Trump's Tariffs, Market Crash, Zachary Perret, Scott Wu, Sam D'Amico, Peter Goldsborough, Nathan Mintz, Michael Laframboise, Fil Aronshtein, Chris Power, Brandon Tseng, Akhil Iyer

28:34I think the communication that's come out is actually pretty good. It's just that it hasn't reached many people. And you're right. They just see like stuff go down, you know. But I think over the next six to nine months, I think it's going to be incredibly positive, both for, you know, S &P and Dow Jones and Nasdaq and for the actual underlying real economy. But yeah, you know, it's like you feel pretty bad going to the gym for the first four weeks when you're a little bit overweight and then you start feeling good in the first four weeks feel pretty bad because you're like wow this is really tough and then you realize like hey i'm just out of shape you know we're getting you're repping two plates yeah you get it and then we'll be repping plates you know jay powell will drop the fucking hammer and we will be we'll be dead lifting you know jay powell's the creative on top exactly uh how as your as your phone been ringing off the from investors that maybe passed two years ago saying re-industrialization is not going to be a thing?

29:26Anybody capitulate yet? I have no comment on whether or not we're getting calls from customers trying to resource massive audience from China and accelerating our factory build-outs. And I also got to drop in a minute and I'm not going to make any comment about future or potential fundraisers in case the SEC whacks me on the head with the ban on that. Yeah, it's been great having you. We got to have you on more regularly to kind of track this story as it develops. This is fantastic. Thanks so much for taking the time to join. You're welcome, guys. And thanks for having me back to capital to capital.

29:54Keep cultivating Chris Power over at Hadrian. We'll talk to you soon. Bye. In the meantime, let me tell you about Ramp. Time is money. Save both. Easy to use corporate cards, bill payments, accounting, and a whole lot more all in one place. Head over to ramp.com. And we have a Ramp investor coming on the show next. Delian Asperuhov is joining, partner at Founders Fund, co-founder of Varda. He'll be joining. Many people have called him a global export expert on tariffs, trade wars, real war. Yeah. You know, the list goes on. Yeah. I mean, he's really dialed in. He's nice. He's dialed in. He's also an investor in eight sleep nights that fuel your best days.

30:33Turn any bed into the ultimate sleeping experience. Go to eightsleep.com slash TBPN for an eight sleep. Do it. Get it. Get it. Oh, I put up. It's fantastic. I put up a hundred. You did. Oh, you're killing it, Jordy. I really. Well, we got to ask. We got to ask delian how he'd do how he did um because i know i know he's on one and i know he hasn't been traveling i got a 95 i was a little bit low on time look at this i got the 80s the 95 95 you got 100 100 100 oh look at this i just needed to be look at this i was like a hair's breath away if i'd gotten two more minutes of sleep i would have gotten 100 two more minutes uh but you know had to keep the, had to keep the alarm at 5 40 AM.

31:16Got to get up. Got to get in the gym. Got to start wrapping two plates. Wait, you get up, you get up an hour after me. An hour after you, yeah. But you go to bed two hours before me. So, you know, it works out. True. Uh, anyway, um, somebody's got to be up late just texting to get 10 guests on a single episode. Yeah. It's not easy. Exactly. It's hard work. Um, anyway, we, we, uh, yeah. One thing I, one thing I wanted to ask Chris that we didn't get to was, uh, what, what does Nike do here? Do they figure out how to make shoes in America? I know they have probably some American made shoes, but it's certainly, it's gotta be less than half a point of, uh, of their, uh, revenue.

32:02Okay. Delian is out. He, we just messed up the invite, got double booked, but let's go through more tariff reaction because I want to talk about um Tyler Cowen's liberation day post uh because I think he gives I mean obviously uh Chris Power at Hadrian lays out a very uh like a very reasonable and bullish scenario uh and as someone on the ground building a factory um it makes a ton of sense like it's his thesis that he's had for years uh the thesis wasn't actually predicated on massive global tariffs. It was more so predicated on we should make things in America, specifically products necessary for defense manufacturing, aerospace, sort of super critical industries.

32:53But it is interesting to hear the other side of this, kind of the more buttoned up economists take. And so Tyler writes that markets have responded accordingly with the Canadian currency hit especially hard and S &P futures sinking immediately. And we saw the market actually did sell off quite a bit. I'm not exactly sure where it is now. Maybe you can hop on public.com and check that out. Investing for those who take it seriously, go to public.com and sign up. Because I actually would love to know how is the market trading during the day? Obviously, we saw it opened down 5 % and some stocks were hit very hard, but I'd like to know overall how things played out.

33:31S &P is down 4 % today. So a little bit of a pop off the bottom, maybe bouncing along the bottom. NASDAQ is five and a half. The dead cat bounce, as they call it, potentially. It's interesting, you know? Be greedy when others are fearful, potentially, or maybe get everything out while you can. Who knows? We don't give you financial advice here. We just yap and you make up your own decisions. Anyway, with President Trump, One never quite knows what one is going to get, says Tyler Cowen. So any assessment needs to be provisional. But that is a big part of the broader problem. High and persistent uncertainty about the basic rules of the game.

34:08And this was the question that I was going to ask Chris if he had a chance to stay on longer was, okay, I understand that you're excited about the current, like what happened yesterday, the breaking news. And to be clear, it's phenomenal for Hadrian. Of course, of course. Like I'm sure they will have more customer inbound today. 100%. probably any other point 100 because i mean there are there are young company they are using american labor they're based in california like things are expensive there are a lot of places where even though chris is great he's a really great founder like there are just structural elements that make his product less price competitive and he wants to get there with software and automation and eventually get to a place where he's completely price competitive He's always differentiated on pace of play, time.

34:53If you're in Southern California building a defense tech company. Or an aerospace. An aerospace company and you need a part tomorrow, Hadrian will stay up all night, get it done, and you won't have any of the shipping times. That's been the key differentiator. But now it seems like he could potentially be more price competitive. But the question that I wanted to ask him and what we were talking to Ryan Peterson about yesterday was, is what's going to happen with this Rose Garden and this reciprocal tariff framework? you might have seen some of these mathematical formulas floating around. Is this enough of a framework to bring confidence to the market?

35:26Because there's a huge difference between, okay, it's 20%, it's bad, we're ripping the band-aid off, but you know that this is the end of the story, it's 20 % forever. You can plan for that, you can update your Excel models, your financial models, you can plan for that. Versus, it's 20 % today, then it's 10%, then it's 15%, then it's 50%, then it's 10%. Like chaos and uncertainty. like two people pointing a gun at each other, you know, sort of waiting. No more, no more. Yeah. The James Bond day is over. Put the squirt gun down. Um, and anyways, it's like, who, who's going to sort of, uh, make a move first.

36:02Yeah. And, and what's interesting is that I think that, I think that this is potentially enough of a framework to understand where, okay, I'll, all I need to do is monitor, you know, what is the reverse tariff? How much would it cost for me to import my product to the country that I'm making it in? And then I can expect that that will be the tariff that goes the other direction. The question is just like, is this a, will these tariff rates stick around for years, for four years at least, or maybe eight years, who knows? Or is this going to be something where literally every single one of these countries comes to the table and starts renegotiating immediately.

36:39And we're seeing tariffs jump around all over the place week to week. And we're seeing, oh, it turns out like Switzerland came to the table and they cut their tariffs so that now Switzerland rates are lower and like all of these different things happening. Like you imagine that there's going to be big discussions between China, Vietnam, like the major countries, but it could be all of the countries. And so that uncertainty, I think, is something that businesses really, really detest because it makes it really hard to plan, especially things like CapEx, right? Yep. So this is a good line. Like a game show host, Trump announced a series of tariff rates on many of America's major trading partners.

37:16How did he come up with the rates? It seems by a crude formula. A given nation's trade deficit with the U.S. divided by the nation's exports to the U.S. There's a base rate of 10 % to be applied to the U.K., Costa Rica, and some other friendly nations. For India, it is 26%. for japan it is 24 and for the european union it is 20 the most incomprehensible are those on vietnam the new tariff rate is 46 tri lanka 44 south korea 25 cambodia 49 in taiwan 32 are those not some of the major countries we are expecting to hold china at bay do we not want chinese manufacturing to end up moving to those in other countries so we are less dependent on the middle kingdom what could possibly and again uh chris was highlighting that you know some of these countries are basically sort of producing goods and then you know passing them through china and yeah yeah he was making the argument that it was uh that some of these countries are kind of fronts i would be skeptical about the idea about the idea that you know like 80 of what we import from taiwan is chinese made at the source but i think his point is probably correct that there is some amount of product passed through.

38:28He says, what could possibly justify the fact that Taiwan, which is a U.S. ally being threatened by China, now faces almost the same tariff as China, 34%. That is a very, very good question. Trump calls these reciprocal tariffs, and the claim is that we are taxing foreign nations at only half the rate they are taxing our imports. The numbers are illusory. However, some of them apparently made up. Brazil at only 10%, and others counting a VAT as a net tax on American imports, which it is not. In any case, we will be moving into a future with higher prices, less product choice, and much weaker foreign alliances.

39:01The tanking of the stock market and other possible asset price repercussions may tip America into recession and increased joblessness. This is perhaps the worst economic own goal Tyler has seen in his lifetime. I cannot think of any credentialed economist colleague, Democrat, Republican, or Independent who would endorse it, and I haven't even mentioned the risk that some foreign nations will retaliate against American exporters damaging our economy all the more. Pavel Asparujov had a great tweet about this. He said, texting all my close friends to go F themselves so I can learn to be more independent.

39:36Short-term painful, but there was literally no other way. It's a good take that it's like, we're not making a lot of friends with this policy, folks. This is going to be rough. Yeah. And one could argue that if you truly are America first, that means putting America above. Yeah. Are even people that are allies. Yeah. Yeah. Pavel's point is that at some point in, you know, when he was starting his company, he basically had to tell his friends to F themselves. So he's joking there. But no, of course. But yeah, I mean, there was a little bit of that for sure. I think this gets to this interesting idea of like this America first stuff is not just, people think of it as like you're either like a nationalist or a globalist, right?

40:28Like you're either like you should be able to manufacture anywhere. It doesn't matter where the jobs go. Have every company be completely global. It doesn't matter where the jobs are. And then there's the other side, which is like everything needs to be made in America. And like I don't care about Canada. I don't care about the UK. But then there's a pretty wide middle here where you have something like the Five Eyes and all the different allies between. I mean, we sell nuclear submarines to France, right? They're a very, very close ally. And this is what Alex Karp talks about at Palantir, the idea of the West.

41:00And the idea that, yes, if America goes it alone and China builds a bunch of allies through the Belt and Road, and not only has more than a billion people, but also has a much larger economy when you bundle them together with Russia, Iran, all of Africa, a bunch of other countries, North Korea aside, and like tons of other countries are like, well, if partnership with America is off the table, all of a sudden partnership with China seems a little bit more reasonable, then America could get really, really smoked, right? And so there's this question of like, how important are these alliances? How important is it to have friends in the global community?

41:39I'm obviously all for making American jobs viable and lucrative and fantastic. But I mean, there is a cost to some of this that I think Tyler's right to point out. So where did you fit? Did you leave off at damaging our economy all the more? Yes. Okay. So you might think there is something to be said for a reciprocal approach to tariffs. Usually it consists of cutting off your nose to spite your face, but it can sometimes work. It requires a president and Congress who is predictable and trustworthy. That's not how foreign nations view the current administration. If you're wondering about the trade treatment of Canada and Mexico, that remains cloaked in mystery.

42:23The threatened 25 % rate on those two nations from earlier in Trump's term violates the NAFTA redo that was negotiated by Trump himself. Why trust in reciprocity here? Oh, and did I mention that tariffs, according to the constitution are supposed to be the province of congress not the president congress did voluntarily turn some of this authority negotiate again and we will be in for yet another round of tariff musical chairs but it's not a game there is real money and therefore real lives at stake here and so he was not a fan and i think that i think that the tariff musical chairs could potentially be the bigger issue and the bigger fear here bill ackman yeah the activist man posted earlier sometimes the best strategy in a negotiation is convincing the other side that you are crazy and it is very possible that uh trump is uh being very effective there logan had an interesting point he's uh it was basically a meme that said i'm adding tariffs and it's a guy with a make america great again hat that says this will create jobs trump and then it's i'm removing tariffs he goes art of the deal i'm adding tariffs this will create jobs i'm removing tariffs art of the deal uh and uh i mean there are like it it's it it sounds really crazy and copey but like how many times you've been in negotiation where there's back and forth like this does actually happen in real life like it sounds stupid when you say it that way classic negotiation strategy is to start and just be why you know completely extreme and then know that you may Maybe you'd be in the middle.

44:00On negotiation strategy, do you buy into that philosophy? I have found, and a lot of negotiation consultants that I've talked to have kind of advocated more for coming with something that's, first, build vision. Make sure you're talking to the right decider, like the person who can decide. Build a really clear vision of what you want the partnership or the deal to look like. And then come in with something that's reasonable that you would accept. never bluff and get a deal that actually sticks instead of just wildly oscillating saying i i think their budget's 100 bucks so i'm going to open with 300 and be prepared to negotiate down that's actually like a harder way to get a deal done but i don't know what do you think about negotiation generally no i aim for deals that i think are fair and great for all parties involved And then I'm very explicit if I feel like it's drifting into a territory where it doesn't make sense.

45:00This is another thing interesting from Ryan Peterson. Eliminated from all countries as soon as the systems are ready. And so we talked about this a little bit with the TEMU de minimis shipping tariff from China. But apparently it's being eliminated from all countries. and so this idea of oh well if we can't do the timu exclusion in china we'll just do it in mexico yeah and still slide in under that de minimis shipping uh threshold well it seems like it's off the table entirely um yeah the market's crashing we're crashing our streaming software but we're back up thanks for paying attention thanks for sticking with us as we uh continue to run the show um do you know if this charger is working yeah it was working for me um you should There we go.

45:46There you go. We're back. So there's a quote from JP Morgan. I don't know if we want to read through this. It's pretty interesting. On a static basis. Yeah, this was yesterday, which is more or less a lifetime ago. Yeah. On a static basis, today's announcement would raise just under$400 billion in revenue, or about 1.3 % of GDP. Static basis meaning like if all the goods stayed the same and people just pay the taxes, which would be the largest tax increase since the Revenue Act of 1968. We estimate that today's announced measures could boost PCE prices by 1 to 1.5 % this year, and we believe the inflationary effects would mostly be realized in the middle quarters of the year.

46:24The resulting hit to purchasing power could take real disposable income growth in Q2 slash Q3 into negative territory, with the real risk of consumer spending could also contract in those quarters. This impact alone could take the economy perilously close to slipping into a recession. We, of course, saw on Polymarket that the probability of recession is now up around 50%. Headlines about retaliatory measures by US trading partners are already coming out, and we expect to learn more in coming days. The somewhat confusing nature of today's news, coupled with the uncertainty over how long these tariffs will remain in place, should make for an even less friendly environment for investment spending.

47:05We mentioned that with the CapEx stuff, though that is one way to narrow the saving investment imbalance and hence narrow the current account deficit. We plan to revisit our forecast later this week. So JP Morgan is not very optimistic. Yeah, Joe Weisenthal highlighted a chart from Polymarket. He says the odds of US recession in 2025 just jumped from they were sitting at 40 percent uh jumped 25 percent to uh did you see the uh restoration hardware ceo reacting live oh yeah finding out their stock is down 25 so there so restoration hardware was having an earnings call after the market closed uh as one does but it happened to coincide with this tariff uh announcement which of course restoration hardware probably sources from all over the world will be very seriously hit by this and he just uh has some expletives uh okay oh oh s-h-i-t okay uh uh uh i just looked at the screen uh i guess i guess you know the the the the stock went down you know based on some of the numbers we reported and then it got killed because of oh oh really i i just looked at the screen i hadn't looked at you know it got hit with i think the tears came out and you know i think everyone can see in our 10K where we're sourcing from.

48:23So it's not a secret. And we're not trying to disguise it by putting everything in an Asia bucket, you know? And he's just like having a really bad day. Rough. Very rough. Logan Bartlett took us back a couple months ago from a quote from Stanley Druckenmiller, the billionaire investor. Stanley Druckenmiller believes Trump's re-election renewed a jolt of speculative enthusiasm in the markets and surging optimism within businesses. Quote, I've been doing this for 49 years and we're probably going from the most anti-business administration to the opposite, Druckenmiller said on CNBC Monday. We do a lot of talking to CEOs and companies on the ground and I'd say CEOs are somewhere between relieved and giddy.

49:03So we're a believer in animal spirits. That was certainly the case during the Trump pump shortly after inauguration and the election. But then things have been cooling off, let's say, potentially in free fall because of how how rough things have been um rough you like this post uh by trevor scott tariffs on bangladesh slash vietnam are like a hedge fund manager fighting with his cleaning lady to get the right back to clean his own toilet saying that like a lot of the jobs that we've sent over there america doesn't want that's always that's always that's always up for debate because when when america does something we do it a little bit differently we still wind up producing the product.

