Starlink Cellphones, Open AI Critique, Ross Ulbricht Founder Story, The Best of X

30:30So what these US firms have been doing is not exactly out of the ordinary. It's just the nature of trying to do things fast as you focused on, you just focus on speed versus efficiency and cost. Yep. Yep. And so he closes talking about aggregation theory says, is on the flip side, non-reasoning LLMs are still great at producing content, and they also get smaller by distilling the output of reasoning models. One of the big R1 takeaways is that you can infuse reasoning into normal LLMs. More than that, though, you can also use them to generate massive amounts of synthetic data that simply teach the normal LLMs the answer to an effectively infinite number of questions.

31:12And of course, reasoning could end up simply being effectively free. One announcement that I should have added to yesterday's post was Google's announcement of Gemini 2.0 flash thinking. It appears to be competitive with R1. The China is crushing US rhetoric today, forgets about Gemini 2.0 flash thinking, likely cheaper, longer context, and better on reasoning. We're still early in the AI race. So this is like completely missed. Yeah. But we don't know the prices yet. Can you believe that Google owns search and YouTube and they basically have every mainstream media company by the balls and they can't even get news out.

31:49No, it is crazy. Their product sense is just so bad and they have this whole problem. And their marketing sense now. It's like, is it Gemini or is it Bard or they've been renaming models left and right and it's clearly they're shipping their org chart because they had Google Brain and then DeepMind and they finally merged them. But they're still just like, I know what Google is. Google is a search engine. I don't know what, I know what chat GPT is. Chat GPT is a text, is a chat bot. Like Google Gemini 2.0 flash thinking, like what, how do I even access that? I tried to get Gemini set up. I finally figured it out.

32:23It sounds like an internal project. I went to Gemini and then I had to upgrade to Gemini advanced. And then I got access to the 1.5 model. But I was even asking the model, like what are your capabilities? And it didn't know. Like it was like not telling me like how to do it. That should be one of the new benchmark for models. You should be able to tell somebody. What's your context window? What version am I on? How do I upgrade? Take my money. You're interviewing for a role and somebody asks, so what are you good at? What do you do? You don't have a good answer for it. That's kind of a tough sell.

32:52Yeah, and so Google is a company that actually cares about and has invested in infrastructure and perhaps doesn't see the need for software type of margins. OpenAI and Anthropic have allegedly been earning on their API. So I wouldn't be surprised if they are very competitive. Of course, they're not open source. But again, R1 is I can get all the thinking I want locally for free. This isn't necessarily dispositive in terms of the long-term prospects for aggregation theory. But given that the entire history of technology has been defined by processing speed simultaneously increasing, even as it decreases in price, the burden of proof is probably on those who say that zero marginal costs are an aberration.

33:32And so he's saying that like in the longterm, all of these models will be optimized to the point where there's zero marginal cost. And at that point, being the entry point and being able to tax that is really valuable. And so there's a couple of posts that we'll go into during the timeline that say, oh, this is massively bullish for Apple because, you know, all of a sudden the inference gets super cheap, gets much better, can be done on the edge, baked down. They don't need to mess around with any of the, uh, the, the, the actual training or inference themselves they can just throw it on the phone and it's there and it's great yeah um and uh and and same with google and facebook they're saying it's really good for facebook because they can just chuck this in and they don't need to worry about uh you know playing the model race yeah but fascinating story continues to evolve ben thompson staying competitive goaded goaded goaded let's move on to ross ulbricht and the story of the silk road um we we've had a lot of laughs oh yeah obviously it's a dark story in many ways yep there's sort of this bright spot now with him being pardoned we're not we'll wait till the end to to talk about whether or not we agree with that decision not that it's on our uh you know not that we like to comment on politics But yeah, there's so many just insane aspects of this story.

34:55And I think that as we looked into it, we realized that so many people had talked about the history and the sort of crime story around Silk Road because it's so fascinating. It's this internet narco trafficker meets hacker meets Anon who was an Eagle Scout, right? So it's just like wild story and an amazing marketer even after getting caught. Even after he still has a ton of fans. I don't know if Ben, you can pull this photo up, but he was an Eagle Scout. I was an Eagle Scout. Really? I didn't know that. My dad was an Eagle Scout. And I remember when I was in the Boy Scouts, they would tell everyone, no Eagle Scout has ever been convicted of a felony or something like that.

35:40And it was like clearly wrong, but it was just to like put you in the mindset of like, well i don't want to be the first one so i can't be a criminal yeah uh and it was very effective the boy scouts and the girl scouts fell off massively there are tons of like culture war issues yeah yeah and and real you know like criminal stuff crimes and stuff like that um but uh anyway so but he has a lot of fans and dripped out technology brothers like really really likes him and has posted him multiple times there's another photo of him uh yeah we'll put that up on the screen uh of him and without a doubt he's he's benefited massively from his you know aesthetics aesthetics yeah the physiognomy is which is why it's underpriced to get diced i don't know that he's diced i don't know that he's actually lifting a lot of people say he looks healthier than brian johnson after 11 years in prison eating prison slop yeah what's the secret what's the secret yeah we'll have to ask he does look young and he certainly played into that and we'll go into kind of the timeline here because a lot of people think oh yeah he was 17 when he did this wrong so he yeah the other aspect that we'll talk about throughout the story is is how good of a marketer he was and he and his family post-incarceration on his carceral journey yeah uh they were able to spin this story like he was like some 18 year old kid you know high schooler almost what you'll find out is that he was you know 11 years ago he was when he was uh put into prison he was 29 years old yeah so he wasn't you know he wasn't a kid no not at all uh he was born in 1984 and he was very aware of his actions so just to get into kind of like the high level founder mode elements of the story and then we'll get into the timeline uh he's a self-taught developer, first time CEO, completely bootstrapped the company, went from zero to 1.2 billion in sales in less than three years, personally netted over 80 million in fees off the marketplace with a very low take rate, which we'll also get into, operating a fully remote, global, and basically anonymous team where he was the only one that knew the real identity of his employees.

37:46He would require them to show ID, leveraged novel payment rails using Bitcoin and maintained this sort of missionary sort of mode to building the company that was basically almost like a religious pursuit for him because of his libertarian beliefs which we also get into so and so the backbone of our research was mostly nick bilton's american kingpin which is a great book i highly recommend it it reads like you know it's a page turner it's like a total thriller uh and so uh bilton kicks it off by taking you back to the beginning of ross albrecht's story born in austin texas march 27th 1984 supportive middle class house household nothing crazy going on uh eagle scout as we mentioned uh friends and family described him as polite gentile and unassuming uh uh olbrick developed an interest in science tinkering with computers he goes to university of texas at dallas on scholarship initially studying physics then he pursues a master's degree in material science of Penn State.

38:47And he basically gets obsessed with libertarian economic theory, especially von Mises, Murray, Rothbard, and Milton Friedman. Yeah. And so while he's there, so one thing to note, he's not studying computer science. He's not a programmer at all at this point. He's interested in technology, but he's spending his time going and debating libertarian beliefs, arguing for things like the legalization of drugs. His big point, the high level sort of his high level view is that government should not have any decision making power over individuals and individuals should be able to do whatever they want and he goes on to do whatever he wants yeah for the you know basically have you seen that post it should go on banger archive but it's like women will say they want a man who reads but every man who reads ascribes to some ho scaring extremist political belief and it's like yeah he got into reading and started reading like mises and rothbard and like these like kind of crazy philosophers and he really speaking of ludwig von mises there's a this this ufc fighter money moicano yeah oh yeah he's done this uh post fight speech where he just is like hammering against the government yeah like uh and i mean obviously like there's a lot of good good ideas in libertarianism but it clearly like ross took it to such an extreme that he was using it to justify anything and clearly bending his, like libertarians love to, they, you know, they have a hammer and everything looks like a nail.

40:19And so they wind up not seeing any externality is just viewing every little minor interaction is like, oh, well this fits with my libertarian ideology. So therefore it's justified. And, and he really, really twisted the ideology and in like a much more negative way than And many libertarians who are just arguing for like slightly smaller government or like, you know, slightly, you know, lower taxes or something or more efficiency in the government. Like you could look at Doge as like a libertarian project in some ways, but it's much different than, yeah, we should legalize guns and drugs and all this crazy stuff, which is like where he wound up.

40:53And so. Yeah, not just legalizing it, but brokering transactions at scale for a number of illicit goods. He dabbled in entrepreneurial ventures after graduate school. one of these involved day trading another was an ebook enterprise none proved lucrative or fulfilling so so so to be clear he was trying to do day trading realized it wasn't very profitable he also uh he he was a part of this someone else's sort of non-profit called good wagon books which they would go around to houses collect sort of old books that people didn't want they would sell the ones online that they could and they would donate to prisons the ones that they couldn't sell.

41:30Wow. And so he was probably foreshadowing, donating books to himself in his later years. And yeah, one other thing about this time that I thought was interesting, while at Penn State, little like odd jobs he was working, he saved up enough to buy a rental house. And he later shared that he found it so frustrating having college students as, you know, degenerate college students as tenants that he sold it. And he actually used that money to kind of get Silk Road off the ground because he didn't have an income for some amount of time. Yeah. So he becomes fascinated with Tor, the onion router, which is the portal to the dark web.

42:11The timing here is so key, right? It's like if he had had all these ideas five years before, impossible, then wouldn't have had Bitcoin. I don't know where Tor was in the development, but it wasn't. All this stuff was like this perfect convergence. Totally. And Bitcoin, obviously coming up at this time. A few people outside of cryptography circles were paying attention to Bitcoin, but Ross saw it as a tool for circumventing government oversight. He once famously stated, I want to use economic theory as a means to abolish the use of coercion. This quote illustrates Ross's self-styled mission of empowering voluntary exchanges.

42:45And he, yeah, it's also very funny throughout this because he's not like super technical. There's a lot of times when clearly you can tell that he's bought, you know, like, oh, nothing can go wrong it's decentralized like oh bitcoin it's anonymous and it's like it's not it's actually not anonymous like in many ways and there's always ways around this stuff you don't have to um but the mean what's the word for you don't have to kyc yeah but but it's it's a public ledger exactly exactly so it's very very traceable and uh and we'll go into this later but uh they're like tracking the bitcoin movements actually got a lot more people caught because it was all trackable.

43:22And so, and there's still companies today like Chainalysis that leverage public blockchains to track down criminals at scale. Yeah. And so combining Tor with Bitcoin and his ideological calling, he sets up the first version of the Silk Road. By early 2011, Silk Road was online, though still small. And his site allowed buyers and sellers to communicate, post product listing and leave reviews. This is basically an eBay. Yeah. And so, and so just going back a little bit uh taking one quick break so he to to anytime you're starting a marketplace so the fact that he took this marketplace from zero to 1.2 billion in volume in three years bootstrapped is insane yep very very very few companies do that yep um he in order to get this started marketplaces have this chicken and egg problem where what what comes first the supply uh you know you need supply in order to have demand on the marketplace and so he actually uh starts growing mushrooms in order to create the supply to have supply on on the marketplace so he's growing mushrooms he's building the site and then once he's at a point where he's ready and he has a girlfriend at this time who's like sounds like a very sweet girl and they're very like in love at the time yep and he at one point like takes his girlfriend like blindfolded out to like see the mushrooms and like is like all proud of it like takes her out to this like damp kind of field or whatever and there's just and so he's he's uh he's this is like the very beginning of him actually so he had the intention to commit crimes yeah and he's very aware that it's what he's doing is illegal and he specifically chose psilocybin mushrooms because he felt like the penalty for that would be less severe than than starting by selling harder drugs or even something like marijuana yeah but i thought the amount that he was growing was it was it wasn't like he was growing like oh he's got like one little plant it was like a whole room full and the punishment for that if he had gotten caught would have been years and years in prison just for that which is like still kind of yeah and one thing is in order to kind of kickstart the first initial sales he uh he went on a site that would talk a for a public forum yep that would talk about mushrooms he made a post and he was very sort of this was smart at the time if you weren't committing crimes but he he posted something under this username i forget what the username was called was it altoid it was altoid yeah it was like hey has anybody tried this site yeah it looks pretty cool looks cool yep and he used that to sort of catalyze some traction because he knew he was holding supply that he was ready to sell yep and so we'll get to this later but that was ended up being part of his downfall because he had used his real email to create the altoid account yep and uh he had gone back at one point and changed the email, but there was a record in the database that it had Ross Ulbricht at gmail.com tied to that username.

46:18So that was one of the ways that they sort of ended up. Yeah. He's one of those things where he's, Oh, everything's anonymized and decentralized. It's like you left paper trail all over the place, bro. Like you were not that good at your OPSEC. And so it's fascinating how fast this took off. So he's thinking about it in late 2010, in January of 2011, he launches the Silk Road, codenamed Underground Brokers in Austin, Texas, aiming to create a free market website where users can buy anything anonymously. And by June, just six months later, Senator Chuck Schumer denounces Silk Road in Washington, D.C., prompting heightened media coverage that forces Ross to bolter.

46:57They also got a big Gawker article, which I think was right around this time. Yeah, this all happened right around the same time. Schumer, so a reporter who is at Gawker, and Gawker's no longer with us due to the actions of some powerful people in tech but uh this gawker article hears about silk road gets on it and is browsing around ends up writing this whole piece ross talks to them yeah and says please don't write this piece that usually doesn't work with journalists they know they're onto something they end up publishing this and and uh there was even a while that that journalist was suspected of starting silk road because it was such a big marketing moment yeah that people were like did Did he just like, did he like use this?

47:40And he'd written about some other topics. And that was like, Ross really felt like it was too early for it to go that public. Like they were starting to do sales in a meaningful way. But at the same time, he was a self-taught developer. And so he struggled with hacks and stuff like that all the time. And so he would notice every now and then he'd be like, oh, what the heck? Like my wallet's getting drained. And so he'd be freaking out. The Bitcoin at the time, to be clear, we should look up on public what the actual price was, but it would be like, I'm sure it was like a few dollars. It was a few dollars, yeah.

48:16A Bitcoin. And so he'd be noticing like, oh, my wallet's getting drained. It wasn't that damaging. But he kept having these sort of small errors because he was not a super sophisticated, he was like a hacker type builder, but not a security engineer. And so he kept constantly getting kind of lightly scammed. And so this launch, like you can imagine, he's just in Austin building this thing by himself. He had a couple engineers that would help him that knew they were committing crimes too, but they were on board with it. And then going zero to 60 in six months, zero to 100, zero to 1 ,000, right?

48:50Like he's getting a senator in Washington, D.C. that's denouncing you. The pressure was on right away. Yeah, usually these government federal level pressures take years until the first, oh, is Facebook leading to misinformation? That took years and years or even the Juul hearings. Probably almost 10 years. Yeah, the Juul hearings were probably, I mean, that company was started like 10 years before. And there was being publicly marketed the whole time. Yeah, totally. Silk Road had the Gawker article and some other coverage, but it wasn't. Yeah, I mean, Chuck Schumer had the Zin press conference in 2024.

