SpaceX/Cursor Deal, Images 2.0 Reactions, Fake Bear Attack | Anil Chakravarthy, Naveen Gavini, Avlok Kohli & Ankur Nagpal, Joel Edwards, Renen Hallak, Darian Shirazi

10:52Avlok Kohli:Correct. And the big, big thing is that the Grok brand has been through so much. There was an idea being thrown around last year that it had been banned in more workplaces than it had been adopted. So more people had said, you cannot use this product in the workplace than we're actually using it in the workplace. Cursor's a great brand. It's a brand that I think can probably expand outside of coding, say in the announcement, to create the world's best coding and knowledge work AI. So we're at a point right now where everyone is building the exact same thing. We got everyone on Earth building a box that you can tell to do things.

11:37Anil Chakravarthy:Oh, so you just want one company to do it all? Communist?

11:41Avlok Kohli:No, no, I don't. I think the competition is great. You want the government to have one. It's bringing out the best. It's bringing out the best. It is. But I think Cursor's like... It's a knockout, dragout fight. Cursor's always had a great brand. I saw someone else...

11:52Anil Chakravarthy:Wait, SPF replied to SpaceX's tweet. It's like, that's me.

11:57Ankur Nagpal:Pull up the first post here and then scroll down. The SpaceX and Cursor are now working closely. it should be like the first one in the timeline SpaceX and cursor, SpaceX AI is what they're calling it now is it not up there? I can find it and send it in let me find this post and send it into the production chat

12:23Avlok Kohli:Tuxedo Sam says do you think they'll make Elon take his shoes off at the cursor office?

12:31Ankur Nagpal:Richard Wu has some context There you go.

12:33Anil Chakravarthy:Look, SBF is somehow on Twitter. How can you be on Twitter from jail?

12:38Avlok Kohli:All these people in jail on X, I don't understand. No, it says it in his bio. It says it in his bio. It's management. It says we can use BOP approved phone calls, emails to tell others what to post on our socials. I think it would be a free speech violation to say, like, if you are in jail, you cannot distribute information in the outside world in any capacity. but it feels like this was maybe some legislation that was created pre-internet because it seems like having like a ghostwriter on your account is a really good way to like start you know kind of like influencing public perception right i think this is elizabeth holmes has had enough kind of moments where it was like she you know her proxy posted something that was mildly kind of entertaining and over time that just wears on people.

13:28Avlok Kohli:And eventually people are like, you know, maybe she isn't so bad after all, right? So.

13:34Ankur Nagpal:Okay, well, Richard Wu broke down the structure of the deal. He says the structure of the deal is pretty interesting here. I think what's happening is, one, XAI is having trouble training a state-of-the-art coding model, hence co-founder departures. They might have a bunch of idle GPUs. Cursor doesn't have capital to blow on a$5 billion training run to compete with Codex and Claude. XAI 3, XAI says to Cursor, use all the GPUs you want at cost and get to a state-of-the-art coding model as long as we have the option to buy you. 4, Cursor also gets a free option. Train a model better than Opus and get bought out for$60 billion or get$10 billion that pays for all the GPUs you rented.

14:18Ankur Nagpal:Win-win. And I was reflecting on Michael Truel's, I mean, fantastic entrepreneur, uh remarkably young uh but his aesthetic is is very much in like the stripe world i imagine

14:32Anil Chakravarthy:because i feel like the one really cinematic podcast he's done is that uh one with was it patrick collison is that the one i'm thinking of and it's like them at the coffee shop and it's so welcoming and warming it's like that is that is welcome in every corporate entity in america right

14:47Ankur Nagpal:like and to your point about like you know oh like if your corporation is like oh what's going on with Elon and politics, blah, blah, blah. Do we really want Grok running around with Mecca and Annie and all this crazy stuff? But if it's just like Michael Truel from Cursor, he's so reassuring. Like if I'm like Coke or GE or Ford, I'm like, yeah, of course. Like we love Cursor. That's great. Aesthetics do matter. Vibes do matter. And I think it makes a lot of sense.

15:13Avlok Kohli:Matt Slotnick says he loves math. Okay, what is the math here? He's talking about Julian. So Julian says at a 30X revenue multiple At first glance, it appears that SpaceX is overpaying for Cursor. However, the deal is wildly accretive for SpaceX, given it is expected to go public at more than 100x revenue. A 70-term multiple expansion on$2 billion of revenue adds up. Wow. Yeah.

15:38Ankur Nagpal:This is a notorious thing in corporate M &A, and occasionally it's gone poorly. But there is like an old adage that if you can acquire earnings at a lower earnings multiple and maintain your current multiple, that is accretive to the stock. And so there's a whole philosophy around that. But the smart investors should price each earning stream differently. And having like a monopoly on launch capacity should be a higher multiple than a super competitive oligopolistic coding market, if that's what this winds up being. It's a tricky, tricky situation.

16:13Avlok Kohli:Will Brown. Wow, Cursor just hit a$10 billion run rate.

16:16Ankur Nagpal:They did. It's guaranteed, right? There's no way that they won't make$10 billion this year. That's not even a run rate. That's just like it's locked in. It's more than contracted.

16:24Avlok Kohli:I don't know. Yeah, and it's very meaningful because it is effectively an exit and that it's by itself. They'll be in a position to actually reinvest that. That's like a nice little Neolab kind of Series A, basically.

16:43Ankur Nagpal:But Ken says no. You've got to multiply that$10 billion by 12 because in that month where they get the$10 billion check from SpaceX, it will be$120 billion. They will be the largest AI company in the world that month. And then they just have to figure out. They don't collect until end of year if they're still independent. Otherwise, it's more than$25 billion. Okay. Well, Fleeting Business, some other thoughts.

17:10Avlok Kohli:What is this post from Patrick?

17:13Ankur Nagpal:Wait, which one? Which one?

17:14Avlok Kohli:This is Patrick is quoting Scott Wu.

17:18Ankur Nagpal:oh yeah last of the mohicans scott lou i love it because uh despite this does not see without

17:24Avlok Kohli:images without images too we just this this kind of asset i actually think this might be done the old-fashioned way there we go it's good at cutting out thank you watermark yes uh he says here we go

17:38Ankur Nagpal:again last the mohicans uh yeah scott was the last one standing in this particular category and yeah he's licking his chops thinking about who might want to hop over to Cognition Cursor Cognition Windsurf Devon Cursor Zombie Corp as the ghost ships continue to line up on the shores of Scott Wu's territory. What else should we go through with the Cursor? Cursor's long term viability was contingent I'm very happy for everyone involved

18:10Avlok Kohli:Yeah, some news from Space News Inc. This is very interesting. China backs Orbital Data Center startup with$8.4 billion in credit lines. They're pilled. Elon is interested.

18:23Ankur Nagpal:$8.4 billion in credit lines. That is a lot of money. A Beijing-based space startup has secured early-stage funding. Early-stage funding to the tune of$8.4 billion? What are we doing here? And extensive credit backing is part of a broader Chinese push towards space-based computing infrastructure. Beijing Orbital Twilight Technology Company Limited. We don't know how to name companies like that in this country. Seriously.

18:46Avlok Kohli:This is a new meta.

18:48Ankur Nagpal:Yeah. What is Cursor's real name? AnySphere? That's a pretty good name. I like AnySphere and I like Cursor, but it doesn't hold a candle. It's a Beijing Orbital Twilight Technology Company Limited. Also known as Orbital Chenguang, announced the completion of a pre-AI funding, pre-A1 or is that pre-A1 funding round April 20th. The round saw participation from venture and industrial investors, including Hison Capital, CITIC, Construction Investment Capital, Cathay Capital. They got everybody. It's a murderer's row over there. At the same time, Orbital State said that it has obtained strategic credit lines totaling$8.4 billion from 12 major financial institutions, including the Bank of China.

19:37Ankur Nagpal:Are they going to build rockets with this? I mean, I don't understand why this would be so capital intensive if they're not going to fab the chips and they're not going to launch the rockets.

19:45Avlok Kohli:Well, they're going to put a lot of GPUs in space.

19:48Ankur Nagpal:I guess they're just going to buy a lot of Huawei chips or something. Are they going to go to Huawei and get some special stuff?

19:53Naveen Gavini:Yeah, I mean, this is pretty interesting because I feel like generally the main bull case for space data centers is that the regulatory environment in the U.S. is going to be so hard to build data centers on normal land. So yeah, yeah supercomputers. So you got to send super computers to space. Yeah, because there's less we can do data centers in space

20:11Ankur Nagpal:We just we if it's on the ground as a supercomputer.

20:14Naveen Gavini:Okay. Yeah, that makes sense

20:15Ankur Nagpal:Because we don't want any more data centers on earth. It's Earth Day, by the way. Congratulations Earth. You've done fantastically Yeah

20:23Naveen Gavini:The whole thing like in China is like they you know, you can just like build things there, right? There's like very little regulatory overhead. Yeah, so it's like what like I feel like the the space data centers It's a lot more sense for the US. Yeah, if you're worried about if the if the bull case is regulatory Which seems to be that's like generally consensus.

20:40Ankur Nagpal:Yeah, I was laughing about how You know how there's all this fear about like data centers using water in America But over in China they have the Three Gorges dam which generates electricity from water and it technically uses a lot of water The water is not destroyed or anything. It just passes through the dam generates electricity But they're using they're using ocean of water exactly the Hoover dam That's a nightmare. If you just like, like there's one frame where you don't want the water to be destroyed or made unpotable. So you can't drink it anymore. But there's another one where you think like water has individual rights and should not be used at all.

21:14Ankur Nagpal:Like it should not be used. It should not flow through a water wheel. It should not flow through a dam and generate electricity at all. It should be left to its own devices still and just chill. Maybe anyway, orbital has incubated. It was incubated by the Beijing Astro Future Institute of Space Technology, which itself is backed by Beijing's Municipal Science and Technology Commission and the Science Park Administration. The institute leads a consortium of 24 organizations. The rationale for the constellation in November briefing. So large scale data centers have expanded rapidly worldwide, but further growth faces major obstacles, including heavy land use.

21:51Ankur Nagpal:Weird. Soaring energy consumption. Weird. Limits on atmospheric cooling. these things usually don't apply in China, but maybe they are skating where the puck is going, and maybe they're thinking that they will need to change their direction. So they're planning a dawn-dusk orbit about 700, 800 kilometers above the Earth, aiming to achieve a large-scale space data center to support space-based computing by 2035. Wow, thinking in decades over there. So they're going slow. They're getting there. An initial phase spanning 2025 and 2027. Wait, why are they talking about last year? We'll focus on core technology changes in the first computing.

22:31Ankur Nagpal:They're manipulating time, John. The experimental satellite was slated for launch in late 2025 or early 26, but it does not appear to have launched. They have like decent launch capacity with the Long March rocket. I think that they just are not amazing at landing it, but you got more money. You can just YOLO more rockets up there, I guess. Problem solved. Although I would be surprised if there's as much pressure to not build supercomputers next to the Three Gorges Dam. Anyway, moving on. More images out of ChatGPT. Images 2, Image Gen 2. Pull these up. Images V2. These are crazy. Has anyone done that rune test of the guy driving the car into the whole thing?

23:18Ankur Nagpal:where he was like, it's AGI, if it can understand this meme. I wonder how, I guess you can't because like that particular meme has been saturated on the internet. And so it no longer is a challenge. I'm going to have it make an image. This is a crazy image.

23:31Avlok Kohli:I am a tiny man.

23:34Ankur Nagpal:What is this?

23:35Avlok Kohli:MySpace. When my son was born. This is truly never. They handed me to him.

23:41Ankur Nagpal:Never forget where you came from. Blink-182. It really packed so much stuff in here. It's almost too much. I have been noticing the Gabriel over there is pushing the model into chaos and seeing what happens. Cows are flying, horses are flying, trampolines are flying.

23:57Naveen Gavini:The next one by Ethan Moloch has like every image benchmark in one.

24:01Ankur Nagpal:You were asking about this. You said, and explain the history of this.

24:05Naveen Gavini:So originally when Dolly first came out, the image that everyone was like, oh, this is crazy. It was an astronaut riding a horse on the moon. Yeah. So then it's like, okay, that's like very easy.