49:45Obviously we use a lot of automation and the things that are made here. Um, and, and, and there's been, there's been a shift to bring, you know, auto manufacturing back to the U S and a lot, but although a lot of that's still done in, in Mexico and Canada. Um, but it, but it, but it is interesting to see, you know, if there really is big onshoring efforts, uh, what will those new factories look like? I would imagine that they are highly automated at least, at least hopefully. Yeah. And it's wild. Uh, Apple's also down. nine percent today so far uh still just barely over the 3t mark rough um but hopefully it doesn't affect tim cook's comp package because he was just scraping by yeah poor guy yeah poor guy poor guy should we go to ryan peterson he says uh remember that these duties are on top of existing duties so for china you have the original duty of seven and a half to 25 percent duty from section 301 then 20 % from earlier this year, then 34 % today, and 25 % for China's purchases of Venezuelan oil.

50:46So it's over 100 % just in the past few years based on Chinese products. And so we should see that work its way through the economy. I do wonder, I mean, a lot of Chinese products, they're just so cheap that even if you double the price, it's like, well, a DJI drone is still going to be cheaper than a GoPro drone because they were never price competitive to begin with. but it will be interesting to see this is all just news right now it's not really something we're feeling but the next time I'm walking around to Best Buy or scrolling on Amazon I wonder if the prices will actually shock me it's kind of unclear I don't think of myself as shopping that much generally, let alone shopping for international goods but again, so much stuff comes from abroad but a lot of times the things like i mean these water pistols that i bought they were probably like two dollars and if they go up to four dollars like it's hard to notice that you're still just like wow that's the cheapest thing i've ever seen like a lot of the prices were suspiciously cheap honestly like we talked about this with timu where amazon launched a clone and they were saying like okay guys if you're gonna sell couches the couch can't be more than 25 to be on this app and it's like i don't know if i even want to sit on a 25 couch like that doesn't seem safe they were like guitars can only to be eight dollars it's like i feel like a guitar is like a hundred dollar item right yeah so like if that doubles to 16 would people still notice it i mean certainly there would be an effect on the economy like people would buy less guitars this is just supply and demand obviously the demand for guitars is not fully price in elastic but it is just very funny that some of these prices were so so low i mean nike you know obviously the the cost of goods is going to get is going to go way up but i feel like nike shoes are a hundred dollar plus and so if those go up uh you know people are still going to want to buy nike maybe i i'm it's unclear to me i mean certainly hurts their margins certainly hurts their business but it's unclear what it actually it's just interesting again it's hard because nike react with how many shoes they need to make and then not having, if this was going to be, if these tariffs were going to be steady state indefinitely, they would have to make massive, massive changes.

53:02But if they think they're going to be rolled back, it's just so. I was thinking about ways to capitalize on this and I think the price of billboards in America probably unaffected by these tariffs. So you should go to adquick.com, out of home advertising made easy and measurable. No tariffs on billboards. Say goodbye to the headaches of out of home advertising. Billboards, folks. Only adquick combines technology, out-of-home expertise and data to enable efficient, seamless ad buying. And yeah, I mean, if you have an American-made product, like you really should buy a billboard right now and you should tell everyone because it used to just be, yeah, rah, rah, America, America, 4th of July, like we're made in America.

53:38There are plenty of companies that have been beating that drum for a while, but now is like really, really the time it'll drum up investor interest. It'll drum up employee interest. Like if you are, if you are long America, like it's, it's a great time as we saw with, with Chris and Hadrian. Um, anyway, there's another post in here. I want to go through. Uh, I want to finish out some of Joe Weisenthal's thoughts. Uh, so, uh, okay. So, uh, this is Joe continuing writing in his Bloomberg newsletter. He says, okay, well maybe we shouldn't set economic policy for the whims of the stockholding class.

54:10Yeah. I'm down with that. But what's interesting to me too is just how reviled all of this seems to be across the board with the only real specific voice of support, the old legacy industrial unions, which are not a big part of the economy. Again, go back and look at the comments from the manufacturers in the latest ISM. They all hate it. Or go back and look at the comments from the latest survey of oil and gas companies by the Dallas Fed. It's just really hard to find a major material constituency for this level of trade. And the reason it's hard to find big supporters of this policy is because the logical or sequential link between trashing trade and creating new wealth is very hard to see.

54:50What are the new growth industries going to be? Who is going to finance the redevelopment? China famously crushed its own real estate and internet sectors a few years ago, but at the same time, it directed its banks to lend more aggressively to its hard tech and manufacturing sectors. And so I think Chris would say, yeah, that's exactly what we want to do. We want the government to direct the banks and the venture capitalists to lend it more aggressively to hard tech and manufacturing sectors. And we're kind of seeing that, but it's interesting because I don't think broadly in America, people believe in the American dynamism movement.

55:29I think in BC, people think it's cool. And I feel this way where it's like, we're talking to a kid from Stanford today who like makes laser weapons and I was just like that sounds awesome but when I really think about it I'm like look I don't know if you have a real business yet you probably don't you're you're young and you're just figuring it out and I don't know if there's like a program record and really good easy way for you to scale this business up and create a power law company blah blah blah but I just think it's cool and I think that's how a lot of people perceive these hard tech and manufacturing projects they're like it's a cool science project I don't know if it's going to work out, but I want to support it.

56:03So I'm just going at it. Whereas I think, I think China was a lot more, uh, uh, rigorous about this is a good financial bet for us. We're going to lose a lot of money in the short term, but we're going to gain a lot in the longterm. And I don't think as a country we're thinking like that yet. Like there's a lot of people that go to the re-industrialized conference and they're like, this is awesome. I hope it happens. But like, I'm not really going to pull my money out of bang to do this. Right. I'm not going to move, you know a hundred billion dollars over for this there needs to be the ai narrative for to get like the masas of the world to do it and then even when masa does it you have plenty of people that are like this is a top signal this is too crazy it's impossible and i don't think they were saying that in china yeah which is interesting no and it's a fascinating situation right now where so many people in our you know industry and in our corner of the internet broadly think this is just a terrible idea yep uh we we have some people that think it's great but a lot of smart people think it's a bad idea and I'm sort of sitting here hoping that the admin you know as somebody that ultimately wants America to win yeah and thrive I'm hoping that you know we're at a very crazy time right now but i think uh i'm sort of hoping that the the admin uh has a crystal ball that the rest of us don't have and is you know yeah clearly they're they were convicted enough in in this initial decision yesterday to to go out and do this press conference like the first time yeah that's true it's also true um but uh yeah let's continue with joe in In fact, oh, I think we got our next guest coming in.

57:47But first, let me tell you about Bezel. Go to bezel.com. Get bezel.com. Buy a luxury watch, folks. I know the stock market's down, but there's never a bad time. Yeah, we were talking with Quaid yesterday after the show, but prices are going to have to go up from ADs. But if you move quick on marketplaces like Bezel, it's very likely that people won't immediately reprice there. their watches. So it'll be interesting to see that. The market goes down, but you still look at your beautiful watch and you remember that the point of a watch is not to tell you the time, but to tell you the time of your life.

58:27That is right. Shop over 24 ,500 luxury watches, fully authenticated in-house by Bezel's team of experts. Thank you to Bezel. Thank you to Bezel. Coming into the studio, we have Akel from Shield Capital. I'm very excited to talk to you, Mike. Boom. Yesterday. How you doing? Hey, good, John. Good, Jordy. Good to see you guys. Thanks for having me on. Yeah, thanks so much for taking the time. Would you mind just giving us a little brief overview, maybe some of your history, what you're doing now, and just kind of generally how your week's going? Yeah, absolutely. And a great discussion prior to, I think, a good tee up to what needs to happen by 2027 and what needs to happen by 2049 when it comes to our own national industrial base.

59:13But I did RTC in college, wanted to go serve, had the opportunity to serve in the Marines as an infantry and special operations officer. Left my time in active duty in 2019, like many other vets, Brandon included, that you'll have here soon. Both amazed by the type of technology we had that the U.S. and its allies could provide, and also incredibly frustrated by the lack of some of the basic commercial tools. And had the opportunity via some mentors to connect and help build a new fund, a new venture capital fund, Shield Capital, where our focus is this nexus between commercial technology and national security.

59:47We cover early stage, you know, so as early as a dream and a team on day zero across autonomy, cybersecurity, AI, and space. That's great. Jordy, you want me to? I mean, I'd just be interested to get your immediate reaction to the news yesterday. And yeah, and then there's, you know, we got a bunch of other questions to go into. Did you have an immediate reaction yesterday. Our point of view, I'm sure you heard is, you know, it's hard. Some stuff is going to, you know, go poorly. Some stuff, you know, some groups and companies and industries will benefit. But I'm curious what you thought. Totally.

1:00:25Yeah, I guess I'll reemphasize the point that I made to start off. It is we had to look at this near term, 2027, this Admiral Davidson window, for those who are familiar with it. How do we protect our interests in the Asia Pacific region and how do we look at it in 2049 structurally, right? So tariffs, whatever you want, has immediate near-term structural effects. But a lot of that's not, we are going to have the industrial base we have by 2027, right? That's not that, that's 18 months from now. So we have to figure out what we can do with the capacity we have. And I'm always reminded by Churchill's quote, while America might be first, the only thing worse than fighting without allies, I'm sorry, fighting with allies is fighting without them.

1:01:06So there's an aspect to that. But ultimately, how do we make the structural changes long term? So as we look at this 2049, particularly as again, looking at this in the national security context, how do we beat and win out technologically, geopolitically against the PRC, what that structure looks like far beyond four years worth of tariffs? Can you break down the significance of 2027? And why? Why we need to be sort of like orienting our defense planning around that date just for obviously people in the industry, you know, understand it, but a lot of our listeners are, you know, in other industries.

1:01:42Absolutely. Well, you know, this comes originally from Admiral Davidson, who used to, prior to his retirement, run the Indo-Pacific Command. So this is the Asia-Pacific four-star command that's really in charge of protecting U.S. interests and deterring would-be adversaries, namely the PRC, from conducting actions, whether that's Taiwan or elsewhere. And 2027 came about as this sort of potentially vulnerable moment in which we as a nation and those that are willing to support us to be ready to defend our interests. And so you'll see that a lot in the narratives, and you'll see that a lot in terms of what capabilities can we really deploy at scale and at speed to defend our interests come 2027.

1:02:23And that stands, obviously, that's super near term, guys, Right. You know, only so much can get done within that period. And so there's this two horizons, just like any, you know, coming from the venture world. Right. You want entrepreneurs to be looking at multiple horizons, the near term one, but then also look for what that long term structural changes will be. And so that's the 2049. And really, that's that aligns with the, you know, 100 years of the Chinese Communist Party. Can you talk a little bit about Chinese competition with regard to robotics? there's some high-flying startups in America, there's some just young hacker kids building cool stuff, a lot of awesome demos, but it feels like the financial markets aren't taking humanoid robotics as seriously in America as they are in China.

1:03:06Is that a mistake? What are you seeing in humanoid robotics? Yeah, great question. And I'll tie it together with AI, just because there's just so much intersection between the digital AI world and then AI applied to hardware, right? Yeah. I grow increasingly concerned that we are just frankly behind. Yeah. In terms of the model development, the application of hardware and the synthesis therein, both from a hardware standpoint, from the software standpoint, and then critically, the ability to test. Yeah. I mean, part of it is just, let's get the things out there. You know, as a prior Marine, I'll always remember, you know, we get taught in sort of military history class, you know, the French had better tanks when World War II started.

1:03:46But who tested them better? It was the Germans, right? They just got them out there and they just started testing with them and experiment them at a pace and scale that was far greater than anyone else. And so you see this environment now and a lot of the things that need to happen are actually regulatory in nature, right? How do we reduce the barrier for folks to actually go out and test either all sorts of robotics applications, right? It doesn't actually have to be pure humanoids. It can be autonomous systems too. And then how do you combine that with actually getting some of these deployed at a scale that you need to?

1:04:18The last point I'll say specifically around robotics and autonomy is that I don't think, well, let me say from a capital deployment perspective, I think there's a real interest in, and you had some folks come on last time, last week when we talked about defenses, is being willing to make some really big bets and be able to provide the necessary capital to help them deploy at speed and scale. Obviously, we're an early stage small fund to start off with. We We have big dreams, but we want to be a part of that journey, particularly if that journey is here in the US. That's very cool. Can you talk a little bit about logistics and just how can we increase resiliency there and what startups are kind of tackling that or how should they even think about tackling that?

1:04:59Yeah, great, great question too. Let me start framing it by, I look at the defense, national security space. And again, we at Shield, we think pretty broadly when it comes to national security, right? So that is anything that touches autonomy, AI, cyber and space that has an application to build. When I think about the national security context, it's how do you sense, make sense, affect, and sustain? Sense is easy, right? That's satellites like Topher came on, one of our portfolio companies, right? He's sensing the environment and making sense of it. How do you affect it? So what are you actually going to do about it?

1:05:28And that could be something physical. That could be Brandon and Shiel AI drones, or that could be non-physical, digital in nature. And then there's a sustainment part. And I think this is just such a huge opportunity. There's a lot of companies working on it and so much more to do. And I specifically call it sustainment, not logistics, for a couple reasons. One, this term of contested logistics, while important, doesn't get to the root of the issues, which is how do you both operate in a constrained environment? So how do you do things when you know you're going to run out of fuel or you're going to have these certain constraints?

1:05:59And then how are you going to sustain it more broadly, not just from a physical movement? So there's two aspects. There's a very physical hardware component to it. We need just more munitions. We need more capacity here to do it. Knowing, though, back to the two horizons, by 2027, we may not have all of that. So you just need to be able to digitally operate and be more efficient with the things that you might have now or within 18 months. And so I think there's just so many opportunities here in terms of how you deploy at the edge. So what capabilities do you decide to go produce in the edge being some location where it's easier to get to?

1:06:36How do you combine the two together? And then how do you use artificial intelligence to actually optimize it all? How do you think about 2027 as a wedge for new defense tech companies that are emerging? A lot of companies come in and they're just focused on legacy systems. Like, I want to build a better version of this missile. And I think I'm going to be able to get a contract because the DOD doesn't want extreme vendor dependency on like one or two old primes versus you know looking at 27 2027 in taiwan and saying hey we want to build a capability for this specific um uh you know potential conflict and is that an opportunity or or do you know is that not even the right way to think yeah i mean a lot needs to happen in 18 months right but that's not the only timeline i thought you brought up some great points in the group that came last week about you know trying to build a feature within the defense space there's only gonna be so many andurals right yeah um there's only be so many that can that can speed and scale now do i think there's more opportunity to do so absolutely that's why we're in this business it's not the only business though i think there's a lot of enabling features to your question some of the most interesting things that i found from say the conflict in ukraine weren't necessarily the the missiles and drones it's how did they move their their physical their their administration to a digital environment using outposts and snowballs to actually make sure that the state functions, right?

1:08:04You wouldn't necessarily think that it's like core national security, but to me, that absolutely is, right? Half the challenge with a lot of the AI applications is you don't have the models accredited. You don't have the models deployed in a way that they can actually be used. And obviously that has a compounding advantage, the more times you can get hardware, the software, and the data together. But directly to your question, I mean, I still there's a ton of room, right? There's a really unique moment in time, especially now with the desire to want more startups within the ecosystem. You know, my colleague just testified to the Senate panel with regards to cyber reform.

1:08:38So how do we actually use our small business innovation research dollars to actually incent, not necessarily just small business or ones that are turning that through, but the ones that actually want to go and scale it and go scale to something bigger, like a traditional pilot program should be. Can you talk a little bit about edge AI, We've seen like the Studio Ghibli moment. We've passed the Turing test. Waymos are driving around. Like, is there something that we should, we've seen those drone shows that seem like, okay, that's a weapon system. What AI kind of Studio Ghibli moments are we waiting for in defense?

1:09:11Is there anything that you're excited about in Edge AI? Yeah, you know, with you guys at Founders Fund, we're invested in a company together called Armada. And it's really kind of giving me a new glimpse into what not just Edge, So edge being where am I going to deploy compute? Again, go back to the sense, make sense of the environment. But how am I going to connect together with some cloud-based, right? It's always going to be some disaggregated network there. But what I'm excited about is, I mean, there's just so much that can be done with smaller models and with reasonable compute, knowing that we're only going to get so much compute.

1:09:45And we talked about tariffs earlier, right? There are those bottlenecks that exist. We're not going to produce the best in semiconductors overnight. And so we have to be able to do more in those environment. I know Anderil is an early pioneer at that, right, in the national security space. How do you bring computer vision and other aspects of sensor fusion with other modalities together? And that's just only the start. So I'm super excited by that. And I think it meets a lot of the customers where they're at, not just for national security, right? People are worried about cloud bills. People are worried about how much, like, what am I actually getting for AI return on investment with all the compute that goes into it?

1:10:20Do you think there's enough private capital going into defense tech broadly? There's been talk of, we've seen over the last year, investors that have no background in national security, sort of FOMOing into the category, but maybe that's actually good for America because we just should have more private investment coming in. Yeah, I guess as a, let me first say, I'm glad that there's more people interested. I mean, I don't think you need to have a military background to do this. I think there's amazing American patriots that just want to get involved and they have really core technical skills elsewhere.

