TML Inkling, California Forever?, TSMC Capex | David Baszucki, Everett Randle, Eric Glyman, Jordan Black

26:23They had really good fundamentals. The cohorts looked good. Like customers were expanding. they were staying um like the the all the fundamentals were really really good and then of course you had an overlay on top of that which was like the public markets were pricing sas companies at like 40 to 50 times sales um that's the craziest thing to me it's like you look back at at like you know the snowflake ipo and you're like i was i was reading the s1 and i was like the thing was that like less than 500 of revenue went out like 80 billion dollars And I was like, okay, there's some crazy stuff that's happening right now, but we have not seen anything, anything like the tops of the SaaS 2021 bubble when Snowflake was going out at like 120 times revenue on public markets.

27:07How much of the multiple compression that's happened is venture capitalists actually learning their lesson, the market learning their lesson, or just purely interest rate effects? I think it's actually just the compression of multiples that we see now is people are just more scared of the business models like obviously everyone's saying like oh SaaS is basically dead like terminal value concerns all those things but when you think about all the most popular business models and the most popular businesses that are getting funded right now there's no precedence on public markets of like an AI app company we don't know what an AI app company will trade at We don't know if it'll trade much better than SAS, moderately better than SAS, or the same as SAS.

27:49We don't really know how a space company, besides with the exception of SpaceX, which is an exception, not the rule, we don't know how a space company will trade. We don't know how... With that one, what about ASTS, Rocket Lab? There's a couple of public comps in the pure play space area. That's true. Unless on launch, I more mean satellite companies. Sure, sure. Or like, and yes, you could say the same thing about like, yeah, with and rule, there's obviously a lot of a lot of primes. But like, God, I hope it doesn't trade like that. Yeah, yeah, yeah. Much more like Palantino. That's the thing where it's like a lot of the things that people have been investing in either don't have precedence.

28:28Sure. They have something about them, like lower gross margins or capital intensity that's scary. Or the incumbents trade really poorly. And so you're like, well, like, you know, this is kind of like when a firm went out. Yeah. I think in 2020, no one knew if it would trade like a bank or like a payments company. And it sort of traded as a hybrid of the two. But no one really knew how to think about the company for a few quarters until it's public. So I think lower multiples, mostly because people are just discounting because they don't really know how these things are going to trade. Sure. I want to talk about closed source, open source, just token maxing and the economics of AI right now.

29:09But I want to go back to your January 31st, 2024 post. You said, making a real effort to not take for granted the, quote,$3 Uber across town era of AI. And I hope you are, too. that feels remarkably prescient extremely true i didn't realize i think the last time we talked about it was around just the models getting expensive around reasoning and the gross margins changing but now it feels like this is like directly targeted at cfos of like large companies who are showing up with i mean we have eric lineman coming out on the show uh they had one their AI spend spend hit 1.5 million in a single week.

29:52And so that we are out of that era. But as you, as you reflect on that, it was that what you were predicting? How are you, how are you seeing opportunities across new companies, uh, in the era of like cost control and ROI maxing? How are you processing that idea of like the end of the Uber era? Because in many ways, there's still a knockout drag out fight between codex and cloud code. And they're resetting limits every 12 hours, six hours they're fighting it out like we're still sort of in the capital fight but at the same time we're also in the some some enterprises are really uh controlling costs now yeah there's god there's so much to this topic and there's so many different things we could talk about so i'll try to hit the best portions of it yeah the tweet the tweet i think there's like a consumer part of the tweet and then an enterprise part of the tweet and like a consumer part of the tweet was like Like there's no ads, you know, the LLMs don't want anything of us.

30:47They're still super raw. It's just this like silly little service that like clearly is going to need to mature into an adult, you know, cash flowing product one day. But right now it's not like you could also compare it to like the old days of Instagram. Like when Instagram didn't want anything from you, it was amazing. It was like the best app ever. And now it wants money from you in the form of like you, you know, being an ad unit. And so all you see is short form video and it's like, you know, and like brain rot. And TVP and videos. So those are the ones that save. And then on the enterprise side, there was all this, you know, there was reports that sometimes it was like, man, cursors, it's really hard to compete against something like cloud code because they would compare the basically amount of cloud usage you could get through a subscription plan with Anthropic versus API via cursor.

31:38And you'd get like 20x the usage with Anthropic. You see insane subsidization on Anthropic. And I think both just the incremental adoption of AI by enterprises and that starting to move down a bit. I still think there's a fair amount of subsidization, but it's starting to go away little by little as the token hungriness of the models gets much higher. Now that we've moved from, again, just ChatGPT to long-running agents that are way token hungrier because they're reasoning models. And like that you sub agents and all these things, the costs have just like absolutely ballooned. And so like on one hand, it's like very clear that we've like exited the$3 Uber stage.

32:24On the other hand, you know, there's folks like Dylan Patel at Semi Analysis. And there's some of these like really forward leaning companies that are like not only our token costs reaching our human labor costs, but like we hope they go over. And we hope all of our competitors use open source models and we hope all of our competitors use dumb models because our employees will be using the frontier intelligence models and that's our competitive advantage. And so I don't think there's a lack of clarity around all of this that I think is, again, part of the disorienting thing about even investing in AI.

33:02I will say we're seeing an immense amount of app companies. I think if an app company, like app companies are either already at 80 % plus open source usage for like their own apps that they're serving to their customers, or like 90 % of them are trying to get to that ratio plus. So across our portfolio and beyond, a lot of people are working with folks like Fireworks to custom train and fine tune these increasingly good open source models. because, and like Jesse at Decagon actually had a really good post on this where he talked about just the fact that like for mature use cases that can be, that are well-known and can be fine-tuned on, you just don't need frontier intelligence anymore.

33:46And oftentimes it's best for these app companies to fine-tune open source models around those specific use cases. Yeah, are you finding with the application layer companies internally they're adopting the semi-analysis approach? They're using the frontier to build their tools, but then if they're vending out tokens, they want those to be very efficient because that scales with their user base, not with their employee count. Yes. I think that that is probably completely correct. I think it's like an extremely good take where it's like, yeah, like for, and, and, but the only reason I think of that is because what are they using it internally for?

34:22You know, like, like they're using it for coding and like they're using it for, and like, these are, these are high velocity startups where like the number one thing that matters is high quality shipping velocity of software. And so, um, if they can get a competitive different, uh, if they can be differentiated competitively by shipping faster, by using fable and just like spamming, you know, fable the whole time they're going to do that. Um, but then the thing that they're selling their customers is a very different use case. Yeah. So if it's like a support, you know, agent, um, you can use open source for that, but like the frontier intelligence on coding is still, you're seeing a lot of incremental gains for that.

34:55Yeah, yeah. The frontier labs are the spikiest on coding. Like that thinking machines example from Bridgewater felt like a unique spike in research and news analysis that might not show up at a frontier lab because it's maybe a smaller market. But thinking machines, they'd like bring that to bear, fine tune something that outperforms everything at a lower cost. Um, what, what else are you sort of retreating to in the age of the application layer? Are you more likely to look at two sided marketplaces, network effects, uh, something with like the other sources of power from zero to one? Um, if, if just like big pile of code is not defensible in the longterm, like it was maybe a decade ago.

35:43Um, yeah. Yeah. What are you, what are you actually looking for? And then are you actually seeing entrepreneurs acknowledge that and then go and build that? Yeah. Yeah. I mean, I will say like seeing a nice at scale marketplace with clear network effects, it's like a drink of water in the desert. It's like, oh, my God. You know, like I don't have to worry about AI labs or, you know, business model quality or any of these things. And so it is a breath of fresh air because I feel like those are always in style. These like super seven powers, modi businesses that somehow avoid AI exposure because maybe they're consumer marketplaces or something.

36:25So I absolutely think that's the case. I've always been relatively less or like not really in the bearish camp around lab risk for a lot of these app companies. You know, one like one one like silly example could be like, you know, some people like, oh, like, you know, Claude for legal is coming out like Anthropics going into legal like, oh, legal AI space. And my response has always been like, look, like Anthropic in like three months of 2026 probably added the amount of like near like even medium or long term TAM that exists in AI legal, which is still like a ton of revenue. like it's still an immense amount of revenue but like you're telling me that they're going to put like their eight like their SWAT team yeah to like grind out what is a top-down sale market over like seven years to maybe add some portion of the ARR that they added like in q1 yeah like it just doesn't like it just doesn't make any sense at all in terms of like the highest and best use of like the labs time yeah and so i think all of these markets like again like um People need to think about, well, what are the theoretical competitive risks and what are the practical competitive risks?