24:15Anil Chakravarthy:and then it became well it's very hard to photoshop that it's very hard to get an actual picture because wait if someone's just like make a picture of a dog and it's photo real everyone's like oh

24:25Ankur Nagpal:who cares we have a picture of a dog we don't have any pictures of of astronauts riding horses

24:29Naveen Gavini:on the moon there's people riding horses right yes and so like it should be able to process where it's like maybe it's not like doesn't need to fully understand like everything that's going on because there's a lot of like references it can pull from totally so then it became can um a horse ride an astronaut yes right it's like the reverse yes and early image models would always just do

24:48Ankur Nagpal:the flip they would just put the astronaut on the horse yep because that's more logical yeah

24:51Naveen Gavini:so there's a number of a number of these things where like if you ask a person to draw it out it's like okay you just think logically like this is how it would look but there's just like no reference images online so the another another one was like a full wine glass yeah so you think of a full wine glass is like it's still only like technically you know halfway three-fourths i never

25:07Anil Chakravarthy:understood why that one didn't work i i saw the whole video images online of a full wine glass being like oh full to the brim because people typically fill them halfway and so in the training

25:17Naveen Gavini:day okay got it yeah yeah and then there was the you know what is this image this is not the one

25:24Anil Chakravarthy:this is not the one this is not the one for the timeline that one's way more aggressive than than the this is the one this one looks aesthetic and it still looks weird the only thing is is it would a horse's belly really look like that it is sort of like a human horse it kind of looks

25:39Avlok Kohli:like a human that but it does have the wine glass completely filled and and then explain the clock

25:47Anil Chakravarthy:was was grok i think okay explain the explain the clock what's going on with the clock yeah that's

25:52Naveen Gavini:just another like understanding thing where like can it if you give it a time can it do the the clock yeah like the correct time there's also one where um you do a bunch of clocks on different time zones yeah and it couldn't do the clock it couldn't do the clock it has two hour hands yeah

26:08Avlok Kohli:You know what that means.

26:09Anil Chakravarthy:We're moving the goalpost.

26:10Avlok Kohli:Do it.

26:11Anil Chakravarthy:Moving the goalpost. Goalpost. Do it. It's time.

26:17Avlok Kohli:It's time.

26:18Anil Chakravarthy:It's time. We move the goalpost. We got a one-shot. It's 99. And it's not complete yet. It's not complete yet. You guys have more work to do. No, no. Sam was talking about this with Ashley Vance. He was saying that, like, you know, he thought the job was finished with, like, chat GPT images because it was really good. And then they worked a lot harder and they realized that there was more to do.

26:42Ankur Nagpal:And this is like the Carpathian thing about like, yeah, you get the self-driving cars to 99 % and then it takes another year to add another nine and then it takes another year to add another nine

26:52Anil Chakravarthy:and then another nine and it just takes forever to improve these things because we demand perfection. We do not accept two hands on a clock. Keep grinding, folks, keep grinding. Anyway, there are a lot of other fun posts. Semi-analysis, I thought this was just a real image of Dwarkech taking a selfie, and then it was recontextualized via a meme. It is, in fact, an AI image.

27:17Avlok Kohli:This doesn't even look like the new model, though.

27:19Anil Chakravarthy:Hi, I'm Dwarkech. I grew up all over the U.S. and now SF-based and always down to nerd out about AI science and history. A little about me. I host the Dwarkech podcast. Study at UT Austin. Just published a book on the history of AI scaling. let's grab coffee or do a fun activity this summer because of course this is a a meme template that is very popular and has gone viral with a lot of new people that have been hired and moved to

27:43Avlok Kohli:so the other thing i've noticed with images too yeah is that i think it has fully the new model has actually has taste i agree and it has fully democratized like high quality lifestyle and product imagery uh and i'm shedding a tear just a little bit yeah uh because you used to be able to tell like the kind of somebody who's working on a cpg company you could kind of clock their ability yep uh as a founder based on the quality of their images right because maybe they're not super creative themselves maybe they haven't raised a bunch of money but if they're scrappy they can meet the right photographer they can put stuff together and now it's like everyone just has a great product photography.

28:31Avlok Kohli:Yep. And I saw it this morning with, uh, there's that Andreessen back company that does, uh, like electric scooters.

28:39Anil Chakravarthy:Oh yeah.

28:39Avlok Kohli:They were just like ripping out a bunch of images that look like they spent tens of thousands of dollars doing them, but they're clearly like just too, uh, which is cool. It's just like funny that we've entered a world where, yeah, I've seen, I've seen some people.

28:53Anil Chakravarthy:I think that the, the end result will be like you will see more opinionated and creative and uh and more people like like there will be a collapsing around like everyone will copy apple or linear but then on the flip side you will see people that are um that are doing things that are really unexpected and those things will be copied but if the if the brand can run through and actually establish itself is like oh it has this unique aesthetic uh it won't matter that somebody can can recreate it because plenty of people did that with the red antler stuff. It was like that, like there were brands that really owned that and carve that out as like their aesthetic.

29:31Anil Chakravarthy:And then there were a bunch of copycats and no one really liked those. Um, I was reflecting on the fact that like for a long time, mid journey felt like it had a very unique aesthetic, like, uh, like, uh, art station and like painterly and sci-fi really well. And then Chachapiti images V1 and some of the other image models just felt like stock photography. And now I feel like I'm starting to see more stuff out of images with Chachapiti that feels more opinionated and has a stronger aesthetic and it can do more of like the sci-fi stuff. Although sometimes it leans in a little bit too much to the photo realism.

30:02Anil Chakravarthy:I think you got to get kind of crazy with the prompts to actually get something that's abstract because I was taking some mid-journey prompts and I was putting them into Chachapiti images and I was noticing that like it was just putting out stuff that was like it was like like what the prompt was like make a video game of like a car racing and it just looked exactly like a video game because it just looks like a screenshot instead of like the idea of a video game.

30:24Avlok Kohli:Okay, last one we're going to pull up and then we have our first guest. Yes. Post from Ben Hilack. What do you say? It says, Nightmare Blunt Rotation.

30:33Anil Chakravarthy:Oh yeah, it can do 360 images. It can do 360 images, which is really cool.

30:38Avlok Kohli:You got Sam, Benson.

30:41Anil Chakravarthy:So it generates a full equirectangular image, which is something you could view in VR. and then you can load that into a panoramic, stereoscopic image generator. I wonder when 3D images will come. And also, I mean, the big question is, people are going to want to animate these. What's the downstream tool chain for actually turning this into video? Are we going back into video at some point? We will see. Anyway, people are having a lot of fun with it, And it should help with front end and a lot of other stuff. It seems like it's done very well on design and layouts and all this stuff. Well, we have a perfect person to talk about AI imagery, AI, generative AI, creative tooling, and more.

31:30Ankur Nagpal:Because we are joined by Anil from Adobe, where he is the president. So let's bring in Anil.

31:36Anil Chakravarthy:How are you doing?

31:37Darian Shirazi:Welcome to the show. Thank you for having me on. Great to be back on TVPN, and congrats on your acquisition. Great news for you guys.

31:43Anil Chakravarthy:Thank you. It's great to see you. Great to see you again. I would love to just get a general update on what has changed with Adobe. What have you been working on since the last time we spoke?

31:55Darian Shirazi:Look, I'm coming to you from Adobe Summit. We are here in Las Vegas. You know, big show, 14 ,000 people. You were just talking about Jensen. Jensen was here on Monday. And really talking about how NVIDIA and Adobe are working together. And you were just talking about 3D, I caught the tail end of your comments there. And that's actually one of the big things we announced is, how do you have digital twins so that you can take the digital twin and carry it all the way from product design into marketing and customer experience? So, you know, with HP, for example, they have 15 ,000 new SKUs every year with all the products they have.

32:32Darian Shirazi:And they're working with us and with NVIDIA and to bring it together into marketing. So we are super excited about what we call customer experience orchestration, which is how do you use AI? How do you use all the software you have to deliver personalized experiences? How do you bring the right content, the right data about the customer, and then put that into the channel that they care about and really get the most out of the customer lifecycle, build loyalty? That's the big topic of the conference here.

33:03Anil Chakravarthy:Yeah, walk me through that HP example, because if they have a SKU, I imagine that there's a CAD file at some point, and then they might want to instantiate that in text or imagery or video or 3D rendering, and they might want to go over to one of your 3D products or bridge to another. How important is Adobe at the center of asset management and actually creating some sort of abstraction on top of what the actual core item is versus just translating from one sort of output to the next in the way that someone might take a PNG from Photoshop and drop it into Premiere Pro?

33:44Darian Shirazi:No, that's exactly right. So they start with the 3D image that they have or the 3D, as you said, a CAD file. From that, what we do is we create the digital twin, and then we apply the brand intelligence on their behalf. So in HP's case, for example, if it's a new PC that they're releasing, they have all kinds of things on what they want when they say it's a laptop and the laptop is open. What's the kind of image they want on the laptop? What's the kind of lighting they want on the laptop? And then they release it all over the world. So there's pictures of people that always want to show a business professional in the laptop, along with the laptop.

34:24Darian Shirazi:They want them showing them using the laptop to do something. So there are all kinds of brand guidelines, of course, but then there's a lot of tribal knowledge on what makes an ad successful. And it's not only for them, then they have to get all of that traveling through the entire marketing campaign because one of the big problems has been, in the current world, they use the 3D CAD files for everything in manufacturing and so on, but the marketing, the content, starts with a photo shoot. They're not actually using the 3D CAD file that they have, the source of truth. And that's what we're enabling them to do.

35:03Darian Shirazi:Use the source of truth so that the images are completely high fidelity. They're brand preserving. But then you can generate everything around that. You can generate the background. You can generate the foreground. You can generate the users. And then, of course, you can do what we call transcreation, which is the translation into different languages. all of that can be generated based on their brand guidelines and what works for their brand.

35:26Anil Chakravarthy:So is your relationship with NVIDIA that you want to marshal enough compute that you can be delivering inference to a customer? Because I remember using ContentAware Phil back in the day, it ran locally on my device. As the models get more compute intensive, they eventually won't run on device. They'll run in the cloud. I know you have API partnerships, but is there a vision to deliver inference to the customer all in one go.

35:56Darian Shirazi:Exactly. It depends on the campaign. Let's say HP is running a back-to-school campaign. Then they want a set of imagery. They want a set of things that they can transfer over to their channel partners along with accurate product data. Or if they're running, for example, a holiday campaign, a different set of imagery, and so on and so forth. So depending on the campaign, depending on the geography, depending on the customer segment, making sure that they have the right campaign that is obviously the content, but it's also the product data, making sure that that's super accurate because it's got to match what exactly the customer's buying.

36:29Darian Shirazi:And then anything that's relevant for the particular channel partner. It could be through their own direct channels, but it could equally be through CDW or through other channels, and they want to make sure that the entire thing carries over. So that's what we're doing for them is getting the workflow right, getting the Adobe brand intelligence, which is one of the big things that we announced this week at Summit, getting all of that together so that they can have a single, seamless marketing workflow and get the benefit of both AI and the 3D technology together.

36:59Avlok Kohli:Jordi? You guys announced a big buyback this week, and that's been exciting. but what do you think you need to do from a results standpoint to show that you guys are an AI beneficiary versus a victim, right? Because the narrative is obviously against you. The market has spoken. But at the same time, AI is a powerful creative tool. You guys have massive distribution into millions of individuals and businesses. And so I think people are waiting to actually see the story in the numbers, and there's only so much you can say to kind of give people confidence. But how are you thinking about it?

37:42Darian Shirazi:Yeah, exactly. As you said, we announced a$25 billion buyback. That is a signal of our confidence. This is going to continue to be a very profitable business for years to come, and we wanted to make sure that everybody in the market knew that. And look, I think to your point, first step for us is AI adoption, and making sure that AI is delivering real value, whether it's to individuals and real value to users or to enterprise customers like we were just talking about. And for us, what that means is, how do you really embed it into the tooling so seamlessly? Whether you are a marketer, whether you are a creative, or whether you're a business professional using Acrobat, that AI works for you flawlessly, and it does what you want.

38:26Darian Shirazi:I love the example from the last show that you had, which is sometimes you do want the horse riding the astronaut. That was an interesting concept. But you know, that may be, but we have a lot of customers like Home Depot that just want sawdust and nails, and that's what makes their campaigns authentic. So depending on what the customer wants, depending on what the user wants, making sure that AI is helping them get value, not AI is getting in the way. That's our focus right now, is just making sure that customers, whether they're enterprises, individuals, small businesses, students, understand that AI is critical to the next generation of creative platforms and marketing platforms and tools.

