that would emerge on the other side of kind of caffeinated beverages and alcohol focused on relaxation. And I didn't know. And so the kind of the light bulb moment was like Red Bull for relaxation. But it took a much more expansive view of the space that would emerge in the different kind of subcategories that I could create a brand that could ultimately kind of extend into.

2:24:14too. And so I remember hearing you on a podcast back, it must've been in the kind of 2018 era where you talked about how Red Bull, I believe you talked about how Red Bull like distinctly, they didn't necessarily want to make a drink that just tasted the best, but they wanted it to have like this specific flavor that just was like extremely identifiable and like made you feel something and how you leverage that with, with recess, which I think you, you did well from the very beginning. Um, but yeah, I feel like, you know, looking back, uh, it's interesting that there were so many, there were so many brands created during that, that, that initial boom, uh, whatever, 2016 to 2020, kind of, I look as like the heyday when you had, uh, uh, everyone was like reading lean lux and uh 2 p.m you know and and it was just like this this so much investment in the category and to me uh recess stands out because it's the only the only brand in that era that like was kind of riding the same wave but didn't look like everything else at the time yeah um and yeah just uh obviously um yeah like even even the fact that like whatever pop-up you did in New York during that era, like still sticks out in my mind when I can't remember a single, I can't remember any of the other kind of marketing that was happening during that period.

2:25:45Yeah, the Instagram sticks out to me like crazy. I remember the Instagram. Did that ever grow? Is that like the cornerstone of the community? Is that still a, because I remember the Instagram just popped up so quickly and grew so fast. Was there, like, did that turn into like a whole flywheel of the business? So what, the twist in the business was like our first product line included CBD in it. And so we got off to this, you know, I never thought of the brand as like a CBD brand. I thought, I always thought of brand as like a relaxation brand. And we did a lot of like, I'd say kind of groundbreaking kind of marketing, you know, activities in that first year in 2019, you know, from our content strategy, which we can talk more about the pop-up in New York, you know, brand collaborations.

2:26:31But what happened was, you know, I saw the writing on the wall that the regulatory clarity for, you know, CBD was going to take a lot longer than everyone thought. And so I'd never, so I basically accelerated the vision of becoming a brand platform and bet on magnesium as this ingredient that we could use that could deliver the same effect, you know, in a fully compliant way, which was this incredible bet. Our recess mood line, which is what, you know, leverages that ingredient is kind of seeing velocities, on par with Poppy. And so that line's National and Target, Kroger, et cetera, et cetera.

2:27:02Yeah, you were early. CBD was an interesting category because the growth of the category was so insane that even though you guys were early in terms of a CBD beverage, I'm sure you just – I remember you guys – It was so noisy. Yeah, it was so noisy. You guys did such a good job marketing that a bunch – something about CBG is fascinating because people just think, like you make a drink and sell it and it's just going to work and you just put it on a shelf and people buy it. And obviously like the actual logistics of scaling a beverage brand are so much harder than that, that like, so, so few of the companies ever, ever really, you know, even crack like a couple million of, of, um, revenue.

2:27:42But, um, but yeah, the timing on magnesium as well. I thought I was supplementing magnesium like in that sort of 2016 beyond era. And then it was only like a few years ago that people started talking and saying like hey did you know that the average like you know 70 percent of americans are deficient in magnesium and to me that had been just like i i knew that because of our food system and there's way less magnesium content and and even vegetables and stuff today than there were you know decades ago um but you feels like nice and early to that and that's an ingredient like a hero ingredient that was quite a bit more durable, in my opinion, than this initial CBD boom.

2:28:22And I could call it a bust, maybe, because I know a lot of people that have built brands, saw great revenue growth, and then didn't figure out a way to center themselves on a more durable hero ingredient. Yeah. Just to double-click on that a bit, I think beyond the smart marketing that we did in the early days, we're about to re-accelerate in a big way. I think I had the right category view of how this space was going to emerge. And just as simple, inside I'd always say, I've never heard anyone call Red Bull a caffeine company. It was an energy company, just like we weren't a CBD company or not a magnesium company or not even a mocktail company.

2:29:00I mean, the other amazing bet we made was on the RTD mocktail opportunity. And so we launched a mocktail line in 2023. Kind of what I saw there was when kind of athletic brewing was recatalyzing the non-alc beer space, my observation was beer was flat to declining in alcohol. So it was kind of fighting for a share of a shrinking pie. What was growing, it was RTD cocktails and hard seltzer. So my thesis was there was going to be an RTD mocktail category on the other side of RTD cocktails, just like non-alc beer existed on the other side of alcoholic beer. You want to bet on a feeling that humans are going to want for a long period of time versus a single ingredient, right?

