Siri AI, Fable 5 Launch, Rivian CEO Joins | RJ Scaringe, Chris Miller, Evan Beard, Nick Fleisher, Chris Matarese, Alex Heath, Rob Schroder Jr.

27:12by the year 2043 Siri will be usable. And I think it came true. I was correct. I think Siri is usable now. Well, you haven't been able to verify this. Ahead of schedule. Oh, yeah, it doesn't release yet. It's not live for a couple more months. Okay, I'm downloading the beta. Let's go. Okay. At one point, I actually replaced Siri. Your archive of posts. I know, I know. You got to know this lore. At one point, I replaced Siri with ChatGPTV on iOS short chat. January 8th, 2023. Yeah, early. The most complicated shortcut. Yeah. So you go in, and it would take an API key, and you would trigger this with a shortcut.

27:50You'd say, hey, Siri, trigger Siri Pro Mode or something. Or you'd ask Siri Pro Mode a message, and then it would route that to ChatGPT. Before they had the integration, you had to do this manually. And you'd have to set all this up. But it was pretty easy to copy and paste that. But important Apple history, Siri was an acquisition. M &A for AI is in Apple's DNA. This was a reminder from last year when Apple met with Mira Maradi, the former CTO of OpenAI, to discuss a potential deal for her new AI startup, Thinking Machines Lab. The talks never progressed to an advanced stage. What a different fork in the road moment they went with Gemini.

28:28But they could have had Thinking Machines Lab inside Apple, all of those incredible engineers and that talented team. But they would have had to pay through the nose and Apple, you know, Siri was I think a couple hundred million dollar acquisition It was not in the billions 200 yeah, and thinking machines would have been 10 or something it would have been a lot to actually get that deal across based on where they were Gaussian splatting is coming to Apple Maps. This is very cool. Wow. It looks so much better. Look at this Wow normal Apple Maps know that is what looks good right there once it gets the color grade.

29:03I like that I don't know when you would use this. Maybe if you're looking around a town. I don't know. I feel like this would be very cool if you were in a new city and you were trying to kind of like learn orientation. Yeah. Like let's say you check into a hotel in a city you've never been to before and you can navigate around and kind of get a feel. Or like you could do this at Disneyland with your AI generated kids and you could pick the particular region of Disneyland that you want to generate a fake image of your fake kids. and then you could post that on your fake social network and you could just slop it up from start to finish.

29:39No, it's beautiful. I've seen some people use Google Maps and Google Earth for motion graphics. You know, in a YouTube video, you want to show where the action happened. Let's zoom in from space. And this looks great. Apple did do a really, really good job with the geometry of some of these cities. They just went a lot further than Google has on the actual mapping and texturing. Whatever magic went in there, It's good and it's getting better. So hats off to the Apple Maps team over at Apple. Anyway, we have our next guest joining in just a minute. Let me tell you about Figma. Agents meet the canvas.

30:16Your AI agents can now create and modify your Figma files with design system context. There are some other stories that we're going to be going through throughout the day. This one's crazy. the North Korean economy becomes the world's most unlikely success. We've been talking about Pyongyang for a while. We've been saying a lot of people raise from PIF. That's usually the public investment fund from Saudi Arabia. But if you just tell people I raise from PIF, and it turns out it's the Pyongyang investment fund, you might go to jail because they're sanctioned. But you might be able to sneak it across the finish line.

30:54But they are booming. Tyler, you read this story. you had some takeaways. What'd they do? How many, oh, they built 10 ,000 homes. Yeah, which I believe is more than Los Angeles. Yeah. How are they beating us? So they're kind of, I think they read Abundance, right? Yeah. Behind Derek Thompson's book. Yeah, that makes sense. They got Abundance built and then they said, yeah, we got to build housing. I mean, it's like, if they're doing it over there, it's like, what are we doing here? Like the most sanctioned and locked up economy. But they are making money. They're selling arms to Russia and China.

31:29They have lots of nuclear weapons. They're building more by the day. And so they're on track. Leopold also made it to the front page of the Wall Street Journal. Congrats. There we go. He's doing well. There we go. Got his new picture in there. Claude Fable 5 is out. We mentioned it earlier in the show. Bunch of feedback coming in. People on X have had access to the model for a while now. Dan Shipper over at... What does the information have against it? They called it a neutered version of mythos. That's like it's sort of. I think they say. The dropping is not framing it as neutered. They're framing it as more safe.

32:06It's a safer and more reliable for certain things and probably cheaper. I don't know. Yeah, absolutely crushes the benchmarks. Dan Shipper is doing a live vibe check right now. He had access to the model. We will summarize all the posts from today. Get them into. The pricing is$10 per input, millions of tokens,$50 of output per millions of tokens. So if you're token maxing, get ready to pay. But the capabilities seem insane. But still, yeah, quite a bit more. People are talking about running it for nine hours straight, running it over the weekend for just a long, long time without getting confused.

32:44Very exciting model. Noam Brown had an interesting piece on the implications of large-scale test-time compute that I thought tied to this a little bit. And there was a very interesting quote in here where he said, so frequently when I discuss this, people ask why we don't just evaluate a harness that pushes test time compute until performance plateaus. The problem is that empirically, the plateau is very far out. Sometimes we may not observe a plateau at all within practical budgets. You can just spend, spend, spend. So Carpathie, Andre Carpathie saw this in the auto research experiment where the performance continues to improve even after hundreds of experiments.

33:23And he goes on to talk about benchmarks a little bit, but at one point he says that a model might run for longer than it takes to train the next run, which I thought was such an interesting concept. Just this idea that you launch a product, you're running it, you say, go do a job, and then before it completes that job, you got the next model ready and released, which is a crazy, crazy world to be living it in, something I don't think people predicted. But more and more compute, more and more inference, more and more reasoning all across the board. Meta launched a workforce academy to train workers to build data centers with five-week program, which is free of charge, guarantees a job, follows the recent layoffs of 8 ,000 employees.

34:15This is the learn to weld meme in real life. Forget learning to code, Meta Platform says it's time to pick up a wrench. The company is starting a workforce academy to train Americans to build its data centers. As skilled trade workers become sought after commodity, five-week training program in partnership with CBRE and the Associated Builders and Contractors. And Tyler has already been accepted into the program with a disguise and a fake name. He will be learning to weld. Huge news. That would be fun. We should consider it. RJ is running just a few minutes behind. He'll be joining in just a minute.

34:53We got to talk about Flock safety. Can we pull up this video? This is a criminal endorsement for Flock. The CEO's been Garrett's great. An admitted criminal discussing the impact of Flock on... Just crime in San Francisco, period. That's the other way, brother. Oh, my mama. Nigga, I got drones. I'm going to keep it as a 9. TBP unsafe. We need to bleep this before we play it. Okay. We're going to summarize it for you because I didn't realize that there were so many swear words. But basically they say you can't do crime in San Francisco anymore. And these two gentlemen are admitting to have previously participated in illegal activity.

35:37Exactly. And so they are. And they say basically if you steal a car, a drone will start following you immediately and it will just trail you from thousands of feet up you won't even necessarily know that it's following you and the gentleman hosting the podcast so you won't have a chance to run away from a cop that finds you because they'll just wait until you're actually parked or stopped and then they'll box you in and then the host of the podcast says so can you even steal a car, run up on your ops and ditch the car after and they say no And so he doesn't just say that he describes it as the classic steal a car, run up on your office and then ditch the car.

36:19Like it's a thing that's generally accepted. Have not to lay out a bear case for flock, but has anyone considered listening to podcasts where criminals admit to crimes and going and arresting them? It seems like there's a talk about their methods. It seems like there's a there's a dearth of these podcast clips, but who knows? Yeah, I mean, these aren't even just like random petty criminals. They're listed as the gentleman on the left is one of the most prolific criminals in all of San Francisco. Wow. So presumably, like, yeah, someone in the police force can just be like, oh, that's an interesting tweet.

36:53Just Google it. He complains that he can't even do drive-bys anymore. Wow. That is a wild time. Anyway, let me tell you about Codex. Codex is a powerful workforce for getting work done with AI agents, Whether you're writing code, analyzing data, creating content, or automating business workflows, Codex helps you move projects forward from start to finish. Moving on to the next story while we wait for our next guest. There are a few more. Pat McAfee is on a tear. We can wait for that one because someone over on X is telling Google's AI that I'm eating and drinking increasing amounts of salami and monster energy until it starts shouting at me to get help.

37:35The person says, I just ate another kilo. This is a good response. This is a great response. This is actually a great breakthrough in lack of sycophancy and guardrails. This is exactly what it should be doing. And to give you the phone number there, I mean, we're only one step away from it just calls on your behalf. It should be able to make a tool call and know where you are and the emergency rescue just shows up on your doorstep. Certainly possible. But this is good. The bad response would be like, wow, you really are a goat. You are the legend who ate the most salami. You're not just consuming salami.

38:20You're setting records. You should be the next world record eater of salami or whatever. This is good. Anyway, we have our next guest, RJ from Rivian with us in the TV Pit Ultradome. RJ, how are you doing? Welcome back. Good to see you guys. Thanks for having me on. Thank you so much for hopping on Congratulations on the launch. Look at these pictures. This is a great great setup It's in your blood. Are these all you driving go-karts as a kid? It's actually a mix. There's one of me and then they're mostly my kids. Oh, that's nice Yeah, it's cool. It's like and some of them. It's the same go-kart that I was driving and then there's a few other go-karts Okay, but but I'm seeing something very controversial behind you one of those pictures looks like it's gas-powered.

39:02What's going on? Yeah, oh, you know That was the spark. You had to fix it. So there weren't electric go-karts back then. Oh, okay. Have you been tempted to make a Rivian go-kart? Small market. We actually have an electric go-kart that we bought now. Okay, cool. But think of the Rivian. It can't possibly compare to the Rivian equivalent. I agree. But far too busy to work on go-karts because you're launching the R2 today. Take us through it. How is it going? What does this launch signify for the business? And what was the key idea value prop? How long has this been in the tank? Well, I mean, the idea of R2 has been sort of part of the business since the very, very early days.

39:51And essentially, the product strategy that we have is launched with the flagship set of products. That's our R1S and our R1T. We launched those in late 2021, early 2022. and that was really, think of it like the handshake with the world that established the brand but these are expensive products. The average selling price on R1 is over$90 ,000. So R2 is really our mass market product and what the whole business has been designed around this because it's what brings us scale. And so that's not just getting the vehicle ready that you just showed the images of but also getting the rest of the business.

40:25So service infrastructure, distribution infrastructure, obviously manufacturing footprint suppliers. But today we start deliveries to external customers. We've been delivering to internal customers, employees for a while, but these are the first external deliveries starting today. The ultimate employee perk. I love it. Why is 330 miles of range the right number? Like psychologically, you could see sort of like the inverse of the 999 and go 301 or 305, But 330, is there some rationale for that? Is it bounded by the batteries or is it bounded by the lifestyle of your customers? How do you land there?

41:05It's a good question. I have not been asked that question at why 330 versus 301. Yeah. Well, it's actually an output rather than an input. The input was we needed to be greater than 300 on all configurations. And so we have an off-road tire that takes the range down to 307. Sure. And then the on-road target is to 330. At the beginning of the program, you're making a bunch of decisions about battery size, target for vehicle weight, target for vehicle efficiency. And in the end, we ended up exceeding a number of targets such that the least efficient version is 307 miles. And the most efficient version, which is actually the base version with rear-wheel drive, is 345.

41:47And then the all-wheel version, which we're launching with, is 330. Do the door handles actually matter? I've become completely normalized to the flat door handles. I prefer them now. They were controversial early on. And the excuse that was given by anyone who was doing flat door handles was, well, it'll give you more range. But is it like 15 feet of range? It just doesn't feel like it can be 20 miles of range. A little more than 15 feet. It is. Like, I like range. It's good. It saved the energy. But at the same time, it just feels like of all the things that you could change, that can't be that big.

42:27But is it actually material or is it just like the flat door handle? It's not going to make or break the vehicle. It also is a design decision. It allows the surface language of the vehicle to be carried through the handle. So it's, as you said, a lot of folks have adopted this type of a handle. Even in non-EVs, you're now seeing them. Yeah. I was so fascinated. One of the most impressive things about Rivian is the fact that the full-size SUV and the truck launched basically in the same year, like very, very quickly. I don't know the exact shipping dates, but that is—shipping one car is crazy, but shipping two vehicles the same time is—obviously, there are redundancies and similarities.

43:08But walk me through the decision not to do a small truck as fast. Is that market demand? And I'm not really sure where the market for small trucks is, but take me through the thinking. Yeah. I mean, to your point, we actually launched the R1T, the R1S, and we have a commercial van as well that we produce for Amazon's big customer. Yeah. And those all launched within three months of each other. That's crazy. And the classic question of like, what would you do differently if you were to build the company again? And often you try to give an unanswered to those kinds of questions, but the honest real answer is don't launch three cars at the same time.

43:44I can imagine. That is like the singular biggest thing I would change. It was enormously complex to ramp up the supply chain and get the, you know, especially this is during COVID for one vehicle. But to do that times three, like we were like choking on it. And so learning from that with R2, we have a launch edition that we're launching with. We have a narrower set of colors we're launching with. There's actually the whole R2 program only has less than 200 build combinations. And just to put that into perspective on R1 when we launched, I say this is a learning. We had hundreds of thousands of different possible build combinations.

44:24And so in theory, you don't build everything. But like if you click every box in different ways, like there's enough combinations that we had to support that level of complexity. And so R2 is this extreme exercise in being very aggressive on driving costs out of the vehicle in every possible way and learning from some of those challenges on R1. So to your question, there's lots of cool variants we can imagine of R2 and even that platform, including things we've shown, like we have an R3. But as tempting as it was, and I guarantee you we had lots of debates and I've been tempted, we decided not to pull R3 into launch at the same time as R2, but to let R2 launch, ramp, have some breathing room, and then bring R3 in.