39:05Darian Shirazi:But it's in the context of what they're using, it brings the UI, the agents and the reasoning, the models and the data all together to work for them. So that's, I think we've made a lot of strides on that front here at Summit over the the last couple of years. I think as the results show, one thing for us is I think from where we are in the market, for the market even to see us continuing to the performance that we've had, we're a double-digit grower, we have very healthy margins, even continuing to see that for the next couple of years, I think will change a lot of minds. And then I think we also see the opportunity through customer experience orchestration to reach a real inflection point.

39:47Darian Shirazi:So that's what we're looking to do. but Jordi, you can...

39:50Avlok Kohli:Yeah, I was going to ask, what's your M &A outlook? It seems like there's a ton of really talented teams building creative tools that could fit into Adobe. Sure. Hopefully, you're spending a lot on the buyback, but hopefully there's still some dry powder for some talented teams.

40:10Darian Shirazi:We do. We have plenty of dry powder. We haven't overextended ourselves. In fact, we are really pleased. We just announced that we have received all the regulatory approvals for SEMrush. And we are in the waiting period to close it, so in the next few weeks we'll be closing SEMrush. We're super excited about that because SEMrush, along with our portfolio, solves a real problem for marketers. Marketers, I mean, we heard a lot from customers at Summit. Every brand is like, how do I show up in the right way through OpenAI, through ChatGPT, obviously, but through Claude and Gemini and Perplexity and Grok.

40:50Darian Shirazi:I don't even know how consumers, they know consumers are going there in droves. What they don't know is, what are they even prompting for that I should know about? So if I'm a brand in the cosmetics world, what are they actually prompting? I don't even know what they're prompting for that I should be aware of. Then how should I make sure, what do I need to do to make sure that I am included in the response? And then what do I need to do to make sure that I'm included in the response in an accurate manner? And then how do I get that traffic coming to me? Or how do I close the sale right there if it's something that I can close right there?

41:30Darian Shirazi:This is a new world for marketers. Marketers have no idea how this whole thing works. I mean, they don't know, for example, what happens when you put in a prompt into ChatGPD. What is the queries that get kicked off? Where does it get kicked off to? How is that information assembled? How does it impact their brand? They don't know the first thing about it is what they're telling us. And they're saying, Adobe, help us.

41:57Avlok Kohli:I'm interested to see how this category plays out, because there's obviously a bunch of companies doing, they call it answer engine optimization, AEO or GEO, whatever they're calling it. But the big question was always, this feels like a very natural thing for someone like a SEMrush to enter in a big way. They already have the distribution, so it'll be an interesting battle between SEMrush and some of the upstarts like Profound and some other players.

42:23Darian Shirazi:Well, I think the battle will be over pretty soon, according to me. There we go.

42:28Avlok Kohli:I think James and Profound, we should have you guys both on and go at it.

42:34Anil Chakravarthy:That's great. I want to talk about video. So, I mean, we saw OpenAI pulled back from Sora. There are some really amazing models that are happening. Some of them are in China. There's a whole bunch of IP stuff. But what I'm interested in is that Photoshop continues to be an important tool, even in a Gen AI world, because there's so many fine details. Having Gen AI as just one possible tool is valuable. The models are getting better. We're three years into this boom, but video is moving slower. It's more inference demand. And I'm wondering about how you're taking lessons learned and strategies that you applied to the evolution of Photoshop, how that integrates with different model providers, different tools, different in-house solutions, and how you're planning to bring that to After Effects and Premiere, because this feels like a place where you would need even more opinionated editing.

43:27Anil Chakravarthy:Like we're nowhere near text box editing, like, you know, two, like 40 hours of video into a movie. Like that's just not, like we're so far from that.

43:39Darian Shirazi:Exactly. So look, this is where we believe Adobe brand intelligence will be a huge differentiator because that's what then gives us the right information to pass on to the creatives to say, this is how you use the Adobe creative agent. And this is where you want to let the AI be takeover. And this is where you want to be opinionated. I mean, what we have done is provided that flexibility. We announced over 30 integrations now, whether it's Runway or Flux. and obviously Google with both VO and Nano Banana, et cetera. So we've been very open and we're very open to integrating any other models that come up as well.

44:18Darian Shirazi:The key, though, is the creative themselves, if you're working for a brand, I mean, if you're working for, I mentioned Home Depot earlier, or if you're working for Coca-Cola and so on, they don't have enough information by themselves unless they really get a really super detailed creative brief on what exactly to where they need to take control, where they can let the AI run. We believe we can automate that and provide the right information at the right time to the creative. They can bring the brand idea. They can bring the hero asset. They can bring the creative idea. And then you can apply the intelligence and exactly to your point, you can be a lot more opinionated in what you produce.

44:57Anil Chakravarthy:Yeah, yeah. It is very fascinating that we got like fully generated video before we got a tool that puppeteers Premiere Pro in a way that can sync up music and edit to beat and make cuts just on normal non-AI generated footage. But that's just the nature of computer use and whatnot. So I'm sure it's an exciting time. Lots to build, lots to work on. Congratulations on all the progress. Yeah, great to get the update. Yeah, thanks so much for taking the time.

45:27Avlok Kohli:Good to see you.

45:27Anil Chakravarthy:Thank you for having me on. We'll talk to you soon. Cheers. Have a good one. Thank you. Goodbye. up next one like quick

45:35Avlok Kohli:thought I think like right now like already the great image models the nano bananas the images too it is like you're just talking to somebody who is a digital guy or girl who is very good at Photoshop like that is the experience today and it was not that way 12 months ago it is that way now, I no longer need Photoshop. I don't need to go to Fiverr to say like, Hey, I need somebody that's good at Photoshop. I don't need to text like Ben and be like, Hey, can you help me Photoshop this? And you can just actually just prompt your way. You do not need any UI anymore. That's true. That's true. For the average, for the average for, for, yeah.

46:21Anil Chakravarthy:I mean, we're, we're,

46:23Avlok Kohli:and I'm just saying that's going to get, that's going to get there with video where you just have a timeline and you can click on a scene.

46:30Anil Chakravarthy:But speed is really, really important here. Like, like if you, if there's one word that's wrong on image and you need to regenerate it, you're going to wait 45 seconds and it will be faster to have done that in just a, you know, traditional workflow. Now it's getting faster.

46:45Avlok Kohli:It's so fast now.

46:47Anil Chakravarthy:It's very fast. It's so fast. But if you're writing a two hour podcast and you say, oh, I want you to cut to Jordy in minute 45 and it has to go regenerate the entire thing like that is slow, you're going to need to puppeteer the tools. You're going to need tool use in here, I think. I don't know. Just because the inference Yeah, I was just shocked because I was playing around

47:08Avlok Kohli:with generating product photography, and you're able to say, put the text here, turn it around, put it at a different angle, more shadow, less shadow, all this stuff, and it's wild what you can do without any UI. But without further ado.

47:24Anil Chakravarthy:We have Naveen from Build Forever. He's the former Pinterest CPO. Welcome to the show. How are you doing?

47:32Naveen Gavini:Hey guys, thanks for having me. Thanks for having me on. I like the bomber, Jordy. Nice piece.

47:37Avlok Kohli:Thank you, thank you. It's a one-of-one New York Stock Exchange.

47:42Anil Chakravarthy:Oh, let's go. NYSE. What date was the New York Stock Exchange founded? You tell me. 1792, 11 Wall Street. Wow, that is a very old...

47:52Avlok Kohli:Great address. Great, great year to get into business. Great year to get into business. Best day to get into business. But it's great to have you on the show.

47:59Anil Chakravarthy:Yeah. First time on the show, please introduce yourself and the company a little bit.

48:04Naveen Gavini:Yeah, totally. So my name is Naveen Gavini. I'm the co-founder and CEO of Build Forever. And honestly, we're just a group of engineers and designers and people that love building products that people love to use. And we've worked, as you said, I was early at Pinterest and we've worked on a number of consumer products that people use around the world today. But our focus has been on a product that we launched yesterday called Extra. And it's really a reimagination of email as your life's inbox. And so for many of us, we spend all day kind of working, sending email. And when we have time to get to our personal email, it often feels overrun, overwhelming.

48:40Naveen Gavini:And just like, I don't know, I personally gave up on my personal email. I had over 250 ,000 unread emails. And so we were just kind of looking for a solution of just making email more manageable, more fun. delightful. And so with extra, it keeps track of what's important for you. So you never have to miss something. It helps you clean up your email, organize it around your life. And it does things proactively for you in the background and helps you get stuff done. And so this endless to-do list feels not so overwhelming and it just feels delightful and joyful to open up your email every day.

49:11Anil Chakravarthy:Is it a for you page for email?

49:15Naveen Gavini:Yeah, essentially. That's how you can think of it. That's a good analogy. Yeah. So everything that's important in your life.

49:20Avlok Kohli:We turn every email that you have into a short vertical looping video.

49:25Anil Chakravarthy:It's not quite that, but Joe Wiesenthal is talking about this. I know what you're saying.

49:28Avlok Kohli:It's basically like, yeah, just actually picking and choosing. It's always been so silly that inboxes were primarily based around who messaged you last, not based around what was actually important or actionable or anything like that. and I feel like we need to move like the idea the whole idea of Inbox Hero is just such a pre-AI idea where you are just getting flooded with more and more and more and more and more spam and I think products that can help here are great also it feels like you can kind of just yeah I'm curious so you're built on top of Gmail I don't know if you're supporting other email providers.

50:17Avlok Kohli:Google is like aware that AI can be powerful in email. They're working on a lot of features, but I feel like this is one of those things that is going to require like really, really rapid iteration. And so I feel like you probably have this beautiful window of like maybe three to four years where they're kind of just slow to figure out some of this stuff and you can probably build a cool business in the meantime. But where do you want to where where does this go? How does this how do you know, you know, how are you thinking about this as a venture scale opportunity? Yeah, totally.

50:50Naveen Gavini:Well, I mean, like maybe starting where you kind of left off, I think one of the challenges in email is historically for the past 20 years, like all of the innovation in email, if you think about it, has gone into the enterprise and it's gone into really sending emails faster. Right. So that's like kind of all the email clients that you've seen have been like, let's help you get to inbox your own send faster. and when in reality like our different take on email is that when you think about your personal email not your work email the amount of emails you send is actually very little relative to the amount you receive and so the the entire experience actually needs to be rethought of from information consumption not as a communication tool and I think that's the big pivot with email to think about on the personal side is that it's more around information consumption delivering to you the right information at the right time.

51:37Naveen Gavini:And then from there, there's an entire business to be built on how do you actually get things done for people in their lives? How do you help them along that next point in time in the journey without them having to do work? And so you're seeing a whole ecosystem of amazing companies being built on the agentic side around fulfilling different actions, but all of them need kind of a distribution entry point of like, how do we start that journey and what is the personal data that we actually help achieve some of those actions upon and so i think email is a really great place for that um and if we can build an experience that starts to make that seamless for a user where they don't have to go and i don't set up an api key or connect to a service and they could just seamlessly launch that from an experience that feels native to them like email um it could be a really compelling experience and i think um you know we previously built a very big business with ads at Pinterest and other companies.

52:32Naveen Gavini:And so this idea of being able to show people products and services at the right time could lead to a really incredible consumer product that's also accessible to the masses.

52:43Avlok Kohli:Ads. I was not expecting that.

52:45Anil Chakravarthy:Well, there was a Pinterest.

52:47Avlok Kohli:No, I know. But you're saying, aren't you saying like in theory, if you build a really beautiful. Yeah, you pay to get at the top of the inbox.

52:53Anil Chakravarthy:I mean everyone's sending you a thousand emails and if I advertise and pay I can get more surface area maybe also

52:59Avlok Kohli:I think people I mean my our stance and many people's stance I'm sure your stance is like if you get a really nicely targeted ad it is like additive to a product experience And so I think in the world in the future where you know somebody's using extra for their email Like and you decide to turn on ads you could probably serve in a really high quality ads users.

53:24Naveen Gavini:Some of our beta users really love actually finding deals and products from brands that they actually love that often get buried and missed in their inbox today. When we show CMOs and marketers the product, they absolutely love the idea of their products being displayed natively, not buried in a promotions tab. Their CTRs are through the floor with the existing treatment in many people's mailboxes. If you're actually interested in a brand and you've bought something from them before, the idea of being able to see other complimentary products or things from that brand in the future could be very compelling.