37:38And throughout SaaS, I'm sure if Microsoft at one point was like, we're going to win this extremely niche market for X at any given point, and it became the number one project for the business, then they could go do that. But they didn't do that because they had Microsoft Office doing tens of billions of ARR and their security business doing tens of billions of ARR. And so it's all these things around prioritization that I think people don't think about. And so I'm not that bearish on the app player stuff. And then the last thing I'll say is that the other really interesting thing that I'm seeing is that there are all these short-term things that I totally get why companies are doing them.

38:19And I think they kind of have to do them. That in the long term, we're going to look back and be like, this clearly made no sense to do long term. The biggest one that I see is like every app or not every app company, but like a lot of these app companies now feel like they need to have like a labs team where it's like every single app company. They'll hire like a few researchers from meta or something. And then all of a sudden it's like, well, we can defend ourselves from the labs because we also have a research team and we're doing like AI research. And it's something that I think we'll look back at in some cases it will have been valuable.

38:53but in many cases, I think it's just like a way for founders to be like, oh no, look, like we also have researchers, like we don't have risk from the labs, like we're doing our own research. And I just think that like, there's not, there's not that many opportunities for like an in-house research team to be doing that much groundbreaking work, you know, relative to like what, what the actual best researchers are doing within all the places that have the most GPUs, which is the frontier labs. Yeah. It's interesting because labs can mean a few things. It could mean AI research or it could mean experiments.

39:25And if you're an eBay. This isn't Ramp Labs, by the way, because Ramp Labs is doing like also experimentation. Yeah, very different. But there's a world where you're eBay and you realize that like the labs aren't really going to steamroll you because you have this like liquidity and this market and this network effect. But, you know, just figuring out the right way to integrate AI and maybe it's not just stuffing a chatbot in the corner. Maybe it's something a little bit more polished and having a team that can go out and look at the full product surface area without needing to be like the top down AI mandate of like every feature needs to be AI enabled is probably the wrong pattern.

40:07but letting a team go around and say, well, yeah, actually, we don't need to add AI to the checkout flow because we want addresses to be deterministically verified. But in terms of descriptions, if somebody's asking about this product, throwing an AI summary there might make sense. And we're going to use an open source model for that because it's going to run on millions and millions of product descriptions or something like that. Tyler, I want to give you a chance to ask a question if you have anything. Yeah, yeah. I was curious. How worried are you about the massive dependence that open source has on China?

40:41There was this article I think a week ago, and it was something to the extent of Beijing is looking at curbing overseas access to Chinese top AI models. Almost all of the Western open source models seem to be quite reliant on the Chinese models, which in some sense seem to be reliant on American low source. Maybe it's just a circle, but it seems like that's like if a lot of these app layers are just training their own models, they're doing fine tunings on open source models. From China. Yeah, from China. If those go away, what happens there? Or they stop accelerating because China says no. Yeah.

41:16Yeah. Yeah, 100%. It's funny. On a podcast recently, I just for some reason can't prevent myself from saying spicy takes that get people mad at me. Let's go. and we were talking about open source models I think it was on Harry Stebbings pod and I was like where are the good western models like why like we're like all like and some and I'm like we don't have any good open source models and everyone was like we have so many good open source models this company and this company and this company is like good and then I didn't because I restrained myself but I just wanted to tweet back the open router token rankings yeah then where are they if they're so good Why don't people use them?

42:00Why do you like look at the top 10 on open router? Like all of them are Chinese, all of them. And so I think that I think that the like a good pushback to what I said on that podcast was like, well, they're coming. And I've always been like, well, where are they? But now we actually are starting to see some American teams like actually really go hardcore at the opportunity. And so like one, NVIDIA obviously cares deeply about there being a strong open source ecosystem. They've done more than any single company across the entire stack to fund and support and bring into existence an awesome open source ecosystem.

42:37And so I think we all owe NVIDIA and Jensen a debt of gratitude for pushing so hard for a healthy open source ecosystem. So they have Nemotron now. Nemotron, by all appearances, is a great start. And I know a lot of people in our portfolio, they're actually quite bullish on the future of Nemotron. Thinky, just Thinking Machines Labs just came out with Inkling, which, again, a lot of people are very excited about. They don't claim that it's, you know, at the frontier even of Chinese open source yet. But, again, it's extremely customizable, which people love, enterprises and app companies love. And, again, it's a, you know, seemingly a bit of a commitment to continue to develop open source models.

43:16Reflection AI has always been, you know, they now have their strategy is, I don't think they've released one yet, but like their strategy is clearly to, you know, have the American open source model. And so I think relative to even three or four months ago, there's more that you can point to around like, okay, like the West is actually trying to do these things in terms of like the nested contingencies of like who's distilling who and like where are all the model capabilities coming from? I think like, I think the whole distilling thing is like, I think it's oversimplified. Like, I think it's like a little too simplistic.

43:47I think it's also like a little, like maybe there's some like xenophobia in there where it's like, um, in the public where it's like, well, the only way that the Chinese models are good is if they're just like distilling and they're doing nothing else. Yeah. It's like, they clearly cook some stuff up. Like they clearly are doing some really good creative things. And like the deep seek paper was like truly groundbreaking. Like it was awesome. And you can see it because like open source architectures get ported back into foundation models and closed source labs all the time. And also you just see that there's a ton of successful AI researchers who come from China and stuff.

44:19But yeah, I think that's all a good point. I have another question related to the application layer. I'm interested. Venture's been through these sort of experiments, whether it was like biotech for a little bit, D2C e-commerce was sort of enabled by Facebook. And then eventually D2C didn't die. It just sort of returned to the better fit was like CPG private equity firms know how to do it. They still do it. There's still some amazing outcomes, usually in like the$500 million to$1 billion category. You're not seeing trillion-dollar CPG companies anytime soon. But are there any areas in the application layer that you're seeing, oh, this category is now potentially investable as a venture opportunity because of AI?

45:12I'm thinking like game studios or something else. Or is there a pocket of previously venture-backable companies that maybe should be moved more over into, hey, just bootstrap that, get it to scale, do some private equity, secondary, run it cash flow positive, more of like a lifestyle business? Yeah. I think there's a lot of both. I mean, even like, if you think about it, even in some of the more obvious verticals where we've seen early AI winners, like even in legal, right? Like legal before AI was not seen as like a venture category. Yeah, Atrium and Clear Spire, two really solid runs at that, the tech-enabled law firm.

45:50And Ruff goes on both accounts. And now it's like, oh, the money's flowing. The business looks like a normal tech company. Yeah, there's still margins and whatnot. They've got to pay for tokens. But in general, it looks a lot more like a tech company than a law firm. For sure. And even the SaaS companies that sold into law, it was always just like, oh, super constrained TAM, it's a slog. You can't get law firms to pay a lot. And now, you know, Lagora and Harvey have just like absolutely eye-watering numbers that like, you know, for the last three years now and clearly are among like the very best.

46:22And Harvey just acquired Benchmark, right? That was a jump scare. I was like, we did what? We did what? Yeah, that was probably a good strategic move, but also just a hilarious troll on the timeline. On the other side, obviously we're in Rekor and they've become this huge, awesome platform for the task economy and finding the data that actually now moves these models forward. there's so many if you think about like at the limit if the limit to like getting ai agents to be able to do everything is to like find all the data in the world and like feed it to them in a really high quality way there's so many people i know that are finding like going out in the world and finding like extremely niche or just like data that no one would think of and then like you know making it you know like high quality servable to um to labs or anyone that wants to buy that data So like there's one, for example, that's like basically instrumenting a medical clinic.

47:27So like every conversation is recorded. Every thing that they're doing is video recorded. They're like, you know, almost doing like a, yeah, like, like, you know, putting telemetry throughout every portion of a medical clinic and then like making that a data set. And so I feel like, like, again, like, is that venture scalable trillion dollar? Probably not doing it if you're like just like the medical clinic data company. but I think there's going to be a lot of like entrepreneurial people that make a lot of money just bootstrapping these things and building them to you know 50 to 100 million dollar revenue businesses for like eight to ten years yeah and like that's that's sort of all you need to do yeah it's exciting for like entrepreneurship broadly like it's just it's just an exciting time to be building uh well thank you so much for taking the time to come chat with us have a great rest of your day have a great weekend and we'll talk to you soon thanks guys goodbye yeah let me tell you about public.com investing for those that take it seriously they got stocks options bonds crypto treasuries and more with great customer service our next guest is tbpn royalty we got eric lyman from ramp he's the co-founder and now the co-ceo he's in the waiting room and we'll bring him in to the tbpn ultra dome first time we've talked to him since he's become co-ceo how is it how does it feel i feel so good to be back it feels so good i missed you too um first time chatting with Tyler directly.