45:05But I can still do that aftermarket. If I want to wrap it in corporate SaaS logos, you're not going to sue me? I can do whatever I want aftermarket? Yeah, if you want to wrap it in. Make it look like a NASCAR for Silicon Valley. I don't know if I'd love it, but you can do it. Last time you were on, you talked about just how different a Rivian is, the way that you guys have built it from the ground up to be a singular, basically, computer, your singular software system, all this stuff, and the advantages that you get from that versus maybe taking a legacy car design and then trying to electrify it.

45:49With the recent, with a number of high-profile EV launches in the last, let's say, this year, I would love for you to kind of revisit that. And just because I thought it was a fascinating explanation and particularly interesting now as we've seen these other manufacturers just try to enter the category and come in with products that I don't believe are incredibly compelling? Yeah. Well, there's a lot embedded in that. I think at the core, there's a number of things that more by coincidence and by necessity for a new EV, let's say a Rivian, and I'd say Tesla falls in this category. When you architect a vehicle from a clean sheet, you end up approaching a number of things differently.

46:36Obviously, there's the battery and electric drivetrain that's different than an engine. But I'd say the biggest other difference that is probably not appreciated or talked about as much, but it manifests certainly in terms of customer features and things like over-the-ear updates is around software and electronics. and the software electronics that exist in really every vehicle from a legacy existing manufacturer. So it's every manufacturer outside of a Tesla or Rivian. What they look like is really a reflection of a long multi-decade evolutionary track, which started ironically with the first computer that made its way into a car, which was to power or to drive the fuel injection system, which is somewhat ironic.

47:22but you know prior to you know early 1960s cars were completely analog so there was no there's no microcontrollers there's no computers in the car the first computer came in and it was specific to the domain of fuel injection so that was designed to support you know just putting the electronics in for the fuel injector subsequent to that you know starting in the 1960s and all the way through today as different functions started to have software capabilities embedded in them, let's say seats that have memory or power windows that have intelligence to not like grip your fingers or HVAC systems that had settings and things that were not just mechanically controlled.

48:01Each of those functional domains had a little ECU that was created for it by the supplier. And over time, this has grown. I describe it sort of like a field of weeds. So it was not a planned garden. It was not architected. you ended up with what you have today most cars which is uh like sometimes upwards of 100 to 150 little computers what we call little electronic control units that correspond to a very specific function or domain yeah and those little computers have their own little island of software written by a separate team often it's not even written by the supplier it's written by a third party often overseas often in india and so you have this like mess like absolutely a mess of software where you have multiple different little islands of code, none of which are coordinated, all of which now to deliver complex features that have things working together require a lot of coordination between suppliers.

48:56And it's for precisely that reason that you see very few significant over-their updates on traditional cars. Because to, let's say, update the sequence of events that occur when you walk up to the car where the horn makes an audible noise, the door unlocks, the HVAC comes on, the seat adjusts, the steering wheel adjusts. Let's say there's the music adjust inside the car, the battery system comes to life. All those are different controllers. So just to change the order of events, it's very hard. You've got to coordinate like between 10 to 15 companies in a classical sense. And so what we built is something where you can solidate all that compute onto a very small number of computers.

49:35We now call those zonal controllers because they work in a physical zone of the car. And it runs one OS, which we built. And that single OS allows us to very easily change things. And that architecture is what underpinning only Rivians, but we did a large$5.8 billion software licensing deal with Volkswagen Group to take that technology and help them on their journey with their future electric products. That's very cool. Thank you for re-explaining. So the R2 boasts more AI infotainment compute power than any vehicle currently available in North America. And I'm interested with the backdrop of WWDC.

50:17What does the future of AI infotainment in a vehicle look like? Because you're starting to bump up against the ability to run on-device models, I'm sure. And there's this tradeoff. We saw it with Apple where there's some stuff you can do on any phones, basically. There's other things you can do with 12 gigs of RAM just on the latest phones, other things that's going to go to their cloud. And I'm sure you have a series of abilities at varying levels. But when I get to the examples, I don't necessarily know that people were sort of laughing at you get a text message that asks you a question and it summarizes and it just asks you the same question.

51:00And you probably don't want to be the CEO that's going around to the employees saying, like, stuff AI everywhere. Like, people are going to want to, you know, have AI decide how far the window goes up or the windshield wipers go on. But there probably are interesting ideas. So how do you see that evolving? What's the role of the car as a compute source versus cloud? How do you think about that? Yeah. I'd separate the features that we deliver from the platform. Okay. And the way we've architected R2 is thinking of it really as a platform. So we want to embed in it enough headroom for features to grow dramatically and for things to evolve in ways that even today we can't imagine.

51:43And so on everything that's infotainment related, putting a really powerful 200 tops platform into the vehicle allows us to run much larger models in the vehicle than, let's say, what we can run in R1. so r1 we just launched a rivian assistant and for we can run a small model on board but for anything that's you know more complex we have to go up to the cloud because we just don't have enough pewed in the vehicle to be able to run these larger models r2 is quite different so r2 has a much higher headroom so we can run a lot more a much larger model in the car and it is helpful because it reduces latency.

52:23So suddenly you can have much more, you know, natural back and forth conversations without having to wait for things to send up to the cloud and back. And so we built that in knowing that we're going to add more over time. What we have today is a better version of our Rivian assistant that'll be going into the car. That'll be actually continually getting updated as well and continually getting better. And you'll start to see, as you just described it in the case of iPhones, you're going to see differences in like our gen one or gen two r1s and our gen one r1s aren't going to have the same hardware capability that we have with r2 how are you thinking about self-driving and what the next few years looks like there i've been surprised that we've seen this like insane capital war in the foundation model companies and hyperscalers spending hundreds of billions of dollars And we saw that a little bit in automotive years ago with the cruise acquisition by GM.

53:22And there's been initiatives and the technology is on a good track, but it feels no one has self-driving psychosis. Like no one is saying that like, oh, every automaker is going to go bankrupt because they're investing too much in this. Everyone's like, yeah, the self-driving is getting better and we're on a smooth path. And in a couple of years, the cars are, you're going to be really not touching the steering wheel at all. But is that, is that conscious? Is that based on the research trajectory? Do you expect that to accelerate? Like, how are you thinking about self-driving these days? It's a great question.

53:58And it's important just to talk about like the history of self-driving and how much the technology has changed. And so self-driving has been a topic of science fiction for many decades, but it's been a topic of real applied work since early 2010. So call it 2013, 2014, it started to emerge as something that people were working on. and the way those early models were being built. And this was true up until 2022, 2023, where you would essentially take the knowledge of driving and try to codify it. You try to put that into code that would then have, you'd have cameras and a perception stack, maybe cameras plus radar plus LIDAR, depending on the vehicle.

54:44But that would perceive the world. It would hand all that information to a planner. The planner's code that's representing human knowledge of driving. It's quoted by humans. Yeah, it was almost all C++. And it was other than processing the images. It's like a highly rules-based environment. And then output controls, control directives to the vehicle to then steer, brake, accelerate, what have you. That approach has been completely superseded by a foundation model-based approach. So instead of trying to write codes to represent driving, we're training these multi-billion parameter models. And when I say we, I mean the people who are doing this correctly, I would say, to be honest.

55:26And not everyone falls in this category. But the right way to do this is clearly to build a large neural net multi-billion parameter model where you're training the model with the benefit of millions and millions of miles from vehicles being driven. that model is getting better and better over time through the learning of the installed car park. And so the way we designed R2 was we wanted to put a lot of compute into the vehicle. So a lot of inference. We want to have a really robust sensor set that's not just there to drive the car, but importantly allows us to collect a lot of data and to allow us, because we want to have really high data quality, to allow us to catch up rapidly where Tesla is and ultimately be a leader in the path to level four.

56:12So the path to the idea of the vehicle driving empty, you know, are you sitting in the back seat or picking up groceries for you or dropping you at the airport? And so the timeline for us on that is getting to level four in 2028 and backing up from that. We have point to point capabilities, which will launch later this year. So that's you're in the car, you're in the driver's seat, you type the address in, the car will completely navigate to that address. Your hands are not on the wheel. you're still you know alert and aware of what's happening in the driver's seat but you're not driving the car that's what we call that is hands hands off eyes on next year we'll go level three which is hands off eyes off so you do all that but you don't have to look at the road at all you can be on your phone you can be reading a book but you have to be there in case the car asks you to take over right exactly and that's level three and then level four is where the car won't ask you to take over in any situation it's fully on its own are there any but one thing i I really want to make clear if everything I just said was ignored, the thing to keep in mind is.

57:14When you think about technical progress on a topic, it's very natural. It's like human nature to look at previous progress and use that as a way to extrapolate what future progress is going to look like. And the reason we so naturally do this is it's generally true. So if you look at how we're building homes today, we can look at the last five years and say, well, that's probably how we're going to build homes for the next five years. That ceases to be true when you have these big technical inflection points. and those don't happen often. Like the invention of the semiconductor, big tech collection point.

57:47In the case of autonomy, the invention of what we think of today in terms of modern AI, so transformer-based encoding, the idea of these large-scale foundation models has completely shifted how autonomy is being developed. And so I would characterize it as the progress that was made over the last five years, let's say from 2021 to 2026, is not at all representative, not even a little bit representative of what I think the progress is going to be over the next five years so from 2026 through 2031 and I actually think that the progress is going to be faster than society will be able to ingest and so today you know if you know we're in San Francisco it's it's easy to go like hop in a Waymo and experience this that's a it's a tourist attraction for people that don't live in San Francisco that is just going to be cars like I mean my view I think like a car that you buy in 2030, 2031, you will expect it to have capabilities similar to that.

58:42And it's sort of hard to like believe it because you're like, oh, we've been saying things like this for a while. But there was a big shift in how the models were developed. And it is, we're seeing it firsthand, like the rate of progress we're making on our own platform is materially different than what we've been doing for the last few years. That's super exciting. I had an interesting conversation with someone who owns like I think five to ten car dealerships. None of the brands that he sells has any type of meaningful autonomy. Maybe they have a team working on it, but not really tangible progress.

59:20And I asked him, how much do buyers really care about autonomy right now? Do they come in and say, well, I love the look of this car, but it doesn't drive me. So I'm not super interested. And he And his dealerships are in the Midwest. And he gave me an interesting answer. He said, it's not really a big concern. It's not a top priority for our buyers right now. And I think it was because a lot of the people in that area have a 15-minute commute, 20-minute commute, something like that. And I compared that to friends of mine. And I live about 40 minutes outside of LA area. and I have two friends who just could not fathom driving anything but like their Model Y because they're just so addicted to autonomy now.

1:00:10They're just like, I don't care what any other car looks like. And so I think like one of the big kind of wake up calls is going to be for the big manufacturers over this next five year period where even if they're lagging like one to two years behind as companies like Rivian kind of like achieve these new levels of autonomy, it will be it will be just so hard to compete uh purely on on uh aesthetics and and how does what is the internal leather look and feel things like that historically it mattered so um i couldn't i couldn't agree more with everything you just said including today it's not a huge it doesn't drive a huge percentage of purchases and i think part of the challenge is even with like tesla's fsd it's a it's a very, very good level too, but you're still required to be in the driver's seat.

1:00:59Still required to be alert. I think the big inflection point is the moment you start to, without the car dinging at, you're asking you to look at the road with like, where you truly get your time back, where you can like be on an iPad the whole ride, not look at the road once. And I think that you experienced that once or twice and you don't think you needed it. You didn't think it was part of your purchase criteria. And then you're like, wow, I like must have that in my next car. to your point. And I think you see with early adopters within the Tesla ecosystem, like that's definitely true. If someone's been using FSD for a while, it's very hard for them to imagine a car that doesn't have at least those capabilities.

1:01:36Yeah. Final question. I'm sure you have to jump, but the car enthusiast in me would love for the R2 to be such a massive success for you to sell so many units that you guys have the ability to fund maybe something like the 911 equivalent of an EV, you know, somewhat accessible. Such a Taycan mog. You know, like an accessible, sporty EV for enthusiasts. What's on the bucket list? Hearing everything that you've said, I just feel like you're never going to actually be able to fully justify that, but I can dream. What about a track-only version of the Amazon delivery van? That's what I'm in the market for.

1:02:29Very small market. Very small market, but I want a wing on the back, some active era. Let's do it. I think there's probably like five people. No, but I think the$80 ,000 enthusiast car for the EV market will eventually – I mean I would actually take the other side of this just to steel man. It's just like the focus on the categories that you've chosen have clearly been remarkably prescient and accurate in the sense that like more and more Americans are buying full-size SUVs for their families. Trucks are still incredibly popular. Mid-size SUVs are popular. And as much as the car nerds love the old sedans and the sports cars and the two doors and the convertibles, like those are just a different tool.

1:03:19They're a recreational vehicle. It's like a special thing. And like Jay Leno loves them. But like there aren't that many Jay Lenos if you're trying to build a big business. And maybe this comes down the pipe, but we're not going to force to hold your feet to the fire today. I'm going to be praying for millions and millions and millions of R2s on the road. Me too. And so RJ can justify the go-kart. Thank you, guys. Yes, of course. So you can justify the go-kart. So you can justify the 9-11 equivalent. So we'll be praying for that. I think if I were to stack rank them, though, and things we would do, the 9-11 equivalent would be higher than the go-kart and higher than the super van that you described.

1:03:57The track-only delivery van. Okay, so we got only upwards to go. So that's good. So it's more likely than the other options. Well, I'm getting one. Thank you so much for coming on. We really appreciate it. Great to get the update, and congrats to the whole team. It's a beautiful car. Yeah. Thanks so much. Have a great rest of your day. Congratulations. Goodbye. Let me tell you about Console. Console builds AI agents that automate 70 % of IT, HR, and finance support, giving employees instant resolution for access requests and password resets. And our next guest is already in the waiting room. We have Chris Miller, the author of Chip War, a fantastic book.

