Trump-Xi Summit, Inflation Fears, Space Data Centers | Max Levchin, Delian Asparouhov, Richard Socher, Brandon Hill, Nate Tepper, Joubin Mirzadegan, Roman Chernin

29:14They got to at least have a stocking horse. How are we not talking about blimp data centers yet? I know. Sergey Brin has a blimp company. You know, Bezos has a rocket launch company. So there's a very logical line from AWS to space data centers through Blue Origin. But we've got to put some GPUs on the blimps. We've got to start mass manufacturing the blimps. This could be the thing. I mean, there's no NIMBYism in the middle of the Pacific Ocean if there's just a bunch of blimp data centers floating around in a circle. Well, I think if you're already in the ocean, you should go down as well. You know, Atlantis, Maxing.

29:53Yeah, I feel like none of the ocean guys that are working on ocean robotics are thinking about like putting ocean at the bottom of the ocean. Yeah, I mean it feels easier than space data center. In certain the space is free, the land is free, you don't run into the regulatory stuff, cooling potentially free. Energy, a little bit tricky down there. Geothermal? Geothermal maybe, I don't know. No, there's oil and natural gas reserves. Do you have to bring oxygen there? Because how do you burn the oil and the natural gas and water big big diving bell tube yeah scuba scuba tanks or something anyway let's continue where are we in this spacex and google speculative technology has been at the center of spacex's pitch to investors ahead of its planned ipo this summer which is anticipated to be the largest ipo of all time last year google announced its own plans to launch prototype satellites by 2027 as part of a moonshot initiative called project sun catcher working with another company, Planet Labs, to build those satellites.

30:56We're working on getting Will Marshall from Planet Labs on the show in the next week or so. We'll send tiny racks of machines and have them in satellites, test them out, and then start scaling from there. Says Sundar, there's no doubt to me that a decade or so away we'll be viewing it as a more normal way to build data centers. A little bit of an interesting timeline there. there's no doubt to me a decade or so away we'll be viewing it as a more normal way yeah a decade or so away he's being a little cautious in his language on his timelines but google was an early investor in spacex and owned 6.1 of the company yeah not bad um the other the The other funny dynamic from SpaceX's deal-making recently is given that the OpenAI startup fund was an early investor in, I believe, Cursor's seed round.

31:57True. The$8 million round. OpenAI, at least the startup fund, will have some meaningful exposure to SpaceX. Yeah, SpaceX, an OpenAI-backed company. That's the way people will introduce it. OpenAI-backed SpaceX IPOs. Yeah, I thought it was quite interesting having that happen. And wow, the whole trial was going on. Everyone owns everything. Everyone has diversified into every company at this point, basically. Let's see. The company last week announced a deal to sell Earth-bound computing resources to the AI company Anthropic. As part of the agreement, Anthropic expressed interest in working with SpaceX on orbital data centers.

32:35Earlier this year, SpaceX filed an application with a federal regulator to launch up to a million satellites for its orbital data center ambitions. That's crazy. I remember, didn't they get, what was the original Starlink approval? I thought it was like tens of thousands, maybe a hundred thousand satellites. I'm starting to think like, like looking ahead, there's going to be a backlash to like, they're blocking out the sun. Like we've seen the matrix. This happened in the matrix, but for like chemical reasons. But like, if there's like light pollution from this at all, it's going to be a absolutely massive.

33:12Oh yeah. Yeah, Panthalossa, ocean data centers. You don't need to sink them to the bottom of the Mariana Trench. How could we forget? Just do them on the ocean. Did you look up how many satellites SpaceX currently has in orbit? Because I think, I mean, it's a huge number. It's over 10 ,000, I believe. But a million is a huge jump. But that actually should math out. I think we did the math. That should math out to gigawatts in space, which is definitely meaningful. So right now they have just over 10 ,000 satellites. Just over 10 ,000. Okay. But I think they're approved for maybe up to 100 ,000 or something.

33:49And so they go and get the huge allocation, and then they start launching. Very, very excited to see the progress on Starship. Isn't there a launch that happened or is happening this week? Yeah, when's the next? Tyler, can you look up the latest launches? I'll keep reading. The other story, this was back in March. blue origin has a play in in space data centers as well so i would kind of you could imagine them and amazon teaming up in some capacity but you could also imagine amazon saying like hey if we're going to be a real player here we need to we'll probably need to work with star cloud finally probably finds a dance partner if not multiple uh many industry leaders see orbital computing as a solution to the limitations of earthbound data centers earthbound is capitalized it's a proper term now, which require swaths of land and power.

34:40These data centers are designed to be powered by solar panels, eliminating the major power constraint faced by data centers on Earth and one of the major ecological issues with emerging technologies. But there are also major engineering challenges. SpaceX made its name as the world's leading private launch provider, sending NASA astronauts to the space station and launching thousands of satellites as part of its Starlink internet constellation over 10 ,000 apparently. As it prepares to go public, SpaceX has struck a number of deals that have rewritten its balance sheet, helped Musk consolidate his companies, including its acquisition of XAI, and SpaceX also announced a deal with Cursor, as we have talked about on the show.

35:21Starship, what's the update on Starship? So the next launch, the 12th one, is next Tuesday, the 19th. Next Tuesday. That's when they're targeting. Okay, yeah, yeah. And what's their goal? But they were like moving it down the runway, sort of getting ready to stack. Do you have any idea what success looks like? I think getting it. So this is the first orbital test of the V3. Okay. So they got to get it to orbit and then get it back and probably land it. But are they going to land on land or water? Because didn't the last one make it up and back but exploded in the water? Or was that the Blue Origin Nuke Land?

35:55I don't know. Anyway, there's a whole deep dive on space data centers in the Wall Street Journal. They say, is it a pipe dream or AI's next big thing? They're pointing out some of the challenges. You're going to need thermal louvers, opening and closing shutters to block or allow heat, thermal contact, special bolts to separate items with different heat requirements, deployable radiators. Heat is transferred to special surfaces that unfold in orbit. It looks like a big, long tail. Pull up this graphic showing sun-synchronous orbit. Yeah, this is cool. So when if you're orbiting the Earth vertically, essentially, the sun is constantly hitting the satellite.

36:39So you're not out of power for half the day. But they say these radiators for data centers will likely be very large. I like that. Phase change materials, materials that can absorb, they can change phase to absorb heat like wax or salicylic acid, usually from solid to liquid when returned to normal when temperature is reduced. Sun-synchronous orbit, 373 miles to 497 miles up. So about 400 miles up is when you get into sun-synchronous orbit. That's on the low end of low Earth orbit. low earth orbit around a thousand miles mid orbit one to 10 ,000 miles high orbit over 22 ,000 miles um and so uh we we we covered a decent amount of this so we can we can move on um do you want to talk about shanu matthew yeah was adding the conversation we had with doomberg doomberg was fine doomberg was saying the only way the data center build out will be successful is by either breaking all the rules or going off grid and sean who said the tech crowd keeps leaning into this off grid is the only way thesis and i disagree with this notion the exhibit a example of xai colossus even overstates what's actually happening at colossus okay xai did not build a permanently off-grid ai campus because the grid was unusable colossus already has 300 megawatts of tva interconnect approved across two substations xai funded plus contractual obligations to curtail during periods of grid stress.

38:14That is a grid-tied architecture with supplemental on-site generation, not an islanded power system. I think Doonberg was, like the other side of this that Doonberg did highlight was like Colossus is the exception that proves the rule because it moved so quickly and took advantage of so many different grids and there were power generation from multiple states at one point. And now there is pushback. Like there wasn't pushback when Colossus was built originally because data centers were not a hot topic. And it's the same thing with launching rockets. Like we were talking to someone who lives up in Santa Barbara.

38:54They're launching a lot of rockets from Vandenberg. It's getting to be a lot of traffic. It hasn't risen to the level of protest, but you can imagine that building 10 more Vandenbergs would be difficult because you go to the local community and you say, hey, we're going to build a space launch station a space port and they say oh that sounds good like you mean because we're gonna go to the moon once a decade and you're like no we're gonna launch rockets 10 times a day or 100 times a day and people if they have an example that they can draw from and say oh well like that community doesn't like it so i shouldn't like it uh that's some of the pushback but anyway We can keep reading Shanu Matthews post.

39:36Yeah, let's see. Turbines solved a time to power problem. So it accelerated the deployment while substations and transmission infrastructure were being built. That's very different from do all of this off grid. And economically, most large scale AI load will still want to be grid tied long term. Interesting. I have made this point several times, but running your own generation fleet at hyperscale is expensive and operationally complex. fuel logistics, maintenance, N plus one redundancy, permitting, emissions compliance, balancing load and supply continuously, multi-year equipment lead times. You don't just figure that out or want to do that overnight.

40:17Amin, the chief technology officer at, or the chief technologist at Google AI, does that mean DeepMind? Straight up confirmed this on a podcast and they literally bought a hybrid power island, hybrid island power developer BTM generation absolutely matters. It's becoming a critical bridge solution during a period where utility interconnect timelines are badly lagging demand growth. But I'd strongly push back on the idea that the steady state future is fully off grid hyperscale campuses. The industry is converging towards hybrid architectures, grid interconnect plus captive generation, plus storage, plus demand response.

40:55They're throwing the whole kitchen sink at it. Anyway. Related. Yes. More Perfect Union had a post earlier and I read it nearly 50 ,000 people in the Lake Tahoe area have been told their utility will stop providing power to them because it's redirecting that power to data centers. Envy Energy, the Nevada utility that supplied most of Lake Tahoe's electricity for decades, says that next year will stop servicing homes in the area and instead direct that electricity to the growing demand from Nevada data centers. Northern Nevada is one of the fastest growing data center corridors in the country. I read this.

41:34I was like, this is completely insane. It's so stupid. Like you read it and you're like, this is such an L in the making for the data center industry. What were they thinking? And then it's immediately getting community noted. And a quote from the president of Liberty Utilities in Lake Tahoe says, this does not mean the power is shutting off. Energy companies, utilities, and large customers change energy supply frequently. So there's a supplier of energy that is saying like, hey, we're not going to renew our contract. We're going to divert the energy elsewhere. But there's a bunch of suppliers of energy.

42:05And so Andy Masley says, everything MPU posts about data centers is complete garbage. They have zero respect for their audience. Literally no one here is losing power. This tweet is a complete lie. What's actually happening is that a supply contract between two utilities is ending. And the small one is just buying power from elsewhere. And this was all expected to happen since 2009. No way. Wow. The company that serves homes on the California side of Lake Tahoe is a small utility called Liberty. Liberty buys about 75 % of its electricity from a much larger utility, Envy Energy in Nevada, and generates the other 25 % itself from solar farms it owns.

42:43Liberty then sells that to 49 ,000 customers. Envy Energy has told Liberty it will stop selling them wholesale power after May 2027. It's kind of like Liberty's a coffee shop that buys beans and sells coffee to customers. The customers are the homes and the beans are the electricity it buys from Envy Storage or makes itself. This is like your local coffee shop ending a contract with a specific bean company and started buying beans from somewhere else. It doesn't stop you from buying coffee. Why is their contract ending with Envy Energy? Envy Energy selling to Liberty was understood as transitional since it started in 2009.

43:23Long story short, Envy Energy was basically Liberty's only wholesale option, but a new transmission line opening in May 2027 gives Liberty access to a much wider Western market and among other things, a much larger share of solar and wind and hydro. That's the whole story here. Ending the contract with Envy Energy and opening up this much wider pool with much more renewable energy was the plan here, completely separate from data center demand. Interesting. Well, anyways. It would be remarkable if all of Tahoe lost energy and Mark Zuckerberg couldn't charge his electric wakeboard because I somehow feel like...

44:01He would hit the streets. He'd be protesting. I think he'd be protesting. I think he would get something done if power was lost to Tahoe. I mean, a lot of influential people are out there. So anyway. All right. We got to talk about... We got to talk about... Unitree. tree gd01 they built they build a new robot and you're gonna love it it's not scary at all and it looks very fun and safe this is from avatar they just built the mech from avatar this has been pictured many times in science fiction and will strike fear into many people uh coincidence they use a racing bucket seat it is cool uh it does feel very hacker culture like it feels like this was like a crack team, a little skunk works project.

44:47This is, it doesn't look like as polished or ready for, you know, sale, but remarkable results. They're like, you got to put this out so that the Americans cancel all of their technology ambition and just go back to the dark. It is intimidating. Is it a coincidence that it was launched the same day that the, or the same week that the summit is happening in China. I don't know. It is amazing that it turns into a horse of some sort, a four-legged creature. Although, how do you drive it at that point if you're laying backwards? It needs some sort of gyroscopic seat. That one hasn't really been considered because if you're laying back while you're driving it in horse mode, you're going to be, maybe you'll just nap.

45:34Maybe you're like, oh, I want to commute. you know, Henry Ford said if I asked people what they wanted they would ask for a better horse. This looks like a better horse to me. You get to work you pop up into vertical mode I'm fascinated by how they're controlling it. Is it just like a video game controller because some of this seems like it would require you to telegraph like in the Avatar films like the operator of the mech has full like the input is the actual arms. So if they want to swing a sword, they swing the sword or they swing the machete physically with their arm and then the robot does the bigger version of that.

46:14Timeline until these meccas replace horses for police use cases. I don't know. There's going to be pretty crazy pushback if that's rolling around during a riot. I know, but the benefit here is that I don't think the mecca will go to the bathroom on the ground. obviously this is gonna happen at some point a lot of these developments are very early uh i bet you if you give that thing a strong kick it falls over and sort of gets stuck at this point um uh sailor over on x yeah uh had pulled out the funniest part yep uh which is that unitree unveils the world's first mecca show it breaking down a brick wall and then in the launch announcement they say please everyone be sure to use the robot in a friendly and safe manner yeah wild uh egocentric data collector versus the mecca mounted tele-op chad uh absolutely wild wild uh is there another video of this oh yes this is an ai video but we have to play the version of this getting hot dropped into what you could imagine as the battlefield with uh four FC-200 for drone formation.

47:25Max payload of 600 kilograms. Unitree's new transformer mecha, 500 kilograms of weight. That's probably without a human inside, so you might need six drones, but this is something that feels not that far away. Not that far away, although you drop that thing in the ocean, I feel like there are so many steps on the humanoid robot path where the deployment in a flat surface in a warehouse makes so much more sense than like standing on a ladder, straddling a chimney in the rain, and there's a little bit of mud, and you use a power tool, and dust kicks up. Like actually ruggedizing all of this is probably a whole second step in this process where you're adding more weight.

48:09That means more battery. You need better battery technology. I don't think you'll be dropping this into the Taiwan Strait anytime soon, but it certainly strikes fear into the hearts of many. uh well uh there's more humanoid news yes red adcock has a live stream going that's right of their robots yeah um i do wonder how they're again i'm sure the comments are all how do we know this is actually live right like how do you how do we know so is this the actual live stream right now it's continuing going because i i pulled this up an hour ago and it looked i mean i guess exactly the same because it's the robot and they've been sorting for an hour uh battery pack or plugged into the wall what do we think what's the battery he says watch a team of humanoid robots running a full eight hour shift okay oh okay so they might have swapped it out at some point for a different one interesting it looks like a lot of progress um it's extremely It's really fast.