48:47I think he's popped in a few times. You've chatted with us in every different permutation, the yellow suits in person, in the New York Stock Exchange, all over the place. But how are you settling in into the new title, co-CEO? It feels good. It's what's been so fun. Karim and I have worked basically this way together for 15 years. Yeah, I was about to say, everyone's trying to do hot takes around it. I'm like, have you actually met these guys? they've been co-CEO the entire journey, even going back before Ramp. It's been fun. Like, for me, part of what makes this fun is, like, we've known for years, like, Kareem is the secret weapon of the company.

49:31Like, he's driving so much of what's going on now, it's, like, more obvious to people of, like, we got at least two of us. There's actually way more interesting people at the company. But no, we're moving fast, growing faster this year. And it's just fun. You know, now he can swap and take some events off my hands, too, which is great. Yeah, I love it. Well, businesses on ramp are moving tokens fast through their systems. It's showing up in their books. You built a website, token-spend.fm. I love the.fm. I think that's a very fun TLD. But what inspired this? I imagine it was from direct conversations with your customers.

50:12Did this come internal? What were the findings? What were the goals of the project? You nailed it. Over the last year, the last full months alone, ramp customer spend on tokens has grown by 21 times. Wow. 21x. Is that a gong or is that a wah-wah? It's a little bit of both. It's some of everything. It depends who's making the money or spending the money. And look, by the way, like the crazy part is it's not like people are like, turn it off. It's like, no, I actually want to spend more on the right things. And so like, you know, so we saw this from our customers. We saw this from ourselves. You know, a few years ago, AI spend was a routing error, like error to, I think in May, it hit almost 10 % of our payroll spend.

51:01The equivalent was on tokens on a payroll. And look, there's great things you can say about it. We're launching products faster than ever. Uh, we're more efficient than ever. Um, uh, we're growing faster. And yet, you know, you, I hate to say there are people at the company who like use fable, uh, to like, look up the weather. Um, we heard about that other companies. I can't believe it. I'm teasing. I'm teasing. But no, it's a, there's this whole thing where, um, people know and get in the abstract of models, even from a year ago were amazing, are great at doing tasks, and we can be more efficient.

51:39Two accounting teams need to be able to monitor this. I think of our CFO who would get a bill for hundreds of thousands of dollars, and then the work began of like, you need to allocate some to engineering, some to sales and marketing, some to you name it. And so there's just so many products that weren't built by the labs. And so today's launch around token spend management is a place where any company, whether or not you tried RAMP, can link up your API keys and then you're good to go. And we're helping people really within minutes start cutting their spend by several percentage points. And so it's been a very fun launch.

52:21Yeah. What was the first sort of generative AI application at RAMP? Was that the GPT API for understanding receipt data? So this was actually – so that was our first ML model for sure. But the generative use case, I think it was six months before ChatGPT came out, we hopped on GPT-3 and we started using this for Go Team. Yeah, classifying different receipts, putting things in the right expense category, things that could be done deterministically. Fuzzy logic could apply, but LLMs were uniquely suited. But at the time, that was a rounding error. Then you go forward to May and you get a bill for$1.5 million in a single week.

53:14What's the actual process for untangling what's happening? Are you looking at prompts? Are you just going to Slack and saying, hey, you know, you were one of the top 10 drivers of token spend? Can you flesh out a little bit of what what you got done this week? That type of thing. Like, what is the correct way for an organization to interrogate their spend maybe qualitatively after they're done with the quantitative side? Great. Most organizations that are even at a place to be thinking about this, they're using lots of tools, right? They're spending on open AI models. They're spending on Anthropic.

53:52They're using Gemini. They might be dabbling in open source. They're using Cursor. And so the first step is actually just seeing it. It's being able to link up your keys so you can understand and start to break up basic questions of like, what's happening today, not in a month when you go get your bill. skills, connecting and tagging that. And that's something you can do out of the box through the product. We come back within minutes to help you understand it. And so you can start to go and see, okay, not just this person normally spends$1 ,000 a month, but they've already ran through$800 in an hour.

54:26And so you can set up notifications. We show you unusual spikes. And so again, think back to the early days of ramp and corporate cards. A lot of this was alerting and visibility. It's these types of insights. And you also see things like, you know, we know how the most efficient companies are running. And so if you aren't cashing, you are overspending. Some people will leave fast mode on, which can be multiple times more expensive. And so we'll just highlight that for you. And then finally, at the end, you get to controlling it, you know, acting on it. And, you know, I think for today, there's so much to do on the analytics itself.

55:04But I do think there's more sophisticated opportunities to be had, whether that's in small model training, in routing, in much more. And we're excited at the whole space. I think there's so much to do to help companies save. Okay. Sure. Yeah, I have a question. So I see the average company, 59 % of their token spend is on Frontier models. How should companies be thinking about allocating between Frontier models and open source? Is it almost a thing where you're in an explore phase, you're using the frontier models, you're doing these kind of net new coding tasks, whatever, and then once you find this repetitive thing, you're running the same process every day, every week.

55:42Is that when you allocate it towards open source? Maybe you're even doing a fine tune. How should people be thinking about that kind of stuff? It's a perfect question. And I think for companies out there, if you're listening to this and haven't used these models, I would say using frontier models just to get a feel is good. It is surprising the capabilities that models have. And, you know, if you don't have a multi-thousand dollar a month build, like, start there, I think, is reasonable. But then you start getting into optimization. And there's a few sets of interesting questions. One, there are cases when using frontier models can, in fact, be cheaper.

56:22Like, for example, in our own benchmarks, on our software engineering benchmark, people think of Sonnet as an older model in, let's say, the anthropic world. and it is cheaper per call, but it needs to think a lot harder and call more agents working in collaboration. And actually the smarter models, like it's kind of if you met someone smart, like they don't need to go and do like long division. They can just like do division in their head. There are cases where using Frontier models, Scott Wu, calling Scott Wu is much faster. His hourly rate is much higher, but there might be certain things, you know, Scott Wu per second might be cheaper than hiring a team of third graders.

57:02Certainly the bad venture capitalists have made. I'm like, I want one Scott Wu instead of a thousand mid-bid. This is right. So that's part one. But then the really interesting part is when you get down into benchmarking of what is the nature of work that you're doing, you can use these trillion parameter models to answer really tough questions. But when you start seeing very high production use cases, you'll see, you know, if you know all of the input tokens you're getting are around customer service, you know, you'll see companies like Sierra having their own small models around what makes great efficient.

57:42And so they've lobotomied, you know, just the part of the brain that is really useful for those types of services to if you can dynamically start to route based on the complexity of the task, you can say a small model just for accounting. It maybe is all we need. We don't need to go ask, you know, a model that can allow us to cure cancer and do quantum physics and that kind of a thing. And so in some sense, it's on both. And you start to get really interesting answers. The more that you can benchmark your own business and the more that you have high fidelity about the nature of the inputs you're getting, the outputs you're seeing, and then the efficacy per cent on getting to that.

58:28And there's so much to build around this area. Talk a little bit about the shape of AI product development, the AI work you're doing, Ramp Labs, sort of the surface area, the spikes there. Because there's just using AI to improve the product that is deterministic, right? Better software. Then there's also AI integrations. I mean, it's such an anodyne feature, but I love the fact that you can open up the Ramp app and just ask a model, like, how much did we spend on camera equipment last month? and it'll just tell me. And that's amazing. And I'm sure I could like wire it up to some other system, but like I love just having it there.

59:06And then there's also like AI research and harness development, all sorts of work that's happening there. And that can be expensive, but how are you thinking about all the different trade-offs and all the different work within the AI slash labs umbrella? So, on using this, I mean, this is just an incredible technology, as you know. Like, I think about, like, part of what, like, let's just talk about, like, B2B SaaS for a second, you know, if we must. Yes, please. You know, come on. I was waiting. I was waiting, too. Yeah, we're finally doing it. Here we go. All right. So, the problem with B2B SaaS is awful is companies are complicated and people want different things.

59:50And so the accounts payables clerk wants a view. Your accountant wants a view. The CFO wants a different view. One person wants a button. You want to make it simpler for these people, more advanced for another. And how do you deal with this? Well, it turns out generative interfaces where based off of who you are, how you're using your product, it can show you the interfaces you need with the views, the graphs that you like to do your work can be intuitive. And so it's very interesting in making products that are very powerful, but feel simple and relevant for the products. And so on one side of it, like forget RAMP.