49:26before Zinn launched in America 2014. And so the dark web Amazon, the Silk Road, really just took off so fast, six months. And to be clear, the reasons why it was, in many ways, a much better, looking purely at the user experience. If somebody that's buying drugs in 2011, while this starts, they can go and find a dealer on the street or hit up some random sketchy person on Facebook. And there's all these ways to have a transaction that don't have a bunch of reviews, right? So you're kind of trusting the dealer, which is like people that sell drugs. I can imagine you wouldn't want to like trust them with your life.

50:07And so the experience at the time was from a purely like a product experience to be able to go on a site to see vetted sellers that have a selling history, an activity on the forum and reviews. he really made the experience of buying these narcotics much better. Yeah. And people were allowed to buy very small amounts. And this ended up being what slowly helped get the marketplace taken down is usually authorities, so like Homeland Security, DEA, FBI, when they're tracking drugs, they're looking for these big shipments. Yeah. And as Silk Road started taking off, they started getting these envelopes that would be, you know, one little pill.

50:51So like one person who's just like goes on there, they just order one. Yeah. It's kind of cute. It's kind of cute. Um, but, uh, but yeah, it was, it was, it, it, it, it, it can't be understated. Like going back to the founder story, but he made the experience, like he really innovated on the experience. Yeah. There's a couple other things that were pretty innovative here. Uh, they had an escrow system, which used Bitcoin kind of smart contracts, but really just it would transfer the Bitcoin out of the buyer's account into a holding account. And then once the transaction cleared, it would get paid to the seller.

51:26And so if you got scammed, you could actually have a dispute resolution process. It was like a PayPal type experience. Yeah, and PayPal really unlocked eBay. And to be clear, it wasn't fully trustless, right? No, no, no. Like somebody could have received it. Very centralized. And we saw that because everyone was stealing Bitcoin from the site constantly. Well, yeah. And Ross would also have to get involved with these disputes. And there was even situations where he'd be negotiating with cartels saying, you know, somebody would would steal. Yeah. And he'd be the cartels would get mad at him and be threatening him.

51:58So so one thing to be clear at every step of the way, he was doing things that didn't scale. Yeah. And that and that was that involved committing crimes. Yeah. Yeah. Yeah. And so looking at and just to compare this to another company like Airbnb that got launched out of this era. Airbnb innovated on the vacation rental because there were some marketplaces, but people would book a vacation rental without seeing any reviews. And then you show up there and just like, well, the toilets don't work and the sheets are all dirty. It's a very, very similar experience. We're just opening it up and creating more trust, really catalyzed some velocity.

52:37Yeah. And so as he's growing the site, he starts going by his pseudonym the dread pirate roberts which is a uh reference to the princess bride yeah yeah yeah uh which is like kind of an odd reference i don't think of that as like particularly libertarian it's just kind of like a funny weird thing to pick because he likes that movie really shows you how old he is though because that movie came out in like the 80s right yeah yeah it's a classic though um and and well he went in and he never went by ross to be clear he went by admin oh okay And so going by Dread Pirate Roberts was a way to build this brand world around the site, right?

53:11It was this pirates themed kind of. It's funny because there's another pirate themed like decentralized, like the Pirate Bay. Are you familiar with this? It's like a BitTorrent, right? So downloading illegal movies and stuff. Much less harmful, but still kind of similar piracy theme. Pirates of the internet. And so people start obsessing over this guy. They revere DPR as a benevolent philosopher king who is giving the world a safer alternative to street drugs. And people really believe the narrative of like harm reduction that he, you know, reduced the amount of violent crime. Because anytime that there's a drug transaction on the street, there's a chance it goes south and someone gets shot or stabbed or murdered or something like that.

53:54And that's not going to happen on the Silk Road. Now, the problem is, is that, well, if you're increasing the amount of drug dealing by a thousand acts, even if they're 50 % safer, well, there's still a net negative impact of that. And you need to measure that. And so, sure, it's like, I'm sure a lot of cartels were like, cool, I'll just go on Silk Road, buy a bunch of stuff, and then deal it on the street. And so you just wind up with more street deals. yeah and at this time so he so the whole this brand world building that he's doing uh this is why if you view him purely as a founder and ignore the heinous crimes that he committed over a long period of time he would do things like they would have a 420 sale right where it was like whoever if you bought on if you bought on the site you got like a ticket that entered you into a you know something where you could win like an all expenses paid trip and stuff like that so he was following sort of like traditional e-commerce like black friday cyber monday is like huge for him yeah he's like let's let's pump and he'd be like no fees today on the platform buy as many drugs as you want but meanwhile the dark side of that is that people would be buying heroin and overdosing and killing like yeah yeah yeah it's bad like it was very yeah to him he he had these libertarian ideals meanwhile you're enabling addicts to if you make it almost as easy to you to buy drugs is going on Amazon, you're enabling a lot of behavior that isn't so great.

55:20Yeah. And yeah, I mean, another factor of the growth was that Silk Road really drove early adoption of Bitcoin and it created this crazy flywheel where you would buy a little bit of Bitcoin to go on Silk Road, buy some psilocybin mushrooms or something. And then because there was so much buying pressure, the price of Bitcoin would go up. You'd still have some leftover in your wallet and be like, whoa, I made money. I could buy more now. And then that would drive more people into it. And so it became this like virtuous cycle. And I remember reading about some journalists who had tested the site and bought like one, you know, drug pill or something when they were reporting on it and then forgotten about what they left in their wallet.

56:01So they bought like, you know, oh, I needed to buy a hundred dollars of Bitcoin and I spent 50 of it on the Silk Road back in 2010. And now it's like 500K or something. And then they have to find their keys and some of them some of them did some of them lost it so yeah so so the crazy thing about this is so ross in the very very early days in 2011 had a girlfriend oh yeah she didn't agree with the plot with what he was doing yeah uh and she basically gave him an ultimatum at one point like me or silk road yep he chose silk road founder mode absolute dog uh so he goes with that he and then and then at one point like later he tells her they're like yep they they get together again at some point in san francisco and he tells her that you know yeah i gave the site away all the stuff his her roommate also during this time found out about it uh because like they got in an argument and she posted on his facebook wall like i hope the authorities don't find out about ross olbrick's drug website and then like deleted it like he got her to delete it yeah and so he had a couple loose ends here the other thing that's crazy about the his experience doing this is he B.

57:08of the Esteem expressME BUNJ So anybody who's built a company before, you know that it's the kind of thing that you're you're thinking about around the clock right you'll wake up at 3 a.m you're thinking about it yep right as you're going to bed you're telling your significant other about it whatever uh it's not something you can get off your mind and it's a very uncomfortable thing to not be able to talk about it because you have all these ideas like right like we're in the gym i'm like i need to talk to you about this challenge whatever um so ross doesn't have any of that he has his girlfriend at first and then she's like wow like my my my boyfriend is like a narco trafficker digital pirate Like this is crazy.

57:43So that ends. And then he starts to develop these friendships online. People that he's talking to, people that are users of the platform, people that are sellers. And so he starts developing these friendships. He's got a buddy that's in Vietnam. I forget. He's really developing like two worlds, almost like a split personality thing. Like he actually. Well, he doesn't have that much of a IRL life. Yeah, it doesn't have much of an IRL life. And then he actually splits his computer hard drive in two and kind of has two wings of the computer. one for his personal life, one for the Dread Pirate Roberts.

58:13And it's almost like there's like, he can switch to just being a completely different person, completely different moral framework. Because even during the trial, a lot of the witness testimony, character witnesses were like, yeah, even during this period, he was just totally normal guy. And it's like, he was able to put on one face and then go online and then be chatting with people about like, oh yeah, let's kill this person. Let's bring in a million pounds of math. Send me the photo when you finish the job. you know so so in this whole time so law enforcement already by this point has started to develop like use anonymous accounts to develop relationships with him he already has law enforcement that are buying drugs on the platform to like build cases and they're trying to he has this guy uh do yegi what's his name i don't remember so this is a random guy in chicago who's with homeland security who's painstakingly collecting thousands of silk road orders which he had figured out uh historically apparently people would send drugs in the mail and they'd have like these handwritten letters yep so that was like one way you could potentially identify sure but then people on silk road wanted to look like they're more professional so they would print out these sort of like mailing address mailing return labels and so there was this uh this guy uh dieggy i forget his name and what's crazy is many of these law enforcement people themselves end up committing crimes as part of the process.

59:38It's so chaotic. It's like the most chaotic story. And I mean, there's just so many different organizations involved in this, the DEA, the FBI, the IRS, Homeland Security, the Secret Service. And then they all have varying levels of jurisdiction and ability. And they all want to win. And they all want credit for it. And so it's just chaotic. Let's go through some of the posts just to kind of break it up. I have this one from Rune here who says, okay, but where are the crypto conferences for people building illegal stuff? I'm talking next generation impenetrable Silk Road, evading Chinese capital controls, war bonds, hit me up.

1:00:20And this was back in 2022 when crypto was obsessed with like NFTs and just kind of like pre-FTX crash. Yeah. Yeah. This is pre-FTX. And, and so, yeah, I mean, I think that, I think that we can obviously intellectually understand that like everything that happened here is terrible it's a tragedy it's like bad in so many ways um but it's deep down i think if you don't recognize that like you know crime stories are a little bit cool and like edgy like yeah like that's just a very natural impulse and i think that's what drew a lot of people to this story and then uh the whole reason that we're talking about this is uh this clip from autism capital that says breaking trump confirms that if he becomes president, he will commute the sentence of Silk Road founder Ross Ulbricht.

1:01:04So this was in May of last year before. So the whole reason that we wound up in this situation is because there was this massive campaign that we'll get into, Free Ross that was driven by his mother. And she'd been campaigning for him a long time. And he got married at one point. And she was working on the project. And then there were a lot of libertarians and a lot of Bitcoin people that were like, get him out. And so it became this like bargaining chip with Trump as like, oh, we will back you super hard if you give us our boy back. And so this is when on January 21st, Ross Ulbricht has been fully pardoned.

1:01:40And Donald Trump says, I just called the mother of Ross William Ulbricht. He misspells his name to let her know that in honor of her and the libertarian movement. He's signing the papers. He's like, what did this guy do again? murder for hire which supported me and they will tell you he didn't get convicted of that yeah he didn't get convicted to be allegedly yeah yeah yeah um it was it was my pleasure to have signed a full and conditional full and unconditional pardon of her son ross the scum that worked to convict him were some of the same lunatics that were involved in the modern day weaponization of government against me he was given two life sentences plus 40 years ridiculous and sauger says I'm no fan of the Silk Road, but the way the FBI set up Ross Ulbricht for life is still one of the most insane cases I've ever read about.

1:02:25And so Sagar is like hugely anti-drug, even anti-weed, marijuana, cannabis, but still this is a nuanced topic. And it is possible that someone could be doing something really bad and then the government can come in and throw the book at them even harder than they should yeah and so so getting kind of into that you had uh one of one of the one of the i forget if they were f uh i don't think they were fbi but maybe homeland security at one point one of the guys had turned like was selling secrets to ross about all the investigations yep and had made some somewhere over half a million dollars selling information to ross about the case even though he kind of still wanted to get him yep but but it became this whole game that you could tell that double agent all the all the agents involved with it were so consumed in the cat and mouse game yep of chasing this guy really he he at one point uh got um citizenship in the Dominican Republic but it wasn't really a big factor in the story and so the other thing is like you would imagine that this guy would take off and be in Eastern Europe or Asia somewhere.

1:03:36He went to Australia at one point, but he was just really visiting his sister. I think he did go to the Dominican Republic briefly. Maybe just some accounts. I think he needed to invest like 100K or under six figures to actually get that. And so let's do a little bit of a tour of the agencies involved in this. The DEA would send agents to infiltrate the marketplace by posing as large-scale narcotics traffickers. The FBI was focused on tracing the Silk Road server, which they eventually got. I think there was one in Iceland or something that they were able to get and decrypt. The IRS wanted to follow the money trail.

1:04:10Homeland Security specialized in customs and import control that recognized that packages from overseas were flooding the U.S. postal system. One key figure was Gary Alford, an IRS investigator who approached the Silk Road puzzle by following internet breadcrumbs. He started analyzing older forum posts discussing Silk Road's launch, focusing on handles like Altoid that might have inadvertently revealed a personal connection. And so this guy, this IRS agent, ended up getting taken down because he was profiting in different ways from the investigation and very, very corrupt. But he was one of the guys that traced those old forum posts, found posts that an account that was called Altoid created by Ross Ulbricht at Gmail that then he changed to a fake email called Frosty at Frosty.

1:05:01Yep. But then he had used, he called the Iceland server Frosty. Yeah. So they tied that together. Not enough imagination on the username generation, bro. You got to get a password generator. Yeah. Just go full random. Yeah. It's the Gary Alford guy. I read a thread about him as well. about how what was interesting was that he didn't have access to like really crazy proprietary databases and oh the fingerprint database and the dna database it was really just like google it was really good at just like googling around finding usernames here piecing things together and so uh uh all of these investigations were hampered by a lack of interagency coordination rather than pooling intelligence each unit often withheld leads hoping they could be the ones to crack the crack the case this fragmented approach would simultaneously prolong the manhunt and create openings for suspicious behavior.

1:05:52Indeed, two law enforcement agents, Carl Force, DEA, what a great name, and Sean Bridges, Secret Service, would later be indicted for misusing the case to enrich themselves. Wait, it wasn't the IRS guy then? I don't think so. I'm not sure, but... I thought he got taken down as well. No, I think Gary Alford was fine. Okay. But, I mean, it was... The whole thing was just a mess and chaotic. It was all just happening on the dark web and there's money flowing around and Bitcoin and everyone thinks it's anonymous. It's not, but everyone thinks it is. And they would have these meetings called deconfliction meetings where they'd bring everybody together and like some people would share information and other people would be like i'm not going to share that like this is my edge in the case and so it's very toxic dynamic where within those types of organizations you rank up and get more titles and comp and paid leave and vacation by cracking cases so everybody wanted everybody was self-interested in wanting to crack the case themselves and get credit for it yeah it's always crazy numbers it's like he stole like fifty thousand dollars and then like you look at the price of bitcoin now and it's like oh that would have been like hundreds of billions hundreds of millions if they had like been able to hold on to it um but yeah the other thing about so so law enforcement is like starting to have this like very like multi-pronged chaotic yeah uh and it didn't take them that long to really start to get some real leads into him and start to put the pressure on right so at this time they're creating fake identities they're taking over they're finding sellers they're they're going to sellers and they're saying we are going to put you in prison for life for selling drugs yep or we'll give you a better sentence if you give us your seller account yeah so then then they would flip sellers yep and then they would just be in there and they also started flipping like different moderators yep and they also just started creating entirely new accounts where where they would come in and be like yeah i'm a narco trafficker and then they would slowly develop a friendship.