1:10:57I think it's helpful that folks came from the visceral operating experience, but that's not necessarily necessary, nor arguably is that why you should go pursue that path, right? Go serve because you want to go serve and you want to go defend the nation. It just so happens that I came out of that experience having some really interesting insights that I thought I could go leverage and go help out within the space and be able to support. Actually, I love, most importantly, I love when non-military, non-nash security, just amazing entrepreneurs and technologists just want to go tackle these problems.

1:11:31And we're able to help them out. I'm not the best when it comes to what's next in computer vision or distributed models, but you know what? I can help you find the right customer set or identify the right contract vehicles. That's what our fund does. And so that point's actually most exciting is how do you get the folks who may go to Snapchat working on some background filter to actually work on some really cool problems within the national security space that have the same technical aspects. I think our audience is probably familiar with the idea of if you're starting a defense tech company, you might start with some SBIR money, then you're kind of sprinting towards program of record.

1:12:06Maybe there's the valley of death where you have something that's working, but you're not ready to really start producing it at scale. What are the other pools of revenue that defense tech entrepreneurs should be thinking about? And can you give us a little more granularity or sense of scale of, you know, how should I be thinking about an SBIR? How should I be thinking about a program record and everything in between? Yeah, absolutely. I'll keep it quick because I know we're on a clock here. Let me give you a financial answer and a non-financial answer. I think both are important. That's great.

1:12:37The first is right. It's not just SIBRS and program of record, right? And you saw the Secretary of Defense's memo around use of the newer software acquisition pathways and specifically other contract vehicles or other transactions to help facilitate this. And that's exactly what organizations like Defense Innovation Unit are there for. So there is this middle ground that I think is being tapped now far, far greater by the new entrants within the national security space. I'll give you a non-financial answer too. Sometimes an unpaid pilot is super helpful. Oh, yeah. Going on a Crata, which I think, you know, Saronic and others had done in the early days, access to data, access to testing environments is just as important, particularly for those within the autonomy space, right?

1:13:18That need to go test and validate, get access to the right data, or just have ranges where you have at least a little lower barrier to entry when it comes to flying, certifying, et cetera. That's great. Last question. No, this is great. Yeah, this is awesome. Thank you so much for stopping by. we really appreciate it thanks guys thanks for having me back yeah we'll have to have you back on soon thanks so much yeah i would love to cheers talk to you soon well next we got phil erenstein from drac coming in the building we'll see when he gets here any minute now um do you remember my brutal mispronunciation oh yeah what was that ever again what was it was it that you mispronounced his name or was that you called him a kid and he was upset about that there was something it was probably both now is your opportunity to say you're sorry man culpa I did.

1:14:04I did. We made up. Never apologize. Always claim victory. I pronounce your name more correctly than you pronounce your name. No, I love Phil. I met him, must be a couple of years ago, probably through Augustus. And I think he moved out to El Segundo, was like sleeping in the factory with Augustus, getting the company off the ground, but has done some amazing work building out his business. And we're excited to talk to him today. So welcome to the show, Phil. How are you doing? boom living life life's good rocking and rolling we're out here in new york uh very apt uh introduction thank you uh mr coogan yeah i heard you're in the the empire state building is that right that is correct we are in the capital building of the capital city of the empire you know what better place to help rebuild the american empire if i uh take my camera and pivot behind me you can kind of see overhead that's the wow that's the view i love it it's much A little bit of a foggy day, but on a clear day, you can actually see New Jersey.

1:15:08Oh, very cool. And we've intentionally positioned it such that, you know, we can keep an eye on them, make sure they don't invade. Okay, okay. Yeah, yeah. A little Manhattanite nationalism. I like it. Have you thought about getting – have you thought about trying to get logo rights on the building? Yes. Throw a big sign up there. Funny enough, if you text like one of those five-digit numbers, you can actually get daily updates on how it will change the colors for the building. Oh, really? Okay. That'd be fun. Yeah, we got something cooking. Yeah, you got to get like an iconic colorway for the company so that when you throw it up on the building, everyone knows these guys are working late tonight.

1:15:41They threw their colors up on the building. You know, like Ramp owns yellow. YC owns orange. You need to pick a color. It's probably going to be, you know, we're building the blueprint to the future. So maybe blue? Some variant of blue. I love it. I love it. I mean, we jumped right into it, but can you give a little background on like the company, what you're building, where you are in terms of the kind of stage and size. Sure. I'll give everybody a little bit of background about myself. Backgrounds originally in electrical engineering and robotics. I was over at Northrop Drummond for a little bit, got TS clearance, worked on some pretty cool radar stuff over there.

1:16:15Did a little bit of EE work, a little bit of mech-e work, a little bit of technician work. Over there, just got to see how absurdly archaic all of the infrastructure was on the manufacturing side of things. We're starting to get the feeling that the West was forgetting how to build great things and I wanted to make sure that that didn't happen. So I got my best friend and co-founder and went to go start the rack. So as a company, we are building the first automated work instruction plan. Sounds like a very vague, very niche thing, but it turns out everybody actually has had experience with work instructions.

1:16:45If you've ever built like Ikea furniture, a little paper instruction book that tells you how to build a thing. Turns out that is actually basically how they make missiles and cars and everything in between so that process is like imagine you're a dude in a factory somebody says here is a cad file or a 3d model of like an engine go figure it out like literally go figure out they will like pull this assembly apart they'll figure out what order to do the assembly and super duper make manually take hundreds of screenshots or photos and then throw all that together into a several hundred page document or work you know word doc or powerpoint over the course of weeks or months.

1:17:22Super brutal, super manual, sounds as awful as it is, almost as bad as being like a McKinsey analyst with like a hundred page PowerPoint. It's like making an Ikea slideshow by hand. Yeah, yeah. I think we saw this week some videos went viral of folks painting artillery shells by hand and the artillery shell moves from one station to the other. And the basic commentary was like, how are we still doing it like this? This is not great. But you could imagine some work order system was built at some point for that. And that kind of concretizes what you're building. So, yeah, how's it going? Where's the business now?

1:17:58Are you live in public beta? How much does this cost? Like, how does the business actually work? Right. So what CAD, you know, CAD's offer was for mechanical engineers. We're building basically that 21st century update to the process for their blue collar counterpart. First we call the manufacturing. Got it. We price pretty similarly. We price 5K per seat per year. It's a C-based system. We actually, great timing for me to come on the pod and chat with you guys. We actually just went live and announced BuildOS V1 yesterday. You know, fully live. We are now enterprise-grade ITAR compliance. We love an ITAR compliance company on the show.

1:18:39Congratulations. Ah, epic. Thank you, fellas. So, yes, we can now deploy on-prem to defense customer. We're already working with some defense companies. We're working with a bunch of automotive companies. We love tier one through three suppliers, OEMs. Got a bunch of really cool companies that are not just, you know, aerospace and automotive. These are like the only two industries that apparently most people think exist. But, you know, we're working with like agriculture construction manufacturers. These are companies that like recent one that we just started working with. Super cool company called Spudnik.

1:19:10These guys make the potato harvesting equipment. That's a hilarious name. I love it. but it's a Sputnik moment for potato farming, apparently. Yes. We're off to the races. Product is live. We're deploying. Congratulations. What is it like deploying on-prem? Does that mean you have to package your software up and send them like a CD or something or floppy drive? Not a CD. The caveat here is that they have to have their own cloud-based resources themselves. Got it. So you can still interface with APIs as you need to. Yeah. Yeah. It's a little bit more complicated than that, but I'll sort of leave it at that.

1:19:45Like they have to have some sort of like cloud-based infrastructure. Okay. To deploy it via Terraform. This is a thing we can now do, ladies and gentlemen. Oh, cool. Yeah. There's certainly a process for it. I'm sure you've been talking to your customers constantly as one does, but what's their broad reaction been over the last 24 hours? Are people, I imagine some of your customers are super excited about the tariffs, others unsure, others negatively impacted in varying ways, but you know give us the update there yeah so on on the whole tariff thing uh man so some of our customers are a little bit upset because prices are going to go up for them um it sort of depends where you are um industry-wise that's yeah so that's that's like the input costs are going to go up because maybe they're sourcing in the short term in the short term um you know they're pretty upset about that um on a couple of different vectors but it again depends like if you look at the what's really cool about like our company is we get to see like the wise varieties of like the coolest CAD files coolest assemblies you'll ever see and so you know if you look at like the hierarchy and the structure of a CAD file it's very tree-length and so that hierarchy of like an assembly of sub-assemblies of sub-assemblies of sub-assemblies really neatly mimics the supply chain of that product there's some really really neat novel insights that we get to see and so if you are like a one of those sub-assemblies you're called like a tier one to three supplier if you're making like the top level thing and you're like you know an anduril or a toyota you're an oem the oems are a little bit more upset than the tier one through three suppliers um as from what i've seen um and so more broadly like material input costs are like closer to the tier one through threes than like the oems the oems get like the final markup which is sort of like a pain uh and so that's kind of what we've seen but i think by and large people are short-term like upset long-term pretty excited because what it means is it's going to force a lot of capital to be allocated towards rebuilding domestically, which is honestly what a lot of the folks that we work with want, right?

1:21:47You want your supply chain proximal to you. You want to have expectable lead times. That's been one of the worst things that a lot of folks we work with have seen. For a company, for an at-scale company like a prime like Northrop, for the average product at Northrop, Do you have any sense of what percentage of the parts that go into a specific end product are American made today? And do you think that companies at that scale are going to feel like they need to react and even invest in some of these tiered suppliers? So I don't have a perfect number for you. But what I do know is that companies like Siemens, companies like Stellantis, these are companies that are global in nature and actually not like traditionally headquartered in the U.S.

1:22:36And we're seeing a lot of them shift more of their production to the U.S. immediately. Like over the past couple of months, we've seen huge announcements from Siemens and Stellantis to move production to the U.S. and open up new facilities, triple down on American-based production. Because if you are selling to the American market, you want your cost to be as low as possible. And so it only makes more sense to have your production be domestic. So, yeah. Yeah. How do you think about, I feel like, one of the bottlenecks to Durac's growth? I said that right, correct? Durac. Durac. Durac. I'm going to get it this time.

1:23:14It's Iraq with a D. uh one of the bottlenecks to directs growth is going to just be having enough if you're selling by the seat having enough manufacturing engineers right i yeah i don't i wish i knew more myself um how do you think about kind of like the talent equation to solving um you know to re-industrializing so there's uh okay i i can get on my soapbox there's like a couple there's like two to three pieces get on it get on it get on it you know broadly um kind of interesting the number of manufacturing, I'll give you a little bit of like the history lesson of the blueprint in general. So basically until like the like early seventies, mid seventies, engineers and manufacturers were connected by one thing.

1:23:57And that was the blueprint, right? Like classic cyanotype blueprint that you imagine in your head when you say blueprint. And then like the, you know, late seventies, early eighties, CAD software emerged and became ubiquitous. And basically all of the mechanical engineers who were on the shop floor, super well integrated production, they were more blue collar than white collar generally all of them basically moved to the back office went from being generally blue collar to white collar and basically since then like many fact like the mechanical design had become like totally divorced from reality you often now have like mechanical engineers never going to shop floors oftentimes designing systems that are generally like not manufacturable and so the blueprint was basically like fractured into two parts cat software on the design side work instructions on the build side cat software got a ton of upgrades for 50 years work instructions never did that's what we're working on and so when that happened you also saw like the you know the archetypal mechanical engineer also fraction you know fracture into two different people like the mechanical engineer that's like your more typical like design engineer and a manufacturing engineer so actually if you look like statistically in the us they're actually roughly the same number of mechanical engineers as there are manufacturing so there's like around 300 000 of these folks in the US, I mean globally.

1:25:09So it's actually like a really big popular job. It's just like, you know, this is where you would like get a mechanical engineering degree. And like, you know, half the time people will just like go into manufacturing engineering. And so there was an enormous, so back to like the portion of like the labor base. These are the folks who will get a CAD file and like figure out how to put this thing together. And their documentation systems suck. I mean, it is like, oftentimes if it's not PowerPoint or Word, it's a post-it or like the back of their head. So what we've been seeing, unfortunately, is, you know, especially post-COVID, you know, a lot of these folks are retiring.

1:25:44A lot of these folks have all this information locked up in the back of their heads as tribal knowledge. And so, yes, like we're automating like a good chunk of the grunt work of making work instructions. You know, we take a CAD file in, we automatically figure out how to put it together, automatically generate 80 to 90 % of the work instruction. But that 10 or 20 % that we can't automate, that is like the tribal knowledge component. And that is what we serve as like a data aggregation platform for. So a lot of what we see is, you know, average age of the American manufacturers, like somewhere between like 45 and 55.

1:26:13I like to say 55 just to be a little bit more precautionary. And, you know, in the U.S., we do not want cheap labor, right? We want smart labor. That's what we want to be advocating for. We want to build new technologies. We want to build new manufacturing systems that take advantage of automation. But we do not want to like replace people in general. We want to augment and aggregate as much of their tribal knowledge and make it into the systems that we use for the next generation of American manufacturing. Like that's kind of how we see it. However, what we've seen like for our customer base, generally speaking, is, you know, the classic question of like, oh, like I buy like some direct software now because I can do the work of 10 people with one person, I can lay nine people off.

1:26:55And it's like, no, no, no. It's actually that, you know, because nine of your people retired, you're still up with one. Now I don't have to shut my manufacturing facility down. So like, that's where we see a lot of the value add and value generation, but also more broadly as a company, we're not just staying in work instructions. That's just, you know, where we're in your head. What do you think about MBAs buying small manufacturing businesses, rolling them up? Last question. Brutal as a concept, awful idea. I'm actually generally pro engineers and manufacturers rolling up SMBs and mid-market manufacturers.

1:27:30This is, I think, a very interesting concept as a whole, if you were to like, you know, if you as a, as somebody with a, like a hardware background had a very specific like search fund for like pumps or valves and you like really knew who to like, like where the optimizations could be generated. If you came in and you were like, we're going on Google drive guys, like no more like writing stuff on post-its. Like that could be very interesting. That's useful. But like an MBA comes in and they look at the PNL and they're like, ah, like cut everybody over 50. And it's like, no, the tribal knowledge.

1:28:03That's like where those guys knew how things fit together you didn't write it down and now your factory doesn't know how to build shit anymore and now we're serving and we're kowtowing to china and it's over and it's over but we don't want that to happen never kowtow never kowtow well thanks for coming on the show this is fantastic this is great uh you gotta come back and you have more news i'm sure there's gonna be a ton this year it's a crazy time crazy year and we're excited uh for what you're doing out in new york keeping manhattan safe from those new jersey folks yes thank you guys for having me and I will catch you guys later.

1:28:35Looking forward to the next one. Cheers. Hello, Phil. Great dude. Always a - What a guy. Very well spoken. Yeah, just high energy. Knows his business. Lots of good takes. Tapped in. You'll love to see it. Well, speaking of tapped in, we got Zach from Plaid coming in next. He had some big news today. Fascinating story. Fascinating company. If you ever authenticated an OAuth with your bank, you've probably seen the Plaid pop up and he is here now. I'll let him explain business. this because he probably knows it way better than I do. Zach, welcome to the show. Hey, guys. Thank you so much for having me.

1:29:09It's great having you. Yeah. Can you give us a little background, maybe brief introduction to the company? I think most people know, but then specifically, what are you announcing today? Totally. So Plaid, we build infrastructure for digital finance broadly. The core thesis is banking was built for a world that didn't envision the internet. We wanted to help people be able to get loans, open bank accounts, pretty much do anything in their financial life online. So we created the API for your bank account. You probably utilized it when you linked your, let's say Wells Fargo checking account to the Venmo app.

1:29:42Any bank account that you linked to pretty much any fintech company, we build the plumbing for all of that. Increasingly, it's not just fintech companies now, but it's the big banks, the way that you open a checking account with Citi goes through Plaid, and then a ton of enterprises. So the way that you pay your rent with Invitation Homes or a bunch of those, all that stuff's going through Plaid. Last few years, we had a big change to our business. We historically just focused on bank account linking. Now we're very focused on utilizing a lot of the aggregate data that's coming through our system to build things like a new version of fraud scoring.

1:30:12If we can see your patterns, you see that you committed fraud in Robinhood. We can tell Venmo that you committed fraud. We can tell your bank that you committed fraud, so on and so forth. We built a credit scoring division that builds alternative credit scores. I think we built a bunch of tooling to do better bank links payments. So it's been a big evolution for the business over the last two years or so. Yeah. Yeah. Talk about the time period. I guess it was like late 2022, 2023. Everybody just said, okay, FinTech is over, but you obviously have like more better data than everyone. And so you can see that like, no, in fact, like FinTech was not over despite VCs, you know, maybe opining on podcasts.

1:30:49Yeah. Talking on podcasts. I'm sure you never lost faith, but I guess like talk about you know where we were a couple years ago versus now totally i mean like i i fintech had a winter uh crypto has winter as fintech definitely had a winter um basically there's a crazy amount of fintech demand pulled forward into 2020 when people couldn't go into their bank they need to figure out a way to do connected services online um 2021 zero interest rate environment you had you had things growing like crazy you had tons of ad budgets so on and so forth um first half of 2022 was kind of a continuation of all of that.