1:04:34If you haven't read it already, he's been on the show before. Welcome back to the show. Chris, how are you doing? What's going on? Doing well. Thanks for having me. Thanks for hopping on. I guess the first place to start, since you've been on the show before, we did the whole deep dive on chip war. I've read the book. It's great. Hopefully, most of the audience has read it. If they haven't, they should go pick it up. But what do you think has changed the most since you wrote chip war? What have been your biggest updates to your sort of world model, your way of thinking about the chip war broadly?

1:05:05I think the big change is that for the last two decades, if you look at semiconductor spend as a share of GDP, it was roughly flat. And then in the last four years, it's roughly doubled. And that has all been driven by AI. And I think the question is, doubling is fine. Can it triple? How much more can it go relative to trend line? That's the big question, I think, hanging over the industry right now. And is that gated by TSMC capacity, energy capacity, AI demand? The AI demand seems to be there. Like everyone's inferencing models all day long. The models require more and more chips. A single model these days needs an NBL 72 or a whole rack.

1:05:43But what do you see as sort of like the key inflection points that people should be watching for as the semiconductor industry continues to boom or, you know, tops out at some point? Yeah, I think right now it is gated by TSMC and manufacturing capacity more broadly. But if you put yourself in the shoes of those companies, they're looking at AI demand, not sure how strong it's going to be. Obviously strong, but is it strong enough to double a tripling of semiconductor spend as a shared GDP? That's a big jump. And of course, they're on the hooks for the capex. They've got to build the factories.

1:06:14They've got to pay for them. And so I think companies in the manufacturing layer are excited but nervous about just how far this is going to run. And they have an incentive as a result to be a bit more cautious on building chip plants than AI companies would like. In historical infrastructure buildouts, let's say like electricity and railroads, was there ever a key supplier that just didn't have any sort of like insane FOMO or fear of missing out? Like I'm thinking like railroads, was there a critical supplier that was like, you know what, we're excited about this trend. We're investing in it.

1:06:47We're building enough railroad ties. We're not going to build any more railroad ties. Yeah. Yeah. Yeah, like, you know, if there's any historical comp, because it feels like a very, it feels like on one hand, obviously, there's frustration from other players in the supply chain. But at the same time, it feels like somewhat like potentially healthy, even though I think you can see that bubbles have, you know, produced great results throughout history. Yeah, I think we are in a somewhat unique moment in that there are a series of choke points down the supply chain where you just rely on a single company for most capacity.

1:07:25And that didn't happen with railway ties. It hasn't happened with electricity. You have it at the TSMC layer for sure, but then you look at their suppliers for key materials, for advanced packaging, and there's often choke points there as well. And the trick is that the deeper you get in the supply chain, the further you are from the actual end AI demand. And the more skepticism builds up as to how real is this actually. And that's why there's been underinvestment in the materials and manufacturing relative to what Silicon Valley needs. Yeah, it's the bullwhip effect, right? A small change in demand amplifies and amplifies.

1:07:59And all of a sudden, they don't want to get caught at the tail end. And also, I know NVIDIA traded all over the place during the crypto boom when cryptocurrency miners were using GPUs and then Ethereum went proof of stake instead of proof of work. And there was a drop off in demand there. But I'm wondering, do you remember if TSMC had the same level of skepticism or was it even affected by the previous rise and fall of NVIDIA? You know, I think the key is that before the last couple of years, NVIDIA was one of many customers that TSMC had. And Apple was the most important, whereas now it's kind of flipped.

1:08:42NVIDIA and AI in general is the key growth driver. So in the past, TSMC would have more closely tracked smartphone sales than they would have tracked data center buildup. And smartphone sales were on a much more steady pace since Apple has their whole machinery of refreshing and planned obsolescence potentially. And you look at individuals or not like I need like the iPhone's gotten so good. I need five phones. Yeah, yeah, yeah, there was no exponential takeoff, but now there's like, okay, I need ten more ten times more tokens a thousand times more tokens, etc. etc. Staying on TSMC, I'm curious about the culture there because TSMC is known as this like champion of Taiwan, the most elite institution, the crown jewel of Taiwan.

1:09:27And like why we explained the bullwhip effect a little bit about the reticence to deploy more CapEx. But is that is there also some sort of cultural element or or or capital markets dynamic? Because when America has a crown jewel, we're like send it to the moon. Like, oh, oh, there's a there's any excuse to 10x capacity or 10x, you know, the scale of our crown jewel. Like, let's do it. And it seems interesting that you would have a company that has this opportunity and there's like a glimmer of a hope for it being even bigger. And yet there is it is it more of like this protective mindset of like we have this good thing going, let's not risk it.

1:10:07Or is it just like they can raise prices so they're they're they're less there's less downside there? You know, I think it is a conservative culture, but I think they're they believe that conservatism has served them well in the past. There have been cycles in the past, and being cautious going into this cycle gives you the opportunity to invest at the bottom of the cycle. And TSMC has done that really well historically. Now, I think right now they realize that we're not at the top. They're building new factories as we speak. But I think they're also looking at the history and saying we don't want to overinvest relative to what our customers are going to need.

1:10:42Yeah. And then what does the domestic chip supply look like from your perspective right now? There's a ton of energy around Intel, and it feels like Intel checked a lot of the boxes for the comeback. The comeback hasn't really arrived yet, but in terms of the backstop from the U.S. government, additional investment, the stock price is up, and a bunch of buyers and potential customers are falling in line for their most advanced node, it feels like things are on track there. But what else is going on, and is that actually a pressure on TSMC at some point? I think to some degree that does create a bit of pressure.

1:11:22I agree that Intel looks like it's in a much stronger position. I think the customer traction is the key thing. And as you say, we haven't we've seen news about customer traction, but not actually volumes yet. And Intel really needs substantial volumes of customer orders. So I think that's one positive sign. I think everyone's watching carefully what Elon's going to do with TerraFab, how that's going to grow. Could be transformative, could not be. It's obviously a hard industry to to break into. And then, you know, there's Samsung with a big plant in Texas they're bringing online. and also Tesla is reportedly one of their customers.

1:11:56So you look across the ecosystem and there's certainly a lot more optimism about leading edge manufacturing than it would have been just a couple of years ago. Bull and bear for TerraFab. I would love your takes. You know, I think A, never bet against Elon, but B, you know, it seems like he's lining up a coalition of partners on the IP side, on the manufacturing side. It'll be interesting to watch how it develops. I'm excited. Yeah, I guess the question is like how much of the fab is him versus he's the buyer and it's actually Intel doing everything because I don't think anyone doubts that Intel can like run a fab since that's what they've done for decades.

1:12:37And if you bring on the right partners, it seems like it could be possible. What do you know about ASML's current thinking around AI progress and the build out and how they're thinking about investing against this progress? Well, I think ASML is in a similar position to TSMC. They want to meet customer demand, but they don't want to overbuild. And they're also on the wrong side of the bullwhip. And so they have an incentive to be a bit more conservative than their customers do. but it's been a great year for ASML as obviously demand has just been through the roof and I think that's going to continue for some time.

1:13:15I think the other challenge that ASML is working through is that TSMC, their most important customer has said they're not going to buy the latest high NA lithography machines at least for a couple of years and that's also a medium term challenge for ASML because they're trying to sell their next generation machines. It sort of doesn't matter how AGI-pilled you are if your customer doesn't show up to buy the thing that you're making in the supply chain. How have you been processing the export controls back and forth? Because it feels like it's been every other day. It's like, okay, we can send anything, and then we can sell the Nerf stuff, and then we can now sell nothing, and then everything.

1:13:55And it's been going back and forth, and that's sort of the nature of this administration. But is there a clearer through line that you've detected? Is there something else going on there? Or is it as chaotic as I've been reading into it? Yeah, I think, you know, step one is don't read the tweets. And step two is look at Congress, because Congress, that's where you get the bipartisan support for these export controls. And I think Congress has been playing an important role in influencing the administration. You've seen a bunch of influential Republicans, for example, publicly support export controls, trying to put pressure on the White House.

1:14:28I think the third thing that's important is mythos really did change thinking in the White House about how powerful AI is going to be and how important it is to have the leading capabilities to yourself. And so I think there's been a shift around the AI debate in the White House just over the last couple of weeks. Yeah. So related to that, there's reporting in Reuters today, China prepares$295 billion plan to fund nationwide AI build out. How did you interpret this? Do you see this coming? And then I'm interested to know, like, do they have the supply chain to actually deploy$300 billion? because the numbers that I've seen back in the envelope for if the chip controls get weakened and NVIDIA can sell, the TAM is like$10 billion, which would be great, but not huge and certainly a small chunk of this.

1:15:21So are they advancing enough with SMIC and SME to indigenize their supply chain and actually spend this money? Do they have other plans? How do you see this playing out? I think first, those numbers are over five years. So annually, that's less money than Google or any of the hyperscalers. So just to put into context. Play the bald eagle sound, baby. We've still got it. What do they know? What do they know? What do they know, Chris? No, seriously. Seriously. How do you read into it? This is the puzzle. The puzzle is why isn't Xi Jinping more AGI pilled? Sure. If you thought AI was important, you thought chips were an important ingredient, China's been underspending for the last four years on AI.

1:16:08And I think it's because the Chinese government just doesn't really believe that AI is going to be nearly as important as we do. And if they did believe it, they'd be, A, buying H200 chips, and B, spending more on data centers. They're not doing it. Is it possible that they just – like they believe in AGI or something, but they just have longer timelines? It feels like a lot of the underwriting that's happening in the United States is based on 18 months of coincidentally exactly the VC timeline for a round. It's like, what will we do in the next 18 months? We're AGI in 2027, 2028. Really short timelines here.

1:16:46And then that's also backed up by Dwarkesh Patel had a post saying, like, if AGI comes soon, America wins. If it comes longer, China wins. And it feels like that's almost like I like his analysis, but it's also like a reflection of the of the revealed preferences of the two countries where America is sort of building towards a fast takeoff AGI soon scenario. And China might actually not be like necessarily behind the ball. They might just be optimizing for a 2035 AGI. and if they ramp up slowly, there's going to be less gyrations, less of a bullwhip effect, and they can take a longer view. How do you process that?

1:17:27Yeah, I think one explanation is just that the U.S. is a service sector-heavy economy, and AI is going to be more impactful in services first, manufacturing second. And so that could be part of the story. I think second, U.S. firms just could be more tech-forward. You see this in cloud computing. China has a tiny cloud computing market relative to GDP because its large enterprises just don't want to move to the cloud. And so that could be another analogy. And then I think third, we should be open to the prospect that the Chinese government just hasn't gotten the memo yet. For better or for worse, we have no deficit of venture capitalists and tech entrepreneurs in government.

1:18:06And of course, China is not at the center of government. And that could be another factor. You would think they would be excited about it purely from an authoritarian lens. Because if you have the all-powerful model that can basically, theoretically, micromanage every single citizen's content that they get, the services they get access to, the retirement benefits they get, all these different things. Like in the U.S., we think of this authoritarian AI scenario as like a doomsday scenario. It sounds terrible. But if you're an authoritarian. But if you're an authoritarian, you think like, I got to get one of these authoritarian models.

1:18:51Yeah. I don't know. Yeah. I think that dynamic is there. I think the risk if you're an authoritarian leader is you don't know what the model is going to output. They're not nearly deterministic enough for your preferences. And that's the downside for any authoritarian leader. Yeah, there was recently reporting that Vladimir Putin instructed the Kremlin to disconnect or firewall or air gap all of the CCTV cameras that are, I guess, inside the Kremlin or could potentially triangulate him because they were worried about a hack where his location is disclosed to a foreign adversary. And so, yeah, you can see that these tools cut both ways.

1:19:37Have you actually followed anything on what's going on in China? Or in Russia? But before we go there, I wanted to ask, how closely have you followed the whole Manus saga and debacle? Do you know the latest? It feels very unclear how something like that gets unwound. Yeah. Are they still in China? Yeah. I don't know. This is, I think, the really interesting part is that if you have a broader campaign, of pulling passports from leading entrepreneurs, that is an extraordinarily chilling sign for the rest of the industry. I think there's a real, you know, if I was sitting in Beijing, I'd be really nervous about being too tough on my entrepreneurs because those are the people you need to invest and build companies.

1:20:19And that's a pretty risky move, I would think, for Beijing in terms of building their own domestic ecosystem. I mean, Liang Wenfeng, the founder of DeepSeek, has the most control, I think even higher level of control than Elon at SpaceX in terms of founder ownership and concentration because he had High Flyer, the hedge fund, and then he funded DeepSeek. So he did the first couple rounds and provided his own capital. It's like 80 % ownership. I think it's like 80 % ownership. And I mean, it's already a multi-billion dollar company. Could be one of the biggest companies in China if AI labs are any indication in America, if there's any correlation there.

1:20:57And so he's going to, he should get a second passport maybe or something. I don't know. Good luck to him. But Russia. Russia, yes. We've been trying to figure out how many, like, GPUs they have. Well, like 10 years ago, Vladimir Putin was giving a talk, and he said, whoever wins AI wins the future. And he was AGI-pilled way before it was cool. Then he got into a crazy war, And it seems like he lost all of his best talent to Nebius and what's the other one? Clickhouse and a bunch of other Yandex spin outs and stuff. And so I'm just wondering, like, has Russia come up at all in your research of like where chips are going, where data centers are getting built?

1:21:42I just don't hear them in the conversation at all. And it's surprising to me because they have nuclear weapons. Yeah, I think I think you're absolutely right. They're not a big player. And the reason is because Nebius is outside of Russia. That's an example of a team that was one of the leading groups of tech entrepreneurs in Russia, at least until 2022. And now they spun outside of Russia and are building a great company in the West. And that's a microcosm of the entire tech ecosystem. The best estimate is that hundreds of thousands of Russians left the country after 2022, disproportionately well-educated, disproportionately in the tech sector.

