Trial Update, AI SPVs, BuzzFeed Sold | Doomberg, Sahir Jaggi, Sam Blond, Kevin Hartz, Alex Shan, Glen Wise, Roger Lynch

20:38Roger Lynch:So anyway, it's going to be very messy, right? Because there's already been... These blog posts are not new rules. It's merely they are publicizing rules that are probably already in the stock documents. Yeah, because if you invested earlier, you're an employee, you should know all this, which isn't a surprise, right? Well, it's possible that very early investors don't have transfer restrictions for some reason. I don't think so. It's pretty standard. No, you always set this up as a company because imagine you have an early angel investor and your company does well and they just sell it to somebody who you don't like.

21:12Roger Lynch:Like part of the reason to be private is you can control who - I just mean like every deal is unique and every deal gets negotiated points. And there might be at some point when some investor and employee was like, I'm not joining unless you give me this. And they're like, okay, yeah, we'll pay you less, but we'll give you this. Yeah, maybe. There's always like horse trading, like double trigger, single trigger. Yeah, but it would be - People negotiate for different things. I agree with you. I agree. I agree. I agree with you. But so anyways, who knows how many transactions there's actually been?

21:38Roger Lynch:Yeah. Right. I would expect like. Certainly like. I don't know. There could be like when you actually look down through all the trees of SPVs and a lot. There could be. What? A lot. 10 over. Yeah. 20 ,000. It's not. It's not like taxi cab driver telling you about the SPV that they got into yet. but it's like close to it. I mean, there was the story of the guy who was like selling his house for anthropic secondary, right? Like there's a lot of examples of this. Like, oh, that's bad too. Imagine, imagine the, the, the, the like record updates, like, like you'll be able to look at the deed or whatever and be like, oh, who's the new owner?

22:20Roger Lynch:Oh, you work, you're an early like, so that transaction, that whole transaction doesn't really work. Oh yeah. And that's extremely public. Yeah, yeah, yeah. That's way more complicated. Yeah. Yeah, very odd. Well, let's break it down for the Frog and Toad fans, the children in the audience, because Frankie over at Paradigm put it in terms even a child could explain, potentially a four or five-year-old. So if you're familiar with just Frog and Toad and you don't know anything about all the buzzwords we've been dropping for the last five minutes, you can think about it this way. Frog and Toad, the loved children's book.

22:52Frog put the shares of Anthropic or OpenAI in an SPV. There, he said, now we can transfer these shares freely. But Anthropic can still exercise its transfer restrictions, said Toad. That is true, said Frog. The Frog and Toad, it's a great one. It's a great one. Is there anything else we need to talk about there? Ankur says, if Anthropic deems all secondary sales of anthropic stock should be voided. Does that mean the original buyer retains financial interest even after selling it away? Lawsuit territory. Yeah, there's going to be a messy thing. People have been talking about unwinding SpaceX AAA or SPVs for a long time.

23:32Yeah, that's going to be a billion dollar.

23:33Roger Lynch:That's going to be almost a billion dollar industry. Yeah, we need to get the Macram clip up again. It goes viral every time we talk about SPVs. What does Mike Isaac say? He says, yeah, look, all the privcos draft this language to scare employees who don't know better from trading on secondary markets and from buyers seeking those shares, and yet SPVs find a way. Funny to see the saber-rattling in Twitter accounts doing hyperbolic posts, though. And so it'll be interesting to see, like, how far does the legal implications, how far do they actually go? Well, over at a different AI lab, Mira Moradi, who was just, was Mira on the stand?

24:14She was actually testifying in person, or was she just video deposition? When I saw her, which was last Wednesday, it was just deposition. I don't believe she actually has testified in the trial yet. It was Siobhan that was on the stand. Correct. Got it. Okay. Well, Mira is cooking over at Thinking Machines Lab TML launch interaction models with a delightfully concise YouTube video that we should play so that we can watch this. Mir Maradi says on X, today we are sharing our work on interaction models, a new class of model trained from scratch to handle real-time interaction natively instead of gluing it onto a turn-based one.

24:55Let's play the video.

24:56Sam Blond:Hey, I need your help with something today. You ready? Absolutely. I'm ready. What's up? Yeah, so we're giving an announcement today, and I've got two of my friends coming to help. Every time one of them enters the frame, I need you to say, friend. Look at those speakers. Got it. Absolutely insane setup. Audio file. So we've got a new system for full duplex audio and video, which means that you can stream input into it in real time, and it can respond to you even while you're speaking to it simultaneously. How does that sound? Sounds like a solid setup. Full duplex with real-time interaction is super useful.

25:37It seems faster than the original voice mode, which was lamented by the viral Instagram reel producers. Can you translate to English in real time for my friend and for audience?

25:52Sam Blond:Absolutely, I'll translate as you go.

25:58Sam Blond:Today we're taking a look at our preview model. I saw or I heard about a version of this in China that's a mask that you wear that translates everything you say out of a speaker on the front. And I was hearing this and I was just like, why is this not in America? This seems so sick. Like we hear about the AirPods. But then you. So the example was a mom in China teaching her kids English. And so she basically wants to be talking to them in English constantly. But she doesn't know enough English to teach them. but she wants them to learn and so she will i think wear put on the mask no it's literally a bane mask it looks exactly yeah yeah uh you merely adopted english she was born in it or born in the ai translation uh minds um so she wears this bane mask that does the live translation out to her kids her kids speak back to her in english uh smart headphones translate back like metal that

26:57Roger Lynch:wraps around? I don't know. I couldn't find it. I was listening to it on a podcast, so I didn't have any visuals, but we got to find this thing and get a pair in America because in theory, we could do the whole show speaking Chinese to each other and the audience would hear Chinese, but we would be hearing English that we talked to each other. Isn't that cool? Powerful. Yeah. So I would be hearing English on a massive delay probably. Uh, but I would be speaking Chinese as it comes out of my Bane mask. And it was just a whole story. The whole thrust of the New York Times Daily was like the optimism of AI, the optimism in China around AI.

27:36Just tons and tons of examples of, you know, everyday people being like, oh yeah, like AI is amazing. I'm teaching my kids English. They're going to have a great life. And like, I would not be able to do this before. And now I can just do this. And there's like so many examples of that. And it's the exact opposite.

27:51Roger Lynch:It says the moment Jordy gets a live translation button, it's over. Yeah. We're not that far away from me being able to press a button. We're working on that right now, actually. Wait, really? Yeah. Are you serious? I guess. It needs to work. Oh, yeah, for guests. For that mask, I would actually be very surprised if that's, like, real or at least if the audio sounds very good. Because, like, you can just look at, like, okay, what are the best, like, real-time translation models? What are they, like, API prices? They're, like, not super cheap. So you can't do it locally, which means it's somehow in the cloud, right?

28:16and just like even the best models are that there's still some delay and they're just basically now getting to a point where it like sounds like a real person and not like super computer audio it has a it has a clanker dialect okay so yeah maybe but but just like getting the latency down is like extremely difficult because people have been working on this for i mean just like google at some point you can but i think it's still like very own asec for this one model you take the llama three version of it you bake it down the huge battery pack you're wearing a whole jet pack full of batteries to power the h100 in the back it's on device inference but they didn't say how big the suit is you have to wear the connects for the mask like yeah you have to nail a whole rack no it's like the nathan for you the chili suit yeah but it's an nvl 72 that you're just like dragging behind you like a washing machine uh anyway we have our first guest of the show So, Doomberg, the anonymous poster and analyst with us in the waiting room.

29:17We'll bring in Doomberg to the TV. Doomberg, how are you doing?

29:20Roger Lynch:Stunning. Hey, guys. Doing great. Thank you so much for taking the time. I love an animated avatar. What can you tell the audience about who you are, why you chose anonymity, pseudonymity, any of that, just as a way of an introduction? Sure. Brief intro. First, thanks for having me. Of course. Great to be here. Thank you. Yeah, we are an anonymous team of former industry executives that write about the energy markets. When we launched Doonberg five years ago this month, we had nothing. And so we decided to build Doonberg on Twitter back then. And the choice came down between another middle-aged white guy and a tie or a green chicken.

30:04And you can't be remembered if you don't stand out. And so that decision actually accelerated our early growth. And then once a brand kind of blows up, we observed other Twitter accounts de-anonymizing. And it kind of destroys the brand mystique. So it's nothing more than that, really. Why is the chicken green? Well, another masterstroke of marketing by our co-founder and editor-in-chief. Love it. So our ideal clients have Bloomberg terminals, and the colors on the Bloomberg keyboard are pretty iconic. I get it. And the most dominant color on that keyboard is it cloaks proximity to the green that we currently wear.

30:51I love it. So yeah, a brand is the gut feeling you induce in people when they interact with your product. And if our ideal clients have a Bloomberg keyboard and they see the green chicken, you know, Doomburg, Chicken Little Gets the Terminal was our first tagline. And they don't know why they like it. It's some combination of the colors and the stunted eyes, we think. But yeah, it works. And when you've got a winner, you know, just keep riding it.

31:20Roger Lynch:I love it. I love combining this high love, right, which is like, you know, serious content with... Sorry, yeah, I want to talk about energy and AI, but I also want to talk about the workflow here. Because am I just watching a looping animated GIF or MP4 file? Or can you actually puppeteer this like a VTuber? Or have you considered that? This is very low tech. Okay. There's no new Coke yet in design. Okay. This is a GIF animated as our background on Zoom. Cool. And I'm speaking to you through a Roland VT4. Oh. slightly modified in real time. Sure. The latency is perfect. Yeah. To build on your last discussion.

32:07Yeah, we've had a couple guests come on and want to do voice changers and no one's landed the plane like you have. So congratulations and thank you for dialing it. Technology is one of the five pillars of any business and we had decided to invest in our technology plan to execute the vision of the green chicken. Come on, I mean, it works. Every time I see an advertisement of all these serious finance people in suits and ties speaking at a conference and then a green chicken sitting there. Let me take this suit off real quick. It makes me laugh every time. So good. Talk about the other four pillars.

32:40Brand, channel, technology, demand creation, and operations. Okay, makes sense. And we have a plan for each. One of the hallmarks of Doomburg's execution on Substack is that we openly shared how we built Doomburg from the beginning. Sure. In a series of monthly pieces called The Work of My Life. Yeah. And it's been fun. Been a fun ride. We've got almost like 400 ,000 email subscribers now. That's amazing. Congratulations. How makes the team run? You said it's just a couple people, right? Our official statement is that you could count them on one hand with a few fingers left over. Sure. Okay. I like that.

33:16Roger Lynch:Leaving some ambiguity with a few is a few. Yeah. Three? Let's start with energy markets. Let's start with the Strait of Hormuz. I've heard it's closed. is that good how bad are things how serious is uh the situation in the in the oil and gas markets and then we can go through some of the knock-on effects but just in terms of like like you know a lot of people have been tracking this but where are we on the cutting edge right now in terms of where this all goes yeah we're launching a piece tomorrow look if you had given us this fact set in February and asked us to bet the over under of 150 on oil, we would be homeless because I would personally have mortgaged the house to greedily bet more on the over and would have lost.

34:05And I think one of the great mysteries of this whole affair is why is oil still so cheap? And it's a really interesting mystery. Go ahead. Yeah. And that feels like that's true for also just like the broader market. Like the market is not processing in the same way. And maybe it's like the AI narrative, which we can get into, but it feels like there's a very, very big, historically significant thing happening and everyone's just sort of like closing their eyes. I don't know. How do you explain it? So we've done a deep think on it. Nobody knows. So one of the things about the oil markets is everybody lies.

34:36That's the first thing. And one of the sort of theories I was bouncing around with a guy who traded oil for 50 years over the weekend was there was an enormous excess of oil all of last year. China bought most of it. They lied about it and they're bleeding that into the market now to keep a lid on prices. Got it. That's one sort of conspiratorial look. Yeah.

34:57Roger Lynch:And sorry, just to double tap there, you're saying they were lying about the levels of their oil reserves, so saying like basically underselling. Yeah, so there's a lot of dirty oil. There's a lot of dirty oil on the market, and they were buying it, you know, sanctioned oil, shadow fleet, Russian oil, Iranian oil.

35:23Roger Lynch:Yeah, because back at the beginning when it first closed, weren't people saying China has 40 days of oil or something like that? They have 1.8 billion barrels is our best guess. They probably bought a million or two, a million and a half barrels a day extra all of last year. Wow. And they're using that for geopolitical leverage now. They're cutting refined fuel deals with Australia. They're helping out their neighbors, looking like the mature, stable, don't have a truth social account to post on during the day. Ascending power with Trump going there this week. Look, I just want to say, in a world where oil is more expensive, oil doesn't matter like it used to.

36:02It used to be 55 % of global energy, now it's 30 and change. And to the stock market, look, the AI revolution is powered by coal in China and natural gas in the US. Natural gas in the US has been made cheaper by this war, for reasons that we can explain. Coal is basically insulated from oil. I don't think it's all that crazy, of course, with the benefit of hindsight. It doesn't mean we would have predicted$100 oil 60 days into the Strait of Hormuz being closed, or 75 days, whatever it's been. Anybody saying that they would have not predicted a calamity is lying. Going back in time, are you learning any lessons or pulling any historical lessons from the previous wars in the Middle East?

36:49I grew up at a time when the war in Afghanistan, the war in Iraq were breaking out. And the protest signs said no blood for oil, which is a completely reasonable thing to say. but I was surprised by the fact that if you look at the oil markets during that time it feels like even if you took the cynical approach that the US was going there to steal the oil it didn't seem like that oil was successfully stolen and flooded the market and I'm wondering what else you've learned from history and the various conflicts in the Middle East about oil prices that you can like draw on today if anything. Well for that war James Baker went around the world and told all of our allies to start pumping ahead of it, to insulate the world from it.

37:37The real comparison everyone draws is the Iran embargo following the war in the Middle East in 1973. But the big difference between then and now, aside from the fact that oil just matters less, is that there's an organization called the IEA that exists. And they have worked with the developing world to ensure that countries have a stockpile of oil for this exact situation. And they flooded the markets shortly after the strait was closed with 400 million barrels. There's still, when you do the math, oil prices should be higher, and they just aren't. So there will be lots of time for an after-action report when this war is done.

38:21But for AI and for the tech world, natural gas in the U.S. being cheap and coal in China being cheap means those data centers are humming and all is good.

38:31Roger Lynch:What's driving natural gas prices right now? Great question. The shale revolution in the U.S. not only made the U.S. a net oil exporter, it twinned the production of natural gas and oil. It used to be that natural gas was drilled for on purpose, oil was drilled for on purpose, and now in the shale patch, in the same well, you get natural gas and oil. especially in the Permian. We're drowning in natural gas in the Permian. So when the strait is closed, oil spikes, drilling goes up, and you've got all this natural gas to get rid of. It's co-production economics, which is actually not widely understood.