49:13It is fast. The movement's very natural. I wonder, what is the goal here exactly? Because is the robot sorting these? What does it do with the blue one? I think it's putting it so the shipping label is visible. Or the shipping label's down. Oh, okay, okay, okay. Yeah, that makes sense. That feels like, because some of the robot applications are things that you could do with a two-axis gantry or a sorter. If you watch how it's made, there are industrial machines, not robots, that can do all sorts of sorting. You watch how Diet Coke gets filled and the cans roll down, and at some point they all need to be facing upwards.

49:59And so there's a machine that sorts them and tilts them all upwards. Obviously, the humanoid use case is much more unstructured, and that is beneficial for so many things. I don't know. If this is your job. Apparently, they're just going to have the robot go until it taps out. Ooh, okay. I like that. That's great. Very cool. Well, in other video news that we need to play, General Catalyst launched an ad on X that might be making it into TV ads or TV ads at some point. What? GCat? GCat? What's GCat? Oh, General Catalyst. Maybe that's the new ad campaign, but the campaign is called Meet GC, and it's a clear reference.

50:47Hi, I'm GC. And I'm VC. Who's your friend here, VC? This is Woof AI, an AI native companion platform that combines robotics and machine learning. You'll never want a real dog after this. Well, I think people like dogs as they already are, though, VC. You don't need to walk it. You never need to tell the kids you sent Milo to the farm. We're leading the seed and could probably make room for you. I'd love to hear more, but we actually have a really high bar around responsibility for these things. Is Wolf AI okay? Of course he's fine.

51:22Oh, sorry, buddy. It's easy, easy. Stay. Stay. No. No! Stop. Stop. Stop! Stop! I'm sure he'll be fine.

51:42Interesting symmetry to the podcast set that Reggie's doing, right? Well, I think Reggie directed. Yeah, but it's cool that like the brand, like you could wind up doing two very different designs, but there's like a, there's a through line there, even though it's obviously a nod to the Mac versus PC ads from the 2000s. which we can pull up to watch one of those. I think we've watched these before. And they have a very similar, you know, stiff PC versus Mac look. But I think that was a good message of like, okay, like, let's not... We're not like the other venture capitalists. But also like, let's not fund the stuff that like is pointless and useless.

52:26And if you already have a dog, keep a dog. And this is a big moment because you have been wanting a VC firm to just commit to paid advertising for a long time. Well, I wouldn't say this is a commitment yet. We got to actually see some spend behind it. Yeah, of course, of course. Yeah. No, no. Magazine ads. Great. Yeah, in the right. I mean, certainly in like the Wall Street Journal and Forbes and like the places that people, the entrepreneurs go for information, it makes so much sense to actually spend on advertising to build a brand, especially when you're at the scale of General Catalyst. Can we pull up the Mac versus PC ads?

53:04We're not going to watch all of them. There's 66 of them. Talk about a generational run. A lot of the same kinds of programs. Yeah, like Microsoft Office. But we retain a lot of what makes us us. You should see what this guy can do with a spreadsheet. It's insane. Mogged. Yeah, and he knows that I'm better at life stuff, like music, pictures, movies, stuff like that. Whoa, whoa, whoa. What exactly do you mean by better? By better, I mean making a website or photo book is easy for me, and for you, it's not. Oh, that kind of better. Yeah. I was thinking of the other kind. What other kind? Hello?

53:37We can switch away because you've seen all these. Marc Andreessen quote tweeted it dunked. He said, stay tuned for our upcoming ad campaign. We're the VC who doesn't sneer at your idea. Interesting. Getting spicy. Yeah, red alert over there. Red alert. um it's a lot of red alert going on um it's a long thing well well both companies are invested in uh robotics company and roll oh yeah i mean i'm sure there's a ton of portfolio overlap oh no i i just think i just think like in another world that that that's an and roll product that dog thing probably uh i'm sure they've experimented with that form factor and both got some fresh funds they need to build a mecca i it is i mean if there's ever someone to build the mecca it would be palmer lucky he has talked about this stuff i i even asked him on stage once like walk me through the pacific rim vision like how do we build that uh and i mean a fun back and forth about it um well do you remember do you remember much about his response yeah so uh his response to stuff like That mecha form factor is just like, hey, I'm a sitting duck on a platform.

54:51Yeah, exactly. So his point is always like the technology to build the mecha is way behind the technology to like remote control something or put an AI on board or something like that. So you actually don't want to build the Iron Man suit because you can just build the drone, the submarine. Or he'll use the example of like the Batmobile. It's like if you need a vehicle for the city. Like, do you really need this like massive vehicle? Right. Clearly Bruce Wayne just wanted it. The parking comment he's obsessed with, he's obsessed with building Batmobiles. It's very funny. I don't know. That is a very cool demonstration though.

55:33But yeah, Andrew always says, don't build the Batmobile and focus on like, is there an actual like urgent need from the military? Is there support from Congress to actually appropriate the funds? And Unitree, I don't actually know. That feels like just like a marketing project at this point. Yeah, I mean, I think their IPO is like very soon, right? I think the original application was like late March. Yeah, that would probably pump it. And then also, you know, they're showing it like break down a brick wall. But like when I was thinking about what that's actually valuable for, we were talking about like, could you deploy that and like sneak through a forest and then attack the enemy or something.

56:17It's so big. It's so visible. Like a single drone with a fiber cable coming out of the back is going to blow that up. It doesn't really seem that practical. Maybe if you're going over really rough terrain, you want the legs instead of a tank tread, but you can sort of just put a huge tank tread on something and just crush everything in your way. But if you're building and you need to get a bunch of two by fours onto the roof, Like there's a theory that that might be a little bit better. You were saying you're forklift maxing and you think the forklift will always defeat that. But there's got to be certain areas where you can't necessarily bring a forklift because there's a narrow, it's an uneven ground, a narrow entryway into the back of a house.

57:02You have all the two by fours. You need to get them on the roof. You would otherwise be going up and down a ladder. And so Mecca to the rescue. Yeah, I mean, it's just like pretty hard to justify this. Like, I think, yes, for certain like emergency scenarios, it makes sense to have some like super weird form. Emergency. I need a really cool thing. Piece of tech. I need something that looks really cool before my IPO. Emergency. Well, we can we can flip over to the other financial news that's making headlines on the cover of The Wall Street Journal. Inflation accelerated 3.8 percent last month. Not good news.

57:43Joe Weisenthal has a couple posts, but one is just man. And he says the headline U.S. April producer prices rose 6 % year over year. The estimate was 4.8%. So obviously the closure of the Strait of Hormuz is having an effect. We were talking about Diet Cokes. You would think that the caffeine doesn't come from the Middle East. The delicious caramel flavor, whatever else they put in this, it does not come from the Middle East. But aluminum, actually, there are smelters in the Middle East. Aluminum is in shorter supply because of the closure of the Strait of Hormuz. And so Diet Coke is rapidly going out of stock.

58:22And so you need to load up if you're prepared. How many? You got four or five pallets? I have not actually gotten any. I'm not stockpiling Diet Coke yet. But who knows? Maybe prices go up. That's what inflation represents. And Wall Street is getting more anxious about it. So we can read through this quickly before we are joined by Max Levchin from Affirm. So surging energy prices have pushed investors' inflation expectations to multi-year highs. Tuesday's hot readout on consumer prices is intensifying Wall Street's anxiety about inflation. Even before the latest release of the Consumer Price Index, inflation expectations had been climbing, a potential trouble spot in the market where stocks have largely shrugged off the U.S.-Iran conflict and the resulting energy shock.

59:10And so investors bet on inflation by buying and selling both ordinary U.S. treasuries and those that hedge the risk of inflation, called TIPS, Treasury Inflation Protected Securities. The gaps between the yields of those two types of bonds, known as the break-even rate, recently hit the highest level since October of 2022, according to Federal Reserve data, suggesting that investors expect annual inflation to average around 2.7 % over the next five years. Now, that's not entirely doom and gloom, but the risk here is that the AI boom, the GDP numbers are sort of concentrated in AI, capex, and data centers.

59:50It's not evenly distributed. The real economy is only growing at 0.1 % while the real economy is suffering from 2.7 % inflation over the next five years. That's a recipe for stagflation, stagnation plus inflation, a very rough thing for any economy to go through and something that the market and the economy and the politicians should be focused on. So the 10-year break-even rate has also climbed, I think 2.5 % this month, its highest level since 2023, driven largely by the war-fueled surge in oil prices. The rise in inflation expectation worries investors because of the challenges it poses for the Fed interest rates policy and major indexes latest run to records.

1:00:35And so for a while, everyone was thinking about maybe interest rates will come down, maybe mortgages will become more affordable. But there was even the whole debate or the fight with Powell and lawsuits, which were eventually dropped, but Powell and Trump were at each other's necks and issuing statements about their vision for the future of the American economy. And on the flip side, you have Kevin Warsh coming in, maybe more friendly, maybe more receptive to a rate cut, but the data makes that very, very hard to justify. And so we are in precedent. Yeah, in some ways, you know, who knows how history will view Powell, but like he landed the plane.

1:01:21He did. And then, you know, we get war in the Middle East. And now Kevin Warsh, in some ways, looks like he'll have just as tough of a job. Eventually. Well, our next guest, Max Levchin from Affirm. He's the co-founder and CEO. He's returning to the show. And we've been keeping him waiting far too long. Max, how are you doing? I'm great. Thanks for having me again. Third time's the charm. Third time? What have you learned about... Third time can't be the charm. I want 25th time to be the charm. Let's keep it going. I love these. I enjoy this charm. What have you learned about making coffee since the last...

1:01:57Oh, yes. The important update. Because I'm assuming you're never like, oh, I'm pretty good at this. Or are you resting on your laurels? Are you the final boss? I'm absolutely not. Okay. I took apart E61 Group, which is the classic 1961. That's the granddaddy of all the espresso group heads. And I wanted to learn how the mushroom valve works because I thought mine was clogged. And it turned out not to be clogged. But I went down an extremely deep rabbit hole of taking apart an E61, which I've actually never done before. So I'm now really boned up on how espresso machines worked in 1961 and since.

1:02:37Yeah, people always talk about when you get into coffee, you effectively vertically integrate or go deeper in the supply chain. You start roasting the young beans. You've got to grow your own coffee. At a certain point, you have to be smelting the metals that go into the machines, understanding the alloys, coming up with new chemical processes. You have to set up your own mind. You're putting all kinds of wrong ideas into my mind. Check, check. Ooh, not yet. Yeah, yeah, yeah, yeah. Did you smelt the metal that went into the espresso machine? I've not smelt anything lately. Wow. A novice. A real novice.

1:03:12Anyway, we're not here. Next time I'll tell you all about my smelting experiences. Fantastic. I imagine that the smelting process is as intricate and as rewarding as the coffee making process in some ways. Yeah, I expect you to be able to try a coffee and understand the exact alloy. The alloy of the machine. Possibly. but I'm very, very long depth. Anything that you can go very deep into, like this is the time in general, but like depth as a competitive advantage is like a profound strength. So the reason I'm so into whatever things I'm into is I found over the years that if you out depth your competitors, they just can't beat you.

1:03:53So I'm very pro smelting. I'm very pro going over deep. Yeah, yeah. That's interesting. Is there a translation or if you transpose that to sort of like advice for young people who might have anxiety about traditional career paths? I was sort of, you know, we look at like job numbers all the time and layoffs. And at the same time, I think about when I was a kid, if I said, oh, when you grow up, you will be a live streamer who had an AI lab. It's like none of those words existed back in the 90s. And here I am. Also, a lot of a lot of there's so much advice out there. it's like, you want to be a generalist.

1:04:30This is the age of being strong. Maybe it's the opposite. And when I look at people that are maybe sort of midway through their career, the highest earning, the most respected are almost always the ones with extreme depth where they can simply out compete anyone else in that role because they know more about it. They've put in more hours. Yeah, but what are you thinking for young people? I'm definitely big on depth. These are entirely non-contrarian opinions, but maybe they're contrarian right now. I think it's a great time to get a computer science degree. I think if you're ultra deep into really understanding how software is made, everyone's going to be a 10x engineer.

1:05:17If you're a 1x engineer yesterday, you better be a 10x engineer tomorrow. That's the new baseline. But if you really, really get it, if you're smelting your own code, I'm just going to go with the smelting analogy for a minute. But if you're that good, you're going to be 10 ,000x engineer. And you will be worth your weight in smelted gold. Who knows? But it's very, very powerful to be a deep expert. You are the one AIs want to learn from. And that is the unattainable Mount Olympus of value. And so I would strongly suggest that being deep is great. Majoring in computer science is great. If you love computer science, this is the time to major in whatever it is you see yourself being as deep as possible because then you will become absolutely invaluable in the world.

1:05:59What about industry-specific depth? Like if a founder comes to you and they're like, oh, I've been building an e-commerce and I've done quite well, but really I'm interested in space. I want to work on that. You're interested in space and you're not working on it. You're like, what are you doing? The very best time in history to do that. But generally, you've done quite well by just focusing on something, a category that you know better than maybe there's maybe like three, four other people in the world that understand the intersection of money and technology the way that you do. and I feel like a lot of founders oftentimes will do one thing, feel like they kind of like climb the mountain and then some will just go back and climb a very similar mountain and do quite well.

1:06:50Again, others want to jump ship and do something completely different. So I tried both. My last startup in between the other payments startup was not in payments and it turns out that I'm very good at climbing this one mountain. I'm just going to keep climbing it because the reason I'm good at it is because I love depth And I love getting deeper and deeper into payments, into how to make payments more expedient, more transparent in the case of a firm. And payments are a lot of things. And access to credit is a totally new idea. Like I've never touched credit until a firm. And now, you know, maybe without false humility, I think we are definitely one of the very best credit underwriters in the world and are just getting better and better.

1:07:30We just announced yesterday we built an entire new model family loosely inspired by the attention mechanism that is powering all of your LMs out there, including your parent company now. Some ideas we borrowed from all these really amazing discoveries in pure language AI. And yet, it feels like we're just getting started. Like every time I look at the sort of corpus of things that we can try to do things, we can build a product, we can launch. It's like, oh, my God, there's so much to do. Like there's absolutely no chance I'll get to rest. I'm not sure I'll get to spend it after all. It's the greatest time to build stuff because everything is faster and more exciting and easier to start.

1:08:14But the depth reveals itself the deeper you dig. Okay. So, yeah, we sort of mentioned, we referred to it a little bit, the 2026 Investor Forum. Who attended? What was the goal of that? Take us through that event. And then I have a whole bunch of follow-up questions about how you're communicating at the current time. Yeah, it was amazing. I'm still kind of slightly high on the whole thing. But the thing that was really fascinating, so we did this event three years ago, or similar event three years ago. And it's like a blink of an eye. I remember it was in the same buildings. A lot of the same people attended.

1:08:51So these are mostly buy and sell side analysts, a bunch of our shareholders, a couple of our board members actually flew in for it, which was a nice surprise to me. And the entire management team gets on stage and they're like, here's what I work on, here's what the company is. But the reason analysts are there, they're like, okay, tell us about your vision, Max, yada, yada, yada. Really, what will the next three years worth of growth targets going to look like? And so the main act, I was the warm up act. I try to be funny. But the main act was our CFO, Rob, who got on stage and said, all right, so we're going to grow to$100 billion of GMV.