2:29:41Yes. And so one framework I had is stimulation, intoxication, relaxation, that this really represented the emergence of this fundamentally new kind of value proposition, kind of in feeling that people would be seeking. And, you know, when I had the light bulb moment for what became recess, you know, Red Bull was started in 1987, right? Like, you know, Red Bull, Monster, Starbucks all rode this kind of secular tailwind of kind of consumers seeking stimulation. And again, my thesis was in the future that we were entering, people would be basically figuring how to relax in the crazy world that we were living in.

2:30:17And that all these trends, whether it's focus on alcohol moderation, stress relief, enhancing sleep, focus are all kind of connected and a part of consumers prioritizing their overall mental well-being. And that's kind of why the Recess Platform strategy has been kind of successful. And I think there's a lot more kind of we can do, you know, beyond this in the next phase of the business. What are you, how do you think about marketing and brand building going forward? I don't know if I have this correct, but it feels like over the last few years, the focus has been like distribution, getting the right assortment of products, like laying the foundation so that you are and have the ability to scale.

2:31:01because one of the challenges is a beverage brand. If you're doing, people like to buy beverages in stores. If you're doing like viral internet marketing, that doesn't necessarily translate to the sales growth that you want unless you have the distribution. And, you know, the grocery store closest to my house has like recess. So I'll grab some from there. But I'm assuming it took a while to get the kind of saturation from a distribution standpoint so that you guys can have the confidence to do a big celebrity partnership or do a TV campaign and start doing these things that just are kind of a waste of money unless you have that distribution.

2:31:41That's right. And I think that's one of actually the best parts of the recess story. As I've been kind of transitioning the business beyond the original CBD line with the additional mood and mocktails, I've been focused on basically performance marketing to drive the Amazon business. And we're still 50 % e-com. And then we just get so much organic kind of word of mouth, you know, basically testimonials. We probably get, you know, 100 to 150 organic tag posts a day across, you know, Instagram and TikTok. Primarily women, which is our kind of core kind of consumer spreading, you know, the word on recess.

2:32:15And that is super powerful. And so I look at this round, this next phase is fundamentally about, you know, scaling the team, scaling distribution and, you know, really recatalyzing brand marketing. because, you know, John, what you guys were alluding to earlier, you know, the kind of groundbreaking content, the pop-up stuff like that, I really have turned off. And again, if you compare, you know, what we've, where we are, you know, compared to where Poppy, Liquid Death, brands like that, we've done really no levers on brand marketing yet. And so you're going to start to see a lot more of that in this next phase.

2:32:46And, you know, just to talk about Red Bull a little bit, like I always kind of thought of Red Bull as like a media company that monetizes through selling cans. And I do think beverage is this very kind of underappreciated category, you know, especially it has some similarities to even, you know, tech companies. Like when I, you know, when I had the idea for recess, I discovered this amazing fact, which is, you know, Monster Energy was the best performing stock of the past 20 years, right? And Celsius did incredibly well, too. It's happened like four times in beverage and energy specifically, like tons of great outcomes.

2:33:19Exactly. And so it does have these like, you know, if you bet on, especially if you're creating a category or writing like a very large secular tailwind, like as this compounding, you know, effect to it. And, you know, obviously brand marketing plays a critical role in that. And I think there's some, you know, a lot of new, you know, opportunities to do stuff in new ways in this era with, you know, the role of, you know, Amazon and digital experiences. Even I think there's a lot of cool stuff we can do in the next phase of recess. So I'm excited to, you know, turn that back on. Yeah. I don't know how much you still work with day job, but if you sat down for an hour, brainstorm with Ryan and Spencer, you could probably come up with at least 100 ideas that would unlock that next stage of growth.

2:34:04Yeah, they'll be back in the mix for sure. We got to talk about the fundraise. We got a gong here that we would love to hit on your behalf. How'd the round come together? Who participated? Yeah, so the round was led by Kavu. It's a$30 million Series B. Kavu's... Voice drowned out by the gong. You said you were getting into Kavu. Yeah, so Kavu was the main investor in Poppy, which they just sold to Pepsi for about$2 billion earlier this year and kind of were their next beverage bet. It's Rohan Oza, right? Yeah. Yeah, he's a legend. He was like top guy for vitamin water, sold that to Coke for$4 billion.