39:14That's like pulling on our industry days. Whenever you have to compete against a co-producer, it's terrible because if either of the markets are hot, they're producing too much and they're flooding the market with the unwanted byproduct, which happens to be what you make. And so when the war broke out, we correctly predicted that natural gas in the U.S., despite a global energy shortage, prices would go down. And in fact, as we're talking today, natural gas is trading in the U.S. for like$3 a million BTU, which is about$18 a barrel oil. And in the Permian Basin, it's negative spot prices. They're giving it away.

39:52They're drilling for the oil. The natural gas is a nuisance.

39:55Roger Lynch:and so it's possible there's a super intelligence that's already in control that wants to feed on natural gas and so they're playing yeah this 40 chess this is the ultimate you know clod agent gone awry yeah yeah uh how is china is china potentially like the biggest loser here because i imagine that coal and oil cannot be co-produced in the same way and so you don't have that dynamic playing out? Are they being squeezed? Like who, who is suffering the worst from the closure of the Strait of Hermuz, I suppose? Europe and Australia, China is going to come out the big winner in this. Okay. Why? A variety of reasons.

40:36So first of all, China has been building out something we've chronicled to the tune of hundreds of billions of dollars, the ability to convert coal into oil products. Oh, interesting. The only two regimes to have done this historically are the Nazis and apartheid South Africa. It's quite the exclusive club the Chinese have decided to join. You do that out of necessity when you're worried about losing access to oil. It's very expensive, very environmentally taxing. It's not something you would do spontaneously to create shareholder value. You do it for geopolitical insulation. But also, China's sway in the Middle East is going to grow if Iran continues to resist the U.S.

41:23Israeli strikes and controls the Strait of Hormuz because Iran is being backstopped by Russia and China. And so in a world where the U.S. has lost some geopolitical leverage in a zero-sum game, China benefits. And we'll see what happens this week. I think this is going to be a historic summit. Yeah, that's what I was going to ask you next. What are you expecting?

41:42Roger Lynch:Before we dive into that, I did want to, one more question around oil. How are you forecasting whether we get high prices or massive shortages with, you know, oil, you know, everything from gasoline to other oil-based products? Because I think they're, I think a lot of people right now are kind of projecting, hey, we're just going to pay more at the pump. But then there is some scenario, depending on how things play out, where you actually have, you know, you can't just go to, you know, we were talking yesterday and, you know, maybe there's a scenario where depending on the last digit of your license plate, if it's an odd or an even number, you can only go on certain days and you get actual rationing.

42:32That's not going to happen in the U.S. It depends where you are. So the U.S. is a net oil exporter. It's a bit complicated. We're detailing it all tomorrow. Trump is playing a careful game where he is allowing the export of gasoline, diesel, and jet fuel to try to help the rest of the world. And the U.S. is still well supplied, but it's paying more. So we see$5 gas,$6,$7 diesel. Trump could reverse that at any time just by limiting the exports of refined products. He's choosing not to yet. But if you're in Australia, you're already in a situation where you have to have urgent intervention by the government, who have done a great job, by the way.

43:12and Europe, when you don't make your own hydrocarbons and you're beholden to the rest of the world, well if everybody turtles up and says we're not going to export until our domestic demands are met, then you will see real shortages and no amount of price will clear. And so North America is fine. If you draw a circle around Canada and the US, the two countries are self-sufficient in oil, diesel, gasoline, jet fuel, fertilizers, wheat, corn, sulfur, helium, all the things that people are worried about globally. We have not yet instituted export controls, but before the stocks would run dry, especially with the midterms coming up, you would assume that Trump and Carney would collaborate on such an action.

44:01Have you been tracking the Diet Coke shortage? I have not been tracking the Diet Coke shortage. But apparently 8 % of aluminum goes through the straight-up removes. So the cans are in short supply now.

44:13Roger Lynch:Yeah, and this is top of mind for us because John could run to the studio if he didn't have gas. But the show wouldn't be possible without him going through three or four of these silver cans. Well, I got one word for you, too. Plastics. Plastics. It's not going to be popular with some people. Oh, yeah, you technically can get a Diet Coke. You can get a DC. You could just buy a two liter bottle or maybe fountain. Maybe fountain is the future. Fertilizer was, was my last, last question around. Yeah. How, you know, how are you, I don't know if we're covering, you know, future, you know, food prices, commodity pricing, et cetera, but.

44:54We sure are again, North America, both in, well, in nitrogen and in phosphorus and potassium, the big three, Canada and the US are self-sufficient. Canada has the world's biggest, most fantastic potassium deposit, potash deposit up in Saskatchewan. We wrote about this a couple of months ago, before the war. The US, you know, ammonia is basically just a natural gas play and the US is drowning in natural gas. Oh, sure. Through the Haber process, you just take natural gas and long story, but you make ammonia that way. There will be shortages of fertilizer around the world. there will be food shortages and all that really means is it'll be more expensive for the rich countries and there won't be food in the poor countries.

45:39This is what we see historically is the market clears and the poorest countries in the world suffer and the rich countries complain. Black pill. Do you have any white pills? Is there a good ending that you are guiding towards optimistic about? Is there anything that you're optimistic about right now? Yeah. I think a major deal is in the works. Look, I don't think Trump would be going to Beijing. I know we wanted to talk about that. Trump wouldn't be going to Beijing if there wasn't a major deal. And the list of CEOs going with him is quite the tell. Broadly, you don't have the president of China and the president of the United States get together in such a high-profile visit without a bunch of stuff worked out in advance.

46:24and um i would i personally being vehemently anti-war would love to see a solution to iran and ukraine all tied up in a nice bow and the u.s focus on its neighborhood here in the western hemisphere and um and we get back to growing and computing and um competing and drilling for energy and you know making money in stocks and you know let the president make them all the money he wants and crypto, I don't care. But another war in the Middle East was not on the bingo card for us in 2026. I don't think many people voted for it. Well, let's shift over to what's happening in America. If we can get back to domestic policy, what are you tracking on the AI build-out?

47:08How important is energy? Everyone's been going back and forth on the chip bottleneck, the energy bottleneck, the chip bottleneck, the energy bottleneck. Do you have a viewpoint? Has it evolved? Where do you see the build-out going these days? Yeah, we're an energy newsletter, and so holding that hammer, all we see are energy nails around the AI space. Look, I think natural gas is so cheap and abundant. So then, okay, what's the constraint downstream from being able to produce electricity from natural gas? That's gas turbines sold out. So then, okay, can I make electricity with anything other than a gas turbine?

47:45All right, well, solid oxide fuel cells by Bloom Energy, their stock is boom. Okay, if I wanted to get sophisticated, half the energy used at a data center is for cooling. And boy, there's an awful lot of natural gas in British Columbia. And last I checked, it's colder up there than in Texas. And so maybe I might want to look at British Columbia, Alaska, Iceland, cold places to build my data centers. And you're seeing some of that. but there's just so much fuel that it's become almost taken for granted in the US that this is the fuel of choice and now you're running into grid connection issues and so one of the pieces we wrote again before the war changed everything was called irreconcilable differences where we predicted that most data centers would have to go off grid because the clearing price for retail electricity is not what a data center is willing to pay for it and no politician can absorb those increases for industry and for you and I at home.

48:46And so we sort of envision these buildings where natural gas goes in one end and data comes out the other. And everything happens under the same roof.

48:56Roger Lynch:Sorry to interrupt, but what's the downside there? Hasn't it been, in some instances, generally beneficial to bring a bunch of new energy production onto the grid just due to yet more supply overall? Prices are set at the margin, and the rate of demand for electricity for data centers is growing faster than the bureaucratic ability to bring on new grid-connected power. The way in which the grid is operated, managed, and built out in this country would shock you, and it is utterly incongruent with the Silicon Valley break it, move fast and break it mindset. A little Freudian slip there. Sometimes just break it.

49:43Just break it. Yeah. You might be moving slow, but you're still going to break it. Break it and then try to fix it. That's the Massa Sun funded. I'll just pour money on the founder until they get it. Look, we wrote a piece called The Exception That Proves the Rule where we showed that Elon Musk built this major natural gas power data center for XAI in Tennessee by breaking all the rules, right? He just built his own natural gas power plant and it proved to us, the exception that proves the rule, that the current rules need to be broken for stuff like that to happen. And so since Microsoft and Google aren't ever going to behave like Elon, you need to do this stuff off-grid.

50:23And so there's a hybrid solution where most of the power is off-grid, but they still connect for backup. And you build these at old shut-down coal plants. That's another trend that we're seeing in Appalachia. They're the big natural gas shale patches up there. So you have an old coal plant with all the connections there that's shut down. And you build new natural gas plants there powered by local natural gas. And you use the connections to the grid for backup. But you're not leaning on the grid for most of the power. And that's kind of a win-win. Walk me through what an off-grid natural gas-powered data center in Alaska would look like.

51:02I'm a big Alaska fan, but do they have natural gas deposits up there that you would need to go set up drillers and then turbines? How would that work? And what is the timeline for that versus something like nuclear? Much, much quicker depending on bureaucracy. One of our operating mental models is that the U.S. has an infinite supply of natural gas. it's just a matter of going and getting it and so if you made it for example if we made it a let me put it this way if trump issued a nationwide price floor of five dollars a million btu for natural gas the u.s would be the drilling stampede that would erupt would blow the world's minds the u.s produces so much natural gas i'll just give you some numbers the entire european union's dependence on Russia before the war was like 15 billion cubic feet per day and the U.S.

51:56alone produces 110 billion cubic feet per day. It's just this mammoth machine of fuel and so yes there's plenty of natural gas in Alaska you could build it in British Columbia next door a little to the south.

52:11Roger Lynch:What about the infrastructure like isn't part of the strategic importance of the strait that they have the infrastructure to, what is it, liquefy the natural gas so it can be transported? Are we way behind on that infrastructure? The U.S. is stampeding to the lead in this regard. So when I was in industry, Freeport LNG... But when did that stampede start? 2015. Okay, so it's been in process. When I was in industry, Freeport LNG was meant to be an LNG import terminal. And then the share revolution happened. And so just to go back to those same numbers, by the end of this decade, the US plus a sprinkling from Canada and Mexico will have gone from zero LNG export capacity to 30 billion cubic feet per day.

53:00And in Qatar today, about 15 to 20 % of the world's LNG capacity sits at a place called Ras Lafen. And a couple of trains were blown up there, two out of 14. but LNG is still a small part of the global natural gas trade. So the Strait of Hormuz is not really a natural gas problem in the way that it's an oil, fertilizer, you know, refined products problem. Qatar is, let's say, just to make the numbers round, Qatar's 20 % of LNG and LNG is 20 % of natural gas. That means Qatar's 4 % of natural gas. What has the environmental pushback been around natural gas? It feels very intuitive. It's burning fossil fuels.

53:48Sure, it's not scarce, but it feels like it could create global warming. And yet I've been shocked that there's been so much focus on the water that's consumed by data centers because that feels much more plentiful and much easier to keep on.

54:02Roger Lynch:Yeah, there's a certain an irony that fear around global warming has been replaced by fear around AI, at least in the mainstream media narrative. Yeah. And yet the - So - Yeah, maybe the root cause is the same. Yeah, there's always a fear campaign around whatever America's excelling at. That's sort of our mental model. Like, hey, America's dominating with AI and data centers. We better whip up some fear. Yeah, sort of like a tall poppy syndrome in our culture. It's, well, who knows, foreign actors who don't necessarily want to see the U.S. succeed. Sure. So to your specific question, natural gas is super clean burning, produces the least amount of CO2 per energy.

54:42That's good. In fact, while you can cook with it in your homes with no ventilation, nobody would say that you would bring your barbecue indoors. Oh, yeah. Which is basically coal, right? Yeah, that's right. And so you have natural gas in your furnace and you have it on your stovetop, you have it in the restaurant. and it's just burning away nice and cleanly. There is one made-up problem with it. Well, I say made-up. If natural gas leaks, it's considered a very potent greenhouse gas. Methane leaks. They've even launched satellites to try to track where industry is leaking methane directly into the atmosphere.

55:20Roger Lynch:Yeah, we were talking with Will from Planet Labs. Oh, yeah. You can use sort of like real-time satellite imagery to track natural gas leaks, and they've been pretty effective, I think, at helping countries and companies identify these leaks. This will blow your mind. Natural gas is so cheap historically and such a nuisance that they would just release it, invent it into the air to get the oil. This is before the Peeker plant, right? Before people cared about methane leaks, to be honest with you. and look this is a much much smaller problem in the US US is very regulated environmental permits and controls are tough where it's a big deal there's places like the Middle East Venezuela where there's you know weaker governments weaker environmental controls but you can go online and find a bunch of people really hyperventilating about methane leaks.

56:13Who else is big in natural gas across the world like who are they do you know what country is number two three something like that. Yeah I know them all yeah so So the U.S. is by far the biggest. Russia's number two. Oh, is that some kind of... It's an eagle. That was an eagle for us. For America. Yeah, chickens don't like eagles. Oh, no. Oh, no. Yeah, so you're kind of triggering me over here. You're going to be careful. So Iran, Russia. Iran's a big natural gas player. obviously Canada is a growing natural gas player because of the shale patch they have up there Australia is a big LNG exporter Qatar is a big LNG exporter but Russia is the second biggest they probably produce about half as much natural gas as the U.S.

57:05and then you know a sprinkling throughout the old Russian the old Soviet Union the Confederation of Independent States I believe they're called now what are you tracking on the nuclear side every time we talk to a nuclear founder they're ready to run through walls they're they're well funded they're ex-spacex ex-rocket scientists geniuses and then they're like it was 2035 yep is there any optimistic scenario where we get nuclear a little bit earlier so there's only one way to do it which is not seductive and doesn't require any technology which is just build a lot of the stuff we already know how to build so that's ap1000s and can do reactors up in canada and there's no like fusion is a fake solution to problems that don't exist sure like we don't really have a nuclear waste problem and we don't have a meltdown risk problem with the latest designs yeah and so all we have to do is build what we have but that's not sexy and that's not a technology story you can sell on wall street and have your ipo and you know so that that's our

58:07Roger Lynch:well there are there are some companies that are not trying to reinvent the wheel and are just saying like let's just do more of what we already know how to do whether or not they should be venture backed is another question uh i think there's better use for venture money than nuclear yeah uh where is solar in all of this how much uh out of out of uh all of your coverage how much is dedicated to solar i think that will we we write about intermittent renewables from a pretty critical lens. Broadly speaking, there's an awful lot of misinformation and disinformation about solar. The biggest one is that the sun is free, as though the price of a fuel is the only input into the cost to use it.

58:53As we're learning with natural gas, it's free in the Waha Hub. It doesn't mean that you can buy your turbines and build your data centers. The biggest challenge with solar is that sometimes the sun doesn't shine. and dealing with that intermittency is a real challenge. And the expenses associated with making room for solar when it's there and getting out of solar's way when it's really hot and the sun is really shining, but also standing in for solar when it decides not to show up for work, those expenses are never ascribed to solar. They're just piled on to all the other technologies that have to stand ready.