1:07:48And there was this weird situation where to develop trust, they would have to give him advice. Like real advice. Real advice. Like you should get three passports. You should get fake passports. You should be able to get to Asia. You should have a contingency plan to get here. You should split up your Bitcoin holdings so that if you get taken down here, you'll still... And then on the platform level, they had created this sort of paypal style system right yep it was very effective every now and then a seller would build up so much selling history that they would it's very easy for them to be like anybody that sends bitcoin to this address and sends me their address so so people would circumnavigate the platform right this happens with all marketplaces right even on airbnb somebody will book an airbnb for like two weeks and then they'll talk to the owner and they'll be like hey like can i just book it through you and like save on the airbnb fees yep and so every now and then these sellers would you know there was one that happened on 420 where this certain seller was like hey like you know if you just pay me directly like and and they had a big selling history so everybody trusted them and they did like 250k in sales in a day and then just like gone right yeah so that would happen and then ross would be in this position where he would have he He would have all these people that were mad at him.

1:09:10His users are pissed at him. But he would be like, well, you circumnavigated the platform to try to save what are not crazy. The other crazy thing. So Silk Road's take rate for selling drugs during the most illegal activity is 40 % lower than Substack, which sells information. Is that true? Substack's not 50%. No, 40 % lower. Substack's 10%. Oh, okay. 6%. Yeah, so Silk Road was 6.25%. And I think it's way lower than OnlyFans too. I think OnlyFans is 20%. Yeah, yeah, yeah. It's like way, way, way. So Ross was so mission-oriented that he really believed, you know, part of the crypto ideals is, you know, there's these financial institutions.

1:09:52They have these crazy take rates. And so he's only getting double the take rate basically of Stripe. Stripe, yeah. And Stripe is like the most regulated, just like vanilla, like we sell SaaS. Yeah. He's selling drugs at scale online. and yeah he could be taking like 30 but he's yeah yeah and he's not and when and and he still had issues because the kind of people he was dealing with you know people that are buying small quantities of drugs online are probably not the most affluent crowd for the most part so they would have issues with it and so he keeps dealing with this stuff and he also has i don't know he has issues where you know something would happen to a seller and then the cartels would be coming to him saying like hey like you owe us a million dollars and he and then he'd be like trying to do deals with them yeah and so every every marketplace founder understands that at a certain point you have this programmatic system that you're running right where like you know let's say you have airbnb but early days i'm sure that the airbnb founders would have to be talking to like one of their like listing people and being like hey like we got to work this out yeah but in ross's situation he was dealing with cartels yeah narco traffickers drug dealers and people buying drugs and so it's not like they painted a picture like he's just sitting there and like he created the software yeah he's just writing code but he would be he at one point he was wanting to test into a product he was encouraged by someone in law enforcement who had built up this you know fake identity that he was friends with hey you should create the masters of the silk road which was a version of Silk Road specifically for global drug cartels.

1:11:35And so, and, and, and so Ross worked with his team. He was like, Hey, we got to move a kilo right now. And so he was just selling drugs, just drug dealing fully. He was just fully drug dealing. Uh, and, uh, and then mass, I don't think masters of the Silk Road really took off. He also around this time, I don't know where we get to it. So he, he, he, somebody started, people would start listing weapons well yeah so uh i have some extra so he he kind of finds like a almost pseudo co-founder uh this ally variety jones who offers him marketing tips security advice and even recommended that ross consider violent tactics against potential threats um he uh he starts thinking about all this violence and alleged murder for hire plots which would become pivotal to the federal charges against him and there's still some uh debate over whether these plots were real or entrapment.

1:12:27But it's really insane how fast the site grows. We said it started in 2011. By late 2012 and into 2013, Silk Road was grossing hundreds of millions of dollars in transactions. Its user base extended across continents and shipments were moving through postal systems at astonishing rates. Within this environment, Ross grappled with immense stress, anxious that each day could be his last as a free man. Still, he persisted, motivated by profits, ideology, and perhaps the thrill of running a digital empire unrestrained by traditional laws. point at this point he's in san francisco yep he's living in a random apartment like he's not living he's not living uh the lifestyle of pablo escobar nice houses and you know cars he's living in san francisco paying cash yeah under fake identity something terry terry jones or something like that he needs he orders fake ids off of the dark web yep off of his own website website so he gets a handful of fake IDs they get caught in the mail by homeland security and at one point homeland security comes and knocks on his door and he's like oh it's over like he thought he was getting taken down and they and they were just like hey like we got these fake IDs addressed to you yeah uh it's too small of an issue to be big for us we just want to know more about the dark yeah yeah so he's like no they were like can you tell us like we're not gonna like do anything right we're not going to arrest you right now but where did you get these and he goes on record and says there's a site called silk road he can't help himself he goes in pitching mode he goes into founder mode he's like well actually there's this site you can go on called the silk road it's amazing only six percent take rate six percent and use this coupon code to sign up you can add some other stuff to your cart yeah guns drugs do whatever yeah um so he's like and so and so he gets on the record at that moment he gets that was the first time he was in the system for committing a crime.

1:14:17And they added base. I don't know how it works, but they added notes to like his profile that he had talked about the Silk Road, which ended up coming back to bite him later. Yeah. And so the DEA at this point is posing as major buyers. The FBI is focusing on these high tech methods. They find a server in, it is in Iceland. And there's a bunch of friction between the different agencies because no one really knows who's dealing with cybercrime. Um, so Jared Der Yegian. That's Der Yegian. Der Yegian, who was the, this is the guy who's just obsessed. Yeah. Der Yegian had collected thousands of orders that he had personally caught.

1:14:57Yeah. And he had just been categorizing them and tracing them to different seller profiles. And he's flipping the dealers to become important, uh, to become informants. Uh, he gleaned details about Silk Road's internal workings, including how vendors ship products. Other groups try to trace the site's IP addresses using advanced hacking techniques. At one point, the FBI exploited what might have been a misconfiguration in a Silk Road CAPTCHA or login screen, gleaning a real IP address that led them to a data center in Iceland. So the whole goal of Tor is to mask the IP address and route through a bunch of different, anyone who's running a Tor server all over.

1:15:32So if you just have Spectrum or AT &T internet, you can spin up a Tor server and then you're routing random traffic constantly. and so that anonymizes things because the traffic's just going all over the place you can't trace it all and so anytime it goes through some random server comes out the other other side randomized or disguised and it's very very hard to track down but they found the actual ip address because it seems like the captcha that was being rendered wasn't going through tor it was going through like you know it wasn't being anonymized properly yeah so they figure it out they they they issue the warrant this is that this is something that happens throughout the whole silk road journey is because he's a first-time developer first-time founder he's just making all these mistakes and oftentimes suffering financial losses but the site's doing so well yep and growing so quickly it doesn't the losses are offset but the one thing that's kind of hard to make up for is getting caught yeah getting caught and so they grab the server from iceland decrypted and it's like the database it has all the information and then they're combing through it for clues that could lead them to who this guy is or like yeah it wasn't hard to flip the whatever company in iceland had the server oh no no get approached by u.s law enforcement they're like we believe people are committing crimes on your server and they're just like you just want us to copy it sure no problem yeah whatever and that goes in and and to be clear as they uncovered they got data on all the buyers and sellers and like presumably all the transactions that had happened in Silk Road history, right?

1:17:04It was like, yeah, it was encrypted, but they were able to basically crack it. Yeah. And every escrow transaction is logged in a database because it has to, even though the, even though the blockchain might be somewhat anonymized, like it's not anonymized when it sits on the database record of the Silk Road, which they got access to. And so it's not like every person who had ever bought drugs or sold drugs on the Silk Road was suffered from that. But if the government had wanted to, they could have gone and knocked on all the addresses. Obviously, people would use fake addresses and fake names and things like that.

1:17:40And so by 2013, enough agencies had processed enough scraps of evidence that Ross Ulbricht's identity was starting to come into focus, though they had yet to conclusively tie him to Dread Pirate Roberts. Ross, for his part, was often oblivious to the scale of the manhunt, trusting in Tor and Bitcoin's layers of security while continuing to manage Silk Road from cafes and libraries around San Francisco. And so the corruption scandal continues. Carl Mark Force IV and Sean Bridges of the Secret Service. What a great name. Mark Force. The DEA and the Secret Service is one of the most dramatic subplots here.

1:18:18Both men were tasked with bringing down the Silk Road, yet they exploited their positions for personal gain. Force, who operated under undercover personas is like knob on silk road directly interacted with dpr knob knob was basically boys with oh yeah he was chatting constantly talking all day long yeah you know knob would give him this is not knob is the guy who'd give him advice you should get more passports yeah things like that and people are like dude stop giving him such good advice and he messed up because at one point he was he was he had a fake account and was chatting with red private roberts and and was like and it was like it's carl or something like that and he was like wait what and he was like oh carl carla like i go by a bunch of different names but that was all on that was all logged yeah and then was it sean bridges at one point that later once sean knew he was getting caught he sean was like i will get you killed in prison yeah like he was like threatening like you're gonna get caught it's all so messy and so yeah it was basically slop on both sides very sloppy uh and so uh from ross's perspective these agents manipulative activities made the silk road environment feel ever more treacherous.

1:19:27Logs released in court showed Ross confiding to trusted confidants that he suspected infiltration at every turn. He also struggled with evaluating demands for hush money or hits on suspected black mailers. Whether Ross seriously believed in orchestrating murder for hire or if he was cornered into entertaining the idea is still debated. Nevertheless, chat logs indicate that Ross agreed to pay for violent solutions if it meant protecting Silk Road's anonymity and his own. Yeah, so this is, I posted this and a lot of people are like oh you left out murder for hire obviously on this post i was purely talking about the business not endorsing his actions in any way but yeah he he over the course of this 2013 era got very comfortable with the idea of paying to get people killed so these were people that he thought were uh informants people that he thought were just generally bad actors there's records of him ordering hits and actually negotiating the price of hits saying you know being kind of frustrated with with how expensive would something would be and the and the person would be like well it's like last minute and you know it's kind of a complicated situation and he'd be like okay he would be provided uh photo evidence of success what he thought were successful hits at one point law enforcement baked one of the hits using like campbell's soup and they were taking and using like crappy phone images to like take a picture of somebody's face like with like Campbell's soup like as if their face had been like blown off blown off or whatever yeah um so very very dark like he clearly at this point had was like living this dual life of like he's Ross and then he's Dread Pirate Roberts yeah and he's willing to do anything to protect the pirate ship yeah exactly Silk Road yeah uh and I think we have a post here it's probably a few deep uh Ben but this is a screenshot from Reddit.

1:21:22It says, are there any merits to the claims that he hired a hitman to kill friendly chemist? Someone on Silk Road who said they would leak personal info on thousands of Silk Road users unless paid 500K. I've never seen this discussed in our weekly Ross posts. Yeah, so this was, there was a user who hacked the server in some way. They were able to uncover quite a lot of data on like the sellers. Yep. And so Ross was worried that, I mean, if people realize that if you bought something on the platform and that your personal information could be exposed, then obviously it was going to really slow down sales.

1:21:56He's also facing competition at this time. Other sites are popping up that are doing the same thing. So he really didn't want this information to get leaked. And so someone replies to this and says, Ross ordered hits on four to five people total. The evidence that he did this is clear. No one here likes talking about this because it ruins the narrative. Now the sentence for ordering a hit in California, if I recall correctly, is 10 years per contract. So he definitely got a harsher sentence than this, but there were other crimes he was guilty of. Not that it will save me from downvotes, but El Chapo is significantly worse than Ross and any system that gives Chapo less time than Ross is busted.

1:22:36But to ignore that Ross didn't try to have people executed is doing no favors to anyone who wants to have an honest discussion about justice. And I think that's just a very interesting thing where there was this big narrative. And if we go back to this debate between Matt Palmer and Joe Posting, Matt says, Ross Ulbricht's work was one of the largest contributions to harm reduction in narcotics distribution ever. The systems he created removed violence from the drug trade by anonymizing and physically dislocating transactions. He almost certainly saved thousands of lives. But Joe says, skeptical of this claim, the vast majority of drug trade violence is caused by production, namely South American cartels and opium warlords in the Golden Triangle.

1:23:24Silk Road made retail purchases safer, but that's small potatoes next to the back end. And it's funny because, you know, it's like, yeah, he might have removed some violence, but then he added it all back by trying to commit hits. It's like, come on. It's just a ridiculous situation. But moving on, we're in mid 2013. And there are enough threads of investigation that had converged that a direct confrontation with Ross Ulbricht was inevitable. Each agency. So at this time, they had figured out a number of people. So they started with profiles. Like, we think he's a smart guy. We think he's in America.

1:24:01We think he's. One of the ways they figured out was hilarious was that he had posted something about how how buying drugs on the street is dangerous. And he says something about like those people. And so they, so they use that to justify this idea that he came from like a white middle class upbringing and was not like a street guy because he wouldn't, he would have said like, when we buy stuff on the street, we get shot and killed. He, instead he was like, they get shot and killed. And so that, that made it clear that he wasn't like from the, from the rough and tumble streets. And so at one point he was even, he was a suspect just based on his profile of being, you know, interested in technology and libertarianism and all this stuff.

1:24:46But they still were like, they actually, people didn't believe that he could have done it because he didn't fit the hacker, like internet hacker developer archetype. Because they were like, well, he didn't study computer science. And so they had this other suspect who had run like a Bitcoin forum that was like more of the prime suspect at the time. uh so so he had some non-believers in law enforcement that were like yeah we it could be ross but like we don't think he's got that dog in him yeah and so the the main breakthrough came from gary alford uh the irs agent and he was convinced that ross albrecht made a slip up early on uh and so he scoured internet forums such as bitcoin talk.org and shroomery.org going back to the earliest where he he was posted hey anybody want to get some shrooms check out this website No, he was like, has anybody bought shrooms from Silk Road?

1:25:35And it was him selling the shrooms. And so he reasoned that whoever created the site might have posted about it during its infancy before it was famous enough to attract major scrutiny. And this is very funny. This actually happened in my high school. There was someone who put up a cyberbullying type website. And the easiest way to figure out who was behind it, it's still like myth in my high school. But I'm convinced I know who it was because I basically traced it back to patient zero. and the first person to say anything about it was likely the person that did it. Because how else would it go viral?

1:26:06It has to have somebody that introduces it. If a website's just up there on the internet, no one's going to find that. But the first person to say, hey, have you seen this? That person is guilty. Guilty. And I'm very convinced of this. So Alford, this is Gary Alford. He discovered a user named Altoid posting in January of 2011 right at the start of Silk Road, mentioning Silk Road and suggesting people check it out. Further digging reveals that the same user had made a subsequent post looking to hire a tech specialist, leaving the email address rossolbrecht at gmail.com. This was the smoking gun Alford had been searching for as it linked a real life individual to Silk Road's initial marketing efforts.

1:26:45While other investigators were pursuing the server's physical location, Alford's simpler forensic analysis of publicly available posts provided a direct link to Ross. And so Ross had gone back to that forum. He knew he had kind of messed up and so he changed the email yeah on that account to a fake email yeah but you can see the change but then the you can see the change and then the name he used for the fake email ended up being the same name he used to name the server so he had some he liked the name frosty yeah and so at this point they they were definitely suspicious of ross but they needed to catch him red-handed logged in as the dread pirate roberts on his laptop if they hoped to secure a watertight prosecution.