1:09:23We're just in the range of touching 50. We're going to double. And we're going to do this by compounding at 25 % every year. And we're going to move our profitability target from 3 % to 4%, which is our current range, to 3.75 % up. And so we're going to up the floor. We're going to be more profitable and grow faster. And it's like, faster? We're a bigger company now. What are we doing? I'm like, wait a second, last time we did this three years ago, we said we're going to compound at 20%. But instead, we did it like 30 plus. And so just like this out-of-body experience of like, we're getting bigger.

1:09:56The room was significantly larger. Same building, different floor, different room, many more people, many more shareholders. And yet we're telling people like, hey, we're going to compound that much faster than the last time. It's like, I guess it's like a flywheel, this network we've built. It keeps on spinning, it's spinning faster. And so it was amazing. in a sense that I knew all these numbers. I obviously improved and worked with the team to make sure we feel great about them. But when you sort of say that out loud, compare that to the last time we told you the same thing, we're going to accelerate.

1:10:25It's like, wow, that is so cool. So anyway, I'm still very high from being able to say that out loud. It's very fun. So there's a flywheel. I imagine with a lot of financial companies, there's economies of scale. And so that seems doable. Are you also talking about TAM at this point because the company is so large? Or is it still early enough that that's not something that investors are coming to you asking to sort of justify, well, you know, the global economy is only this big. And if you take 50 % of it, well, there's nothing else. The good news is that$100 billion of payments in this country is but a drop in the bucket.

1:11:07Okay. That's good. Even in the larger bucket. We're in no danger. The US revolving credit, which is obviously a fraction of total economic rotation, is like a trillion three right now. And 100 billion is like, we're taking shares. So I like to go there to that number. People are not using revolving credit. They're using a firm. It's good for them. Not revolving. No fees. All that. And so we're not yet at the surf time. By the way, these are all US numbers. And we're already live in the UK and Canada. And we've announced a bunch of other countries. Okay, so speaking of the investors, obviously, it's very important to communicate with investors right now, both for your growth plans and also what's going on in the market.

1:11:46As you think back to the March time period, the SaaSpocalypse, every company got sort of beaten up. You came back really quickly. How much of that was show versus tell? How did you think about communicating to investors through that? How important was the investor communication versus just continuing to deliver on the actual metrics? As you're confronted with one of these, like, oh, there's a new narrative, what's your playbook for actually working with investors to get them comfortable? You know, to be completely honest, I don't know. I think, well, I'm hugely honest, so I might as well tell the truth every time.

1:12:31So this particular time, we said nothing. We basically said, okay, I guess the sky's falling. Doesn't feel like it's falling on us. We're printing a really, really good quarter. We're about to report it. We could wave our hands and then, like, you got it all wrong. We're fine. Or just wait a few more weeks and be like, hey, here's what we printed. How about that? And by the way, we're going to guide, so we're going to reveal that we're having a pretty good quarter, too. And so that's what we did this time. and we just didn't spend too much time communicating how the story isn't true. I don't know if that's the best response.

1:13:09Definitely in the past, we would read the most recent time when I thought we need to speak was when the rates were rising very quickly. We were screaming into the void of like, no, no, no, this business is fantastic at Zerp. It is fantastic at 5 % Fed funds rate. It is just fine at a number that's higher than that. We love our value creation opportunities more or less at any rate. Obviously, it breaks at some point, but the US economy breaks at some point too. For all possible values of the federal funds rate, we're going to be just fine. And a long explanation why, and I don't think anybody heard it.

1:13:46People are like, yeah, but the rates are up, so you're obviously fixed. And so the dip in return of our stock is like, oh, a great turnaround. But it basically amounts to people saying, wait a second, this thing is in just as much demand, does just as well, grows just as fast, just as profitably through whatever rate cycle. Yeah. I think we've talked about the history of the effective interest rates on a firm. But we're now in a new regime, and the fear is not higher rates. It's higher inflation. And so do you already have an intuitive sense of how a different inflation regime or different inflation environment will affect a firm?

1:14:28Are you confident? How do you think about the relationship between inflation and the business? Yeah, I can imagine it's somewhat of a double-edged sword in that higher prices means people are more likely to want to use credit, but maybe there's a drop in some purchasing activity of some items. you know also just like if you're getting ten dollars in two years and it's worth less that that that should have an effect but how is it actually playing out so a little too early to tell yeah but you were exactly right in a sense that we we saw this game play out in the last inflation spike just a few years ago we absolutely saw an increase in demand because as things became a little bit more expensive people felt that it would be better if they weren't paying for them up front people who initially would say yeah it doesn't really make sense for me to finance this thing, I have the cash.

1:15:12I kind of want my cash to go a bit longer because I don't know exactly which way the price are going to go. We expect more demand. We're always very careful. The number one line I give at every investor event is credit is job number zero. I was a computer science major, I count from zero. It is the most important job. We grow as fast as credit performance will allow us to grow full stop. We have to print consistent credit returns. Otherwise, we lose credibility with our debt investors. And that's the most important thing. So we will grow fast, no faster than credit results will allow us to. We expect more demand.

1:15:47We don't yet see literally anything related to change in credit performance. We just printed our results and they're just as we expected them. And so TBD, whether we see some deterioration of consumer credit due to prices, we really didn't see much of it at all through the last inflation cycle, which was quite dramatic, if you remember. And so we feel pretty great about our ability to underwrite kind of all eventualities. We are obviously not blind to the macro reality the minute before I got on stage and promised people 25 % growth with an increased profit margin. So we must think we're going to be okay.

1:16:23And that is, in fact, the case. Yeah. How is AI changing how you think about international expansion? Does it make teams more efficient in terms of adapting the product for different markets, everything from language to just simply being able to ship more code? Or is your international GTM just much more like, we know what it takes to launch a new market. If AI makes it slightly more efficient, great, but it's not going to change the strategy. I think the 1A of every list of things that have really changed thanks to AI is shipping code. I think this is the best time to be a CEO with a computer science degree because you feel what this means.

1:17:10You know what it's like to make code. You've done it, in my case, for the last 40 years. I know how much easier it is, how much more effective teams can be, how you can have three people in a room build the product over the weekend, which is an amazing thing that didn't exist six months ago. Shipping code is absolutely, we're seeing that. in my latest shareholder letter actually showed an illustration of percentage of code written by AI at a firm. It's not like a slow rise. You're like, okay, we're trying, we're trying. We're convinced. 60 % to start, 75 % last month. It's just rocketing. It's not like people are writing less code or reviewing less code.

1:17:46It's just that much more productive. That helps us internationally, helps us domestically, helps us with everything. I think other parts of the business are much better with AI. So translation, obviously, services are fantastically effective with AI. You can do a lot of interesting things with legal. Anything that's text-heavy, you have just a great helping hand. But the sort of night and day moment is writing code. That's one A through maybe like one P on the list of things that are just stunningly effective. Are you expecting token cost to be like an important line item in the P &L going forward?

1:18:20Like we've seen, because there's so many stories of a lot of code written by AI. Sometimes that moves the needle. Sometimes you're just sort of doing what you needed to do and doing it more efficiently or faster. But at the same time, if you get hit with like a billion dollar token bill in a year, that might be material. And so you start having to do, and it feels like we're at the earliest innings of ROI calculations. We're more in like the feeling of like, oh, everyone loves this. We're seeing good results. Max doesn't strike me as someone who's just going to tell your team to use a lot of AI because obviously there's stories coming out of Amazon and Meta where teams are basically just like, I want the optics to be that I'm using more AI than anyone else on my team.

1:19:07So I'm just going to run things overnight for no reason. Yeah. We are extremely, extremely metrics driven company. Some might take issue with just how completely obsessed we are. You improve what you can measure. If you're going on fields, you're going to feel great until you don't. So we measure everything obsessively. We have, at the moment at least, fantastic ROI on our token spend. I would say it's real numbers, so it's not like, oh, don't care, don't look. We have a weekly report that's generated thanks to AI and some very smart humans who are monitoring our token use and tell us how each team is producing value and what it's costing us in tokens and all the various conclusions downstream.

1:19:54So we are already very mindful of what it means in terms of return on investment to tokens and return to shareholders at the limit. Right now, it's undoubtedly a very, very accretive thing. But we're also not assuming that infinite budgets are just great. We also expect, by the way, prices of tokens will probably increase over time. I think there's plenty of subsidies taking place. You're now inside one of those places, so you probably know the true price. If we can circle back to specialization from AI creating effectively more generalists, I'm interested in sort of computer science history, your career history.

1:20:38how have you processed, there was a point where front end and back end engineering were two very separate disciplines. At the point where you could do JavaScript on the front end and the back end, you see more full stack engineers. Now you have engineers that are designers, designers that are engineers, designers that might be pushing server code and stuff. So I'm wondering how you're thinking about maintaining that idea of you want the specialized genius the artisan, the true expert in your organization, versus you also want to empower someone to move really fast with a small team. And so you might not need to staff 100 experts to do one thing.

1:21:20And there's got to be a tension there. So I'm wondering how you're grappling with that. It's a great question. And you're totally right. So there are definitely pockets of today's software engineering that accrete profoundly to specialists. If you are an extraordinary infrastructure engineer, you're far from being replaced by some mindless drone because it's as much art as it is science, intuition, experience. I've seen this kind of a failure before. AI is good at it, but AI is a great tool. Like you're in no danger of being supplanted just because so much depth goes into that. And by the way, AI making a slight mistake could cost you a massive outage in the case of, and so the cost of error is very high.

1:22:09Like an even better example, actually, in my world would be an underwriting model. So somebody who designs underwriting models, it's like, hey, AI, go build me a great underwriting model. Come back when you're done. Like here it is, I hallucinated one for you. Like that's like real money lost that we will never see again if it, in fact, didn't hallucinate the right thing. And so many of these ultra-specialist roles, they are absolutely benefiting from AI, but that human is not just in control. They're not just steering. They're reviewing every line of code. They have another human making sure that there's absolutely nothing that could go wrong.

1:22:39So that's one thing. On the completely other spectrum of this, which is what you're alluding to, fun examples, we just had a product hackathon. So only product managers can attend. A lot of our product managers have CS degrees, so we're cheating here a little bit. But these people were like, hey, I love writing code, but I want to make it into things as opposed to code. And I want to ship a full product. So most of those folks haven't written code professionally in quite some time, maybe since college. They're really good with Figma. They know how to design things. They have a sense for taste.

1:23:11But they don't remember anymore what it's like to go deep into some SQL query debugging. we had 100 people, 37 projects in 27 hours went from a whiteboard plan to a shippable feature that was presented to the entire company. Like, hey, we have this thing. And we graded it not just on, so the winners and the whole grading of who won first through whatever, 10th, were all people that had to report, not just like, here's my idea, here's what it looks like, here's my prototype. How close are we to shipping it? Like, are you ready? And the winner was absolutely probably the best idea, but also the ones that said we're ready.

1:23:48Like if we're allowed to ship it tomorrow, we will. So that is like an extreme generalist who has a vision and a few tokens and a feature in 27 hours with like two of their co-conspirators in like a pizza box. So that is new and different, and it's totally a new phenomenon. This AI thing is going to be terrible for the pizza industry because famously two pizza team, you only need one pizza teams now. 50 % reduction in tan. 50 % reduction. Short dominoes. This is a disaster. I hadn't thought about this. We sprung for a somewhat higher quality. Okay. Oh, yes. Okay. So revenue's flat. Margins potentially going up in the pizza industry.

1:24:28Okay. We've got the bulk case. Last question for you. How are you? What's your framework for evaluating all the different AI products being pitched to you across the rest of the organization? Yeah. You have the benefit of being a technical CEO. A lot of other CEOs in your role are just like, I just want to buy AI everywhere. Just give me every part of my company. Just give me three pilots. I'll pilot anything. Whereas I think you're probably looking at some of this more non-deterministic work saying like, hey, you can play around with it, but maybe you don't have budget. So I have a great heuristic.

1:25:07this will be potentially worth the rest of my drill. If you know how to describe the evaluation criteria being used by the maker of the tool you're buying, it's probably worth piloting. If you can't, it is slop and you're being sold a story. We know CodeGen works and is amazing and it's only getting more amazing because we know how to validate code. You can use another AI to validate code, but you can also just like, look, it doesn't work. It doesn't pass the unit test. So the feedback loop of I gave you a thing, like codex was okay, and then it was better, and then it was great, and now it's really pretty damn good.

1:25:46It's not because someone was coding faster. It's because it has really objective eval criteria, and it just loops on making itself better with some degree of human influence. The same can be said for a bunch of industries. It cannot be said for others. I'm not going to dig into examples too quickly, given we're short on time. But if you can say, oh yeah, I know exactly what these guys are doing. Customer service centers. Is the consumer happy after they hung up the phone with an agent? Can we ask them? Yes, we can. What is their satisfaction rate? Is there a way to say, that was good, that was bad, AI do more of the good kind?

1:26:18Yeah. Fast feedback loop, high quality eval criteria. Yeah. It's great. So we use a ton of agentic customer service because we know it'll just get better and better and better. Yeah. That's a great thing to buy. We're not a specialist. We are excited to buy it from the specialist. Somebody tells you, oh, it's AI. It's going to be a tool. that's going to make you a better writer of fiction? Yeah, or even pitch decks are an example because you could have the worst formatted pitch deck and have tremendous success with it, but it didn't have anything to do with the deck. It had to do with your delivery and who you are.

1:26:51So I would not buy pitch deck AI assistant even if somebody paid me to do it because it's 95 % the talk track. so far. And the company and the idea and the market and the TAM and all those things. But most importantly, 100 companies pitch their decks good old and made by AI. Seven out of 100 get funded. 93 % failure rate. Sucks. Should never raise money. Is that the conclusion? So I would stay away from the non-objective or very slow feedback loop systems before I consider buying tools there. I love it. Well, thank you so much for taking the time to come chat with us great to catch up have a great rest of your week on the progress i'll come thank you and i'll come back with smelting news we'll talk to you soon have a good one goodbye um we have delian asperhoff from founders fund and barda joining in just a few minutes uh while we wait for him to get here he's coming in person uh we will talk about joe low who uh i thought was a household name but apparently is not he is the fugitive behind to the 1MDB scandal.

1:27:58It reads like IMDB. It's not 1MDB. It was a Malaysian financial fraud that led to the disappearance of four and a half billion dollars. And he's in the news today because he asked Donald Trump for a pardon while on the run, I believe. So Joe Lowe, the alleged mastermind of one of the greatest financial frauds in history. You got to read this book the camera's following you around. That's the new meta. New meta. Go on the run until you can get the pardon. You're on the run. And you're just popping up to say, I'd like a pardon, please. Yeah, yeah, yeah, yeah. So yeah, you got to read this book, Billion Dollar Whale.

1:28:45Fantastic book. I thought it was going to be turned into a movie at some point. It should be. It's a fascinating story. But we'll just give you the high level and we'll do a whole deep dive later. Joe Lowe, the alleged mastermind I think we should take matters into our own hands Let's move into a play A play, okay, a stage play I like a stage play We haven't done a play yet No, not yet Although a lot of the red string poster board sessions They feel like plays They're very well acted But I'm talking about even if we're reading off Yeah, yeah, we don't have lines for those Joe Lai Walked into the room billionarily Yeah So Joe Lowe, the alleged mastermind, alleged mastermind of one of the greatest financial frauds in history is asking President Trump for a pardon.