59:33and so historically whenever you reach a certain threshold of solar on a grid things start to break. I could explain technically where that breaking point is but it's probably beyond today.

59:51Doomberg. Is the name Doomberg reflective of your demeanor at all times? It's mostly tongue-in-cheek sarcasm. We're techno-optimists. We are defensive pessimists. We spend a lot of time pondering worst-case scenario risk, and then once those are properly abated, we feel that we're in a position to take more risk personally. I'm personally a prepper, for example.

1:00:17Roger Lynch:that's good to know I wouldn't have guessed that Doonberg was a prepper actually maybe I would have I had one question one last question and then I know we're out of time would love to do this again soon I enjoy talking with the chicken although your eyes do make me kind of go cross-eyed myself which is a challenge do you believe that we've seen videos online of people filming data centers with generators outside them. They seem to be not exceptionally loud, but loud enough to be mildly annoying. Lower decibel than sort of legal limits, but still maybe not something that someone wants. 59.9. Yeah, maybe not something that someone wants in their backyard.

1:01:05Do you think there's any innovation

1:01:07Roger Lynch:on reducing overall noise pollution on that front? or is that to date, at least we talked to somebody yesterday who was like, that's the least of my issue. But it feels like something that probably can and should be worked on. Unless we put them all in Alaska. NIMBYism is real and I don't think should be dismissed. And I think local concerns are always worth listening to, especially if you want to be durable as a good neighbor and as an industry that has persistence. Yeah, historically, factories were very ugly, but they provided a lot of jobs. And so if you come through and you're like, hey, we're going to build a new factory, but it's not going to create a lot of jobs.

1:01:55Roger Lynch:That's not a super compelling pitch. Right. And it's going to be loud. So I assume that the diesel generators are there for backup power predominantly. That's what we're looking at. And I would suspect that there's all manner of venture backed companies pitching stationary batteries. You know, a stationary battery for backup at a data center is a different problem set than say a battery for an electric vehicle, which gives you some more degrees of freedom in design. Because with a car, for example, you care a lot about gravimetric energy density, whereas you might have different CTQs for a battery set up to provide backup power for a data center.

1:02:35and so there's lots of people working on it i see some private deals floating around in our own personal lives look the speed with which this revolution is unfolding means that you're going to break a few eggs you know like we were talking about earlier you know move fast and break stuff is happening it's real and you'll see local communities embrace it because there are jobs construction jobs and you know so on that come with these things and they're not all yet staffed robots. Chicken eggs or eagle eggs or both? What are we breaking? I'm in the egg business. It's a renewable resource from where we are.

1:03:12It is a renewable resource. That's an optimistic question.

1:03:14Roger Lynch:Last question. Do you think California will be producing more or less oil in 10 years than it is today? Oh, way more. Yeah, they're heading for a big crisis. And California needs to drill more, refine more, and connect pipelines to Texas. And I do think one of the big laments of the Trump supporters is that this war and Iran may have squandered the opportunity to get domestic energy projects like that over the line where he had political wind at his sails. We'll see. But I think, let's put this way, I'll leave you with this. California has as much oil and gas as Texas. And the reason why Texas is a global energy superpower and California is a flaccid energy vassal is little more than politics.

1:04:00and you get a big enough energy crisis, politics is easy to wipe away. Yeah.

1:04:07Roger Lynch:I had the pleasure of having dinner with a guy who had basically like an oil drilling S &B in California for like a decade and then ended up shutting it down about a year ago because of some new regulations. And he was just sitting there being like, I don't, you know, just kind of at a loss because he's like, we use so much oil. We depend on it. We should be making it here. versus just importing it. Well, thank you so much for coming on the show. This was a pleasure. And we hope you have a great rest of your day. We'll talk to you soon. Thank you so much. Thanks, guys. Talk soon. There's a good note for the listeners.

1:04:42If you're looking to build a diesel refinery out in Malibu, reach out to me. I'm happy to finance it. It won't be a problem. We'll build a massive diesel refinery right in Malibu. The majority of the time is not paying attention.

1:04:57Westinghouse, they make nuclear reactors. We are in an AI boom. We are in an energy crisis. What do you think the stock's done over the last six months? Down. Completely flat, up 0.4%. Perfect store of value. Anyway, we have our next guest, Sahir from Forrest. He is the co-founder and CEO. Welcome to the show. How are you doing?

1:05:18Sam Blond:Good, guys. How are you doing? Fantastic. Great to meet you. First time on the show. Please introduce yourself. Tell us what you're building. Yeah, thanks for having me. So today we're publicly announcing for the first time our company for us, which has raised$160 million from Thrive Capital, General Catalyst, Excel. This is such an out of the game. What a lineup. Out of the game. You have a coming out of stealth with a$1 billion valuation. Congratulations. That's amazing.

1:05:45Roger Lynch:I usually give this advice to founders. Yes. Don't even talk about what you're doing until you're a unicorn. Just focus on the basics. Don't worry about the news. It's kind of true. No, it's actually true. Underrated strategy if you can pull it off. Yeah, but let's talk about what you're actually building. Talk about the business. Talk about the development. Maybe a little bit of the history that went into building the company, deciding to start the company.

1:06:08Sam Blond:Yeah, sure. So what we do today is we help people get access to medicine faster, easier, cheaper. Most impactful are people with high costs and complex conditions. So think things like autoimmune diseases, COPD, cancers, anything where the drugs are unaffordable without insurance coverage or financial assistance or complicated supply chains, we might take a doctor and patient weeks of phone calls and research and paperwork, get their medicine on time affordably. What we're doing is using AI to take on all that complexity and abstract it from them to get their medicine without any of the burden falling on their shoulders.

1:06:37Sam Blond:We do all of that entirely for free because it allows us to build a large network of doctors, patients, and the data and systems between them. And we're then using that network on the other side of our business to partner with life science companies. Think companies like Pfizer, Lilly, Johnson & Johnson, helping them develop and bring to market new drugs faster and more efficiently. This is really a two-sided model. Okay. Two-sided model. I feel like every time I talk to healthcare, it's like 10-sided model with like insurers and healthcare networks and doctors. And then the hospitals have private equity back and they have a different set of incentives.

1:07:09Like who are you? Are you cutting anyone out? Who are you not interfacing with? Are you interfacing with insurance or not? Is that a deliberate choice? Will that change over time?

1:07:19Sam Blond:No, we so that's actually part of why this is such an impactful product for the core users. So we sell the doctor's offices as free product to help them automate all the complexity involved in dealing with all those other pieces. So think the insurance companies, the PBMs, the pharmacies, any other aspects. And really, the goal is to automate every process that involves them working with those folks externally so they can focus on treating their patients and not have to worry about all that complexity underneath the hood. we interact with all those folks to kind of push things through the system, but it puts us in a position where we are kind of at the center of each individual transaction and have kind of a unique view into what's going on.

1:07:54Sam Blond:And that's what sets us up, then partner with these life science and biopharma companies to help them in a unique way on bringing to market new therapies. Have you developed fax machine super intelligence yet? I would bet that we have some of the best fax AI. No way. And that's both on, uh, is that both on sending and then receiving and transcribing OCRing and understanding and then putting in some sort of database? So like, do you, are you bi-directional in your faxing? We are bi-directional. There's like a pretty decent chunk of transactions that can only go through fax. Yeah. And reality fax is actually a considered HIPAA compliant.

1:08:32Sam Blond:So you have a lot of leeway there as opposed to in other transactions, but it's also very reliable. If you can't get someone on the phone, you don't have their contact information, you can almost always find their fax number publicly. So despite the fact that it seems insane, it's a shockingly reliable form of communication in the system. Yeah. And so what else is enabled or accelerated with AI? Because I can imagine you can use AI to build business logic and software. Like you can build SaaS faster for deterministic workflows. But then you can also do sort of agentic things when I hear about like finding someone's fax number online That sounds like yeah, you could google it, but that's usually a person There's not really an API, but with an agent there sort of becomes an API And so where where are you doing agentic tasks on an ongoing basis versus using AI to develop sort of sass?

1:09:23Sam Blond:Yeah, so there's really two layers we think about and what makes the problems hard The first is kind of what you're describing a genuinely hard set of agent problems you're navigating this multi-step path dependent process where there's almost never an obvious correct answer and so it's usually not even cataloged anywhere what you're supposed to do or what the right answer is you're working with imperfect information every term what insurance does someone have well what does it cover what pharmacies work for this specific drug what approval criteria exist what medications have this person tried before and you're interacting with all of that like you mentioned through faxes phone calls poorly designed websites and scattered information.

1:09:59Sam Blond:So that's kind of one huge piece of it. The second is a set of really complex ML problems where you're using dozens, sometimes hundreds of pages of medical records per person to answer very precise questions about someone's medical history across thousands of medications and diagnoses, dozens of subspecialties, and tens of thousands of doctors who all document and write notes about their patients and diagnose them and treat them differently. And so that same capability is what powers everything from navigating insurance authorizations to identifying whether a patient might be eligible for clinical research.

1:10:31Sam Blond:That system kind of never stops evolving, right? New drugs, new guidelines, new insurance policies. And so as we're building and scaling, the complexity keeps increasing, and you're kind of constantly re-generalizing everything you've built in your platform. Last question for me. Talk about the data side of the business. I imagine that you want every doctor's fax machine number. That's a data problem. You might be able to scrape it. You might be able to buy it. There's also the data that goes into maybe fine-tuning models, maybe just setting up models for success, giving them the correct context.

1:11:04Like, what is the shape of the data problem and how is it evolving?

1:11:08Sam Blond:Yeah, I mean, it's kind of like what you described. It's through every single step in the process. You can imagine where we sit, we see this from end to end, right? So we see everything from the clinical information, how the doctor made their diagnostic decision, all the way through to logistically what got stuck in the system and prevented someone from getting their medication or resulted in being late. All of that's really relevant in understanding not just, A, how do we translate that into helping us automate more effectively and have more predictability in every step of the process, but also in then informing decisions that our partners are making on how to kind of move therapies forward in the research and development process, how to think about launching them, where to allocate their resources so those medications can reach as many people as possible.

1:11:48Roger Lynch:Got it. How big can the business be?

1:11:51Sam Blond:So, I mean, there's two parts, right? We think this can be the most important company in life sciences. Our goal number one is ubiquity, right? Every doctor's office and patient in the country should be using our product. That position doesn't obviously just let us eliminate friction for more people, but it puts us in a position to accelerate every step of bringing new therapies to market on the other side, right? When a new molecule is ready for testing.

1:12:11Roger Lynch:Do you become basically just like a legacy version of this and maybe in another industry like a distributor? Is that like the less?

1:12:20Sam Blond:Distributors are like a partial analogy, but like a lot of what we're going to do is not the actual physical supply chain, but really helping on all kinds of decision and actions around that. So think about when you have a new drug, right? There's a ton of stuff happening right now in AI drug discovery. All of that is translating into more and more hypothetical molecules. But how do we translate those molecules into production, real life, mass market medicines? From the moment a new molecule is ready to test in people all the way through all those steps, you have to figure out, you know, how do you identify the right clinical trial sites?

1:12:48Sam Blond:Which patients do you recruit and are not contaminated by other medications? When a drug launches, which doctors are the most patients that look like the patients that did best in the phase three trials and therefore the right early adopters and can benefit the most? As it scales, how do you kind of use real-world usage to identify where there are new conditions where the same drug can be effective or there are gaps in the market? That full loop from clinical development through mass market access hasn't really been possible before. And we think we can kind of be the main chassis through which that happens.

1:13:15Sam Blond:Today, we are, as you can imagine, kind of growing in a ton of different specialties. And the kind of first speciality to be launched, we're already kind of approaching a third of the country. So you can imagine you really can get really far along and become the best partner to facilitate all these decisions. Well, congratulations on the progress and congratulations on the round. Thank you so much for coming on the show.

1:13:33Roger Lynch:Great first day of media. What were you doing before this?

1:13:39Sam Blond:So I used to work at this company called Oscar, if you're familiar with it. That makes so much sense. I was thinking this whole time.

1:13:46Roger Lynch:I was thinking this whole time. You must have been an awesome guy. Drive universe. Drive universe. Cinematic universe. It's a great one. You and the SF Giants, similar portfolio. Fantastic. We'll talk to you soon. Goodbye. Thank you. Thank you. Up next. Before our next guest. What do you want to do? We actually are running behind, so we're going to bring in the legend, the living legend, Sam Blonde. Let's bring him in. From Monaco. Sam. Companies Monaco calling it from San Francisco, I assume, but get that cash register ready. Count out a CRM. No. Don't count it out.

1:14:22Sam Blond:Yeah. Great seeing you. Great seeing you. Thank you so much for having me. Of course. Round two. Round two. Do you wait, by the way, do you leave? Did you guys want to hear the gong? Yes. You want to hear the gong? You have a gong? Show us the gong. You have a gong? Hang on. Let's see if we can have a bigger gong than us. If you have a bigger gong than us, it's over. Do you guys see the gong? Oh, look at this!

1:14:44Roger Lynch:This is amazing. Hey, team. Let's hit the gun. Congrats, everyone. Okay, I have a question for you. Do you leave up the whiteboard behind you to just kind of torture and mess with your competitor so they're, like, screenshotting it and trying to do it? You know, people are trying to reverse engineer this right now. Everybody's just gibberish, like you just...

1:15:06Sam Blond:It's mostly art at this point. It's kind of funny. It is a cool wall because it goes all the way around. Oh, yeah, it's big. Like whiteboard wall. There is something up here that still has dates from last October. Okay. So I don't know that it's currently functional. It's seen some war. We use it every once in a while. It's seen some war. But, yes, kick us off with the news. What happened? Let's see. Well, thank you for having me on round two. Great seeing you both. Always. And we're so fortunate. We launched in February. Things are going really well. Jack Altman was an investor through Alt Capital.

1:15:43Sam Blond:And so he receives the monthly updates. We've known each other for a long time now. And recently, you know, the business is performing, I think, better than we would have anticipated last time we caught up, which was sort of like mid-February. And Jack reached out and said, we're sort of interested in doing something with you and in the space. And we caught up. And I think this is just sort of the dream round for us. You know, we did Founders Fund in the Series A. That's a firm that, John, you and I have a lot of history with. Couldn't have dreamt a better round for the Series A. And then we're repeating it with the B.

1:16:15Sam Blond:I think both with benchmark leading, Founders Fund tripling down, Jack joining the board. It's awesome. I thought this was an Everandles special. I thought you were just like, I got to make F some money, my former colleague. But interesting that it's Jack Altman. Makes sense, though. I mean, Lattice, a lot of experience adjacent to this space, a lot of career lineage there. But take us through the product. How has the company evolved? What's traction like? Let's see. Launched in February. We entered February pre-revenue. We had some design customers. It's tough to do this thing where you predict how the first few months are going to go because you have no data history.