1:00:28I just think organizations in spending time around dynamic and generative interfaces, there's I think you can just make better computers. You can make better tools for people. Why do we care as a provider of services? what is so different structurally about spend on models and on tokens and on software is you could just hammer salesforce all day you're not going to get like a bigger bill from um from salesforce sorry going uh cream's calling i'll call him back um uh sorry yeah Yeah, you're on. I'll save it for a minute. But to go a bit deeper on it, if you start going and using, as folks know in the token maxing era, lots of tokens, like your bill can go from$1 ,000 to$10 ,000,$100 ,000 to$1 million, like very quickly if you start going.

1:01:30And it's not like payroll spend that companies are able to manage in some way. It's not like normal vendor spend. In some sense, it's like an untapped corporate card that you can spend as you go. And by the way, the meter is not running and you don't see it. And this starts to feel a lot like what we've obsessed over for years of can you help people manage every incremental dollar far better? And so it's pulled us deep into answering the question of if you want to know return on investment, we should be thinking about like what is return? What did you buy? Can you understand just the semantics of it?

1:02:05So what was the output to the efficiency as there's more types? So it is, we're obsessing over this from every floor of the building. One of the interesting things about Ramp is, you know, everyone who has a Ramp card in an organization has, you know, they can open up and see all their transactions. They can see their budgets, their limits, the policy that applies to them. And they can implicitly understand that if they spent$10 ,000 on their card or$1 ,000, did they deliver that much value to the organization? And I'm wondering if you see either RAMP or just generally businesses need to push more of that data to the end user, the token consumer.

1:02:49And how will that instantiate? I'll give you an example from the card world. and we're seeing this already in AI spend management. So in the card world, there's this concept of just like out of policy spending. Like let's say that you, let's say you never got a notice and you spend on Uber Eats because you forgot to switch over the card on the weekend. You might keep running it up and never really realize it. And it turns out if you just tell people once, hey, that was out of policy, you see spend and out of policy spend just drop. You tell people like you weren't supposed to do that. They don't do that.

1:03:27People actually want to be good and do the right thing. And this is the checking the weather with Fable 5. Yeah, it's like, I didn't realize I spent$100 to check weather. And sometimes some subtle UI like this and feedback goes a long way. And so in the product we've already seen, actually just exposing people, here's your AI spend. Like John Tyler. I don't know if you guys know what you spent on token spends yesterday, but on Ramp, you can know. And it turns out when you see it, you start getting more efficient. And so even just the act of exposing it to you is driving down these savings for people.

1:04:09So you nailed it. There's so much there. Yeah. We probably spent a lot on tokens yesterday. We vibe-coded a bunch of really, really jokey sites that provided a lot of laughs and a belly laugh. We had Sagar and Jenny on the show, who does not like prediction markets, and we built him an entire prediction market for his entire life. And the belly laugh that he got from that was priceless. It was all play money. But I think it was worth it. But I actually haven't seen the token mill, so I don't know. It might have been rough. I want to talk. Do you have another couple minutes? Of course. Okay. I guess last question for me.

1:04:48The Ramp Econ Lab. That is a separate lab. I'm very interested in the knock-on benefits of Ara Karazian's excellent work studying the economic impacts all over. I mean, the research has gone to the front page of the Financial Times, the Wall Street Journal, so many other places. What has that unlocked for you as CEO in conversations with customers? What have been the knock-on effects of that project? at first it's just you can kind of just understand the world better um it's very obvious it's been this uh i guess to paraphrase elon like a supersonic tsunami where it's gone from didn't really exist years ago to uh perhaps one percent of the united states's gdp in the next 12 months like it looks quite likely at this point um and this data is going so fast like you look at most economic indicators and you get things a quarter later, it's not measured precisely.

1:05:46Whereas ramp data, we're tracking about 1 % of all corporate spend in the United States. And you can just see it and you can understand it. And you can adjust your strategies faster. So I think it actually helps people better run their business and not get left behind. So I just find it useful for finance teams and technologies, people building businesses. Beyond it, it's just grown awareness. You know, we're competing against some of the best known brands ever created. And, you know, if we're going and trying to win you over and say, you know, try your tools. You should trust us to move money, store money, help you get more from every dollar an hour.

1:06:29And you've never heard of us. It's just a much harder sell to. Oh, yeah, I saw a ramp in the journal on TVPN, you know, on the Founders podcast or, you know, more and more. It starts unlocking it. And when it shows up in a way where it's actually already providing value to you before we have a conversation, it's you can get deeper much faster. And, you know, I think over the long run that that leads to more growth. That makes a lot of sense. Well, thank you for taking the time to come chat with us. Congrats on the launch, the website token-spend.fm. Go check it out. Optimize your token spend today with RAMP's latest project.

1:07:09Have a great rest of your Thursday. Have a great weekend. We'll talk to you soon. Goodbye. Let me tell you about Figma. Agents meet the canvas. Your AI agents can now create and modify your Figma files with design system context. We have a couple interesting op-eds I want to take a cruise through. In the Wall Street Journal, The bear case for Malibu. This is interesting. For decades, this 21 mile stretch of coastline served as one of America's most durable expressions of wealth, offering residents ocean views, private beach access and the opportunity to spend large portions of the day on Pacific Coast Highway.

1:07:47That proposition is beginning to face scrutiny. Rising insurance costs, wildfire exposure, limited restaurant options, and the difficulty of completing basic errands have weakened the case for full-time residents. According to property advisors who are familiar with the West Side, quote, You are paying$18 million to live somewhere that makes buying toothpaste feel like regional travel, said Graham Pelt, a partner at Arroyal Property Research. Several homeowners have recently shifted their primary residences to Brentwood, Montecito, and Pasadena, retaining Malibu properties for occasional use. The beach remains attractive, but the emerging bear case is that visiting it may be sufficient.

1:08:27Interesting. Interesting. I feel like this is the wrong day for Jordy to step away from the show because this is not good news. I feel like if he were here, he would be defending Malibu, but unfortunately he's not. I have another. I guess we just can't really. We'll never know. I think I mostly agree with what I'm reading here. Yeah, yeah. It makes some good points. There's another interesting op-ed. This one's in the Financial Times. They're calling it the end of Bottega Veneta. Bottega Veneta's position is the preferred label of consumers seeking to display wealth without displaying a logo, showing signs of strain.

1:09:00The Italian fashion house's woven leather bags, oversized footwear, and muted branding helped define the quiet luxury era, but their growing visibility has made the products less useful as signals of discretion. Quote, the customer bought Bottega because only certain people recognize it, said Isabel Marchand, an analyst at Mode Capital. The problem is that now everybody recognizes it. That's not good. Stylists say some younger shoppers are moving towards vintage accessories, smaller Japanese labels, and tap-out T-shirts. Familiar with those. Whose providence cannot be immediately identified from across a restaurant.

1:09:33Bottega remains a significant luxury business, but its cultural difficulty is that the absence of a logo has effectively become what? Interesting. I feel like Jordi would push back on that too, but there's one more we should go through. Apparently the G-Wagon is losing its grip. The Mercedes-Benz G-Class, long the default vehicle of musicians, professional athletes, and men who describe routine commercial activity as motion, is losing ground among a small influential group of tastemakers. In recent polling, Future, Jacob Elordi and Gunna each identified the 2014 Jeep Grand Cherokee as the emerging vehicle of choice.

1:10:11Yeah, I've been hearing this. Yeah, yeah, it is on the come up, citing its restrained styling, limited social media exposure, and availability with a factory-installed CD player. That's a nice feature. Quote, the G-Wagon communicates the owner has money, said one person briefed on the survey. The Grand Cherokee communicates that the owner has somewhere to be. That's a good point. Dealers have reported increased interest in low mileage examples with dark paint, tinted windows, and minimal modifications. Mercedes remains dominant on conventional luxury buyers. But among chads with motion, according to the study, the status hierarchy is shifting.

1:10:46Authenticity now requires cloth seats, a loose headliner, and at least one dashboard warning light. Yeah, and I think we found this graph of different tastes in cars, how they've moved. Can we pull this up? How overall taste in cars has shifted from 2025 to 2026 looks a little bit like polling numbers. And we'll see. The Mercedes G-Wagon has dropped from 95 % approval to just 45%. Meanwhile, the 2014 Jeep Grand Cherokee here has jumped from 33 % to 97%. Yeah, I mean, certainly among my friends, I think the 2014 Jeep Grand Cherokee has almost become kind of like the aspirational car. Sure. This is like you really know you've kind of made it once you're running in one of these.

1:11:29Yes, yes. Other big movers, the Nissan Murano Cross Cabriolet, of course, went from 65 % to 83%. The Dodge Challenger Hellcat Scat Pack has moved from 45 % to 74%, eclipsing the G-Wagon as the must-have vehicle. And the 2016 Honda Accord, a strong showing, going from 22 % to 54%. Yeah, I mean, over the course of a single year, that's a pretty big jump. Yeah, it seems like if you got a G-Wagon, you could get a 2014 Jeep Grand Cherokee and a Honda Accord from 2016, potentially. That might be the move. Well, we'll keep following the story, and we'll see what Jordy has to say about all of this in the future.