1:29:32The request was filed in recent weeks, according to people familiar with the matter, and if granted would remove U.S. criminal charges against the fugitive Malaysian financier. A Justice Department website lists a pending request for pardon for completion of sentence under Joe Lowe. The move represents the latest gambit in the extraordinary saga of Lowe, a once little known businessman who prosecutors prove prosecutors say used subterfuge fake documents and payoffs to engineer the heist of billions of dollars from one MDB, which was a Malaysian government-owned investment vehicle set up to promote economic growth.

1:30:08He's known for his lavish lifestyle, partying with Hollywood stars and political rulers. He was involved in, there were a bunch of other people that went to jail for this, but he financed the Wolf of Wall Street in potentially the most ironic thing you could do as a fraud, finance a movie about a fraud. So it's illegal to make awesome movies now? I guess. It is a great movie. And you can tell that the budget was really flying with that one because they crashed a Lamborghini Countach, which is maybe a$500 ,000 car. And I think they just destroyed it. And they destroyed maybe the actual... I don't know.

1:30:41That might be not real. But very fun movie. Anyway, we have Delian Esprit from Varda and Founders Fund in the TVP at Ultradome. There you go. Here you go. There we go

1:30:56He's doing a victory lap

1:31:01Running around the table for anyone who's been living under a data center introduce yourself. Hi, my name is Deline Co-founder and president of Varda have a couple other side gigs, but that's the main let's focus on Varda today. Oh, yeah, we're talking space data centers, right? We do have some chips up there. So in theory, we do more valuable things than just some inference. We make some drugs up there. And there's a big announcement today. Yeah. So for the first time in human history, there is a large publicly traded company, United Therapeutics,$25 billion in market cap, traded on the NASDAQ.

1:31:33They're using their own balance sheet to go produce a product, physical product in low earth orbit with us. Yeah. Pharmaceuticals. They focus on pulmonary disease. I think, you know, lung, blood, et cetera. Yeah. We're working on those products together, crystallizing them into a better formulation, bringing them back down. That's the only company that makes physical products in space. Everybody else, it's all radio waves. It's internet. It's inference. It's photos of the earth, et cetera. This is literally the first time in human history where there is physical products being moved in space as a way to generate revenue up there.

1:32:03Or real business. Is that happening or is about to be happening? Yeah. So we signed this deal. Call it like, you know. I'll stop you right there because there's an opportunity for someone else to put a small factory in a balloon. We should race. We should race a big weather balloon. No, no, wait, wait. Balloons can't go to space. Balloons can't go to space. You got to go on the rocket. What if we have a balloon and then once you're up there, jet pack type thing to. Yeah, people have talked about the like, you know, could you go float a rocket up there? But it turns out the like size of balloon and complexity that you're just better off building a rocket to get the rocket up there.

1:32:35Oh, yeah. I talked about this coming space ride. They would take the balloon up. And this was actually used back in like the 30s, I think. I think they did some like very early tests when rockets were small. Yeah. And the rockets are big and like satellites are big, a little harder to get up there. But yeah, we signed the deal a little while ago. We've been working on the products with them for a period of time. In order to get ready to go to space, we do do some work on the ground to understand, hey, what is the thing that we're going to go do in space? And let's make sure we figure out all the other process parameters.

1:33:03So when you're like crystallizing a drug, there's a particular temperature, a mixing rate, a solvent. We just bring one extra knob, the gravity knob. Now here on Earth, we can't decrease gravity, but we can increase it. And so alongside the customer, we look at basically adjusting that gravity knob down here on Earth, figure out kind of how to tune all the other things. So we're tuning the right knob. Once we get that all set, load that up into a spacecraft, send it up to space. Obviously there, the gravity knob goes to zero, get a different result, land it in Australia and then send it off to the clinic.

1:33:30You know, we're still working with United on the ground so far getting those drugs ready for flight But we'd expect basically or in next year to fly the first United and how are they making this drug on earth today? Today you're using traditional techniques. So there's a whole set of companies much less efficient You're just getting a different result. So as an example, you know, the you know sort of use case or paper that the company was in some ways predicated on obviously There's been 40 to 50 years of work on protein crystallization up on the International Space Station Skylab Space Shuttle but in 2019 Merck basically showed their blockbuster cancer drug Keytruda they crystallized it up in space they showed they could shift the administration from what was previously an IV drip to now a subcutaneous syringe so you don't have to go to an IV clinic a rural patient that can't access IV clinics can now access this drug and so that's what we're doing up there with United Therapeutics is we're looking for basically changes in performance of the drug because of those different results that allows them to shift administration United Therapeutics is famous for you know, a variety of different things.

1:34:27So the company was originally started by Martine Rothblatt to solve a rare pulmonary disorder for her daughter, built that up into a huge platform. They've really leaned into the frontier over the course of the last year, so 20, 30 years, including they like, you know, make gene modifications for pigs to create human organs inside of pigs. But one of the things that they're known for is for one of their pulmonary compounds, they shifted the administration from a nice pig sound. Well done. Well done. I like it. you know, a lot better than waiting on like a, you know, whatever, 24 year old kid to die on a motorcycle and get your kidney instead of just get it from a pig farm.

1:34:59But one of the other things that they're known for is they actually shifted one of their, you know, sort of primary drugs from an oral pill to instead an inhalable and made it much more efficacious, easier for the patient because you have to take the drug less often. It's things like that that we're looking to sort of do with them. Dumb question. You have the gravity knob, you're able to turn that off, but aren't you adding a knob for like vibrations and basically dialing it to 10? Like, does that ever affect because you imagine you're sort of centrifuging it, like it's gyrating as it's reentering.

1:35:26So is that a problem? Do you have to, is that like for the selection criteria? Do you have mitigation strategies? What you can think of is like in a pharmaceutical process where you're crystallizing something, you're basically going through like a phase change. You're going through from like a liquid to a solid. Where things matter is when that phase change is happening. In that particular moment is where you don't want the sedimentation, convection, et cetera. So we do in some ways, we like load up all the liquids ahead of time. Yep. Those liquids for sure on the rocket light it up get shaken, etc.

1:35:52But doesn't matter because the liquid still saying a liquid. Yeah, then up in space. What we do is we go through that phase change. We go from basically like a liquid to a solid. Okay, that needs to happen in a very pure environment. We shut down all the reaction wheels. We make sure that like everything on the spacecraft that would vibrate is totally silent. So it is as pure of microgravity basically as possible. It then becomes a solid. And at the end of it, it kind of looks like a salt, basically, like think of it like table salt. Now on the way back, that table salt for sure is shaken a bunch.

1:36:18But the table salt, if you think about like a, you know, some table salt that we put and we go put it in like a centrifuge for 100 years at a thousand G's, it's still going to be table salt. Sure. Where are those like vibrations that matter? You need to manage heat more. You do need to manage heat. If you melt the salt, you're fucked because then it's back to a liquid. But, you know, this is what convinced United that we would be capable as a partner is we actually had data sets from our very first mission where the surface of the heat shield was hotter than the temperature of the surface of the sun.

1:36:44So like extremely hot. on board I think it was like something like 14 degrees centigrade plus or minus 0.1 degrees and so we had extremely precise temperature control on board and so a lot of what has brought you know people to the table for this you know sort of first commercial deal is while there's been this historical work on the ISS nobody showed how do you go do this on a purely private platform fully autonomous low cost high cadence and a part of what convinced them was yes both the regular flights we've been doing right we are now on W you know sort of six seven eight nine will be you are sort of launching later this year.

1:37:14But it was also, hey, not only are they launching and landing these things, but on board, they've got the right process control so I can see, hey, they can go work on my drug. And by next year, when we fly seven times in a year, that's going to be higher cadence than everything that the like ISS, space shuttle, et cetera, have done in all of human history, let alone in 2028, 2029, as we continue to go higher and higher cadence. So how many things need to go right in a row to have a successful mission? I imagine that, you know, there's like all these different... Like just the space mission or like get the drug into the clinic?

1:37:43Because the drug in the clinic is more complex. Just the space mission. The space mission, at this point, we've like kind of shown we can do pretty safely, but I'll walk you through it. First on the ground, we got to go build, basically effectively think of it as like a two-part spacecraft. One is sort of looks like a traditional satellite system. It's a little bit lower power and under, you know, spec'd relative to most satellites because we don't need super high power to communicate with, you know, internet terminals, radio waves of photos, et cetera. Oh, that makes sense, yeah. The only power we need is just to run the bioreactor and the bioreactor doesn't consume that much power.

1:38:11So think of it as like a basic telemetry. Yeah, basic telemetry, but we don't need like super high pointing accuracy while just floating up there. Because, again, we're not pointing at a particular place on the ground to basically try and like take a photo of it. And so think of it as like we build an under spec sort of satellite. Now, the one thing that it is big on is like it's got a lot of thrust and propulsion on board because we need to come back on like every other satellite. But otherwise under spec satellite. So we do those on the ground. We've now built a handful of those. Then we have to build the second part of the spacecraft, which is the reentry pod.

1:38:38All of this does have a relatively complex supply chain. Think like the solar panels, the GPS chip, the flight computer, that type of stuff we buy out of house. Some things you have to do in-house. You can't buy a capsule like off the shelf. So we have to build the heat shield, the structure, et cetera, around that. Those have to get integrated. We have to do a bunch of ground tests to make sure that works. Then you ship it off to SpaceX's facility a couple months before launch. Make sure that everything's still working over there. Install it onto the rocket. Once we're on the rocket, we kind of look like any other satellite that goes up there, whether it's like, you know, asteroid mining satellites or comm satellites or spy satellites.

1:39:10SpaceX takes us up to orbit. They then drop us off again, like any other satellite. We spend between, call it like four to 12 weeks up there. Kind of depends on the drug manufacturing process. Some go pretty quick. Some take quite a bit of time. While we're up there, we have basically pharmaceutical scientists on the ground in mission control. So you remember those like Apollo films in mission control? We literally have like, think like Amgen scientists, but like they're in mission control. I can imagine you love hanging. out in there. Brewe always makes fun of me. He's like, you know, I don't quite know the American idiom or don't get it, but hopefully you guys will.

1:39:42But he's like, he calls me like the gentleman's mission control where like there's like the gentleman's farmer. It's like the guy that stands around the farm, but it's like obviously not totally useless. I'm like the gentleman's mission control where like yeah, I like hanging out there. Obviously, I like I'm completely useless and mostly a distraction. So I try to mostly just listen into the live stream now. Every team needs a class clown. Yeah, exactly. Can you unpack a little bit more about the orbit? There's a piece in the journal today, Space Day centers face a lot of challenges. They all got to go to sun synchronous orbit.

1:40:09I imagine you don't, but I want to know about the knock-on effects of like, what can you tell me about sun synchronous orbit? What orbit do you use and why? And then how might this change what happens in the future? Yeah. Part of what's beneficial at sun synchronous orbit is you're basically like always like facing towards the sun and have sunshine. We are not as dependent on that. As I mentioned earlier, we're not super power constrained. And so we can just charge up, you know, basically our batteries on board and while we're on the dark side of the earth we can basically just drain those batteries recharge them basically on like the next orbit we're up there just for the micro gravity and so we can be in almost any orbit that gives us a ton of benefits one when you're in space you don't have to worry as much about traffic we just go where other people aren't yeah but two it actually helps a ton with launch you know as an example later this year for the first time we'll be actually launching historically we've only launched a sun synchronous orbit because that's where all the transporter missions which are the spacex ride share missions that's what i was mask.

1:41:00They now have what are called bandwagon missions, which go up to either also ride share, but they go to polar orbit. We'll actually be flying our first bandwagon mission later this year. So now we have launched flexibility. There's a bunch of companies that can't go on bandwagon or basically, we're actually probably one of the only companies that can go on both. Either. That's what I was going to ask. Because what happens if everything winds up being sun synchronous orbit? Because I think there's 10 ,000 or so Starlink satellites. Elon's asking for a million for space data centers, that means like 90 % of the launches are going to be sun synchronous, but that's okay for you.

1:41:33Yeah. We're okay going to sun synchronous and we can quickly get out of the orbit if we can need to or try and go, you know, sort of slightly off of it. Yeah. Or we can just go to polar and be totally, you know, sort of happy there. Yeah. And that gives us some benefits on the like launch economic side of things. Right now we're basically able to go on any rocket site. I was going to ask, it seems like every hyperscaler, some startups are, you know, and some of the labs are thinking about space, are you expecting like launch to could, you know, theoretically increase could be like bottleneck launch.

1:42:04It's been falling for so long, but yeah, what do you expect? How are you planning? Cause you have to buy capacity, launch capacity years out. Yeah. Yeah. To date, launch prices have only gone up. So they have not gone down since we started the company launch costs for SpaceX. I'm sure have, but there has not yet been pricing competition. So why would they necessarily pass on those savings to us? You know, and they haven't, I think, seen that much price elasticity in the market when they've like lowered prices. It's not like they've seen like 10x greater demand. And so for them, it's like capture as many margin dollars basically as possible.

1:42:32Yeah. I do think what we're going to start to see is more competition in the launch market over the course of the next five years rather than the prior five. Right. Blue Origin, I think it was today or yesterday, announced they're going to be doing their first external sort of fundraising, which speaks to, you know, I think them taking themselves much more seriously as a company that is going to like regularly show shareholder value and launch very regularly. You've got Rocket Lab now. It's like a$65 billion company. Yeah, wow. Definitely have enough resources to go tackle Neutron. And they've got shareholder expectations for them to get that medium lift, you know, sort of rocket up.

1:43:02You've got Stokespace. And so there's a few others basically playing in it. We are booking out, you know, sort of rocket launches now all the way through 2029. So we do have the capacity that we need for the next year, sort of many years. And I think by the time we're getting into booking late 2029 flights, yeah, there's a world where there start to be, you know, basically more providers online. SpaceX, at least basically to date, has been like, you know, for us at least as many times as we've wanted to launch, that capacity has been available. Like they are not capacity constrained. They are still more demand constrained.

1:43:31I do think that no one's making anything in space. Totally. Nobody's making one. And that's why they were able to be so successful with Starlink was because they had the residual capability, right? So it's like a tealism, right? It's like we created the space economy and then it's just more internet. Yeah. And now it's just going to be more AI. How are you thinking about other drug categories? I can imagine Space Retta would be a pretty hot drug if people would smoke Space Retta. Yeah. One thing that I didn't realize is so Ozempic today, one kilo of Ozempic retails for a million dollars. What people don't realize, what people ask me, oh, space drugs, economics, etc., does this stuff work?

1:44:13I have to tell them, yeah, for you, it might be like a thousand bucks, you know, basically per shot, but it's because there's very, very little Ozempic basically on board. A lot of them are like powders that then get diluted and then injected, and so, yeah, the actual core ingredient is so tiny. Exactly, and what we do up there is we just make the powder. Yeah, exactly. United has, United Therapeutics, you know, our partner that we're announcing today, they have a ton of expertise in all things like, you know, rare pulmonary, you know, certain disorders. They're for sure going to be the person that we work with on that indication, you know, sort of area.