1:16:53Sam Blond:On February 10th, literally no one knew who Monaco was because we didn't have LinkedIn's that were up. We didn't have a website that was up. We went from sort of like this deliberate stealth mode with design customers where there are a small handful of people that we were partnering with to build the product to trying to make as big of a splash as we possibly could. And I think we sit here three months later in May, and we sort of blew past all of the sort of business performance expectations that we had in that period of time, measured by number of customers, revenue, customer sentiment, which is maybe the most critical of those things.

1:17:33Sam Blond:But just sort of couldn't have hoped for a better start to the business. Okay, in go-to-market, in sales, I imagine that there's a ton of processes that you just want to make reliable, more efficient, all of that. And I'm sure you're executing on that. But I'm interested, has anything stuck out to you that's sort of like the Studio Ghibli moment for this sector? Like, you know, image generators came out. It was like, yeah, you can make a picture of a horse or a cat. But then, like, there was this thing where it was like, oh, no one really knew that that was coming. and then all of a sudden it was like this delightful new experience.

1:18:10Now you can like turn yourself into a cartoon if you want. Is there some like net new process or like your customers, when you see them use the product, you're like, oh, they're doing things a little bit differently. It's not just sending the email. It's not just the CRM management. It's not just all the other pieces. It's something that like, oh, this is uniquely enabled by AI.

1:18:31Sam Blond:Yeah. I think there are three things that come to mind that differentiate Monaco relative to anything else in the market. And the third one is sort of the like... It will shock us. It will shock us. The third one will shock. It'll be the like Ghibli moment. Perfect, let's do it. To use Coogan's language. The first two, and I won't go like super deep on these things. I'll time box this to 30 or 40 seconds. The first two, we're an all-in-one. So we replaced traditional or legacy CRM. These are your Salesforce's HubSpot's Adios. We also replaced all the disparate tools that integrate to those traditional CRMs over APIs.

1:19:07Sam Blond:And so we're an end-to-end platform, we're an all-in-one, maybe like the rippling version for go-to-market. So that's like the first category. That in and of itself isn't like the Ghibli moment. The second category is that we are AI native. You know, just sort of definitionally, we started, let's call it post-ChatGPT. The way that we think about being AI native, agents are the first line of defense. The things that historically speaking, sales users like me, people in RevOps, SDRs, those workflows that we were doing with manual or human labor, we now have agents doing. And you should think about the user of Monaco as having this front row seat to all of the work that the agents are doing on their behalf.

1:19:47Sam Blond:So that's number two. The third thing, and this one is a little bit contrarian, like Peterism. And it is maybe the thing that I think we have a unique competitive advantage in. It's very difficult for any of our competitors to get write or even be able to do. And that is, you know, there's this thing right now that's like the forward deployed, the forward deployed engineer, the FDE is like the most valuable asset in deploying AI successfully across enterprise. And you see these, you know, open AI and Anthropic investing billions of dollars in these almost like Accenture style consultant type companies.

1:20:23Sam Blond:Well, we sort of invented this concept of the forward deployed AE. And every customer that we have is paired with a startup sales expert, somebody that has deep experience doing startup go to market. And you should think about a lot of our customers. These are seed and series A startups that, one, don't have a lot of experience in go to market, a lot of technical founders and technical early teams. And so this is a very complementary skill set. But two, just definitionally, they have no experience working with the platform and agents that we have in Monaco. And so that buffer, that layer between the customer and the technology itself that is our forward deployed AE, that is some of like the secret sauce for us in terms of making Monaco work better than any of the competitors that you try and just like deploy these agents in the technology in the wild without anybody making sure that you're successful.

1:21:19All-in-one compound startup, rippling philosophy. I imagine that eventually you'll get to a point, if you're not there already, where some big company will come to you and say, ah, but we're not ripping out this thing. And you have to build a connector. Do you have a strategy for that? Or is that a moment where someone comes to you and says, yeah, we have this weird niche B2B SaaS product for just our industry that we need to keep around. is your philosophy agents will connect or you'll just go and rebuild that we have an open api okay

1:21:51Sam Blond:right api ability to do claude mcp sure and so we will integrate and do integrate with third parties examples would be like we have a granola integration we have a slack integration we have a g-suite and many more yeah we we don't today have native sort of traditional crm integrations and if you leader today is Salesforce. And Salesforce is a system of record. And then you think about other system of record companies, there's some large players that exist in the space. The other type of sales technology company is a point solution. These are tools that integrate into the system of record. And if you think about the outcomes, the terminal values, the sort of market caps of these point solution type companies, they are less interesting to us to sort of be like, I think this word is politically correct now, we don't want to be the tallest midget.

1:22:46Sam Blond:We want to be the market leader in sales technology. And in order to be able to do that, we have to disrupt the system of record companies today, like the sales forces of the world. But the space will become much larger than it is today, because we are not just taking the IT budget away from companies that today are spending on platforms like Salesforce, we are taking the labor budget. And so Monaco is far more expensive than the traditional competitors that exist in the space. And it's because we're not a replacement for the traditional CRMs. We're not just a replacement for the traditional CRMs.

1:23:23Sam Blond:We're a replacement for you hiring a bunch of people to do this for you in a deeply integrated platform. Okay. Where can people go to get started? You're in public beta? We're in public beta. GA in the next couple months. Okay. I would love to come back. So that would be fun. We'll gong it out.

1:23:43Roger Lynch:Who's the best sales rep at Monaco?

1:23:47Sam Blond:Guys, I can't do that. You can't pick a favorite.

1:23:50Roger Lynch:Isn't it objective? There is an objective truth. You can't leak it right now. They'll get poached. Mark Benioff will be flying him out to Hawaii. Come on. It comes to him with the dolphins. Yeah. He'll do his little thing.

1:24:03Sam Blond:We don't have a worst sales rep, but I should say that name if we did. Oh, okay. Yes, yes, yes. No, this is a little, this is maybe like philosophically against what I would recommend for folks. We are in the fortunate position that we are just inundated in demand. We're still on team goals. The whole team is like really working with one another just to try and manage the demand that we have. And so we actually don't even yet, to your point on like, isn't it objective? Maybe we don't have a leaderboard. It's just all winning. So what you're saying is Mark Benioff has to buy the whole company. Got it.

1:24:40Roger Lynch:How has the billboard campaign gone?

1:24:44Sam Blond:It's great. You know, I think these things we do, we do the launch videos and a bunch of the like, you know, launch posts and those sort of things that hopefully get amplified. We do the billboards. Our billboard strategy right now, we're just doing like a dollar symbol and then Monaco.com. It's a little provocative. We have these big poker tournaments and a whole bunch more. Who won the poker tournament? It was the CEO of Sindoso. His name's Chris Rudigarp. Nice, nice. Another sales chat. All of these things, it's sort of like one plus one, plus one, plus one. It like equals 10. It's like the billboards compound the poker tournament that compounds the post, that compounds the truck that are driving.

1:25:25Sam Blond:Today we have a plane with a banner trailing Monaco behind it. I love this. This is blimp adjacent. We're huge fans of this. anyway thank you so much for coming on the show

1:25:37Roger Lynch:congratulations on the milestone and always counting down the days till GI talk to you soon have a great day you guys are the best up next we have Kevin Hartz from A Star he's the co-founder and general partner he is a star is that why he named it A Star I think of myself as a bit of a star Kevin Hartz welcome to the show how are you doing hey guys I'm doing great So great to see the both of you. First time on the show. Welcome to the show. That's crazy. It is crazy. I feel like we've been on. We've talked about so many of your investments and so many of the projects you've worked on. Well, it's funny you say that because I'm sandwiched between Sam in Monaco and Judgment Labs.

1:26:22And we have a... A-Star has a small check in each one of those. So it feels very comfortable in this position. The man behind the curtain. With a curtain behind him, actually. But we're not here to talk about Judgment Labs or Monaco. We're here to talk about A-Star. Give us the latest news. What is the update with the fund? Well, we've just announced today that we've raised our third fund. It's$450 million. Let's do it. Okay, so seed fund,$450 million. So like one AI lab, is that the plan? Or you're going to split this up between like two companies these days? I mean, valuations are high, but what's the strategy?

1:27:03It's a good point. It would be, you know, if it was a lab, it would probably be just about one company. No, we are sticking to our knitting. We are generalists. So we're looking at all different, you know, all different types of businesses. Certainly in this super cycle that we're having right now, it's driven by AI and the application layer of AI and we're investing pretty aggressively in that space. But, you know, our checks tend to be three to five million, although we go higher up to 10 and so on. Now, certainly there's an EO lab that will raise a big round, but that's really in the 1%. We're still in this core market.

1:27:46Yeah. Where are you fishing? What lakes are stocked these days? Are you fans of the mafias or the, or the, you know, universities or the dropouts, like there's so many different pools of entrepreneurial talent. Where are you finding success at Seed? Yeah, that's the right question is how to source this talent, how to be in front of everyone else, how to meet these founders when they're still working in their gigs or still in college or in sometimes even high school. I will say ages have declined on average, you know, like you're now seeing more and more founders that are teenagers. And, you know, I like to think of it as having, you know, seen like, you know, we had Bill Gates and Steve Jobs in the 70s when they were teenagers.

1:28:35They started their company and that was such an anomaly. And you fast forward to today and it's it's really dramatically changed. So to answer your question, I think of folks like Corey Levy at Z Fellows, who's just terrific at finding dropouts. And, you know, more and more, they're high school dropouts as much as they are college dropouts. Yeah, it's remarkable when you meet a founder and it's like Corey did the deal like three years ago and you're like, just getting started.

1:29:06Roger Lynch:How are you thinking about incubations with this new vehicle? Is that going to be opportunistic? Do you expect to have a certain amount that you're aiming for? What's the philosophy? Well, incubations are, I mean, I don't like the term incubation. It kind of sounds like this kind of sort of contrived venture. We like to find founders and spend time with them and help them kind of develop ideas. And we've done this a couple times. We did this with a mortgage AI business that's run by a founder named Michael White, who came out of Block. And that business has grown substantially. And we've done that very recently with a company called Sauron, which is a physical security business.

1:29:56So starting in the high end of alarm systems or monitoring systems. That is really just a bet on, you know, you see all this stuff happening in autonomy, autonomous cars and robotics. And a lot of money is invested in that space. And when we see that happen, you know, that usually means there's like dropping price of LIDAR, cheaper sensors and the like. And, you know, that means an opportunity in this case in the home security space. Wait, is there an application for LIDAR and home security that I'm not aware of? Absolutely. If you have sensors around, LiDAR sensors, you can know exact distances.

1:30:38You can track objects more effectively in different weather. And that doesn't become available when they're so expensive, but it absolutely becomes a very meaningful aid to understanding a scene when the price drops. That's fascinating. You obviously have an incredible track record in Silicon Valley, but I'd love to know about the mood among LPs around a$450 million seed fund. because we talked to a lot of the mega funds and then we'll talk to solo GPs. We had one on the show last week that raised a$50 million fund. And I'm wondering about, are LPs looking for a particular strategy with that size of fund?

1:31:28What's the appetite? Like, how do you talk about, like, where you're positioning for the long term? Just any of the dynamics around that particular fund size at this particular time in the market? Yeah, great question. It was a step up. Our first two funds were about$300 million each, and we went up to$450 million. But we do have five of us on the investment team, and we're expanding the team. So if you look at kind of divide the amount of capital by the number of those putting that capital work over the period of time over a couple of years, we've been successful. And our first two funds are in top 5 % kind of category.

1:32:06Thank you. I'm a venture capitalist, so I have to brag a little bit. But, you know, we've been very good at sharpshooting, like meaning like we haven't plowed money and we've really waited for the right companies and spent the right amount of time with these companies and helping them grow. So, you know, it's kind of expressed in like we have an incredibly high conversion of seed to series A, which, you know, if you would imagine, like typically most companies don't even make it past the seed stage, the zero to one phase. And so, you know, we don't want to disassemble our model by spraying capital out there.

1:32:44We think that's very different from the multi-stages that have almost this incentive, you know, with the fees against very large capital bases. We're very opposite of that.

1:32:59Roger Lynch:How do you stay collaborative? Or are your elbows getting sharper with this fund? I mean, we have a mutual friend who has like a similar size seed fund. I know you guys have collaborated a ton on deals in the past, but I know you guys are also both very competitive and want to put up, you know, top funds. And I'm sure it can get, you know, tempting at certain points of, hey, I could get 20 percent ownership in this company and I don't necessarily want my buddy. It doesn't necessarily benefit my fund to give 10 percent to someone, even if they're a great friend and could also help the company. Yeah, it's challenging.

1:33:42Our partner, Gautam, his wife is Christina, a GP over at Chemistry. And, you know, if he wins a deal over her, you know, like I can only imagine what would happen. So, you know, like it's tricky, but it is, you know, we see a lot of new funds. I spend a lot of time backing new funds and helping, you know, these fund managers kind of grow. And then they get to a point where you can no longer kind of even co-lead deals. the funds get so big. So, you know, and we're going into this like massive super cycle of an incredible amount of, you know, fast paced and a lot of capital invested. So it's, you know, I want to say that it's always on our shoulders to find, you know, the founders early enough and be the first ones there and just not be in those situations.

1:34:33How are you thinking about services as a software, the AI economy expanding beyond software and IT spend. I mean, Sam Blonde was just talking to us about the forward deployed account executive. And we talked to Long Lake about buying companies that are heavily service oriented and infusing them with AI. And I'm just wondering if there's going to be a boom in de novo companies that are more services sector focused. and what you're seeing in that category right now? Yeah, well, you really have to turn towards Palantir and just give them a nod because this Ford Deploy Engineer thing back in 2004 or 5 was universally hated by the world and the investors and so on.

1:35:26And they really gave us 20 years of a look at how to make that incredibly effective. And generally, though, I think that it's in the early stages that this kind of custom work is done. And, you know, that may lead to kind of automating things over time. And then the flip side that, you know, to critique it would be simply that, you know, if you look in other kind of boom eras, the consulting services really did well. When the markets pulled back, they were hit almost the hardest. So, you know, there's certainly a trade-off there. But to get new services into these old markets, you know, we're just going to have to get our hands dirty.

1:36:12I don't know. But, you know, I'm old. So I look at the services industry as this, like, really tough thing we want to replace by software. That's tough. Second best city to invest in, I assume you'd say SF. It has to be New York. New York. Yeah. I've been very impressed with New York. We have a number of companies there from a company called WAP in the creator services side to Antioch, which is physical AI, robotic infrastructure. And I'm just amazed every day. But I guess it makes sense that you're able to pull talent from the Northeast out of college. And it's still a big financial center. There's a lot going on.

1:36:59So it very much in my mind is a number two. Nothing's even close, not Austin or anything else.

