Warner Deal Drags, H200 Exports Resume, Meta AI Chafe Gate | Joe Weisenthal, Ben Smith, Matt Hicks, Stephen Schwartz, Saam Motamedi, Nicholas Kelez, Antoine Tessier, Filip Kaliszan

27:23Just having more planes is a supply and demand equation, and you're going to see deflationary. If they move over into focusing on AI and it pushes out their timeline, of course, Blake at Boom is arguing that this actually accelerates their timeline because they can. And I'm sympathetic to that argument. Yeah, me too. But it was fascinating to see that like, okay, there are companies that I could see pivoting to AI. Boom was pretty low on the list for me. Yeah, you didn't think that the airplane startup was going to pivot to AI. But it makes sense. Right. Like if there's – I mean it's intuitive.

27:56I mean this is one of the ironies about sort of talking about inflation on the big scale, which is that how do we get things more – how do we get things cheaper? Well, we need more supply side capacity. We need more planes. We need more wires. We need more all this. In the meantime, that all costs a lot of money and it absorbs a lot of resources, etc. So supply side expansion sounds really nice because that's ultimately how society moves forward and things become more affordable, etc. However, to get there, that is a resource-intensive process. And so it's not the kind of thing that, like, A, none of that disinflation will happen tomorrow or the next week or the next year even.

28:36And in the meantime, it creates tightness across the supply chain, which is potentially inflation. Yeah. I mean, the other thing anecdotally, I know a number of companies that were just like, oh, we have tariffs now. I'm going to pass this on to the consumer. And they just immediately raise prices. And so that factor is very real. How is Wall Street in general thinking about the tariffs just being determined to be unconstitutional? Yeah. There feels like that. Wait, do you mean the NVIDIA 25 % tax? No, no, no, no. I'm not talking about export tax. Yeah, the risk that the Supreme Court says the tariffs are null.

29:17You know what I think? I think Wall Street would just love to not have any more headlines about tariffs. Because look, the stocks are basically at all-time highs, even with the tariff announcement. No more headlines. No more headlines. Call them off. Moratorium. Presumably, if the Supreme Court— Just 2 % a day forever. That's all we want. Yeah. Presumably, if the Supreme Court strikes down these tariffs, the assumption is that the administration will come up with new tariffs under some different rule. Like they'll come up with some different argument that's not national security related. Tariff jujitsu.

29:51But then we have more tariff headlines. So it's like I think that in theory, yes, maybe it's better for stocks in the market if the Supreme Court strikes down the tariffs. In reality, I think people are like, oh, we just let them be. They have the stock markets at all time highs, et cetera. The last thing we need to do is to have yet another Liberation Day where Trump unveils a new reason to have tariffs under some other statute, some other technicality of the law. I think that's the last thing investors want to see right now. Yeah, yeah. How much are you paying attention to the tenure now in the near term?

30:30It obviously dropped on the news and then it's just climbing back up. I think this is actually very important, again, thinking about who is, when we think about the Fed in the future under any chair, right? Because what is the 10-year yield? The 10-year yield is the average overnight yield for the next 10 years. That's how to think about it. The Fed directly controls the overnight yield. But let's just say, OK, let's say the Fed cuts aggressively. Let's say we get that 200 basis point cut of people's dreams, et cetera. Well, intuitively, that would be inflationary, right? You set off another boom.

31:06You set off the animal spirits again. Suddenly, you get more inflation, and people are looking out, wow, there's going to be more inflation over the next 10 years. What does more inflation over the next 10 years equal? Well, it probably means rate hikes sometime down the road. So there is this tension where, and so then the tenure goes up. And so there is this tension where, like, cuts at the short end do not mechanically, by any means do not mean lower rates at the long end. And lower rates at the long end are where the Jews are at. Lower rates at the long end are what affect mortgages and credit cards and corporate borrowing and all this stuff.

31:41So this is another thing that I think the next Fed chair and the administration has to think about, which is that you can cut rates at the short end and not get any juice in terms of the actual lower rates from the parts of the curve that actually affect the real economy. And so even cuts don't necessarily lead to the kind of monetary easing that you would like to see. Last question from my side, we'll let you get back to nursing your hangover. I love how you just assume that Joe had like such a wild night. I imagine there was a lot of people surfing going on. I like to imagine you people surfing on all the fans in the tenure.