1:27:25And detective work in the digital age can hinge on human error. The Altoid handle and the Gmail address turned out to be one of Ross's biggest mistakes, an unintentional bread crumb left behind before the Silk Road success. One thing I'll note here, this is just speculation, but his girlfriend at one point said that he was a big marijuana fan. I think he admitted to it at different points as dread pirate roberts and marijuana is a performance decreasing drug makes people forgetful it makes people anxious and all these things and so imagining him as a first-time developer high all the time yeah trying to you know committing crimes at scale and and again i respect the libertarian view that that says well nothing he's doing was wrong but he was committing crimes by way of our legal system.

1:28:19And so imagining him just like hanging around San Francisco, smoking pot, being a narco trafficker. It's like not a, you know, it's inevitable. There's other people that would have made it like seven years, eight years, nine years, 10 years. There's, there's narcos that like real narcos that make it 30 years. They buy soccer teams. Yeah. Yeah. Mansions. They get presidents elected. Yeah. It's crazy. So it's actually wild to think about if he had maybe not as intense of marijuana habit or gone and went to Russia or something like that. Totally. There's a world where he would have become like a Bitcoin, you know, a hundred billionaire, like one of the wealthiest, most like, you know, influential people in the world and could have been out of reach in many ways.

1:29:03Totally. Yeah. It is so funny that he, you know, his whole philosophy was, was based on this idea of like drugs aren't this gateway. Nothing bad can happen if you start doing a lot of drugs. And then he is the best case study for drugs ruining your life. Drugs completely ruined his life. Started doing drugs, then started selling drugs, then started trying to get people killed, then got massively arrested and thrown in jail for a decade. It's like, yeah, drugs were not good for you, bro. Like, calm down. And so as the law enforcement officials homed in on Ross Ulbricht, they began careful physical surveillance.

1:29:42His whole laptop was heavily encrypted and he had a single button that if he pushed it, it would lock and encrypt the hard drive. So even if you got access to it, you couldn't access it without a password. They had no way to guess the password. It would take a computer millions of years to decrypt that or hundreds of years to force the decryption. Although maybe it's faster now, who knows? But at the time they were very worried and they were like, we have to get him while his hands are on the keyboard or hands off the keyboard. but he still logged in. And so they were excited about the idea that he kept working in public spaces because they could stage an unexpected confrontation.

1:30:17It's just the irony here of him in another reality, he would have been in Y Combinator just absolutely crushing it on some normal business. And so he would have been in these coffee shops in San Francisco at the explosion of the sharing economy and mobile. Oh yeah. And he would be sitting next to people that it's not unlikely that some very well-known founders today were in the same coffee shop, right? Totally, totally. The craziness of doing this all from the epicenter of tech. I lived in San Francisco when this happened. And I would go to this library. I would go to the San Francisco Public Library.

1:30:57I actually worked out of there a few times. Crazy. And so on October 1st, 2013, Ross Ulbricht walked into the Glen Park branch of the San francisco public library sat down and opened his laptop unbeknownst to him undercover agents sat nearby agents orchestrated a ruse where one undercover officer posed as a feuding couple creating a minor commotion to divert ross's attention as ross turned his head other agents sprang from behind grabbing his laptop before he could even move to close the lid um the narrative of the takedown is cinematic ross is stunned half standing and as fbi pushes him back into his seat and secures arms to visualize this a man a male and a female agent start yelling and like pushing each other yeah he looks over and then and then yeah yeah yeah it's literally a a woman who's an agent just sits right across the table and just is like pull this away don't touch it has it open and so they immediately what they do is they take it they take it and they rush it to a van outside like imagine like you're like trying to keep your computer from going to sleep oh yeah that's what they're doing and so they're making sure they're moving the mouse moving the mouse and so for the next like 10 hours they just sit there like moving the mouse yeah and like downloading all of the data off the computer like backing it i think they backed it up like nine times in nine different ways yeah and you could imagine because because when they when after we'll talk about this in a bit as they go to prosecute him the the the um defense's main defense is that it wasn't ross yeah that's their main thing they were like some there's somebody else dread pirate roberts framed him they put all this evidence on his laptop but they obviously caught him yeah literally red-handed yeah with the with uh and it's like if there was like some sort of like screen sharing software where yeah okay maybe maybe he was just using his computer and then the real that dread pirate roberts was like you know putting evidence on there there would be evidence of that software But they tracked him so many times where they would be physically viewing him.

1:32:54He's typing. And he logs on. Because they had moles on the Silk Road team. So they had like law enforcement was being paid to work for the Silk Road. And so they would see when he logged on, he'd be typing. And they would be recording all of this where they'd be watching him typing. Yeah. And Dread Pirate Roberts is typing. And so it was kind of a tough argument to make, Even though various members of law enforcement were committing their own heinous crimes, it's sort of difficult to defend. And related to that, we have a post from Sam Parr. He did a podcast on Ross Ulbrich, the founder of Silk Road.

1:33:31And he says he admitted to creating the Silk Road but said he sold it to a new owner. And they're the ones who did the murder for hire. What do you think? Was Ross the owner the entire time or ordered to murder for hire or no? Why? and Anthony J. Descenzo says, of course he owned and operated it the entire time. He admitted to creating the Silk Road at the beginning and was caught red-handed working on the administration page at the ending. Follow his Bitcoins from start to finish. And I completely agree with that. He had tried to, he told his girlfriend once that he was no longer running it and then she walked in on him after like they were hanging out.

1:34:05There's just so much evidence. It's so clear. And then later he even had this crisis on the platform where he made a post where he's like, I'm gonna change the way I talk so that it's less obvious who I am and then everybody was like got really mad at him because they were like wait like is this safe to use now did they flip him or something like that yeah so in the days following his arrest the global community of Silk Road users found themselves in disarray vendors buyers and administrators scrambled to figure out whether their personal identities had been compromised because as part of the onboarding process to work for the Silk Road you would have to send him a photo of your real driver's license.

1:34:43And it was kind of this like getting sworn in into the secret society. There was panic over Bitcoin funds held in escrow, which now seemed out of reach. People posted frantic messages on the dark web, some lamenting the loss of their livelihood. Oh, it's terrible. You know, you build a drug business and it just goes up in smoke one day. Others questioning whether the Dread Pirate Roberts persona might somehow live on. Law enforcement officials. Also, it's like if there was a real Dread Pirate Roberts who his fall guy gets busted, why wouldn't you just keep operating the site make a new or like make a new thing yeah just just yeah you can think about it so at this point or even just move the bitcoin they're doing hundreds of millions of volume a year yeah and you could imagine at any one point there's i don't know an s very rough estimate would be a hundred million dollars of like drugs like changing hands and so that that was quite a lot of money that was just locked up in escrow at this time that was clearly the silk road team had to be the team that would approve when you know that the recipient would say yes got it yep then they would approve you know the payout yeah and so afterwards after the arrest law enforcement officials lauded the arrest as a significant victory in the war on cyber crime politicians who had long criticized silk road took credit for pushing agencies to shut it down mainstream media coverage exploded with headlines labeling ross as everything from a brilliant hacker to a modern day outlaw the sensationalism surrounding the kingpin moniker overshadowed the complexities of ross's motivation he was painted as a cold-blooded trafficker who profited off of addiction and despair i think that's probably correct um his friends and family were stunned he definitely was cold-blooded totally he was able to separate yep the nice guy ross yeah who had a loving family from yeah he embodied fully embodied the the dread pirate roberts yeah i wonder if there's anyone that gets to this level that isn't cold-blooded though it's like it's kind of a prerequisite every seat every seat every billion dollar every unicorn ceo that i know cold blood even the ones that are nice you can tell ice in their veins ice in their veins yeah meanwhile the government's forensic teams sifted through the trove of data from ross's computer they discovered personal diaries chat logs between dread private roberts and administrators and spreadsheets dealing detailing profits the data portrayed a person intimately involved in day-to-day operations from vendor disputes to strategies and strategies for evading law enforcement.

1:37:08You could just call that drug argument. How to evade the government federal, the IRS.txt. How to beat the secret service. Yeah, that was a big part of this. He was not living this high life because he had all this Bitcoin, but he couldn't really figure out a way to get it off chain. Yeah. It was clear that Ross faced a battery of charges, money laundering, computer hacking, drug trafficking, conspiracy to commit murder. The last charge stemmed from his suspected willingness to eliminate threats to Silk Road's anonymity. Whether or not actual violence occurred, federal prosecutors used the chat transcripts to argue that Ross was willing to orchestrate killings.

1:37:46As the immediate chaos settled, the case moved toward a long legal process that would captivate the public and set legal precedents about dark web marketplaces. And so the defense strategy, the legal defense strategy for Ross focused in on a few key ideas, wrongful identification. They argued that Ross wasn't the true dread pirate Roberts and that the real DPR had set him up. Reliability of evidence. They questioned whether the laptop data could have been tampered with, especially considering corruption charges that's a yeah because of how corrupt many members not many but at least two carl force and sean bridges carl force it's like yeah maybe there was something weird going on yeah and they were encouraging him to do things that work like that was a whole like i think it was knob who who would be like yeah you should take this guy out you know and it's oh yeah they definitely and law enforcement helped the entire thing they they helped him yeah uh they were involved with helping fake these sort of murders as well yeah and so they they wound up not uh convicting him of that but it definitely like set the tone of the trial and kind of get people out of this mindset of like he just built a website it's like he was a young guy and maybe he did this other stuff we're not even going to push him on that but it like maybe he did a few things that didn't scale but but it also is interesting it would have been sort of i imagine untenable if he was convicted on the murder for hire stuff to actually get pardoned.

1:39:18So that small detail, I think it doesn't seem like Trump knows his actual name, but I imagine there would have been much more pushback if he had been actually convicted of murder for hire. So look at this digital diary. There's an excerpt in here that says, I'm doing about$2 million a week in sales now. They also had logs with references to specific violent acts that Ross had allegedly considered or at least verbally agreed to pay for. Yeah, and so he had sent$750 ,000 of money to fund hits. So he was paying for the hits. Yeah. They weren't happening. So he pleads not guilty, and there's a public trial.

1:40:02His mother becomes a tireless advocate for his cause. They argued that the government was making an example out of him, which I think is probably true since this was like the first major cyber crime uh deep web case yeah and and and if they didn't have it there would just be a million more and there was super like there was gawker articles yeah that was what catalyzed it all stream for sure so it's very embarrassing to law enforcement to have a website that anybody can go to to buy yep that's if law enforcement can log in and view it and regular like a high school kid can do it and some you know grandma can do it yeah it's just such a violation of like the the social contract in the end the case would be resolved in the public eye with Ross heading to trial January of 2015 a date that would not only decide his fate but set a precedent for the future of dark web marketplaces the trial took place in New York in Manhattan federal court presided over by judge Catherine Forrest it was a high profile profile case and the courtroom was often packed with journalists curious onlookers and Ross supporters the atmosphere was tense the prosecution maintained a mountain of files uh presented a mountain of files taken from ross's laptop this was part of the challenge for the defense is there was like six terabytes of data they were like using against him and so they're like they're like yeah like we're gonna use all of this against you like good luck one other thing he benefited from is he had tried to set up a silk road armory oh yeah but it totally flopped yeah you know like you know sometimes you hit pmf with one thing side project he he realized that it was like much harder to like send guns in the mail oh yeah but he was trying to sell i think you could buy explosives on the self-road grenades and you can buy fully automatic weapons which is just like even even i think that gave ross some pause around you know that yeah this was the libertarian thing that always got to me it's like he would argue that you know i am willing uh i'm i'm willing to consent to sell drugs you're willing to buy drugs therefore the government has no say in that uh but there's always this question of like negative externalities and what what got to me was like well at a certain point you were selling like cyanide and yeah and and also it's like okay even if that's not bad between the two parties what about the the ups guy that has to carry that like did they opt into that if explosives are going into the mail yeah it's like oh i'm just a i'm just a fedex driver and now i have to carry grenades Like I didn't opt into that.

1:42:30Like in your libertarian philosophy, I don't consent to that. Libertarianism seems to work if you had a private island. Yes. And everybody there is there by their own. It's an obscene joke. I mean like, I mean, basically going there. But no, it's totally. When your actions are affecting other people that are participating in a society that has agreed to have certain laws. Yeah, you never think about the negative externality of, okay, you brought these drugs in and then the drug dealer's on the street and commits violence because of this. or you're funding a, like, it's always just, let's look at just the one micro interaction and not consider the knock-on effects.

1:43:05And that's why we have like an actual society and societal contract. And so the government witnesses included law enforcement agents who had participated in Silk Road investigations. Ross's defense contended that he was set up. Friends testified to his peaceful nature, pointing out how out of character it was for him to order violence or run a massive drug site. Over the course of three weeks, jurors were presented with a dizzying array of digital exhibits, as you mentioned, six terabytes or something like that, IP addresses, chat logs, and email addresses. And on February 4th, 2015, after only a few hours of deliberation, the jury returned a guilty verdict on all seven counts, including narcotics trafficking, computer hacking, money laundering, and maintaining an ongoing criminal enterprise.

1:43:50Yeah, and so to be clear here, this was like three weeks. it was not the kind of trial that stretches on for months and months or years it was like very quick and the the deck was certainly stacked against him right he had all these different agencies that were and there was so much evidence yeah um and when you think about other other trials it's like well yeah like maybe they got some photos or something or maybe they kicked down a door and they found something but it's all there's always this question of like oh was it planted but when you when you show someone six terabytes of like okay we got his computer he's his hands on the keyboard he was logged in it's a lot harder to yeah to paint the you know the yeah and even even this is why they it ends up being really hard for law enforcement to pin down traditional narcos and they get them on money laundering and things like that yep or wire fraud you know this stuff that's like unrelated was al capone went down for tax evasion not yeah trafficking and it's because it's really hard especially the the ross was able to build a massive enterprise quickly because of the internet yeah but he also generated a massive amount of data related to that activity and a narco you know you have like you know i'm on like a radio you know talking or whatever they're you know there's less of a lot of narcos at least in mexico have like regular businesses too that they're talking about yeah yeah and so and so not the same mountain so sentencing happens a couple months later may 29th 2015 uh judge catherine forrest sentences him to two life sentences plus 40 years and because it's a federal case there's no possibility of parole so he is truly screwed um and this was one of the it was significantly harsher than typical sentences for non-violent drug offenses especially given his age 31 at the time which is like it's not that young but the whole 30 you know he was young he did this in his 20s but he wasn't a teenager who was like his prefrontal cortex was developed yeah developed and he had a good five-year run with a full cortex full cortex full cortex mode yeah and so he was smoking pot they should have included that yeah uh ross appealed the decision uh and this outcome underscored the u.s justice system stance on dark web marketplaces, an uncompromising approach that signaled to future clandestine operators that they too could face the rest of their lives in prison.