1:12:09When he's back in the TV pin UltraDowel, we had to take a shot at him. We had to have fun. No, of course, we're joking around with Jordy. Let's go back to the timeline, because there are some... You're going to talk about the DoorDash CLI. Yes, DoorDash launched a CLI. Yeah. People have been asking for this. Have they? Have they been? DoorDash, I mean, there's that funny meme of like, robot, push the order food button. This makes it like one step easier. Are they imagining that people are locked in terminals, vibe coding, and that they will want the DoorDash CLI to order them food? Or are they expecting developers to build whole applications on top of DoorDash?

1:12:50I think the idea is mostly that you'll have coding agents use the CLI to then order. So presumably you're super locked in. You've had your codex goal running for six hours. It's going to ping something. Is this bad news for MCP? Because they have an API. They have just a web front end that a computer use agent can go and use. Sure. I wonder why the move to CLI, maybe it's faster, maybe more token efficient. People are trying to be efficient. A CLI means you can drop DoorDash into whatever you already run, wire it into your internal tools and office catering orders itself. I could imagine office catering, if you're starting to build or vibe code sort of like an ERP for your office organizing, you could potentially do that.

1:13:38But I mean, DoorDash shared orders in an office is pretty seamless. Usually someone who's like quarterbacking the order would just drop a link in Slack. Everyone picks what they want in the DoorDash app. It's all linked together and paid. I mean, I think it's just one of those last mile problems where you've automated so much, but you still have to manually do the DoorDash order. Might as well just plug it in. People are having fun with it. Lawrence Jank says, my biggest fantasy is becoming a reality. Jarvis, order$57 worth of Shake Shack on DoorDash. No tip. That's a lot of Shake Shack. That's potentially too much.

1:14:13It's actually not that much. Shake Shack is actually pretty expensive. Yeah. $57. $7. That's got to be like two huge burgers and a shake, something like that. Well, Mod Retro CEO Torrin was interviewed by Tay Kim and Dylan Abrascato on our team shared his favorite moment from the interview. Tay's take says, I'm extremely bullish on Mod Retro. They have Steve Jobs-like product taste that will serve them well beyond retro video game consoles. That's interesting. What would they do outside of retro video game consoles? something new, something to compete with the Xbox. Jobs' original DNA was combining beautifully designed, high-quality products with a simplified, friendly customer experience after using the Chromatic, I believe, Mod Retro, can deliver that type of premium user experience with less frustration and fewer data privacy issues.

1:15:05I wouldn't be surprised to see them expand into televisions, headphones, and other high-volume consumer electronics, maybe a dumb TV, which Palmer was talking about when he came on the show. He's sick of smart TVs. and their advertisements and sign-ups and QR codes and all that. Yeah, iPod-like device music. I'm very interested in, do you think the M64 will be somewhat hackable in the sense that you could get sort of a dummy cartridge and then you could potentially vibe code a ROM that loads onto the mod retro, gives you the full experience of the controllers. Because we've been building a lot of web-based games and WebGL, And those are fun, but it just doesn't feel the same when you're on a MacBook keyboard that's not really a mechanical keyboard.

1:15:52You don't have a mouse. You don't have a controller. I imagine it's also pretty easy to wire up an Xbox controller as an input to a web-based game. Yeah, yeah. I mean, you can just connect with Bluetooth. It's like fairly simple. Yeah. But there's something magical about the original sticks of the N64. Yeah. and actually seeing it, like the constraints actually breed the innovation. You can create some mashup between Mario Kart and Goldeneye or whatever you want pretty easily with Vibe coding. It'll be interesting to see where the hackers take it, how moddable the mod retro is. Anyway, we have our next guest in the waiting room.

1:16:29Let me tell you about Cisco first, critical infrastructure for the AI era, unlock seamless real-time experiences and new value with Cisco. And we have Jordan Black from Senra Systems. He's the co-founder and CEO with a huge funding announcement. How are you doing? Welcome to the show. Doing great. Thanks for having me. Long overdue. I mean, I heard about this company because you've been working with Founders Fund for a while, right? But take me through a little bit of the history. Introduce yourself in the company. Absolutely. Jordan Black, CEO, co-founder. Started this company a little over three years ago, right out of my apartment building wire harnesses on my carpet floor.

1:17:06Yeah. Uh, founders fund been a great investor in us since the pre-seed all the way to a series B, which we just did. How much was the series B? Tyler's going to hit the gong. Let's go. How much did you raise? $65 million.

1:17:23Okay.

1:17:27okay so uh explain like i'm five the the the product the customer base what's fueled the growth what's uh what's in the supply chain what do you what's your key value at perfect i brought some props on the show but fantastic senra is solving the wire harness problem uh in the u.s for aerospace defense and you're probably wondering why harnesses or anyone watching this and this is what it is it's just like a bundle of wires connectors cables think of it like your iphone charger but a lot more complex and this whole thing i'm holding in my hands is designed in excel spreadsheets and powerpoint slides and it's all done by hand today as well by really skilled workforce putting this together and think of it like a cheesecake factory but trying to scale it it's really complex and there's no culinary schools that exist and no recipes and you just got to figure it out and make it happen too.

1:18:26How on earth are people designing these in PowerPoint? That seems like a crime. Like, is it, they're drawing out little diagrams on, on PowerPoint slides with like the, the, the, the draw line tool. They use that. They use Microsoft paint. Visio is a big one. This is anything from the large aerospace defense companies to startups too. But it's the input into wire harnessing is not standardized. The output of who builds this, how you build it, what's the right way to build, it's not standardized. And like Senra is solving this$165 billion market by being the ones that says like the bullshit's over.

1:19:06And we're just going to take over and standardize the entire thing. So why not a pure software solution? Like just wire harnessing SaaS. There are big companies that have been grappling with vertical integration. the anduril spacex like i imagine that you could sell this as a sas product but why why work on the actual production that's where the problem is i we started the company even with the design tool and we got some traction with that too okay and in the day every company just wants the wire harness and they want to come faster than normally is they want to plug in and work uh and it's the quality it's the speed it's the cost but they care about the physical product.

1:19:47And I think if you want to make a generational company where it's like, where were we before Google Maps came out? It's like, how are we building harnesses in the US today? It's like, we're with Senra 10 years ago. And that's kind of what the goal we want to have. But to fix the problem, we have to vertically integrate the entire thing. And what's driving the customers to Senra? Is it speed because you're local? Is it forward deployed uh engineers that you've sent into organizations to sort of co-design wire harnesses before you make them is it the made in america or price or speed like what what are the key factors that jump out yeah i think just being better is not it's not how we're going to win and how we're going to win every time but it's like quality is our number one thing like it's really hard to get a high quality harness because it's all done by hand so you don't know it works until So you plug it in, turn on the rocket, and the wires fit in the right spot or the wires aren't crossed and the whole thing blows it up.

1:20:43They just recall a million cheap vehicles because the wire harnessing is bad. This is a really big problem just in any industry. So qualities are number one thing, and we're over 99 % first-capacity yield with all our customers. And you just will never go out of style, and this is why you keep coming back to us. The second is going to be speed. It usually takes months to quote something, takes even over six months to even get a wire harness from a company today, or it's going to be faster for the customers we're growing with. And the last one is like that forward deployed engineering portion of it.

1:21:16So we do everything prototype to production. So we will partner with the Neo Primes, the Primes, just any of these companies and say, let's be your engineering partner. Let's be your expert and tell you how you should design this thing, how you should be thinking about it. and let's go build you the prototypes and let's go scale in the production sense of it. Like we're not just your contract manufacturer. Like here's the PowerPoint slide, go build it. It's like here's the PowerPoint slide. Let's go design this perfectly, build the prototypes perfectly, and then make this at least your problems in the long term too.

1:21:44What subcategories of electronics or products are actually growing their wire harness footprint? I'm thinking of like the smart fridge boom where there was a move to put a screen and a Wi-Fi router in every device in your kitchen, and it feels like that sort of peaked and maybe that's declining. What are you seeing outside of the obvious automotive, space, defense, categories that are sort of like sneakily interesting markets or maybe on a growth trajectory that you might not have expected unless you were on the ground in the industry? Yeah, that's a great question. I think it's maybe obvious, but like the data center.