1:37:06Roger Lynch:Yeah, that makes sense. How often do you find yourself backing teams that are building things that you know are on that or you expect could be on the roadmap of the labs? Because in certain instances, even if the labs care about a certain part of the application stack, that doesn't mean you just shouldn't still back a team, right? It's just a new version of what if, you know, Google does this or, you know, something along those lines. You know, I want to say that the startups, you've always got to, like, hope and pray and expect that the startups are going to win. This is the big question of our era is, do we go ahead and build all these, put all these apps forward or build all these applications only to be steamrolled by the big labs?

1:37:56We saw that happen in the 90s. Bill Gates and Microsoft would watch and see what people would build on Windows. And then they build their own disk compressor and give it away for free. And so, you know, this is like a pattern that these monopolists do, you know, in this case. And, you know, our companies need to show that they can stand on their own two legs. You know, we're in businesses like Decagon, which is AI customer service. It is the best product in the market, and they have to stay the best. And we know they can do it. Yeah, that makes no sense. Well, thank you so much for coming on the show.

1:38:40Congratulations on the round. It's great that you got some more.

1:38:43Roger Lynch:Great to see it. Yeah, great to see you. Have a great rest of your day. We'll talk to you soon. Goodbye. Up next, we have Alex Sean from Judgment Labs, an A-Star portfolio company, apparently, but here to talk about a new round from Lightspeed Venture Partners. Alex, how are you doing? Doing great, guys. Thanks so much for having me on board. Kevin's great. Also nice to have him for a nice event to open for you. Yeah, exactly. Yeah, some nice guys over here. He only gave us a little bit. So tell us a little bit about yourself and the company. Yeah, happy to. And before I do that, we got a little bit of a crowd here, which I'll take you guys out to come and be with us.

1:39:21Let's hit the dog for that. In person here out in the office in Financial District. This is turning into a...

1:39:26Roger Lynch:Whoa, let's go.

1:39:34Great to have you here with us, team. Financial District and the rest of SF. but thanks for having me amazing uh explain the orange suits yeah you know we are a judgment orange you know it's the color of the company and we like to be proud about that and so um you know we wear it loud and proud you'll catch us running the beta breakers race in sf hopefully winning it with the whole team so be on the lookout for the orange suit it's still uh such a good strategy to

1:40:01Roger Lynch:pick a color that doesn't have a loud startup already kind of anchored around it just own it Good luck going up against Facebook blue or Coinbase blue. Yeah. Much easier to stand out with a funny color, yellow. Anyways. Please introduce the company. Tell us about the progress, the news, everything. Thanks a lot, guys. You know, Judgment Labs is the platform for improving long horizon agents from production data. We sort of started the company with this thought process that these autonomous long horizon agents are going to consume the vast, vast majority of the economic values. that AI is set to create across the next decades in the economy.

1:40:40And, you know, we're already seeing the first sets of those things happening. Developer productivity is skyrocketing at rates that I don't think anyone, including myself, coming from a research background, could have anticipated. And yet that sort of progress is also barbelled in the sense that in many industries, we don't see the same progress on these long horizon agents. And so typically that's, you know, to do with a lot how verifiable or semi-verifiable the outcomes are and therefore how easy it is to train those agents. But we believe that regardless of what agents you're building, the single source of truth to improve them to get to that point is going to be production data.

1:41:15During the runtime of these agents, these long horizon agents emit so much production data ranging from their reasoning tokens to the tools they call to the retries and their memory and all the things more that are going to come out on these agents. And so that data just forms the cleanest record of how those agents behave with customers, software, and their broader environments. And when you process that right, we can sort of find out what users actually ask for and struggle with, which failures actually happen in production, and where agents actually find breakthroughs to solutions that we could have never predicted.

1:41:48And so therefore, the goal for us as developers and sort of people that are going to bring about this agent revolution is to operationalize that production data for all these agent companies out there to create these flywheels that convert distribution advantages of people like Sam into their product moats that are going to last them for a long time. And so we've been very lucky to partner with a lot of people across the journey of the company. Coming out of Stealth today has been an amazing journey. And, you know, Nova backing us at the pre-seed all the way to Lightspeed backing us at the seed.

1:42:18And Lightspeed doubling down to co-lead the Series A with Green Oaks. What's the sweet spot customer look like right now? So we love partnering with people who are building, you know, agent-native companies and focusing on long-horizon agents. Does that mean like startups? like scale-ups, like series B companies? Like what's the - Primarily agent-native startups in that range of like series A to series B is our sweet spot. We focus on these companies that produce a lot of production data and want to figure out how to use it. And is it particularly focused on knowledge work and sort of like the next iteration of AI agents or are you doing coding work as well, both?

1:42:59Definitely a lot of coding work. You know, we actually serve agents across the stack. Sam and his company Monaco are customers of ours. And so different vertical agents require different versions of improvement. And so we work across the stack, but mainly on these new age long horizon agents that sort of autonomously do tasks end to end. Yeah. What what what are you helping with specifically? Because I imagine that if Monaco builds an AISDR and agent that goes and runs around and figures out everything about a customer and build scripts and battle cards and all the stuff that they do. all of that's logged.

1:43:34They have it somewhere. Where's your value at? Like, why are they a customer? Like, are you helping them actually change production designs or is it more about organizing and unifying data for them to go improve their own products? Great question. Mostly the latter. So if you think about in practice, improving those agents is really challenging for teams. And so like most teams with all those logs that you're saying that they store have to sort of manually comb over these tables and tables of data. And so whenever they find a failure case, the question often the case is not just like, is this a problem, but it's, you know, how frequent does this happen?

1:44:14Are our most important customers affected? What task types are most affected? And so being able to chop up and parse this data using other agents, in fact, to sort of pinpoint the exact failure modes and therefore the exact part of, you know, an agent framework or an agent harness is exactly what we help these companies do. Interesting.

1:44:33Roger Lynch:Next breakout agent category. Use case. Yeah. Coding. Yeah. You know, we tend to believe here that at judgment, we think that the domains that are going to get solved first are proportional to those that are most verifiable. Meaning that if you can check the answer, you know, this is the smallest feedback move exactly. So I would say that a lot of these domains are going to be the ones that are quantitative. You know, these are things like, you know, you know, the coding agents are easy. You can imagine the site reliability and ticket resolution agents next, and then the ones that do math. But, you know, we are increasingly seeing a lot of progress in non-verifiable domains as well.

1:45:10Stuff that you would traditionally think is like not very easy to quantitatively measure, such as like finance and legal and even sales to say what Sam's agents are doing, are incredibly, you know, fast in terms of how the teams have been able to use their data to improve their agents. Tax and accounting seems pretty verifiable and like closed loop versus, you know, like, I don't know, long horizon. How did this cancer drug respond to someone over a decade? Like it's very hard to close that loop. Well, congratulations on all the progress. Jordy, any other questions?

1:45:41Roger Lynch:This was great. Thank you so much for coming on the show. Go Orange. We'll talk to you soon. I'm sure you'll be back on soon. Congrats to the whole team. Have a good day. Cheers. Up next, we have Glenn Wise from Cinder. He's the co-founder and CEO. Good nominative determinism. We got a wise man in the waiting room. And here he is. How you doing, Glenn? What's going on, guys? Good. Welcome to the show. Thank you so much for stopping by on such a big day. Introduce yourself. Introduce the company. Tell us the news. Yeah, I'm Glenn, the founder, CEO of Cinder. We just raised$41 million. Whoa, whoa, whoa, whoa.

1:46:22Roger Lynch:Good guy. Good news. Right to it. Yeah. Fantastic. Radical Ventures. I got a buddy, Rob Taves over there. Wow. Yeah, they're great guys over there. Yeah, amazing. Really great team. But our focus is helping companies stop all of the AI-powered abuse that's happening across the internet today. Okay. Yeah, what does that mean? Because there's like cyberbullying and like mean comments on YouTube videos or live streams. And then there's like spam and hacking and cyber attacks and all sorts of crazy stuff. Yeah. And honestly, it means the entire gambit of threats. Okay. And that's really, I think, like what gets missed in this conversation, which is the fact that like they're small, right?

1:47:07There's small incidents such as bullying. There's large incidents such as like state-sponsored espionage. Sure. But companies need to respond to all of these. and we've never before seen kind of the scale of threats that we have today. And this was a problem before Gen.ai, but obviously Gen.ai has made this exponentially worse. Sure. So it says customers include OpenAI, Spotify, Depop, Black Forest Labs. I'd love to know about how much of this is happening like internal to a particular product. Like someone is effectively doing internet graffiti on like the Spotify comments. We get comments on our Spotify sometimes.

1:47:48They're usually pretty positive. But I could imagine a state-sponsored actor wanting to take us down and writing a bunch of mean comments. Versus, and that would be something where you would go to Spotify and say, I can solve your problem internal to your product. Versus there's a misinformation campaign that's happening on X or Instagram about Spotify. And you're notifying them. Like what's the trade-off there? Yeah, that's a really good distinction. So we sell directly to the customers themselves. So they can combat if there's some horribly racist comment, that shouldn't be on there. So they can combat taking that off.

1:48:24And so how the platform actually works is that our customers set what policies they care about. So they say, hey, we really care about some of the really big ones now, AI-generated, NCI is like AI-generated deepfake porn, right? That's a huge one, a huge issue that a bunch of people see. Obviously, anything child safety related, anything, any egregious hate speech and things like that, they are able to set these policies on our platform. And then we use AI to detect and mitigate it at whatever scale the platform is operating at yeah um how uh what has it been like ramping up to some of these bigger customers i imagine that uh if you get the fire hose of like spotify content that's a lot was that a challenge like how did you solve that obviously there's a lot of off the off the shelf tools but like how big is the company at this point how are you able to take on those clients yeah i mean we were really lucky in the sense that the whole team uh the whole founding team came from meta um and so like we saw saw a thing or two yeah we've uh and prior to that we were at the u.s government um okay so we've seen we've seen kind of what harm at scale looks like yeah uh and um and obviously that's like kind of like an infrastructure challenge right that we that we deal with.

1:49:47But inevitably it is one, like actually be able to process data as quickly as possible. That's a big one, right? So how can we make a decision as fast as possible of whether or not something violates your policies? There's a bunch of techniques there, as well as just like being able to handle that scale, right? We have some customers that have a really large Gen Z audience that all log in at the same time. So that adds some really great kind of distributed computing challenges that the team is working on. But that's all part of the fun of building this.

1:50:25Roger Lynch:Is there something about this problem that makes companies want to outsource this function? Because I'm assuming at Meta, if you're working on this problem at Meta, you're working on internal tooling and platforms at a certain scale. Maybe they end up wanting to do this themselves, but is there a certain part of this problem that makes it particularly suited for having a partner like Cinder? Yeah, I think there's a few. I think primarily it's taking the human expertise and really understanding the policy and understanding how to mitigate that policy. Every customer of ours can't be an expert in every single issue that they might face.

1:51:07So that right there means that they need to bring people on. And yeah, Facebook, I was on the threat intelligence team there. They have an amazing threat intel capability, or they're also Facebook, right? So they can spend on building out that threat intel capability, but not everyone can or should have to do that. So that's a big piece. And another one that we've been seeing more and more often, actually, is the third-party credibility of going with a company that's also truly a set of experts. And so you're not creating your own homework when you're trying to defend your platform. You have someone else that can bring that expertise in and do that for you.

1:51:47Totally. How are you thinking about the actual model choice or just scaling? Because I imagine that there's so many of these TOS violations. You know, you just ask, like, is this a TOS violation or threat of violence or something that, you know, doesn't conform to any of, like, the frontier models. And you're going to get a very accurate result. But that's going to be slow and probably expensive if you're running it, like, over every single Spotify comment or every single upload to the platform. And then you can go open source, cheaper models, faster models. You can also try and run models on ASICs or more advanced chips.

1:52:30Like Cerebris is in the news this week because of the IPO, but there's obviously other providers. But how have you thought about the infrastructure trade-offs as you scale the service? The thing that is most important for our customers, I talked about policy. It's really evals and ground truth data. And so once our customers have, within our platform, set what does true look like, what does an actual violation look like? Because as you can imagine, these violations are incredibly nuanced. And it really depends on what's the platform, where they're based, how old are their users. A really classic example is a gaming company could have two different games.

1:53:13One that is a first-person shooter for adults. The other one that's a game for children. obviously they're going to define a threat of violence very differently. Oh sure, even within the company. Right, and so you need to be able to set ground truth and really set these evals. So then from there you run evals on these models. And it kind of depends on are you prioritizing costs or latency or accuracy? Those are basically the three trade-offs that we see. and you can get really great results now, especially around fine-tuning some of these open-source models. But what's funny is that obviously these models themselves are trained to not be able to produce this content.

1:54:02And so you do start hitting limitations with these foundation models. And so you can do techniques like model obliteration where you can actually remove guardrails and host them yourself. You can do traditional classification, again, depending on what the policy area is.

1:54:20Roger Lynch:But that's why you need to - I've heard enough. Give him a billion dollar cluster. Well, speaking of cluster, has there been any demand for on-prem? We were talking to David Buzuki from Roblox about this, and I was sort of saying he has a younger audience, obviously, on the platform, and there's been a lot of pushback about the communication that happens between adults and children on the platform. And I was saying, like, it feels like, although this is a huge problem that obviously needs a lot of attention, like, the technology is getting better and better to the point where you should be able to screen every single chat message that flows through the Roblox platform in real time with a very, very advanced LLM.

1:55:00But Roblox runs their own infrastructure. Is there an API call? And I could imagine a situation where Roblox wants to run this, like, deeper in their stack. And is that something that's on your roadmap where you've heard customer pull from, or do you think it will never be an issue? Yeah, I would love an intro. I really appreciate that. Yeah, I think for us, because of the proliferation of these foundation models, our customers have gotten really comfortable on utilizing, you know, already utilizing OpenAI. Because they're already pulling stuff from AWS or GCP or Azure and they already have like a fabric they can pull things into.

1:55:40Exactly. And we, because of our sort of security paranoia background, we've invested a lot in, we even have run a full single tenancy architecture that our customers love because, you know, they have, they know all their data is theirs. and so you know customers have gotten more and more comfortable but I could see the pendulum swinging especially with open source models I could see it going the other way where they want to self-host cinder in which case you know it's built in a way where you know they can yeah that would be really cool last question get me up to speed on your work with Black Forest Labs because I believe that that's a more unique relationship they do benchmarking it seems like they've shared some data, but can you get me up to speed on your work there?

1:56:27Yeah. We've been doing some really exciting red teaming work with these models. I think it's a really important job that these models are able to be tested before they're released, obviously. Because once they're released in the wild, then they are subject to the rest of the world. And so that's a lot of the work that we do as well. It's allowed companies to set up those guardrails, but also allow them to not only test the guardrails, but test the models themselves. And that leads to just dramatically safer outcomes when they release these models out into the world. And I think that we're going to see standards coming out of the UK, the EU, the U.S.