53:57Naveen Gavini:And I think we're thinking about multiple tiers. Like, I think there's obviously a lot of folks that, you know, may just want to not have ads and pay. And so I think there's lots of different ways to go about it. We're still early in the journey, but right now we're focusing on getting as many people to have a joyful inbox experience as possible before we start to monetize.

54:13Anil Chakravarthy:What's the beachhead agentic experience? Is it just unsubscribed?

54:19Naveen Gavini:people love coming in to clean up their inbox it's crazy i i recommend everyone that's listening in like if you if you're tired of your inbox being overwhelmed five minutes with our onboarding flow we'll we'll give you a inbox designed around your life and you know and you'll feel a lot lighter and cleaner after after using extra but i think a lot of people is that specifically for the person

54:36Anil Chakravarthy:that's sitting on like 200 000 emails if they have like 10 like i probably have like 10 emails in my personal and like they range a lot from like need to write a thoughtful response to need to do some flow in some web app or need to send a payment or need to do and I'm like I don't know that I would hand over the keys to an agent for most of those but I would definitely love for you page on my like promotions and updates tabs in gmail which are like basically newsletters and sponsored stuff and then i would love because gmail's done like an okay job with the unsubscribe button but it misses it a lot and but then there's some services that are just like we're breaking the law and like you have to call us to unsubscribe from our emails and i'm like that i'm not gonna like chase this down so i'm just gonna keep getting like you know random or privacy policy updated for some like telecom service usually yeah so i think with extra you would get an

55:38Naveen Gavini:amazing for you page with the information they want and i think honestly a lot of people just feel the sense of control and clarity of being able to see it in a different view of like here's what's important here's what i need to do today and you know it's distilled down to just a few items versus this long list of things that you have to do in your inbox that's cool is the app live on the app store it is um yeah we went live yesterday uh amazing your life's inbox here we go

56:07Anil Chakravarthy:happening now. I'm getting it. Thank you.

56:10Avlok Kohli:There we go. Very excited to try this. Great to meet you.

56:13Anil Chakravarthy:Well, thank you so much for coming on the show. Thanks for coming on. Breaking it down for us. Congratulations on the launch. Excited to give it a try.

56:18Avlok Kohli:We'll talk to you soon.

56:19Anil Chakravarthy:Cheers. Goodbye. Up next, we have Avlock from AngelList. And I believe we might have someone else joining as well. An Anker is joining as well. Fantastic. They've both been on the show before. You know them, you love them, and they have a big announcement today. AngelList is launching USVC, a public venture fund, alongside Naval Ravikant. How are you doing?

56:42Avlok Kohli:Yo, yo. Hello. Feeling great.

56:45Anil Chakravarthy:To the show. Big day. Big day. Break it down for us. What is USVC?

56:52Naveen Gavini:All right. Perfect. I'm going to let Ankur break down what is USVC.

56:56Avlok Kohli:We're working on getting a four up. Just give us one second. Okay. We can just hang out. Great, great, great. Did you just get a haircut?

57:05Anil Chakravarthy:Here we go. We got everybody. There we go.

57:07Avlok Kohli:There we go.

57:08Naveen Gavini:Yep, got a haircut just for TBPN.

57:10Avlok Kohli:There we go. I thought so. Great to see you guys. Welcome to the show. Massive day. Ankur, it's been too long since last week. Since I've been here.

57:22Joel Edwards:Every Wednesday afternoon blocked out. But no, today's launch is really fun. I mean, we couldn't reveal that much last week, but really the last month has been gearing up towards this. And I think Naval mentioned it when he first started AngelList. This was such a big part of his vision of what this company could become. And it's really fun to finally get this out there.

57:46Avlok Kohli:Let's get right into it. How are you describing the product? Yeah, let's talk specifically about the product. Everyone is aware of the companies that are a key part of it. But yeah, talk about kind of the decision making that went into the product, how it's different than other products in the market, all that stuff. Cool.

58:08Joel Edwards:Yeah, so the idea with USVC is we wanted to open up access to the asset class of venture. Right now, I believe it's very siloed. You need to know a lot of people. It's very, very hard for most of America to have access to the place where most of the wealth is created. So that's the goal with USVC. Can we build sort of a high-quality way to index into venture as an asset class? What's unique about this structure is there are a lot of private market ETFs. People may have seen the Destiny ETF, the Robinhood ETF, all of that. The difference with this is this is set up differently, where it's a closed and tender offer fund, which sounds like a lot of heavy words.

58:50Joel Edwards:But what it really means is when you're investing in this, you're actually holding something very close to the underlying business. So the price of what you pay and what you redeem at is roughly equal to the price of the underlying companies. It's not driven by FOMO or markets being super excited or down. And I think that is structurally very different. I don't know if I've looked at anything to that.

59:15Avlok Kohli:And part of the challenge with some of these other products is they can have great assets that make up the fund, but it's hard to justify if they're trading at five, six, seven times NAV. It doesn't matter how good the underlying assets are. No good investor can kind of confidently say, I'm going to invest in this fund unless you truly think that the assets are kind of mispriced fundamentally by five or six X. Yeah.

59:45Naveen Gavini:Yeah, that's exactly right. I think the way to think about USVC is it's meant to be a vehicle that you can think about over the long term. So rather than trying to think about, am I getting it at the right nav? Am I getting it higher or lower than it's valued? You can just trust that when you invest in USVC, you're getting it at the right nav and you can hold it for the very, very long term. That's why USVC made the decisions that it made.

1:00:13Anil Chakravarthy:So how do investors actually onboard?

1:00:18Avlok Kohli:It's very easy.

1:00:19Joel Edwards:So right now, yeah, it's very easy. We'll get you all to invest soon. But it's fully self-serve, usvc.com. It's been, yeah, that's sort of been the innovation here. Historically, these types of funds required people to be accredited investors. But now access is truly open to anyone with as little as$500.

1:00:40Avlok Kohli:How are you thinking about number of bets? It's open-ended, so it sounds like uncapped, but is this the kind of thing where you want to, I feel like, you want to concentrate on like 20, 30 core positions similar to a venture fund? I imagine this isn't like you want to spray and pray at seed, but maybe you would if it's the right founder. How are you thinking about it?

1:01:06Joel Edwards:Yeah, so I can talk about portfolio construction. You'll see a lot of the names we've gone out with today are the names everyone has heard of. XAI, OpenAI, Anthropic.

1:01:21Joel Edwards:However, long-term, I think a lot of the long-term alpha is not even necessarily in these names. So we absolutely will also start investing in a lot of seed stage companies. The idea is these are bets. It's not just about the next one year, but bets that will pay off in the next three, five, seven, ten years. So about a third of the portfolio, the goal would be to have it skew early stage as well, just because we want to be finding these companies before they're actually discovered.

1:01:49Avlok Kohli:Yeah, so similar to a kind of a platform VC where they're going to concentrate a lot of their capital into later stage, establish winners that are more stable, and then you can still get exposure to the early stage of super promising companies. That's very cool.

1:02:06Anil Chakravarthy:Can you talk about the concept of direct ownership? How many layers of abstraction? I think that there's just like FUD generally among retail investors that I've talked to that they will see a name that they're excited about and then they will find a product that sort of proxies that name, but it's seven layers deep. It's very confusing and they don't really know how to process it. And mostly, they're not even necessarily worried about fees or anything like that. They're more worried about, like, I thought I owned SpaceX, and then it just turned out I didn't. And we've talked to Matt Grimm at Anderol about this.

1:02:45Anil Chakravarthy:There's been all sorts of stuff.

1:02:47Avlok Kohli:Yeah, people promoting Anderol SPVs that don't have access. Don't have anything.

1:02:51Ankur Nagpal:And it's just like, yeah. And I think that that messaging is important. So can you talk us through how you think about ownership, what rights you actually do need, what rights you don't,

1:03:02Anil Chakravarthy:how you think about delivering exposure to the end user or the end investor.

1:03:10Joel Edwards:I'm going to let Avlok take this because AngelList as a platform has drawn the line on what they will expect as an SPV. So Avlok, why don't you take this one? Sure.

1:03:19Naveen Gavini:Yeah, one of the unique things about USBC is that it runs on AngelList. So we're able to have it take advantage of all of the infrastructure of AngelList. And one of the things I tweeted out a few months ago was AngelList, as an example, had banned all layered SPVs by default. for the reasons that you mentioned. In fact, when we did it, we lost revenue because of it. But that's because we didn't know who the underlying owners were and we had no way to actually even trace it. And so we banned it. So in general, when it comes to the infrastructure that we're running at AngelList, we are always thinking first and foremost about ownership of the underlying assets because we're running infrastructure for funds, SPVs, apps, scale.

1:04:07Naveen Gavini:So from that vantage point, You can think of it as USVC in the way it thinks about it, acquiring assets as the exact same ethos, which is you want to only look at assets where you actually know where the underlying assets are coming from. Rather than these layered SPVs that have fees that are not disclosed and carry that's not disclosed. That's something that we effectively banned from AngelList a while ago.

1:04:37Avlok Kohli:Makes sense. What is the pitch for founders? Why should they take USVC money? I can give reasons, but how are you positioning it?

1:04:47Joel Edwards:I think that this is the most fun part. And you're going to see this soon where, okay, you know, you'd argue that Anthropic doesn't really need more promoters right now. But we're going to be taking some bets on companies and startups that have very loyal, very passionate communities. But they may be a$50 million business,$100 million business, something in that range. And to them, it allows them a very scalable way to actually let their community share in the upside. And that's going to be one of the magical things here where it's not obviously an IPO or anything, but now we can have a vehicle for people to get their communities involved in their upside.

1:05:24Joel Edwards:And for most founders, it's generally pretty cool to be able to say, hey, by the way, if you are a customer and you want to participate in this, you can invest in USVC.

1:05:33Anil Chakravarthy:There's a$500 minimum. Is there a maximum?

1:05:38Naveen Gavini:there's no maximum. So load up the truck.

1:05:42Anil Chakravarthy:What happens if Elon, Sam, Dario, these guys are like, you know what? I want to just team up with the other guys. Let's throw 50 billion collectively into each other's companies.

1:05:53Avlok Kohli:Through USBC. Through USBC.

1:05:56Anil Chakravarthy:Let's just all create a Keiretsu. This is the Japanese way, correct? Yeah.

1:06:02Joel Edwards:You did strike something interesting. The nature of this fund is different, right? Like effectively it's an evergreen fund, which means we can accept kind of unlimited amount of capital. But from a deployment perspective, every time that happens, effectively we have, you know, we have to kind of come up with a strategy for that. So it's a very different structure. Yeah.

1:06:24Anil Chakravarthy:How should investors think about the time horizon? If you're going, I've talked to people that have LP'd into VC funds and they're like, I don't even know if I'll see it before retirement. I mean, there's people who got into like early rounds of SpaceX and they're like 20 years into like, it looks great on paper, but I still don't have liquidity. And that's a benefit, but it's also a drawback. And I think going in with eyes open is important.

1:06:49Ankur Nagpal:But how should the investor, they think about this as 10 years journey or something that they're throwing in retirement bucket mentally or should they think about it? Obviously, it's not something that they're going to be trading in and out of on a day to day basis. this, but what's the right mindset to go into this with?

1:07:07Joel Edwards:So I'll caveat that this is not a liquid instrument, right? Like we've been told to repeat, this is not a liquid instrument. Yeah. However, the goal with this type of structure is at our discretion, things are looking good and this is our goal. We will have up to 5 % of the fund available for redemption every single quarter. Sure. So the idea is that people theoretically, once we get into a good rhythm, can kind of pick and choose for how long they want to be a part of this journey. Again, it's not the most liquid instrument, but from a timing perspective, people can kind of come in and come out.

1:07:45Joel Edwards:However, only through quarterly redemptions. Yeah, that makes a lot of sense.

1:07:49Avlok Kohli:Very cool. Jordy, anything else? No, this was great. I'm very, very excited. This is the most angel-less product ever, I think, even though you guys are more than a decade in now, right? And yeah, I'm excited to see where this goes. I feel like, I imagine you guys are going to be spending a little more time on the East Coast with this. I guess you're already over there, Ankur. We're already in New York and on the West Coast, so we have good coverage.

1:08:14Anil Chakravarthy:The website is usvc.com. There's a beautiful video of Naval Ravikant.