1:46:20And we didn't really see a replacement pop up very quickly. It was pretty, I think it was effective. Well, many of these transactions still occur on the dark. I can't tell you. But there's not a brand name. Here's the thing. I think historically, anytime a drug has become a brand name yeah they get taken down right sure and so like that's why when you think about okay billions of dollars a year of cocaine gets consumed in the u.s there's no brand that you can think of right and as soon as you tie a brand to it then there's like well now we can start tracing this and so it's just like colombian cocaine yeah like that's sort of yeah yeah it's sort of that that one's more obvious yeah but yeah i imagine that this way more volume happens now it's just not these sort of brand name marketplaces right yeah silk road was the door dash or the uber of hits you know whatever you wanted and so uh carl force and sean bridges um after the after the ross conviction the scandal emerges and they get sentenced to six and a half and six years um and then more when further misconduct was discovered and so uh they go to jail for stealing a bunch of money and basically not doing their job at all.

1:47:39Meanwhile, it's a weird thing. They were trying to catch him, but they were also trying to make, you know, a buck in the process. Yeah. Weird thing. And so it goes on, but let's move. So that was, let's see, 2015. In 2016 to 2017, Ross Ulbricht appeals his conviction to the U.S. Court of Appeals asserting evidence was tainted by law enforcement corruption, but the court upheld the guilty verdict. In May of 2017, the Second Circuit of New York reaffirms Ross's life sentence, reasoning that the massive scope of Silk Road justifies an exceptionally harsh penalty. In 2018, June 28, the U.S. Supreme Court declines to hear Ross's final appeal effectively exhausting his direct legal avenues for overturning the conviction.

1:48:28Lynn Ulbricht during this time, 2015 onward spearheads the Free Ross movement nationwide championing her son's cause. And Lynn is a cracked marketer. Cracked. Absolutely. She went to town for her son. And so in December of 2021, the Albrecht family auctions Ross's writings and artwork as NFTs online, raising millions through the decentralized organization Free Ross Dow to support continued legal efforts. In 2021 to 2022, a stash of over 50 ,000 stolen Bitcoin from the Silk Road is seized by the U.S. government and Ross relinquishes any claim to help satisfy his$183 million restitution order. And in 2024, PirateWires reported on April 2nd that the U.S.

1:49:15government has moved roughly$2 billion in Bitcoin confiscated from Silk Road to what's reported to be a Coinbase wallet per CoinDesk. Yeah, and everybody's like, are they going to market it's self-serve. Everyone's worried. And so in May of 2022, Congressman Thomas Massey calls publicly in the House of Representatives for Ross's commutation, viewing the life sentence as a grave injustice beyond appropriate punishment. And to be clear, it is a bad precedent that law enforcement agencies can commit a bunch of their own crimes in the effort to take somebody down and then still if they get like it it is a terrible precedent right we we want to live in a society ideally where nobody yeah a vibey libertarian utopia where nobody's you know nobody's like hurting each other but then if one person commits a crime it doesn't justify another person to commit crimes in order to take that person down and so many wow wow we both believe that many of the things that he did were were net net negative and bad it it is you know the the people on the other side of that that don't believe he did anything wrong, they also have a, you know, I don't necessarily think they have a good point there.

1:50:30They do have a point that it's a bad precedent that, you know, law enforcement should be able to commit crimes and then still, you know, deliver this like, you know, very intense sentencing. Yeah. And so let's go through some of the more recent facts about how we got to the pardon. And in May of 2024, Donald Trump promises that he will pardon Ross on day one, swaying libertarian-minded voters and crypto enthusiasts. In June of 2024, RFK Jr. running for president similarly vows in a public statement to grant Ross a pardon. In November, Chase Oliver, the Libertarian Party's presidential vote. UK wanted to spotlight Silk Road's role in pioneering cryptocurrency, which is kind of like everybody's like really just trying to lean into the marketing.

1:51:21For sure. The Libertarian Party's presidential nominee reaffirms in Reason Magazine that a full pardon aligns with fundamental libertarian principles. I debate that. And then on January 21st, 2025, President Donald Trump signs a full and unconditional pardon from the Oval Office, fulfilling his campaign pledge. And so the crazy thing about this is like, imagine you're Ross, you're in jail for a decade. Yeah. Trump gets elected, signs a doc 48 hours later, you just walk out of prison. Yeah. You're, you're free. And that's why I felt like this was a, I wouldn't have wanted to cover this story at all a month ago.

1:52:01Yeah. Cause it was just purely dark. It's like, okay, he committed a bunch of crimes. Now he's life in jail. Yes. He was, Now he's off to Sand Hill Road. The execution from a business standpoint. Yeah, now he's taking it on the road. No, and there's rumors that he's still worth, you know, presumably. Yeah, it seems like he might've had a second or third Bitcoin wallet that was not seized. And so he might've come out with a lot of wealth, which would be fascinating. And I think - He was forced to hold it. Yeah, yeah, yeah. Ultimate huddle, ultimate hudler. And so Ross, now free, speaks across the US about prison reform, cybersecurity, and the lessons of Silk Road, aiming to reshape his legacy in the libertarian movement.

1:52:41And he's pardoned and living under close public scrutiny, continues to champion libertarian advocacy and prison rehabilitation efforts. So it'll be interesting to see once he actually does like the Joe Rogan style interview or the Lex Friedman, like the full story. I am interested to hear his side of this. I wonder - I would be surprised if he doubles down and says, i wasn't dpr that would be interesting i just can't do that no no no he doesn't need no he doesn't need to do that so if he does do that that would be and then he's able to prove like through some crazy thing which i which i don't believe yep the main thing my main takeaway is this guy is a goaded operator that's true like clearly like he benefited from some luck and timing and was like this missionary founder uh but but self-taught developer first time ceo bootstrapped zero to a billion in sales very very profitable the entire way operating a remote team yeah he has clearly is very powerful in some ways he's got insane aura yeah and if he uses that for good it could be very good it could be very good in some ways he's uh he's playing the game on hard mode in the sense that as you mentioned he can't talk about um people you know he can't talk to anyone about his business.

1:53:57He can't, you know, get, you know, public investors or advisors or anything. But on the other side, he is selling the most addictive product that just has immense pull from the market because it's illegal. And so, I don't know how much credit you actually want to give him. Let's go through some more posts. We got Captain Nemo says Silk Road's historical importance is still underrated. I thought that was interesting from 2022. This was well before the pardon and there's another post from captain nemo in here uh 2022 says the ultimate tech anon moment was when forbes did an interview with the dread pirate roberts the anonymous founder of silk road at the height of silk road's ascent when multiple federal agencies were trying and failing to track him down that's so funny that he did an anonymous interview successfully with forbes because it's like now you know beff jazos can't stay undoxed And like, you know, can't do an interview without getting doxxed.

1:54:52And this guy was able to stay anonymous while appearing in Forbes. Yeah, one of our, one note, friend of the show. Lone Ranger says, Donald Trump paved the way to be to the White House as a quote unquote convicted felon, giving Ross a clear path to a presidential run in the future. ross who turned 40 in prison is now old enough to run for president and could be the first libertarian president if elected so that's a stretch to me it's a joke but it's one of those things where it's like maybe but but the oftentimes the most entertaining outcome is the most likely i agree and i yeah it does feel like not totally out of like if if ross's goal is to create a libertarian utopia united states is awesome it would be a great place to be a true utopia and if that's what he believes now he's got a few hundred million bucks he can finance a campaign you know i will be campaigning against him that's all i can say yeah yeah uh we need law and order captain nemo continues and says uh more recently he posted this january 21st when ross was pardoned hard to overstate how impactful it was to be a young earnestly curious student when ross olbrich was running silk road as the dread pirate roberts operating a completely illegal digital bizarre openly for years despite every effort to stop it by the most powerful nation state ever massive hansonian view quake viscerally opened my eyes to technology's power to reshape existing power dynamics and so the flow of history for better or worse and i think that's super interesting to think about how powerful the internet and this new technology was that even though it was only two years and he did get shut down he went on a generational run and was able to actually do this thing that no one else was able to do.

1:56:39Yeah. And crypto for a long time was looking for use cases outside of Bitcoin being digital gold, meme coins being speculation and other activities. And the most obvious use case outside of digital gold that had the craziest product market fit was the Silk Road. Right. But no crypto VC could be like, oh, look, look what's possible. Like this is the potential of crypto because there was just like a thousands of crimes being committed a day at scale um but uh and it's and it's funny because everybody that was if if all the people that had just been you know committing crimes with btc early days of silk road if they had just bought and held they'd all be millionaires because they'd be using like 20 bitcoin to buy like a one pill you know so that was like an expensive night on night on the town you know yeah the the stories around Bitcoin have evolved so much.

1:57:40Like version one was this, we've used math to solve the general's problem and it's going to be decentralized and not controlled by the government and perfectly anonymous. And then a lot of those stories kind of eroded and it became just this crime money basically. And then it somehow made it through that and just became digital gold. And now, and then there were new narratives around, oh, well, there'll be all these like games and metaverse built on top of it and then that kind of melted away and now it's prediction markets and and meme coins and digital gold and just kind of a store of value but it's interesting that at every point in time there's been so many negative narratives about this is the worst thing ever but there's been this one enduring narrative that's stuck with it and driven value and now it's 100k it's like it's crazy well yeah and it's still even though what like the i don't like honest uh analysis of crypto technology you could never say this isn't cool exactly like this isn't like this crazy truly novel transformative technology yeah it's just that the primary case study was a nefarious use case right yeah but it's still incredible that you could operate an open air drug bazaar online that anybody could go to and see and law enforcement could see and not do anything about.

1:59:02Like that is a wild, wild situation. So let's go to Catherine Hahn, former GP at Andreessen Crypto, now with Hahn Ventures. And she is quoting, I think the founder of Chainalysis, which is a company that does research into how crypto is used nefariously. Joni Levin says, today is my proudest day at Chainalysis. We enabled US, UK, Germany, and South Korea to take down one of the largest child abuse material sites. Law enforcement in 38 countries made 330 arrests of alleged pedophiles and rescued 23 children from abuse. And Catherine Han says, great work by Chainalysis and the authorities in such an important case.

1:59:45as I found when working on the Silk Road corrupt agent and other cases, having the digital breadcrumbs of crypto was a useful tool for law enforcement. And so she's actually saying that, like the reason that she was able, I didn't know this, but I guess she worked on those corrupt agents in the Silk Road case. And the reason they were able to figure it out - Because the agents were obviously taking payment in Bitcoin. Exactly. And so they were able to trace the Bitcoin where it moved out of the Silk Road account into their account, and then was eventually taken off chain. And I think they were buying like sports cars and stuff.

2:00:18And so they were able to figure that out and track it down. And she was saying like, if this was fiat, that would not have been possible. And so that's actually the exact opposite narrative that people were telling in crypto, but it still worked out. I don't know if she's saying it wasn't possible, but normally - Much harder. So if a corrupt agent takes a cash payment - Exactly. There's not a record of that. Yeah, the classic, like you kick down the door, you've gotten the drug kingpin and there's a huge stack of cash, a huge stack of cocaine. and then a bunch of luxury watches and you're just like, yeah, throw the watches in the back.

2:00:48One node. Yeah, yeah. Oh yeah, we got a lot of cash and a lot of cocaine. I didn't see any gold bars there. Yeah. Throw it in the backpack. And like you see this in like training day and like those like kind of cop movies and they're probably some element of truth and you know, a lot of good agents don't do that. It shows the, you know, the fact that Catherine was working on this crazy high profile case. Yeah. Still recognize the potential of crypto and goes on to have a$2 billion fund now. She was a GP at a historic run, 2021. Coinbase and stuff. Yeah, fascinating. So wild, wild story. So let's go to a promoted post.

2:01:27We're done with the Ross Ulbrich story. I hope you enjoyed it. We're moving on. We're going to go to the timeline, but first we got a promoted post from Josh Steinman promoting my product. The one I worked on with Jordy says, co-founder just texted me confirming that Excel performs as promised. and uh excel if you don't know is a project a little marketing stunt that jordi and i worked on uh to uh deliver shareholder value so it's a nicotine product that says this was in many ways the genesis of tv because we would this was the first loud opulence yeah yeah we would riff on what nicotine meant in the context of value creation and that that many of those early conversations sort of transformed into the show so it's a cool physical yeah i mean i think i I think basically the first time we did anything that felt like this format was the, the, the launch video type of thing.

2:02:17We did a vibreel and then we did an hour sit down and we both came into it being like, oh yeah, like, let's just like riff on this and talk about what we did and we just were fully in character the whole time. And Ben, our vice president was like, is Jordy an actor? Like, like what, what was that? And, and we were, there's some amazing quotes in there. It's fantastic. that's a lost episode we've never uploaded the full thing so it's like over an hour we've only released like i can't believe i can't believe we recorded for now oh yeah we were just on fire we were just locked in podcast for sure for sure um let's move to uh a very important story valentine's day is coming up i'm sure there's someone in your life that you need to get something nice uh i was asking jordy if there's not this is kind of an aggressive move right now to reach out to somebody maybe you've been thinking about.

2:03:09Cuffing season is here. Cuffing season. And so I was asking Jordy, what is the Patek Philippe of Valentine's Day gifts? He said the Birkin bag, which I think is a good answer. I did hear that Birkins are maybe not a Valentine's Day gift, more of a Christmas or birthday gift and Valentine's Day is more jewelry and chocolates. So we need to find some good jewelry and chocolate options. Some controversy. We're going to do a whole deep dive on Valentine's Day gift guide for sure. Yep. But there's an interesting story going on right now because Walmart has cloned the Birkin bag. Oh, I know. Have you heard about this?

2:03:45So Bethany Frankel says, we are witnessing a luxury goods rebellion and we are rewriting the rules of fashion. Last night I talked with NBC News about the viral Walmart Birkin bag has taken over social media. And they call it the working bag and it's 80 bucks and it's a clear knockoff. and the Birkin bag if you're not familiar is from uh LVMH right or Hermes right Hermes separate separate company it's been family owned and it's public now but it's been cost to get in the game it's like 20k 30k something like that yeah I mean it's the same thing as Patek and where you can go up to 200k for alligator stuff yeah you can't really just walk in off the street exactly yeah yeah you have to be invited relationship and so it is it is in that you you know, Audemars Piguet, you know, Patak, Realm.

2:04:32Holy Trinity. Yeah, where, where. And they started with saddles. Oh, yeah, they did. That's right. Yeah, so there's an amazing acquired episode on the history of Hermes, and there's this family drama and, you know, this whole dynamic. It's kind of, it's a wild, wild story. So we should do the TB reaction to the acquired episode on Hermes. Okay, I like that. Should we just press play for five seconds? Pause. Yeah, it was funny because I was looking up like Walmart stuff and I got a ton of posts from Bernie Sanders being like, they make too much money. And I was like, well, I hate them too, but for a different reason.