1:57:04on expectations around red teaming, especially as these models become more and more powerful and the attacks become more sophisticated. Yeah, yeah. We're already seeing with that, with the, who was it? it wasn't meta, but it was Google, Microsoft, and maybe XAI joined OpenAI and Anthropic in delivering models to the government earlier to test. And this could be a logical place to test as well. But congratulations on the progress. Thank you so much for coming on the show. Fantastic to meet you.

1:57:34Roger Lynch:Thank you for doing this work. And the chat is concerned by your co-worker's posture in the back there in the blue. We're going to get some ergonomic experts in here. but uh yeah to give him give him our best yeah well i gotta tighten up the shit no no no it's good he's locked in that's actually a high performance positive that is that is you know and the window open you get some fresh air co2 levels probably not a problem doing some critical work anyway thank you so much for the show great to meet you glad to meet you we'll talk to you soon uh bunch of updates really quickly first the chat has given a name to my next project it's the diesel the diesel refinery company of malibu get ready jordy we're going to be pumping diesel fumes all over malibu it's going to be a boom time uh also swatch yeah yeah let's pull it up so we talked about the swatch ap collab the swatch adamar piguet royal pop collaboration well the final design or something close to the final design has finally hit the timeline and we can pull up this image because it's not a wristwatch.

1:58:42It's more of a pocket watch. It goes on a necklace, I guess, and it does not come with a...

1:58:46Roger Lynch:Is this more of a charm? Like, I see people tying this to, like, a bag or something like that. I think this tells me that all of the fears that this would be confused with a stainless steel Royal Oak were probably misplaced. What do you think, Tyler? Yeah, well, okay, so it's based off, like, the Swatch Pop, right? Yes, yes. So this is just, like, I'm talking about, like, this is a long time ago they made the Swatch Pop, which is, like, this little... Yeah, it is a watch. But you can pop it in and out into a necklace, into like a little charm or onto like an actual bracelet. A stainless steel bracelet.

1:59:15There might be, like we haven't seen anyone actually buy this yet. It's just like been promo video. So there may actually still be bracelets that you can put it into a watch form. That's true. But so far everyone is up in arms. Platinum, platinum, platinum wrist. Yeah, I'm trying to find pictures of the swatch. Maybe? Hop. I don't know. Well, there's a release video that we do think is real. I think we verified this with Quaid over at Bezel. and it's showing how they're building it, how they're putting it together. Some cinematic music and they're making them, these are mass manufactured. They're showing them being mass manufactured, testing them, but they come in all sorts of colors and we'll be interesting to see what happens.

1:59:58This does not seem like an it's so over moment for the AP Royal Oak Market. It seems like they have found - It's so over for the bears. Yeah, it's so over for the bears. Everyone that sold yesterday needs to buy them back, potentially.

2:00:12Roger Lynch:Yeah. Interesting. I think it's working to the degree that I see that, and I'm like, I kind of want one of those. Yeah. It's like a cute, I don't know. It just fits a different case. I have a guess as to what the hypebeasts will do, John. Do you know what they're going to do? What? They're going to take those royal pops, and they're going to use them to tie their shoes. They're going to use them as shoelaces. So they'll have like, you know, a bunch of Swatch Pops hanging off of, you know, some like Nike Dunks or something. I could see that. I could see that. But why not just have the full stainless steel Royal Oak hanging off their shoes?

2:00:52There's levels to the game.

2:00:53Roger Lynch:Yeah. Well, GameStop is going to need to level up if they want to successfully take over eBay because eBay has rejected GameStop's$55 billion takeover bid. The online marketplace, that's eBay, called the cash and stock proposal, quote, neither credible nor attractive. The New York Times has a story here. The online marketplace rejected the proposal. GameStop announced the proposal last week. We talked to Ryan Cohen on the show about this. To combine with eBay, which is a company nearly four times its size, the offer has confounded much of Wall Street in part over questions of how the company would afford it.

2:01:31GameStop's chief executive, Ryan Cohen, initially declined to elaborate on how he would finance the deal. And much of Wall Street remains skeptical about the mechanics of the deal. eBay has officially turned down its lopsided marriage proposal, said Don Bilson, head of event-driven research. This news should surprise no one since the odds it would accept GameStop's brash offer were infinitesimally remote. In a letter to GameStop, eBay's chairman, Paul Pressler, listed several concerns with the bid following a review of the offer with legal and financial advisors. The concerns include uncertainty about how it would be paid for and the amount of debt the deal would add to the company.

2:02:12A cornerstone of the deal was a letter that GameStop secured from investment bank, TD Bank, saying it was highly confident it would raise$20 billion to fund the offer. that letter, which is not binding, stated that the confidence rested partly on the assumption that the combined company would be investment grade, according to at least two of the three major credit rating agencies. So what does Ryan say? Has he responded? I did. I was confused because I saw a post by Paul Branham and I thought, Paul, that's the chairman of eBay. No, it's a different Paul. And this Paul is a major GameStop supporter, I believe, who said, Ryan, we got your unsolicited.

2:02:58Let me translate the eBay letter. We got your unsolicited bid. Our board thoroughly reviewed it. We're rejecting it. Not because the math doesn't work. Not because we're highly confident. And so this person is very excited about this deal, I think. Anyway, there is another media deal going on right now. Now, Byron Allen is buying BuzzFeed, investing$120 million in the digital media company and will become the CEO. This is a very interesting story because I don't know how familiar you are or the audience is with Byron Allen, but he had a fascinating career where he was originally, he jumped straight into late night talk show host.

2:03:40Uh, he was, he, he became a late night talk show host and then eventually had this very interesting business where he would buy zero to yap. Basically he would buy the rights to broadcast on TV in certain slots in certain hours. And then he would independently go sell advertising against the programming that he, uh, would put together. And so the money would flow from the advertiser to him, and then he would pay to air his content on traditional TV. Interesting. Very interesting.

2:04:15Roger Lynch:So he was on the hook for the airtime, basically, but any difference was his. But he was paying for the airtime, and then he eventually bought the Weather Channel and a number of other sort of traditional over-the-air TV stations and sort of grew. He also will be taking over the time slot from, I believe, Stephen Colbert post that changeover with a show called, what is it, Comics Unleashed? It's a roundtable conversation. It's sort of just a podcast with a bunch of comics. And when I first saw it, I was like, that's so weird that they're replacing Stephen Colbert with a show about comic books.

2:04:55But it's not. It's a bunch of comedians. and Theo Vaughn's been on before and it'll be interesting to see how that show does in that slot. I think the cost structure of that show will be much, much lower. I don't think it's a live band. It's sort of just a studio with a round table and a couple chairs. And so I imagine that the economic equation works much better, but that's not what is in the news today. What's in the news today is that he is buying BuzzFeed and will become the CEO of BuzzFeed. BuzzFeed had sort of changed hands a few times and now it is in the hands of Byron Allen. Jonah Peretti, who co-founded BuzzFeed 15 years ago or so, will step down as chief executive, but he will still serve as its president of AI.

2:05:39And if you love reading AI listicles, you're probably going to get a lot more of them because I think that's part of the plan. But let's read through what the New York Times wrote about Byron Allen's acquisition of BuzzFeed.

2:05:50Roger Lynch:It's time for listicles to come back. Yes. Here are five key things to know about Byron Allen buying BuzzFeed. Number four will shock you. Byron Allen, the comedian turned entrepreneur, is buying a controlling stake in BuzzFeed, the digital media company that pioneered virality on the Internet. Pioneered virality on the Internet. That's a bold claim. I think that's probably true. But, you know, David after dentist would like a word. Allen Family Digital, a company associated with Mr. Allen, will pay$120 million for 52 % stake. And this is a huge jump from where BuzzFeed was trading. I think BuzzFeed was trading around like$40 to$80 million market cap or something.

2:06:31So it's like almost a 3X premium. And we can get into the share price in a minute. But Mr. Allen will become the CEO. Jonah Peretti will become the president of artificial intelligence. Byron Allen, pictured there, is 65 years old. He will remain CEO of Allen Media Group, a news and entertainment company that owns local TV stations, as I mentioned, the Weather Channel and a TV production arm. He also produces Comics Unleashed, not about comic books, but about comedians, which will replace Stephen Colbert's The Late Show on CBS at the end of the month. And where I'm did I lose this? I don't know, but it's an interesting story.

2:07:07Yeah, I'm sure there will be more developments on what happens with BuzzFeed.

2:07:11Roger Lynch:Yeah, I'm so curious what the plan is. They had Q1 revenue of about$31 million,$31.6 million to be precise, and a net loss of roughly$15 million. Revenue was down 12.4 % year over year. so losing a bunch of money revenue is shrinking I don't think the brand is I don't think it's a good brand at this point certainly has name recognition but I don't know anybody that wakes up in the morning and says yeah I gotta know what BuzzFeed is talking about today granted there's probably a lot of people and Byron is a media tycoon so So now that's why I'm curious. Like what is, what's the play here? I think he sees an opportunity.

2:08:02Roger Lynch:If you, if you had$120 million to just build a new media property, you wonder, Hey, uh, what, what could you actually do? So is it, is there some massive audience that's still sneakily more engaged? Uh, maybe he sees a pivot to prediction markets. Oh, I don't know. I don't know. Let's have a cover of Buzzfeed today. Let's check it out. BuzzFeed.com. 50, why would you put that thing in writing photos that prove people are the worst? That's the number one trending article in BuzzFeed. 41 celebs people used to love and now can't even stand to look at. 22, they really go, they love the listicle and they're getting longer.

2:08:48I was joking about five key reasons. That would be, I would never make the cut at modern BuzzFeed. 22 stories about boy moms and their sons that will make you cringe into oblivion. I don't want to read that. 32 people confessed the secrets they've been hiding, and these would destroy multiple people if they ever came out. And there are reactions. I did. I was a fan of, I was never a fan of the BuzzFeed quizzes, but I was a fan of that.

2:09:16Roger Lynch:Yeah, there's an arcade, so maybe there's a gaming play. They also had a bunch of different, like, CPG spinoffs at various points. I think they got into physical goods. But a lot of the talent did go off and venture on their own. Like the Try Guys, I think, famously left BuzzFeed and started a YouTube channel. And there was always like a little bit of a talent management not always perfectly aligned. Anyway. We have the perfect guy to ask about this. I don't know who's going to comment on any of this, but we can certainly try and ask him about it. because we have Roger Lynch, the CEO of Condé Nast, with us here in the TBP in Eltradell.

2:09:54Roger, great to see you again. How are you doing? I'm all right. For those, I mean, we were hanging out last week, but for those who don't know, introduce yourself. Let's go a little bit back in time, take us on your journey, and then we can get into all the hot topics in media. Sure. Well, yeah, I've been CEO of Condé Nast for seven years, but prior to that, I spent my whole career really in technology. Yeah. And primarily a fantastic guitarist. Thank you very much. That was my life's ambition. That was an incredible performance. It's a little bit of just lore, I guess, but we can get into hobbies and things outside business.

2:10:31But yeah, take us back. What was the first job in media? How did you get to where you were? First job in media? Yeah, maybe that's a good place to start. Well, I mean, it depends on how you define media. Really, I spent my career at the intersection of technology and media. Sure. So the first company that I ran was a broadband business. It was one of the first broadband businesses in Europe going back to 1999. And literally one of the first things we did is we did a deal with the NFL to stream live NFL games in 1999. That's crazy.

2:11:01Roger Lynch:How much demand was there for NFL in Europe at that time? Well, the reason the NFL was interested in it, this is back when Paul Tagliabue was the commissioner. or he came over to announce this crazy idea that we had, was they were trying to build the NFL in Europe. They're like, I hear people love football over there. Why aren't we making money? Why isn't it our football? I think there was a team called the Amsterdam Admirals at the time. There was a European football league that they were trying to promote. Broadband was a really interesting technology, and I was really excited to see how it could be used to change how people consume content, and that's why we did that deal.

2:11:41And then I started an IPTV company, first video on demand, IPTV, and then Sling TV, Streamy TV. So always sort of at the intersection of technology and media or content. Then I ran Pandora, the first company I ran that I didn't start. I loved Pandora.

2:11:57Roger Lynch:Yeah, Pandora is truly, when I think of magical technology experiences in my childhood, I think of Pandora. I think of being in my garage with my dad. we'd be like playing pool listening to music or work so many obscure songs on pandora is amazing was there some sort of uh unique opportunity with pandora around treating it like a radio station so because it feels like there was some sort of licensing deal on the back end that was not the same as spotify or itunes store at the time where right because yeah the trade-off i remember i must have been i must have been intuitively at the time i was like okay this is a fair trade-off Like I'm used to going to iTunes and having to pay 99 cents.

2:12:43Roger Lynch:Or I can just kind of like roll the dice. Maybe I'll get my favorite song on Pandora. So I found myself on Pandora a lot. Pandora took advantage of some rights that allowed them, compulsory rights, allowed them to stream all of that content. But one of the tradeoffs was you couldn't choose the song. And so they did launch a subscription long before I joined. subscription service, but were late for that game. They were quite late for that game. By that time, Spotify already had a very strong presence and some of the other big tech companies were getting into it. But you mentioned AI. I mean, to me, one of the key things with Pandora was the way it combined sort of human taste with AI.

2:13:28So we had a team of musicologists and one of the, you know, you mentioned, I've been a guitar player all my life. One of the best parts of that job is they were all fantastic musicians. So we'd do these company events, and we'd play all the time. And these guys were so, and they were mostly men, were so good. But then we had the data scientists also, and they would take the work that the musicologists did and create their machine learning algorithms around that. And each of the algorithms they had, I can't remember, around 90 or so algorithms, each one would get tuned for every individual listener.

2:13:59So it would be weighted a little bit more, Jordy likes this, John's like this. And so it creates a personalized experience. experience. And to me, you know, I still listen to Pandora. I also listen to Spotify. But when I want something just to put something on and let it play, I'll go to Pandora because I think those algorithms still outperform. Yeah. I mean, we've talked to this new co-CEO of Spotify, but like that AI driven feature, the promptable playlist is just coming to Spotify like this year. And I'm sure it's souped up and powerful and stuff, but it is remarkable how long that like internet radio Right.

2:14:36These things have long lives. I'm wondering about your view on durability in media generally. It feels like any time that there's some platform shift, there's endless think pieces about legacy media is dead, linear TV is dead, this is dead. Everyone loves to talk about that. But in your experience, how does the media industry actually change as technology arrives? You know, the media industry has a history of not changing quickly enough. And you can start with the music industry. You know, recorded music industry peaked in 1999. And then, you know, Napster.

2:15:23Roger Lynch:And that's sales revenue. Yeah, and recorded music industry. We found out last week or the week before that vinyl record sales are something like 10 % of streaming revenue. So vinyl records, that's an interesting trend to talk about. But what the music industry did or didn't do is, and this is one of the big mistakes, and like most lessons that you learn, you learn the biggest lessons from your mistakes. What the music industry didn't do is look at how their customers were behaving and say, okay, let me craft my business around that. They said, no, I don't like that behavior. I'm going to change the behavior.