1:08:20Avlok Kohli:And I have no doubt we'll have many of your new PortCo founders. on the show. We can't wait. So keep us in the loop. Excited for it. It's great to see you guys.

1:08:28Ankur Nagpal:Have a great rest of your day. Congrats, guys. We'll talk to you soon. This launch video is very funny because there are clips of Naval and there are clips of founders. And the first clip sort of makes it look like Naval is talking to Steve Jobs if you just have the sound off. But what a fantastic portfolio. Go check it out at USVC. There are seven companies in the portfolio currently, XAI, Crusoe, who's been on the show, Anthropic, Sierra Technologies, Brett Taylor, Lagora, OpenAI, and Vercel. You have seven different companies here represented. Go check it out at usbc.com.

1:09:10Avlok Kohli:Wow, before we go into the next guest segment, I'm trying to, this hasn't been posted by any super reputable sources yet, but there's a number of sources saying that Toma Bravo, actually according to Reuters, is nearing agreement to turn software firm Medallia over to creditors, which would be a$5 billion loss. That is rough. Absolutely brutal. We'll dig in here more next.

1:09:42Ankur Nagpal:Anyway, we have Joel Edwards from Zankar in the waiting room. Let's bring Joel in to the TVP and Ultradome. Joel, how are you doing?

1:09:51Naveen Gavini:What's going on? Good. Hey, guys.

1:09:53Anil Chakravarthy:Welcome to the show.

1:09:54Naveen Gavini:Thanks for having me on. Great to meet you.

1:09:56Anil Chakravarthy:Thanks for hopping on. And thanks for cleaning the camera. I appreciate that. Always want to look sharp on TVP. First time on the show, please introduce yourself and the company.

1:10:04Naveen Gavini:Hey, guys. Joel Edwards. I'm a geologist by training. I'm from Zanskar Geothermal. We're a group that we wildcat for new geothermal resources out west to make power.

1:10:15Anil Chakravarthy:Okay.

1:10:16Naveen Gavini:what's the incredible what's the actually music to my ears what's the best if i got one more ai agent i was no i'm kidding name every geothermal resource like what are we actually

1:10:29Anil Chakravarthy:we just concretize it for me like what are we talking about here what is you striking gold

1:10:34Naveen Gavini:look like yeah striking gold in your head have you guys ever been to yellowstone national park first national park yeah i think so seeing the old face if faithful guys or any of those thermal features okay these are the types of systems we're looking for except for the systems

1:10:49Anil Chakravarthy:we're looking for are hidden or blind okay so there's nothing at the surface there's no geyser

1:10:53Naveen Gavini:there's no hot springs okay nothing but there are massive geothermal resources at depth that you can tap with a well field you can pull that heat out of the ground and you can put it in a turbine and

1:11:04Anil Chakravarthy:make electricity interesting yeah take me through the the the geology 101 the where's the heat coming from why is this underground how do we get it out is it just there are just like pockets of hot air hot water i i really dumb it down for me there are pockets of hot water underground okay

1:11:27Naveen Gavini:not hot air yeah uh and they're fairly discreet fairly local but when you find them they're incredibly energy dense so think in your mind like volcanoes yeah right that's a that's a manifestation of a geothermal system okay um think hot springs and so forth there are parts of the

1:11:45Anil Chakravarthy:world of the crust where there's just a lot of heat yeah and um that gets manifest in these

1:11:51Naveen Gavini:different thermal features and you can drill into these things and you can pull steam or hot brines out of the ground and then you put it into a power plant just like you know all thermal power plants nuclear coal combined cycle gas yeah they all put heat into turbines turbine spins generator and you make electricity and so forth yeah is that classic meme we we discover a new

1:12:14Anil Chakravarthy:way to generate power and we are going to use it to boil water and generate steam and spin a turbine so we get more electricity and this is like exactly do every time we discover something new

1:12:22Avlok Kohli:what what does the what is what is the business actually going to look like is this a whale hunting where you're really trying to find a single site in the next 24 months and then you'll

1:12:33Anil Chakravarthy:spend years do you want to commercialize it or do you want to sell it off to another company at that point uh like how how full stack do you wind up going here yeah we already own and operate a

1:12:44Naveen Gavini:power plant geothermal power plant in new mexico so we sell electricity okay to an investor-owned utility and then they service albuquerque and santa fe and so forth interesting so the business is to find geothermal resources, build a power plant, and then sell the electricity to a customer. So this is part of that.

1:13:02Anil Chakravarthy:Sorry, this feels like eco-friendly. Is there pushback to geothermal energy production generally? People are worried about earthquakes or something? I don't know. It feels like this is a step forward. People are going to find a way to hate anything. So what are they going to hate about this? Are you renewable? Are you clean energy? What category are you in, do you think?

1:13:29Naveen Gavini:Yeah, right now we are beloved by both sides of the political aisle. So you show up in D.C.

1:13:36Ankur Nagpal:Enjoy it while it lasts, buddy. Yeah, exactly. Somebody will find a way.

1:13:41Naveen Gavini:We're one of the few bipartisan things where you show up in D.C. and everybody loves you, shakes your hand. It's a really exciting moment. There's attributes about Geothermal that people love. it's baseload there's no emission profile it's domestic so all these resources are in the u.s you know it uses u.s supply chains it uses drillers everybody loves drillers well not everybody but a lot of people love drillers and so forth so it has a lot of those attributes that speak to both the left and the right and then probably you know another attribute is the underdog attribute everybody loves a good underdog geothermal is an underdog we're a niche small industry.

1:14:17Naveen Gavini:We have a lot of the same setup that oil and gas had like 100 plus years ago, where it looks like there's a lot of resource out there. Looks like a ton of potential. It's still niche. Is it going to scale? Yeah.

1:14:29Avlok Kohli:Is this one of those things like rare earths are not actually that rare? It's just hard to find, hard to get to, we don't like doing the refining nearby. How much geothermal energy is there?

1:14:43Ankur Nagpal:Are we talking like tens of gigawatts potentially if we were to put in like ai data center uh parlance yeah i

1:14:51Naveen Gavini:think tens of gigawatts is near term super duper realistic based on the tools and the tech that we have today yeah so exciting yeah um obviously there's people talking hundreds of gigawatts terawatts we'll see what happens right as as things as industry scale non-linear unpredictable things happen, right? Costs and technology and all these things change. So it's hard to predict what's going to happen 10 years from now. But basically, there's two things that drive scale for resources. It's the number of resources out there in existence. And then it's your ability to extract the resource. And that's really technology dependent.

1:15:27Naveen Gavini:So geothermal, where Zanskar really focuses on finding more geothermal hotspots. We have a thesis that there's a lot more out there. We've already found a bunch of sites. We've announced a few of them. There's more to come and then there's other groups that have focused on how do you get more out of these systems and those are in the unconventional bucket it's like it's like the oil and gas play in the Permian in west Texas yeah right they came in with unconventional well fields they drill horizontal wells they stimulate they get more hydrocarbons out of the rock yep that process is happening in geothermal right now as well okay so you have the exploration piece finding more and then getting more out of it.

1:16:01Ankur Nagpal:Yeah. Double clicking on the exploration piece. It sounds like AI can be used to do more computational discovery, actually interpret data. But what's the gold standard for actually obtaining the data? Like what sensor are you using to detect the potential of a geothermal, uh, you know, uh, discovery system. What's the secret sensor?

1:16:31Naveen Gavini:We, the trick in geothermal is that there's not a single type of geologic data that tells you if a system is in existence other than just drilling a well into the thing and measuring. There's nothing you can do

1:16:41Ankur Nagpal:just like radar or like pull something through the ground and find it that way.

1:16:47Naveen Gavini:Unfortunately, no, I wish it was that easy. Okay. In oil and gas exploration, they use seismic reflection imaging and that was kind of their silver bullet tool set to find a lot of these reservoirs. In geothermal, we use a mix of data sets to try to find these hidden systems. Interesting. And that's where like AI tools really flex because they can handle the hyper-dimensionality problem really well, better than humans. So we basically build a sandbox in which the models learn how to find systems. And building the sandbox piece is the really hard piece. You have to put the right data in there. You have to put the right learning, objective rates and so forth.

1:17:22Naveen Gavini:So that's the piece that we live in. We build the sandboxes for the models.

1:17:26Anil Chakravarthy:Interesting. Last question for me.

1:17:28Avlok Kohli:I feel like you guys are bending towards the meme template, like the world if it ran on geothermal energy. And it's like this idyllic, like there's flying cars. I like it. Everything's green.

1:17:43Ankur Nagpal:Hypothetically, a friend of the show, Mark Benioff, he's out in Hawaii. He's big on AI. could we put a cap on a volcano and capture all the energy out of a volcano and use that to power

1:17:56Naveen Gavini:salesforce ai sure why not a cap what is what does the cap look like i don't know i'm just

1:18:02Anil Chakravarthy:imagining i'm imagining a physical something to trap something to trap the heat that comes off

1:18:07Ankur Nagpal:the volcano maybe you want to drill into the volcano and extract the lava that way but has anyone actually at least theorized about capturing energy from volcanoes they seem very powerful

1:18:18Naveen Gavini:They're pretty powerful. We have a lot of active operational geothermal wellfields on volcanoes today. Really? So the main island of Hawaii has a geothermal wellfield. They've drilled into the side of that volcano, and they make electricity out of it. That's crazy. I guess if that's the cap. Yeah. Yeah, yeah. I guess the cap is the wrong approach. Yeah.

1:18:39Ankur Nagpal:But they are extracting energy from the volcano. That's remarkable. That's right.

1:18:43Naveen Gavini:Wow. Yeah, so there's a lot of geothermal operations, power plants in Indonesia, Japan, Philippines, where a lot of these big volcanic systems live. In the U.S., we have some volcanic systems generating power in California. And then most of the rest of the systems are generating from cracks or fracture zones in the crust. Sure.

1:19:04Anil Chakravarthy:That's very exciting. Did you raise money?

1:19:08Naveen Gavini:We raised some money, yeah. How much did you raise? We got some cash. I want to ring the gong for you. It is. It's exciting. The gong is coming. I knew the gong was coming. Yes. We raised$115 million a few months ago. Sounded. Congratulations. Thank you. Wait,$40 million what?

1:19:25Renen Hallak:Credit facility? It's a credit facility, yeah.

1:19:29Avlok Kohli:Massive. Yeah.

1:19:30Ankur Nagpal:It's all good. I'm really glad you're doing this. Thank you. Yeah, this is amazing.

1:19:32Avlok Kohli:I'm really glad you're doing this. Appreciate it. You know, people talk about AI, bottlenecks in AI, right? You know, talent, chips, you know, energy. and there's sort of like this cycle in technology live streaming right now. And right now there's sort of like a talent bottleneck and an equipment bottleneck. But if we keep doubling from here, there will be an energy bottleneck in technology live streaming. So I'm glad you're doing this work.

1:20:02Naveen Gavini:Thank you, guys. Appreciate it. Have you ever been on a drill rig? No, I have. You guys have not lived yet. I mean, this is the American experience. is to be on a drill rig.

1:20:12Avlok Kohli:I know, I know. Tell us when you're in Southern California. We would love to go live from the rig.

1:20:20Ankur Nagpal:Yeah.

1:20:20Avlok Kohli:So anyways.

1:20:21Ankur Nagpal:Thanks for hopping on. We'll talk to you later. Thanks, guys.

1:20:23Avlok Kohli:Appreciate it. Cheers.

1:20:24Anil Chakravarthy:Goodbye. Up next, we have the founder and CEO, Vast Data.

1:20:30Ankur Nagpal:Just hit a$30 billion valuation. Congratulations. The$1 billion Series F.

1:20:37Anil Chakravarthy:Absolutely. Massive news. How are you doing? Welcome to the show. Good. How are you? Thanks for having me. We're good.

1:20:45Ankur Nagpal:Would you mind just giving us a little bit of the journey, a little bit of the background? I'd love to know all the things that went into building the company to this point since it's such a massive milestone.

1:20:59Joel Edwards:Of course. It's been 10 years in the making. We started in 2016. We wanted to redo infrastructure. We thought AI required a new infrastructure stack way back then. If you remember 2016, it was the very, very early days of AI, but it was already clear that you needed fast access to a lot of data to train these massive systems. And now we needed to infer and to fine tune and for reinforced learning. And so we've been on this journey with AI throughout its various evolutions. We started from storage, building a massive...