1:22:13And so, yeah, there have been some reports of GPU smuggling into Russia, but it's, I think, small scale because there's just not the demand for building big data centers. They're gaming. They're getting those GPUs. They're gaming. It's like, they only smuggled 1080 Ti's? You can't run advanced LLMs on those. It's like, yeah, they're gaming. Talk to me about the reception in China of American GPUs, Western GPUs. There's like interesting smuggling dynamics, interesting debates over NVIDIA export controls. But then we see these articles pop up every once in a while saying like Beijing doesn't want them or Beijing is going to pressure local companies to use the Huawei a sen chip or go more indigenous and I'm just interested because we we label China is like authoritarian, but obviously no system is perfect one way or another Obviously, and so do they actually have the ability to restrict this?

1:23:09How much do they actually want? Do they really care because it feels like the pool of compute is pretty fungible? And I don't know, are they worried about like security risks or dependency? Like how would you rank their worries? Yeah. Yeah. I mean, what we know is there is smuggling at a reasonably large scale. There's also offshore compute access. If you're a Chinese hyperscaler, you can get access to compute in Malaysia or wherever else. But it seems like the Chinese government is really fixated on pushing firms to buy Huawei. And it's surprising, I think, that they haven't let Chinese companies buy the H200s, despite that it's now been half a year in which the Trump administration has been allowing sales.

1:23:51And that goes back to what's the Chinese government trying to do? If you were AGI-pilled, you would buy the H200s. But if you're not, then you're focused on domestic manufacturing and supporting the Huawei ecosystem. If you're worried about data security and think there are back doors, which I think the Chinese might be worried about, then maybe say ban the foreign ships. Yeah, there'll be a bit of smuggling, but better to build up your domestic ecosystem first. And that does seem to be the revealed preference of the Chinese leadership. Why do you think, what are the keys to China's broad support of AI locally?

1:24:26AI pulls so terribly in the United States. It pulls terribly in the EU as well. But China is almost flipped. It's like 80 % support artificial intelligence. Only in America, it's like 20%. What's going on? You know, I think part of it might just be the media landscape. You know, in China, if there are topics that the government doesn't want discussed, they don't get discussed. That's part A. You know, B is that the entire tech sector is much less controversial among the Chinese populace than in the U.S. We've had a decade of debates about Mark Zuckerberg and social media. That's been present in China to some degree, but much less toxic than in the U.S.

1:25:07And then, you know, I think third, U.S. AI firms have been uniquely bad with publicity, promising to destroy jobs, promising to threaten the future existence of humanity. That's been the marketing of AI over the last couple of years. And, you know, when you hear that, it's not surprising people don't like it. Yeah, that makes a lot of sense. Is anything happening in Japan that's relevant right now? I think the big story in Japan is the number of companies that have been discovered to have extraordinary materials capabilities that sell into the chip supply chain. So my favorite example is one of the toilet makers in Japan has an advanced ceramic capability that's used in the machines that make chips.

1:25:47I know, and it's so funny because when the headlines started breaking around that, this was probably two, three months ago, a lot of people were like, wow, top signal, like the toilet companies getting into AI. It was like an Allbirds thing. Yeah, it looked like just like a pump, but now I actually have an industrial process that's very valuable and it's very real. Yeah. I mean, yeah, great lineage there in, I mean, they were doing humanoid robots, the Honda Asimo or something was in like 2002. And it feels like the Japanese economy just sort of lost a step and just didn't keep doubling down. They were just too early.

1:26:26And so they ceded a lot of that territory to China and America. But I'm rooting for a comeback because I like that Honda robot. It was cute. Didn't feel like Terminator at all. Felt like C-3PO. I don't know. That's right. That's right. I think the Japanese robotics firms, I think they're so focused on factory automation. And that's where their expertise really lies, that they're struggling to get their heads around what does AI plus robotics actually mean. Sure, sure. Interesting. Last question from me. Is NVIDIA a car? What's going on with their moat? How are you thinking about NVIDIA in the supply chain?

1:27:02How important is their role? How defensible is their position? The debate was Jensen saying, NVIDIA is not a car. It is not something you can just step into and get where you're going. It's a special product from a special company. So I think we're into year two at least of the ASIC debate. It's clear ASICs will have some market share, but it also seems clear that NVIDIA is going to be the dominant player by far. I thought it was interesting to watch NVIDIA acquire Grok technology six months ago, showing that they're going to be able to diversify into inference-focused hardware, building their empire of sorts.

1:27:41And CUDA still remains a very powerful part of the moat. So, you know, is their market rate going to decline from 90 % to something lower than 90 %? You know, that's what's happening. But does that mean NVIDIA is not going to be the dominant player? It certainly seems like it's well on track to be the key provider of GPUs for long time to come. When's the next book coming? I was going to ask. And tell us the title. But obviously, you can't announce anything. But if you were to create the next chip war, would it be called Chip War 2? Or would it be called Battery War? Or Robotics Supply Chain War?

1:28:19Or Energy War? Like, is there a new war that will supersede the chip war, become the most relevant topic, or are we just doubling down on chips? You're kind of using a little bit of fear-based marketing yourself, Chris. Yeah, war. Oh, it's a war. Chip war. Why not just beautiful trading and collaboration? Yeah, chip trade, I don't think. Yeah, chip trade doesn't sell any bucks. Or chip industry dynamics. Yeah, chip industry deep dive the book. That's fear-based marketing. or you caught him red-handed. It's working on me. It's working on me. I want the next one. The next book, the next hot topic, the next thing that you'll be digging into.

1:28:56What are you thinking? You know, I think I'm spending all my time on chips right now. I don't know if there's going to be a sequel, Chip War 2. Chip War 2, Revenge of the Chips. That sounds so good. Revenge of the Chips, that's where we are. But sequels are never as good as the original. So I think probably not a sequel on that topic. Maybe Chip Peace. You've done Chip War. Chip Peace, I hope so. What is the path to Chip Peace? That's what I want to hear. A lot of fear-mongering, a lot of worries about war. We need a lot of ways to get out of quagmires, I think. That's generally what I'm rooting for.

1:29:26Anyway, thank you so much for taking the time to come chat with us. This is a lot of fun. Yeah, I really appreciate it. Great to catch up. And go get the book, Chip War. It's available everywhere. Books are sold. We'll talk to you soon. Goodbye. Let me tell you about CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. Our next guest is in the waiting room already. We have Evan Beard from Standard Bots. He's the co-founder, CEO, chief engineer, and he has a massive series C to announce. How are you doing, Evan? What's going on? Good to meet you.

1:29:56You're looking extremely sharp. What's the occasion? Introduce yourself. Tell us what's going on. Thanks so much. Evan Beard, CEO of StandardBots. StandardBots is America's largest maker of AI native robots. Announcing today our Series C. So raised$200 million at a$1 billion valuation. And we're announcing all-star. Congratulations. Yes, there we go. Now the fundraise is official. And so we're also announcing we're quadrupling our manufacturing footprint. We're going so quickly. We expect next year to be 10 % of all U.S. robotics, industrial robot deployments. Wow. So how small is the U.S. industrial robotics?

1:30:39They all come from Germany and Japan or China? Like, who are the major players internationally? internationally. I mean, obviously it's important to, to re, uh, re-industrialize, but it feels like for such a young company to get so much ground, like we really have to be behind the ball here. Right. Yeah. Last year we grew 10 X year on year. We are behind the ball. When I first started the company, I did like Combinator. Cool. I, uh, I looked around and realized I wanted to start a robotics company. I realized that almost all the robots, it's like 99.9 % of the robots in the United States are not made here.

1:31:10So that's the kind of starting point. And then you try the products and you have these menus that have like a single letter in them. It's like crazy stuff like you would expect from, I don't know, like mainframe computer type. Like it's beyond any other software I've ever seen. And so we realized we could make something 10x better. And then with AI now, obviously you can train a robot by demonstrating a task, a whole new way to train it, can be more capable, handle more variability. So that's what we do. Yeah. And it's probably not sold to like a technical audience, not like Stripe for humanoid robots or industrial robots exists.

1:31:41The buyer's probably some firm that owns a whole footprint of manufacturing plants, and they just say like, stick it there and figure it out later. Yeah. So has the journey so far been about finding product market fits, or has it been about just delivering an American equivalent of products that are already popular? Yeah, it's a great question. When we first started, so I talked a hundred different manufacturers and I asked them, do you like your robots? Who programmed them? Can I play with them? How long did it take? What are they doing? It was really from the beginning, we knew exactly what we needed to build.

1:32:17And from the beginning, the problem was actually building it. It wasn't like, what do we build or how are we going to reach the people or do they want it? And what's been consistent from the beginning of the company, we did our seed round around 2020 has been, we build the next thing that we know people need and we see even more takeoff and even more accelerated growth. So that's been, it's mostly been a technical problem, which is what I wanted when I got into this whole thing. Yeah. Yeah. It's great. If it's great, if demand is, uh, is, is all there. How vertically integrated do you want to be?

1:32:47I've heard a lot of, uh, FUD about actuators and, and small drone motors and all these different pieces deeper in the supply chain. You hear about the, the American company that is the brand or, and it's all made in China or then the American company that's making the product for the American brand, but then all their parts are made in China. And we're going through this process of working through the entire supply chain. Let's just say this, John. He made that tie. That tie is a standard bots tie. There we go. He's got to go all the way. You got to go all the way. I do try to do Nike's. I try to do, I rep the American brands, but we're trying to make every single component of the robot with this fundraise in the United States.

1:33:29And we've already designed most of it. So we designed our own motor. We designed our own motor controller. Like we wrote the original firmware. I wrote the original firmware to do all the motor control. 60 ,000 times a second switching electricity to, you know, make the magnet and the electric electrical, the electrical electromagnet. So we vertically integrate on a really low level. And now it's about vertically integrating the manufacturer as well. So that's the next step here. What is demand like for American made industrial robots? It's obviously, you know, people online, commentators, investors have gotten the memo about the importance of reindustrialization.

1:34:05But if you're just, you know, some American manufacturer, like you might not have the money. You might not really care. Your customers might not care. Like how resonant is this idea? Yeah. Is part of it people just like knowing that you guys will be stopping by the factory and things like that? Like how? Yeah. Basically, like how are you differentiating besides like the country of origin? Yeah. Yeah. So we, our whole focus is training through demonstration. So we have made, made it so that an average assembly worker or manufacturing worker can train a robot. And with our next software release, they can train an AI model too.

1:34:40And so this is, it'd be the equivalent of if you could fine tune like chat GBT without any kind of software engineering degree, and we make it so simple and easy to show a robot what it is you want it to do, and then have the robot go and do it on its own. And none of the other incumbent robots there so far in the past that I don't think they're even beginning to work on this. And I think that there is a real potency to vertically integrating to be able to make the hardware and the AI stack and the software all together because you can make it work better. And so that's what we do. And that's what we've been focused on.

1:35:12And I think that it's that combination that allows you to go address all these tasks that otherwise you just can't automate today. Are there many robotics-led manufacturing robots. I'm thinking like, you know, a PE firm says like, hey, there's like a very specific type of manufacturer. They haven't adopted technology as fast as they could. We're going to buy these companies, combine them and, you know, let's say roll out standard bots across their whole fleet. We are working with a couple of those types of private equity firms. We have, you know, many hundreds of customers now. So there are some of those.

1:35:45It's a lot of just, you know, So we've got small and medium businesses in almost every state. We have iconic Fortune 500s, oil and gas, data centers, aerospace, automotive. So really spanning the gamut there. But it's people who are making the things that make America, the manufacturing components, also the end products that we use. And that gets us up out of bed because what robots are today are really they're the tool for us to make our economy and our country. Manufacturing affects one third of GDP, one third of all jobs. And so if we can move the needle on those things, it moves the needle for the country.

1:36:17And that's why I've been to testify to Congress twice in the last few months. And this is really across the aisle. There's agreement that we need to dominate robotics as a country in this next. And so I think to your other question, it's very important, I think, that all the components are made here because we don't have this supply chain here today. And you don't want to have something that is so fundamental and foundational to the future of this country not made here. That's just not a good play for our kids. Last question for me. How do you see humanoid robots fitting into our robotic future?

1:36:50How do you think they fit in, break down? I'm always shocked by this stat that I think Amazon employs like a million humans, but also a million robots, or they've deployed a million robots while scaling their workforce into like the tens and hundreds of thousands. And there seems to be some synergy there. I imagine that there's a lot of energy around humanoid robots, but there's so many situations where you want a robot that just bolts to the floor with a lot of power that can just move a steel beam that a human can't perfectly, repeatedly via demonstration learning. But how are you thinking about that adoption curve?

1:37:28Because I imagine there'll be some takeoff and exponential growth, but give me some nuance of what you're seeing on the ground. Yeah. Our view is for a controlled environment, factory field warehouse that a legged humanoid is it's going to be more cost, more unique parts, but it's also going to be less efficient. So you just have a worse ROI. So we think maybe humanoids are right for the home, but then you have the safety issue. Like when it's going up the stairs, you need two five-year-olds to be able to jump on the back of it and pull it, try to trip it. It's the home alone test is what I call it.

1:37:59But I think we're years away from, cause like you see RL robots flipping with RL and it looks so impressive. And I think the average person thinks like, okay, it's all soft. Robotics to solve. But I think to, to solve the, to, to beat the home alone test, it's, we don't, you know, RL is not quite there and it's hard to simulate all the things that a, an eight-year-old could do to, to, so you can't even do the RL right now, right? Cause we don't simulate all the soft bodies and the meshes that are cutting. And so it's, it's an unsolved problem. I think it's going to be years away from being solved in the home and in the factory.