1:22:29but what's really interesting it's not just the wiring that goes in the data centers but the surrounding uh infrastructure around it's like we need more generators we need more chikers we need more hvac equipment so you're seeing a really big uh inflection point in that sector too um aerospace on just the actual commercial aerospace like more satellites you have obviously defense with everything growing in too um but anything that requires electricity so now you're all these new energy companies. So I think the one that's going to start taking off is going to be like micro reactors or nuclear reactors.

1:23:02Like those are really difficult wire harnesses to build. And there's not a lot of people who know how to build that stuff as well. So as people, the new incumbents and the Westing houses of the world start like scaling up, it's like, we're ready to be kind of part of that journey as well too. So what does your path to automation look like? How did you make the first wire harness? How are you making one today? What does it look like in a decade? It's scaled from me building it in my apartment three years ago and just going to investors saying, look, I have revenue I can build wire harnesses. So you literally ordered the parts on Amazon and put it together, basically?

1:23:46I just put together a carpet floor. I got this PO. I love it. Revenue generating within the first few weeks. I think the first year was I got a really great team of like – because my background is from SpaceX. Like really skilled technicians who have been doing this for 10, 20 years, and they were building five nurses. Now probably over 90 % of our workforce is people who we've trained to go build the harness in four weeks versus the number of years it takes to go build that. so I think that's like the inflection point now of like how do you scale the unscalable it's like build a training program build an operating system for them to go build these harnesses on and then build as much integrate as much semi-automation to the factory too and then what's going to happen in the next like one to five year range is like we have a dedicated team working on AI and robotics of like talking to all the new companies talking to the existing incumbents of like we are ready to go bring in as much robotics and much automation into this factory.

1:24:43We're tracking all the data from the design input into telling technicians exactly how to do with work instructions to the physical automation data points of like, how are they doing things with their hands? And the really goal, I think everyone from the technicians building it to the executive level suite is how do we automate this as much as possible? And I think that's the really exciting part, but we have a really good foundation of like, we're building this, we're collecting the data, we're working with our customers, we're seeing what their cost points are and trying to grow as much as possible.

1:25:10A couple years ago, Daniel Gross wrote a blog post called AGI Bets. And I think the very first one was, is copper underpriced? Which I think was a very funny one. He was 100 % right. Copper has risen in cost a lot. Do you think about raw material input costs as an important lever on your business? Do you hedge? is this material or uh or are you able to pass it through to customers and not have it affect the core business uh i think it's a little bit of both but overall like we're buying this and we're we're not making the copper wire we're not making the connectors we assemble it and that's kind of our point of um yeah value add but i think the difference is because we're this engineering partner we want to be a cost-effective supplier for these customers too so we can go we have actually your own software um that we built out in an ai tool that ends up like looking at the bomb or the bill of material costs and says this is how much it should be and then suggesting to the customer you should go with xyz other component because it's cheaper readily available it'll work for your application but nobody's telling them this is how you should do it and that's why i say it's so much like a cheesecake factory of like why are we using this really exquisite beef when we can go maybe this over here which like has the same flavor or you can't even taste it once you put a thousand calories of cheese on it or something like that too so um that's really i think the value add to is like the price of copper is going up nothing we can necessarily change in our control to do that besides having better suppliers and distributors we work with and working with our end customers of choosing the right products from the two where are you based and who are you hiring we have two factories one in redondo beach and then one in cypress california uh and that's we just opened that up it's 82 000 square feet of manufacturing space um and we're hiring all across the board we're hiring in operations so technicians engineers um industrial uh engineers as well too manufacturing people just be on the ground floor building the factory from the ground up and it's really exciting it's like there's not a lot of greenfield factories that you say this is how things should be built this is how they should be done this is we're building the ship as we're um uh driving it to um we're hiring people on the engineering side from the software perspective and automation of like how do we go have the lever of making this more efficient and more automated in the future um and then we're also hiring us like business development and sales of like partnering with these customers and the program management side of like you get to go to fly these customers see what the wire harness needs are see what your goes into and really get integrated with their end goals, too.

1:27:52Very cool. Well, congratulations on the new round. Thank you for everything you're doing, and thank you for coming on the show. Have a great Thursday. Have a great Thursday weekend. Let me tell you about Railway. Railway is the all-in-one intelligent cloud provider. Use your favorite agent to deploy web app servers, databases, and more. Well, Railway automatically takes care of scaling, monitoring, and security. I'm very glad that the dog bark made it through. Let me also tell you about Shopify. Shopify is the commerce platform that grows with your business and lets you sell in seconds online, in-store, on mobile, on social, on marketplaces, and now with AI agents.

1:28:29And without further ado, we have David Buzuki from Roblox. He's the founder and CEO. He's been on the show before. Welcome back, David. How are you doing? Hey, it is great to be here. Thank you. Thank you so much for taking the time to come chat with us. I'm very excited about Build. I'm very excited about a lot of other things going on in the Roblox world. But take us through the announcement today. It makes so much sense. I think a lot of people could have predicted this happening, but I'm very interested in the shape of the project and how you actually see it changing what Roblox is. Yeah, the shape is ambitious.

1:29:05And at the same time, it goes all the way back to our roots. You know, 20 years ago when we launched, we had this mission and vision of removing limits of gaming and having everyone be a creator. The notion of a UGC platform was new. It's interesting that 20 years ago, our first slogan was you make the game. And so, you know, time has an interesting way of going full circle. Fast forward to where we are right now. Roblox Studio has a bunch of models working to accelerate creation. We have the Studio Assistant. People are using it with MCP. And so we're gathering all of those models and bringing the Studio Assistant right to a tab in our mobile app, both for one-shot game creation and iterative gaming creation.

1:29:55It's really an elegant unification of what has traditionally been Roblox Studio all the way to the mobile app tab as well. So right now, I've seen tons of models that are capable of designing incredible games when prompted appropriately in a variety of systems. But they're all sort of expensive right now. Some of them are subsidized on plans. But I think everyone's optimistic about the cost coming down by orders of magnitude very quickly. But how are you thinking about doing that dance right now of giving creators the most powerful AI and not putting too many limits on it, but setting yourself up for a really solid financial footprint over time as the product gets more popular?

1:30:45The hope is, you know, our well over 130 million DAUs, more and more of them can be creators. And I'll highlight that the economics aren't changing. We expect more and more money to flow to our creator ecosystem as even part of this announcement. There's a neat thing underneath what people see on the user-facing side of Roblox, and that we're a huge infrastructure company. We have data centers all around the world. We have bandwidth. We have CPU. We have inference. And we started this, fortunately, well over 10 years ago to keep costs down and performance high. A lot of the inference we run today, we run all on our own data centers.

1:31:26We optimize that in a way. The philosophy and the optimism of costs coming down goes straight to build in that just as Roblox Studio was the way people made games 20 years ago, that's still going to be live. but we think as games get more complex as they get multiplayer as they have interesting economies as we want to save the infrastructure all of that running behind it that promise comes back with people being able to prompt and create games our vision is that everyone will have access to this for a certain amount we will initially have the ability to buy more token usage if you want But the beautiful thing is this is eventually consistent.

1:32:06And as inference gets cheaper and cheaper and cheaper, just as some other things were expensive 20 years ago, we think more and more people are going to be able to use this more and more. As you reflect on the decision to build your own infrastructure, how bad would it be if you hadn't done that right now? Would you be feeling like a memory crunch? Are you feeling any of that? What about what's going on in public cloud or the AI build-out is well-positioning you or maybe even affecting you? Yeah, I think we've said publicly before the cost benefits of our infrastructure may be roughly 3x. Now, I don't want to quote that on inference and other things, but there's an enormous advantage to that and an enormous advantage of taking all that money, pushing it to creators rather than cloud providers.

1:33:03We are great partners with some of the cloud providers, especially in burst mode. There's a mathematical optimization where if we can run on our own in for most of the time and burst to cloud when we need to, that's kind of like the optimal cost structure. But I do think the vision is we want all 130 million of those creators and users to participate in making games. take me through some of the other ai initiatives that are rolling out across roblox right now i was fascinated by uh the ai upresing uh technology i've been very optimistic about that all over gaming we've seen it early signs of it with dlss but uh clearly this is next generation technology what's the what's the feedback been what's the process like how i think there's a little bit of a fun boiled toad thing going on here.

1:33:58We're all used to what a game looks like. We've been all playing games for 10 or 20 years. We know what they look like and we have an expectation of what we look like. I don't think any of us have the expectation that a game should be photorealistic at 4k 60 hertz like a movie. Like that is something that's the province of movies right now offline video models that create super high res and in our minds we haven't disconnected like what could that be like our vision and our dream and our hope is multiplayer gaming at photorealism 4k 60 hertz and we believe the best strategy for this is not pure 3d traditional gaming not pure video world model you know action systems and all of that but a hybrid system that is both optimizing the coordination of the thousand people in the multiplayer world with local super upresing for each user and so that's you know that's what we published a blog post on it's why we're working on this super upresing video model that we're going to incorporate we showed some early demos more demos to come but but we do believe it's almost going to be like going from black and white movies to color movies no one has we just aren't used to a purely photorealistic feeling game.