1:21:38Avlok Kohli:So was there any points on that journey where you were like, maybe we were too early. Did we pick kind of the wrong category? Or was it kind of like steady? You felt like there was steady progress being made and you had line of sight to getting to where you are now the entire time.

1:21:57Joel Edwards:We definitely did not have line of sight. When we started, if you looked at my presentation that I built for myself, the last slide had a picture of a brain on it and it asked, can we build a thinking machine? I'm not sure we still have today line of sight to doing that, but it's been our North Star. And over the years, we always partnered with the organizations that were on the bleeding edge of AI. of AI. Before generative AI, it was hedge funds and life science institutes that were doing massive analytics using GPUs. And then, of course, once generative AI hit, it became the labs and the AI clouds that became our biggest customers.

1:22:40Anil Chakravarthy:Do you have insight into how hedge funds are scaling compute resources?

1:22:45Ankur Nagpal:I just saw, didn't Jane Street invest a billion dollars in CoreWeave? And it It seems like I saw another company that they funded that was doing custom silicon, and it feels like they have incredibly advanced compute stacks that are a little bit more opaque because they maybe just have a different recruiting flow or a different public messaging flow.

1:23:06Joel Edwards:That is exactly right. In fact, Jane Street is a customer of ours both directly and through CoreWeave, and so we know them well. We play in that space now for seven or eight years. I found that before the big AI labs, the hedge funds were the ones that had the biggest GPU clusters. Yeah, they're ahead of their time and they're very secretive. So, yeah, we don't know much about what's going on there.

1:23:34Ankur Nagpal:What about the social networks and the social platforms? I feel like ad delivery is also potentially underrated as a source of like large scale machine learning, large scale compute clusters. We've seen Meta trained the llama model on the reels-sized cluster that they built as sort of a bonus. But how big is that of a business for you, and how do you think it comps to the hedge fund world?

1:24:02Joel Edwards:I think the hedge fund world is a lot more secretive, but I would dare to say that it's bigger in terms of size. There are very few of these Metas out there, and there are a lot more hedge funds.

1:24:15Ankur Nagpal:Oh, interesting. Okay. Well, talk about what the next phase for your company is on the back of this financing round.

1:24:25Joel Edwards:So we're trying to fill in that software infrastructure layer. Jensen gave a really good analogy of a five-layer cake, power, chips, infrastructure, models, and applications. We're that middle layer. We want to abstract this new hardware away from these new models and applications. We want to make it easy, make it secure for everybody to generate AI agents and use AI in production. And especially as we move from the labs into enterprises, I think it needs to be simplified. And it's always been that software infrastructure layer, what I call the operating system, that took a new technology from new hardware and a killer app to making it widespread where everybody can use it.

1:25:15Joel Edwards:And I think we're at that moment with AI and we're trying to do our part in accelerating the adoption of AI.

1:25:23Ankur Nagpal:How have you been processing the CPU shortage? This idea that as agents get more and more robust, they need more CPU. They need to be fed. You've got to feed the GPUs. Is that something that you're working on particularly, or do you have a view on the overall just CPU shortage, which sort of blindsided, I think, a lot of people in tech who've been following the GPU ramps, but then they're saying, oh, well, what's going on with the CPU crunch? I think these AI factories are bigger pieces of technology than we've ever built before.

1:25:59Joel Edwards:It includes CPUs. It includes DPUs. It includes GPUs. In some cases, it includes TPUs.

1:26:08Ankur Nagpal:DPUs? Can you break that down?

1:26:10Joel Edwards:D, data processing units.

1:26:11Ankur Nagpal:Oh, data. Okay. Yeah.

1:26:12Joel Edwards:Yes. And so all of these chips are in high demand. We're seeing a NAND shortage. Yeah. That's extremely severe right now. We're seeing a memory shortage. And so I don't think there's anything that is of abundant supply right now. The fabs need to be built out. Nobody was expecting this type of curve in the growth of AI. And I think it's going to continue for definitely a few years to come, if not many years to come. And so the hardware vendors need to build out a lot faster than they have been. Yeah.

1:26:48Ankur Nagpal:Can you walk me through at a deeper level your relationship with CoreWeave and how that fits together? I think a lot of people think of CoreWeave as servicing the companies that are training and inferencing models specifically. What are you getting out of that partnership?

1:27:06Joel Edwards:So CoreWeave has been an amazing partner for us. They're the biggest of these new AI clouds like Nscale and Crusoe and Lambda. you see them around the world also as sovereign clouds. And basically, they're building this new stack. And they're making it easy for end users to consume this new stack in a cloud environment. Or just the software builders. And so we try to provide them with as much software as we can, such that they can turn that around into cloud services, whether it's a storage service or a database service or a streaming service as we add more and more layers of this stack those are the things that are required from those end users okay so we

1:27:57Ankur Nagpal:I mean we were just talking to the president of Adobe it sounds like Adobe is doing inference and they're training some models and they're doing a lot of different things they might go to core weave and then vast data might be powering the software underneath and they might not even necessarily have a direct relationship with you because they're getting just access to the best possible product from CoreWeave directly effectively. Is that right?

1:28:16Joel Edwards:It is right. Adobe specifically does have a direct relationship with us. Most of these larger enterprises tend to have both a cloud environment that they're leveraging and on-prem and hyperscale. And what we've built, what we call a data space, basically allows them to do all three of those and have one abstraction layer that enables a seamless experience.

1:28:44Ankur Nagpal:Interesting.

1:28:46Avlok Kohli:Given your exposure to the world of hedge funds, are there a bunch more situational awareness-esque funds that have absolutely printed over the last year or so, but just done it a lot more quietly and the West Coast kind of hasn't picked up on it?

1:29:05Joel Edwards:That's a really good question. I actually met those guys from situational awareness a couple weeks ago. They have a really interesting view into the future, and I think they're capitalizing on that view for every phase as it unrolls. I am not the right person to ask because those funds tend to not have as much infrastructure. The ones that we work with tend to be more quant driven. Situational awareness, I think, is just a few very smart people. They don't need that much compute power.

1:29:38Ankur Nagpal:Yeah, it's more macro research.

1:29:40Avlok Kohli:Doing it the old fashioned way with guts.

1:29:43Ankur Nagpal:Yeah, I love it.

1:29:44Avlok Kohli:Conviction.

1:29:45Ankur Nagpal:Yeah, I mean, conversations and research and having a contrarian view. Well, congratulations on the round. Thank you so much for taking the time to come chat with us.

1:29:54Avlok Kohli:Yeah, great to meet you. Fantastic. Appreciate you breaking it down. We'll talk to you soon. Thank you. Have a good one.

1:30:01Ankur Nagpal:Yeah, can you imagine situational awareness with a couple gigawatts of compute under the hood? Anything's possible at that level. I wouldn't be able to ask them. What was that copy trading profile?

1:30:14Anil Chakravarthy:You know the one I'm talking about where you can create the Nancy Pelosi stuff? Autopilot. Autopilot. Autopilot has a tracker for situational awareness.

1:30:23Naveen Gavini:Every time they post about it, they use this AI image of him. It doesn't look anything like Leopold.

1:30:27Ankur Nagpal:No, no, no, no. But there's so few images of Leopold on the internet that that AI image has just become what mainstream media will pull for him because they just assume that that's actually him and it's not. But it's just very funny that it's him.

1:30:42Avlok Kohli:A man who has only appeared on Dwarf Cash. Yes. There's no other. There's only video of him.

1:30:46Anil Chakravarthy:SBF just posted his full holdings. If lawyers hadn't fire sold, he's up 165x on Anthropic, 27x on Solana, 8x on Robin Hood, Genesis Digital.

1:30:59Ankur Nagpal:Anyway, he's taking a victory lap. We have our next guest, Darian, from Gradient Ventures in the waiting room. Welcome to the show. How are you doing?

1:31:08Avlok Kohli:What's going on? Hey, how's it going? Good to see you, Jordy. Good to see you. It's been a long time. Good to see you, too. Where are you calling in from? Yeah.

1:31:16Renen Hallak:I'm in our office in Jackson Square. We just moved in here about eight months ago, and we're right next to Thrive and Obvious and IVP. It's like a VC community now. We can live here even. There's apartments upstairs. That's amazing.

1:31:34Ankur Nagpal:Since this is the first time on the show, I'd love to get some of your back story, some of your journey to venture, just a little bit of how you wound up in this particular seat in Jackson Square.

1:31:45Renen Hallak:I grew up in Silicon Valley. My father came here in the 70s. He worked in tech as well.

1:31:51Ankur Nagpal:What was he doing in the 70s? What was tech like in the 70s? Semiconductors. Semiconductors. There we go. The true Silicon Valley. Yeah. Yeah, true Silicon Valley where we actually made stuff. Yeah, we actually made stuff. He was industrializing. Now we're re-industrializing. So he was working in semis.

1:32:08Renen Hallak:Yeah, and then he sort of fast-tracked and coached me through everything on what startups were, venture financings, all those kinds of things. he was actually fortunate because in business school his closest friends were Vinod Khosla and Bob Cagle probably everybody knows Vinod but Bob was one of the founders of Benchmark and so he had been steeped in all these different kinds of communities that were very venture focused and startup focused and the industry has evolved a lot then I was fortunate because I actually got an introduction to Sean Parker when I was 17 through my cousin Hadi Partovi who I think you've had his brother on the show So he introduced me and I visited the Facebook office and met Mark and Mark was like, oh, you should come work here.

1:32:49Renen Hallak:I think they were struggling to hire people at the time because I wasn't exactly the best engineer. But, you know, it was it was a fun time. No, we built a lot of stuff. We launched newsfeed, photos, et cetera. And then I left to go to college.

1:33:02Ankur Nagpal:Is the story is the is the apocryphal, potentially apocryphal story of like everything was a single file and you would yell, hey, I'm changing the code. Do you think that story is real at all?

1:33:15Renen Hallak:Oh, I mean, when we wanted to push to the web tier, we would just rsync the latest folder on Dustin's laptop. Wow. It was like that was the push process. And then we introduced Subversion. Actually, there was a guy that I worked with, Aaron Sig, who was brilliant, who we put together Subversion, checked in files in and out. We created templating. I worked on that project too. But when we got there, there was tons of SQL interspersed with HTML. It was hilarious. But that is what startups are about. It's super messy. And that's what I learned there. Although I also learned that only one in a billion are as anomalistic as Facebook.

1:33:52Renen Hallak:Not every startup can go that way. But also hilariously -

1:33:55Avlok Kohli:Did that warp your kind of like, I don't know the full story. Did you come out and you were like,

1:34:01Anil Chakravarthy:everything I touch turns to gold. And then it's like, okay, normal VC world. There's going to be failures. I don't know.

1:34:07Avlok Kohli:I feel like I'll talk with founders sometime and it's their first company and it's going so well. And they don't even know how anomalous it is. And sometimes I'll just be like, you have something really, really special here and stay locked in because the odds of this happening another time in this way are very low.

1:34:28Renen Hallak:Oh, totally. I mean, I ended up starting an enterprise software company, which was much more difficult. I remember meeting Aaron Levy when he was starting Box. He was in a bunk bed with Dylan in a house in Berkeley, and they asked me if I'd invest, and I thought they were crazy, and I didn't, and that was a huge mistake. But then there are positive stories. I met most of the founders of Palantir and invested personally early in Palantir, and that ended up being an incredible company. Or when Luke Nosek was talking about SpaceX almost a decade ago, and I was like, you're crazy, we're going to launch rockets to the moon?

1:35:00Renen Hallak:We're not going to do that. And ultimately, you really just have to surround yourself with really smart people. fortunately I've always been surrounded by people much smarter than myself and so I think that's why I'm in this chair ended up being a founder, invested in a lot of great companies like first investor in Case Text which got bought by LexisNexis one of the first investors in Lagora which is now on a tear and then at Gradient we've seeded Lambda Labs my partner did that deal I joined here about 8 years ago with the goal of investing in AI mainly because I didn't get crypto and I was like I don't understand why crypto is interesting and so I joined the nerds at the AI fund.

1:35:38Avlok Kohli:Yeah, during the 2021 era, you were Google's early stage AI fund, but you were still as a fund overall, some of the partners were branching out and would do different stuff, obviously, but you guys now get the benefit of we were doing all these companies almost a decade ago or a decade ago and now they're in core.

1:36:02Ankur Nagpal:What was the enterprise software company that you built? And coming out of consumer social, why enterprise?