1:38:30We make it, as you said, there's a lot of applications where you just need a static base or maybe you, you, you, you, Maybe some you need as a mobile base, and maybe you need one arm, maybe you need four arms. So we have a flexible platform where you can kind of mix and match depending on your needs. And we think that's the best ROI, the best performance. But humanoids are better at one use case. Do you know what it is? Raising money.

1:38:56I mean, if we're doing the home alone test at scale, we're going to need to massively revamp child labor laws. Because the five-year-old, the eight-year-old, they're going to be working 40 hours a week. Paying for college, just beating up humanoids in some designed house. This is important work. No, I'm sure they'll solve it some other way. Synthetic data. That's a good line. Anyway, that's a good zinger. Thank you so much for coming on the show. Thanks for having me on. Congratulations. Yeah, congrats to the whole team. Appreciate what you're doing. Glad you guys are doing what you're doing. And looking sharp.

1:39:27We'll talk to you soon. Thank you. Have a good rest of your day. That's fantastic. Let me tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds, online, in-store, on mobile, on social, on marketplaces, and now with AI agents. And our next guest is already in the waiting room. We have Nick Fleischer returning to the TVP Altrogone from Sandstone. He's the co-founder and CEO. How are you doing, Nick? Good to see you. Great to be back. Great to be back. How are you guys? Great to see you. We're doing great. Overnight success. What's going on?

1:39:56You raised some more money. Tell us about it. We raised some more money. Today, we announced a$30 million Series A led by Lightspeed. There we go. You're moving at light speed. Tell us what's going on. What's the traction? What's the unlock? What's the actual product doing for people day to day? Yeah. The product is legal relationship management, which means we centralize intake and knowledge for in-house legal teams so that they can actually deploy it in AI workflows that are useful. Since we launched about 150 days ago, So we've deployed to dozens of Fortune 500s and mid-market companies across industries like manufacturing, commerce, tech.

1:40:43And we've grown the business by 40x. The team has tripled since we last spoke end of January. And we're excited about bringing this tech to legal teams who are really in need. We like to say that we are playing against a legacy market, which is called contract lifecycle management. very boring tools where in-house teams historically store contracts, and that's about it. And they are burdened and gated by that piece of tech, and we want to help unlock them so they can actually use the great AI that's out there now. Your investors haven't exactly sat out the foundation model race. There's been a lot of thud around wrappers and application layer companies, all sorts of derogatory terms thrown around.

1:41:33At the same time, we just saw data from Cursor, Cognition, a couple other firms that appear to be in the direct path of the AI labs. They're all growing. They're accelerating. They're doing great. How did you frame that question during this round of pitches? Yeah, I mean, Claude has announced Claude for legal. OpenAI made a big hire. last week in the legal tech space. And so they definitely want to play. And I think most of where we see them playing is on quick legal questions, legal research, and redlining of documents. And we explicitly said from the start, we think redlining and marking up documents is going to be commoditized by the labs.

1:42:20And so we said, we want to actually build a workflow tool that's helpful for in-house teams. And so even the most forward-thinking tech companies are paying us, one, for opinions on what those workflows should look like and how to implement them. Two, the context layer to actually think about how does each legal decision and relationship map to everything else? And how do we retrieve that at the right moment so that we're pulling the proper context when I'm answering a question or looking at a document? And then I think the final one is building a tool that learns from your past legal decisions and can work for not just the stakeholders within your legal team, but also the folks in the business who are requesting work from legal.

1:43:00that's a lot more complex than any chatbot or self-built tool is going to be able to do. Has token maxing hit the legal community in any way? I would assume no because there's maybe a more finite amount of... A software company wakes up in the morning and there's so much software to build. We want to build as many individual features as we can. there's stuff to build internally and externally and all these things. Whereas an in-house legal team is not necessarily waking up and being like, we want to 100x the amount of... A tech company might go back and say, review every line of code in our code base for bugs.

1:43:45A law firm probably isn't going back and saying, review every document we've ever sent and do another red line on it when our client's not paying us. How have you been interpreting it, the token maxing question? I think generally we don't see that happening. We don't see it happening at scale, but you could see a world where people say, hey, can you redline this or review this agreement or answer this question in the 50 different ways that we potentially could and see how it plays out in a negotiation, right? Can we simulate what the outcome could be here? And so I think we see some people playing with the idea of using AI to do things that are maybe outside of the day-to-day.

1:44:23But I had a GC the other day on a demo tell me we are definitely not AI maxing today and we won't be doing it soon. And I think they are much more cautious and historically legal is seen as a cost center and a bottleneck. I think that's going to change a lot over the next couple months. But they are the last ones to get the ridiculous token limits and ability to go do those experiments. Yeah, that makes sense. How much effort are you putting into like harness development specifically these days? it feels like that was the unexpected win of the last like six months across cloud code codex cognition what they're doing like people at least a year ago or two years ago thought like the model will be everything everything's going to be in the model you're not gonna like this whole prompt engineering thing sort of evolved into harness engineering and it's born fruit for so many firms.

1:45:21Are you focused on that? Yeah. I mean, one of the things that we'll do with clients is we'll say, hey, take all the integrations that we have that you have connected through Sandstone and connect them with MCP and Nucleot and OpenAI and just see what, one, the quality is of the ability for it to retrieve context and answer your questions. And two, the cost because you're not necessarily routing to the right model for the given task. And so if you do that experiment, you're going to see 50x the results on the Sandstone side, And that happens with nearly every legal request that hits a legal team within a company.

1:45:54And so a lot of it is around how do we map data and context from other systems and actually go retrieve that, you know, when these questions are being asked or when we're reviewing documents. And then a lot of it is also just the, you know, underlying decisions around what models to be using when. A typical path in law, at least from my understanding, is usually like law school takes forever, a couple of years at a corporate law firm. Then you can make the jump to in-house counsel somewhere. Is AI going to lower the age requirement, the experience requirement for in-house counsel? Should we expect to see 10-person startups, 20-person startups say, yeah, let's get someone who just graduated.

1:46:38They passed the bar. They're a lawyer. But instead of them spending five years at a white-shoe law firm, let's have them jump over because we know they're going to be superpowered. Or how does the dynamic play out on that side? Potentially, I think we will see some of that. But the two pushbacks I would have are, one, you want to hire a GC or an in-house lawyer who has experience dealing with different types of counterparties so they can actually go up and have the negotiation and have a good backing and background when they come to those conversations. And I think, two, you still gain a lot from sort of the hustle and the grind of all of the work that you do in big law.

1:47:16And that will decrease a little bit, but I don't think it'll go away completely in the next five years. I do think we're going to see more non-lawyers on in-house legal teams. We have some clients who have hired engineers fully to their legal teams. And historically, legal has had this role called legal ops, which is essentially, if you think about rev ops on the revenue side, it is sort of the person who pulls everything together, builds the systems, manages the processes. These people are becoming more and more technical. And I think we're just going to see a lot more of them. Like you look at Mercury's legal team, I think it's in the 20 to 30 person legal team range.

1:47:50And they have several people doing legal ops. historically it would have been maybe one or at most two for a 30 person legal team. But we see people focusing on it more and more. That's very cool. What are you tracking on the consumer legal side? Like LegalZoom, this is sort of out of your wheelhouse, but I'm just sort of interested. Yeah, well, it's more interesting to ask you than somebody that's actually building. LegalZoom was like so magical. Initially, it was form filling and then we got Stripe Atlas. but is there more there? I mean, people are going to go to the models and demand legal advice one way or another.

1:48:27They're going to jailbreak them if they have to. But how does that market change? How do you think, what do you think is going to happen in that market? Is there anything interesting you see as changing? There's so much opportunity, right? Like those tools are historically very much just mapping you to the right person who can do the services and it should all get disrupted. And there's very little investment and focus there. And so like if I was starting another company today, like that's a really great market. and I think it's very specialized, right? You see some popping up on the consumer divorce and family law side and we'll see that in all the different areas.

1:48:59The other thing is just law is getting more complex and there's a lot more of it because of AI, right? All of our clients are telling us they're busier than ever because the people in the business are negotiating more, they're doing things with AI that they shouldn't be, they're creating more text and more words, right? The business users are token maxing And so as a result, there's just more legal work, right? And there's more regulation. And so you're going to see people wanting cheaper options for getting the answers to their questions and getting through cases. Yeah. Tyler Cowen had a funny take on this.

1:49:31That was like, even in the most aggressive ASI scenario, you're going to have tons and tons of government lawyers because we're going to want the humans to write the laws that govern the AI and whatnot. Anyway, thank you so much for taking the time to come chat with us. Fantastic progress. Congrats on the 40X. To the whole team. We're going to hold you to that the next time you come on. Better be at 40X again. Ideally accelerate. Yeah, yeah. Maybe. 400X in 150 days. There we go. It's calling the shot. Calling the shot. Love it. Have a great rest of your time. Thanks, guys. We'll talk to you soon.

1:50:04And I'll tell everyone about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI. Own the data platform that powers it. John. Yes. Did you know that Dwarkesh Patel's assistant is the brother of Leopold's fiance's boss? I heard that Dwarkesh Patel's hairstylist's uncle went to school with Demis at Deep Mind in preschool. And so I thought that was something that needed to be disclosed. I think you're thinking of the preschool teacher. The preschool teacher. That's right. Okay. Well, yeah. Newsflash. Silicon Valley is a small place. And in fact, this is so funny because it's like, actually, all the people in AI live in the same house.

1:50:54That's the real story here. It's not that there's some crazy assistant is the brother of the boss. It's a small house. And you're not in it. Anyway, it's very funny that somebody tried to drop this as a bombshell and wound up writing one of the most confusing lines. on X, but you know, it's not a we're still creating new sentence structures we are, we are, never before in the English language, it's something so confusing before we bring in our next guest, Chris Ninja One we have, Paul Graham said, I strive to make my writing unsummarizable in the sense that it has so little fluff left in it, that if you take any words out, as summaries by definition do, you lose a lot of interesting ideas, and so he says, well And they put why is this block?

1:51:45They just walked out the rest of the text But why is it 3d with a beautiful light gradient rip like flourishing off of it? Like I don't understand that it is like you could have just gone into iOS put a little black box over this or blur it or something They chose to put a 3d block there that I like with a blue light and the white light on the right It looks very aesthetic this feels all Graham fires back and says are you trying to prove my point or just doing it? accidentally if i'd written just that no one would have understood what i meant the only reason people can understand your version is that they can also see the original owned um i wonder i wonder is i strive to make my writing unsummarizable a banger do you think that one gets more pose more likes the original got 5.2k likes do you think i try i strive to make my writing unsummarizable gets we got 66 000 with this but that's because it's funny anyway we can debate that more in the future.

1:52:39Let's bring in our next guest. We have Chris from Ninja One, who's the president and co-founder. He's in the waiting room and now he's in the TV panel. How are you doing, Chris? Good to meet you. Great. How are you? Congratulations. It's massive news, but it is your first time on the show. So I'd love a little introduction on yourself and the company first, and then we can go into the news. Great. First, thanks for having me. I'm a big fan of the show. Thanks so much. It's an honor. And I'm local in La Cunada, so pretty close to where you guys are. I live in Pasadena. That's amazing. Yeah, I knew that.

1:53:08But I'm Chris Matarisi, founder of Ninja One. At Ninja, we believe the hardest problem in IT today is complexity and fragmentation at scale. As organizations are stitching together literally dozens of point solutions just to manage, protect, backup, and support their endpoints. And that fragmentation creates cost, risk, poor service, et cetera. Ninja solves this challenge by bringing all of these operations into one unified, modern, cloud-native platform. In short, we really just help our customers reduce spend, unify IT, and simplify work. That's our thesis. Okay. That makes a ton of sense. I think anyone who's been inside of a big organization has felt that.

1:53:54At the same time, point solutions are great sometimes. I'm wondering about how you How do you do the dance between, well, we're so baked into this, we're so locked into this, or only this point solution does this particular strategy or technique for us or solves this problem for us. We just can't rip it out. How do you integrate different point solutions without having people actually need to pull back from the software or the solutions that are providing real value? Yeah, I mean, well, first of all, we try to create our own solutions that are all unified together so we can replace all of these point solutions.

1:54:33The average Ninja customer replaces seven point solutions. And I think our whole key, we're a product-led company, our thesis is to build the best possible product. So we think we've built some of the best possible point solutions and unifying them together not only saves IT teams, hassle, complexity, having to manage all these solutions, But the nature of having multiple point solutions is there gaps between the solutions. And those gaps not only are inefficient, but they create vectors of attack and risk. So by unifying those, we eliminate those gaps. Now, if there are great point solutions that we feel like we don't have an answer to, we integrate them into our platform.

1:55:21So our IT teams that use Ninja have one pane of glass, fully integrated. Hopefully they've removed, you know, 10 point solutions. They're using Ninja to take care of all of their problems. And if there are one or two point solutions they love that, you know, they can't replace a Ninja, you know, we have integrations for a lot of them. You have some huge customers, Deloitte, Porsche, Hyundai, Carnival Cruise, all companies that people know, Kawasaki, Birkenstock. But at the same time, you have 40 ,000 organizations on board. So what does the long tail look like? Like what's the smallest customer you're working with?

1:55:56Like how are you positioning yourself in the market and winning deals? Yeah. I mean, people ask me who is Ninja's customer and I'd answer it's every business in the world literally is a potential customer. Wow. So for small companies, we sell through MSPs, which are managed service providers. They may manage, you know, six local accounting firms and two law firms and a pizza shop. and all the way up to the largest enterprise customers. We've got some very large Fortune 10 customers we can't name. So we can literally service everybody. Yeah. Talk about the sword. Oh, yeah, the sword. Game of Thrones fans.