2:34:43like truly the crowning achievement of the CPG beverage industry at the time and still today, one of the greatest Bev deals ever. And then he's been on Shark Tank. He's just like a legendary consumer packaged goods investor. Yeah. Quick lightning round of questions. I'm assuming that Kavu is not underwriting this, underwriting the business from with any type of AI lens, but are you getting any leverage out of AI? I would say like we at the show, unfortunately, get very little. I would say it helps with some research and we build software internally that's helpful. But I'm curious if the chat was wondering if it's been help move the needle at all.

2:35:32Not yet, but I'm starting to have conversations with different groups kind of building kind of AI-driven kind of content production. And I'm very excited to figure out how we can leverage that. I mean, you have to pump out a lot of content, you know, running a beverage business or any consumer brand today. And I think there's an interesting way for us to use it in a kind of a tongue-in-cheek way. I mean, the whole recess story and antidote to modern times is kind of, you know, was in response to the implications that AI would have, right? And I think so just to, like, incorporate it into the content strategy, you know, in I feel like you could do something really fun with AI customer service where the AI, like you need some customer service.

2:36:11People are going to have questions about the product generally. There's going to be a lot of back and forth. But you could probably do some crazy stuff with like fine-tuning the LLM, bringing a unique brand voice in and kind of like go. That just feels like recess day. There's also, I can imagine, like, I would imagine a lot of your distributor relationships today are still, like, somebody has to call somebody on another line. And a grocery store has to call the distributor. And it's still, like, kind of analog. So I can imagine some opportunities there. Another question from the chat. They're asking about the potential, like, are you excited about drone deliveries?

2:36:48I can imagine. Beverage is something that people... When people want to drink, you've built a big e-com business, but when people want to drink, they don't typically think, let me go on my computer and order a drink. And we saw there was... I don't know if this company is still around, but there was a company that was started in the same era as Recess that tried to go really all in on e-com. I think they partnered with Coke at some point, and I don't know that they're still around. I know who's talking about names escaping me. Isn't it Lemon something? Lemon Perfect. No, not Lemon Perfect. Lemon Perfect was like...

2:37:21Dirty Lemon. Dirty Lemon. Dirty Lemon. Yeah. Text messaging. They were like insanely good at e-commerce. But yeah, theoretically, if you can just say like, I want a six pack of recess mood and hit a button on your phone and a drone just drops it into your backyard, that should increase velocity. But I'm curious. I mean, I'm a big believer in just Omnichannel. I mean, Instacart's a huge channel for us. GoPuff, DoorDash, increasingly kind of anywhere where kind of consumer products are sold, you know, we want to be. And so, you know, when that becomes a real channel, I think we'll explore it for sure.

2:37:54But it's not something I spend a huge amount of time thinking about. Yeah, got to stay focused. Awesome. Walmart and Costco next before. Yeah, I mean, you get those and it's just like, okay, you've kind of won. And then you'll just be in the place to take advantage of whatever thing comes next. So yeah, lots of opportunity. Thank you so much for stopping by the show. Yeah, great to find you. Thank you for coming on. We'll talk to you soon. Congrats to the team as well. Cheers. Have a great rest of your day. Let me tell you about public.com, investing for those that take it seriously, multi-asset investing, industry-reaching yields, trusted by millions.

2:38:28Let's go through the - Palantir, speaking of stocks, Palantir earnings, Palantir, according to CNBC, tops estimates, boosts fourth quarter guidance on AI adoption. They issued a strong guidance, attributing growth to adoption of its AI. government sales which have been central to palantir's ascent grew 52 percent from a year ago and again stock is not up a ton after hours um but uh we can uh dig into this more uh probably tomorrow uh did we want to try to do yeah we got to go through a little bit of this we got to do a little bit of a uh i mean we're just going to go through sort of like random segments, I guess.

2:39:14But basically, the Ilya Sitzkever, who I dressed up as coincidentally for Halloween last Friday, he's the co-founder of OpenAI. They have shared new details on the internal conflicts that led to Sam Altman's initial firing, including a memo alleging that Altman exhibited a consistent pattern of lying. There's a deposition transcript that is going around that is now public from the Ilya deposition. Toucan kind of summarizes here. Ilya plotted for over a year with Mira to remove Sam. Dario wanted Greg Brockman fired and himself in charge of all research. That's Dario Amadei, I believe, from Anthropic.