1:31:23And then interest rates started going up in the second half of 2022. And in large part, the fintech market wasn't prepared for that kind of change, certainly not that kind of change at the speed with which it changed. A lot of fintech businesses were predicated on lending and lending slowed down quite significantly. And a lot of them were predicated on investing or crypto and those markets slowed down quite significantly. And so So you saw a slowdown of fintech in the second half of 2022, and then kind of like a bit of lethargy throughout kind of the first half and almost the second half of 2023.

1:31:57And a lot of that was the businesses themselves like retrenching, going in and focusing on profitability. It was no longer growth at all costs. You got to build a model in which you're actually profitable. You're not just gross margin profitable, but you're operating margin profitable. A lot of it was also like retooling from focusing just on, you know, investing and crypto to also doing things like core banking and a bunch of other services. And so you saw this whole rebuild of all of the fintech companies. And then going to 2024, there was a rebound in 2025. We've seen very much a fintech spring, as I like to call it.

1:32:28So things are moving really quickly. There's a ton of startup formation at the earliest stages. In the mid stages, these companies have retooled they're now back to growth. At the late stages, you're about to see a couple of IPOs. So Klarna is coming soon. We think we've heard that China is coming soon. I've heard that a bunch of others are coming soon. And so, you know, it is very much a sense of optimism right now. But, you know, going through these cycles of difficult times, I think it makes companies and in our sense, I think an industry a lot stronger. But I can't say it's fun to go through.

1:32:59Can you talk about stable coins? How are you thinking about that in general? It seems like there would be some cross pollination there, but also like it's a wildly different industry in many ways. Yeah, and specifically, you don't need to speak to this, but we were covering the Circle S1 briefly. It feels like they benefited from some amount of a monopoly temporarily, and maybe that's fading, but just creates more opportunity for other fintechs, SMBs, and banks. Totally. Well, I haven't read the Circle S1 yet, so I wish I could comment on that. No, don't comment on that, to be clear. The, like, broadly stable coins, like, a huge opportunity.

1:33:38You know, in the U.S., if I want to send you money over the ACH system, it takes three days. That doesn't make any sense. We have this whole new thing that's rolled out over the last few years called same-day ACH. Great, I can send you money the same day. There's an RTP system, real-time payment system, where I could send you money theoretically instantly, except not every bank accepts it. It doesn't work universally. Like, there's still some issues with it. And stable coins, I can just send you money really easily. And so there is no question in my mind that stablecoins are going to grow quite massively.

1:34:05I think there's still a question on consumer utilization. How is it going to get actually into consumer payments where no one's going to walk into a Starbucks and buy a coffee with a bank account? No one's going to walk into a Starbucks and buy a coffee with a stablecoin. Certainly not for any amount of time that I can think about, maybe 10, 15 years in the future. but for a lot of the core, you know, business to business, especially cross border where it's really messy types of transactions, I expect it to grow quite a lot. So definitely an area that we're participating. We're working with a lot of companies on and we're excited to support.

1:34:36On that topic of like the slow ACH transactions, that feels like something that I understand the value of crypto, but also like databases are fast now. Is there a world where if you were put in charge of like doge for finance like dofe or something and you just had like carte blanche in the government you could speed it up or is it not like a personal issue you can you think you can do it yeah how would that actually work it's like the the federal reserve has a system called fed now yeah and fed now is actually just like instant bank to bank transfers yeah and they're cheap the interesting thing is um it's actually a new revenue line so the bank bank would make processing revenue from this so there haven't been a lot of new new revenue lines uh for the banks recently.

1:35:18The issue is like getting banks to install it, getting banks, like setting up the right incentive systems to get banks to actually set it up. There are like, you know, a few hundred banks and they're mostly small banks that are using it. I think there are like four or five easy changes. You change the incentive structure, you create a mandate that every bank has to support it. There are like, like this, this, the small set of changes that you could get instant bank payments running in the U S very quickly. Now it's a question of like, does the government add the appetite to force things upon the small banks?

1:35:44And like, it is costly for the banks to implement it. It's not crazy costly, but it's not zero cost. And so does the bank, does the government actually have the appetite for something like that? That's really helpful. What, what are you, it feels like there's so much to build still. I had to go to the bank yesterday to send a large wire and it's still like, every time you do that, you're like, you know, they're looking at your phone and they're like writing down the wire instructions and they print it out and they're like, can you confirm it again? And then they're like, can you sign this and can you sign that?

1:36:16And then I got to text the recipient and the whole thing still. Do not copy and paste your account number twice. You can copy and paste it in the first box, but not the second box. I feel like this is such a beautiful time for Plaid. You're a founder run company. You have incredible distribution and there's still so much yet to build. What gets you most excited in terms of, I'm sure you just spend a lot of time talking to big bank CEOs and startups and your position is just like how can we enable you to do what you want to do or or improve existing products but kind of what are you most excited about in the uh plat ecosystem uh or i i get to have the most fun conversation in the world with our customers and with the banks i get to go in and say hey what frustrates you about the financial system and they will just like talk for 30 minutes i'm like amazing we can't solve all that we can solve these things yeah and we can work together to solve those things.

1:37:10And like maybe over time we can, as an industry, find a way to make better. So they're incredibly fun conversations. To your point, like financial services is just barely becoming digital. And, you know, it's crazy to say that because, you know, you have online banking and, you know, maybe use Venmo and maybe buy some Bitcoin on Coinbase and you can make a trade on Robinhood. That seems really easy to you. But to most people in the U.S., most of their financial life is still not fully digital. And so I think just the core of our business has a lot of room to grow, a long way to keep running. We've got to get rid of that, hold your phone up, type in your account number.

1:37:44All that stuff can become instant and easy. I would say the two big areas that we've really been investing in that I think will be game changers over the longer term. So obviously, the core business matters a ton, but the two new areas, the first is fraud detection. So online financial fraud is going up at somewhere between 20 % and 25 % a year off of a gigantic base. Deepfakes are having a big impact on this. A lot of AI tooling is having a big impact on this. I mean, you've probably heard of the pig butchering stuff that's going on where people are calling folks and tricking them into sending Zelle payments to crazy places, so on and so forth.

1:38:19But that is at an all-time high and going up really quickly. And so we've built a set of tools that look across all the data in our network. They ingest a bunch of third-party data. We have customers reporting to draw data back to us. And you can kind of think of it like Palo Alto networks for financial services. So how do we notice if something is weird over here and then tell everyone over there that they should maybe be on alert for it. So that's one big area that we've been focusing on. The second big area is around credit scoring. So right now, if you get a new job tomorrow, your income goes up by 3x.

1:38:47It will take a very long time for that to show up in your credit score, right? And, you know, because you have to get loans, you have to then repay the loans. And like for the whole thing to trickle through the system, it doesn't make any sense. But you are a better credit risk today because you got that new job. And so we've built a series of tools, including our own credit score, that looks at real-time data and brings it into the model and then increasingly will allow more and more people to get loans that are based on today's data, not five years from now's data. So that's what I'm excited for.

1:39:15Yeah, on AI specifically, in Plaid, just in fintech generally, do you think it certainly hasn't felt like the most hyped category? And maybe that's because 10 years ago, people were promising sort of like AI-based lending and all that stuff, and maybe it was AI, maybe it wasn't. Do you think it's getting enough attention? I'm sure you guys are taking it seriously internally. We're taking it very seriously internally. Look, from an internal efficiency standpoint, like leaning in hard, and frankly, a lot of the banks are leaning in hard. And so I think that'll be a big step forward. I don't need to talk to you about that.

1:39:51You've talked to everybody in the world about that kind of stuff. From a financial services product-specific lens, other than like AI causing fraud and then using AI to fight fraud, but like from a like core banking product standpoint, I don't think you're going to see a lot of changes fast. I think behind the scenes, if you go to a bank and you talk to a teller or more likely like you do a Zoom call with like a wealth advisor, they're going to have an AI dashboard and a bunch of AI tools that are real time telling them like, hey, what's going on with John's portfolio? You know, what recommendations should be making?

1:40:23You know, how might it be different? But you're not going to get that direct like AI bot style interaction for I think a long time, mostly because there's so much regulatory overhead, so much trust overhead that goes with it that I think the bank should be hesitant and slow to launch. Look, I'm on the furthest edge of this. Like I would love to have a like set of AI bots that just like move my money across my accounts, like leave it in treasuries until the minute that I needed to pay, you know, whatever bills I need to pay. And then if I have excess leftover, like move it back into treasuries or balance across my loans to pay the lowest interest rates.

1:40:51But I'm probably like way on the furthest edge of that. I have two questions out of the big bank CEOs. Who's the best DJ? Well, you know, only one of them plays a Catella. So, you know, I'm happy to have a team to do Sol. On a serious note, I feel like there's this interesting dynamic with Plaid where you guys have, it's a financial infrastructure company, but you take design incredibly seriously. Where does the design chops come from? Like, how did that become so instilled in the company? So, from the earliest days, our mission has been unlock financial freedom for everyone. Like it is a consumer centric mission.

1:41:28Like our goal is to help consumers and small businesses have a greater amount of financial freedom, have more control over their financial lives and be able to do things that they want to do that are out there. And so like we took the position that we need to fight for the consumer, even though we build a B2B product. And that's where B2B2C or like B2B to small business. And with that in mind, we knew that we needed to build a brand that resonated with consumers. It doesn't need to be the loudest brand, but in a lot of senses, we take inspiration from Visa. A lot of consumers don't know what Visa does, but they certainly know that it helps them make payments.

1:42:02All right, well, we want to learn from that. We would like every consumer to know what Plaid does. We're also realistic to understand that not every single one is necessarily going to fully understand it. But we want them to have tools that come from us. We want them to have trust in us. And so we focus a lot on building that type of consumer experience. And then you see us also in the press and in the media try to go fight these battles on behalf of consumers. So fighting the open banking battle, fighting against the debanking stuff that's going on, being very public about saying, hey, we believe that every consumer should have access to every financial product that they might want.

1:42:33We think that if we continue to live up to this somewhat idealistic view that consumers should be financially free, that's going to drive a lot of value for the company. And that then flows through into the products that we build, the way that we act, the design sensibility, so on and so forth. Last question on my side. Do you have any advice for founders in maybe defense tech or AI that are sort of like riding the high that fintech maybe felt in 2021? Like, is it time to, you know, I'm curious because like, you know, this is such an amazing moment for you and the team to come back. You obviously, you know, the company has been marked up.

1:43:12You have a bunch of, you know, a world of opportunities, but you had to go through a couple darker years. Any words of advice? I mean, as the saying goes, things are never as good as they seem, nor as bad as they seem. I would say that the dark times, honestly, it's my favorite. And it's the time that really forms the company. And it lets you know who you are. It lets you know who's really on your team. And it forces you to make the most important decision. Nothing's ever going to be easy in startups. Nothing certainly is ever easy for Plaid. But knowing that we've formed an amazing team, a good set of customer relationships, like we've made good product decisions in the times that are really hard and allow us to go fast in those times where it gets a little easier so um i don't know if i have any specific advice other than like just keep on keeping on it's good yeah i mean that is the best advice you can give i think no i'm genuinely excited and i can't wait for you guys to build more products because every time i use plaid products it's a breeze and every time i use anything you know anything from from the legacy banking world it's absolutely brutal so don't talk too much trash about all those partners We love the banks and our goals.

1:44:19We're very, we're very thankful for everything. Make the banks better. Good luck and congratulations on the round. Yeah. It's great having you on. Always welcome. And congrats to the whole team. We'll talk to you soon. Thanks for having me. Bye. Next up, we got Nathan Mintz coming in from CX2. Very excited to talk to him. Going back to defense tech, had to give you the update because there's some breaking news about Plaid, not a defense tech company, but still got still snuck in a defense tech question, Jordy. I like how you did that. That was very good. No, it's just that we're at this moment, you know, Plaid was started, you know, got to, you know, form itself when FinTech maybe wasn't so hyped and then went through this period of exuberance and, you know, insane valuations, the same multiples, you know, we were seeing in AI today, FinTech companies were getting, even lending companies we're getting yeah well we're talking to a veteran of defense tech nathan welcome to the show how you doing hey good john good good to be here with you i was listening in and i'm i'm bummed that i don't have as good a hair as zachary or around he has fantastic hair uh you know we get some compliments on our hair every once in a while but he blew us out of the water i think uh so you know the fans are just gonna flock over to the plaid now yeah but but yeah how you doing and can you give us a little intro on yourself and some background and what you're building now.

1:45:41I'm doing great, actually. Yeah. So, you know, right now it's sunny and 72 degrees outside in El Segundo. And, you know, it's a great day to be in defense. We're seeing just, you know, it seems like every hearing that I watch of these appointees for this new administration seem to be echoing our talking points. So it's kind of nice to know that the last few years of pushing for a transformation and the way we do our force mix and how we fight wars is actually, someone's actually been listening. So as you know, I've been in defense for about 20 years. I started out at the big Soviet tractor factory primes.

1:46:25I spent 14 years at Boeing and Raytheon as a radar systems engineer electronic warfare uh engineer i worked on you know programs with names like next generation jammer and uh the the radar for the f-15 and the f-18 and a bunch of space programs and stuff uh and then in about 2018 an old friend from college uh joe lonsdale called me up and said hey we're starting a defense vertical do you have any ideas uh and i came to him a couple months later for with the idea for what turned into Epirus, which is high-power microwave to kill drones and other electronics. So got that started, ran that for a couple of years, then moved over into the automotive radar space, started a company called Spartan Radar that does software that makes automotive radars have higher resolution.

1:47:15That one we ended up selling to a major equipment OEM in the past year, and so we've exited that one at this point. And then about a year ago, I got together with my co-founders, Mark Trafgar and Porter Smith and Lee Thompson, and we started CX2 with the goal of transforming the way that the U.S. fights warfare in the electronic warfare domain. So that's where we are today. The company is about 24 people. We're here in – based here in El Segundo. We're backed by 8VC and Andres Horowitz. and right now the office is pretty empty today because most of my team's out participating in an exercise so exciting times abound yeah you know you see those viral videos of the Chinese drone displays where it looks like a dragon and everyone immediately quotes it and says like that's a weapon system at the same time as scary as that is it feels like between Epirus and Anduril and, you know, Allen Control Systems is just pelting bullets.

1:48:17And we're talking to a company today that's building laser weapons to take down drones. There's a lot of different companies that have addressed this. Is it as dangerous as we think? Or is it more of a solved problem maybe that we already know? Or is it just like we need to scale up the systems we have? So I'll give you a couple statistics. When I was over in Krakow at the NATO Innovation Summit last year uh the ukrainians threw out a statistic that 30 percent of the uh of the casualties that they were experiencing were due to drone strikes i think today in the kursk offensive for the russians it's the majority if not almost all of them for certainly for the tanks and vehicles so it's become a mainstay of modern warfare and right now that's where we are today is just the beginning most of the systems that we see used, it's these FPV, first-person view, with some guy sitting there with goggles like he's playing a video game, and it's very 1v1.

1:49:14Well, in the next few years, it's going to become 1vmany. And at that point, those command and data links that today are essential for that drone to get there, and we're figuring out how to make them work more autonomously because there's all these countermeasures, like you mentioned, to try and jam that data link or deny it, it's going to become even more vital because one person suddenly, that archer is going to be firing 100 arrows, right? We're kind of taking a step past that at CX-2, and we're trying to develop the systems that shoot the archer, not the arrow, with that in mind. And a lot of it comes down to finding the drone controller, which becomes an increasingly harder problem as the cat and mouse game continues in modern warfare.

1:49:58So what does the device look like that's sending out the signal to find the drone operator? Are you putting up your own drone? Or is this something that can be tracked from satellites or UAVs or any sorts of other devices? Or can you even talk about it? Yeah, so we're building our own electronic warfare stack to find, fix, and finish on those emitters of interest. And that starts with a drone that does SIGINT and finds and fixes on those signals. We call it WRAITH. It's a group two drone with about, you know, 45 minutes of later time or 40 kilometers of range, depending on how you think about it, that takes off and geolocates those emitters.

1:50:40And by that, I mean it finds the position of those emitters. It's a little different from systems on the ground today that mostly kind of give you a line of bearing and say it's out there. We'll actually give you a fix on it and identify what it is. From there, through our Nexus operating system, we'll hand off to an attack drone called Banshee. It'll go out. It's a loitering munition with a home on emitter seeker that'll go out and take that emitter out. So you go find the controller, and then you have another drone that follows it and actually takes it out kinetically. So that's the full attack stack that we're building.