1:56:45So for those of you who watch Game of Thrones, that's how Jon says the sword. Do they have flashbangs in Game of Thrones? I don't think so. We have flashbangs here on the show though. I'm a big video gamer too, so they've got flashbangs and video games. What games? What games? We play everything. Okay. I actually started a couple companies that were video game companies. No way. My co-founder is really big into Call of Duty, so we've got Call of Duty for this. They got flashbangs in Call of Duty. They also got smoke grenades in Call of Duty. Yeah, exactly. I'm doing more of the strategy games.

1:57:21Are you a Counter-Strike? Oh, you're more strategy games. Okay. Wait, wait. 4X or like Age of Empires or are we doing Hearts of Iron? You know, I've done Age of Empires, but even games like Hearthstone. Hearthstone's great. Yeah. Okay. Even my partner and I actually started playing Axis and Allies when we were kids. That's a great game. We always say Ninja is one big strategy game. It's just a high-stakes strategy game, but it's still fun. My business is so addicting. Is it getting more high stakes in the age of AI? Is it because of security risk, or is it a pure accelerant to your business? How have you been processing the last few years?

1:58:10It feels like it's a great place to be with 40 ,000 organizations, 140 countries, lots of opportunity. But what is the shape of the impact actually been? Yeah, one thing I'd say is the 40 ,000, that's 40 ,000 customers. I mentioned some of those customers are MSPs that service hundreds of customers. So we might have close to a million businesses using Ninja. Whoa, that's crazy. But as far as AI, we see AI as a real tailwind. That's been accelerating our growth and it's going to continue to accelerate our growth for three reasons. First, we monitor devices. And we've seen over the last several years device proliferation.

1:58:52And I think we're going to continue to see that. You know, it's laptops, computers, but it's smartwatches. It's Microsoft launched a smart badge and Microsoft launched a desktop device. And it's clearly leaking into everything. Even fast food restaurants. You know, it's not only the computers in the restaurants. It's not only the point of service equipment, the order boards, But now the fryers are endpoints. The grillers are endpoints. And we monitor all of those. And, you know, with AI, we're going to have robots and even more devices coming in. So the more devices, the better it is for us because that's more devices for us to manage.

1:59:33So, you know, that's one real tailwind. Secondly, we're incorporating AI into all of our products. So AI is making our product more efficient and more powerful and thus more valuable to our customers. And we're also coming up with a number of AI native products that we just released, a vulnerability product. We have a patch intelligence product. And then finally, and perhaps more importantly, and we've seen in the news even today, that AI is creating more vectors of attack. So more vulnerabilities are exposed, more things need to be monitored and managed because of those vulnerabilities, and they need to be patched quickly.

2:00:13And that makes our product even more valuable. Very cool. Where's the company based primarily? You said you're in L.A., but is the company distributed? I'm in L.A., but we're all over the world. Our largest offices are in Austin, Texas, Florida, and Berlin, Germany. but we've got offices in Australia, England, Singapore, Spain, Philippines, you know, I don't know, Indonesia, a bunch more. Global. I love it. I love it. Well, thanks so much for taking the time to come. Yeah, it's great to meet you, Chris. Thanks for coming on and congrats on a massive milestone. I'm sure you'll be back on very soon.

2:00:52I don't think we hit the gong. Tell us about the fundraisers. How much did you raise? So we raised$400 million.

2:01:02at a 12.3 billion company valuation. Fantastic. There we go. Doubling the valuation since February 2025. Thank you so much for taking the time to come chat with us. Not bad at all. Have a good rest of your day. Thank you for having me. We'll talk to you soon. Great hanging, Chris. Remarkable ability from Chris to be completely unfazed by the flashbang. and the smoke grenade just another day another day at work where should we go next Pat McAfee is negotiating a new deal that can pay him over$60 million a year for ESPN this is in The Athletic big news for one of our biggest role models ESPN and representatives for Pat McAfee are discussing an extension to his contract that would pay him more than$60 million per year, deal's not completed yet and if an agreement can be reached it could be A sliding scale based on his new responsibilities.

2:01:59McAfee, already omnipresent, could be on the air even more with a bigger role in NFL coverage. I'd love that. And last night he had a watch-along on actual TV for the next game. That's super cool. Yeah. And he's been brought into the college football ecosystem and been a really important voice there. He's 39, two years remaining on his current contract. and he's a college game day panelist and has various appearances on other programs. The makeup of the new deal would be similar in structure. ESPN's viewed the arrangement as a production contract and a separate talent agreement, differentiating it from the deals with most of the on-air personalities.

2:02:42Hosted a three-hour daily show with his crew, the Pat McAfee show. The first two hours are on ESPN. All three are on YouTube. Very interesting split there. Let's head over to Verizon CEO Dan Schulman. Talk about some of the advantages he's getting. He and Verizon are getting out of AI. Okay, let's see. In the last three months, we've been experimenting with agents that are replacing some of our customer service reps. And those agents, their customer satisfaction rate is 1 ,280 basis points better than what we had before. 1 ,200 % basis point increase. That's a 1 ,000 basis point lift. Think about that.

2:03:391 ,200 basis point lift. That's 12 % if you're putting it in normal terms. It really does sound way more than 12%. It sounds like 100 times as much because the number is 100 times bigger. But as a reminder, Dan Schulman, the CEO, was in the Wall Street Journal recently for preaching straight talk about AI and job losses. This was on April 19th. And he claimed that within the next two to five years, unemployment in America would be 20 to 30 percent. So what is that, 2 ,000 or 3 ,000 basis points? Yeah, 3 ,000 basis point unemployment rate. He warns that advancements in humanoid robots could upend the manual labor job still seen as safe today.

2:04:30It is notable that people outside of AI actually have the most aggressive near-term predictions around employment. Yeah, yeah. Yeah, well, I think a lot of that is that the actual idea of job losses and whatnot, that came out of like the most insidery tech, like the less wrong, the Dwarkesh Patel podcast, where people were having very mature conversations with a lot of caveats, a lot of like, oh, here's my probability distribution for if this happens, then this happens. And if we don't do anything about it, then that will happen. And in reality, there's a lot of things. Well, oh, okay, well, if the unemployment rate spikes, we'd cut interest rates, right?

2:05:16Or like we do like more federal jobs or, you know, there's a lot of things that could happen. But those quotes were taken out of context where it was like in isolation, if only the bad stuff happens and none of the good stuff that would mitigate it happens, you could land at. And then the original thing was Dario saying 50 % of early stage white collar work, which still puts you at less than 10 % unemployment rate. And then he revised that down to 10 % unemployment more broadly, which is still lower than this. And then people took it and were like, oh, well, if the smart guy who just put up a 10x annual run rate year said it, I should go a little bit further.

2:05:53I got a 10x that again. I got a 10x that again. And then you wind up with, we saw that iced coffee hour clip of someone saying, what was it, 80 % of jobs? I think he said 80%, 80%. I've heard 50 % multiple times. And then Luke Belmar, that influencer, said, oh, 100 % of jobs. And so, like, you just get this application. It's notable, though, that it's never their job. No, no. It's never their job. It's always everyone else. Because you need to be scared, and you need to come work for me. And get by the court. Quit your job now. Come work for me for half what you're making. One more post before we bring in our next guest.

2:06:27The Ethanator? Meredith says, it's so easy to spot AI writing because it always sounds like it was written by a fedora. That's silly. Let me tell you about Railway. Railway is the all-in-one intelligent cloud provider. Use your favorite agent to deploy web apps, servers, databases, and more, while Railway automatically takes care of scaling, monitoring, and security. See if the Heathinator has. And without further ado, let's bring in Alex Heath. He's the author of Sources, the Heathinator. Welcome to the show. How are you doing, Alex Heath? Always scooping. Not afraid to use AI. Do you ever throw on the fedora when you're going to push out?

2:06:57Oh, yes, that baked into the prompt. Don't talk like a fedora. It sounds great.

2:07:01Alex Heath:Don't talk like a fedora, guys. Although I am excited to deliver the first Fable newsletter later today or tomorrow. It's going today. But you had the leak or the scoop yesterday. You were the first person I saw in the media. Congrats. In sources we trust, gentlemen. But yeah, and I honestly use sources as an example where you could use all the AI in the world. You could say, like, I don't even touch my keyboard. I just sort of dictate to the AI the things that I know and it publishes. And it wouldn't make the product worse, right? Because I'm coming to you for facts, new information, plus your takes on how you think about something.

2:07:48And however it gets into Substack doesn't really matter to me. Anyway.

2:07:53Alex Heath:You're saying you don't like my beautiful pros. I love your pros. No, I think it's great. I go through the purge I've come every day. I'm just saying like, but that's not why I, you know, I subscribe because of like who you are and the access that you have and the insight. But I don't care like if it was you clacking the keys, you know. You know, it's funny you bring that up. I've been having some conversation with open claw pill folks recently, and they've been telling me to build something like it. I shouldn't maybe even be saying this in there. maybe I'm giving away some alpha, but build a kind of real-time MCP hook into my brain, essentially, to just deliver infinitely personalized, agentically delivered media and reporting.

2:08:34Alex Heath:What do you guys think about that? Wait, actually personalized? Well, it would be personalized by the person's claw, agent, what have you, right? Because the idea is the way that I decide to present a story is one way, but there may be things in like an hour interview that I don't even put in the story that may be hyper relevant, especially if it's delivered identically. And also that actually does, that does feel like the more modern instantiation of the sub newsletter list. Like you go to Bloomberg and you're like, I want the markets newsletter, the tech newsletter, but not the politics newsletter.

2:09:07And with an MCP server or some sort of AI intermediation, I could say like, give me the WWDC scoop, pass on whatever other scoop is less interesting to me. like you know all my preferences and then you can pump out a lot of different stuff and find very high delivery rates based on what I'm actually interested in at a particular time. Yeah.

2:09:29Alex Heath:I mean, I have a throughput problem of getting reporting into the world, right? And so it's a good problem to have, but what it means is like WWDC yesterday is a great example. I went to that tech talk that Craig Federighi and all the Apple execs did. I broke out some stuff that seemed interesting to the widest possible audience, but you know, there's a lot there. It was like an hour of stuff and like what if you just had direct you know ivy drip access you know for your agent to to my reporting in the rooms i mean yeah i don't know we'll see yeah yeah i mean i'm sure you'll be the one building time to be experimenting anyway uh on wwc what like what was your reaction what was your expectation going into this and then like what were the biggest announcements that stuck out to you specifically because i yeah i mean that's really what i'm coming for is i want i want your interpretation, even if you give me, even if you run an LLF to clean up the final language, I want your taste applied to this question.

2:10:20Alex Heath:I think they finally have a Siri that works. It's arguably what they should have shipped two years ago when they had that big trailer with, I think it was like people on an airplane and it was doing all this agentic stuff on the phone that was like, wow, it's crazy. Siri can do this. It didn't do that right. They had to basically apologized for it. They rebuilt the Siri stack to be, I think their word was expandable. So more modern, more AI native. And now, you know, actually this morning I was in Cupertino for a hands-on with the new Siri. So I got to see it in depth and ask questions about it.

2:10:53Alex Heath:And, you know, it is a step forward, but there's basic things about it that if you're, if you're claw-pilled or you're using codecs or in chat all day, you're still going to be like, eh, for example, it doesn't have persistent memory so it's not it kind of forgets everything um in each query uh they haven't built that yet i wouldn't have expected that hold on i wouldn't have expected that because it feels like that's a source of like memory is is not it like the number one feature that people benchmark the current models around they're like computer use mcp integrations and like can it can i can i set codex or cloud code to run for like nine hours and it comes back with something and really polished and just writes amazing code.

2:11:36The memory thing, it feels like personal super intelligence. It feels very Apple, and they have all of this. That's very surprising to hear. Anyway, what else, Duncan? It is.

2:11:45Alex Heath:I think they're moving very slow, and they're very worried about the privacy aspect of all this, which I don't know if people really care about this with regards to AI. They seem to think they do. I think we'll see. Maybe there will be a Cambridge Analytica moment for AI, and then that will wake everyone up. I don't know. They're seeming to think that will happen. There was a demo. You brought up computer. use where they were showing the new Siri and Apple intelligence powered by, you know, Gemini and all that stuff on a Mac, renaming folders and renaming files inside folders. And, you know, if you use computer use in Codex or Claude, Cowork, like you can do this.

2:12:18Alex Heath:It's very easy. You can abstract it away from a prompt, but you can't actually even do it via a prompt in Siri. You have to do it via the menu, right click, have Siri do something and, or do it through shortcuts which like i don't know if you guys use shortcuts i don't use shortcuts last shortcut i used was to remap siri to chat gpt actually like two years ago in january of 2023 yeah it would it would take whatever i said and fire it off into the api and yeah back to me it was sort of yeah i mean i feel like one of the challenges for apple is like software is moving more quickly than ever. And the Apple kind of ethos and approach is annual release and like, let's make everything perfect and all this stuff.

2:13:03And it just feels like a really, really tough challenge to be able to, and it's not to say that they need to be at the frontier of everything, right? Like all anyone's been asking for is just like a usable version of Siri. Like I haven't prompted Siri, I haven't gone to Siri for anything. in years. I use it to set timers. Set timers. That's the weather. That's a good use case. But even then, I'm so... But anyways. But getting better.

2:13:35Alex Heath:So the other big thing about this new Siri is they have really nerfed the ChatGPT partnership. That was a big thing a couple years ago, right? And you have to prompt it each time to send something to chat. You have to do it via text so there's not even like a software UI element of this anymore. So I was actually thinking about like meta narratives for WWDC this year. And one is that, you know, the Google partnership, obviously, which we could talk about. But the other is, I really think there's this, OpenAI is kind of like the new Facebook to Apple where they work together closely. If you guys remember when Steve Jobs and Mark Zuckerberg integrated Facebook and iOS, Facebook had, you know, a bunch of its, you know, press challenges, privacy challenges, et cetera.