2:40:01Mira Marotti told Ilya, so let's give her, that Sam Altman pitted her against Daniela Amadei. Ilya wrote a 52-page memo to get Sam fired in a separate doc on Greg. And there are some clips here that are absolutely crazy. The witness, I believe the witness is Ilya, correct? Correct. And the witness says, one thing I can say is that the process was rushed. And the attorney says, well, I was rushed. And Ilya says, I think it was rushed because the board was inexperienced. And the attorney asks, inexperienced in what? And Ilya says, in board matters. Let's go through a little table reading here. Let's go do some other stuff.

2:40:46I'm on page 17 of the deposition. Yep. Tyler is going to be playing the attorney Agnelucci, and I will be attorney Molo. And what's the number in the top right? 168. Okay. So let's pull this up. Tyler, kick it off. You're the attorney Agnolucci? Correct. Okay. And I'm Ilya? You're Ilya. I don't even know if you're going to be here. And you're Molo. I'm Molo. Okay, let's go. But first, let me tell you about adquick.com. Out-of-home advertising made easy and measurable. Say goodbye to the headaches of out-of-home advertising. Only Adquick combines technology, out-of-home expertise, and data to enable efficiency in this ad buying across the globe.

2:41:21Okay, Tyler, go. Okay, Jordi, I think you should actually start because it starts a little bit down the page. So start at line five. Okay. Line five. It certainly does matter. how much. Keep going. What do you think the value of your equity at OpenAI was at the time Sam Altman was fired? And I have the same objection, and I'm instructing him not to put a number on it. What did you think the value was? You can answer the question that he is saying is relevant here, which is whether you thought you were going to lose value. It isn't my question. I have the right to ask a question. You can object to the question.

2:41:58My question is, what did you think the value of equity and open AI was at the time of Sam Altman's firing. And I'm instructing the witness not to answer as to the money value. Are you going to not answer? I mean... What is this? John, that's you. Oh, I'm answering. Okay. So you say, are you not going to answer? Are you going to not answer? I mean, I have to obey my attorney. Okay. So you're not going to answer. I'll do what my attorney tells me to. Okay. Were you concerned about possibly losing your equity at the time that I withdraw the question? Eventually, the board agreed to resign and restore Sam Altman, didn't it?

2:42:43Yes. When was that? Later in the week. And why did they do that? Tyler? Objective four. There was a question of why the board did it. Correct. Or is this a question of why I supported this? First, I'm asking you, why did the board decide to resign and reinstate Sam Altman? Right now, my view is that with very few exceptions, most likely a person who is going to be in charge is going to be very good with the way of power. And it will be a lot like choosing between different politicians. The person in charge of what? AGI. And why do you say that? Objective form. That's how the world seems to work.

2:43:31I think it's very, I think it's not impossible, but I think it's very hard for someone who would be described as a saint to make it. I think it's worth trying. I just think it's, it's like choosing between different politicians. Who is going to be the head of state? Looking back at the process that, that preceded the removal of Sam and Greg from the board. What's your assessment of that process? Objection. Big. Calls for speculation. Okay. That's the end of that scene, I think. End scene. We need, we should have rehearsed this. Okay. This is a table reading. We're riffing it out. Okay. Should we go to 26?

2:44:14Because we already did the board experience. Okay. Let's go to 26. Where's 26? 26 starts. the witness. At least at one point, I expressed support. After Sam was removed, do you recall Helen Toner telling employees that allowing the company to be destroyed would be consistent with the mission? I do recall. And what was the context of that comment? The executives. I don't know why we have a... We need to be Southern. Every law exchange is better when it's in a Southern twang. the executives. It was a meeting with the board members and the executive team. The executives told the board that if Sam does not return, then OpenAI will be destroyed.

2:45:00And that's inconsistent with OpenAI's mission. And Helen Toner said something to the effect of that it is consistent, but I think she said it even more directly than that. More directly than you've related here? Yes. Okay. And what was your reaction to that? I don't remember my reaction at the time. Did you think that would be consistent with the mission? Objectiform. Objectiform. Objectiform. Objectiform. I could imagine hypothetical extreme circumstances. That answer would be yes. But at that point in time, the answer was definitely no. For me, it would not be inconsistent with OpenAI's mission to destroy the business.

2:45:44Is that what he's saying? i'm kind of i'm kind of lost on what his actual stance here is what is he saying he says do you think that was uh uh so what was the original criticism let's go to 28 do you know tyler do you know what he's saying is he pro-destroying so the executives there was a meeting with the board members thought okay the the executives told the board that if sam does not return then OpenAI will be destroyed, and that's inconsistent with OpenAI's mission. And Helen Turner said something to the effect of that it is consistent, but I think she said it even more directly than that.