1:44:42But microgravity has a wide set of pharmaceutical applications, neurological, immunology, oncology, et cetera. And so for sure, we'll start to, you know, I think in the success case of VARDA, it's not going to be like we have like 50 different partners. It's probably going to be like five to seven that we go really deep with. We kind of choose sort of one partner per sort of indication area that we go as deep as possible. You know, ophthalmology is another area that we're looking, you know, sort of deeply at, you know, partially because like the eye, smallest organ, again, smallest amount of powder that you need.

1:45:07Also an area where some of the other changes of administration technologies don't really work as well. And so, yeah, we're starting to explore who are the partners for the other indication areas. What about beyond bio? I remember ZB land being something that people were talking about potentially being able to manufacture microgravity, wildly different economic tradeoff there. But are there other, when you imagine like the industrial city in Leo, like, are there other categories that extend maybe 10 years out, 20 years out where it might be logical? Yeah, I think like if we look at the next decade, you know, call it like if there's 200 products that are manufactured in orbit, I think 195 of those are going to be pharmaceuticals.

1:45:45So vast majority is going to be, you know, sort of there. And that's where our core focus area is. If I had to, you know, sort of peer into the crystal ball and look at what comes next. I do actually think probably fiber before semis is probably, you know, sort of my rough guess. um you know when we were looking at that like high-end you know sort of z-blend you know fiber market back in 2021 when we started the company there was clearly some level of like you know sort of interesting capabilities there but just like relative to what we were seeing on hypersonic pharma not as large interestingly that market has matured a lot there's sort of two sort of called three areas where it has applications uh one is um it is the lowest um basically uh uh you know think of it as like interference inside the optical fiber for infrared.

1:46:25Near infrared is now used in a lot of the high energy weapon systems. If you think about having to pump that laser through a fiber, you basically want as little resistance as possible. There's just a lot more being spent on those types of near infrared weapon systems, especially with some of the anti-drone stuff that's coming down the pipe. That's sort of expanded. It's also used now a lot more in metal cutting and organ eye surgery relative to where it was five years ago. That's expanded. The other area is quantum communications. Quantum entangled photons are much more sensitive to those types of impurities in fiber.

1:46:56Quantum comms has also grown a lot over the last five years. And then the other area is oddly data centers. I was going to say, as soon as there's a data center story, there's going to be 25 companies funding, IPOs and stuff. So ground data centers, not space ones, but they are actually. No, no, no, no, no. You make the ZBLAN there. You bring it back and then you. Dude, ZBLAN is now being used in terrestrial data centers. That was not a use case at all five years ago. So all these things. Photonics and optical. culinary. Yeah, they're still like early I would say. What's happening though is also like the VAR economics keep improving on a flight by flight basis.

1:47:29The Z-Bland market keeps growing. We're like for the first time, I would say we're like dedicating resources or anything, but like around the office for the first time in five years, somebody was like, the Z-Bland stuff is like almost starting to pencil out again. It's probably like four years until we like, you know, sort of do anything, but like you're starting to see those lines start to get closer together. That's what I love about a platform like ours is like, if you had told me like predict where your revenues would be five years ago, really hard, even this year like things they're landing are probably not what I would have underwritten a year ago like I think pharma has like way exceeded expectations like it's pulled in probably like three and a half years relative to like you know our series C that we announced last year our financial projections on that on pharma we're just like totally you know sort of wrong and so I'm excited by the idea that like yeah there might be other areas that are wrong semis I think is just going to be like you know the furthest out partially just like the process equipment and the sensitivities like if you think about a bioreactor it's like hard but it's kind of like mixing like liquids together the hard thing is like which liquids that's what's hard the mixing of it not yeah but you're making those decisions down here on the ground fiber same thing it's like you know it's like once you like make that like precursor like rod then drawing it is not like a crazy complex process it's making that rod that's hard but again you're doing that on the ground with semis it's like oh my god that process equipment is like so so sensitive right if you look at like the like um you know stuff that they use for euv basically like you know lithography the mirrors for that if you were to lay out a lithography mirror over the course of the size of Germany, the amount of variation you see in terms of like mountains would still be less than 0.1 millimeters.

1:48:54And so this stuff just has to be like so, so, so, so, so, so, so precise that it's just like. The cost is so high. Yeah. Even during the experimentation process, you could. Yeah. The famous quote from TSMC is that if there's an earthquake, they don't have like a pager duty. Like they don't slack everyone. Hey, you got to come in. There was an earthquake. Everyone knows if there's an earthquake, just go to the factory. Exactly. And the employees just know because it's just so, so important. And so just that like microgravity process equipment is just so much more complex than me. So it'll get there one day, but like bioreactors, the fiber draw things are like orders and orders of magnitude simpler to make like microgravity bioreactors, microgravity fiber draw towers.

1:49:30Will it ever make sense to have a permanent like ISS style structure that you are transporting supplies to and then sending, you know, finished product down? because like knowing you, you would like to have a proper like dedicated space factory, but does it actually make sense? It's always been the somewhat secret, somewhat not secret, like ambition of VARDA is to go build that, but go do it step by step, right? So when you look at like generation one of basically what we're building, it's this two-part spacecraft, right? Satellite, pod. Satellite has all the process equipment, et cetera. Pod just has the finished good.

1:50:05When we're done, pod survives. All that process equipment, everything on board, we basically just burned it up. Generation two, that'll be flying in like haul 2029 think of it as just like we make it so that that heat shield material just envelops everything and so now the satellite plus the pod they both survive and that'll probably look like a little mini space plane is kind of how you can think about it so space plane has the solar panels the propulsion it's got the process equipment it's also got the finished good that goes up and down and so now that full system is reusable improves the economics we'll have more payload on board too now at some point like it doesn't make economic sense to keep moving that process equipment up down up down every time caught by the end of the decade the goal will be we'll start to invest into those like fixed pieces of infrastructure in orbit early on they'll probably just look like a satellite just with a little docking port basically they're like space plane will come with the raw ingredients basically the liquids etc it'll dock with that like satellite up in orbit exchange for the fabricated goods but then we'll have like 10 of those satellites we'll start to stitch them together basically looks like a station one day there'll be so many of those pieces of equipment on board that we'll be able to economically justify hey probably need a dude with a wrench every once in a while to go like fix some stuff up there but like once we can economically justify like one person with a wrench 10 100 1000 and so like yeah we for sure we want to build the first industrial city in low earth orbit but we're taking it like one step at a time building out the business getting great unit economics proving out one use case at a time what about the other parts of the stack that you actually need for that so like i'm thinking like docking is there a startup that's just just working on docking yeah i mean uh you know sort of credit to them um there's a company in seattle called starfish you know, sort of space that is hyper-focused just on like the like docking, maneuvering, the software for that.

1:51:42Yeah, because that feels like something that like if that's not your core competency, like seems like you could have a series of nightmares around just trying to figure out docking. And that is a probably, you know, super widely applicable process for the rest of the space economy. Totally. It's like, you know, back in the day, we would have had to make our own solar panels, our own thrusters, propulsion tanks, et cetera, for like the stuff that we build on the ground. That stuff, you know, over the course of the last decade has become a much more mature supply chain. As we start to get to this, like, space station world, I think there will be some of these things where, like, Starfish, I believe, basically makes this, like, camera that you can basically attach to your satellite.

1:52:16They take over the controls for your, like, propulsion, and they'll dock you to wherever you're needing to go. Yeah, five, ten years ago, there's no way that we would have, like, been able to buy that. We would have absolutely had to build it. And so, yeah, I think on an ongoing basis, we'll always be doing that, you know, sort of build-buy trade. And ideally obviously if there's an off-the-shelf solution integrating that and that only accelerates basically our progress And so yeah, it's cool to see that like as obviously VAR is developing the general space economy and all these use cases are developing And heck when you said like, you know sort of warehouse in space There are companies like a gravitics that are trying to do like dedicated warehouse vehicles Maybe there's some world where like yeah We like buy the warehouse and we just install some docking ports fill it up with plastic women But we don't feel like build the warehouse.

1:52:54I'm not like opposed to that What we really want to focus on is like we're gonna have the best lab down here on earth to like assess how to make these formulations We definitely have to make the bioreactors ourselves. Nobody else is gonna make my gravity bioreactors We got to make those space planes basically ourselves because like nobody else is gonna be bringing those up and down all the time But the rest of it pretty open to like, you know buying where we can How are you thinking about the public markets? SpaceX is going out at like In the trillions a lot of bio companies. I'm sure United Therapeutics went out in the billions probably.

1:53:24And a lot of biotech companies, they go out earlier. Pharmaceutical companies go out earlier. The public markets, sometimes they like really stable projections. Do we understand the quarterly forecast? Sometimes they like a big vision and you get out there with a Tesla or something and it does really well. What is your take on how you might fit into the public markets in the future? Yeah. I mean, there's not a lot of private, like 10 plus billion dollar and market cap, like pharmaceutical companies. They basically all go public before that. I mean, there's so many deals like every day a big biotech company is buying uh something for 1 billion 2 billion all day long totally that's basically like the default yeah now i think like glps have shown that like in the therapeutics world you can build a like you know be a business that can effectively be like a trillion dollar outcome just one therapeutics business um you know we're definitely thinking about that from the you know founders fund hat side of things how do we back things that aren't just that one to five billion dollar therapeutics outcome at varda i think we'll look at it like at a round by round basis where like i think about it as like cost of capital the public markets are offering me a lower cost of capital because they have more expertise because there's a bunch of hedge funds that have like MD, PhDs, and tons of them on staff to deeply understand pulmonary diseases, ophthalmology, et cetera.

1:54:33Yeah, we'll go to the public markets if that's the case. If we're still seeing tons of support in the private market and we think it's like relatively, you know, sort of not similar, you know, we'll study private for a period of time. If I had to, again, peer into the crystal ball, my guess is like, yes, relative to a SpaceX or an Andrel or things like that, I think we will have much lower cost of capital early on, you sort of being public rather than not, because the public markets have so much appreciation for the types of clinical data sets that we'll be putting out. What about on the other side?

1:54:57I've heard there's a really great way to make a lot of money really quickly as an unlicensed broker dealer of SPVs. Would you recommend that? What's your take? You know? Get into that game? Like, fine. Go to some employee. There's no securities law in space. Find some random person. Oh, there we go. SEC can't find me there. But how have you been processing the SPV boom, all of these questions around brokering and what's going on there? Yeah, I mean, I do think that one lady's like Anthropic tweet basically led to Anthropics policy on this. Part of why that sort of is happening is there's this SEC regulation on the number of entities you can have on your cap table while staying in a private company.

1:55:34I forget the exact number. I think it used to be 1 ,000. Now it's 6 ,000. These private companies, as they stay private so long and have this number of SPVs, and especially as these SPVs get warehoused out, it increases your entity count. And so I do think there's a significant lockdown on it. And employees typically own options and they don't show up on the cap table until they exercise. Exactly. Exactly. So, yeah, I mean, we're obviously tracking that of our in terms of how many entities we have. We're not seeing some like exponential growth. We're like, we're too worried about it. You know, I don't know that we've been like as stringent to date.

1:56:05But as I look at our future rounds, yeah, like you need to start to think about like, OK, how many more rounds am I going to stay private? And at some point, like I need to keep the entity count. You got to tell it. So totally get the anthropics of the world. It's like they've just raised so many good bajillion of dollars in the private markets that like they have to. I did get some more backstory on that one deal. Yeah, it was not. Allegedly, it was a much more complicated structure that wasn't as bad sounding as the original post said. There was an SPV involved and some other stuff. But anyways, why every single person that you know that has invested in the company has probably come to you saying, what are you doing with data centers?

1:56:48and all the biggest companies in the world are now like dedicating resources to it. You guys are seemingly staying like extremely focused. You've had conviction around timelines around space data centers being longer, but now that the sort of regulatory environment on Earth is changing things, that could change potentially the need or the economics. Like, when would you change your mind and capitulate? I mean, I'm definitely, you know, sort of open to changing my mind as like a shareholder of companies that may take advantage of these technologies. as somebody that's going and building a space company, I really want to focus on like where I think we have the right to win and can sort of build up something that has like, you know, sort of durable margins.

1:57:39Yeah, not a great situation. Like you being in a situation where you're like this like deeply entrenched partner with five, you know, massive pharmaceutical companies that are dependent on you for a specific part of their supply chain, that is much better business to me than like competing with SpaceX on like, you know, putting GPUs in space when they just are naturally going to have a lot of advantages. And so it feels like, yeah, you could pull forward like around, but do you shoot yourself in the foot in the process of that? Yeah, I just think there are a lot of companies in the space industry that will raise off of contracts, renders, et cetera, but ultimately these things aren't durable unless you are regularly flying spacecraft, building up a production line, right?

1:58:20You know, the Elon quote that I love is like, the factory is the sort of product. I think the thing that we've done well at Varda is we've stayed hyper-focused on just like our particular W-series vehicle, getting that up to, you know, production rate, flying it regularly, making sure that it's succeeding and serving, you know, customers across a wide variety of verticals versus distracting ourselves with like there have been a lot of opportunities that we've said no to. I'm sure some of those things in the short term would have inflated our valuation and top line, et cetera. But wearing your investor hat, you're like, I don't care about what my valuation is today.

1:58:49I care about what it is in 10 years. I care about where it is in like 10, 20 years. And so like I don't need to like listen to the noise of the market. And so I think that is the benefit of like having somebody like me on the sort of cap table or as a co-founder versus like there are plenty of companies that had XYZ vision two years ago and are now fully pivoting to space data centers because like that's where investors are deploying capital. And at some point it's like, if you're changing your company vision and product off of the basis of like where investors are like cycling capital into versus like what customers are demanding.

1:59:16And this is where it's like, look, I like, are there areas where it's like, yeah, ZeeBlan might get affected. And there I think we have much more of like a right to win. And that affects terrestrial data centers and things like that. Yeah. Like there might be areas that we, you know, sort of play. But like go launch a bunch of NVIDIA Jetsons up into orbit and do that at economics that aren't competitive relative to SpaceX. and even then I think the SpaceX economics, while promising, still have a long ways to go. That's not a game that I want to play in. You know, competition is for losers. There you go.

1:59:43Yeah, yeah. I mean, also, like, you're so far from realizing, like, the TAM of what you're building. Like, it makes sense for Google to, like, jump into AI. Like, search is saturated and they need the next thing. Yeah, it's possible we'll look back on this moment and be like, okay, every viable competitor to actually go and compete in pharma, like, went and did this other thing and maybe some did well, but then that still left an opportunity to just kind of like verticalize, own the category. And I think what like tech people misunderstand is just like the like size of the TAM in pharma. So, you know, Anthropic is what?

2:00:17I think like a$60 billion run rate or something like that. I forget like the, you know, sort of latest numbers. Keytruda, that drug that I mentioned that Merck did in 2019, that one drugs top line last year for Merck, $25 billion in revenue. Just that one drug. Yeah. They obviously have many other drugs. There are many other cancer drugs. There are many other immunology drugs. And so it is a massive team. If you're able to actually significantly improve the performance of these things, capture some upside, start to go more full stack yourself in pharma, I'm not concerned. And especially, by the way, once there's AGI, what do you think everybody's going to be focused on afterwards when there's no more white-collar labor that is needed?