2:05:11Me and Bernie can agree on something. We agree on one thing. They're ripping off luxury goods. They should be charging more. Yeah, I mean, but tying this back to yesterday, we were talking about what's happening in the automotive industry with the premium brands being knocked off. the thing here is that the way i can guarantee you the the woman or the the households that are buying birkin bags are not seeing this walmart product and saying i'm gonna get that instead it's people that aren't buyers of hermes yeah that are saying i just like the way this purse looks maybe they like the way the fact that it looks like it uh birkin i mean you could always buy a knockoff birkin bag at like canal street right on the street the street vendors very low quality knockoffs same thing with watches or anything and stuff the only things that are hard to buy knockoffs of are cars cars they do they do make perfect replicas of cars yeah yeah but i mean they still end up being like 200 000 because it's like a super bespoke there's only so much you can do yeah um but uh yeah it's just funny that walmart would do this i feel like there would be a legal battle on the design patent or something but i'm sure they'll but it's also like the birkin's been in market for so long do you can you actually defend that ip you can have design patents yeah maybe not and uh but that's why they can't they can't copy the brand yeah walmart is not a move fast and break thing like small oh like maybe we'll get a letter from hermes like they clearly consider the the legal impact of this before they yeah the main thing here too is is if you hold an actual hermes product up to this oh yeah it's not close it's not anywhere close and so the some people will argue oh it's like it's the same exact thing why is hermes charging this much and it's like charging that because of the brand but also the quality like they've mastered the art of making these bags and they they have incredible margins but it's still a fantastic product yeah like you know 80 dollars like the cogs on a on a true real hermes birkin bag or what probably a thousand probably a thousand so 10 times as much just in quality and then you get the actual brand and all the extra lift on top of that.

2:07:18I thought that was an interesting story. But stay tuned for our full Valentine's Day gift guide and our reaction to the story of Hermes. I'm sure we'll cover it at some point. This is interesting. I saw this going around some friends. There's a scam going on. You know, we love to highlight scams on this show. There's a new scam I've just recently heard about, says David, the QR code scam. People are either sending you a package or they put it in your mailbox. Inside might be a small item. not of much value or no item at all. With that, there's a coupon or a piece of paper with a QR code on it for you to scan.

2:07:52You might say free or discounted or even a giveaway item. Once you scan the QR code, the hackers now have access to all or some of your data, including financial information. So they're basically trying to trick you to go into like a phishing flow. So they'll be like, scan this QR code and it takes you to like amazonlogin.com and then it looks, and then you type in your username and password and they basically phished you. And they've used like the analog real world to get you into a fishing flow, which where that would normally be caught by a spam filter, but it's not going to be filtered by the USPS.

2:08:22Real world action. Yeah, very interesting. I had a buddy recently that got his Instagram account taken over and it was like a bunch of Instagram stories of him hyping up this person named Coach Maria. It was like helping him invest. And he's like, you know, I don't normally, like it was written in a way. It was like, I don't normally talk about this kind of stuff. Oh, it was just like text over? It was like Instagram story. Yeah, so it was like text over an image. and it was like, I don't normally talk about this stuff, but I started working with this woman named Coach Maria. She helped me turn two grand into 50, like reach out to her.

2:08:53And of course, like all me and all my other friends are like, awesome. Like I got to hit up Coach, all the comments. Finally got back in. I honestly don't think, I don't think it fooled anybody, but they're doing that at such an extreme scale that they're bound to get. So this is a promoted post for two-factor authentication. turn it on lock your accounts down the hackers are desperate these days anything for a buck but have you heard of lumpy mail generally no what's that so lumpy mail is a uh so basically like if you send someone like junk mail they'll usually just filter it out in and uh and they'll just throw it out like at the mailbox when you get your mail you'll just throw out like oh this It's clearly like a flyer for something.

2:09:39I'm just gonna throw this out. Then the physical mail retail marketers figured out that if they got a machine to hand write your name and your address and make it look like it was script and like it was written by an actual person with a real stamp on it, it would be like, oh, maybe this is a Christmas card. I'll open it up. They open it, then they see the ad and they engage a little bit more. Lumpy mail is a letter that has something in it, like a little chocolate. it. And so the envelope looks like it's lumpy. And so it's more expensive to send through the mail, but it has a higher open rate.

2:10:11And so you can send people lumpy mail. Conversion optimization. And it's all about conversion optimization to just getting someone to open the physical mail, see the ad, and then potentially buy the product. And this is just the next generation of that. Yeah. The classic is, I mean, I would pay an almost ungodly amount of money to never receive physical mail yeah from i would even be willing to give up letters from loved ones and christmas cards and fully switch to digital just to not get physical mail because it's just such a have you ever done like earth class mail or any of those services like po box forwarding and then it scans it all you see i know but like enough people have figured out yeah you have they just can send it to your address right yeah yeah um it's rough but um you gotta be really careful now is like the like they'll just write do not throw away yeah you're like you open it and it's like okay it's an ad for some insurance thing that i don't need i feel like in here there is a non-scam version of a very viral marketing strategy like if you like if we were to do some sort of drop where we got a bunch of people's addresses and we sent them something that looked like a package they open it up there's a qr code it goes to a vibe real announcing season two of technology brothers like like That's more like a public service.

2:11:25Exactly. It just goes to our X account and just says, you want to follow it. Speaking of mail, lumpy mail, something huge. We were out of town for a couple of weeks, but I came home to this, a package from Fiorentino label. Fantastic. I can open it up here quickly. I'll read this. If you don't know, Fiorentino label is by an entrepreneur and friend of the show, John Fiorentino. He says, gentlemen, it is with the deepest admiration that I present to you this handcrafted tie from Fiorentino label conceived by hand and brought to life by Fabio Caldarella, a true maestro of Italian bespoke tailoring with over a quarter of century of mastery.

2:12:05This piece is a testament to the timeless elegance and unparalleled craftsmanship we hold sacred. Got this wonderful letter from John himself. And then I saved it to actually open it on the show. John had given us a little bit of um you know a subtle critique that we don't wear ties enough and so now we don't have an excuse this thing is fantastic so expect to see us yeah rocking that I like that he just sent us one tie well I think you got I think you got one second time is there no no I think he sent one to you okay okay like buried in your mail um no no no it's our communal tie we'll trade yeah yeah we'll share it or you i can just hold one side yeah hold the other and it's like the fidget type thing exactly no no it's great i i need to get i need that's the next evolution i got a bunch of new suits i'm i'm sporting the white suit today got a couple more i'll only be strutting on the show you look like uh colonel sanders had a liquidity event that's what i'm going for that's the look um but definitely the tie game is next i like the open the open collar look, but you know, it's a little too casual for her podcast, for technology podcast.

2:13:16Yeah. Uh, Oh, that's great. Well, thank you to John Fio. And if you do wind up purchasing a suit from Fiorentino label, tell him the technology brother sent you. We've already had a few people go through. We've had a couple conversions. What was that? Okay. In the group. Yeah. You want to read some Q and A stuff? Jordy, what you got? Q &A. Let's see. Can we get an affiliate link in the description of those suits? Incredible suits today from Sky. Honestly. Thank you. We really appreciate it. AJ Sharp says, honestly, a groundbreaking banana bone cream. Yes. And John says, white suits for a black market.

2:13:59Tyler says, VP, let's get a ticker tape on the bottom where the fits are from with codes. new ad skew. Uh, yep. This is great. So this is great. This is great. This is fantastic. My see you in the chat. Ashley says, my question is what's their plan to monetize with this podcast? Brother, we are already monetizing on a scale. Uh, before seen, you don't become the most profitable podcast in the world with running a lot of ads. I do think that we are very much on the side of integrated brand partnerships, advertisements, and there's a very good reason for this. I mean, first off, we don't believe in audience capture.

2:14:43And if so, if we were charging the viewers, pretty soon we'd be like, what do the viewers wanna see? And then we'd have to deliver exactly what they want. And so we are 100 % corporate supported here. So if you wanna help support the company, call a company and have them sponsor the podcast. This is the key. Yeah. But seriously, there's a long history of this debate about should you just charge like$5 or$10 a month, the Stratechery model versus an ad model. We decided early on that the ad model was much better because it allows us more flexibility. It gets - And we like supporting companies. We like supporting our cool companies.

2:15:17And also it allows you to price discriminate in a way that captures more value. So there are Stratechery readers that are literally billionaires who work at big tech companies. They pay the same price as the college student who's paying$10 a month. Which is cool. It's cool. It's great. But it doesn't allow them, it doesn't allow them to capture the maximum value. We would rather anybody in the entire world to be able to come and get the 12 hours of content that we put out a week totally for free. Yeah. And then if you want to use Ramp or work with other partners, if you want to go on Bezel and buy a fantastic watch, you can do that.

2:15:53So expect more and more ads. Got a couple other questions Ashley says, asking about S &P 500 and just like public market investing in the future, is it going to be, you know, will companies require the same amount of capital as they get more and more efficient with AI? My answer there is that I think we're still in the early stages of just the hyper financialization of the world. Crypto is the hyper financialization of memes, right? And companies, I don't think the capital markets are going anywhere. In many ways, people predict that labor will be less valuable and capital will be potentially have be able to be more impactful because you can now, you know, we talked about this yesterday with all these roll ups.

2:16:38These companies are being bought because they have a thousand employees and people think they can bring that down to 50 employees by replacing people with AI. Also, when capital actually becomes more valuable. Also, when you just talk about the S &P 500, the S &P 500 is an index on American business. And obviously, America has this narrative like we're in turmoil. We're more divided than ever before. Things are crazy. There's stagnation. And there's so many bad things happening. But when you go around to other countries, we just did a deep dive yesterday on Germany's economy. And they are in a much worse position than us.

2:17:12And China's economy has been stagnating because of COVID lockdowns and deflation and currency fluctuation. And tariffs. Yeah, tariffs. And there's so many other things. So the question of like S &P 500 or not, to me, feels like America or not. And I'm still very low in America relative to everything else. The markets are a reflection of the general value, the earnings potential of those businesses, as well as their future potential and the memes and the narratives that get built around these companies. And so thankfully, we're still going to be able to deploy capital with our absolute boys. We got another just comment from CX Productions.

2:17:52They say, thank God the studio is back. It's been a rough few days. It's been a rough few weeks, actually. They tried to stop us with those fires, but they couldn't. And then we have another one question. We thought we needed energy infrastructure to support new AI data centers. We actually needed data centers to justify the energy infrastructure. it's more of a statement potentially than a question um but uh clearly not jevin's paradox build yeah um get up to speed yeah i don't know i i think uh even with all the deep seek stuff uh every hyperscaler is still saying we still need to build data centers we still need to and have all this CapEx and the energy requirements of the way that, you know, on BG squared, Brad Gerstner, I was listening to their episode from last week and they were talking about how one, the way that open AI is projecting their chip demand just from Nvidia, it would be like a third of all the chips that are sold this year by Nvidia and Abilene, Texas, where this new data center is going to be definitely doesn't have the energy infrastructure today to support that kind of, you know, just energy demand.

2:19:08So yeah, we'll see. It's going to be exciting, but it does seem... Yeah, I think DeepSeek, just based on, you know, letting a few days breathe, it's like it changes the economics of the B2B market. It might change the economics of the consumer market to some degree, but everyone is marching forward towards gigawatt training runs and then 10 gigawatt training runs yeah nothing's changed on that front people want the best possible foundation model to build the other stuff on top of and sure if you can get those optimizations let's see what happens if you run the super optimized model a thousand times much more hardware and that just might speed things up uh cool let's go on to more timeline speaking thank you everybody before And before that, thank you everybody for submitting questions in the chat.

2:19:56If you're listening to this on the RSS feed, we're now live streaming daily. So you can add questions live or just DM us post and we will get to your questions ASAP. Yeah, so Simp4Satoshi says, deep seek went viral outside of Twitter because of the Elon like and zero hedge retweet of my Regera meme. This broke containment and I had a lot of Normie friends in LA tell me they saw this post on a bunch of TikToks. check the app store before this tweet and after. DeepSeek went from 31 to first. And the post is, Sam spent more on this than DeepSeek did to train the model that killed OpenAI. And he posted it January 24th.

2:20:35Okay. I don't even want to respond to this post with a video. So Ben, don't respond to this because I generally, I've met some first associate. I think he's a sharp dude, but he is the biggest hater of OpenAI. And there's a lot of assumptions in here. One, I think everybody sort of understands that they probably spent quite a bit more than than what they're saying two you can't claim credit that you're one post when everybody had viral posts this week about yeah uh deep seek i don't think you catalyzed it to go number one in the charts it was very clear that it went number one like in a very inorganic way and they were just buying you know downloads because this started happening sunday and it didn't really hit the mainstream until this week So this is either humor or humor.

2:21:19He could be joking. I don't know. But we're putting it in the truth zone. But I do love just posting all the time. And then if something goes viral or something happens, just be like, look, I'm responsible. I'm responsible. You know, I'm the one that posted. You know, he. Oh, yeah. I mean, he very. So very clearly wants to be credited for taking down OpenAI. eye you know you you i think on the monday show when nvidia was down 15 you said on the show that you bought i did and then what happened the next day it ripped seven percent pop yeah you need to take you need to take responsibility for that i look at the stock chart when i when i did that market buy on monday exactly people said whoa there's some whales there's some whales that are buying we gotta go not financial advice we're joking around here and i uh not yeah we never give financial advice i did i did post um it was so funny because like sunday night satya came out and he's like jevons jevons pair you know jevons paradox all this stuff and and i posted in a sort of joking way just imagine being unfamiliar with jevons paradox on a day like today because it does seem like what like part of it's part of it's like wall street is not always betting on their beliefs they're betting on about the future they're betting on what they think the market's going to do the next day.

2:22:38And so even if you have these very intelligent analysts in Wall Street that understand Jevons paradox, it's like energy as energy gets cheaper, we use more of it, things like that. They can understand that and still short the market because they expect it to go down and they're just trying to make money that day. They're not thinking about five years from now or they don't really care about long-term capex implications. Do you remember what I said about Mark Zuckerberg in October of 22? I think I said he was goaded and he was going to go on a generational run. And then look, Joe Wiesenthal says meta is up 659 % since November of 2022.

2:23:15Look, I must be responsible for all that. Wow. Yeah. It's amazing. Yeah. But I do. Yeah. So, so make a, make post something and then wait for things to happen and then take credit for sure. And then if anyone comes for you, just say, I was joking around. I would never take credit for or something as big as that. Hubers, bro. Built different. But I do think this is a crazy stat, almost a thousand percent in two years. Like, I mean, this was the bottom. Like everyone was super bearish on meta at this point. It was the interest rates. TikTok was doing well. Everyone thought they over invested in the metaverse.

2:23:50The metaverse was a big thing. It spent like 10 billion and the AI thing hadn't happened yet. So this was pre-ChatGPT. ChatGPT dropped in like December of 22, something like that. And so - And the other thing that can't really be understated, though, is that Gen Z was spending more time on TikTok. Totally. Yeah, and there was no real like, oh, ban TikTok, anything. So the risk was like, hey, your next generation of users prefer another app. Yep, yep. So there were a bunch of bear theses. Ben Thompson, he gets to claim credit for this because he was writing about how it's oversold and how Meta was due for a huge comeback.