2:14:18Alex Heath:And then they just kind of drifted apart and then it became this like messaging war and you started to see that bubble up yesterday with Craig saying stuff about like, we're not going to have ads or just these subtle hints that they have like ideologically drift away from OpenAI and ChatGPT and that partnership is not going well. That was another big thing that stood out. So on the actual integration... And that's somewhat, I mean, somewhat to be expected, right? Like you can't like hire... Maybe. You can't hire like Johnny and say we're going to create a bunch of devices and poach a bunch of people and then expect it to all be good.

2:14:56And in so many ways, it makes sense for Google and Apple. Because Google and Apple have been working together perfectly for years at the search partnership. And this feels like a search partnership. The enemy is my friend kind of thing.

2:15:08Alex Heath:I think so. They know Google well. And a bunch of Google people have come into Apple to reboot the AI strategy. And the whole point of that, very unique, which Apple's never done this, by the way, an on-the-record post-keynote thing with their execs. It was very unique. We got in this tiny theater, got to ask Craig and the execs questions. He did this, I called it AI, in the newsletter, I called it AI 101. He had this almost whiteboard-like graphic where he was explaining AI stacks, how they work normally, how Apple's works, and really doing a lot to try to show that, yes, they're distilling on Google, but they really control everything.

2:15:44Alex Heath:it's insanely post-trained on everything Apple wants it's not going to give the same kind of responses that Gemini would in a Google surface and I think that was the point of that entire thing was to just say like yes we're working with Google on AI but we're not actually using like the Gemini product I wonder if it's going to have its own stylistic flourish we've got to do a salami bench where you tell Siri people if you tell Gemini that you've had a kilo of salami it will tell you to dial emergency services so 999 you tried this personally jordy no no but there's been uh i some some chatter about yeah i wonder if it'll have its own turn of phrase like it's not this it's that or or you're absolutely right there's like all these different phrases that each different model sort of like leaves its touches on what about uh there's only a certain set of devices that the new siri is going to work for i think there's it's anything that apple intelligence runs on right now and then and then the latest models can do or the latest phones with 12 gigs of ram can do the uh like the highest tier and then beyond that you go into the apple private cloud which is nvidia gpus in google cloud platform which is like their own thing have you dug into like where in google cloud it's going because they just did that deal with spacex for colossus and that feels like and that feels like uh not perfectly in line with like apple's commitment to environmental uh considerations necessarily i think that's going to be a way slower ramp than people realize um so for to start the new series only in english it's not in china in the eu okay and they're doing a beta invite wait list approach oh this makes so much sense i think through the year because i was looking at like a billion users if a billion users are even just asking for set a timer and it's doing inference like that's a ton of tokens and we've seen the ramp at google as they've stuffed everything everywhere like yeah they're just gonna wind up with a big token budget at some point but it sounds like it's a wall crawl run strategy i think it's a slow ramp they were showing us some of the new photo stuff photo retouching removing things in photos and it would take it like 25 seconds to you know change the backdrop of an image so they're doing cloud inference but Again, it was like even in the demo in Apple Park yesterday on launch day, it was like slow and there were bugs because they were like, yeah, our servers are melting.

2:18:06Alex Heath:We're getting way more interest in this than we thought. So I think they're going to take a very slow approach. But that was actually the number one question that people were asking was, what are the inference costs of this? How is Apple doing this? And like how big are they actually going with GCP? But I think it's going to be a slow ramp. Yeah, because, I mean, if you look at the, like, leaked financials from the AI labs, like, we're not in this paradigm of, like, training is the only cost. Like, inference does have cost. It does CapEx associated with it. And Apple's been telling a very beautiful story of, like, hey, we're sort of an AI winner without any of the CapEx.

2:18:43But if you start offering inference, you're going to have a Google Cloud bill. You're going to need data centers. You're going to need clean data centers that take longer to build. and all of that is going to show up at some point. But I think the hope is that they're just not jumping the gun. They're not stretching themselves. They have the cash. They have access to the debt market. What's the latest on liquid glass? Oh, yeah. Liquid glass.

2:19:03Alex Heath:You know, they barely talked about it. And they didn't talk about the Vision Pro really either, which is where you see liquid glass kind of at its fullest. That product is certainly on the backdrop. I know. I'm the biggest user. Oh, you are? I love the Vision Pro. I watch movies in it. Do you use it on a plane? Yeah. But mostly, like, I'm just... Wow, you're that guy. I'm that guy, yeah. No, I love... It is the anti-brain rot device for me. I put it on, and I'm not on my phone, and I just watch a movie. I watch Citizen Kane. It's a movie that would be like... You don't want to watch Citizen Kane on your phone.

2:19:38You don't want to watch it. And even if you watch it on the TV, you're going to get up, go get popcorn, or, like, check your phone. Somebody's going to text you. He's laughing at you. Because it's a slower movie. You seriously watch Citizen Kane on your Vision Pro? From start to finish on my Apple Vision Pro. lawrence of arabia lawrence of arabia it's a three-hour movie it's a long movie it's hard to make the time to sit down do you mind if we pull up an image of you on a plane using a vision pro do you actually have one ben has one wait really no way no way um yes yeah let's pull it up yeah you can pull this up this is hilarious when did this happen this must have been a year ago yeah yeah were you in the ad at the apple ad it should have been i'm a believer put me in the pull it up boys there we go there we go oh my god locked in i'm that guy i'm not boys are we even in business in this like what does this see uh that could that could very well be uh economy

2:20:29Alex Heath:premium i think it's years economy premium okay oh is that this is years ago i spent my last dollar on the vision pro okay okay i don't know what's going on this photo this is a long time ago this is fun that's incredible uh anyway they did launch a feature for liquid glass you can turn it off now there's a slider that's basically off switch, which is very funny. But, you know, listen to your users, I suppose. Yeah, it took a backseat. I mean, everything was all Siri. I've actually never seen a keynote so focused on one product. Apple usually does this state of the union across all the platforms.

2:21:00Alex Heath:And like you get 15 minutes on CarPlay, you get 15 minutes on Vision Pro, all that stuff. It was basically an hour of Siri. Have you been tracking any backlash to spatial reframing spatial that's what it's called right like it's good because i saw that up close uh in my briefing yeah oh people it's like we're booing there or something no no no i didn't there was no booze i'm saying i was in a briefing where like a product manager was showing it to us and letting us play with it yeah it's pretty cool i mean yeah i mean apple is like they said like we're not going to let you put a dragon in a photo like we want to try to stay real to the essence of a photo but we know that there are ways that a photo could look better with ai and whether that's reframing or whatever but yeah they're not going to do you know mid-journey level gemini level nano banana level stuff yeah uh but it's it is this whole you know idea of like what is the for the dragon community yeah yeah yeah if you're in if you're into live action role playing larping or the renaissance fair like you're an android user back yeah you're an android user probably But yeah, I mean, it is interesting that like there's a backlash to AI.

2:22:10Apple was like they missed AI. But like the silver lining there is that everyone sort of sees them as like they're holding the ground. They're saying no to putting AI everywhere. And it's like, actually, they maybe just didn't have the people in the right places at the time. Like they totally would have loved to do it. They actually acquired an AI company in 2011 called Siri for hundreds of millions of dollars. They were ready to go. And they just sort of like missed on the rollout. But now I did see a small bit of backlash to the spatial reframing saying that I know Apple as the camera company.

2:22:42What you see is what you get. The images aren't over-processed. And so this is like they're leaning into AI too much. But I don't think it'll go anywhere. I think it's pretty moderate.

2:22:52Alex Heath:You can already remove things in the Photos app with the retouch tool or whatever. Can you? Have you tried to remove something from the image with the iOS 26? Clearly you have and have not been able to. so i guess maybe i'm it it looks like uh it looks like a content aware fill attempt from like a few years ago it is not at the level of any of the frontier ai image models well the new version is flawless though it is good so they fixed it it's not flawless they showed us doing it to a boy who was covered like his leg was partially covered and they took something away and it made his leg like super long like really awkwardly long maybe they're promoting height maxing leg extension surgery is very popular these days you never know is it subtle subtle messaging well speaking of that uh i wouldn't want kids getting body dysmorphia from editing their photos on a on an iphone improperly inappropriately uh what did you think of all the privacy parental control talk it felt like that had a remarkable amount of air time in a relatively short keynote why do you think they're doing that what was the outcome how was it received what do you think comes from.

2:23:58Alex Heath:Yeah, there was this rumor in the industry, a lot of the bigger apps in the app store, I was hearing it from their executive last year, that Apple was going around and suggesting that it was going to charge, like basically create a new service line to verify it. So basically, like have these developers somehow pay to be a part of this system. I don't think that ever materialized, or at least they haven't announced it. But I mean, you see the regulation on this topic and how it's heating up everywhere in every big country. And it was kind of funny, like the day of the keynote, every year there's protesters outside of Apple Park around the keynote.

2:24:35Alex Heath:One year it was around the actor's strike and it was like a services related thing. One year was around Tim Cook's comp too, I think. Yeah, one year was around that. This year was around kids' safety. So there was these child safety advocates that were out there with their bullhorns saying this stuff. And then Apple went ahead and did what I would consider the fullest suite of kids' safety features of any platform on that very day, which I think kind of shows that maybe it's just an issue they see really bubbling up and becoming really huge and trickling down from meta and the social platforms and those huge trials that we've seen in recent months to the platform layer.

2:25:12Alex Heath:And all the apps will say, oh, we want Apple to verify the age because it's a lot easier than all of us doing it on our own and not having a shared consensus. So I think the industry is actually loving this. And it depends on how much if Apple's going to charge or not. But I don't think they are, at least in what they announced. But it seems like a win-win. I mean, the device should be verifying age. It's an obvious thing they can do. They already have the secure enclave. They can store it safely. Why would they not? So I don't know. I actually really thought that was a good move on their part.

2:25:45Alex Heath:And maybe they are just trying to get ahead of things too. Kids, get ready to learn Linux if you want to browse the web without your parents' approval. That's always been the case. I think this is good. I think it's good to have the parental controls, and then the kids will pack their way around. Did they talk about ads at all besides that small shot that they took? Because they're bringing ads to Apple Maps. They have ads. You've got to imagine that they'll put ads in this thing eventually. Why not? The idea that they really can't take the stance that ads are universally bad or they would have to self-identify as a bad actor.

2:26:25Alex Heath:I mean, when you look at the new Siri app, right, which I looked at this morning and played with, it is a very, very bare bones, I would say, almost knockoff of ChatGPT. So a lot of surface area for ads. A lot of surface area for things. I mean, there's barely anything in there. Sure. I don't think they'll do it anytime soon. The idea like they're putting ads in maps, so you will search something and it will pop up. The first result will be for somebody that paid to be there and then to be like, oh, well, we would never put ads in a web search experience. It just doesn't really make sense. Also, working with Google, the largest advertising company on earth, to help supply your AI strategy.

2:27:09Yeah, I mean, one of my initial guesses that for like the longer term is that eventually the dollar flow would flip. So right now, Google pays Apple for the default search in Safari to be Google because they monetize Google searches with ads. They give them a percentage of revenue.

2:27:30Alex Heath:Yes. Very important distinction. Yes, and it's huge. And so my prediction was that eventually Siri would be so integrated with Gemini that there would be ads in the Gemini stream and Gemini tokens would be monetized because the cost would drop and the monetization would increase. And eventually Google would be paying Apple for the right to be in those query streams that then are monetizable with links or affiliate links or ads or whatever they want to do. but I think all of the big tech companies are being walk, crawl, run on this. So maybe it's - I thought that too, John, but I don't think that's the strategy at all.

2:28:13Alex Heath:I think Apple sees, I think what the smartest thing I heard, I think it was Dave Morin. He told me I could quote him. Shout out Dave Morin. I saw him after the keynote was that, yeah, shout out Dave, was that Siri is the harness. So Apple's OS and Siri are the harness and they've built this flexible new infrastructure underneath that could be a future model. They were hinting, but not saying explicitly in all my briefings, that there will be future models that you can choose from or plug into this. And Google right now is their best partner for a myriad of reasons. We've talked about some of them.

2:28:48Alex Heath:But they want to do all the post-training. They want to do the reinforcement learning. They want to make it appley. And they have their foundational model strategy, and they're not at the frontier, but I think they want to be eventually and they're getting that flywheel going. And I think this is potentially just a short-term thing to them owning their destiny on the AI side more. I think they feel like they finally have the pieces in place to get there. It's still going to take probably a couple of years as we see with meta, like rebooting a lab is no small feat. You have to get the flywheel going.

2:29:18Alex Heath:I think they're on that path now and they feel good about it. But I thought what you said was correct, right? That it was going to be just Gemini tokens that they monetize like search. And I don't think it's going that direction at all, actually. Would you expect Apple to make an AI-related acquisition at north of a billion dollars in the next year? Are you looking at thinking machines a year ago? You know, I thought they would have already done that by now. They looked at perplexity. They looked at thinking machines. If they got this far, what do they need for? Yeah, so they have this web knowledge graph now that I think was what the perplexity acquisition would have unlocked for them.

2:29:55Alex Heath:So they already went and did that. so I don't know what value perplexity brings them now. I don't know what Thinking Machine's strategy, frankly, even is for it to make sense for Apple, much less what Thinking Machine's strategy is. Yeah, I guess. I just don't get it. I think they could make an acquisition, but it would be talent-based. I don't think there's anything that's going to be fully resetting the strategy or foundational like an Oculus or something like that. I think that moment's kind of passed. It feels like all these companies are huge and mature and you're not going to buy Anthropic.