1:51:18Right. And alongside that, we've actually built an FPV kit with a version of the Banshee Seeker that can snap onto another drone. We call it Badris that will actually go out and seek that emitter out. And it provides an overlay. So the FPV user sees a line of bearing and kind of the strength of signal. And you're getting warmer, you're getting colder. No, no, no. Fly left, fly right. And can home in on the particular signal. So that's kind of our product mix. Wraith, Banshee, Vajros, Nexus you're kind of seeing a Halo theme in here I like it, very cool you have a question? I have another one as you're talking it feels like there's some there's plenty of companies in the Gundo and just Defense Tech broadly that can just sort of think long term about capabilities and trying to win these bigger programs it feels like you have to take a much more iterative approach because things are kind of evolving in real time and potentially that's like the the gonna be the case for the entire life cycle of the company right where you're just always trying to stay um always trying to stay whatever a step ahead of adversaries is that different than you think you're working at you said Boeing and Raytheon back in the day uh where they're just sort of thinking in sort of big programs and big capabilities and and you're now having to be like nimble and and constantly trying to stay at the edge yes absolutely the way that we used to do product development and aerospace was very much a bell curve with a long tail of sustainment right so pretty much all the effort would culminate around critical design review and then at that point most of the systems engineers and stuff would roll off and the program would go into manufacturing sustainment whereas if you look at software products if i was to look at how facebook does a rollout or you know google or any of these others, for instance, it's much more of kind of a logarithmic plateau.

1:53:18It gets up to a certain point. There might be a little bit of a hump in effort once the posts are kind of put in on the house, so to speak. And at that point, there's a software sustainment tail that's much larger that takes place over time. And that's what we see in Ukraine with the drone manufacturers that are over there. There's like 200 drone companies in Ukraine that are out building the million or so drones that they're putting to use right now. What they're able to do is they're able to rapidly iterate using commercial, you know, CICD, commercial, was it constant integration, constant delivery type of processes.

1:53:57The most extreme report I've heard of this is they had cases where the Russians were rapidly changing tactics and employing new systems, where they were updating software at a rate of six times a day. And like with the systems I used to work on, I mean, the missiles would get software updates so infrequently they called them tape updates because they had to manage to go out there. Yeah, and so, you know, they were lucky if they had an update every two years, much less, you know, six times a day. So the way that we do software acquisition in the DoD has to fundamentally change. There's been some good signs in that respect with the rules that the SecDef has pushed out for software acquisition pathway, where they're saying we really need to buy software using commercial processes as a default, as opposed to still using the traditional waterfall.

1:54:47You know, I call it the Soviet tractor factory way of procuring things, right? And, you know, I think on the hardware side, we eventually need to move that direction as well. It's a little harder when you're building a multi-billion dollar aircraft. I mean, just realistically, that is building a drone. But let's start with software and iron that out because that's where the most palpable need is right now. I love all those phrases. They're going to stay in my mind forever. Can you break it down for us about DJI? There's a lot of fear that we're never going to catch up. There's also just a general fear of like, are all the DJI drones going to rise up one day and attack us?

1:55:25you've probably seen like the internals of these drones you know how to probably take them over the drop of a hat you can probably do it on your phone if you wanted to how much of a risk is DJI we've had other guests on the show say maybe we should ban the importation entirely where do you stand on DJI I mean you know we already have export or import controls in place and like they're banned from use from U.S. government agencies for example with with exceptions yeah The solution is we've got to build our own drone industry here in the States. I think we're doing a good job in that. The CX2 is part of that.

1:56:01But we're also partnering with Ukrainian drone firms. I don't know if you saw. There was a big piece in the Wall Street Journal talking about us and Skyfall, which is a Ukrainian drone firm. And so partnering with the guys that are already building a million drones a year overseas and trying to take their lessons learned and scale it over here is one sheet code that we can apply. to catch up faster, right? The big advantage that the Chinese have is they applied consumer-scale technology and manufacturing to the drone problem, and they took advantage of our own regulatory blockers that we were putting in place.

1:56:39I don't know if you're aware of this, but to fly a drone in the U.S., you had to have a, I think it's a FAA Type 109 license. That's what it's called. And the Chinese got around that by labeling what they were doing a toy. So anytime that the U.S. drone manufacturers, you know, we've been building FPV drones since 2005, 2006, but nobody could get funding to actually scale it because of these regulations and the fact that, oh, it's too hard to train the pilots. It's not scalable. The Chinese, on the other hand, found the loophole and they scaled up as a result. Right. So our own barriers from our own regulatory infrastructure are what need to be revisited.

1:57:14And that will unleash U.S. innovation and allow us to compete with them toe to toe. Got it. Are there any considerations for Indo-PACOM versus what's going on in Eastern Europe? Clearly, you're very focused on Ukraine, but are you looking ahead to any other theaters? Yes. I mean, in Indo-PACOM, the ranges are just a lot larger. So you're going to have bigger drones with, you know, larger scale, right? That's the main difference. Also, the Chinese are just more likely to bring out, you know, more sophisticated systems. I mean, you know, the Russians, for all the talk about, you know, the ZOO-57 fell in, the reality of it is they fielded all of 12 of them.

1:57:55The Chinese J-20s and J-31s are starting to get into the hundreds. That's their, quote-unquote, fifth-generation stealth fighter. I can make an argument that it's not quite fifth-generation, but anyway. And then just the amount of drones that they're talking about bringing at scale. They recently disclosed that they have an order for a million kamikaze drones that they're putting forward, right? In Indo-PACOM right now, our plan is to deploy a whole bunch of legacy Battlestar Galactica assets with names like Rivet Joint and Compass Call that are mostly on older aircrafts. Some are on 707s. Some are moving into Gulfstream 5s to do a lot of these capabilities.

1:58:32And they're going to be pushed way back from the Taiwan Strait. The only thing we have that can really get close is the Growler. And all of our missiles that we're using to do this mission cost millions of dollars. That's what we're seeing over in Gulf of Aden right now. You need a$6 million missile to take out a$20 ,000 drone. So we're here to help bring the cost parity back. Well, thank you for everything that you're doing. We certainly appreciate it. And we appreciate you stopping by. You got to call back in when there's more news, more updates. Those are some great takes. Yeah, we could keep going for a long time.

1:59:02I'm sure we're just going to go into it. I mean, it's the most fascinating geopolitical situation. It's the most fascinating technology. And yeah, we thank you for taking the time to chat with us today. I'm sure we'll have you on again soon. So thank you. Absolutely. Happy to be here. Thanks for having me on. Have a great day. Talk soon. Talk soon. And we got Brandon from Shield coming in to the studio in just a minute. I believe he's here. Let's bring him on in. We got one minute.

1:59:34If you're not familiar with Shield AI, develop, test, and deploy autonomy faster than ever. autonomy for the world another defense tech company and he is here now brandon welcome to the show what's up guys how you guys doing we're doing great how are you doing great fantastic thursday afternoon that's great yeah thanks for taking the time to be with us uh for those who don't know could you just give like a little intro on yourself and the company uh yeah sure quick intro on myself uh mechanical engineering background i went to the u.s naval academy became an engineering officer on board a ship, deployed to the Arabian Gulf on that ship, then laterally transferred, became a U.S.

2:00:13Navy SEAL, and did three deployments, two to Afghanistan, one to the Pacific, got out in 2015 while concurrently going to business school, started Shield AI with my brother and have been at it for the past 10 years. That's background on myself, Quick background on SHIELD AI. The mission is to protect service members and civilians with artificially intelligent systems. In pursuit of this mission, we've been building the world's best AI pilot. The easiest way to think about an AI pilot is self-driving technology for unmanned systems. It enables them to maneuver without GPS, without communications.

2:00:54It enables them to maneuver without a remote pilot. It enables the concept of swarming or teaming. Notable milestones along this journey. We're the first company in the world to put an AI pilot on the battlefield. In 2018, we put it on a quadcopter. It would go inside buildings ahead of special operations forces. That was deployed through Iraq, Afghanistan, Syria, most recently used in Israel to rescue hostages, which was really cool. We had the text messages back from Israeli counterterrorism forces from October 2023. And then also, we were the first company in the world to put an AI pilot on an F-16 and fly an F-16 autonomously.

2:01:36We won the DARPA Alpha dogfight in 2020. In 2022, did the first F-16 flights. In 2023, we did the first ever AI piloted F-16 versus human piloted F-16 dogfight. And then in 2024, the Secretary of the Air Force flew our AI piloted F-16. We were finalists for the Collier Trophy, which is given to the greatest achievement in aeronautics or astronautics. Wright Brothers won it. Chuck Yeager won it for breaking the sound barrier. We were finalists and lost to some NASA asteroid mining thing. Cool, whatever. Who's paying attention? Yeah. I mean, it sounds like an overnight success, the type of overnight successes we like to highlight on the show.

2:02:21Overnight success. That's always the way it goes. All the greatest overnight successes take decades, in my experience. Yeah, I mean, it's a 17-year overnight success if you count the naval experience. Yeah, exactly. What's it like having your first real startup become a multibillion-dollar company? uh most founders have the benefit of you know starting a couple things that don't maybe you know little ideas or things like that is it you know going back 10 years ago at this point i guess nine years and 11 months uh did you feel like you knew what to do from the beginning or you had good people around you i'm curious you know um one is you don't know what to do in the beginning You want to surround yourself with great people just to be directly responsive to those aspects of the question.

2:03:18I don't think too much about that aspect of, oh, it's now a multi-filling dollar company, principally because it's a knife bite every day. It's a lot of pain and suffering. I tell everybody that. Like when Jensen Huang from NVIDIA talks about pain or suffering, when Elon talks about the pain and suffering that goes into building these types of businesses, it's absolutely true. And so, like, there's a massive amount of stress. There's a massive, like, number of times that you fail. There's a massive amount of embarrassment, like, when you fail in front of customers and when you disappoint customers along that 10-year journey.

2:04:01And so, you know, I think one of the reasons I think we've been successful is the resiliency, the ability to keep moving forward, the ability to pick yourself up once you get brought to your knees, like when you get punched. And it certainly happens. And so, you know, in that sense, you know, I think we had that when we started. I experienced that in the SEAL team. So I was grateful to have those experiences and basically used to the life of suffering. So that's paid off well over the past several years. Can you talk a little bit about the path to full autonomy for fighter planes? We saw this with chess where Deep Blue beat Garry Kasparov, but for a long time, a combination of AI and human would outperform.

2:04:53They called it like centaur chess. Some people say we're in the centaur era of AI image generation, or a lot of people use chat GPT, but then they're editing it themselves. And it's not a pure AI creation. It's not pure human. Are we in the centaur era of air supremacy right now? Or are we getting there? And how long do you think it'll last? I think at this stage in the game, autonomy is at superhuman levels of performance. And so I don't, yes, people will always augment machines and make those machines better and more useful to the people. But the level of involvement in doing that is becoming minuscule in terms of like what's required.

2:05:37And so, look, you know, that journey, right, for us to flop starting to fly an F-16, unfortunately, in 2015, when you're, you know, three-person founding team with zero money, zero track record, they don't hand you the keys to the F-16 right away. And so we had to earn our right, you know, our path, you know, our right to fly that aircraft. And it took a long time and we stair-stepped our way to get there. Right. It took seven years before first flight to F-16, proving it on a quadcopter, proving it in simulation with the DARPA Alpha dogfights, proving it on our V-BAT aircraft. And eventually, you know, they, you know, more and more people now are giving us, quote unquote, the keys to their jet aircraft.

2:06:26Yeah. um but it's um i yeah i'll just say like autonomy is a really really hard problem it's also a really you know valuable thing to create and we're at the stage now where you know i yeah i'm a big believer i think the entire future is going to be an autonomous future i think i agree with elon musk when he says there's going to be you know millions of autonomous systems in the world his goal is to put a billion humanoid robots on the planet. You know, we'll have millions of self-driving cars. I believe there will be millions of self-driving aircraft and millions of other autonomous systems in Shield AI.

2:07:07Our objective over the next 10, 20 years is really to enable that future. Can you talk about the developer platform that you guys were building? I know that's part of the that was part of the announcement that you did with the new round at the beginning of last month. We asked ourselves the question, you know, how do we put a million AI pilots into customers' hands in the next 10 years? We spent 10 years building the world's best AI pilot for all the reasons I mentioned. I feel like we've checked that box. And then it became how do we put a million AI pilots into customers' hands? And the answer was we have to supercharge the aerospace and defense market.

2:07:47We have to supercharge the autonomy industry. and we took a page out of Amazon Web Services playbook, right? If you're unfamiliar, Amazon Web Services, they had basically built a great internal product. Team said, hey, what if we brought this to market? What if we commercialized it? Would it be valuable for other people? All this infrastructure, these data pipelines, these developer tools, and obviously the rest is history, massively valuable for Amazon Web Services, those most profitable business unit they have. And so we basically said, let's package up all of our developer tools, our infrastructure, our pipelines, and enable the rest of the defense industrial base.

2:08:34And again, the rest of the autonomy industry and those interested in autonomy to actually develop, evaluate, test and deploy autonomy. And so spent the better half of last year or more than last year, They're really focused on building that product and rolling it out to beta customers. And we're going to general availability here in May for that product. And the response has been game-changing. It essentially enables you to reduce the number of engineers, reduce the time to actually build autonomy and take it to market by 10 to 50 X. So it's just massive improvements. We're flying first flights on a jet aircraft, two engineers in six weeks, right?

2:09:16Wow. So if we had these tools back in 2015, they may have let us fly the F-16 right out of the gate. So it's incredibly powerful. Yeah. Speaking of the F-16, what is actually the hardest part of flying an F-16 in a military scenario? I can imagine that dogfighting feels like the most intense, the most high stakes. But then it also sounds really hard just to fly an F-16 into the theater for six hours straight. You get tired. And then landing on an aircraft carrier in like stormy seas, that seems really hard. Are you trying to do it all? Is there, is this the idea of like self-driving, you kind of turn it on when you're on the highway?

2:09:55What's the most difficult? So just to be clear, the work on the F-16 was to burn down the tactical risk for this next generation of uncrewed fighter jets. But in terms of like what the, you know, the most technically hard, like the technically hardest part about it is actually around safety and certifiability, right? The U.S. Air Force, the U.S. Navy, they're not putting up 20 ,000 pound aircraft in the air, right, that are just going to like not perform, right? Especially in the dogfighting scenario, when we have relative closure rates between two 15 ,000-pound aircraft going at 1 ,200 miles per hour closure rates within, call it 50 meters of each other, you have to be able to say, I can guarantee the safety aspect of what's going on here.

2:10:49Yes, there's risk, but this is how it's been burnt down. This is why it's safe. This is why we believe it's going to do exactly, or why we know it's going to do exactly what it's going to do. So as people think about, you know, and I think that's where Shield AI has really shown is our understanding of not just like the autonomy aspect, but that intersection of autonomy, jet aircraft, safety, reliability, certifiability. That's where Shield AI stands out. They spent a long time working on. Do we need a new Top Gun movie where the protagonist is a software developer? It probably wouldn't be as entertaining as Maverick 2, or as Maverick, but I'm open to it.

2:11:36I'm open to it. How do you think about M &A going forward? I think you guys have made a couple or at least a couple acquisitions to date. There's now a ton of new investment, but you guys have spent 10 years winning customer trusts, winning contracts, et cetera. And I imagine there's going to be some companies that develop cool technologies or have great talent but don't quite reach where you guys are. How do you look at that opportunity going forward? Certainly, we've built an acquisition muscle and acquisition arm in our company, and we are constantly looking at opportunities. And there's just a very, very – it has to go through a lot of different wickets for us to say, let's get serious about something.

2:12:28Ideally, it's strategic because it takes up a lot of executive time if it's truly going to move the needle for the business. At the same time, you'll see us do smaller acquisitions. We'll announce like a really, you know, a smaller IP type acquisition here in the next several weeks. And so there's that range, but in the ideal world, you know, strategic needle moving for the business, you know, gives us better market access, gives us, enables us to build a better product, one that's aligned with our strategy roadmap, with our product roadmap, with our vision for the business. And so we're always on the lookout for new companies.

2:13:10That's fantastic. Last question or are we good? No, that was it. I mean, come back on when you have, whenever you have news. This was fantastic. I mean, such a fascinating business and like such a entertaining, just dramatic in so many ways. I mean, we could go way deeper, but thanks so much for taking the time to talk to us. Really fun conversation. Thank you, Brandon. Thanks, guys. I'll see you. We'll talk to you soon. Bye. Jordy's hitting the bathroom, but in the meantime, we have Peter from Rune Technologies here. Let's bring him in and I'll have him do his intro and then Jordy will hop on in just a second.

2:13:43So Peter, are you there? Can you hear me? Hey, Peter, how you doing? I got you. Cool. Yeah, thanks so much for joining. I've heard a lot of great things about the company. I actually haven't gotten a chance to really dig in too much. So could you just give me a brief intro on you, your backstory and kind of what the company does today? Yeah, absolutely. Absolutely. Happy to give you an intro and then tell you more about the company. Great. But myself, I'm the CTO of Rune. I lead the product engineering team here. And before Rune, I was at Anderle for four years as a software engineer. I had some incredible opportunities there with some amazing teams.

2:14:15And before that, I was at Facebook for three years. Facebook Ad Research. You're the meme. You're the meme of like you were building ads and then Palmer said, hey, come do something meaningful with your life. I got delivered over by Palmer. I love it. Yeah, it's amazing. It's real. And I actually dropped out of college to join Facebook when I was 19. Cool. I'm an intern in London at the time. And I'm originally from Austria. So I like to consider myself the most patriotic Austrian-American since Arnold Schwarzenegger. Arnold Schwarzenegger, I was going to say. Exactly. But I had the opportunity to come here when I was 19 and participate in the American dream.