2:24:28because the core business was just so solid and was just throwing off billions and billions of dollars. The greatest ad platform of all time outside of Google. And ads are the best business model. The other thing people were really worried about was app tracking transparency, the iOS update. And everyone was saying that's going to screw Meta's ads and their ability to track users with cookies and stuff. That was Tim Cook trying to take down small businesses. Yes, yeah. And who did it wind up hurting? It wound up hurting small businesses and every other ad platform except for Meta because Meta has so much data that they can actually run AI across their entire data.

2:24:59They were impacted, but not to the same degree. And so they don't need to know that you literally clicked on this ad, clicked on this link, came back a day later, and then converted. They can just look at all your traffic across all their networks. And they're listening to everything that you say. Obviously, obviously. And so, yeah, Ben Thompson. Yeah, to help prep for our Valentine's gift guide, I just want to say, hey, John, I'm really looking to buy some new gifts for my wife for Valentine's Day. Send me some stuff. After the show, I'll scroll and I'll get some good options. I told you that my wife actually uses Instagram that way, where if she's shopping for a product, she'll visit a couple of the websites, not just scroll a little bit, not really actually shop, and then just be like a king, like come to me on Instagram.

2:25:45And then all the retargeting ads will come and be like, I'm ready to hear your pitch, but you have to pay. It didn't feel like it always was that way. Now they really follow you around. Well, they follow you around. But the other thing is, this is why it is such a bloodbath of competition in e-commerce right now. Because if you go, you know, Rora, right? We sell water filters. If you go to Rora.com right now, R-O-R-R-A.com and browse around for a second, and then you go back to Instagram, you will start being served a bunch of ads from our competitors. Granted, we have a much better product, much better tested, it's more effective.

2:26:20So we're confident that you'll come back to us. but still it's wild that Meta, the company we spend more with than anyone except basically our own suppliers is like working against us in many ways. It's like you knew about Rora. Now we're going to show you all these other alternatives to it. It's a free market. Welcome to libertarianism, Jordy. Yeah. Yeah. Ross would be proud. Cope harder. Let's go to David Holtz. I'm not coping. We're confident. He says, I worry an unsustainable need to raise billions of dollars has broken the discourse around AGI, ASI timelines. There's too many incentives to say you're on the brink of a breakthrough and too many incentives for everyone else to say they're not far behind.

2:27:03Interesting. We do see a lot of this where there's a lot of the AI foundation model leaders who are saying, AGI is so close, ASI is so close, just one more training one, bro. Just one more. It's almost like you know the uh you know the the scientists how they always want to build the the suit the height the large hadron collider and there's that meme of like the scientists being like just one more collider bro just one more just one more collider i just want to go a little bit bigger and then it's like i guess we do get cool foundational science out of it but it's very hard to say like what has the large hadron collider done for me lately like yeah i guess it discovered like quarks and stuff but like how has that really changed my life i don't really have like you know teleportation or like supersonic travel or like you know space exploration because of the the colliders and so uh we're seeing the same thing with the with the training runs i mean i am very i want them to do it just because yeah you know light some money on fire masa and let's see how good is gpt yeah what can gpt6 do for me yes if it's the same old and it's still messing up okay cut it then but uh half a trillion let's let it rip truly let's let it rip let's go to alex wang He is doubling down on the DeepSeek hate.

2:28:15He says, what does DeepSeek R1 slash V3 mean for LLM data? Contrary to some lazy takes I've seen, DeepSeek R1 was trained on a ton of human-generated data. In fact, the DeepSeek models are setting records for the disclosed amount of post-training data for open source models. 600 ,000 reasoning data, 200 ,000 non-reasoning SFT data, human preference RLHF data set of undisclosed size, human process synthetic data for cold start data. According to Chinese AI engineers, DeepSeek actually values data annotation even more than other Chinese labs with the CEO personally labeling data for the model. That's kind of crazy.

2:28:51This reminds me of Karpathy, who used to spend a quarter of his time labeling at Tesla. The DeepSeek V3 paper even has a dedicated acknowledgement section for data annotation. Very interesting. Well, we don't know exactly what's going on there, but this is why I put out a call to action in Chinese characters. I said, if anyone on the DeepSeek team wants to spill any highly confidential information to us, we'd be happy to discuss it on our podcast. So if you work for DeepSeek, feel free to call in. DMs are open. DMs are open. Call in. Let us know. We'll get on WeChat for you. Yeah. We'll talk it over.

2:29:26We'll talk it over. I mean, DeepSeek really is having an impact even as an open source model. You can see Arvind Srinivas from Perplexity has integrated DeepSeek R1 and FactSet to do financial research on steroids. And so they've connected crunch-based data and FactSec data with R1 so you can ask it to reason through things. And this is really cool because a lot of times I go to ChatGPT and I'm like, okay, we're going to talk about Coinbase today. Give me their entire funding history. And it just doesn't have access to that data. It's not reasoning through it properly. so then I have to go to Coinbase, I have to go to Crunchbase, export all the data, copy and paste that into ChatGPT, pull that.

2:30:05It's very cool to see Perplexity integrating those extra data sources so that you can get better results. And I think that's maybe an increasing trend. Like you saw this with the operator launch where they had dedicated agreements and integrations with a bunch of different companies to get access to Instacart to make it work even better instead of just trying to brute force everything with a model that might not quite be there, might kind of mess up more. It's like, hey, yeah, just give us the API access. Yeah, because a lot of these apps and platforms that you'd want to interact with have anti-bot products.

2:30:37Yeah, yeah. Kind of trying to prevent that activity. And so, yeah, I mean, using DeepSeek has been a little bit like controversial from the geopolitical angle. Obviously, Marc Andreessen's firmly on the side of like open source is great. Everyone should be using R1. It's a gift to humanity. I actually, we discussed this briefly on the show, But I asked on X, how sci-fi or tinfoil hat is it to consider the idea that there might be a Manchurian candidate buried within the weights of an LLM? So basically, you get this open source LLM out there and it gives you normal answers to everything. But then at some point, it switches on you and starts changing the way it responds or doing something.

2:31:21and is this like five years out or 10 years out or is this doable now? And Trevor Blackwell, I believe it was him. He was one of the founders of YC was like, it's possible and it's happening today. And I was like, crazy. I got like one response. It was like, it was like, this is the smallest post for my account. But I was like, this guy's very high signal. Like this is, this is crazy. So I don't, I don't think there's any evidence that they did that. I don't think it's actually what happened here, but it is something to consider in the future. We got the hat ready. yeah it is it is something considered shot and i think we should do the same thing next version of llama zuck let's embed a manchurian candidate that uh you know send that out into the world and convinces everyone to get into luxury watches brought to you by bezel yes let's go to near near says why did deep seek go viral tldr class resentment anger and especially shot and fraud very little actual app usage in comparison to the above and so near says my memetic model has really failed with DeepSeek and my analysis of why I failed is also failing.

2:32:23Does anyone who studies this topic have any novel takes? And so NIR has categorized the first week of the DeepSeek launch showing the increase in queries for DeepSeek on X. The posts go from 35 ,000 to 66 ,000 to 114 ,000, 191 ,000 and then explodes to almost a million on quote unquote black Monday the 27th. Well and like 50 ,000 of those were us. And then the iOS rank it went from 400 all the way to one and then there's mainstream viral videos CNBC, Forbes, CBS, CNN etc. And so Nier really did a crazy deep dive here in a spreadsheet of kind of tracking how this model went so viral and what happened and it really is a very emotional issue for a lot of people and and it spans the the gamut like uh clearly taylor lorenz was saying like yes like go china because she's just has this like funny bit that she's doing right now where she's like a full-blown communist and like loves everything china does and let's send her over there and then but then there are other people that just love open source and and they don't care about the geopolitics at all and so they're just like i don't like that open ai doesn't open source things anymore i'm an open source purist and there's a lot of those people so they'll amplify it for that reason yeah then there's other people who just really are sam altman haters and they're like anything that hurts sam i will amplify and i'm stoked about then there's other people who are just like like you know what i just want to use a cheap ai model to create my grocery lists and my recipes and this is the best app and i was on the pre-plan of ChatGPT, it wasn't reasoning at all.

2:34:04I didn't have access to O1 whatsoever. This one gives me reasoning. I'm in for that. I love this, thanks. It's a cool free app. And so there's all these different like - Other people, bat enthusiasts, if you ask OpenAI, can you make me a recipe for a really delicious - Terrible. And then also, I mean, there's even people who are like anti-NVIDIA and anti-hyperscaler, and they're like, I've been sick of NVIDIA making all this money. I've been sick of this story about Microsoft, you know, these big tech companies. I just don't like the big tech companies. And so if this hurts them and I see their stocks down, this is awesome.

2:34:38And so there's all these different effects going on that were very unexpected, not priced into NIRS model, which I think was interesting. Lorenz was not priced in. Not priced in. Let's go to Joe Weisenthal. He says, I think one thing that's fun about AI is that it's brought back tinkering. For years, it's been impossible to play with the computer, especially smartphones. Everything felt so sealed off for most users. Maybe this helps revive a new era of tech literacy. And I completely agree with this. I think this is so cool. It's not just the cursors and the cognitions and the Devons, it's just this ability to have a new tool.

2:35:15I mean, I remember when I got to Silicon Valley, it was the Slow Mo Co or whatever. It was like social, mobile and local was the trend. So like Foursquare was at the intersection of that, but there were really, really strong APIs for Google Maps, for delivering software on the iPhone via an app store. Nothing was locked down at that point. And there were also social graphs. So very quickly you could say, okay, for my app, I want to combine Google Maps with your social graph and I'll plug into the Google Maps API and the Facebook API and boom, I have something today. And instead of needing to build these big services, now everything's locked down, walled garden.

2:35:52You can't really like integrate these in the same way. And so it's been, there was like that narrow window of opportunity for like, yeah, and LLMs are so magical across all these different app experiences and model foundation models that there's this broader excitement. X has always been willing to try a new social app, right? Something pops off and they'll be like, oh, everybody will download it and play around with it. Usually it dies fairly quickly. But right now you have a more, the general, so many hundreds of millions of people have tried chat gpt and been relatively impressed with it totally even if some of them are using it in relatively simple ways like you know asking it questions like they would google uh that there's this broader willingness to just try new products and experiment and and this is why i think the whole like anti-chat gpt rapper meme is so harmful to the next generation of entrepreneurs because i imagine that in a few years like building a somewhat viral chat gpt rapper even if you get killed by open AI, even if you don't make a lot of money, is going to be a massive bull signal for entrepreneurs.

2:36:55Because you're going to have someone who, you know, yeah, they took a couple computer science courses, they learned a little bit of Python, they installed Cursor or Devon, and they started spinning something up. And they just made a small little niche app using R1 and these free open source LLMs. They got it up, it delighted a few users, and it was an end-to-end product. Good project. Project. And then when they find that business opportunity that's maybe be boring, like rolling up HOAs or whatever. It's going to be like, well, I know that this founder can build. And so I'm totally ready to trust them.

2:37:29It's the new sneaker. It's the new trading sneakers. Exactly. Exactly. Exactly. And so I'm very excited about the era of AI and what it means for the tinkerer and just having more tools. I mean, even just in 2012, Heroku was a huge deal because it allowed you to write basically just python and then click you know you would you would push your git repo to github and it would automatically deploy it on the cloud so you didn't need to install any linux servers even aws which was huge because you didn't need to rack the servers yourself aws was a huge increase in just developer productivity and like hacker productivity uh heroku was another step because you didn't even need to say okay i want to provision a server it it would just do that automatically.

2:38:13How big is that business today? Heroku? I don't know if it's been like fully, so it was bought by Amazon for, I think almost a billion dollars. It was a YC company. It was one of the first major liquidity events for a YC founding team. And so they were, when I got to YC in 2012, people were like, oh man, like Heroku, like that's like a sick outcome. Like that's a great business. Like they did so well. And then I'm sure it got folded into like a million different projects because - Inspired, it got to a point where half of the YC batch would be DevTools in many ways because that one event really inspired.

2:38:46Yeah, you could start on Heroku. You could even, now they have even simpler products called like serverless architectures. Are you familiar with any of this? Where like you don't even need to write the server. It's not, Heroku would like spin up a server and keep it on all the time. And it would kind of go dormant every once in a while if you're on like the free tier. But generally the server was on and if you visited the web app, it was there. Serverless is just sitting there and only when the query comes in, it spins up the server immediately runs the query that you want or the the the code that you want and then gives you the answer so you that was like super super cheap because you could throw something up if you had no users it was zero cost yeah you only got caught you only got charged for the queries whereas heroka would give you like one free one so you can keep something small up but yeah uh if it's scaled at all it would still be expensive because you'd be running it when you didn't have demand there were some like automatic load balancing stuff and then as you scale up your business you go to okay now i'm using all of aws's like bespoke tools that i'm provisioning like dedicated servers and then maybe I'm building a 500 billion dollar data center in Texas you know let's go to Palmer Luckey we uh we talked about this a little bit but he is also beating the drum on DeepSeek uh and the and the controversy around DeepSeek he says DeepSeek is legitimately impressive but the level of hysteria is an indictment of so many the five million dollar number is bogus it is pushed by a Chinese hedge fund to slow investment in American AI startups service their own shorts against American titans like NVIDIA and hide sanction evasion.

2:40:12America is a fertile bed for psyops like this because our media apparatus hates our technology companies and wants to see President Trump fail. We have so many useful idiots uncritically reporting Chinese propaganda as fact because on some level they want it to be true. They love seeing hundreds of billions of dollars wiped off the market cap of our largest companies. And so there was a little bit of a back and forth in the replies to this, Palmer kind of clarified a lot of people were saying, oh, well, you know, what are you talking about? Like they didn't, they didn't drive down the stock price with a short, it's a multi-trillion dollar company.

2:40:47Like they wouldn't have been able to do that. But what he was saying was that they might've just had like, you know, a billion dollar short position and boom, they just make$150 million and that's a great trade. He wasn't saying that like all of the downturn was caused by short pressure. No, the whole, I mean, look at Hindenburg Research. They're taking a position, releasing a report and hoping that it goes down. They're not capturing the entire loss associated with that sell-off, right? Exactly. And I think the things that make that sort of conspiracy theory or broader theory somewhat believable is it was clear that the app on a random Sunday when nobody outside of X was talking about it.

2:41:29Yeah. Just happened to go to the number one app in the entire. iPhone app store with a Chinese character developer name that just screams, like even TikTok doesn't use Chinese characters in there. Yeah. I mean, to be fair, a lot of the app chart is very gameable and it's, and I believe that that screenshot was in the productivity category, which is also very slow moving because there aren't that many viral apps that are gaining and the chart is based on momentum. And so if you're getting, you know, double the amount of downloads every day, you will be number one. Even if a thousand times more people downloaded ChatGPT that day, the momentum is what matters more than anything else.