2:00:50Everybody's just going to want to live forever. Where do you think all that capital is going to rotate into? It's going to rotate into longevity, therapeutics, manufacturing. And so I'm, you know, sort of happy to stay on the sidelines and, you know, sort of accept that capital once, you know, sort of all the AGI people rotate out. I love it. I love it. Well, thank you so much for coming on the show. Oh, yeah. Exactly. Finally come in person. Good to see you, boys. So good to have you in person. We'll talk to you soon, guys. Have a great day. Say hi to the team. We have Richard Socher from Recursive in the waiting room.

2:01:17We've been keeping him waiting, so we will bring him in to the TBP and Ultra Dome. I love when companies emerge from stealth. Nothing makes me more frustrated than one more. What's going on? We talked to Richard before. Yes, welcome back. But we're very excited. We've talked to you before. Yes. What's that? That was a bad joke. You.com, right? Oh, that's right. That's right. Yes. Great to see you, Richard. But even though you've been on the show before, let's reintroduce the company and sort of set the table for us on what you're building. Happy to, yeah. So still happily running U.com and AIX Ventures, but now very excited to start Recursive with seven incredible co-founders.

2:02:02At Recursive, we're looking to build recursive self-improving superintelligence to automate knowledge discovery. It's a lot to unpack there. We're getting closer and closer to AGI. I think we have to set our goals now to superintelligence. I think AI is code and AI can code. So now we can actually put those two together and allow in an open-ended fashion to let AI actually improve itself. Yeah. Are there any other, is the entire focus on AI research or are there any other areas of research that you're interested in? You see a lot of labs do research on cybersecurity or research on bio or science.

2:02:48There's a whole bunch of different initiatives. How focused do you want to be on AI research? Yeah, it is part of that focus. Just if you can get RSI actually going, then everything else you can enter seemingly very easily. There you go. You kind of answered the question. That's exactly right. I think for now, as a company, you want to have a very strong laser focus. And that laser focus for us is on enabling AI to automate the scientific method on itself, the ideation, implementation, validation of ideas. Right. And once it's gotten really, really good at that, that means it can be fully recursive self-improving.

2:03:27Then we're going to apply it to a whole host of other applications, first in software and broadly construed digital work, eventually even physical work. And I saw your previous show just now. I'm very excited about pre-clinical biology and the impact that I can have on that. Talk about the round, the structure, who's in, how much did you raise? We raised north of$650 million. Thank you. There we go. Walk us through the pitch that you gave investors. What's your right to win? You're one of many, many teams working on this problem, including all the existing labs. But I'm sure that the pitch was compelling.

2:04:17Otherwise, you wouldn't have gotten the$650 million. That's right, yeah. At a$4 billion pre, as led by Google Ventures, Graycroft, some amazing participation also from NVIDIA, AMD, and many other incredible funds that we're very grateful for, Angel, Strategics, and so on. our right to win is essentially fourfold it's the focus yes we know that everyone works a little bit on self-improvement auto research things like that but no one is fully focused on this we have the team we have incredible co-founders tim rock teschel who invented retreat augmented generation with others and rainbow teaming and prompt reader and genie 3 which is like the most sophisticated world model that Google DeepMind had recently launched, like this incredible talent.

2:05:05We got Jeff Klune, who's worked together with Tim R on many things. He's done incredible papers like the Darwin Gödel machine, hyperagents with some of his students who are also with us. We got Tim Shi, who built Cresta into Unicorn, AI for service centers. We got Josh Tobin, who's one of the earliest people at OpenAI and eventually led some of their work on Chia Chia Tee agents, Codex, Deep Research. We've got Saming Xiong, co-inventor of Prompt Engineering. We've got Alexei Dostoevsky, co-inventor of the Vision Transformer. We've got Yuan Dong-Chen, who used to lead RL at Meta. I mean, it's just an incredible team.

2:05:44That's great. Yeah, that's pretty compelling. Then how are you thinking about scale being all you need or not? Is there a capital war or is$650 million enough to do the level of training or inference that you need to actually reach RSI? Because if a lot of the labs at least are sort of, you know, putting the AGI, ASI terms in orders of magnitude of compute or orders of magnitude of dollars. And so is there some sort of race condition or do you think that there's a more like elegant solution? We need new algorithms, I guess. It's a great question. Certainly 650 in this league that we're now in is step one.

2:06:33If you want to compete at that level, you want to build massive frontier AI. You have to eventually raise more. At the same time, this will last us for quite some time, unless we're seeing enough progress that makes us want to accelerate this. And then if we prove a new kind of scaling law, where more compute results and more inventions, more capabilities in AI, more automation in the process of AI research itself, then we're probably going to accelerate that. And to be honest, the team has already made some incredible meta inventions that led the AI to make its own inventions. And so we're really excited about the progress and likely will accelerate.

2:07:14Do you view today's coding agents as somewhat of a form of RSI or is that the wrong category? I'm glad you asked that question. The current models are great for auto research, which is a step towards RSI. But you're not doing true recursive self-improvement. If you don't have full control over the entire self, namely the model, the architecture, the infrastructure, its entire harness, and all of the things that go into the training, pre, mid, post training, all of these things. It's a useful step to use coding agents for auto research, but it's just a step towards the true RSI vision. Got it. How are you thinking about standing on the shoulders of giants broadly?

2:08:04I mean, you mentioned a bunch of researchers who have published a bunch of papers, and obviously you're integrating that. But is there a way to pull forward progress or catch up to the frontier faster based on open source models, open source research, open source data sets, or distilling or integrating existing open source projects? I would love to know just your thesis on leveraging open source and tweaking and fine-tuning and iterating on versus start from a completely blank sheet. Great question. Yeah. I think, as with many things and similar to the applications of RSI, you want to start with a laser focus and then open up the aperture to more and more things.

2:08:49And 100%, you want to stand on the shoulders of giants, both closed, open source. Open source has done an incredible job bringing in more capabilities to the community. And so we will use anything and everything that we can. But we also know that long term, you're going to want to own and be knowledgeable and able to build the entire stack. Yeah. Now that you have your own funded Neolab, do we need more new Neolabs or do we have enough? uh i'd like to think so one we want to build a real company right we're not we're not just a lab um i sometimes struggle a little bit with that terminology i think there are a couple of labs that are truly just labs and it's a little bit unclear where they're going to go long term um we have folks that also build unicorn companies from scratch with revenue and so on uh have launched amazing project products like an opening i codex with josh and others so we're we're excited But at the same time, this machine we're building is almost like a Eureka machine in the sense of like it'll keep making inventions for you.

2:09:58And so a lot of labs that are focused on like continual learning and world models and maybe memory and all of these other aspects. I believe those are all important aspects. I believe that if we were successful, those are all just special cases and outputs of this machinery that we're building. So do you, yeah, I mean, how close are you? I imagine that this is a whole process, but how close are you to thinking about a product for businesses or a product for consumers, an API, a web playground, a demo? Is that something that by design you want to be super fast about and get something out into the world, have some impact in the interim?

2:10:43or do you want to keep everything closely held for potentially a really long time? I don't know, forever, potentially, if you're just going to invent. Yeah, when I hear the Eureka machine, I'm keeping that to myself, personally. Yeah, what's the point? Initially, we thought about really giving ourselves a year or more of time. In the last few months, the team has already made some incredible breakthroughs, And so we may accelerate some of the productization of this research to come out earlier. I don't want to commit yet to a specific date or anything, but I think we want to build a viable company here that brings super intelligence and allows it to have massive impact to help humanity flourish.

2:11:29And that won't happen in just a research lab. I love it. Could you ever see a scenario where you create something that would make more sense to spin off into another company to productize? Or do you expect to basically use all of your creations internally and productize them yourself? I can see how our customers will use this in incredible ways so that they can then use like create new kinds of products and new kinds of product categories. I think we've seen similarly incredible new companies like that that have used AI and code generation to enable others to build their own businesses. You know, Replit, Lovable, and so on are great examples of that.

2:12:19And I can see our technology doing something similar at an even more foundational level. Amazing. Thank you so much for coming on the show. Congratulations on the progress. Great to get the update and come back on for your first release. Yeah. Great to see you. We'll talk to you soon. Cheers, Richard. Have a good one. Goodbye. We have a debate. We have a debate. What's that? In the Wall Street Journal, they are reporting that typing is being replaced by whispering. And it's way more annoying. This is a trend because programmers, startup founders, startup employees are starting to resemble high-end call centers.

2:12:59Only these employees are talking to AI and people are saying it's a little awkward. Where do you stand on whispering? Tyler, you have a take? Well, so I think this might be a play on words, right? Because whisper is like the model that you use to speak into. Yes, but apparently - Are they literally whispering? They are literally whispering. So Molly here mumbling. Molly's mumbling was starting to get on her husband's nerves. What was once a sacred nightly routine, putting the toddler to bed, collapsing onto the couch and opening their laptops to finish their work in peace had become anything but peaceful.

2:13:28Instead of typing quietly, Molly started to hold down the function key and talk in hushed tones to her computer. She runs her own AI business in Seattle and is hooked on Whisper Flow, a company you might have heard of, a dictation app that uses her pairing with coding tools like Codex from OpenAI and Cloud Code to turn rambling stream of consciousness prompts into coherent usable texts in seconds. Efficient, the Wall Street Journal says yes, but annoying, you bet. It didn't take long before Molly's husband told her they needed to talk. The couple now often sit apart. If we need to get something done at night, one of us will stay in our office.

2:14:11Across Silicon Valley, work is being remade as once mellow spaces become dens of din. And we got a mention of our friends over at Ramp. One venture capitalist said visiting AI startups today is like showing up at a high-end call center. Everyone is, except everyone is chatting with AI. Engineers at credit card startup Ramp sit at their desks wearing gaming headsets so they can talk loudly to their AI assistants. Gusto co-founder Edward Kim has encouraged employees at the Human Resources Company to experiment with dictation technology, telling them the office of the future will sound more like a sales floor.

2:14:47People are going to be screaming at the AI agents. Oh, I like that. Like, yeah, stock trading. Yeah, we're bringing back the New York Stock Exchange. There is a way to combat this. I've seen a couple masks, the Bain mask. The Bain mask. It's the Bain mask, basically. The Bain mask. But people do put it over and it has a headphone jack and a USB-C port. And then they can yell very aggressively if they're live streaming video games late at night. And they don't want to wake up their partner or roommate. But I think I'm pro this. What do you think, Jordy? I think I'm in favor of a noisier, louder.

2:15:20I do like a library environment. I like a calm environment. But there's something invigorating about everyone yelling at their computers all day long. Where do you stand on it, Jordy? I like it. You like it? I bring the energy. Yeah. What about you, Tyler? Yeah, I like the aesthetics of people yelling. Although the muzzle, the coating muzzle, I think is a good. You won't put on the Bain mask. I don't want the muzzle. Yeah, you don't want the muzzle. Yeah, you can't muzzle me. You're not going to stop me from screaming at my computer. So you say you're a fan of this, but I don't feel like I've ever seen you talking to Whisper Flow while you are vibe coding.

2:15:54That is true. Reveal preference. I find I usually only use the speaking when I'm driving or something. I do that all the time. I'm always on the dictation mode. I don't use the advanced voice mode that often. What I will do is I will go and press the little microphone button, ramble for a few minutes, and then fire off a more robust query to ChatGPT with more context. Yeah, you're doing that like once a day, and it's incredibly powerful. I actually don't think many people realize that you can just ramble. Once a day in front of you. Yeah, yeah. Like 50 times a day. There's some controversy has hit the timeline.

2:16:29Okay, what's going on? Sox has pulled a screenshot of the figure live stream where the robot appears to be doing something like adjusting a headset. Okay. And so he's alleging that it's teleoperation. It's teleoperation. Okay. And the robot is actually just being controlled by someone in a VR headset. Well. There's some comments that say, hey, maybe this could have been in the training data. I was about to say. Yeah, it could be in the training data. Interesting. So who knows? It's interesting to think about all the vestigial behaviors of human behavior that might exist in training data for humanoid robots.

2:17:10Like it might just go and pick up a phantom Diet Coke and take a sip because it's had a long day and it knows that's what humans do. So it recreates that. We'll let Brad Adcock respond to this, dunk on it. Yeah, the main thing is the speed. The speed up is insane. oh that's so sorry i don't know just the the robot how quickly yeah yeah yeah but from the because the the last version he was he was talking about the biden walk going away and it was still a little like jerky and this doesn't look jerky at all this looks uh this looks very polished and uh and i don't think we've seen anything at this level like optimus is still a little jerky and even the unitary stuff is pretty jerky that crazy huge unitary was pretty jerky and we're all sort of used to that because it doesn't really matter.

2:17:56I do think, I do think, I do think they should have allowed some type of like actual live demo. So people could go and see the robot saying, Hey, or like a respected journalist in the room or something. I don't know. There's a bunch of ways, but this, this debate will continue going back and forth with people understanding and debating the capabilities of this technology. But we can come back to that in the future because our next guest is in the way we have Brandon Hill from Vorey, the CEO. I kind of like that. How are you doing, Brandon? What's going on? Welcome to the show. How are you doing, guys?

2:18:29Thanks for having me. We got to ask you, what's your stance on whispering in the office? Have you heard this? All the AI employees, all the startup employees are whispering into their computers to give commands to cloud code and codex. Are you in favor of having your office feel like a sales floor, or would you like a quiet library-like environment? I mean, ABC always be closing, right? Like whether you're closing PRs, whether you're closing deals, we want kinesis on the internet. I love it, I love it. I love it. Yeah, I agree with you. I think it's unanimous. Get used to it. But we're not here to talk about whispering to your computer or screaming at it.

2:19:06We're here to talk about your company. So please give us an introduction on yourself and Vori. Yeah, absolutely, guys. Thanks for having me. My name is Brandon Hill. I am the CEO and co-founder of Vori. I'm actually a third generation grocer, just to give you my story. That's amazing. Yeah, my grandparents were in grocery. Cool. My parents met and fell in love in a grocery store and had been in the industry for over 40 years. That's amazing. I went to Stanford University. That's where I met my two co-founders, who are two of my best friends. Yeah. Worked at Google with Trey. Rob was an aerospace engineer at SpaceX under Elon, and then self-driving cars at Lyft.

2:19:38And we're building the operating system, a self-driving operating system for supermarkets. Okay. They basically help them make more money and operate more autonomously because, as you know, grocery is a paper and pencil industry. But it's also$1.5 trillion of the American economy. Yeah. So are you starting with back office ERP inventory management accounting? Or are you going to try and replace those automated checkout machines that everyone knows barely work even though they've been around for decades? It feels like there's opportunity in both. How quickly do you want to focus? Well, you know what's interesting is we found that the alpha is really in automating everything before checkout and after checkout.

2:20:19I can imagine. As you know, there's a bunch of companies that raised hundreds of millions of dollars trying to do the just walkout Amazon model. Yeah. The unintuitive thing is what we're surprised by is it actually turns out building inventory, automating pricing. Sure. Helping grocery stores market their products to their customers. everything before and after is really where the that's where the economics are and that's where the grocery stores have the most need and willing to spend money yeah so that's what we do we happen to have a sleek modern checkout on the front end yeah but it's about connecting everything in the store end-to-end okay automating pricing in a store uh there's you know the price of oils going up there's inflation there's all sorts of different prices that are changing all day long the price of milk fluctuates day to day uh you mentioned a pencil and paper and pencil industry i imagine that at some point a store manager gets a spreadsheet or an email or some sort of notification that a price needs to be changed and then they have to print out a new label?