2:14:48And I'm grateful for that ever since. That's fantastic. What about Rune? Can you tell me? Yeah. So about Rune. So in short, we're a military logistics technology company. And really the realization was that over the past few years, as defense technology companies have emitted on drone swarms and hypersonic missiles and autonomous submarines, what they haven't had to focus to think about is, well, if that drone breaks down in the fight, where do its spare parts come from? Or if you shoot one hypersonic missile, where do the next 30 come from? Or if you have a collaborative combat aircraft, where does the fuel to charge the battery to get it off the ground come from?

2:15:22Those logistical considerations. And as I looked more into logistics, I realized that it was sort of the forgotten part of the military, especially at the tactical level. And I realized there was an opportunity to bring the great innovation that other companies have brought to intelligence and command and control and fires, but now bring it over to logistics. Because I also knew that the great quotes of amateurs talk tactics and professionals talk logistics. And I knew how much logistics mattered to Pat's third army. And so it was just such a stark contrast between logistics really matters. But then when you look at logisticians in the field, they're using whiteboards and Excel spreadsheets and scraps of paper.

2:15:59and there was a gap and that's where we found it ruined to fill that yeah i don't know if you ever played like hearts of iron 4 but it's very funny that uh you know call of duty is wildly popular but hearts of iron 4 is this like intense military simulator where you can spend 12 hours just optimizing like the flow of oil to the front line it's very logistics based and people say it's like never never play the game because it's too addictive and you'll just be playing it all the time but you're playing it in the real life uh can you can you talk to me more about uh what contested logistics mean?

2:16:28I've heard that term thrown around, but I don't really understand it. Is that relevant to your business? Yeah, it's an interesting term because when I started out with Rune, I also really tried to get into what does contested logistics mean? Because it's a buzzword, it's out there. The more and more I spoke with logisticians, they actually laughed when they heard that term because all the logistics in the military they've ever done is contested, right? The military operates in contested spaces. So the contested logistics is really not, you know, it's actually not necessary. It's just logistics.

2:16:55So, you know, what we're building is not software for contest logistics. We're building software for logistics. Got it. Can you take me through some of the history of logistics? Obviously, it was like pen and paper. And I don't know, even before that, probably like carrier pigeon. But then, of course, you know, we've heard that like Microsoft has actually been a great partner to the DoD and they've vended in everything from Microsoft Outlook to Excel. And those tools, although they seem silly, they're probably very helpful in terms of just understanding like how many bullets do we have in the bear in the in the armory or how many rations do we have um but but has there been uh what what has the progression of technology and the adoption of technology look like over the last 20 years like post uh uh global war on terror yeah i mean you know logistics always has mattered right there's actually a great quote all the way back from alexander great where he called his logisticians a humorless lot because they were the first to be slaughtered if anything went wrong.

2:17:50So it's always mattered, and always been important. When it comes to technology, one thing that's interesting about the global war on terror is that logistics wasn't actually really the focus there because we really had air support already. So every shipment from Germany or the US that had to get to the Middle East made it there in one piece. It really wasn't the primary focus. And it's really now more so as we're looking towards Ukraine and future conflicts with near peer adversaries, logistics are starting to matter again the way it did in past large-scale conflicts. And seeing Russia, for example, really almost fail at taking Kiev in large part because of logistics, where that kind of lets people up to that problem again.

2:18:29Now, in terms of the technology, there's been less focus on it. And of course, Excel and PowerPoint are great general purpose tools. But logistics is a really focused specialty with lots of doctrine and tactics and procedures And so, you know, you can solve any problem with PowerPoint, but that doesn't mean you should. And so, you know, the software rebuilding is really focused on what does a logistician need when they're in the field and solving their problems. Yeah. How do you think about the tradeoff between flexibility of the design of your system versus creating something that's more deterministic, more enforcing rules on the user?

2:19:07you obviously like the worst thing when you're building software is like yeah we did the demo we did the install and then a week later they fell back to excel right i'm sure you want to avoid that yeah you know working with with your customers it's often a back and forth between understanding their current workflows and supporting them but then also showing the art of the possible with what new technology can bring to the into the fore right um you know what you can do in excel you know isn't isn't what you can would do with ai for example and so it's actually showing them what's possible as well as supporting their current workflows, you know, at the same time.

2:19:39And, you know, when it comes to generalizing the software, that's where, you know, we work with a lot of different service branches now, you know, with the Army, with the Marine Corps, you know, we're looking, you know, looking very closely at the Air Force on their branches. And so looking at how logistics is done in different parts of the military helps us build really general purpose software that can even scale beyond just the military one day, right? And disaster and rescue, you know, oil and gas also have similar logistical needs. And also common, you mentioned earlier, Microsoft, there's also something that is a unique realization for us is that the military doesn't always have perfect infrastructure available when it comes to its internet bandwidth and whatnot.

2:20:14And so we've also really focused on building the software to run on a laptop in the jungle, in the Philippines, in the trenches. And the way you would write your software in that kind of environment is very different than in a stable data center with infinite bandwidth and infinite resources. And so you're supporting that tactical trench warfare kind of environment is also what's unique about what we're doing so you're not when you look at gpus every time you fire up a query in room yeah it's to me the interesting thing is you know if you look back at the start of the iraq war the iphone didn't release for years after that right so i'm interested to think about how you think about mobile and now there's just like in theory like an order of magnitude more devices out in the field that theoretically could be used for you know uh to to make what you know the sort of logistics operations more efficient so uh is mobile like you know sort of widespread with these systems to date or is it or is it again like you know the sort of laptop scenario in in the jungle and and just yeah i'm curious how you think about mobile broadly yeah mobile is popping up a lot especially at the lowest levels where you really have you know soldiers or marines with their phones typing in logistical reports that's happening right now and we're working on projects to integrate with that.

2:21:31But you know, what's I think even more interesting is how do you get away from humans even doing the county right now. So, you know, very honest, the way the military right now knows how much fuel is in a certain place is that you have, you know, private dipstick in and see how far up it goes, right. And so you know, that's how it's done right now. And your phones get you to you're reporting that perhaps more quickly. But what we also want to get to is how do you not have a human loop in there at all with you know, sensors to just measure that, you know, whether it's ammunition in a base or a fuel, you know, ideally that's all automated.

2:22:00How much, you talked about Ukraine and learning, you know, maybe what not to do from the Russians. How much do you think that the U.S. has to learn in Ukraine around logistics? Or is Ukraine doing anything really well? Are we being sort of efficient there? We heard from Nathan, they're making a million drones a year already. So it seems like there's some industrial capacity there. And then I've also heard those reports that like Russia was like ripping like semiconductor chips out of like washing machines and like old Ford F-150s because they were so out of like supplies. And I don't know, I never know what to believe with these stories, but I'd love to hear your take.

2:22:42Yeah, I certainly think that United States would have fared better in Ukraine, right? The way we fight is different. But you know, what's not too different is how we track logistics at the tactical level right now. You know, Ukrainians are using, you know, papers and whiteboards, and that's why there largely isn't data at the tactical level and what they're actually consuming. And the United States military isn't too different from that right now. So, you know, even when it comes to tactical logistics, you know, the US military has a lot, you can modernize on that front. And that's what we're interested in doing right now.

2:23:11And so, you know, that's what our focus has been. Do you find who do you connect with most on the customer side? Like, are there people you know within the dod that are just like clearly logistics nerds and you guys just like you know have a 30 minute call and end up going two hours and it's just like you know you finally are like yes like you get it uh because i feel like if you're you know anybody that's a true sort of student of history you know could get to the point where they're like yeah i'm actually i care less about like the sixth generation fighter and more just like the basics of like how we get one thing from point A to point B?

2:23:45Yeah, you know, honestly, from the get-go, the one thing we've never had to convince somebody of is that what we're tackling is a problem. Everybody understood that logistics matters. Everybody understands that, you know, the technology that logisticians have in the United States military is not where it's supposed to be. And, you know, there's obviously the logistician branch of the military, and when we work with them, and they've been, you know, our closest design partners so far, you know, they understand these problems because they live them every day. but even other warfighting functions and other military members understand the problem as well.

2:24:17They sometimes need to be, you know, they need to understand why logistics needs to matter to them. You know, when you're talking to an artillery officer, for example, you know, they do sometimes have to be allowed to understand how can AI for logisticians allow them to be more lethal, right? Because they're going to have munitions when they need them before they need them in the right place. So that's sometimes something that we show the art of the possible. But in general, everybody understands this really matters. How are you thinking about the go-to-market and like the revenue side of the business?

2:24:45Is this the standard, like get some SBIR money, then make it through the valley of death, land it, program of record? Or is there just like a very different model because you're selling software in logistics? You know, the good thing is that, you know, over the past few years, the military has woken up to logistics really mattering a lot. So, you know, there's a lot of buzz around it now. And, you know, in terms of what that allows us to do is one, we can both go to operational units in the field who actually need the software, right? They'll most often be our design partners and help us develop.

2:25:15That's not going to be the big dollars, but it's really important for us to build the best product. And then we're also going to the innovation labs, you know, across the services, there's organizations that, you know, help field technology, you know, from the innovation stage. And then there's also the program offices themselves. And, you know, across the services, there's very large projects or programs underway that include sustainment now. They maybe wouldn't of two years ago, but they do now. And so it's really across the board from the largest modernization projects in the army, to the innovation labs, to the operational units, we're going to all of them and having success with all of them as well.

2:25:48What kind of skill sets are you hiring for right now? It feels like AI would be really important, but maybe not today. What's the type of engineer that fits in really well at RUNE today? Yeah, you know, honestly, we've been scaling rapidly. We're 12 people now and I've had an engineer onboard every single week for the past four weeks. So that's been really exciting growth for us. We're actually now looking for more product-minded individuals or product managers that have lived the dream and perhaps were veterans themselves, but now want to build technology and understand that as well. So we're looking to scale our product team right now.

2:26:25And as we grow further, engineering will always be our greatest asset. So engineers that have really cared about the mission before, we both care deeply about the mission and what we're building for, as well as having the right engineering skill sets. So engineers that identify with wanting to, like I did, not build ads anymore, but build military technology, we're always going to be looking for those. Drew? That's it. I had one more question about just on the data integration side, is it important for you to build integrations into different data lakes, data warehousing? Is it important to just do really great PDF ingesting?

2:27:07How are you thinking about actually getting, I mean, I'm sure as you grow and scale, there will be times when you run into like, okay, there actually is a lot of data here, let's bring it in and onboard it. Is Palantir a piece of all this? How do you see Rune playing into like the broader ecosystem of like military data broadly. Yeah. So it's important about logistics that it does really require very holistic decision making. And then you can't just know what you have on hand, but also what transportation you have to get it from A to B along which routes with what crews to actually move that equipment.

2:27:37If you don't have any of those pieces, you're not making holistic decision and it might actually just break down when it comes to the real world. So we're very interested in integration. We have a super open architecture that lets us integrate with programs of record and other systems. We're talking to lots of other companies that want to integrate with us. And then we're also allowing manual inputs as well. Like you said, whether it is PDFs or Excels or your manual inputs too. It's kind of like a mix of other integrations, manual input, and you're combining all of that to give that real world recommendation that connects all those pieces that I just mentioned.

2:28:12Yeah, that's great. Well, good luck to you. Thank you so much for stopping by. This is a wonderful conversation. We'll have to have you back when there's more news. Yeah. Yeah. Great to meet you. Yeah, have a great day. Very cool. We got Sam. We're switching gears here. We're going from defense tech into hard tech impulse stoves. I want to talk to Sam about what Big Stove is doing in reaction to the tariffs. Well, before we get into this, you know what somebody that's selling stoves online should use? Oh, I know. I think you know, John. Numeral, baby. Numeral. for sure. Put sales tax on autopilot.

2:28:53Yes. They put it on autopilot for thousands of leading e-commerce and SaaS businesses. It is the platform for sales tax compliance and automation. You don't want a guy like Sam spending any more than five minutes per month on sales tax compliance. Five minutes is honestly the perfect amount. It's the perfect amount. You want to be dialed in. You want to be paying attention to it. You don't want to be overinvesting. Reverse searing a stake and posting a great video and doing interviews. You don't want him wasting time on sales tax as he sells We should film an ad where we give an ad for numeral while searing a steak.

2:29:27You probably do your sales tax faster than searing a steak on a whole stove. That's right. You could maybe make it a ritual. You could maybe make a ritual and just say every month, I'm going to spend five minutes on sales tax compliance while I cook a steak. And you know where I expect to see a lot of these stoves installed? Where is that? In Wander's, for sure. That's right. You check into a Wander. you find your happy place find your happy place find your happy place book of one with inspiring views hotel great amenities dreamy beds top tier clean i gotta say john john andrew kyle let's get some impulse stoves and wanders i would love that people are going to be begging i want to be able to filter for it they have a bunch of filters you can filter for great wi-fi has pool uh king bed all these different things you want i want to know if there's an impulse stove anyway we got the founder of impulse coming into the studio welcome sam boom how you doing great to great to chat with you guys live yeah yeah i'm so glad to hear uh we've i think we featured your post before we've talked about you we've always said that it's uh it's interesting that i feel like in some ways impulse is kind of like a dividend of anduril it's not anduril for stoves but it's something that like people didn't think that you could start a new stove startup in a few years ago and now you can and so uh give us the pitch so basically for context um though i think i overheard you guys talking about me before but basically we make a stove that's about 60 times seven times faster at boiling water than most other stoves so like you can boil like 10 cups of water in like a minute and a half or something crazy so like your mac and cheese is immediate yeah um but then it also lets you set an exact temperature sort of like an oven so it's like instead of low medium and high you can turn our like cool magnetic knob to an exact number and you don't get smoke you can like fry without seed oils for all of your esteemed health conscious followers.

2:31:15Oh, yeah. So there's lots of fans. And you can buy it right now at ImpulseLabs.com. We should have about 12 weeks. That's amazing. And you can lock in, you know, current pricing at that point. I'll joke about that later. Cool. And just like the technological innovation here is that there's like a massive battery pack. There's a massive battery inside. So basically, it's like value prop is you got this cool stove and it has all these capabilities you can't get in an air stove. It's like a fundamental leap in performance, but it wedges a battery into your house. And once we install enough of these, we actually deploy a decentralized battery network kind of across the grid.

2:31:47And you can actually get like more distribution of batteries than like Tesla Powerwall relatively straightforwardly. If you essentially intercept the like 55 million major appliances sold every year in the United States. So like there's been like 400 ,000 total Powerwall installs in the US and Canada, apparently. but like there's always an appliance installation truck on your block like every couple days so like it's actually this really interesting thing of you can actually deploy a crap ton of battery stores that way yeah and so that's the big vision right yeah and then we've actually figured out how to get the distribution unlocked so one is you could buy this dove at impulse labs.com it's awesome but we're also partnering with a bunch of major appliance oems to get the tech in there cool and so that means that you can go to some random appliance showroom like joe and bob's appliances buy a brand you already know and it might come with impulse inside um and so i'm starting to roll that out of next year are you thinking about even i'm sure you've thought about this but i'm curious if you're doing it partnering with people that are building homes because it's a big yeah so it turns out interest rates being high means that that's a little less like like high volume it turns out that like you want to intercept the like you want to intercept like where expensive appliances are made to start because you you're putting a battery in it and like we managed to push the battery costs down substantially, but it's still something where it's like, there's an item that's not in the bomb of a normal stove.

2:33:06And so you kind of want to start high end, very similar to Tesla and all that other stuff. But then where the high end appliances sold kind of diffusely. So getting into these brands, having a standout brand of our own, but then also getting into brands that people are already buying lots of is the way to do that. And like, I then have to talk to like 10 different OEMs versus thousands of developers, basically. It's actually, and then you monetize the battery the same way either way. Like once the battery's on, once the thing is installed, the battery's under our software control. And so we can sell that battery to utility.

2:33:39We can rent that battery to utilities for grid services and stuff like that. So we get access to revenue either way. Awesome. Wait, talk more about that. Talk about the grid integration and getting that extra leverage and specifically recurring revenue. I mean, is the base value prop, even beyond selling energy back to the grid, is it more just like if the power goes down in my neighborhood, this stove could potentially power my house for a couple hours a day? What am I thinking? The stove itself works, and it's got an inverter so it can share power with the rest of your house. So if you've got whole home backup, it will support that whole home backup.

2:34:16so it'll add like it's like a quarter of a power wall basically and so the vision is once we've rolled this out to multiple appliance categories and multiple brands like you could just turn this thing on and you'll have like you won't have to have a power wall you'll just have this tech how did uh i love the design of the product how do you think about making smart tech uh stupidly sort of easy to use right i have this i i got a uh yeah i need an app on my phone i'm not so the other the other day you don't have an app no so the other day the other day i i walk into my uh bedroom and i and i go to like raise the the blinds yeah and it doesn't work and i ask my wife about it and she's like oh yeah we need to charge the blinds i'm like what do you mean and i look up there's like a cord i gotta like charge it once a year i'm like give me a break i don't want to think about charging my blinds it's hard enough keeping this thing charged yeah yeah uh so i think like we're entering into like there was like the last 10 years have been like the smart home era yeah but everything going back anyway home and we need to get smarter but also dumber yes at the same time we've been in the midwit the midwit home era it's the midwit home it's the midwit it's like um it's it's like okay does your smart home require someone who's like an it expert to set it up and then you don't want to touch anything because you'll like disconnect your light switch and then by the way like google home still doesn't have an llm to it and it still doesn't know how to set an alarm properly and like if i ask it to play a certain piece of content it thinks that i mispronounced it even if i always request that content like it is actually crazy how bad this stuff is yeah it's wild what we realized was like okay people hate these touch panels on the stoves and stuff like that so we we figured out a way to do knobs where like they're magnetic and removable so you can clean all the guns underneath them oh that's cool if um so so That was pretty cool.