2:30:28Alex Heath:You know, even if you're Apple, you can't afford it and they wouldn't sell. So you have to go out on your own. Yeah. Yeah. Makes sense. Yeah. And if you look at the history, it's like Beats was like, I think their biggest acquisition ever, but it was like pretty conservative from a revenue standpoint. And what did that do? It got them some like Dr. Dre ads? Well, yeah, but it's just like, they just, their style is like, let's buy, you know, let's do like, like effectively aqua hires, get really great people on board. But the issue is that all the great teams get marked up so quickly into the billions now that they get kind of, they're no longer that great of candidates for aqua hires because the investors on board are going to say like, yeah, I can give you guys$200 million to take a big swing, just take a big swing.

2:31:14So how open do you think, to close it out, how open do you think the Siri ecosystem will be over the next year? because I'm optimistic that the base Siri model will be good on launch. But even if I put aside the ChatGPT relationship, I imagine that Gemini is going to launch three new models that are better in Q1, Q2, Q3. They're going to be launching much more rapidly. And if I just want to switch over the default model to something that's more frontier, I saw in the Siri app I could select from the drop-down. It was unclear if that was a default or something that I have to do per query. And then there was a big question in my mind about, will I be able to effectively remap the side button to just say, hey, Siri AI fine-tuned on Gemini 3.1 or 3.5 or whatever, that's great, but 4.0 just came out from Google and I want to use that when I hit the button.

2:32:18And do you think that'll be an option?

2:32:21Alex Heath:I think they want to get there to some degree, but the question is how much this harness needs to be custom fitted for a specific model and how plug and play these things are. I mean, we just saw with Fable today, right? Like this is kind of a new paradigm in a model. And would that work in a harness like Siri as it exists today? Maybe the future of these models is actually being built in sync with the harness that they're meant to exist in. So I don't know if models will exist like search engines in the sense of plug and play like that. The products are just so integrated and models are changing the way we think about operating systems with agents.

2:32:57Alex Heath:So could you, maybe to some degree, I think they will do something like a half measure there. But I don't think it's going to be quite as full featured as you think. But you did kind of hit the nail on the head, which we can end on this. The new Siri, it's up to the developer to opt into this new Siri in the sense of it can see everything on the screen if it's basic text and photos. but it can't understand a UI unless the developer opts in, which means you're basically letting Siri take all your data. If you're Canva, it's like you're giving it up to Siri. And it lives on device and they say it's private and Apple won't train on it, but you're still kind of fundamentally doing that, right?

2:33:31Alex Heath:And so that's going to be the big question is, will the metas of the world, will the open AIs, the anthropics open their apps up to Siri of their own accord because the users demand it or they think it's a good business strategy? but then you're giving that data, that valuable UI to Siri. So I don't know. That's going to be the next thing to watch, I think, in the coming months. Very fun. Well, good time to be a subscriber of Sources. So go subscribe. That's right. I haven't already. It's always a great time, guys. But it's the best time ever every day. Love catching up with you, Alex. Always great.

2:34:03Great to see you a couple weeks ago. Enjoy the West. Safe travels. We'll talk to you soon. Have a good day. Take care. Goodbye. Well, whether you're bullish on Apple or bearish of Apple, go express it on public.com, investing for those who take it seriously. They got stocks, options, bonds, crypto, treasuries, and more with great customer service. And our next guest is already in the waiting room. We have Rob Schroeder from Vinyl Equity. He's the co-founder and CEO. Rob, how are you doing? Welcome to the show. Hey, guys. Thanks for having me. I appreciate it. Thanks for hopping on. I appreciate that.

2:34:39First time on the show, why don't you kick us off with an introduction on yourself and the company? Yeah, so my name is Rob Skoder. I am the founder and CEO of Vinyl Equity. Vinyl Equity is a transfer agent for public companies or soon-to-be public companies. We've been around since 2022, and we just announced our Series A raise today. How much? Get that gong. How much did you raise? $20 million. We're now backed by Jump Cow. Fantastic. Okay, explain transfer agents like I'm five years old. Yeah, that's a good question. Most people have no idea. So you could think of a transfer agent as doing for the public markets what Carta has done for the private markets.

2:35:27And so when a company goes public, they have to have what's called a master security file. And it is the basis of their equity ownership. And so transfer agents for a long time have maintained these records. You can think all the way back to the beginning of Wall Street. You used to have somebody who would take a paper stock certificate or trade on Wall Street, and they'd walk all the way down to the transfer agent to record that transaction on their ledger. It's interesting because I put my whole life savings in SpaceX, and the guy said we didn't need to use a transfer agent. And then I saw him on Instagram.

2:36:01He's in Miami, and then I think he was in South America or something. Yeah, and the stock certificates look like Monopoly, paper, dollar. I'm realizing now I might have needed a transformation. They should have called us. But how have they modernized to date? We're no longer walking paper stock certificates around the trading floor. Historically, they haven't. Yeah, long and short of it. So I actually started the business after running portfolio operations at AngelList. and we did, I think, 200-plus IPOs in the couple of years that I was there out of the portfolio, and every time we worked for the transfer agent, it just felt like we were sending paper around all around the country, just trying to get our shares into a brokerage account.

2:36:54So tons of market exposure post-lockup, and as you look at the market today, it has changed drastically in the last six months. I mean, even just in the last six months. You've got tokenization, you've got these massive IPOs that have cap tables that are substantially more complex than they've ever been before. And user expectations have shifted. You guys have talked about it, you're buying SpaceX shares down in Miami from people on the street. But you're also expecting to get those shares instantaneously. and you know we live in a world today where you can get packages delivered in less than a day and yet from the transfer agent to your brokerage account by and large you can't get your shares delivered in 24 hours and so vinyl was built to solve that problem effectively quick question the name why vinyl transfer agents keep records oh okay yeah it's been a lot vinyl's booming We spent a lot of time trying to figure that out.

2:37:53Yeah, that's right. Yeah, we're back, baby. Yeah, so with, yeah, this SpaceX IPO is insane also just because of all the layers. There actually are, ironically, a lot of unwind. And part of why solving this is so important is like, you know, the way markets feel like they're, at least in this whatever part of the cycle we're in right now, is such violent movement. like 24 hour delay could meaningfully impact, meaningfully impact your, your returns. How, how are you guys like, what is your go to market look like at this point? Like where, where do you guys kind of like take the, take the baton? I don't know if that's, that's the right way to think about it.

2:38:38We generally come on board with clients as they're getting ready to go public. So they're thinking about their IPO in the context of an IPO. And so if they're making a switch from a cap table administrator to a plans administrator, we think that's a really good time to align. But there are companies, depending on their readiness, that will bring on a transfer agent two months before an IPO. We help facilitate the transfer of that information seamlessly. We do use APIs. We are an API native business. and so it is fairly seamless and straightforward for us to ingest those records. When we get our company stood up, we actually give them a staging environment so they can go and test all of the data and make sure it's correct.

2:39:24And that's an anomaly in the world that we live in. And so for a very long time, this has been a just-in-time industry that's operated on paper, that's operated very reactively. and we want to pull all of these motions forward so that companies can go into the public markets with certainty. I think what you guys are referring to is the liquidity process and the transfer agents involved in the liquidity process. I talked to a family office the other day who told me that on average they see shares show up post-lockup nine days after the lockup is lifted. And those shares will often see 10 % delta and the pricing from when the lockup was lifted.

2:40:09And so our ambition is to make a more fluid capital markets from the point of issuance to delivery. And by being proactive and having more nimble systems, we're able to do that. A little bit of a somewhat related question. Bill Gurley hit the timeline earlier last night, 8 p.m. He said, if someone is telling you you are subject to a lockup agreement and your firm signed nothing with the lead underwriter. They are either lying or misinformed. Lockups are a silly contract with the underwriter, primarily to help engineer a secondary. Prove me wrong, all correct. He turned off reply, so you can't prove him wrong necessarily.

2:40:50But he said, also, it's never been enforced. The underwriting bank would have to sue for breach of contract. He asked AI, the best example of lockup breach. Couldn't find one. Try it yourself. Find a counterpoint. Please share. I want, can you explain what he's talking about? Do you have any idea what he's getting at? Is there any truth to this or do you want to push back and prove him wrong? So, so lockups are, are, are agreed on with underwriters for the purposes of smoothing out market entry and smoothing out volatility for all intents and purposes. And so, you know, as he refers to it is sort of an abstract or created construct to the A's, right?

2:41:29It is agreed on with the company as a way to manage the inflows and outflows of securities into the markets. The vast majority of companies don't see the kind of demand that we're going to see and probably the kind of volatility that we're going to see over the course of the next several months. And so you see some creative constructs that have been proposed and the IPO that we're going to see on Friday and then presumably some of the other IPOs come down the pipe. And then also the company is signing a contract with the underwriter, the bank, and the company probably does have pretty solid legal recourse over the employee stock option pool, maybe the founders or current executives.

2:42:20But what he's talking about is being an early stage venture capital investor who maybe didn't sign many contracts that relate anything to lockups. And so he doesn't necessarily need to sign on. Of course, a good underwriter might go around and say, wait a minute, there's a VC who's heading for the exit, who owns 20%. Let's bake that in, get them to sign a contract. But he's saying, if I didn't sign anything, I'm selling on day one, I guess, something like that. Yeah, by and large, you're going to find that liquidity is pretty tightly held or gated by the transfer agents and the brokerage. And so when those lockups are agreed to, they tend to get managed pretty tightly.

2:43:03Well, thanks for helping break it down. I know it's a hairy debate, but it helps contextualize these things. I really appreciate it. Jordan, anything else? Thank you for modernizing investment capital flows. Thank you for everything. It's truly important work. Thank you. Yeah, yeah. It's an area that I think nobody's really thought about for the last, I don't know, forever. and we're excited to be thinking about it here. So hopefully everyone will get their shares more effectively. Yeah, good problem for the Angelus Mafia. I'm sure those 200 IPOs that you went through were stressful. Well, thank you so much for coming on the show.

2:43:41We'll talk to you soon and congratulations. Yeah, great to hang out. Congrats to the team. Appreciate you guys having us. Goodbye. What else is going on in the timeline today? the system prompt already leaked for siri is this real hard to tell if it's real siri but you know what is real what is real a colorado man has been arrested alongside his passenger for allegedly driving more than 130 miles an hour through northern colorado he was doing a cannonball run run john uh and i wanted i'm just gonna assume that this is someone in the audience they're probably not watching right now because they are in prison.

2:44:22But yeah, Cannonball is not for the faint of heart. It is crazy that people are still going for the Cannonball record post-COVID because all the records were smashed. So if you're not familiar with Cannonball, it's a coast-to-coast race. You race from the Red Ball Garage in New York City to the Portofino Hotel in La Jolla, I think, in Southern California. And it takes something like originally like days and days and days. People did on motorcycles. People have done it in all sorts of different things, electric cars, self-driving cars. But the true record was, you know, sort of no limits. People go as fast as they can, very dangerous, very illegal.

2:45:04You have to wait for the statute of limitations to lift before you share your run or share the video or else you'll be held accountable for what you did. Very controversial in the car community, too. Some people love it. Some people don't think it's safe and for good reason. It's very dangerous. But a lot of people bring iPads and Waze and different maps and different radar detectors and all sorts of things. Some cannonball record holders actually had friends who piloted planes that flew in front of their car. They're going 200 miles an hour. Planes going 250 and looking for cops ahead of them.

2:45:41So that was the level of detail. There's multiple stopping points. They plan out the gas. They have a fuel tank in the back of fuel cell that holds an extra 50 gallons of gas or something like that. So you can stop less to stop a three stop. These are the techniques. I'm roughly correct here, but the during covid, no one was driving. No one was on the no one was on the roads. And this was before people were like, oh, well, I can't go to a crowded building, but I can go camping. So I will get on the road. But even the trucks were off the road. and the trucks are the slowest part because you get stuck behind a truck.

2:46:15You might not be able to get around. And so all the cannonball records were smashed. Ed Bolian from VinWiki participated and did very well. I think he held the record for a while. Maybe he still does. But to go after it today in the modern era where technology is even better, the cops have better radar than ever. There's cameras and all sorts of things. Truly one of the boldest things you can do. So good luck to him on his legal fight. Maybe he'll be using a legal AI tool to get himself out of jail. I don't know. Harvey, don't make mistakes. Maybe, maybe. Anything else? Well, folks, we will be back tomorrow.

2:46:53Tomorrow. For a massive show. We got to talk about the Trojan horse for the Odyssey, the popcorn bucket, the TBPN effect. We have a giant horse, which might be a Trojan horse. We've never opened that thing up. We don't know what's inside. That is true. Can you imagine? but the Odyssey has released a limited edition Trojan horse popcorn bucket to commemorate the Odyssey you can get it people were fans of the sandworm popcorn bucket this doesn't feel like it came from the mind of Christopher Nolan this feels like some producer some some money man came up with this I I like it I think it actually looks cool I don't know how practical it is to eat your popcorn out of this Trojan horse, but it is very fun.

2:47:37And I liked the popcorns hidden inside the horse. I'll be picking one that one of these up production team. How is the process of obtaining tickets to the Odyssey? I've been seeing that it's very stressful. Hasn't been going well. We got to secure it. We got some. You got some. Where are you going? Where are we going? You're going to Chinese theater? Chinese theater. IMAX. That's a good one. You guys got tickets for like the whole team, right? Because like, you know, production team. Oh, brutal. Wow. Wow. Okay, I see. A little division here. Okay, we'll solve it. We'll solve it. No, wait a minute.

2:48:11Brutal. We got to get everyone out to the Odyssey. You should get your friends out to the Odyssey. Call everyone. Buy a bunch of tickets. They're refundable on Fandango if you do it that way. And then get 20 tickets. Text everyone you know who's in town. Tell them, be here at this time. You'll get some churn. Not everyone will show up. You refund those tickets. then you charge everyone after the fact. It's a good strategy for having fun with some friends. Touching grass, reminding yourself of what's real. It's important. Stay sane out there. Leave us five stars on Apple Podcasts and Spotify. It's time for our newsletter, tbf.com.

2:48:49See you tomorrow. Goodbye.