2:46:23Yeah, so it doesn't have anything to do with Ilya's position on whether the company being destroyed is consistent with the mission. And you say here there's reason to believe that Sam was removed from YC in the past for reasons similar to the one that you identify in this document.

2:46:45Who else has summarized this? I'm completely lost on the actual deposition. Let's go back to the timeline. Typed female has a screenshot here. It says, this is some social network type stuff. The movie is going to be incredible. We can go back into reading these because they're a little bit more digestible. And what was your response to that ilia says i was very unhappy about it and the question for the why why why uh because i did not i really did not want open ai to merge with anthropic why not i just didn't want to what that doesn't it's actually not this is creating more questions than answers um gdp calls it the worst coup ever planned for a year without any pr strategy as they say if you go for the king, better get his head.

2:47:36First and foremost skill that any leader needs is to be able to survive. No feel-good management book will tell you that. Ilya is a great scientist and great human being, but not a practical leader. Ilya didn't have the skill to plot and survive and come out on top. Sama is the right leader from OpenAI employee perspective. You couldn't go this big without sama or i guess he typed uh it's so bad in so many ways says rune i really hope one day sam gets the credit he deserves so they're saying that like if you can't pull off the coup you probably can't pull off the act two of the company and so it's that's a pretty reasonable uh that's a pretty reasonable uh stance um what else we talked about the amazon deal we didn't get a chance to talk about Wander, find your happy place, book a Wander with inspiring reviews, hotel great amenities, dreamy bed, stop to your cleaning and 24-7 concierge service.

2:48:31It's a vacation home, but better. I like this post from Buck. We almost kicked off the show with it. Open AI? The compute purchase order press release company? I think startups should start just announcing their planned cloud spend. Just, you know, startups always need, like the more times you can launch, the better. Definitely. Go through So, you get$100 ,000 in credits and then project out, spend 10 ,000 of those credits the first month, then spend 20 ,000 the next month, then spend 40 ,000 the next month. You're almost out of credits. You've spent 90 ,000 of your 100 ,000 credits, right? But you have exponential growth in your credit spending.

2:49:14you project that out a decade and then you announce that based on the trend we will be spending a quadrillion dollars with aws if the trend continues and then just show the day hey we had 10k one month 20k the next month 40k in the third month do the math folks it's exponential growth that is a good hack i have another hack uh because uh sampar is in the timeline put the timeline in turmoil over whether he is a$40 million giga chad or a popper at$17 million. That's the debate, basically, right? Someone, he has said that he sold the hustle for$40 million. Someone quote tweeted him and said it was actually only$17 million.

2:49:58And everyone was debating the nature of his acquisition. I thought it'd be interesting to dive into some of the claims. I don't really care that much about whether it's$17 or$40. Both are big numbers. Congrats to him. The interesting thing is just the nature of acqui-hires, acquisitions, how these different things can play out and how funky they can get. And he's in a unique position because he kind of has to talk about his business credentials for his business, right? But the more interesting thing is like if you're negotiating to sell a business, what are all the levers you can pull? Because there's a ton of them.

2:50:36So the headline number, I believe, was - Strangely, like the hustle acquisition was kind of, it was like two deals rolled into one. There's like the core hustle. I could say seven deals. There's so many deals. Well, yeah, there's the core hustle business. There's the podcast, which was a decent chunk of the revenue. And there's the talent. Like the podcast is not really valuable without the talent. So there's a talent deal. And I think he was adding up a bunch of those numbers, rolling them into one, and talking about that headline number. and he broke it all down and explained it. Yeah, there's no real established way to calculate.

2:51:15There's no real norms around how headline numbers and acquisitions are accounted for. If you get acquired for$100 million, but half of it's on an earn out and you don't hit that earn out, you probably should go back and say like, hey guys, I know I sold my company for$100 million, but it's actually, it was only$50 million because we didn't hit the earn out. or vice versa. And what it feels like happened was he sold the company for 17, but grew My First Million so much that he kept making a lot of money from it. So the thing that he built wound up generating 30 million. And as talent, he was getting a lot of stock.