2:36:07But then basically the UI is really simple. It's like you, it's the same as like a gas stove. It's like you basically push in and twist and you get heat. Like it's not like any sort of crazy. It's like, and then the smart feature we realized was make it hold temperature accurately. So instead of like, you can say low, medium, high, we still have that. But like you also can say 315 degrees and then like your eggs come out exactly the same every day. And the butter doesn't burn. Maybe it lightly browns. If you don't want the bottom of the egg to brown, you can set a lower temperature. But like, basically we just give you like direct control over the thing that people actually want to do, which is not play back a smart recipe and like be on rails with New York times cooking.

2:36:48It's like, no, I just want to be able to do the thing that good chefs are able to do by like hovering the pan over the burner and like doing all the right motions. How do you think about, uh, what's your vision for humanoids in the home? because i it's not hard to imagine you know my my humanoid going grabbing the steak out of the fridge slamming it on the impulse and then you know just like you know doing that but maybe they don't even need to touch the knobs right if you just have the integration like they're just like you don't really have to touch the knobs with our thing either because you just turn it on once and then it's just like it's just like at the temperature you don't have to mess with it but like i realized that the number one automation in cooking was actually just holding temperature consistently on a on a pan and if you can do that you elevate a midwit cook to a decent cook and so do that and then that's that's kind of the 80 20 of that's the 80 20 of kitchen automation like i i cook at the office i made some like crazy braised thing and it was like super simple um i made rice without a rice cooker like you don't even need these accessories do you have a rule with your team where it's like you can't order out like you have to use the product every day at lunch yeah i gotta i gotta tell everyone that the tariffs are you know cutting into the lunch budget now oh yeah yeah let's talk about the tariffs and your supply chain uh i'm sure you're impacted it's impossible not to be yeah and one one thing i'll lead with is like we're we're in an interesting space because all of our competitors are also impacted so like basically even the u.s made appliances like so if you go to like a whirlpool factory all the circuit boards in there are actually like made by like german or chinese companies so or a german company in china in many cases.

2:38:23So it's like, basically, if you tear down any induction stove, you pretty much see Chinese and German components inside, even if it's made in the US. And so for that reason, it's like, okay, we're building our stuff overseas. We're going to figure out, hey, what the lowest tariff regime is, make it at Vatican City or whatever, whatever, whatever, whatever works. Hopefully blessed by the Pope. Yes. Yeah. We can commiserate over our Italian heritage but um but the uh our share Italian heritage but but basically um but basically the point is like everyone's going to be impacted because inputs are impacted so like even if I go and if I build a factory in in let's call it like Phoenix Arizona um I'm not like my sub suppliers haven't on short yet in volume like an example is like I'm like I'm an investor in Hadrian like Hadrian like does not have enough CNC machines to make all the world's iPhones yet for instance like It would take them a second.

2:39:18I'll overestimate. I'll be optimistic here. It'll take them at least a second to get that capacity up and running. And this is going to happen across the board. So the lesson from the last wave of tariffs was Vietnam. Basically, Vietnam was this quote-unquote loophole country that now is seeing 45-plus percent tariffs or whatever. But the tariffs were only on China. um there's a lot of chinese manufacturers that just basically just drove across the border and set up a factory and all the all all the engineering staff chinese like they're just flying in it's kind of like two hour flight one hour flight situation from shenzhen but effectively it's a chinese-run factory um now to get the made in vietnam you had to actually get make some of the components there um but what this meant was all of the large format injection molding machines because what people move there first?

2:40:11Televisions. They moved all the TV, like$600 TVs and stuff like that. They moved them there, but that meant all large format molding machines are just completely occupied. And so like if we want plastic parts like our like induction coil assembly or something like that, we want to do that in Vietnam, we probably couldn't find the machine. We'd have to import that part from China regardless because the machine would be occupied. And then there's a back order of those machines and like all this other stuff. So it ended up like even to get to this point where a ton of consumer electronics from like Samsung, LG, Meta, et cetera, moved to Vietnam.

2:40:43It took like six years or five or six years from when those tariffs kicked off. And so if you want like a preview of what like US reshoring would look like, it's going to be something of that nature or prices are just going to go up a bit and people want to put it in the line item at checkout. So like weirdly enough, it's like we're insulated from this a little bit by making a high ticket item that's cool. and like maybe we'll get permission to raise prices by other folks or whatever. I don't want to be the leader in that space because I think that would stick my neck out. But it's something where, and then additionally, like as a component supplier to all these appliance OEMs where we actually make our money in software and recurring revenue from the battery storage, we're very insulated in that respect of the business.

2:41:27But it's something where like I had kind of a reaction to this being like, it would be really cool if uh i would have a different approach to reshoring manufacturing in the us and it would be more around like making it legal to build a factory in san francisco again and stuff like and stuff or the bay area the san francisco bay area again without getting like angry nimbys on your your ass um or having to build a tent in the parking lot like elon did like five times i mean he was the only guy who did it because you have to basically operate in this like legal gray area yeah yeah uh where else are you seeing the most opportunity in home appliances or just like tech for the home uh ovens seem adjacent i don't know what you take on you can do that with the battery really well you think so that's fun uh anything else come to mind yeah so i mean i think there's actually there's some interesting the home tech and the humanoids come to mind is like i think just making a laundry machine that folds stuff at the end yeah that'd stick that'd be amazing people would spend like five grand on a laundry machine if it did that totally yeah and we'd basically reprice the whole like laundry market if you if you like and i think the tech for that is going to exist like next year yeah i think you just spawned like five yc companies with that yeah yeah and then they can go you can license p like pies models or whatever yeah but i'm excited for that that sounds amazing yeah but so so you can do that um we're actually thinking like i want to be the index startup for anything with a power cord effectively so anything with a power cord realize that like most appliances are used intermittently and even within that intermittent use they're not used at full power like you're you're not like blasting a turkey fryer level of power which we can do we can actually fry a turkey indoors on our thing um but you're not even when you're frying a turkey you don't need full power all the time and so um and so i'll be able to blow dry my hair in two seconds and it's just there's a problem with like maximum temperatures and you know you don't want to burn your hair and stuff like that um they've tried it they've tried it but yeah but basic basically i i think that there's this play where you can essentially realize that energy is used super intermittently but the grid is sized for peak use all the way around yeah i think power companies had really good explainers on a bunch of these things as well but basically we solve a similar set of issues kind of like even at the more hyper local level than even at the home panel or something like that sure sure but um it turns out you can basically any device that kind of has like high peak low average draw shove a battery in it and have an inverter in it so when the device is not active it's able to share the battery with the rest of the building and so that's the vision get that into as many devices as possible turns out stoves are a kind of juicy target to start and then then go from there and why don't you just drop the link one more time for the fans who want to pick one up where do they go pulse labs.com and if you order it now um it ships in like i think it'll ship like early summer and we just got most of our compliance certs all like officially granted and the rest of them should come first like momentarily so it's legal to install in your house as well which is exciting fantastic well thanks so much for stopping by this was fun thanks for hosting i'll be around for peanut gallery on tariffs and trade and all that stuff whenever you want so fantastic that'd be great you you got you're a takesmith i can tell yeah a takesmith that sounds terrible okay no it's a good thing it's a good thing uh you got good takes ready to fire them off yeah we need to slap an impulse we're getting a new studio soon you just put the stove in the middle and you guys do some hot pot or something it'll work yeah yeah i just want to be uh yeah eating uh steak all day long throughout the show that's my future for sure do we know if you want one down in la yeah yeah yeah we'll figure it out awesome awesome thanks so much sam great to talk to you we'll see you soon and we got scott wu from cognition coming in uh to the studio he's not here yet but i did get an interesting question for him i posted tune in to tbpn today at 145 pacific for our interview with Scott Wu.

2:45:14If you have any extremely complicated math problems you want him to do in his head, leave it in the comments. And we got one. Someone said... Is it from Aaron? No, no, no, no. That was more of a joke. Brian Chow says, ask him if he really did cheese IOI 2014 problem six. He'll know what I mean. Scott, welcome to the show again. Great to have you back. We will get to the amazing cognition news, but I got to know, did you cheese IOI 2014 problem number six? You know, I can't answer that question actually, but no, it's great to be back and it's great to see you guys again. How are you guys doing?

2:45:55We're doing great. And I mean, congratulations on the launch. Can you break it down for us? What is different about Devin and Cognition today? Yeah, yeah, absolutely. And so what we rolled out today is essentially an agent-native IDE. What that means is, you know, I think there are a lot of great products out there that are about really accelerating you in a synchronous workflow. What we've always built Devon for is to be truly asynchronous and to be able to delegate and to have your own team of Devons that's taking on tasks, you know, and to be able to manage several Devons at once or to be doing other things while you're working with Devons at the same time.

2:46:28And what we're rolling out essentially is a way to really cleanly interactively work with your Devons as you're using it. And so it's a full IDE experience. It's a collaborative planning experience at the start of each session. And then some of these other features like Devon Surge and Devon Wiki that we've been rolling out. What else do you have? I have a question. No, no, go into it. Well, I want to just get into your overall thesis for AI and how the market's moving broadly. almost 10 years ago to the day, Sam Altman posted a blog post called Bubble Talk, where he said, everyone was saying we're in a bubble here.

2:47:09Let's format it as a bet. And he said, the top six US companies in terms of unicorns are Uber, Palantir, Airbnb, Dropbox, Pinterest, and SpaceX. They're currently worth just over a hundred billion. He thinks that in 2020, those companies would be worth over 200 billion. There's a few of those companies that are worth over 200 billion alone. He also said Stripe, Zenefits, Instacart, a bunch of other companies will be worth more than 27 billion. And he was, I think he was off, but only by a few weeks. And it was this interesting thing where everyone felt like it was a bubble. He formulated into a bet.

2:47:44He was correct. But how are you, how are you feeling about the overall like murmurs about, is AI a bubble? Yeah. Yeah. And I think he was forecasting like a 3X or something in just a few years. And so whether he was like barely off or not quite, you know, or barely made it, I mean, I think it's like, you know, certainly if you just hear that list of companies, you know, Uber and Airbnb and SpaceX and Stripe and all, you know, it's, it's, I think the point was very clearly there that those companies did have real merit and real value. And they proved out a lot more of that, actually. I mean, it's almost comical to, it's, it's been 10 years now since then to just think, wow, like these are, these are some of the great public companies.

2:48:20Right. And I think that, you know, we were talking about this, but I was thinking about it a lot because it's been almost exactly 10 years. And it's also, I mean, it's super cool. Sam was running YC at the time, which is why he put that out. Obviously, now he's running OpenAI. But yeah, I mean, I think people talk about bubbles so much in AI. and it's almost, I feel almost the exact opposite where the value that we are suddenly proving out in AI is almost underrepresented in what we're seeing and what is going on, you know? And you see this in all these different spaces and, you know, I think as we were saying earlier, like code is one of the first ones because it's so nicely automatable.

2:49:00There's a clean feedback loop and all of these things that you can really train models to get really good at code. but I think we're really starting to see it basically everywhere. And it's a crazy thing to think about, but a lot of these businesses that we just mentioned, these are really, really amazing businesses and really powerful businesses, right? And a lot of what they do arguably is, they make particular flows of your life 1 % easier, something like that, right? They come in in this particularly painful process and solve that hard part for you and deliver this. And obviously these are incredible, incredible businesses.

2:49:30This is less about the businesses and more just about just how big the world is out there you know, and how much value that there is to provide. Right. And now when we're talking about AI and we're thinking about what AI can do, you know, for consumers, it's, you know, an AI assistant that does all of your work for you, you know, it does all your hobbies and takes on all these things. Right. And, and in enterprise, obviously, you know, we're talking about multiplying every single person's output by like 5x. And so I think that the it's, it's, it's, I was thinking about it, especially because, you know, it really does feel like across a lot of these different layers, you know, the foundation model layer, the application layer, and so on.

2:50:02It's sure it's a tough question to decide which one is going to succeed, which one is not going to be, you know, and only a few companies get to be the Google and Amazon. And a lot of companies, obviously, you know, have a tougher time. But if you just ask the question overall is, is AI as a space going to deliver massive, massive value? And is it going to build these multi-trillion dollar companies? I mean, I think at this point, it's pretty clear that it will. Yeah. Can you talk a little bit about the Studio Ghibli moment happened last week? And I'm wondering, like, with the Levels.io flight simulator vibe coding andre karpathy coined that term it kind of took fire it really uh it really was a great term for something everyone was kind of dancing around uh are you expecting a studio ghibli style moment for programming because i think what was so magical about studio ghibli was that it took the it took the onus of of creativity out of the process and it made it personal because you just take any photo from your camera roll any selfie you could take your own dog or your own profile picture, type one word, and you get something that feels cool and different.

2:51:05Is there a world where we get something where it's like, hey, make a video game about my life or something, and it just does it? What would a mass adoption moment for AI-driven programming look like? For sure, yeah. So I think there's two kind of different categories, I would say, within AI coding. And one is, you know, I'll call it kind of the more general purpose, like let's say single use software type or more hobbyist type work right where you you know you want to build a cool website you want to do this you want to make a nice game or you want to put a lot of these elements together and i think that's going to i mean it's honestly it's already taking off um pretty pretty massively it's you know you don't have to know how to code anymore and you can put together like a really cool website and you know set things exactly as you want them and so on right um and i think they're all i i'm sure there will be more exciting moments to come where you know as we cross these new tiers of capabilities you know the interface is going to change for that and the set of things that you can do.

2:51:57On the other side, I would say is the massive software engineering industry, which is a little bit more oriented towards a lot of big companies that are spending maybe millions of hours of software engineering time developing really, really great software and making it super resistant to all the different things you can think of, figuring out all the little details of architecture and so on. And I think on that side, I think for the time being, that's going to be primarily focused on software engineers. Just because while we're still working with these layers of abstraction, you still really need to have all of these concepts in your mind and the ability to really just reason with the computer architecture.

2:52:41But there, it's kind of like, we'll see a 5X there. So maybe one way to describe it is I think there will be a level of programming and being able to interact with the world through code that everyone will have access to, which is super, super exciting on the one hand. And then on the other hand, I think for a lot of the deep technical work that we do, I also think that, you know, engineers who are focused on that and working on that are going to be able to do like 5x more. So we're kind of seeing both of those sides at the same time. How do you, what advice do you give engineers that are just joining the Cognition team?

2:53:09You guys have such a ridiculous sort of, you know, sort of probably, I would assume the average engineer at at cognition is a 10x engineer in any other organization and so you're looking for like you know there's uh there has to be this pressure of joining your building the tools that build the tools you know uh how do you think about sort of ramping people to the sort of um to the output that you want to see out of engineers at every level of the organization yeah yeah i was gonna say i mean there's very little advice that i can give because these folks are always smarter than i But no, I mean, I think it's interesting.

2:53:48I mean, one thing that comes to mind is people ask me all the time, like, should I even be studying CS? Like, should I even be, you know, how do I even think about software engineering? And I think that the main thing I would call out here is just, you know, as the capabilities change, the interface of AI product changes a lot as well. Right. And so it's one thing, you know, it's, for example, like, you know, there was a phase where text completion was the main thing. and that was where the model capabilities were at. And you could get a lot of value from just pure text completion. And I think we're already past that and pushing into a lot of new things.

2:54:22But each new era that we get into in terms of capabilities is gonna unlock a new product experience in AI code. And I think that the main thing to call out, because I think a lot of this is gonna happen so quickly, is just, it's really, really important to, as an engineer, to stay on top of all these tools and to understand how best to work with them. I think at this point, it's, you know, there's no shortage of things to do in code. You know, I don't think we're gonna run out of things, you know, software that we want to build anytime soon. And so I think it's more a question of how do you stay maximally effective at building software?

2:54:53And a lot of that is just, you know, really being up to date with everything that's happening and understanding each of the new waves and learning how to use these new technologies, because it does take time to learn. How do you think about AI adoption among engineers broadly? Or it has every, you know, there has to be, you know, I think about the example of like the Japanese soldiers that like didn't know the war ended. And so they were just like on an island and like, you know, still like in like, you know, war fighting mode. And it would have been like 20 years or something like that. And so I think there has to be engineers out there that like, you know, maybe they don't know about cognition or they don't know about open AI or any of these other tools.