2:21:16Is that how it works? And then how will it work in the future? So there's the old way and the new way. Yeah. In the old world, imagine a supermarket which has 100 ,000 products. Whereas a grocery store, you know, a restaurant might have 50, 100 menu items. Grocery store has 50, 100 ,000 SKUs. they're accepting dozens of payment types. They have hundreds of employees and they might do more in sales than a restaurant or like a donut shop or a coffee shop might do in a month or a year in terms of overall volume. So the complexity of solving the problem is really hard. Now today, the state of the art, if you can believe it, is you have a pricing coordinator named Judy.

2:21:56She has her bifocals on. She receives an invoice from the supplier. She's looking at it with her bare eyeballs, going through line by line with a ruler and highlighter to figure out if milk and bok choy and ketchup and cereal have gotten more expensive today versus last week. She finds the price change and has to go type it into her ERP system, like the back office system, and hope that that reflects accurately at the POS. It's a 12-step process. Vori does it in one click, so our pricing agent reads all the incoming invoices from all of the hundreds of wholesale suppliers that a supermarket is using.

2:22:30It detects when there's changes in cost, which, of course, there always are due to inflation and supply chain issues. And then automatically changes the price across 30 ,000, 50 ,000, 100 ,000 items in real time. So the changing of the price at the checkout actually seems like the easy part. Because when I'm in a grocery store, I feel like a lot of the prices are printed and they're labeled right on the shelves. Is there a move towards e-ink displays or LCD displays that could be updated in the cloud in the future? Is that an important step along the road to automating the price setting of grocery stores?

2:23:13Oh, it's critical. In fact, I got a couple right here. Oh, no. Electronic shelf labels, right? So this is the future. So Walmart actually just spent a billion dollars rolling out electronic shelf labels across every single item, across every single of their 4 ,600 stores. That makes so much sense. But the thesis behind Bori is we do that today for all of our customers. And we're taking that Walmart and Amazon level technology and rolling it down market to other 75 % of the trillion and a half dollar food and beverage retail market. I didn't realize it was that fracture. I would have guessed Walmart doing like 70 % of all grocery or something.

2:23:46Do some of these smaller grocery stores, or I guess the full stack, end up selling products at a loss accidentally sometimes because they get a price change and then they didn't roll it out and then they're just losing money on an item? Is that a thing? Well, it happens all the time. So Dylan, right? Dylan from TVPN. So Dylan, I was going back and forth with him on X yesterday. And so his favorite shop is Mill Valley Market, up in Mill Valley. Love that store. It's beautiful. That's powered by Vori. before we went in that store and ryan the owner will tell you yes they were mispricing items here and there and they were losing margin we go in we find five points of gross margin sitting on the table with our uh and give it back to them put it back in their pockets with our automated take it out of our pocket take it out of dylan's pocket and put it in the store in his pocket i like this hey i'm pro competition i'm pro america that means i'm pro small business right just trying to help them succeed no no no it's doing fine but yeah it's just funny to frame it that way The price of bok choy is going up.

2:24:46Yeah. Good luck, Dale. Get ready to pay through the nose for your bok choy. Tell us about the round. How much did you raise? What happened? Yes. So we raised$22 million to invest really in our go-to-market. We've been expanding rapidly. We've done over$500 million in payments, which is worth 60%. percent of our revenue comes from. We're investing behind that, advancing our product, releasing more agents for the store to do more work to help them be more competitive against big box stores, and investing behind our deployment team to help install this hardware and software and complex payment system into more grocery stores across the country.

2:25:32So we're super excited. That's amazing. Well, congrats. Seems really smart. Very, very unique market too. Very unique. hard to compete with you having probably done all of these different jobs at different points yourself back in the day. Generational success. I'd love to see it. There you go. Have a great rest of your day. Great to meet you, Brandon. Thank you so much for coming on. Come back on soon. Yeah. We'll talk to you soon. Have a good one. Up next, we have Nate Tepper from True Short. He's the founder and CEO here to talk about funding from Coastal Ventures, WonderCo, a bunch of Hollywood investors for AI-generated vertical films for mobile, the Tepinator.

2:26:14Welcome to the show. What's going on, dude? How you doing, Nate? Hi, guys. Good to see you. Let's go. Let's go. First time on the show. Introduce yourself. Tell us about the company. Tell us about the product. Nate Tepper, founder, CEO of True Short. We're an AI film studio and streaming platform. So on one side, we have creatives and engineers that are making movies together. On the other side, we make the streaming platform too, like Netflix, distribute the movies, monetize them. Full stack, creative company. Vertically integrated. How do customers experience this? Mobile first, web, desktop.

2:26:54What is the watching behavior these days? Yeah, exactly. So we were kind of inspired by the micro dramas. I don't know if any of you guys know about that, but basically saw that China was pumping these vertical soap operas that were making more money than the box office in China. Like some of these apps are doing 50 million a month in revenue and they're all shot vertically, minute long episodes. And that kind of led us to this idea that like, wait, there's something in between Netflix and TikTok. People are consuming this on their phone, vertically, short form. So we kind of took that exact same approach, but not necessarily so long.

2:27:30Yeah, we had that realization probably a year ago, too. We were looking at some of the iPhone kind of charts and seeing, like, what are all these companies I've never heard of that are in the top 25 that are printing money? Yeah. And someone else had a realization like this years ago. one of your investors uh a good good friend of ours uh jeffrey katzenberg uh you got him into the round why uh what did he see in kind of your approach that would um you know make uh make this a great investment i mean the next hollywood is being built right now from the ground up right like all these new creators are coming in i think some kid in his bedroom is going to make the next star wars leveraging ai and maybe different formats short form etc and i think he just sees that opportunity and the approach that we took we have this vision of like the next netflix but we launched with a true crime app we just took a very strategic like amazon launch with books we took a niche wedge approach and within six months with the number one true crime app three million in annualized revenue twice i think he saw the vision but that actually we know how to execute as well.

2:28:47And so I think he was bought into that. How are you working with creative talent? Are you hiring all over the world or is this going to be like you want to get a big studio here in LA and hire a bunch of people? The next James Cameron. Yeah, let's go. I like that. We actually just opened an office in LA. And so we call them creative pods. It's kind of the way we work. A pod is basically a showrunner who's like the visionary, knows the story, the characters, the brand. Then there's an AI filmmaker who brings all the shots to life with AI, kind of like the DP, director of photography. And then you have the editor who strings it all together.

2:29:30And that pod basically produces content every week, a series a week. And so we want to keep building more and more of these creative pods. And we're testing a bit right now. We have remote pods, but we just opened our first office in LA with our in-person pods and just the speed that you can work collaboratively together there. So we're stoked about that. Talk about the customer acquisition flywheel. You've been at the top of the app charts. I'm sure that that has a lot of energy. There's news about the company, but how do you think about the content being shareable? One of the critiques of Quibi was that you couldn't screenshot or screen record the content.

2:30:10At the same time if someone's just wiring up every time something goes out on true short just upload the full thing to youtube and tiktok and instagram and like let me steal the ad revenue that's not going to work so how are you how are you dealing with getting attention for the company having the flywheel leveraging the content that you're creating without giving everything away and still giving customers a reason to subscribe and pay you yeah yeah great question um and like growth Growth is in our DNA. Jordy knows this, but our last app was number one in the app store for health and fitness.

2:30:42I think it had close to a billion views on TikTok. Nice job. And we, I mean, look, we run like kind of similar playbooks. We're super growth hacky. We're running many different TikTok accounts. Like we know how to do all that stuff. You steal it yourself. You steal content yourself. That's probably the right move. Yeah. I mean, that's what we do here. We clip our own show. Yeah. I know we make content. We might as well put it out there everywhere. Yeah. But I do want to be straight up, too. Like, the micro drama space is run on paid acquisition right now. Very much so. And, like, I won't deny that, too.

2:31:13We definitely run paid acquisition. We just know how to do both. Yep. So we have a growth advantage. Yeah. And I feel like the cost of paid acquisition probably falls when there's already some organic content out there. There's more familiarity with the brand. All of that helps with the CPMs. Yeah. yeah how quickly do you expect the the youtubes of the world the tiktoks to actually roll out dedicated micro drama features i can't talk did okay so tiktok has one called like pine dream pine something i don't know i don't know why it has like 200 ratings on the app store so i don't know what they did with it um netflix is creating kind of like vertical okay section in the app but they haven't made vertical content any yet so it's definitely happening things are going yeah it feels like it feels like this business to me will over time probably look more like a24 that owns its own distribution and actually sells the product because you're going to get like competition from all the platforms all the features and so your advantage is like can you create a system that can reliably create hits and IP and deliver enough value to customers so that they subscribe.

2:32:31They keep coming. YouTube, YouTube had, uh, is that, is that, is that, is that right? Yeah. Yeah. That's why we want to build the full stack here. Like it's almost like its own flywheel where we create the content, put it in the app, funnel that data back into our own technology and creative teams and just keep making more. So the speed that we're going and the learning, the pace of learning on the creative side too, I think we'll get to hits much faster. I honestly just don't see these companies keeping up in terms of speed and iteration of creative, actually. Yeah, I mean, YouTube got into original content that they were producing, and they pulled back from that eventually and just maintained just pure platform.

2:33:15Netflix obviously does productions, but a lot of that is done with other studios, and then they just buy or license the actual end product. So, yeah, the vertically integrated approach. Yeah, I think the key will be creating a setup where a pod can make more money, like, building on True Short than they can by just going and setting up their own kind of YouTube account. I'm curious in general, like, part of what I'm thinking about is, like, there's about to be a million filmmakers. Like I said, some kid in his bedroom is going to make the next Star Wars. Where is that going to be distributed? Is it YouTube?

2:33:54is it netflix is it true short i think that we're gonna see emerging films which is already happening that are actually high quality that people want to watch where are people going to watch them i don't i don't know yet um i think we'll see some stuff over there as well how are you thinking about episode length and number of episodes what have you actually tested it feels like the the base case is like a two minute episode maybe 10 episodes per story uh is that roughly correct and then like do you think there'll be wide variation like we see a 90 minute movie and a three-hour epic from uh nolan every once in a while like where do you see the dials turning yeah i mean i actually view this micro drama space and what we're doing as like separate from theatrical even separate from netflix the way people consume it is different too it's like they open this stuff when they're bored on the subway right and so it's actually if you still want to go watch a full two hour length movie you're gonna go watch that on netflix or go to the theater that will still exist until these become good enough that they're distributed there but and so for now just for now that we're focused on these like kind of niche genre one to two minute long episodes many episodes per series and like getting a flywheel going around that uh what is what is the do you feel like you have hit ip yet something that you'll invest you know 20 million dollars into a specific like series over time yet or are you still just like taking taking shots getting base hits doubles etc so i i do intuitively we're launching it later this month um it's not true crime so it's not on our true crime app it's our next genre and just seeing what we're creating there i would honestly say our true crime stuff is just like that would be the lowest quality we'll ever put out stuff like it's getting better and better so intuitively i think we're making now is real ip people that will have fans so so true crime true short there's obviously a linkage there but the the name true short feels like it can hold anything like it's not like yeah home box office no one cares that they just think hbo and it feels like you'll be there very quickly but it sounds like you're considering multiple apps is that in the roadmap um i don't want to say too much yet about exactly what direction because like it's we're still discussing yeah it But what I will say is like, there are a lot of opportunities now around niche genres.

2:36:33Yeah. What about, uh, I think that's interesting. What about like pseudo or semi, uh, user generated content? Uh, HBO, you need an agent. It's going to do incredibly high bar to get your, your, your media product, your movie or show on HBO. Uh, Amazon prime sort of has a self-publishing like route. if you're really creative and Kindle self-publishing, you can publish a book without any. So like, I think it needs to meet standards, but it doesn't necessarily, it's like an app store review, not it's maybe just one notch above YouTube to publish on the Amazon suite of products. How are you thinking about engaging like that random, the next James Cameron who isn't in LA and, and didn't, you know, have a great resume, but created a great product and you could monetize it for them.

2:37:23Have you thought about that? Yeah, I mean, you nailed it. Like, that was the original vision, was like, let's be the distribution for these million filmmakers that are coming, and curation and taste is going to be really important, things like that. But we quickly learned, like, and just realized that, like, out of those million filmmakers, a lot of it will be slop, and it's still the earliest days. And we also learned from the micro dramas that, like, there's a formula, especially for winning in the beginning. So we're like, let's own it. let's learn it ourselves let's build it right now and we can take this if we could probably take this to a billion dollar company just as our own team moving fast but i do think the big big vision like i said is like how do you find the next james cameron where is he putting his stuff that's that's really exciting favorite song well we have 30 seconds left do you want to use the opportunity to do a quick solo or or your guitar i knew you were gonna ask me to do that but i will plug i Check out my band Pink Roses on Spotify.

2:38:23If you know Dave Fontenot, my bandmate. Let's go. Oh, yeah. We had Dave on the show. Yeah, they've had this crazy side quest of being rock stars. Amazing. It's amazing. It actually has millions of streams. You'll like it. Well, congratulations on the round. I don't know if we hit the gong. Hit it again. Boom. Great to see you, Nate. We'll talk to you soon. Make a micro drama about Tyler the Intern's life at TVPN. Should we use his likeness? Yeah. Yeah. Yeah. Recorded. There's a lot of training data too. So how about it? Well, later. See you, Nate. Thank you so much. Our next guest is the co-founder and CEO of run road runner, a new company for AI native revenue infrastructure.

2:39:11I like the sound of that. John. There's that again. Welcome to the show. How you doing? Hey guys. Thanks for joining. How you doing? It's happening. Good. Revenue, infrastructure. I love revenue, and I love infrastructure. Yeah. We talked a couple years ago, but for those who don't know you, please introduce yourself and the company. I'm Jubin. You guys pronounced my name right, both first and last, which I was impressed by. I am one of the co-founders and the CEO of Roadrunner. Thanks for having me. Yeah. Great to meet you. I mean, introduce the product, introduce the problem, and sort of explain where you fit into the businesses that you're selling into these days?

2:39:52Sure. The backstory is that we incubated the company at Kleiner Perkins. The reason that we did it was because I run a group of CIOs here that meet twice a year and over the course of several dinners, they basically told me it's the most broken problem inside their company. I actually didn't believe them because I was like, there's no way this has not been a solved problem. They were like, no, seriously. And in some cases, it was the number one negative NPS surveyed software inside of their business. I come from sales. So I've been the consumer of this problem. And I'm like, okay, I understand the problem.

2:40:25So we did a full market map, looked at every company, ended up not finding anything, and so decided to do it ourselves. So you said that the existing solutions were low NPS. Was the market also highly fragmented? That's often like the Keith Reboyd lens that he likes to look at, both low NPS and because if it's low NPS, but there's just one monopolist, it might not be a good business opportunity. But what was that market map? How dense was it? Yeah. So I think the mother of all tailwinds for us right now, which is the challenge that every incumbent is going through, is that every 10 years, there's a new CPQ vendor that comes alive.

2:41:06And the reason for that is because about every 10 years, there's a new technology shift that happens. We went from software to SaaS. That became a subscription-based billing. Then we went from SaaS to AI. AI is very likely going to be a usage or consumption-based billing. Every time that happens and there's a new pricing pressure that comes onto a business or a pricing model, you need somebody that can actually price. Like if you're a rep trying to do a deal, you need to be able to price that deal. If the data models with the incumbents were not built to be able to actually price those deals, you're screwed.