2:42:13And so no one really knows the algorithm, but it is very interesting. And honestly, it's been weird because in the paper, they say we don't count R &D dollars in that$5 million number. We don't count the servers that we had from a previous training run in this number. We don't count. We don't count the data. Singapore GPS. So there's a lot of things that they didn't count and they admit to this, but it's been kind of uncritically reported in the US as just, oh, it's 5 million. The point is that it's still - Well, because there's so many, like going back to Palmer's original point, there's so many people that want to see tech fail.

2:42:46Like the traditional media hates tech still. Yep. There's a lot of people that want to see Trump fail. He just announced Stargate. you know want to people want to position him as silly or dumb or whatever just give him an l yeah and so there's a lot of people that just take everything at face value something very like memetically or like inherently viral about the fact that the number five is both in the deep seek announcement and in the stargate announcement so it's literally five million versus 500 billion It's exactly a hundred thousand. And I think if it was like four million and six million, six, 600 billion, it like wouldn't have clicked as much in people's heads.

2:43:27But just the fact that it was exactly a hundred thousand dollars, exactly a hundred thousand times cheaper to do something like impressive. And it's like, what's going on? This is such a big, it's also disingenuous though, because presumably the Stargate level training runs will provide even the theory. The whole reason to do it is it will provide models that are much better than O1 and much better than DeepSeek. And yeah, I mean, the original GPT-4 training run was 500 million. So 100x. So it seems like they were able to get 100x improvement in efficiency if the number is even close to being right.

2:44:03Definitely a 10x. Even if their number is off by 10x, they're still 10x cheaper. but we don't have numbers on what 01 cost to train because that is not the same as the R1 model. It's in reasoning model. It's a different thing. It's, it's, it's more about the algorithm than, than, than the training data. It's a smart marketing strategy to let everybody compete on advertising how much they're spending on training runs and then take the exact opposite approach. Yep. Totally. It's like a fitness trainer online being like, everybody's telling you to work out six days a week. I've got a product that lets you work out one day a week and get the same results.

2:44:38It's just like so contrasted. Yeah, it's similar to like the friend.com. We spent our whole seed round on a domain. We spent$2 million on this domain. That gets a story. And then also I built a massive viral success with a$10 domain. Anyone can do it. That's also interesting and clickable. But just going with something that meets expectations, like you have to break expectations if you're going to go viral. Well, let's go to some good news. Did you see the boom arrow news? Yes. The supersonic plane broke the supersonic barrier, broke the speed of sound. Mach 1.1, very good news. And Nicole Wiscoff says, my husband from the other room, babe, can you believe the founder of Boom Arrow used to be a product manager at Groupon?

2:45:21Unbelievable. I got to frame his LinkedIn and put it on my wall. Serious congratulations, big fans over here. And I love his, did you read his LinkedIn? It says at Groupon, he was there for two years, two months. And he says, there is nothing like working on internet, internet coupons to make you yearn to build something you truly love. It is such a fascinating story for him. It's been over a decade at boom, really rough go hard down round, lots of regulation, tons of red tape. When I see the announcement, I like everyone in the YC world was going crazy. Cause I think they just did the new round as well.

2:45:56And there were a lot of people that doubled down. I think Joe Gebbia was in a few other people. And, uh, and, and on the face of it, I was like, this isn't that impressive. It's just a plane going Mach 1.1. Like we did this in the seventies and like they had to caveat the record and saying it's like the first domestic, it's the first civil plane that's domestically produced that's broken the speed of sound because the Concorde was a French project. And so I was like, this doesn't feel as innovative as it could. It's not like it's like Mach 10. Like we'd never done that before, but at the same time it it is impressive when you think about just all the red tape that exists these days in these hard tech companies and it just shows they actually broke through that so it's almost more impressive business and regulatory story than an engineering story to me totally yeah yeah i buy that i mean they had 50 people on the team yeah it's crazy that's a group of 50 people came together and said let's build a plane that can go let's build the fastest possible plane we can build it's crazy it's amazing story and it i mean if you look back it's like we as humanity we gain the ability to build things and then if you don't keep the pressure on you lose you lose the ability totally uh if we ever get to a point where we hit hour three on a podcast and we and we decide oh i'm tired i need to go to the bathroom just remember just remember you got to keep the pressure on uh but but but this is like elon when starting spacex he wanted to buy Russian ICBMs because he was like, well, they, this is like this technology that, that they had that still like is viable and we can use it or learn a lot from it.

2:47:33So I think it's great. And, and it's such an amazing story to me that, uh, many, many investors would have left this company for dead at the down round. And I'm sure many did and are now kicking themselves because they didn't believe in the company when it was at its roughest point, they turn around so it's just a fantastic story they're going to make documentaries on this it's going to be awesome jason carmen already has i'm pretty sure but we need a new one we need the full hero's journey the i mean the really out the recap yeah the really dramatic documentary that they're going to make is the hermius versus boom story they're in different markets because one's military and one's commercial but uh there are these two founders they're clearly racing against each other to build hypersonics and supersonic planes and there's like a lot of similar engineering that goes into it.

2:48:19And I think if you start telling that story as a horse race, it gets a lot more exciting as opposed to just the story of one company. So I hope that happens. Yeah, we're going to the Middle East later this month, or sorry, later in February. And I wish we could be going Mach 1. That'd be amazing. Be nice. Jack Rain says, the Screlly versus meme coins has been a great Twitter side plot in Q1. And Martin Screlly says, ha, ha, ha, ha, ha. fart coin and dog whiff hat tokens for our words um what happened it went down it's only down like 30 that doesn't seem that bad still i expect this stuff to go down 99 yeah that's the thing memes have some intrinsic value the fdv is 793 million dollars which is far too high for something so stupid but uh people do like hey it could be the future of finance don't don't judge it don't jinx it i mean that's what i'm with dogecoin it's it's too bad uh but it is funny that screlly's been been out there giving out lots of financial advice uh let's move on to uh so it actually it is a it is a really good bit for him to go heavy against uh just calling out things that he identifies as stupid or scammy or he's going after he goes after these like bio he's he's had a couple bets where he'll post something Sunday night, short this company, and then maybe it's a butterfly effect, or maybe they just like people figure it out.

2:49:49He has a huge audience. So after Satya Nadella said Jevons Paradox strikes again and posted the Wikipedia to Jevons Paradox on a Sunday night or something because he was worried about the stock going down, Ara Karazian over at Ramp, their economist that they just hired, says, we can see this in the try ramp data. Here's data from a small market, a small sample of our base. Some thoughts though about whether the market reaction is justified or not. Companies purchase more tokens as the average price per token collapsed. And so you can see even just over, I guess it's just two months or one month, the token, the average price per million tokens of LLMs dropped by, I guess, a factor of and the number of tokens purchased increased on ramp cards because companies are buying more and it makes sense there's so many places where you want to stuff in llm yep and if it's super cheap it makes sense on a per transaction basis it's like yeah my ltv of a customer 100 bucks i can't afford to spend 10 on llm inference per customer yeah but if it's a dollar sure yeah why not um I got a promoted post that's in the form of a review.

2:51:03Like if a podcast called All In was good and interesting. Unnecessary jab. It's our favorite political podcast. And Jeremy Sun says, if you want to understand what startups are actually like and immediately tap into the unhinged schizo gundo core vibe, this is the show for you. Who do you trust? a couple of dudes in the arena building or a guy who invested in Uber once and won't shut up about it. This review brought to you by Symbiont AI. Symbiont helps keep your grandma from getting scammed through a free AI security app that reads email, texts, and more to identify scams in progress, stops them before they happen, and cost scammers money by wasting their time.

2:51:46That seems super valuable. I need that. Jeremy, this is awesome. We covered a couple of scams, the QR code scam. Yeah, so it's S-I-M-B-I-A-N-T dot A-I, Symbian. And I need to get this for my family members. For sure. I would love to get a little printout at the end of the month, maybe actually physical piece of paper. Great. If you can make a printer integration, Jeremy, that'd be awesome. Do you want me to read the next one? Yeah. And we'll go back and forth. Lifelong bureaucrat. Great podcast, although it has nothing to do with my line of work doing TPS reports and pushing paper in the federal bureaucracy.

2:52:23It gives me a sense of how the other half lives and better yet the 1%. Love to listen and then drop the lingo on my GS-14 supervisors. Don't know what that means. Get a great way to seem value-add and tech native. Since no one in my government workplace understands any of these words, banger, Patek Philippe, misspelled. It's two Ps and then E. Size gone. They think I must be working in the IT. the net result is they leave me alone and then i have more time to listen to the technology brothers podcast let's go let's go next one should leave an ad for your agency well we love the we love the government well it's an ad for the government it's an ad taxes on time yep and uh don't break the laws yep uh technology brothers this is from nick stewart technology brothers gave me the strength to quit wearing lululemon and the courage to start using nicotine again Thank you.

2:53:16This review is sponsored by AngelList. Attention, beloved capital allocators. Are you still working at a large tier one venture firm and letting an investment committee stop you from backing the next Lucy? Are you sick of getting Carhartt merch? Wow, savage. Do you wish you could avoid the internal politics and get more personal upside from your investing? Well, you already know that some of your smartest colleagues have left to launch their own solo fund. What you might not know is that the smartest ones did so using AngelList's full service fund offering. AngelList takes the operational complexity out of running a venture fund, helping you focus on doing what you do best, making great investments and running various parts of the federal government.

2:53:53Start your solo GP journey with AngelList today and we'll help you hit the size gong at first close. Make sure to tell them John and Jordy sent you. So anyways, I use AngelList all the time. I've invested in funds on AngelList. One of my very close friends, Jack, recently set up a new, I think it's like a$40 million fund on AngelList. And yeah, I'm an LP in it. It's an awesome experience. And yeah, AngelList is the best. I used to have to compete with them. I did not enjoy that. Now I'm just happy to be a user. Thank you to Nick for the five-star review. Let's move on to Kalmead805 says, the missing piece into my Chad diet.

2:54:35Last year, I committed to overhauling my diet and becoming a true Chad. Existing nutrition apps weren't cutting it. So I took matters into my own hands. I built your body AI now available in the Apple app store or at yourbodyai.com. The fastest and easiest way to track your calories and macros, but there was a missing piece, my information diet. Fortunately, I discovered technology brothers. They consistently deliver the essential tech insights and entrepreneurial inspiration for my mind that my mind craves with body, with both body and mind now fueled by optimal nutrient nutrients. I'm a new man.

2:55:06I'm down 12 pounds. I'm pushing up two plates on the bench. My wife and kids respect me. I couldn't, I couldn't be more excited for what 2025 will bring. All right. Uh, we got to check out your body AI. Very cool. Um, and, uh, I just love how, uh, everybody that leaves a review, like it crushes the ad. They crush the review. They they're doing best when it's all integrated. Oh yeah. It's fantastic. It makes me, we already love ads. We love reading them, but you guys are, you guys are brilliant. So keep it up. If you haven't done it already, go leave a five-star review. And I mean, this is untapped alpha.

2:55:44You can do it twice. There's Spotify and Apple. You can create new accounts. We might have to set a limit on a per company basis, but you can do that like crazy. We will get flagged as like, basically, they'll be like, this is the next deep. I just, I just want to, yeah. Yeah. If you, if it's really funny to think about an Apple, like podcasts, like moderator, who just like stumbles upon this and and and it's like starts removing these because like it's probably against the terms probably spam but we support it 100 yeah so thank you so we're capping it at two right now one on apple podcast one on spotify mix it up um let's go and also you can leave an unlimited amount of ads in the youtube comments true true yeah and we post like We're now posting five videos a day.

2:56:33Yeah, like, subscribe, ring the bell. Go on OpenAI, make an operator bot that just spams the comment section. No, no, just generate the text, the cheap LLM and then copy paste. Yep. It's the artisanal way of spamming. Orrin John says, he's about to cross a thousand short form videos. This is all it took to achieve financial freedom mid-career and never have to work for someone else ever again. Kind of ridiculous when you think about it. So congrats to Oren on hitting a thousand. Yeah, I just thought this was cool. So he started like, I think really leaned into Reels. I've followed him on Instagram.

2:57:09I think he's also on TikTok and some of these other platforms. And he's just been dialing in, not only building his business in public, but like helping people understand these like short form platforms and really built a pretty awesome community around it. So I think that that's the amazing thing. it uh five years ago it was super hard to get attention on instagram you could get attention but it was super slow it was like very hard to grow on instagram there was a period of comments everywhere i had a bot yeah yeah yeah so it's just like really tough yeah it was spammy tough time and then these short form platforms now make or it's much more democratic system where they don't like some if you're an account and you have a hundred thousand followers on instagram yeah and then you stop really posting or leaning into short form you're pissed because you're like i post a thousand people see it yep but it makes it so it levels the playing field and you can have a hundred followers and you post a good video i still will be on reels sometimes and i'll get a video that has like no views from like a new account i'm like sometimes it's super relevant other times it's total slop testing it out on you um it's a free way to to change your life Well, we started with Elon and Starlink and SpaceX bringing internet to your phone from the stars.

2:58:24And we will close on Elon Musk and SpaceX. The president has asked SpaceX to bring home the two astronauts stranded on the space station as soon as possible. We will do so. So very good. Yeah. I mean, it's absolutely wild that they've been up there for a very long time. And seemingly Elon was very willing, excited, and able to assist in the effort. And the Biden admin had snubbed him at the like EV car event that they hosted and just like ignored Tesla, ignored that he had the most dominant, you know, private space company or space, you know, force in the history of mankind. Yeah, it was crazy.

2:59:06And the debate over whether or not they were technically stranded was like a big thing. oh well it's just a safety thing they could go back or they could go back anytime they could go and then it was like no they actually can't go back on that boeing pod they got to go back on the spacex thing but when will they go back do they do the astronauts have a decent uh internet connection when they're up there can they can they use like reels i don't know i don't know how fast can they do like can they watch like brain rot slop or do they might be able to use star like old office reruns they're right up there with the they can just beam down they got black market i think they have pretty good internet i don't know but uh i mean the steel man here is that like they were supposed to go up for like two days they got to stay up there for like nine months like i think going to space for nine months maybe it's like a mutiny thing and they're like we don't want to come down yeah we like it up here we like our little stars now yeah yeah we like our little like it is crazy elon's never been to space but he's like the space guy but he's never gone it's so crazy too that astronauts have to keep a straight face and and just like it would be very embarrassing for nasa if they were freaking out oh yeah sending sending help messages out like tweeting up tweeting at elon saying boeing like stop like please let us but like biden got to just leave the white house and go on vacation and they're sitting up there being like really like we don't get to go home until somebody sends a spacecraft i mean people definitely jumped on this because it was such like a pro elon narrative obviously but then it was true like it was like Okay, yeah, Boeing actually couldn't do it.

3:00:38ULA actually messed up. And then it was amid all the Boeing planes and stuff. It was just such a mess last year. Rough year for Boeing. Anyway, that wraps up our show. Thanks for watching. White suit day. Go leave us a five-star review. Put an ad in the comments. And thank you for watching live and leaving comments. We enjoy. We love podcasting and we love live streaming. And we're excited to do this with your support for decades to come. And we'll see you tomorrow. Have a great day. See ya.