1:36:12Renen Hallak:Yeah, I mean, I was always obsessed with data. I actually thought that the edge that Facebook had was how clean the data was on everyone's profiles. People would just give us their birthday, what classes they were in, all this information. And it was very well organized. and this is before LLMs where you couldn't organize and massage that data very easily. Now you can, things can be amorphous and it's easy to process, but before you couldn't. And so I was very interested in small business data. I thought that we could compete with Dun & Bradstreet. It was a company called Radius that we scaled to pretty significant ARR and we sold it.

1:36:50Renen Hallak:It was a huge, it was a long journey. It was full of crisis, full of learning. And actually that kind of helped me with becoming a VC mainly because I really empathize with how founders are going through a terrible time. I mean, running a company is not fun, regardless of whether it's going well or not. The best companies in the world, it may look like everything's going well, but the mess is just masked by growth. That's the difference between a good company and not a good company. And in general, founders I really have a lot of respect for because I decided not to sign up to found another company after my own.

1:37:23Renen Hallak:I decided to go to the dark side and be a VC, which sometimes I say is a cop-out. But being a founder is really the most difficult job. And if you can sign up for it multiple times, I mean, that's incredible. That's a sign of just incredible resilience.

1:37:38Avlok Kohli:Or a masochist. Yeah, that too. I'm so curious what you're excited about investing today. And I know it probably comes down to just backing great teams because that typically works well. But we're in such an interesting time right now where it feels like all enterprise software is converging on the same kinds of simple use cases, this chat style interface to get agents to do things. Everything is converging. Just the text box. And you guys were, you did Lambda, you did a NeoCloud eight years ago. That was the best time to be investing in a NeoCloud. and then now that it just feels like you have the SaaSpocalypse in the public market and then a lot of early stage companies that are getting investment are still SaaS.

1:38:35Avlok Kohli:So I'm curious do you still believe in SaaS? What kinds of opportunities are you most excited in?

1:38:43Renen Hallak:I believe in shorting SaaS if I can. That's probably what I believe in right now. I generally think that software is like That's a good laugh track. You're bullish on puts. I'm bullish on Salesforce puts is what I'm saying. I think that the reality is that we are doing a lot of soul-searching like a lot of seed funds. There are a lot of things that are still very interesting and investable. We just invested in a robotics company that I'm super excited about that has a hardware component. I wouldn't touch hardware with a 10-foot pole five years ago. Now I'm very interested in it. We've invested in tools that help you manage multiple coding agents.

1:39:22Renen Hallak:We've invested in video editing solutions. We're investing in an AI hedge fund. We are investing in a lot of really interesting things that are outside of the software as a service scope. And the real reason is just that if you want to build anything you can in a few hours, it's just so easy too. And I think that that is a major change, not just for software companies, but generally for the bottom 40 % of work that you sit behind a desk for. Maybe the bottom 60%. And so we're spending a lot of time thinking about ways in which we can think about new areas. Now, we have the benefit of having done this before, because when we launched in 2017, right after the Transformer paper came out, there were no AI companies.

1:40:05Renen Hallak:There were none. And OpenAI was a nonprofit, and Prophec didn't exist. DeepMind was still a small division within Google. Like, you know, now, you know, so we had to go and hunt and find companies like Lambda, like Rad AI, like Streamlit, like Writer, you know, like a lot of these businesses. And so we're getting back onto what we had done before, which is scouring and doing a lot of outbound, going and meeting founders, getting to know founders, and really slowing our deployment pace until it's very clear where the value is going to accrue at the seed stage. And that, I think, is the smart thing to do right now.

1:40:43Renen Hallak:I think that software in general is really in jeopardy. And we've made some software investments, but we believe they have strong moats because they have network effects or they have data network effects. But in general, like 80 % of software companies are really in trouble.

1:40:56Ankur Nagpal:Yeah. Talk about the pipeline for founders and how it might be changing. I'm sure you've been tracking, like, there's this crazy fall off in the number of computer science grads. And that used to be just fertile ground. It used to be general casting, right? Central casting for VC-backed founder was like Stanford CS. And I don't know about Stanford specifically, but it seems like we're getting a lot less or fewer computer science grads. And I'm wondering if you envision a future where you'll be pulling more physicists and mathematicians or theologians or philosophers into entrepreneurial stuff.

1:41:36Ankur Nagpal:I mean, Mark Zuckerberg did not study computer science as his primary major, right? Wasn't he a philosophy major, I think? or something like major yes like psychology psych major so like like there's plenty of examples

1:41:46Avlok Kohli:this honestly makes a lot of sense for social media brilliant um but but i mean do you see

1:41:52Ankur Nagpal:there being like a pipeline crisis is the contrarian move now to study computer science at a time when coding jobs are going away like walk me through how you're processing this idea that you know our best and brightest aren't going to you know just learn to code and become computer scientists at the same rate?

1:42:12Renen Hallak:Absolutely. You talk to any scale-up or tech company today, the mid-level engineers are managing coding agents in English. They're not even coding. They're managing hundreds or many dozens of coding agents at once. I think at the senior level the engineers are probably okay because we do need more code reviews and evaluations because a lot of these coding agents are spitting out bad code at volume. and that will get improved over time, but I think it is a challenge. But I do think for entry-level positions, we've told a whole generation, including my generation, that you should go to college when I don't think that that's necessary.

1:42:51Renen Hallak:College was originally formed, especially liberal arts, was formed for the process of being creative or thinking or philosophy or things like that or writing. We've told people that they can go to college and get a good job at a tech company, all those kinds of things. I think that that's kind of in jeopardy currently. My hope is that we focus more on real trades, like welding and plumbing or ceramics and pottery. These are going to be more respected lines of work in the future as knowledge work just is completely replaced by AI. I don't have a great answer for you, but I generally do worry about this because I don't know if colleges should be teaching computer science to everybody.

1:43:31Renen Hallak:That being said, I think everyone should take a course to understand how AI works, how these LMs actually work. I think that everyone should do their best to read the Transformer paper, everyone in the world, because it is kind of the Magna Carta of this generation. But I do worry about this. I worry about workforce displacement and how that transition works and if our government is even capable of helping people transition from one phase to another or one area to another.

1:44:00Ankur Nagpal:Yeah, I'm just wondering, is the next great pottery entrepreneur going to go through pottery trade school or be a business major and be able to marshal a billion dollars of capital to build the pottery empire of the future? Do you go deals guy route and then tack on the trade? Or do you pull from the trade school? Maybe it's a moot point because you'll know it when you see it and you meet the person. But it's a fascinating world to imagine because for the longest time, it was like, oh, you want to do something into pottery? Well, it's going to be a SaaS company and you're going to have to know computer science.

1:44:32Ankur Nagpal:and now it's a little bit different, right? I'm like somewhat right here.

1:44:36Avlok Kohli:Do you think - I think actually - Oh, go ahead, Jordy. No, I was going to take the conversation another way. So finish. Oh, I was just going to say that like,

1:44:44Renen Hallak:imagine being someone that's incredibly good at like some form of ceramics. You would create your product and then AI would market it, take photos of it, would design it, buy ads for it, do the back office and do the finance for it. That's actually the future that I think we're going to end up in. Now, ceramics is kind of a weird example, but you know what I mean? like a car mechanic, like an antique car mechanic or, or, or a welder. Those are examples of like how AI would help those people. So I think we'll have many, many more entrepreneurs that are not building unicorns. They're going to be building, you know, smaller lifestyle businesses.

1:45:14Ankur Nagpal:Yeah, I completely agree. It feels a lot like, uh, what happened when everyone got an iPhone and a YouTube account, there were a lot more creators. There's like this Flora or Shopify, same thing. Like you're democratizing these like long tail businesses that like previously it would be like oh you want to like during the dot-com boom there was like oh you want to you want to sell t-shirts online here's a 10 million dollar check so you can buy some servers and rack them and and just have a website yeah well remember teespring yeah teespring was like sort of a meta platform a little bit but yeah i mean it's a good example of like a lot of hot a lot of expensive infrastructure for doing something pretty basic sorry jordy uh what's that i was curious do you

1:45:52Avlok Kohli:think you'll write more checks this year than last year or vice versa um i think have you gotten to or have you reached a point of frustration around valuations you're like you've been through you've been you've been through you know cycle cycles enough to to kind of know when things are getting

1:46:11Renen Hallak:probably overheated yeah i mean we don't feel as though valuations are out of control at the pre-seed and seed stage, where they are out of control are probably in the later stage. Series A, Series B, even really late stage are trading at incredible multiples. I think that we did this robotics company at sub-50. We've done this other multi-coding agent company at sub-50 as well. We're pretty focused on keeping valuations below 50. I think that capital-constrained companies are the ones that end up being very successful because they sort of figure out how to build better products and become more efficient.

1:46:49Renen Hallak:It's when you overfund companies, like some of these new Neo Labs that are raising billions of dollars, people start making bad decisions when they're overfunded. And so I think that where we play, which is not funding the next contender to Anthropic or OpenAI, the valuations are pretty favorable.

1:47:05Ankur Nagpal:Yeah.

1:47:06Avlok Kohli:Jordy, anything else? Thoughts on solo GPs today. Is it overrated to be a solo GP?

1:47:14Ankur Nagpal:Yeah.

1:47:14Anil Chakravarthy:And should there be a trade school for becoming a GP? Should we take millions of plumbers and teach them how to write checks?

1:47:23Avlok Kohli:Millions of venture capitalists.

1:47:25Anil Chakravarthy:Everyone who's doing pottery. You know, we keep coming back to the pottery example. If you are a top-level ceramicist, which is the actual term,

1:47:32Ankur Nagpal:it is incredibly lucrative, incredibly prestigious.

1:47:35Avlok Kohli:I didn't know you had this pottery. Oh, yeah.

1:47:38Ankur Nagpal:Ceramicists are real. It is an art form, and it is incredibly high-skill ceiling.

1:47:44Avlok Kohli:But not as high of a skill ceiling as venture capital. Not as high as an art form.

1:47:49Ankur Nagpal:Yes, yes, it is an art form. But yes, thoughts on solo GPs.

1:47:53Renen Hallak:Yeah, I mean, I met one this morning. I've invested in a bunch of them. I think that the sub$50 million solo GP is a great business. If you can raise the money, you can get allocation in rounds. You don't have to compete. It's when you get above$50 million that it's really challenging because you're going to be ownership constrained. You're competing against someone like us. and we write a larger check. I think also another thing is that the solo GPs are really effective at feeding companies to the multi-stages and to pure play seed funds like us. And so I think it's actually a fantastic place to be.

1:48:26Renen Hallak:But it's just going to be really rare for the solo GPs to break out fund size well beyond that. So you have to be comfortable with being a fund of one with no help because your fee structure is not going to be able to support much more than that. But I am bullish on it. And especially with these AI tools, you can really diligence companies without needing more people. You can run your back office entirely without needing other people. And so I'm in general pretty excited about them. They have struggled to raise more recently. LPs are not deploying capital at the pace that they were when solo GPs were breaking out in 2021, 2022.

1:49:05Renen Hallak:And so I think that you're going to see a lot of them probably go join funds and a lot of the really good ones with good returns, be able to raise their next fund. Do you think more of them should be thinking

1:49:16Avlok Kohli:like, okay, I'm going to do a$30 million fund, a$30 million fund, and then a$30 million fund? Because it feels like a lot tend to be like, okay, I'm going to do the$25 million fund, and then I instantly want to ramp up as much as possible. And then suddenly you have a different strategy. Suddenly you're actually competing head to head, where it feels like if you do want to break out and become a brand and a platform over time, if you have like three really high quality funds back to back, but in deploying them on a shorter time horizon, maybe it could be a better route.

1:49:47Renen Hallak:Yes, faster deployment cycles, smaller fund, because they're just sort of liquidity constraints across LPs. But a lot of the fund funds I've noticed are now focused on sub$75 million funds. And so there is a market for that, excuse me. And so I would generally focus on keeping your fund size consistently small at$30 million, maybe deploy over a shorter time horizon. And then you can also get LPs to pre-commit to multiple funds, which is something I've seen people do. Is that, hey, I'm going to do this every 18 months. Do you want to commit some amount every 18 months? And that actually ends up being a better story for people than raising one bigger fund.