32:21here. Do you read anything into consumer confidence from Black Friday? We were covering it a lot with our friends who run e-commerce stores and like there were a lot of good signals there, but it's hard because it's like one e-commerce store that we know and they're doing well. It's not like the broader economy. And it's a broader trend of Black Friday just moving online. Exactly. Yeah, it's hard to know. It's hard to get. You know, it's hard to get a read. You know, J.P. Morgan, actually, they presented at a conference yesterday. They said they're starting to see a little bit of cracks in the consumer.

32:58I don't remember the exact term, but they did call out potential frailties there. So that was very notable. It's so hard to get a read on confidence because for the last five years, we've been getting the most – the surveys, we've been getting the most dismal consumer confidence measures going back decades. Yeah. And yet people still like spend like crazy. It's the vibe session thing a little bit, the Kyle Stanley line. Yeah, and so it's so hard to get a read on confidence. but by and large, yeah, there was a, I think that you have to take those comments from JP Morgan seriously because they have like, you know, they have a great read on, they have just so much business everywhere that they could see into these things.

33:36But by and large, there isn't a ton of evidence yet that like, oh, there's a real deceleration happening in consumption. Yeah, yeah, no, that makes sense. Jordan, anything else? No. Thank you so much for coming on the show. Thank you, anytime. Merry Christmas. Can we play some Christmas? Overnight success. Overnight success. Christmas music. Play some Christmas music to let Joe go about his day. Merry Christmas. Have a good weekend. We'll talk to you soon. Turbo Puffer, serverless vector and full-text search, built from first principles on object storage, fast, 10x cheaper, and extremely scalable.

34:10The air horn over the Christmas music is not something I've ever heard before. Turbo Puffer. Anyways, should we get into this post from Matt Levine? Absolutely. He says the Warner deal will take a while. We said something similar last week. I'm sure he will have a... Ed Levine's also coming on the show on Friday. Very excited for that. But let's give everyone a taste of his newsletter. He says, also M &A, AI data, trillion dollar IPOs, and good TV is bad for stocks. We're really doing Bloomberg day. Warner Wars. It's perhaps worth saying that Paramount's offer for Warner Brothers Discovery, Inc.

34:48is not exactly a classic hostile tender offer. Warner has signed a merger agreement with Netflix in which Netflix would buy most of Warner for about$27 per share in cash and stock, leaving Warner shareholders with a bit of the company worth somewhere between$1 and$5 per share. That merger will take a long time to complete. For one thing, Warner shareholders have to vote on it, which means that Netflix and Warner need to put together a proxy statement and prospectus for the deal, file it with the SEC, and hold a shareholder vote that could take months. For another bigger thing, the U.S. Department of Justice will need to review the deal for antitrust concerns.

35:22Those concerns are significant, and Netflix and Warner have budgeted at least a year for that review. That deal was announced last Friday, and on Monday, Paramount jumped in with an all-cash,$30 per share offer to buy all of Warner, which we discussed on Monday. It took the offer directly to Warner shareholders. It launched a tender offer scheduled to expire on Jan 8th to buy those shares. The two deals operate on different timelines. Warner plans to ask its shareholders to vote on the Netflix deal, but that vote will happen long after Jan 8. And if Paramount buys all the shares before the vote, then the question is moot.

35:54Oh, because they'll own all the shares, they'll vote. No. Yeah. Interesting. If the shareholders all sell their shares to Paramount in January, they can't vote on the Netflix deal in March. And if 51 % of the shareholders sell to Paramount, Paramount will control Warner, vote down the Netflix deal, and acquire the company itself. Interesting. That is the classic benefit of the hostile tender offer. It's fast. If Paramount's tender is more appealing than Netflix's merger, then Warner's shareholders will sell their shares to Paramount before the Netflix vote and Paramount will win. And if the deals are roughly equally appealing, if shareholders are more or less indifferent between the two bids, then the speed of the tender offer is a real advantage.