2:55:28And, but it has to be some, like, I would imagine like 90 % of people that are just obsessively writing, you know, code every single day, 90 % plus are sort of aware of these tools. But how do you think about adoption broadly? Yeah, for sure. And I think at this point, there's a pretty significant fraction of all the top engineers in the world are using these AI tools every day, and they're getting a lot of value out of them. The main thing I would just say here is, this is where folks sometimes like to get a little kind of wishy-washy about AI is going to come in, and then suddenly all of our problems are going to be solved.

2:56:01And I think one of the things that we're finding, even in code, is, yeah, there's just a lot of practical work to do out there in the world. Right. And so I think I think it's one thing to, you know, to be able to solve these theoretical problems in a vacuum. It's another thing to, you know, all of these different all of these different code bases out there, all of these different development environments, all these details. You know, there's a lot of COBOL out there in the world still. You know, there's a lot of all these various different languages or all these crazy idiosyncratic setups. And so I think one of the big things, honestly, that that that we're solving as a space is is actually not just the capability itself, but just solving for a lot of these practical constraints and getting the technology to the point where it works for everyone and not just the subset of people who are building the latest and greatest apps in Python and TypeScript or whatever it is.

2:56:45Can you talk a little bit about the importance of multi-modality and image diffusion and understanding images in the context of coding? I think a lot of people assume that, well, it's just code. You don't even need to think about the advantages of being able to process images effectively. But at the same time, it feels like the more data you throw at these models, the better they get, even if it feels completely tangential. Just having, you know, the ability to not just know Python, but also speak Russian and Chinese and Japanese and all these different languages. It seems to increase overall intelligence, even though it's not the narrow set that you thought it was.

2:57:25Yeah. And by the way, it's actually a fun exercise if you've never done this before. to basically, you know, a lot of the queries that we feed language models of just like raw, massive blobs of text to try to do those yourself, like as a human. And one of the things that you find is like, wow, it's actually really hard if you're just looking at some massive chunk of text of just finding the thing that you want and getting the right thing. Like humans naturally, you know, there's just like a lot of systems and how we process information visually and all these things. And what I would say, yeah, I mean, I think in terms of code, for example, the, I think it's one thing for it to be, call it like theoretically possible.

2:58:01You know, it's from the set of information I'm giving you, it is theoretically possible to extract out exactly what needs to be done. And, you know, you could say this, for example, with let's say you're trying to build a new feature and you just say, all right, here's the entirety of my, you know, 1 million line code base. Just tell me what I need to do to build the feature. And obviously no human can do that on the first try and just tell you exactly what needs to happen. And really, and for most of these more complex tasks no AI can either. And in practice, the way that we solve these things is obviously through a much more iterative process that involves using all of our different tools.

2:58:33And it might involve, for example, running the front end locally and then clicking around on the website and seeing what happens. And you're trying to fix this button. So you go around and click on it and you move around and you see what errors come up in the logs when you do that. And so that's how you solve your problem right um and so a lot of it i would describe it as almost like um setting the the stepping stone instead of the the rock cliff face where you can make the incremental progress towards a solution and you know this is what we do all the time in software engineering similarly like i think you know being able to use image or being able to interact with these other data sources is is what really gives ai is that same capability uh please one question that you are uniquely suited to answer.

2:59:14Do you think we see an AI win an IMO gold medal this year? It was silver last year. And I imagine we made some progress since then, but what's your take? Yeah, I'd be pretty surprised if we don't. So the greatest competitive programmer of all time is a guy named Taurus. His name is Gennady. He's from Belarus. And he works at Cognition, actually. You can look this up. No, it's true. It's true. It is subjectively true. It's subjectively true. And so, Gennady, you know, we have kind of a bet going internally on mainly the question, not of whether it will be like a, you know, like a, you know, top level high schooler, which is essentially what the IMO or IY gold medal is, but whether it will beat Gennady, who is, you know, the greatest of all time.

3:00:02And I think most folks think it's probably going to happen this year. Yeah. And if not this year, then next year. Yeah, I think Gennady is he's he's pretty adamant that he'll still be able to do it. And so I'm kind of looking for I mean, I feel like we should have the we should do the whole show match, you know, Gary Kasparov style and do it. Let's do it live. Let's do it live on TV. Well, can you give us the call to action? It sounds like Cognition and Devin are much more accessible. How can people get started? How can they sign up? How can they play with this tool and see if it works for them?

3:00:34Yeah, so we rolled out a whole new experience. And then on top of that, we would really love to hear what folks think. And so we're making it a lot easier to try out. And so we have a new plan that starts at a$20 minimum, and it's all available at app.dev.ai. So you can sign up immediately. It's fully generally available and you can try it out on your code base. Very cool. Well, hope those GPUs don't melt. Hope the servers stay online and good luck with the next couple of months as I'm sure it's going to be a continued rocket ship. yeah congratulations to the whole team appreciate you soon thanks a lot scott talk soon bye uh he's like yeah he's actually on the team yeah well i i've met ganadi because he worked at ramp and i interviewed him and uh a lot of what he said went over my head if i'm being honest but uh yeah he's a beast and it's crazy so on polymarket there's it's only at a 59 chance that ai wins an They're selling dollars for 59 cents, folks.

3:01:31Not a financial advice, but you heard it here. It seems pretty obvious. Anyway, we got Michael from Aurelius coming in the studio. Welcome to the show, Michael. What's up? How are you doing? How are you breathing today? You got the nose strip. Is the oxygen coming in? Good. How are you doing? Going well, dude. One of my nostrils barely works, so it's just all jacked up. I got to figure that out at some point. But you're out for a while if you get an ENT fix, right? Oh, yeah, yeah, yeah. It'll be fun. I think I have the same. I've tried those. I've tried the nose strips for sleeping at night. They're pretty, they're pretty wild.

3:02:03This guy's the Alex Firmosey of laser weapons. Yeah. But yeah, I appreciate you. I gotta get a new thing then. Yeah. I appreciate you DMing me. You just said, Hey, let's talk about laser weapons. And I was like, I've never heard of this guy before this company, but I'm in. And, uh, and, and so I, I did a little research. I want to hear about your experience at Stanford. I want to hear the basic pitch for the company, your background. Can you just take me through kind of the 101 level of who you are and what you're building. For sure. Yeah, for sure. So I'm an engineer. I worked all across a bunch of different heavy industrial systems.

3:02:34I've worked in, a lot of my time was spent in electro-optic system development. I helped work at the biggest U.S. laser company on laser weapon systems and in R &D capacity, and then it went into sales, and I sold a bunch of systems, including some components into a lot of the primes for the big laser weapons that are out there. I didn't go to Stanford, But at Stanford, we were essentially, when we first started the company, we were hiring the first round of engineers. We had sent out hiring calls to a bunch, you know, among LinkedIn and X and stuff. Also to a series of universities. And all of them were cool with it, except that we got kickback from Stanford, where the Stanford hiring board was like, you cannot, you know, post here because you have like, you're a weapons company.

3:03:16Right. And, you know, that's really bad, I think, for Stanford students. But great for us because we just start posting it. that were like, dude, this is a BS. This doesn't make any sense. And it's great. That was, you know, Larson Jensen made a bunch of posts about it, and we'd continue to kind of chat about it and got a lot of interest on that, especially for hiring. Like if people want to work in defense, there's not that many companies, and the one that's getting flamed because they make weapon systems, you know, if you want to make weapon systems, there's a good chance you would have led at our company.

3:03:46Can you talk about the history of lasers? I was going to ask the same thing. You said the big laser weapon systems? Yeah, yeah. Are there laser weapon systems right now? And after you talk about the real history, maybe you can sort of talk a little bit about, I have a big tinfoil hat here. He's like, the Death Star is real. And no, there's been a lot of conspiracy theories about directed energy weapons, space lasers, things like that. But talk about the sort of the history from your point of view. Yeah, definitely. Well, you know, the Death Star doesn't exist yet, but the Death Star and stuff like this would become you know like a trillion dollar company but eventually become an orbital weapons platform company so probably the only way that you do like low earth orbit trans lunar or trans martian warfare is through light you know if you're going to take the missile system up into lower earth orbit and there's 50 000 chinese satellites there's almost no way that you can do it shooting down in a cost-effective way but orbit weapons platform is great but um history of directed energy weapons you know maybe 40 years ago when lasers started to kick off in the um in the, you know, commercial space in terms of cutting and welding, and then also in the communication space, people like, wow, I can cut sheet steel with this.

3:04:54Can I shoot down a missile from like a thousand meters away? And that kind of kickstarted a bunch of effort and interest. Those systems haven't necessarily panned out over the last 40 years. I think in the last 10 years, we started to get a series of systems that are deployed by Lockheed and Northrop. And so, you know, there are massive warships that will have, you know, when you're building the ship, you have to build a laser weapon system turret into it. But we've deployed, I think there are eight ships that have a series of like multi-hundred kilowatt laser systems on it. And you can cut the wing off of a plane from 10 miles away with those systems in about 10 seconds.

3:05:26So they're pretty metal. They're pretty rad. And that's what a lot of the directed energy supply chains look like. The directed energy R &D development has looked like in the country. Does blue, is blue effective against lasers, the color blue? I know that like, isn't there something about like a specific frequency of blue that sort of prevents damage from lasers am i making that up to the the power density and the lasers we're talking about like you need some very very specialty materials to kind of defend against them in any kind of you know scaled capacity so uh like the color blue i'm not sure about that i mean you could like you have mirrors that reflect the laser light right but they're very small and they have they have extreme like extremely expensive rare earth materials that are kind of doped in those mirrors for replantants.

3:06:16It looked like one of the first things you were starting with was anti-drone, counter-UAS systems. We've talked to a lot of these companies, Allen Control Systems, kind of putting a gun on a truck. There's electronic warfare attempts. We just talked to Nathan Mintz. Anderil has a variety of systems for counter-UAS projects. Why is that the landing? Why is that the beachhead for you? Why are laser weapons so effective against drones? Yeah, definitely. So fundamentally directed energy systems, the promise there is that if you are using electrons as your ammunition, then you have an extremely low marginal cost to shoot down.

3:06:51Like you bring the price to shoot down a drone. You know, if you're using a missile, it can be millions of dollars. If you're using an Anderrill drone, it could be one hundred to two hundred fifty thousand dollars per drone shoot down. You know, that's an improvement, but it's still extremely expensive and you don't have a cost differential on your side. If you turn a laser for three seconds to shoot down a drone, that's like 25 cents in electricity cost to shoot those down, essentially. So that's really what we're looking at on that front. And then your second question was, I think there was a second one.

3:07:21Oh, I mean, I just love to know, like, it feels like this technology is still somewhat sci-fi. I mean, you said that they've been deployed, but, you know, we haven't seen like videos of this. Like, oh, in Ukraine, it's changing the battlefield or like or like with the what was the shoulder mounted rocket during the during the Ukraine war when that broke out. We were like, like, there's not enough in the supply chain. Like it was like not just it's real. It's like it's having such an impact that they're using too many of them. And now we need to figure out the supply chain. I haven't seen any stories like that about laser weapons or directed energy weapons.

3:07:56So where where are we actually in the rollout of this technology? Yeah, so there are large laser, like we were talking about earlier, there are large laser weapon systems that are deployed across the Navy, for example. Those are really, really big. Primes generally are interested in making extremely expensive bespoke systems. This is like the Android player, right? Their business models do not allow them to do anything other than the particularly expensive bespoke system. What we're doing is we're coming from the bottom up and saying, what is the lowest swap? Like, what is the lowest weight? What is the lowest size?

3:08:30what is the lowest cost for a directed energy system coming from the bottom up and doing it. We're approaching our target for distance very rapidly on our RD systems that will then go out and look to deploy early to mid next year in fielded capacity through some of the DoD units. I think a really salient part of what we do is like when you're talking about some systems like maybe microwave systems or radio frequency systems or even bullet systems is the range is extremely limited i mean when you're firing a uh a round out of a m249 the bullet the muzzle the muzzle speed is like 700 meters per second so you have to lead something you know when you get out to 700 meters it takes one second for the bullet to land so you're arcing a bullet the drone is flying dynamically that's a very hard control problem we are we are shooting things down at the physics limit like the like the speed of action essentially this where you know when we shoot a a pulse of light at something a thousand meters away and it's moving left to right at maximum speed say 100 miles an hour that the drone moves that throws 30 microns 20 microns in the period of time that it takes for the light to hit it so we have some salient control benefits and we also can continue to move out further and further and further you know as we kind of build out the system and build more products on top of it the pathway that one two three four five kilometers is is right there have you uh i'm curious you've thought about defending various assets against drones that are non-military so you could imagine if if somebody has uh let's call it an oil rig somewhere and and uh it's threatened by drones for one reason or another and and or or potentially a better example is something like you know an nfl stadium that's worried about you know potential drone-based terrorism can you have you thought about you know putting these you know turrets uh because one of the issues with with traditional kinetic anti-drone weapons is you're sort of shooting bullets into the air, those bullets are going to land somewhere.

3:10:25Theoretically, with lasers, you could take the drone outs without any risk of, you know, undesired damage. Yeah, definitely. So, you know, in an urban environment or at the border, right, you know, like you're not going to shoot a missile or a bullet, you know, in an urban environment at some drones. But there are, you know, I think that the Super Bowl had something like 50, 50 to 100 something like unseated airspace injections of drones that were not supposed to be there and you couldn't really do anything. DHS couldn't really do anything about it. So we go forward and we become an option where we're probably the only option in an urban environment where the laser is invisible, it is silent, we can autonomously target, detect, track, and destroy drones that are threatening civilian infrastructure.

3:11:11So that's a great point. That's exactly what we want to do. And, you know, when we, you know, when you focus the laser onto target to get a high density, there's a there's a small depth where you get a very high density. You also de-conflict and defocus past targets. So we have this kind of depth where it's fairly lethal to targets, but then we can de-conflict pretty easily as well. Interesting. Do you, yeah, this is sort of a scary thought, but do you expect there to be drone-based, you know, terrorism, like some type of drone-based terrorism event in the next five to ten years? It seems like a huge threat that we don't necessarily have any.

3:11:50It's not like a police officer standing outside some, you know, soccer stadium somewhere is going to see a, you know, drone coming in and take it out with a handgun. So it doesn't seem like we necessarily have any defenses for that kind of attack. And you don't need such a sophisticated actor to pull it off necessarily. Yeah, definitely. I mean, there's almost certainly there have been attempts that the FBI has thwarted. So I think maybe three months ago, someone was planning an attack in Tennessee on a on a either a power plant or a nuclear reactor. I forgot which. But they thwarted the guy in advance.

3:12:27They found him, checked his communications and stopped it. Wow. But, you know, almost certainly I think one of the main dangers and what people are afraid about with joint warfare is that it allows non-state actors to inflict massive damage on trillions, trillions of dollars of human and infrastructure assets. So, you know, I don't think that we're too far off from a major attack happening. Obviously, our state defense apparatus is doing everything that they can to stop stuff. And they're fairly successful. But like if you miss one out of a thousand, that's pretty damaging. How are you thinking about the revenue and growth side of the business?

3:13:00I can imagine pulling in some SBIR money. I could imagine this being kind of like a DARPA project almost. Long term, you probably want to be a program of record. But how are you thinking about staging things out? and what does it look like so far? Yeah, you know, we have a lot of interest from a lot of the national labs in terms of going straight to OTA, in terms of procurement contracts. We are moving, like, people didn't really think that this could be done. No one was looking at small-scale, lightweight, edge-deployed directed energy. And at this point, we're moving so quickly, like, by the time a CIVR, like, is written for, like, exactly what we're doing right now, we'll be, like, a year down the line and we'll be ready to produce, like, 50 to 100 units.

3:13:39So at this point, you know, our customers are pretty well receptive to that if you're deploying directly to DOD. And then we just have an unending list of people that want to want to demo the turret on their vehicle platforms. Like so they can be able to companies like all the way like small startups, mid startups, prime stuff like that. And so I think we're trying to find that sweet spot where, you know, where do we deploy? We've done a good job building the system. Everything that we're doing makes sense. And then what we're going at is where do you go from here? Which of the promising opportunities do you tackle with limited resources?

3:14:17Well, I'm a potential customer. I'm big into big game hunting. And I'd love to take this on my next hunting trip. And it'll be cooked. It'll be cooked. That's what I'm looking for. And shoot deer. And then you can just eat it right there. That's exactly what I need. I'm sure Peter will love that. So thank you. uh it's great it's great to meet michael thanks for doing what you're doing yeah thanks for the message and thanks for hopping on uh really fun chat and good luck to you thank you guys thank you of course thank you so much yeah we'll talk to you soon cheers uh well what a fantastic tour of uh defense tech i feel like i learned a lot about all the different companies and got to talk some really interesting people uh do you have anything else you want to cover before we jump off for the day america day america day was a success i just want to say that america day doesn't end when uh the stream when the stream stops it's gonna keep going uh forever forever actually sort of a perpetual day yeah regardless of what the market's doing yeah um but uh no i want to say thank you to ramp yeah polymarket public bezel numeral adquick eight sleep and wander they make the show possible we are 100 corporation supported yes and uh we're very grateful for it yeah thank you everyone uh we will see you tomorrow can't believe it's friday tomorrow john it's crazy flew by one more stream this week yeah it's gonna be a rough weekend it's gonna be great thanks all right thanks guys cheers