2:16:04Let me sue these teenagers in Iowa who are downloading music or sue the ISPs or their parents or whatever so I can change the behavior back because I really like it when they buy CDs. That's really good for my business. That was disastrous for the industry. So finally, once they had embraced downloads and then streaming, it started growing again. It's only just gotten back to the size it was in 1999, 27 years later. There's more people and people still like music just as much as they did before. Of course. It's surely a failure. Of course, but they fought it for far too long. And it's a mistake.

2:16:38Vinyl records have grown every year for the last 18 years. And sales of vinyl records. And it was, it used to be people my age buying vinyl records and collecting them. Now there are as many people in their 20s buying them as there are people in their 50s or 60s buying them. A lot of people in their 20s don't even own a record player. They buy the vinyl records. There's an interesting trend that we, and we see it a bit in our industry too, like young people buying physical magazines. It's like, why? Well, I think it's a search for authenticity. I think when you have so much digital content that is in your pocket, and it's all free or free to consume, it becomes less valuable and maybe less authentic to you.

2:17:19Roger Lynch:Yeah, and there's something that's always been missing from part of the experience of being a music fan to never actually go and trade your dollars. I think people do like to vote with their dollars and express their interests and actually have this physical embodiment of their taste. Well, they're doing it with live music now. That's where the money has gone. The money is, you know, really moved to live. It used to be, you know, in the 90s and 80s and everything, people would go on tour to support their record sales. And now it's the reverse. You release a record so you can go on tour and sell tickets.

2:17:53And it feels like the in-person events, stadiums are getting, like the CapEx is just skyrocketing across the sphere. SoFi Stadium here in Los Angeles, there's like more and more ways to draw people in with like ever larger spectacles. and these like shelling points where like, did you see Taylor Swift in the Ares tour? Like that was a key moment that even like the casual fans needed to find.

2:18:14Roger Lynch:So after Pandora, talk about the journey into Conde Nast. Yeah, it was, you know, it wasn't at Pandora very long because we sold it to SiriusXM. And, you know, I was thinking about what I wanted to do next and I was fortunate enough to be in process on four different companies. Two were in New York, two in LA. We're from LA. So LA had a lot of attractions for us. And I was flying back and forth between New York and LA and having trouble deciding what I wanted to do. And my wife was like, usually you're so decisive. It's like, I know, it's really tough. And then I finally realized on one of these flights that when I'm sitting there, I had all the information on all these companies.

2:18:56Every time I'd go to the Condé Nast information, I wanted to read about that. And that's literally how I made my decision. like that's the most intellectually interesting to me i'm going to go do that um so and i but there were a couple criteria i was i had for what i did next one was i still like the intersection of content and technology and distribution models but non-exclusive content was going to be dominated by big tech companies you know music sure films tv whatever the stuff that I had been doing, it had all been non-exclusive. Like, I wanted to go somewhere where we had our own content, we had our own brands, we could control our distribution more.

2:19:36And so that was certainly one of the criteria, but also still the opportunity to innovate around technology, how you use technology to create new business models, distribution models. And Connie Nass really fit that well. Yeah.

2:19:48Roger Lynch:There is interesting... I mean, we've talked about this a ton because thinking about all the new categories of media, which we joked about. We put out this really unhinged market map of media as a joke. And then unfortunately, we called ourselves neo-traditional media, which was a joke. And then now people will tell us and be like, you guys are a pioneer of neo-trad media. We're like, we created that category as a joke. But something that we've come back to over and over is just the value of these legacy brands that have been built across decades and how, you know, take away like the business models and how those are evolving.

2:20:35Roger Lynch:Like it just seems like the value of a Vanity Fair or a Vogue or the New Yorker are shockingly durable because we're just, you can make more of these kind of properties, but you need decades, right? And so I'm wondering your strategy around kind of how you think about counter positioning these brands against the content that is flowing so freely across. You're referring to the trough. What's that? Oh, yeah, yeah, yeah. The trough of social media apps. But yeah, but yeah, like even, you know, I've also talked about the the challenges with Substack around certain stories. Substack, if you're an individual selling a subscription.

2:21:21Roger Lynch:It will reward people that publish multiple times a week that sell a subscription. And yet there's so many stories that take months to tell. There's great stories out there that you'd want somebody writing, spending a year on it. Seymour Hersh is not going to break the MyLi Massacre. And so there's this opportunity of like the value of brands and curators that is maintained. And we're not creating, we are like, again, I would say we're creating new iconic media brands, but it'll take, you know, 20, 30 years, right? It's just, you cannot do it overnight. And then how these things can operate as platforms where there are a lot of super talented writers that shouldn't be trying to publish every single week because their calling is to publish maybe once a month or even once a quarter at different points, right?

2:22:08Roger Lynch:And finding those lanes. So I'm curious about how you're thinking about the role of the different brands under Condé Nast and counter-positioning against platforms like traditional social media or Substack? Look, I think you bring up a really good point about Substack in particular, which is it is a great platform for certain creators. Yeah. And if you want to be on that bit of a hamster wheel, meaning, but it may not feel like a hamster wheel to a lot of people. They love to publish content multiple times a week. That's great. It's a great platform for that. if you want to spend six months, 12 months, deeply researching something, and Substack is not the medium for that.

2:22:50It won't reward that behavior. The New Yorker is, you know, it really is. And that's, and we get rewarded for that by our subscribers. When we come out with these really deeply researched investigative pieces that, you know, we have a huge army of fact checkers at the New Yorker that comb through every single word so that when it is published, it has really, really been thoroughly fact-checked. When we publish that, we see the numbers spike on subscriptions. Our subscribers reward us for that type of journalism in a way that I don't think works so well with Substack. Other things work really, really well with Substack.

2:23:26Roger Lynch:Yeah. That said, we cover tech primarily. So we've seen a lot of people from tech leave the sort of like brands or platforms to go to Substack. And some of the times they come out and they're just scooping every single day and it's amazing. But more often than not, I'm like, I actually wish that at least a few of you guys would go to one company and I could subscribe to you and you weren't feeling this pressure. And I don't actually want, like for a lot of people, I'm like, I think selling ads is a waste of your time. You should just be writing, right? And a lot of them feel that. And then the hamster wheel thing, I was talking to a really big sub-stacker yesterday, and they were feeling that.

2:24:10Roger Lynch:They were like, I don't want to publish every day, right? But you built a business around that, and then you're sort of trapped to this business model. So anyways, I think we're going to – I've said it, I think, in this age of AI and this age of slop and sort of like ultra-fast media, I believe that being a true journalist, being a reporter, being a writer is only going to, I think it was always relatively high status, but I think it will even go up and up and up over. And become more valuable. Yeah. Yeah. And it's more valuable. It's like, we want people that are doing original journalism, fact finding, it's so essential.

2:24:49Roger Lynch:And then also, yeah, just, just spending, spending the time. I mean, we're, we're sort of a symptom of the internet, right? We make ultra fast content, right? I don't expect people to watch most of any of the shows from last week, right? Maybe there's some interviews that are sort of durable, but the majority of the commentary, it's just, it's comes and goes, right? We expect people to watch it in the 24, 48 hours that we create it. But there's so much content that I think about, you know, sitting down on a Saturday where I'm like, well, maybe I want to read, I have limited time. Maybe I want to read something that somebody put six months into.

2:25:24Roger Lynch:it. Look, I think it's important to know what you're good at and take advantage of that and not try to be something that you're not good at. And you guys are really good at exactly what you just described. And so you've made the most of that and you've attracted a really important audience and it's really worked for you in a business model. For us to try to chase that would be to move away from what we're really good at and try to become something different. And I agree with you. I think where, you know, with the amount of AI generated content or low quality content that is being flooded into the market, that only, I think, accrues to the benefit of companies that can really stand out from that.

2:26:03And so don't try to be that. Like I always tell our, you know, we're going to always have human created content. First of all, I think it's what I know it's what our audiences expect and want. Secondly, we have no competitive advantage over just creating AI generated content. That doesn't leverage any of the advantages we have. And so knowing what your advantages are competitive and really building upon that, I think, is always important in any business. And for the industry changes that are happening right now, I think there's real value in it. Because, unfortunately, there's going to be fewer places that can do that.

2:26:34Because the ones that are more marginal may not survive the changes that are happening. And, you know, our brands have been really thriving in it.

2:26:43Roger Lynch:What is, how do you compare your philosophy of running like a house of brands versus, let's say, an LVMH? Is there similarities, differences? What is the philosophy? Yeah, I mean, you know, when I first joined, I spent a lot of time talking to those companies to try to understand how they were organized. Because one of the things I had to figure out is what I wanted to do with the way we were structured. Because we were structured very differently. We were really a loose collection of companies all around the world. Every country operated entirely independently from every other country. Really?

2:27:20Oh, my God. It was crazy. There was no technology collaboration. There was no—they competed, literally. I remember literally three weeks into the job, I start traveling. I go to Milan. I'm trying to visit all our different offices. I get a call from my assistant, like, you know, some of the team in Milan is upset you're not visiting. I'm like, I'm in the office. I'm here visiting them. You're in the wrong office. I found out we had seven offices in London. Conde Nast U.S. had an office there. Conde Nast Russia had an office. Conde Nast France had an office. All in Milan, all different offices.

2:27:52Because, of course, they couldn't be in the same office because they were competitors. Yeah. So a lot of changes to make in that model. But look, actually, it was a great strategy when the company was a print publication business. It worked by definition. Kanye West became a very big, successful company following that strategy. But it was not the right strategy for the Internet age and a digital age and how audiences had changed. Audiences moved from, oh, I read my local newspaper or my local content to, I want to see what's happening around the world. I want to consume content from Korea or China or Sweden or Israel or wherever.

2:28:30Much more cosmopolitan in their approach to how they consume content. and so really we use that as a guidepost to say, okay, how should we structure ourselves and just question everything about how we organize ourselves and even the culture of the company, which was very, very territorial and fiefdom-based to what it is today, which is much more collaborative. So obviously plenty of efficiencies across the portfolio geographically. The brands are power law driven, right? You have a few brands that drive the vast majority of the revenue. Have you been in a portfolio expansion period or portfolio contraction period?

2:29:12Is there a benefit to going more focused around the tentpole brands or do you want to expand further? How are you seeing the scope of the business? What we find is certainly our largest, most important brands have done very well in this. Vogue is our largest brand. Vogue has grown every year I've been at the company. It grows revenue, grows profitability every year. Thank you. It is good news. And the New Yorker also. The New Yorker just had its most successful year ever by a long shot. Those brands, whatever's happening with search algorithms or AI, they seem to just be able to rise above it.

2:29:56We have smaller niche brands, Pitchfork, a music brand, very small. It's 1 % of our revenue. But it has a very strong, loyal audience in the category that it covers. It's doing very well. And so there's this sort of barbell effect that's happening, at least within our portfolio. And then we have some that are in the middle that are impacted more. Either they don't have as strong authority in the category, or they're a little too broad that they don't go deep enough in a specific category. Yeah, we were just talking about BuzzFeed and it felt like for a long time it fell into that category of, you know, decent size audience, but ultimately built on a shaky ground of another platform without that really strong core audience that would stick around through thick and thin.

2:30:40Roger Lynch:How do you think about talent identification going with sort of discovered talent? Let's say a writer who's established that already has a following versus somebody who has a lot of potential but maybe hasn't had a breakout moment yet. And then the same thing with executives. Yeah. I think, you know, first of all, for writers, we're a great home for the best journalists in the world. in part because I wouldn't have thought this was a necessary competitive advantage several years ago, but it is today, which is that we're not impacted by political influence. We're not under the FCC's thumb. We don't have licenses that they need.

2:31:24We're not trying to buy Warner Discovery and need merger approval. And we're owned by a family, as I'm cutting ass, for seven decades. that, you know, I've been at the company now seven years and not once have they ever called to interfere with anything we do. Therefore, I don't need to do that with our editors. We can just hire the best editors and stay out of their way and let them do their job the best. So that is very attractive to journalists because they know when they come to our company, they're not going to get a call from the CEO or the board or whatever about why did you say those things about this advertiser or whatever it is.

2:31:57No, the journalism comes first and will always come first. So that helps us attract very established writers. But at the same time, we also are a great place for people earlier in their career to learn because they can learn from the best. So we always try to make sure that we're recruiting really high potential new journalists into the company, as well as, you know, the best external. In terms of executives, other than Anna Winter, every other executive has turned over since I joined the company, every single one. And I did most of it immediately in two reasons. One, if you want to affect culture change, change people.

2:32:41Change people that don't reflect the culture that you want to have. And when I got to Condé Nast, I felt like this is not the culture. There were great things about the culture. You know, the focus on excellence really, really deep at the company. But there are other aspects of it, very internally competitive and political that I didn't like. And I just decided, I'm going to, I want to create the culture of a company that I want to work in. So let me find people who think similarly about, about the importance of culture. And then secondly, because, you know, we were going from like in the U S that was a, had its own CEO as a separate company from the rest of the world, it was very focused on the U.S.

2:33:21market. I wanted people who had much more global perspective and global experience. And so the skill set I wanted to be broader than what the company had traditionally had.

2:33:33Roger Lynch:Probably 2018, this idea of content to commerce got incredibly popular. And even by the time we were starting this show... You're thinking New Yorker protein powder. When's it coming? Yeah, I love that. But even when we were starting this show, a lot of people said, wow, you have this audience of entrepreneurs. Why don't you build your own software and spin out software companies or develop stuff internally? And we said, with what hours in the day are we going to do that? And why would we deserve to win over a team that is entirely dedicated to a certain problem? Where has content to commerce worked within Condé Nast?

2:34:12Roger Lynch:and where have you experimented or avoided it? You know, if you think about from an advertiser perspective, the reason advertisers have always come to Condé Nast is the influence that we have with audiences, right? That, you know, whether it's fashion or travel or home, you know, it's the influence that we have. Now, you know, that was very, very true in the print era. It's very true today. But they also have many more avenues to reach audiences than they used to. So for us, when we look at commerce, we think that ability to influence audiences certainly exists even more than before because of how much larger our reach is.

2:34:58And so we can use that maybe not to create the New Yorker protein powder, but to sell fashion, to sell travel. And so we've been investing in commerce, but not creating our own products per se. Partnerships. Yeah, in partnerships. And that also has grown every year. And we announced, it'll be launching soon, an initiative we announced last year called VET, which is really at the intersection of certainly e-commerce growth, social commerce in particular, and the creator economy. And so what VET is, we have relationships with all the luxury fashion companies. We're using those relationships, creating a marketplace commerce platform that then creators can use to connect with their audiences.

2:35:47And so we'll be working with initially a small number of real tastemakers in fashion and then using the relationships and the technology we've built to create this creator marketplace called VET. How do you think about journalists becoming influencers? can be great, develop their own audience, and then that draws more people into their stories when they do have something to publish. Double-edged sword, because if they leave, they have an audience that might sign up on day one. They might say something that doesn't necessarily represent the views of the publication. There's sort of, you know, some organizations have gone back and forth on it, either saying, everyone needs to be posting on Instagram every day, to you can never post on Instagram any day.