2:51:53And the stock went way up. And he was counting some of the appreciation of that stock to get to the headline number. And I can, yeah, he created a podcast that is entirely focused on talking about wealth. Exactly. So I think you got maybe a little bit - Yeah, I got a little carried away. The Hampton show. Yeah, you have to show the number. It is, I mean, it's like headline grabbing. Like if you want to go viral, especially on like YouTube, saying like, I sold my company. There's this guy who's like whole shtick is he sold his company for, or he's like a$100 million entrepreneur. Alex Hermosi is like really big into like the$100 million branding.

2:52:33I think he has like a patent on it or a trademark on$100 million just because like that's a round number. And so he will throw out, I have$100 million. I sold my companies for$100 million collectively. I have$100 million this or that. And that really, it really works to get clicks. Like it really works to get attention. If you want to sell your company for$40 million,$17 million, I have a hack for you. So this is what you do. You, oh, Tyler's locked in. He's ready. This is the number one resume builder right here. Okay, so. Tyler's not just listening. He's studying. You work maybe at some sort of podcast or something.

2:53:10You get together like$5 ,000 or something. Then you lever up to get to like, you need to get to like$400 ,000, I think. Once you get to like$400 ,000 in debt, it doesn't really matter. You go and you sell your company. but you don't sell it. If you sell it for USD, the value of your bank account is only 400 ,000. And that's not going to be like, oh, turning heads. So what you have to do is you have to sell, you have to, you know where I'm going with this? You got to sell your company in a different currency, in a different currency. Maybe like Guayanese dollar. Yes. The Guayanese dollar. So the Guyanese dollar trades at 210 Guyanese dollars to one U.S.

2:53:55dollar. So if you have$400 ,000 U.S. dollars, if you've created$400 ,000 of assets here, and you can sell that in Guyanese dollars. It's an amazing multiple. So 400 times 210 is$84 million in Guyanese dollars. So$400 ,000 in cash in US dollars is$84 million in Guyanese dollars. And so what you do is you build your business to the point where you can sell it for$400 ,000, maybe with a bunch of leverage that'll have to get paid out. But you sell it, the press release, we sold it for$84 million. And you don't specify. No, but you can put in the fine print at the bottom of the press release. Exactly.

2:54:39Super, super fine print. Guyanese dollars. The transaction occurred using the Guyanese. Guayanese dollar. This is actually just a hack for everything. If you want to become like a social media - OpenAI should start doing this. They should start announcing all their deals in Guayanese. Wait, wait, wait. Maybe they have been this whole time. What is 1.4? Maybe that was the answer that Sam needed is he's just - He's pushing up on 300 trillion Guayanese dollars. Yeah, maybe he should. Sam, how is a company with only$14 billion in U.S. dollars of revenue going to spend$294 trillion in Guyanese dollars?

2:55:20$294 trillion in Guyanese dollars is his liabilities. Raghav says Zimbabwean dollars are the real unlock. That's how you get in the quadrillions. Yeah. The other thing you should be like, oh, how am I going to pay for 1.4 trillion? 1.4 trillion, how am I going to pay for it? Well, guess what? I got 2.9 trillion in revenue coming in right now, buddy. 2.9 trillion right now. That's my revenue right now, dollars.

2:55:52But OpenAI will cross 3 trillion in dollars. 3 trillion revenue dollars this year for sure. 70 guanese 7 trillion guanese dollars the guanese dollar is the greatest it is such good alpha because you can go do a press release and just take whatever you did whatever you achieved maybe you're making 6 figures for the first time in your life convert it to guanese dollars now you're making 2 million a year oh you cashed out you made a million dollars how'd you make your first million How do you make your first$210 million? Startups, I like to flex how quickly they got to$100 million run rate. Huge opportunity to get there with the Guyanese.

2:56:37Make it 210 times easier with the Guyanese dollar. We should acquire some Guyanese dollars and just have a stack. We should. We should. The exchange rate will work in your favor. Anyway, there's a bunch of other posts in the timeline. We'll have to get to them tomorrow. We're on the road tomorrow, but we're still doing a show, 11 a.m. Pacific. We'll see you there. I don't think we'll be doing any guests. We'll see. It might be a little bit of a shorter show, but don't worry. We have a bunch of fun stuff planned. Please leave us a five-star review on Apple Podcasts, Spotify. We also have DietTBPN now, which you can listen to.

2:57:15DietTBPN is a summary show, 15 to 30 minutes, just the highlights. Cut down. If you don't have time for the full show, you can go listen to DietTBPN. Listen to your workout, your commute. and also follow us on Substack, tbpn.com. Drop your email. Thanks for tuning in today, folks. We'll see you tomorrow. See you tomorrow. Goodbye. I love you.