36:30The headline here is that this deal is going to take a long time. And here he's saying it's fast. Well, let's see where he gets it. This is interesting. I'm hooked. Then the speed of the tender offer is a real advantage. Shareholders think, I don't care too much, but if I tender to Paramount, I'll get this done faster, so I might as well tender, and Paramount wins. Or that is a classic theory, but it is hard to achieve in practice, and it's not really true here. Paramount's offer says at the top that it expires on Jan 8, but it's not like it will buy the shares on Jan 9. Even if 51 % or, for that matter, 100 % of Warner shareholders tender into Paramount's offer, the offer will not close until two other conditions are met.

37:10One, Paramount's deal also requires antitrust clearance. It is not legally allowed to buy the Warner shares until it gets that clearance. For a combination of fundamental and Trumpy reasons, Paramount thinks it will have a much easier time getting antitrust clearance than Netflix would. But I remember seeing that the Netflix team was arguing that from an antitrust perspective, Paramount has a lot of watch time as well. and so Paramount Plus, even though it's a much smaller streamer, you put everything together and they were like, it's really not that, it might even be more total watch time across everything.

37:46I'm not sure that that pans out, but it was an interesting point that just from creating the Monopoly perspective, like maybe it's the fourth biggest, the fourth most controlling stake, but there is an argument there and so it does need to go through review And so that will hold things up. Yeah. Paramount's proposal expects to receive regulatory approvals likely within 12 months. Faster than Netflix's expected timeline, but a lot slower than Jan 8. Two, Paramount's deal is by its terms conditional on becoming a friendly deal. A condition of its offer is that Warner Brothers shall have entered a definitive merger agreement with Paramount and the purchaser substantially in the form of the merger agreement submitted by Paramount to Warner Bros.

38:31on December 4th, 2025. That is, Paramount does not just want to buy a majority of Warner stock and block the Netflix deal that way. It wants Warner's board to abandon the Netflix deal, pay that$2.8 billion reverse termination fee, and sign a deal with Paramount instead. The deal is too big, and the antitrust approvals and financing are too complicated to do as a purely hostile deal. Paramount will need Warner's help to close its deal. In some sense, then the Paramount deal is not a real tender offer, one that depends only on the shareholders, one that shareholders can accept even over the board's objections.

39:08The Paramount deal is a pressure tactic, a way to get shareholders thinking, hey, I would rather get$30 in a year than$27.75 in 18 months, and telling the board that. If the shareholders all would tender into the Paramount deal, then it's hard for the board to stick with the Netflix deal as a matter of fiduciary duties and shareholder pressure. But it's not like if those shareholders all do tender into the Paramount deal, it will just close. It's a jumping off point for negotiations. And so Bloomberg's Lucas Shaw reports that Paramount and Netflix are girding for a battle they predict will stretch well into 2026.

39:43Lucas says, well, if you want to follow along with Paramount or Netflix, go to public.com. Investing for those who take it seriously. Multi-asset investing. You're trusted by millions. And yes, Netflix is on there. Paramount's on there. Warner Brothers is on there, at least for now. Lucas Shaw says Warner Brothers was given 10 business days to respond to Paramount's hostile$30 a share bid for the company on Monday since that offer was already rejected once. The Warner Brothers board isn't planning to cancel the merger agreement signed last week with Netflix, according to people familiar with the company's thinking.

40:13Doing so would require Warner Brothers to pay Netflix a$2.8 billion termination fee. That puts the onus on Paramount to make the next move in what everyone expects to be a drawn-out affair lasting months. Paramount can follow through on its tender offer to buy Warner Brothers shares from investors at$30 each on Jan 8. It can also extend the bid, sue to stop the Netflix deal or increase the terms. Shareholders of Warner Brothers, one of Hollywood's biggest film and TV companies, are hoping for a bidding war that further boosts the price of the deal. Both companies have communicated that they have the ability to increase their offers.

40:46And the Financial Times notes, some WBD shareholders expect Paramount to lift its bid before the tender offer expires after Ellison's company said in a regulatory filing that$30 was not its best and final price. Whoa, going up. Well, you get another sovereign in or something, you know, spread that across everything. How many more sovereigns do we got? We got the big three. He's got to go to Norway. Norway would be cool. Paramount is privately weighing an increase or whether to instead add sweeteners intended to give WBD's board greater confidence in its regulatory prospects versus Netflix. And Matt goes, yeah, you don't go around saying on television as Paramount did that your offer is not best and final if you want shareholders to tender so you can close next month.