2:41:37So every 10 years, we have a new technology shift. Every 10 years, that puts a bunch of pressure on pricing models. And every 10 years, you need to be able to actually get quotes out the door, leveraging those new pricing models. And so I think in our case, we are the beneficiaries of that. What is the sales process like? Because you mentioned the CIOs, the chief information officers. They feel like they have an incredible amount of leverage over the decision of what platform to use. but then the end user is different. So can you sort of walk through the actual user journey a little bit? Yeah.

2:42:15I would say the two primary personas are CIOs, who are the ones that are responsible for delivering software to an organization, and CIOs, who are the ones that are responsible for getting deals done inside of an organization, and the underlying software that they're using is just fundamentally broken. So those are like the two people that really matter. The unique thing about this problem is that there's many hands in the cookie jar, which is why it's like a unique problem for a startup to go solve because you have deals desk and rev ops and finance and sales and IT. All of these folks touch this business process.

2:42:48It's actually quite difficult both to build because you have to build for all of these personas and sell because you have to get all of these people kind of on board with you. Even if you can get all of that done then you have to convince them that running one of their most important production systems onto an early stage startup makes sense. And so I think that's like kind of the hill that we, I guess that we have the honor of climbing. Jordy? Yeah, just, you're like, I'm pretty good at sales. Why don't I sell something that requires buy-in from every part of the organization? Yeah. No, it's a great challenge, but it seemingly will be incredibly sticky once you get everyone bought in.

2:43:25Where is AI good at this out of the box? Where foundation models are open source useful versus like you got to go build a harness or you got to go write some sass on top of it or get some of your own data and fine tune it like where are we on the frontier of like this problem being solved end to end by ai yeah so uh during the the series a fundraise the the hottest question was why won't Anthropic eat you, basically? And my general point of view is if they go after this, we're all screwed. Like we might as well put all of our money and all of our eggs inside of the Anthropic basket because this feels like the most esoteric problem that you could possibly go after.

2:44:11I think the unique thing about this is, you know, at least at KP, we invested early in companies like Windsurf and Harvey, and we saw what happened when you can point these models at structured and unstructured text in nature. And anytime you can do that, the models are very, very good at reasoning with them. And CPQ is a very similar problem. You have price books, approvals, volume-based discounting. All of these rules sit somewhere. And the models are very good at reasoning with them. The challenge for us, I think, like where our kind of secret sauce is, is that you need to be able to have this agent architecture, call it at the header, then on the y-axis, you have a bunch of policy engines that are enforcing a probabilistic system through a deterministic engine.

2:44:53That sits on top of a data model that has to be flexible enough for the pricing models of today and in the future. So the combination of those three things is really our secret sauce. And then obviously, I think the problems that many of these kind of bleeding edge enterprise AI agent companies are running into is like, how do you get an agent to work predictably with the harness around it inside of a large enterprise doing something where if we go down, like we get sued. Like you can't get quotes out the door. And so you can't not get it right. And so I think, you know, in many ways, we are tackling probably one of the more bleeding edge agent problems in the enterprise.

2:45:29And that's really where we live is in the enterprise. Awesome. Tell us about the round. How much did you raise? I want to hit the gong. We raised$27 million. There you go. There you go. Powerful. we announced the seed from KP, 5.2 mil, and then 22 million with Founders Fund leading and KP doubling down. Any familial conflicts going on over there? Just kidding. Trey Stevens led the round. Don't worry, he's brothers with Amin. Thank you so much for coming on the show. Oh, I didn't even put that together. Yeah, yeah, yeah. Amazing. Anyway. Family business. Love it. Have a good one. We'll talk to you soon.

2:46:07Thanks, guys. Goodbye. Thanks, guys. Talk soon. Up next, we have Roman Chernin from Nebius. He's the co-founder and chief business officer. If you've been living under a data center. And Nebius is only up 15 % today, so we'll ask him. The AI cloud division posted 841 % year-over-year revenue growth. Earnings per share beat expectations significantly. Shares are up, as you mentioned. And the business has been on absolute tear, And we're excited to be joined by Roman to break it down for us. How are you doing? Great. Thank you for inviting. I must say that I think three meetings ago, someone said that I need to take a nap.

2:46:53So don't be surprised. I just fell apart here. I can imagine you're working nonstop right now. How long have you been working on this? I feel like Nebius is in the news every day, but can you take us back a little bit on your journey with this company? Yeah, so I am with Nebius from the very beginning, and Nebius officially, in the current shape of the company, exists from summer 2024, so less than two years. But we as a team had experience longer than that. you maybe know that core team came out from Yandex which was a large Russian internet company and yeah we started with quite a unique mix of talent that helped us to start like really fast so I mean people know Nebius NeoCloud but that can mean a lot of things how are you describing the shape of the business how are you describing the differentiation Before we get into that, what's the other spin out that's also on a tear?

2:48:02From Yandex? Yandex. Yeah. You maybe know ClickHouse? ClickHouse. That's right. The Yandex. Yeah, the talent bench at Yandex seems to have been just like genuinely insane. Yeah. You can find a lot of other startups or companies that created with X-Yandex people. The Yandex mafia. Yeah. Yeah, not really, Papi.

2:48:32Talking about how we describe our business, I don't really like the word new cloud because I think it's too broad definition of too many companies that do different things. Like someone is doing just really data center business, someone is doing data center plus renting out hardware, where someone don't own hardware and do kind of marketplace play. We like to say about us that we built vertically integrated full stack AI specialized cloud, so that's what we think we do. And I think that the difference of like NeoCloud or bare metal compute and cloud is quite significant because it's completely different developer experience, right?

2:49:21So if you need to come and rent a large cluster and wait like six months to be delivered and then sign it for three years and run it, probably it's not really real cloud experience. In the cloud, you expect more flexibility, faster time to value, more tools that you can use as a developer, more layers of the value. So, yeah. How do you think about lagging edge model inference, like load over time? Because a new model comes out. There's an incredible amount of hype. Everyone's looking at benchmarks and testing it. And then at a certain point, open source catches up, different models sort of commoditize.

2:50:08But if you're an enterprise and you found that, you know, GPT-4 is great for scanning your receipts or something, you might leave that capability, that functionality running forever. And you might never need to deploy a smarter model against that problem. And I'm wondering, as we see skyrocketing frontier revenues, lots of debate over token maxing versus incredible results on the profitability side, how are you trying to understand what's happening with those workloads that have been sort of baked into the economy already? Like the AI diffusion story is done because that capability has been adopted fully.

2:50:54yeah so i think there are as we see a few brands let's say so first as you said open source models are catching up uh different tier models quite quite fast probably i mean i think that like there is three six months gap like that we see for the most of the tasks uh and we see that a lot of people, a lot of customers, when they come to the scale, so the journey is you start with the frontier model, you want to have the best capabilities to unlock the use case, to see the things working, to start growing. But then when you grow, you may meet the limitations. And first of all, in economics, because at scale the economics matter.

2:51:45And then if you have other capabilities from open source models that can deliver in a particular use case that you already understand, like same or close to same performance and quality for times lower cost, you need, you're actually switching. And it's not easy to switch because you need to do those models. Nobody uses obviously vanilla models. models, you need to figure out your data and so on and so forth. But again, if you're scaled, you have a lot of value there. And then what you need from infrastructure, where we believe that our value is created is to help you with that, to lower the barrier to A, tune those models and then B, run those models reliable and cost efficient.

2:52:40and that's like the layer, the next layers of the offering that they're building. As you look out over the next couple of years or even a decade into the future, which sounds like an infinite amount of time, but on the near and midterm, how are you thinking about semiconductor bottlenecks versus energy bottlenecks? So we've been going back and forth on this. Both are in short supply. What's keeping you up at night? I'm a lucky person. I'm more on the product and demand side, and it's a lot of fun. Being the demand guy during the explosion of demand has got to be great. The best worker in the world.

2:53:29So people hug you. But no, I think that now, obviously, the physical infrastructure, even not the energy itself, but getting from greenfield to having data center that works and full of GPUs is actually the big challenge. The bottlenecks are along all the supply chains, starting from whatever, connecting to the grid, bringing local generation, and all the way to even human power and all the all the complexity. So I really kind of take my head off in front of the people who are bringing those gigawatt capacity online. And that's challenging work. There's such overwhelming demand and just energy to bring compute online.

2:54:39How do you measure yourself and the team's performance, how do you know whether or not you're doing a truly great job, right? Because people are so desperate that they'll work with like a third tier supplier just because it's their only option. You guys have shown, you know, tremendous capability. And so, but then again, it's like, how do you know if you're actually doing an exceptional job? It's a good question. I think the race is so that you never know are you good enough or not. So you look like oh you're growing like whatever. You're growing like seven times a year or so. Is it good enough?

2:55:26Like in any normal business yes. Probably it's excellent growth and you meet your customer and they say oh you know what I grew seven times in the last four months. And like okay probably we need to move faster. Yeah, but there is another component that I think people speak less about, which is how you finance all that.

2:55:58You asked about the bottlenecks and the chips, you asked about the bottleneck to bring physical infrastructure online, but then there is another part you need to finance all that. So I think that now if you would have unlimited capital, we would be able to on technical execution, on operational execution, we could even move faster. So there are so many components in this business of AI infrastructure that you need to do efficient and financing finance enough and finance smart to not eat all your margins. It's a part of the science here. What is a job at Nebius that is sort of the unsung hero of the business?

2:56:53Besides you. but we're singing for you now he gets sung for all the customers they're hugging you but is it like somebody that's like boots on the ground I think that our business is very much like any cloud business to be honest it's post sales business so when you sell you give it promise people hug you that you allocated capacity to them and they're happy to start working with you and so on. But then how you make sure that the customers are happy and things are working. And again, everything is moving so fast. We've got new chips every three months. We've got new physical data centers every month.

2:57:45We've got new customers of the scale that we never saw before every month. And the workloads are changing so fast. And I think that it's not like one role, I think, that underappreciated, but in general, delivery in this. And I started with that. It's execution business.

2:58:13It's less magic. It's a lot of boring execution on each layer, starting from finance, like physical infrastructure, software, customer-facing engineering, support, like every piece. And then only magically, everything comes together from supply chain to customer facing person that make sure they don't waste their money with us. Then things start working. So, yeah, I think delivery is the key. Delivery chain is the key in this business. Post sales. Last question. Can you talk about some of the recent acquisitions and talent moves at Nebius? I'd love to know the philosophy and strategy there.

2:59:09The philosophy is very simple. We need to build so many things that we need to move, and we need to move so fast that we're always looking for people who can accelerate us. and it should be exceptional talent and or it should be something that has a great adoption. Our two recent acquisitions that we announced just like with a two weeks pause two teams that work on inference optimization so you can think again, a big part of our business is how efficiently convert GPUs into tokens and like a value for the customers. These are two teams, one of them, Agn.ai, another Clarify.ai. One is very much focused on model optimization, like the engine of inference, how you run specific model and all the techniques around spec decoding, quantization, and so.

3:00:15And another is more like system optimization, all the routing, TV caching, orchestration across the big cluster of compute and so on. And we had a very strong internal team also working on inference, but we felt that we need to move faster. We need to move faster, we need to bring more capabilities there because the market is so fast that every three months you can lose the pay. Like, so big piece of the pie. And it's going to show up in your margins and your earnings, obviously, which are important now. If you have unoptimized chips, you're not going to get the yields that you want, the results, and the tokenomics are going to flip.

3:01:00Yeah, that's true. And also what's important that it unlocks the new types of the customers, the new types of the workloads that we can serve. Not just against cell, raw, compute, but serve all these fast-growing vertical AI companies and enterprise adoption. Yeah, that makes a ton of sense. Well, thank you so much for taking the time to join us on a busy day. Yeah, are you going to get some sleep or are you going to sleep in a few years? I will take a nap now. Fantastic. Just a nap. I know you're across the pond, right? So you should be just going to sleep for eight hours, but he said it. I love it.

3:01:39Well, thank you so much for coming on the show, Roman. We'll talk to you soon. Have a good one. Goodbye. The last post I want to talk about today is about video games, of course. There's an individual who beat, is this a Dark Souls boss? but they built a controller that uses their full body. It's not a VR game. It's not a VR simulation, but if you want to attack, you strike the dummy with a physical stick and that presses the button in the game to trigger your character to attack in the game. And then it appears he's playing on a green screen or something because you can see the game actually playing behind him and he also is wearing glasses of some sort you don't like this what's not to like you need to get a workout while you're gaming the future of gaming just very well might very well produce some of the fittest people yeah i don't like the aesthetics of of this you don't uh not you think you should you're more in but i should knock it till we try You're more a fan of unironic LARPing, like live-action role-playing where you get the SD Kid concert.

3:03:01You're a fan of that. Put on the actual armor. Do the real battle. Don't play the video game version of that. That's a poor simulacrum. Hit the park. Hit the park. Or find a multiplayer version of that. Just get another human to stand next to you, and you can learn defense. Before we go, What? There's more of a scuffle on the timeline around the Meet GC campaign. I realized why Mark is taking shots at it, and it's because I think they use an actor to try to look like him. Let's watch it again. Oh, really? Interesting. I did notice that the actor that plays the general catalyst character is over-the-top handsome in the sense that But the original Apple, Mac, and PC ad, Justin Long, he's sort of like an everyman.

3:03:53And the actor who's playing the General Catalyst guy looks like a male model to me. I don't know. You can be the judge of it. Yeah. All I'm saying is I think we got a Drake Kendrick situation on our hands. I think the new media team at Andreessen needs to respond. They need to try to dunk on... General Catalyst? GC. Okay. I want to see a war. I want to see, it should be a bloodbath. Anyways. Demanding acrimony in the tech industry. Sowing dissent. Yeah, no, no, they need to get revenge. What about peace? They need to get revenge. Mark says this is a clear inversion, clever inversion of the original Mac versus PC commercials.

3:04:32This time clearly intended to make the sponsor appear smarmy and judgmental. Fascinating. You got rage baited. They rage baited you. You could have just muted this. You could have blocked them. You could have not amplified it. Now it's on everyone's timeline. It's war now. Because of this, we're going to get a VC content wrap. No one would know what General Catalyst is until now. Now there's a fight and it's working. No, just kidding. It is entertaining, though. Very fun. Well, duke it out. Duke it out. It's a good campaign. It's time. I do, I do. Eric Thornburg, Reggie James. Oh, yeah, that's a matchup there.

3:05:08It is just, I mean, to put aside the war, it is just interesting seeing a produced 30 second 60 second ad for a venture capital firm it is sort of a first I'm just happy to see a a non vibrio yeah the vibrio meta that was sort of played out at this point so we got we got to go a different direction and we're going to TV ads we're going to television full 30 seconds highly produced ads running on the Super Bowl on Saturday and live. I don't know. When would the VC advertise? Humberg, CNBC? I don't know. We got to get on with London. Yes. So we will see you tomorrow. Leave us five stars on Apple Podcasts and Spotify.

3:05:55Sign up for the newsletter at tbfn.com and we will see you tomorrow at 11 a.m. Pacific. Sharp. We love you. Goodbye. Goodbye.