2:36:34How have you toyed with that or dealt with that tension throughout your career? You know, because we have, you know, as you said, a house of brands, our brands are very different. So, you know, a journalist for The New Yorker may be very different than a journalist for Vogue in their approach to that question. So, you know, we don't have hard and fast rules that we would apply. So no one size fits all. Definitely not one size fits all. But we do know that, you know, Journalists that are able to build profiles for themselves tend to be good for business. So we certainly support that. Got it. I want to talk about events.

2:37:10Yeah. Are events more power law driven? Do you want to raise the long tail of events, do more events, and try and elevate to something where there's a Met Gala happening every week or something? I don't know. Where does the event strategy go? Events for us are one of the fastest growing parts of our business. But not because we're just doing more and more events. We're actually doing fewer events than when I started. We're doing fewer events, but we're focusing on events that really are what we call cultural moments. Met Gala is a great example of that. Met Gala was last Monday. In the first seven days, I just saw the numbers last night, we had 3.1 billion video views of the content we created.

2:37:58That's remarkable. It is. It was up, I don't know, 60 % over last year. And isn't a lot of it off the record, too? That is insane. I've never seen, like, you can't just live stream it. You can't watch what happens inside, or there aren't microphones on the dinner tables. We do a live stream of the red carpet. Yeah, yeah, yeah, exactly. So it's even a limiting in terms of what you're sharing. The live stream had 200 million people tuned in to view it. That's amazing. Wild. So every year we do the Met Gala. Yeah. it just grows at a level that's hard to believe. And we finish it and we go, oh my God, how are we ever going to exceed that next year?

2:38:31And then it grows 65 % again the next year. Wow. And it was the same thing for the Oscar party, the Oscar party this year, 65 % growth year over year. Remarkable. So I think we found a playbook on that, but it's not a playbook where you can say, oh great, let's just do one a week. Yeah. You can't create cultural moments like that. What you can do, what we found is doing fewer and doing them at very high quality. Sure. and make them global events. Like the Met Gala is a global phenomenon now in a way that it wasn't, you know, seven years ago when I joined, it was an important, very important, you know, event that people in the U.S.

2:39:06knew about and, you know, people in the fashion community around the world knew. But by bringing the company together into one organization, now all of our brands globally promote it and promote the live stream and the content from it. And that's really helped elevate it to become now a global cultural moment. Yeah. Interesting.

2:39:26Roger Lynch:Help me. I don't know how much you'll be able to say here, but help me understand why BuzzFeed is worth something like$120 million. No,$240 million. About half the company for one time. Oh, half the company. Yeah,$240 million. What's the both case? The revenue is declining. Decent, you know, run rating, $60 million a year of losses. I would guess an aging audience. Do you have any idea where the value is? Well, look, the only thing I read about that is there was like$20 million going into it. Oh, I thought it was$120 million. There's a valuation of that, but there's a stage. You guys may have read me about that.

2:40:07Okay, okay, yeah, yeah. But look, I can't speak specifics of that business. That was a business that did very well. They were very innovative around a different era of the internet. when you could take search traffic and social media traffic and turn it into commerce dollars or other things. That era is gone. Why? Yeah, what killed that era? Like, people are still spending time on social media. They're still searching on Google. And yet publishers have not been able to monetize traffic or generate traffic from the activity.

2:40:39Roger Lynch:I think it's like I look at BuzzFeed as like, you know, I look at Conde Nast. This is like luxury media. That is my personal view on it. It's like this is the LVMH of media, and BuzzFeed was like a fast fashion. Just say you've never been to the BuzzFeed gala. Think about it's really interesting. We did this for a board meeting about six months ago. Took a snapshot of search results from, I don't know, seven or eight years ago. And what you saw were a few sponsored links, and then the 10 blue, you know, the traditional search page. Yep. do the same search term today. You get an AI overview. Yep.

2:41:17Then you get rows and rows and rows of commerce links. And then you get sponsored stuff.

2:41:22Roger Lynch:I was saying, somebody last week was saying, how is search revenue up? Have you done a search recently? Yeah. I basically have to go to the second page to get an organic result. It's been good for Google. Yeah, it's been great. It's been great for business. If you're a publisher, you've gone to the same page. So if you had a business that relied on that to arbitrage that traffic to sell whatever, that business got very, very difficult. So, you know, look, the changes in search traffic have certainly impacted our business, but not to the point that we haven't been able to grow our revenues and grow our profitability, but it's a headwind.

2:42:00But, you know, last year, so, you know, each of the last three years, we would do our budgets. We put some forecasts in of search traffic declining. You know, why? Just because we'd seen the pattern of algorithm changes. And generally, those algorithm changes were negative. They had negative impacts. So we're going to forecast it to be down. And then every year, it was down more than we forecast. So last year, I told our teams, assume there's no search. you have to have your businesses planned as if search is zero we don't expect it to be zero yeah but we you know don't bank on it we expect it to be a single digit percentage of our traffic very low so we started working on plans for each of our brands around that and some of the brands we looked at said they don't really have a good plan for that so we're going to reprioritize the ones that do and uh but if it you know if you don't have those paths forward and you know And if you don't have really strong authoritative brands or brands that have very strong niche in certain areas or direct audiences, then you're just going to be fighting that all the way down.

2:43:04Talk about subscriptions, bundles, subscription pricing in a time when we have little spurts of inflation here and there. How important has that been? How resilient has the subscriber model been? What are you seeing there? You know, it's a very important part of our revenue stream. But, you know, our digital subscriptions grew 29 % last year, revenue. And, you know, they're growing double-digit percentages this year. So it's a really important growth area of our business. And we're launching more digital subscriptions for more brands. Like Pitchfork, a small brand, just launched a subscription earlier this year.

2:43:44Tatler, another small brand in the U.K., launched it. But, you know, our big brands, the New Yorker, you know, very, very strong growth. Vogue is showing incredible growth in digital subscriptions. So that's an area that's important to impress. And we think we've built up some really good capabilities, both on the technology side, but then also on just the people capability side, too. And then do subscribers get stuck in a mentality of I pay a certain amount and they're resistant to a price adjustment in a time of inflation? Or is there some price elasticity there? You know, we have raised prices on subscriptions fairly materially over the last couple of years.

2:44:21Okay. And, you know, each year we think, okay, we're raising the price. The retention is going to go down. And actually the retention has gotten better every single year. So the elasticity looks pretty good for us so far.

2:44:35Roger Lynch:Yeah, in some ways, you know, and we're the biggest fans of independent creators on Substack and other newsletter platforms. Like we really, we have a lot of them on the show. We subscribe to a lot of them. But in some ways, they're helping your guys' pricing dynamic. And they're like, well, I want$20 a month for my newsletter that publishes twice a week. And I just kind of write what I'm thinking. And you guys are like, well, we're going to give you all of these stories and all of this video and images and these deeply researched stories. And so your product or subscription for one of the brands starts to look like incredible value.

2:45:17Roger Lynch:because you're like the alternative, my dollars are going to go way less far with an independent creator in terms of volume of stories. Now you don't get the same dynamic that they have, which people just like to support independent writers and content creators. That's a part of it. It's just, you enjoy saying, kind of helping somebody be in business. But I think that's an interesting dynamic. Can you talk about the further nichification of media, Architectural Digest, The New Yorker. These are already not niche publications, but they have a category, Vogue, GQ, right? There's a theme to the product.

2:46:01And what we've been tracking over the last couple of years is that the internet native media properties, the creators have been able to find even smaller niches. So we've talked to someone who just does, you know, car reviews or just does the car dealership guy was a good example of like that would not be a national magazine, but he's made a business work there. And I'm wondering if there's opportunity for more niching or if there's value in not over niching a product and how you're thinking about because you see all these niches and you think okay maybe there's a roll-up strategy or maybe there's some sort of you know synergy between them but that's already sort of playing out on the platform in the sense that like youtube is making money from both doug dimuro reviewing every car and the car dealership guy talking about the dealer side of the automotive industry and these are separate from an automotive magazine that might sort of in previous era address both sides.

2:47:02You know, I think where publications can get hurt is if they're caught in the middle. Sure. If you try to be too broad, too large of an audience, this is not the era for that. Yeah. You know, five years ago, maybe that worked, but not today. You either need to be large and authoritative in a big category. Yep. Vogue is a good example. Or architectural old adjunct. Yes. Or Kanye West Traveler would be another one. Or you need to be really nailing a specific niche where you have a loyal audience that's willing to pay. And, you know, ad supported only, tough. If you have a brand where you're investing in the journalism, if you have to make significant investments in journalism, supporting that just with advertising is a tough place to be.

2:47:51but if you've got you know really content that people are willing to pay for then but to do that

2:47:59Roger Lynch:don't get caught in the middle yeah it's a place to be uh the devil wear prada's uh the devil wears prada 2 box office hit uh do you expect that to be a pretty major catalyst for for vogue you know it's uh it's actually it's actually been a catalyst for condé Nast broadly you know Obviously, the movie is based on Anna Wintour, and the company is based on Condé Nast. But I was talking to our chief revenue officer a couple weeks ago, and we had a really good first quarter. We exceeded budget, and second quarter was looking strong. And I asked her, what's driving the strength? And she stopped for a minute.

2:48:40She said, the movie. I was like, what? Wow. That's driving even other brands. I think there's just more interest in Condé Nast in general. Fascinating. I think it's more than just that, but I think the movie has created a lot of intrigue, and it's been fun. I imagine it's good for hiring, but can you zoom out and talk a little bit about the hiring pipeline? There's so much uncertainty in the job market. Should you become a software engineer? Are there going to be no software engineers? AI can write stuff but can't really do investigative journalism, but there's still a lot of anxiety. How are you seeing the next crop of great journalists develop right now?

2:49:16or advice that you give to new grads who want to work at Columbia Nast? Well, we hire journalists and we hire software engineers. Yeah, of course. And it's different. And everything in between business and finance and legal. Look, I remember my mom growing up, she always said, there's always room at the top. And it was good advice. If you can be at the best of what you're doing, there's always going to be room for you. That's remarkable. Yeah, moms have the best. That's so good. So for us, you know, journalists who really excel, I think they'll always have a home. You know, in terms of software engineers, you know, we brought in a new head of product and technology really fortuitously in December.

2:50:01And December was really, you guys covered this very well. Agent moment. A step function change. Yep. And so when he started, you know, I told him, you need to question everything we do. start with a blank sheet of paper, rethink everything that we're doing, how we do it, and how we can use AI. And the first thing he did is he started some small pilots, three or four people on a team, eliminating certain roles that would have been on a much bigger team to create new products. And he ran the pilot six or eight weeks, and there was enough information already where he said, okay, let's go make big changes now.

2:50:39And so we just, last month, made big changes in that org really centered around how we use AI at the core of not our content, but how we develop technology and products. So the result of that is there were whole departments that we no longer needed. Like we used to have, it might be a team of 10 or 12 people on a big project. When you have that big of a team, you need a technical project manager. You need QA engineers. You need product analysts and all these other things. Well, we just redesigned it and said, actually, you have a product manager, and they're going to be the product analyst also.

2:51:17Maybe there's a designer, and there's an engineer, and we're going to have AI create the software and also do the QA of it. And so these teams that were 10 or 12 people became three or four people, and they moved at three times the speed. So what does that mean if you're a software engineer? It means there's going to be fewer jobs, without a doubt, fewer jobs. for now, but if you're a product manager, you can do things that you could never do before because you can actually create the code yourself using AI.

2:51:50Roger Lynch:Well, yeah, and Condé Nast is a unique company because you guys don't sell technology, you sell content. And so you want to make great technology to serve the content, but it's not the core, that's not the thing that you sell. Whereas, yeah, we've noticed something is that we basically hired a full-time software engineer early in the company, Tyler, sitting over there. Tyler. And we're the kind of employer that never would have hired a software engineer historically because for a small podcast at the time, why would you... Build software. Yeah, why would you build custom software? And so there's job creation happening by companies that never made sense to hire software engineers, but now they can.

2:52:33Yeah.

2:52:33Roger Lynch:Cool. How are you thinking about... I imagine that at almost all the publications, there's essentially no AI doing writing or creative work. But have you had to confront anything on the advertising side? Like I imagine if I flip over the back of The New Yorker, I'm sure I've seen a 3D render of a watch at some point. Will I be seeing an AI render of a watch? Does that matter? Does anyone care? It matters. You know, last June, there was an ad that was run in Vogue print magazine. And the ad used an AI-generated model. That's right. And it blew up. Yeah. But people who were angry, they were angry a little bit at the advertiser.

2:53:21Yeah. They're mostly angry at Vogue. Interesting. And I loved it. I thought it was fantastic. because it reaffirmed what I had hoped was going to be the case, which is our audiences want human-generated content. They want to know what they're reading and seeing is real and not AI-generated. So to me, that was a really important indicator of, frankly, our future, that our future strategy about using AI in many, many places to drive efficiency, to reach audiences faster, speed up the velocity of what we do, all to enable us to invest more in human-generated content.

2:53:55Roger Lynch:that that was a really, it's very, especially clothing is really interesting. There's a slippery slope where let's say you generate, you know, you have a real piece of clothing and you say, put this on this, you know, even if it's a real model, but put this on this model. And then what happens if like, you know, you could just prompt it and say, make, make it fit, uh, like slightly different. It's like, well, then now that you're, that's not the product that you're selling, you're now selling a product that doesn't really exist anywhere. So there's certain, uh, certain, certain categories that I think will.

2:54:26Roger Lynch:And just, yeah, it'll be a brand decision. And I think ultimately that that is why that is why I think your brands will endure because there will be plenty that make the opposite decision. We're going to lean into it, but there's always there's always room at each end of the barbell. So lots of care with regard to AI advertising. Zooming out, are ads a bug or a feature? if I open up a copy of Vogue? Well, in a print magazine, it's absolutely a feature. I think so. Yeah, without a doubt. I think for digital, it can be both. Sure. You know, programmatic display ads, maybe more of a bug than a feature.

2:55:08Yeah. But, you know, really high quality.

2:55:10Roger Lynch:It's just, it really, it's mostly the visual disruption of like, I'm reading this like beautiful story. I actually like integrated sort of a native ad from the publisher. that was, you know, considered, but anything that becomes, you know, display ads, just the. So our biggest advertising category is branded content. Yeah. And it's, it's great because it, it, it leverages a big competitive advantage. Sure. Our brands, our audiences, but our creativity. And so that's a, that to me is a, is a really great place to be in our business and to see the growth of that every year. you know of course we have display ads we have print ads some of which can be branded content um a lot of video video ads yeah yeah anything else jordy no this is fantastic fantastic really glad this work uh we'll wrap the show right now uh leave us five stars on apple podcasts and spotify sign up for our newsletter tbpn.com and we will see you tomorrow at 11 a.m pacific sharp goodbye