41:34They know there's a lot of negotiation to come. Yeah, it's this position that the Ellisons are in where it feels like every other week they have to offer a higher price. It's like, how do you, how do you, um, it's kind of a vicious cycle. Yeah. It's, uh, it's pretty, pretty crazy, um, to have them, uh, yeah, going back and forth here. I feel like it's going to land with Netflix. I don't know. I mean, I, this is the first time I've tracked one of these this closely in my entire life. It's, it's also just sort of an unprecedented deal because of the scale and all the political stakes and whatnot.

42:14but it just feels like the breakup fee is real. Like the fact that there's a massive multi-billion breakup fee on both sides, that's like material to their market cap, material to their, you know, you have to pay, you know, essentially 1%, 2 % of your market cap in the event of a breakup. That feels like Warner Brothers and Netflix were like, let's actually make this happen. Let's be really sure this is gonna happen. Let's make sure it makes it through antitrust. Let's make sure. I don't know. Then again, the Adobe Figma thing, I was shocked when that broke up because that felt like a crazy breakup fee.

42:50But$1 billion was still lower than what Adobe was trading at at the point. It was less than 1%. This is higher on a percentage of market cap, breakup fee to market cap ratio. So I don't know. It feels like Zaslav probably thought about it a lot. But we have some more folks coming on the show today to talk about this. We can answer a lot more questions. We have Ben Smith from Semaphore. He's the co-founder and editor-in-chief at Semaphore. He's joining in just 15 minutes. While we move on to our next story, let's tell you about Graphite.dev. Code review for the AI age. Graphite helps teams on GitHub ship higher quality software, faster.

43:28There's so much clapping going on across the studio and the soundboard. Should we get into this piece on Meta? Absolutely. From Eli Tan over at the New York Times. What does it say? Meta's new AI superstars are chafing against the rest of the company. It's Chafegate. It's Chafegate. We've established this. Eli writes, an us versus them mentality has emerged between Meta's top artificial intelligence team and longtime lieutenants to Mark Zuckerberg. Yes. Eli writes, when Mark Zuckerberg revamped Meta's AI operations this year, he recruited a new leader, former guest of the show, Alexander Wang.

44:04Let's go. A 28-year-old entrepreneur to build a team of top researchers from rivals like OpenAI and Google. That team, called TBD Lab for to be determined, was placed in a siloed space next to Mr. Zuckerberg's office at the center of Meta's headquarters, surrounded by glass panels and sequoia trees. Mr. Zuckerberg wanted to separate the new AI group from the bureaucracy of the company, which owns Facebook, Instagram, and WhatsApp. Said two people familiar with the matter. I'm glad those people know that Facebook owns Instagram. No, I'm just kidding. Five months later, that divide has become more than physical.

44:44In meetings this fall, Mr. Wang has privately told people that he disagreed with some of Mr. Zuckerberg's longtime lieutenants, including Chris Cox and Andrew Bosworth, chief product officer and CTO, respectively. So, yeah, you're going to be interested in this, John. So, in one case, Mr. Cox and Mr. Bosworth wanted Mr. Wang's team to concentrate on using Instagram and Facebook data to help train Meta's new foundation model to improve the company's social media feeds and advertising business. Let's go. Which is, you've been wanting this this whole time. Yes. It's like, do this whole thing, personal super intelligence, and then just make the algorithm better, make the ads better, you know, grow the business in that way.

45:26So what did Mr. Wang say? He argued that the goal should be to catch up to rival AI models from OpenAI and Google before focusing on products, the people said. So this makes sense, right? This makes sense for Wang. I don't know that it makes sense for the company. I would like I would like from everything that we've seen so far it feels like meta could like add a trillion dollars to its market cap by just focusing all this incredible talent on just making the core business better but Wang and the rest of the team are going to be a lot less motivated by that than having the biggest data centers doing the biggest training runs having the best model, competing on the global stage.