1:50:27Renen Hallak:And so I generally do think that the smaller fund on a faster cycle will yield better results. Because you also have to put a lot of companies in the portfolio. If you run portfolio modeling, which we do quite often here, at our fund size, it's usually 40 to 50 companies per fund in our Monte Carlo simulation that yields a 4 to 5x fund. In the smaller funds, it's really like 80 to 120. And so you have to be writing a lot of checks and get to conviction quickly and be willing to own less. And then you can run SPVs into the follow-on rounds, which I think has been really successful for a lot of people.

1:51:04Renen Hallak:But the smaller the fund, the more work in my mind. because you have to constantly be looking at deals every week. You have to be putting capital out every week into different companies in order to make the math work out.

1:51:17Anil Chakravarthy:Yeah. Well, tell us about the latest fund at Gradient. What's the structure? How much did you raise? I want to hit the gong.

1:51:24Renen Hallak:Yeah, we raised$220 million.

1:51:32Anil Chakravarthy:I think we already talked about deployment.

1:51:33Avlok Kohli:And it's also possible we already hit the gong for you. Well, just, you know, whenever, whenever it got announced. But great, great to see you. Thanks for coming on. Appreciate all the insights. And let's get, let's get your new robotics bet on the show as soon as they're ready. Oh, absolutely.

1:51:50Ankur Nagpal:That'd be amazing. Yeah. Have a great rest of your week. Have a great rest of your day. And we will talk to you soon. Great to see you. Goodbye. Thank you so much. Great to see y 'all.

1:51:57Avlok Kohli:Later. Yeah.

1:52:00Anil Chakravarthy:Anything else going on in the timeline? There's a bunch of stuff. Tons of images. Where else do we want to go today?

1:52:09Avlok Kohli:What other news?

1:52:11Anil Chakravarthy:Oh, I wanted to get your take on this. Imagine if Codex existed in 2005. And it's this very retro.

1:52:19Ankur Nagpal:People are doing Imagine if Codex existed in 2012. And it's the Apple design cues from the early Mac OS X. And then the Windows XP aesthetic. Do you think the Windows XP aesthetic is overdue for a comeback? This is in the middle of the GPT Image 2 feed right there. This aesthetic.

1:52:44Avlok Kohli:It's got to come back.

1:52:46Ankur Nagpal:This is a Mountain Dew. It would fix you. This would fix me.

1:52:51Anil Chakravarthy:No, I have somewhat fond memories of XP.

1:52:57Avlok Kohli:John, imagine playing Halo while you just look over and this is just running there. I don't know. You're just drinking a Mountain Dew.

1:53:06Ankur Nagpal:For some reason, I don't know. A lot of the Windows features that we're launching during this time were a little bit rough. This was when Mac was starting to take off. And these releases, Windows Vista, Windows Post XP, Post, what was it? I don't even remember the other versions, but Windows 8, I think, was one of them. They were starting to be less loved. They were starting to be a little bit more like, is it worth the upgrade? Is it a good vibe? I mean, it's not nostalgic for me yet, I guess is what I'm saying. But there are a couple other important warnings in here. One of them, let me find it.

1:53:53Ankur Nagpal:I know you had thought about potentially putting on a bear costume and trying to defraud your car insurer. and if you in the audience were thinking about dressing up like a bear and attacking your car in order to collect an insurance payout that's up to$141 ,000, think again. Think again because humans, this is in the New York Times, humans who used a bear suit to defraud car insurers are sentenced to jail. You might be thinking, I'll just throw on this bear suit and I'll attack my car and then I'll call my insurer and I'll collect a check and it'll be easy, easy money.

1:54:33Avlok Kohli:easy money get rich quick scheme no no three southern california residents were sentenced to jail after masterminding a scheme in which they staged fake bear attacks on their luxury cars then collecting more than 141 000 in insurance payouts to carry out the attacks the residents had a person in a bear suit climb into the cars and use claw-like kitchen essentials to leave scratch marks the los angeles residents then filed claims to defraud three different insurance companies so i don't understand why they had to be in a bear suit like were they filming were they filming yes there is security footage it's okay okay no way yeah yeah we're gonna pull up the

1:55:10Naveen Gavini:security page it's absolutely uh yeah rolls royce ghost yeah 2010 rolls royce ghost i know someone

1:55:19Ankur Nagpal:who has one of those i don't think he's responsible for this but uh they are dressing up like a bear to get into the car and rip everything and destroy it so that you can file an insurance claim.

1:55:35Avlok Kohli:Hey, I'm just a bear. I'm going to just get in this car.

1:55:39Ankur Nagpal:The schemes are really out of control these days. That is a wild, wild one. The California Department of Insurance began its investigation called Operation Bear Claw after an insurance company flagged a suspicious claim about a bear rifling through a 2010 Rolls-Royce ghost in Lake Arrowhead, California, where there are, in fact, bears. So it's not that unreasonable. The defendants claimed that the bear had damaged the interior of their Rolls Royce with photos they submitted to the insurance company showing scratched seats and doors. Video footage submitted with the claim and released by the department shows what appears to be a bear crawling around in the backseat of the Rolls Royce and swatting at the dashboard.

1:56:19Ankur Nagpal:Investigators later discovered fraudulent claims submitted to two other insurance companies that claimed a bear had damaged the same interior. of two Mercedes-Benz. Just scratching everything. That is like the most perfect scratch line. Like it's so suspicious. Like it's so clearly like, I feel like a bear's claws would be way more organic and like it's also hopefully doing more damage.

1:56:41Avlok Kohli:That looks like the weakest bear ever.

1:56:43Ankur Nagpal:Yeah, because it's not a bear. It's a human. After its investigation, the department concluded that the culprit was not in fact a particularly nimble bear. The defendants were arrested in November of 2020.

1:56:55Avlok Kohli:So I would, I would, my, my first thought is not super believable that the bear walks up to the Rolls Royce goes, opens the door and goes around. But a few weekends ago, I was hanging out at a former guest of the show's house. He has goats. Friend drives up in his car, parks, and leaves the door open. A few minutes later, what's in the car?

1:57:21Anil Chakravarthy:A bear.

1:57:22Avlok Kohli:A goat. A goat. A goat. Goat went in the car. and was just like and this was a this was a Land Rover Defender okay, it was like quite a jump up go go jumps up and it's just hanging around like actually just

1:57:35Anil Chakravarthy:Was there damage to the Land Rover Defender?

1:57:37Avlok Kohli:I don't think that if there was he didn't bring it up, but there may be some hoof marks marks some hoof scratches

1:57:43Anil Chakravarthy:And this is all a complicated

1:57:45Ankur Nagpal:It just seems like such a such a wild scheme. Here's a real bear going in a car from Tyler. Okay It really can open the door.

1:57:56Avlok Kohli:I feel like they had to have seen this video and thought, finally.

1:58:00Ankur Nagpal:I thought, I feel like most cars will automatically lock the doors. You know, this wouldn't happen with those, everyone loves to hate on the flat door handles that all the electric cars have. But Bayer's gonna struggle to open a Tesla door for sure. This is, uh, is the Bayer still in there or is he, he's, wow. Wow.

1:58:20Anil Chakravarthy:There's a history of bear visitation in Pasadena. What do they know? There was a woman who was on the local news and said that a bear came and swam in her pool. And she seemed like oddly happy about it or like excited. Like she sort of liked having the bear come and visit. And it felt like she wasn't exactly like building the strongest fence and maybe was sort of excited about the idea of a bear coming for a dip in the swimming pool.

1:58:50Ankur Nagpal:But people do odd things with animals.

1:58:53Anil Chakravarthy:People dress up as bears. Scientists also apparently have been giving salmon cocaine. I have no idea why. But the New York Times has a post. These salmon got high on cocaine. That wasn't the craziest part. Scientists in Sweden made an unexpected discovery. I think Tyler read this piece and can spoil the ending because...

1:59:16Naveen Gavini:What are they doing over there, Tyler? What is the unexpected? I think they tested, like, what happens when you give the fish cocaine.

1:59:21Anil Chakravarthy:Okay.

1:59:22Naveen Gavini:And I think the answer was that they swim much faster and they can swim for longer.

1:59:25Anil Chakravarthy:Okay. And that was unexpected? That feels like...

1:59:29Avlok Kohli:Imagine being the scientists that, like, didn't get a grant for their research. Yeah. You know, and they were working on something.

1:59:35Anil Chakravarthy:I'm really close to breaking all silence.

1:59:36Avlok Kohli:And they're reading this article and they're like, wait, like I was going to do Alzheimer's research. And then these scientists just wanted to give hard drugs to fish. Nearly twice as fast.

1:59:48Ankur Nagpal:Nearly twice as fast. I guess that's somewhat interesting. But this does feel like something that could be one shot. Interesting discovery. There's no way.

1:59:55Avlok Kohli:There's just no way you could have.

1:59:56Ankur Nagpal:You had to prove it.

1:59:57Avlok Kohli:You had to prove it. You had to prove it.

1:59:59Ankur Nagpal:I mean, I guess it's relevant in the field of environmental toxicology as much as we're joking. This is a good quote.

2:00:04Naveen Gavini:While it's unclear if swimming faster and further while under the influences harm these fish, experts say it's probably not great.

2:00:13Ankur Nagpal:But, yeah, I mean, I guess if you're an environmental toxicologist, it is useful to have various data points on what happens with contaminants in the environment to the fish populations specifically. And so I am willing to believe that there is good that will come out of this other than just a viral post. He wasn't trying to bring a Halloween hoax to life. He wanted to see how salmon in the wild reacted to pollution from the illegal drug. And there might, in fact, be pollution if, you know, if importation goes poorly and narcotics are delivered to the water supply. That would certainly not be good.

2:00:50Ankur Nagpal:In recent years, there has been an alarming rise in the number of waterways polluted with the drug cocaine, prompting scientists to wonder how fish might be handling their highs. As it turns out, fish indeed get wired. In a study published Monday in the journal Current Biology, Dr. Brand and his colleagues showed that coked up salmon, this is in the New York Times, coked up salmon swim. Isn't there some account that just says like first time it's ever been printed in the New York Times and they just screenshot like words and phrases that feel funny in that particular when they're shown in the gray lady in print.

2:01:24Ankur Nagpal:Makes them swim faster, travel farther than their sober counterparts. The study prompts additional questions about the effects that human drug habits may be having on salmon and other freshwater fish. Well, we certainly want clean waterways.

2:01:34Avlok Kohli:Speaking of things under the sea, red lobster brings back endless shrimp for a limited time starting April 20th. Endless shrimp. Luke Metro says this is an EA cause area. Hostile takeover of red lobster. Make it vegan.

2:01:51Anil Chakravarthy:Make it vegan.

2:01:52Avlok Kohli:Make it vegan.

2:01:54Ankur Nagpal:No, they got to make a play to make it come back. And this seems like something that customers were clamoring for. So have you ever been to a Red Lobster? Nope. I don't think I've ever been to a Red Lobster. I've done the Outback Steakhouse.

2:02:06Avlok Kohli:There are things in life that I don't think I will ever do.

2:02:09Anil Chakravarthy:No.

2:02:10Avlok Kohli:And Red Lobster, I believe, is one of them. Ben, have you been to Red Lobster? I've been there.

2:02:15Anil Chakravarthy:Yeah?

2:02:16Avlok Kohli:What's your... They're big in Minnesota. One to ten. I want to rate it. It's fine. I think they're all gone, though.

2:02:22Anil Chakravarthy:One to ten. What are you rating it?

2:02:24Avlok Kohli:Like a five.

2:02:24Anil Chakravarthy:Like a five. I think before it was no five. No five. So you got to pick a side. Four. Okay. Subpar. It's sub five. In fact. Anyway, thank you for watching. Anything else, Jordy, you want to run through?

2:02:39Avlok Kohli:No, it has been an honor and privilege to.

2:02:42Anil Chakravarthy:Well, this is kind of cool. ESPN launching sports only trivia show called ESPN Jeopardy. I like this. I know this is a really, really good idea. I can't believe it took them 50 years to come up with this concept. but apparently Joe Buck is closing on a deal to host the show.

2:02:57Ankur Nagpal:ESPN Jeopardy is expected to air on Hulu, Disney +, and may make a run on Linear TV on ABC or ESPN streaming platforms. This seems so obvious in hindsight. I think it'll be very, very effective. A lot of sports fans love trivia, and now you can watch it.

2:03:15Avlok Kohli:We love you. Goodbye. See you tomorrow.

2:03:22Thank you.