1:35:24So if the successful, like the keys to success as a UGC game creator, sometimes it can be asset driven. They can create something really high fidelity. Sometimes it can be they are able to actually instantiate the game quickly. All of that's becoming easier with the two products you mentioned. What remains the secret sauce to a breakout UGC creator on Roblox? Yeah, I think there's a couple of interesting factors here. The overarching thing, if we take a step back, that gaming provides us in society is really our belief. We think the world needs to be playing a little bit more, hanging out together, using their imagination.

1:36:13You know, it's how we've evolved as humans and play is just a good thing. We think that as far as the creation of these experiences, we're going to see more and more interesting ways for people to play together. I feel it's a little bit like we've moved from oil painting to Photoshop. We're all going to get better at making digital assets and things like that. But there's going to be enormous room for creativity around what type of environments we play in. We're all going to feel more powerful creating those environments. We're going to have the same opportunities, I think, for many of the large teams on Roblox that are big studios now.

1:36:55But we will also have opportunities for first-time creators. Just as sometimes first-time video producers get a breakout hit, I do think we're going to make that possible as well. Yeah, I'm curious how you're thinking about, you know, using it not just to build the games, but also like within the games. So like, you know, I think everyone who's used these models has had this idea like, oh, this would be an incredible NPC, right, in a game, you can talk to it, it has this incredible, you know, ability to respond to what you're doing. I'm curious how Roblox is thinking about, you know, using models.

1:37:28I would say yes, yes, yes, yes. Both NPC creation as well as dynamic world creation as well. You know, one can imagine a gaming world where like in the movie Inception, there is a dream master who can modify the whole world for other people in real time. That's a very complicated computational challenge, you know, folding the road over in that dream sequence and inception. but dynamic world generation, I think we're going to see in real time. Also NPCs, you know, both, not just doppelgangers and digital twins and every single sci-fi movie we've ever seen. There's another really interesting aspect for NPCs in that it's very hard.

1:38:14I think it's much harder in the gaming industry to figure out, is that thing going to work or is it going to be interesting? We've seen so much success in code acceleration because we can define it. We can write a test plan. We can do iterative loops. We can let it go all night and get better and better. A game is a lot more difficult to define what is good. I think we're going to see more and more NPCs used as testing agents. And the interesting thing about NPCs is rather than trying to write a test plan, like let's put 100 random NPCs in a game, give them the same mission as a human, and see how they perform.

1:38:51The fun thing about really extrapolating to the future with a lot of compute and a lot of inference is those NPCs could conceivably run 100 times faster than humans. So it's feasible to imagine a 100-player test for 100 hours with NPCs being compressed down to an hour. That starts to introduce the notion of Wiggins Loop programming for game creators initially with NPCs. You mentioned Inception. The whole team's nodding because they all just saw it in 70 millimeter in theaters because it was re-released. They love that. What about Roblox, the movie, or IP that is developed in Roblox going to the big screen?

1:39:34We saw Backrooms, a Blender project, very successful summer blockbuster. What's the future of that pipeline? We are looking into it. we've been really conservative because what we've always imagined roblox as a ip factory where new ips that are not coming from the movie angle are coming from the you know dress to impress and grow gardening i just went and bought some dress to impress physical toys so i think we're looking at how maybe in the future we would accelerate less of roblox and more of those creators it's fun to imagine a future where the brands of those creators supports property. So I would say a lot of opportunity there.

1:40:19How is advertising developing in Roblox? It feels like AI unlocks, it just lowers the cost of actually doing a branded integration. Someone who's a non-technical marketer can potentially come to you and say, I want a physical instantiation of my store. I want to do some sort of stunt and you can say, yeah, like this will just be a couple of tokens. It's going to be a couple of bucks. I think you're exactly right. What we're, we're, we're experimenting as well. Even the descriptions of experiences, the thumbnails that creators make, all of that is starting to become AI and dynamically generated.

1:40:57I would also say as our discovery tool moments more and more starts to become front and center in the product. That's a much more advertising format a lot of young people are used to. Also, our on-platform advertising business, which is creators, in addition to using our recommendation algorithm, boosting by buying advertising on our homepage is going very well. And then, as you mentioned, we're seeing continued growth in both brand integration as well as video advertising as well. Sorry. I did. Sorry.

1:41:39It's very funny. How are you thinking about new platforms, new consoles, just the general strategy of the Roblox footprint? Are we past peak new platform, or are there more surfaces that you want to expand onto? I know three surfaces right now. We're doing early experiments with Android TV, which is exactly the same Roblox client. Many experiences on Roblox that are not super high Twitch related are super interesting there. I think there's a huge opportunity to be on all TV platforms. Of course, we really respect Nintendo and Switch. Continuing to talk with them, we do think Roblox should be on that device.

1:42:33And then as we start to see all this collection of AR glasses and VR headsets starting to pop out, we're going to see more and more maturation of what is kind of the standardized AR form factor, which is heads-up display overlaid on glasses, ultimately projection. That's a real interesting platform for 3D communication as well. So we're tracking that. And of course, we're big fans of MetaQuest and Roblox is live there, and a lot of people play in VR right now. Yeah, in general, the glasses format, I mean, there's been some exciting launches, Snap Spectacles and the MetaRayBand displays, but it feels like we're in a little bit of like a, like a AR VR winter in the sense of like, it's, it's just wait for the next major iteration.

1:43:24We're just sort of in between cycles. Is that what you feel? I think there's a huge AR glasses opportunity. Once we get speaker, microphone, camera, projection, lightweight, all working together. Everyone's dancing around the edge of it. arguably the Google Glass from 10 years ago, I feel was on the right track. What's the lightest wearable everyday option? So I feel we may be in an AR winter. I'm not sure, but I'm very optimistic about that form factor. Yeah. Yeah. It's interesting. I'm such a VR bull, but at the same time, when I see just rumors about, oh, this next great display was canceled or something like that.

1:44:12Yeah, I mean, VR and AR are super different. I had the privilege of trying on a VPL data glove literally when Jaron Lanier ran the first VR system on SGIs, so I saw it super early. So I'm super optimistic about AR. What about screenless experiences? I mean, there's a lot of smart speakers and the meta Ray-Bans that don't have the displays have an AI that you can talk to. And I'm wondering, is there any opportunity for a Roblox creator to create a game that, I mean, there are games on Amazon Alexa, and I'm wondering if there's any Roblox creator that could potentially create a game that doesn't require a screen, at least for part of the experience.

1:45:04I think the more Roblox is not thought of just as a game or a platform, but incredibly high performance, low cost infrastructure that's available to everyone. That infrastructure is both single player and multiplayer. It's 2D and it's 3D. It can be on low end devices and high end. And as that infrastructure more and more incorporates NPCs and audio and those types of things, you can imagine crossover type games that involve NPC interaction, jumping from those with a visual display to pure NPC interaction. So I would say we're very focused on providing high-quality, low-cost infrastructure throughout the platform.

1:45:48And I think also focused on where it makes sense from performance and privacy, whether it's our voice safety models, our text filter models, our super up-sampler model that we've announced, uh npc model uh game creation coding model scene gen model single part um creation model there's many of these where we feel we have the data to build world class and kind of put it all together in our build harness what what is your like overarching philosophy on where certain pieces of the the safety and kyc infrastructure should live because uh i mean i have kids they're not playing games yet, but I imagine they will at some point.

1:46:33I'm probably going to have an opinion about the amount of screen time. I'm probably going to do some research on what the right amount is. Some of that can live at the device level. Some of it can live at the application level. Some of it can live just at the parenting, paying attention level. How do you think about the different pieces of the puzzle where identification lives, where screen time lives, where different filters live? Is this an important trade-off? This is a big discussion in D.C., right? What responsibility do device manufacturers have? Do they have to tag the age of every device?

1:47:08I would roll back all the way to Roblox values. One of the four is we are responsible. And that value has led us to, in a way, shutting off a phone call on my Apple Macintosh. Sorry about that. I hope you don't hear that. So that has led me to, sorry about that. Problem of having integrated phone on your PC. That has led us to taking responsibility and doing a few big moves. No sharing image or video, age checking now everyone on the platform. So both AI and biometric signals and really being unique in leading that charge, we ultimately will take every age signal we can get, whether DC mandates it from a device, whether we collect it, and we just get higher and higher resolution.

1:48:07but we're not waiting for a law or for device manufacturers to do that. Like we're, we're, we're already done. Like we're already age checking everyone and using that to band communication and monitor content. The other thing I would highlight is there's no silver bullet there in that even with device age check, so many parents are so busy that so many devices get handed around the household. just go take my phone, go take my tablet, that we will have young people, we will have nine-year-olds on devices that are age-checked for 18, that there is some reliability and constantly doing continuous age-checking like we do.

1:48:54Yeah. I mean, the funniest example I can remember is there's this old Twitter exchange where presumably a young woman got banned from using Twitter by her parents. And so she logged into her Samsung smart fridge and sent a tweet. It was like, I'm back online. And it just shows you, like, kids are so ingenious. Like, they will get around things. So you have to have layers of protections at every level. And there's no one-size-fits-all approach, which I think is your... That's exactly right. Yeah. I'm curious how you're thinking about safety, especially in regards to AI. I mean, every time a new frontier model comes out, you'll see someone within, like, an hour who's jailbroken.

1:49:33Yeah. They have this crazy prompt, and you can get the model to say all these, like, crazy stuff. So I'm wondering how you're thinking about that, especially in terms of these large language models. Oh, like red teaming? Yeah. Sort of? Yeah, I would say we're going further than that in that now for everyone on our platform under 16 right now, they have a huge corpus of content. It's called Kids and Select Content. It's well over 20 ,000 games. But these are going through a fairly excruciating both user funnel as well as moderation funnel. and in a way it's working really wonderfully that's an enormous amount of content at the same time it's not the full ugc catalog of millions and millions of things um and because we have age check we can push it there the vision with build is we have the ability in build um that we don't fully have in studio where everything's being created by a prompt where we can see a history of all the prompts that have been used to create a game as well as um ultimately the images that have been uploaded, the models, all of those kind of things, to really make a similar determination on the quality of that content.

1:50:42Whereas when you use a wide open IDE, whether it's Roblox Studio or VS Code or whatever, you probably can make anything. And so we are optimistic we will keep the same safety gauntlet for experiences created by build. We're also really optimistic that because our discovery system is so unique to gaming, it's very much based on estimated long-term retention, based on direct measurement, that our discovery team's pretty optimistic. Even if there's 20 times more games being created, one could have the fear, oh my gosh, we're going to get a lot of AI slop. But we already have millions of people making games.

1:51:27Some of them are amazing. They're not all amazing. They need to make it through a high retention gauntlet before they start really being surfaced. So the beauty of this is we think our current discovery systems are already perfectly poised for the expansion of creation from build. Yeah, this is the aggregator thesis. You're already filtering everything and you're set up for it. How are you thinking about intellectual property on Roblox in this where it gets even easier to make games and experiences? is there have been some artists and IP owners that have been more lean forward on, yeah, remix my songs or use my likeness.

1:52:09Sora had this weird cameo feature that I thought was pretty elegantly implemented where someone could go in and say, anyone, like Jake Paul was like, anyone can remix my image. I want to be all over the internet. Other people said, don't put me in any videos that you generate. And I'm wondering if there's, like, what the long-term relationship with different pieces of IP. Some filmmakers might want a bunch of free UGC games that promote their movie, and some might not want any of their IP to leak into Roblox. How are you treating that? Yeah, so that relationship between IP holders and current creators and game developers is really complicated.

1:52:50There's multiple countries. There's Hollywood contracts. Imagining a small one - or two-person shop going and getting a license to some big IP is somewhat unfathomable. We do believe the future of this is just like Roblox solving it in a systems-oriented way. We have a platform right now that is somewhat new called IP Manager, where we want and we are running the gamut all the way from some pieces of IP, which, hey, we're open for licensing. We want multiple creators to come and use our IP. The IP from the movie Saw is in our IP manager. And so a creator who's interested in using that IP can directly contact, you know, do an online contract and start producing something from that.

1:53:44But that IP manager can also act as an IP controller as well. And IP can go up there more. And the more that AI gets good at auto scanning and auto detecting can also be some companies that just say no one anywhere should be using RIP. So I think we're viewing this as a systems opportunity. And just like the democratization of gaming, we want more creators making interesting games, democratization of the licensing process. Yeah. I mean, I've been really optimistic about AI solving this because I've watched firsthand how YouTube has dealt with it, where you put a song in, immediately the royalties just go over there.

1:54:29You don't make money, but that artist does. And most artists are fine with that. And then they always have the option to click that button and say, actually, I don't want that at all. And it's not perfect. Everyone has approvals at the right time, but it's like this stable equilibrium where I think everyone gets what's economically viable. I'm very optimistic. Like this will ultimately be a solved problem. Yeah, it's exciting. Well, congratulations on Build. Congratulations on all the progress. Thank you so much for taking the time to come chat with us. July 28th, Build goes into Alpha. July 28th.

1:55:00Thank you. Thank you so much for coming on the show. Have a great Thursday. Have a great rest of your week. We'll talk to you soon. Good to see you. Goodbye. Let me tell you about MongoDB. What's the only thing faster than the AI market? Your business on MongoDB. Don't just build AI. I own the data platform that powers it. In creator world, there is some news from Colin Samir. Lexus is now the official car of Colin and Samir. What does that actually mean? They made four ads for them that roll out across YouTube. They're sponsoring four videos on their channel. It's the first of its kind deal that represents broader shift taking place in media.

1:55:39The aperture of what it means for a brand to work with the creator is changing quickly. It's very cool to see because obviously they've been on YouTube for a long time. They've done a lot of like host red ads, mid roll ads. But this is a much deeper integration and something that I think will be hopefully replicated all over YouTube and be a new source of revenue for for creators of all kinds. So I was excited to see this in other entertainment news. uh jake uh from econ cm pic uh economic uh says this is almost hard to believe disney spent 129 billion dollars acquiring marvel star wars pixar espn and fox which is 182 billion in today's dollars throwing all their legacy assets in the entire company's market cap today is 169 billion dollars wow do you know what this picture is missing uh which what do you mean so so they're saying they acquired all these assets and the company's only worth 169 billion dollars what's missing from this analysis the cash that's been returned to shareholders disney across uh dividends and buybacks has returned like 70 billion maybe more to shareholders which is i don't know i just thought this and it is it is it is an interesting angle because they have spent a lot acquiring and the company is not worth more than what they acquired.

1:57:11So there's this question of were those acquisitions accretive or destructive or dilutive? But there is a whole separate picture, which is that a lot of cash has been returned to shareholders throughout this journey. Also, I mean, the mechanism with which those acquisitions were funded also should... Yeah, it matters a lot. I don't know. It was sort of interesting. Sean Frank has a pitch. He says you should Move to New York City. Bro, you got to move to NYC. The weather, horrible. 100 degrees. Easy. AC, F that. Taxes, so high. Rent, highest in the country. Air quality, some of the worst in America.

1:57:46Tech, bro, we banned Waymo. Do they really ban Waymo in New York? I believe so, yeah. There's no Waymos. Wow. That's very wild. Yeah, if you can make it here, you can make it anywhere. So, I don't know. Do you ever have aspirations to move to New York City? At some point, it seems... You've been to New York City. Yeah, yeah. What do you think? It's a nice city. Solid city. That's the thing is that all of this is true, and it's still a great city to hang out in. It's so fun. It's so dense. You can see so many people walk around. It's beautiful. It's just like, I don't know. It's unlike anything else.

1:58:14Still great, but yeah. You never lived in New York City. I've never lived in New York City, but I've spent a lot of time there. So I've had a good time. Anyway, let me tell you about Codex. Codex is a powerful workspace for getting work done with AI agents, whether writing code, analyzing data, creating content, or automating business workflows. Codex helps you move projects forward from start to finish. And there's some other news in the timeline, but we can go over it more next week. Eli Lilly is buying psychedelics firm Atai Beckley for an initial$2.8 billion. Atai was founded by Christian Angermeyer.

1:58:48I've actually interviewed him years ago. Fascinating deal, working on psychedelics and a bunch of other things. Therapeutics for mental health conditions. A huge deal going on there. and there's a few other stories, but we can get to them tomorrow. We're off tomorrow. There's some travel going on, but we'll be back Monday at 11 a.m. Pacific Sharp. Thank you to everyone who tuned in in the chat. Thank you for positive reviews of Tyler. Let us know what you think of Tyler. Leave us a review on Apple Podcasts and Spotify. Write us an email. Tell us how he did. I think he did fantastic. Have the best Thursday of your life.

1:59:24Yes. There you go. That's a good impression. That's a good impression. But thank you. Sign up for a newsletter at tbpn.com, and we will see you on Monday. See you. Goodbye. Going flashbang. Oh, we got the flashbang. There we go.