46:13And so I can see why Wang is pushing the other direction. Okay. So let me tell you about Adio, the AI native CRM. Adio builds, scales, and grows your company to the next level. But, you know, like, let's actually unpack this because, like, if, you know, Mr. Wang here, he says he's developing the model, He argues that the goal should be to catch up to rival AI models from OpenAI. Like if they wind up having a model that is, you know, actually in the same league as Claude and Gemini and OpenAI and XAI. And it's this like, you know, closed source. It's an API. It does well on MMLU. It does really well on the benchmarks.

46:58It's like what value does that really bring? Because like. That's what I'm saying. Even on the benchmarks. You could just go and get a model off the shelf. Like if you want to compete in search, knowledge retrieval, even agentic commerce, you can take models off the shelf in the same way that Apple's doing. Yeah. Oh, it's good enough for Apple, but not meta? Interesting. Interesting. Yeah. So I'm just trying to think. You make the best model in the world. Are you going to go compete with? So we've seen this. We've run this with XAI, right? They are trying to build the best model in the world. Yes.

47:33And it's now becoming clear that just having a great model does not automatically give you a meaningful amount of market share. Yeah. No, no. You need to productize it. And OpenAI has productized very well with a viral, like it is synonymous with AI, consumer AI. Everyone has the app mostly on their home row. They're using it a ton. They have a billion DAUs. It's growing, you know, doing great, or MAUs. But then you have Google, just so much surface area to actually stuff knowledge retrieval AI in knowledge retrieval products. You're already trying to do that with Google search. So you do AI searches.

48:13You stuff Gemini in Sheets and Docs and all the different products. Makes a ton of sense. Anthropic, super focused on code, super focused on B2B. Facebook doesn't have a B2B team. They're not like a hyperscaler like that. It might make sense for Amazon to be like, hey, we want to take that approach. And then XAI is sort of the same thing. At least they have X to distribute through. But being the fifth, the fifth hottest, even if the model is for this week the number one, right? It's like no one can really tell. It's very hard to be definitively number one for seven months straight. It just doesn't happen.

48:53Yeah, I get excited to look at benchmarks and have people on to talk about them. Does it change my behavior? And does it stick? And does it stick? It rarely sticks because it's like, you know, what did we see? Gemini 3 was at the top of all the benchmarks. Then Opus 4.5 comes out. That's at the top. Now we're seeing, you know, 5.2 from OpenAI probably coming. Probably going to beat on a number of benchmarks. Probably going to be, you know, better in a bunch of different ways. But is that going to radically change consumer behavior? Even radically change business behavior? No. And so, I don't know.

49:24I would be very focused on what can be done within Instagram and Facebook and WhatsApp to a lesser extent. The flip side, the other question is, I think that there are some... The reason to be excited about that as a Meta shareholder is that AI is such an obvious tailwind for Meta's business. It's talk to Sean Frank from Ridge. right he's creating he's having to create hundreds of new ad assets a week yeah if ai if meta can help him create thousands he will spend a lot of incremental dollars on meta yeah right yeah you can get better at targeting if you can get better at serving content right um and and uh that will ultimately over time provide even more resources for these sort of like moonshot style projects Meta has been pushing this personal super intelligence narrative.

50:21The only problem with that is that I don't know what that means. It sounds awesome, and I'm happy to wait and see, but there's been a number of employees churning out already, and it's possible that they don't necessarily know exactly what that means themselves yet. They're running it like a startup internally. Yeah. Let me tell you about fin.ai, the number one AI agent for customer service. Automate the most complex customer service queries on every channel. So I agree with you. What does personal superintelligence mean? I feel like there is room for product-led innovation in AI, new instantiations of the under-relying, like new ways to interact with the fundamental, like, you know, we're having this AI moment.

51:15And then we get video models, we get image models, we get image editing, we get knowledge retrieval, we get agents, deep research, we get coding agents. Like we've had three or four or five like really cool instantiations of it. And not every lab is frontier at every single instantiation. Anthropic doesn't have an image generator, right? Other labs like they're, you know, obviously OpenAI really thrives in the consumer and has created just a great app that is reliable and answers your questions reliably. Other companies have struggled to hit that instantiation. It would be very, very cool to watch the Facebook team figure out what is a way that they can bring AI to bear inside of Instagram in a cool way, in a new way.

52:03The problem is that Facebook and Instagram don't really have that DNA. They sort of tried it with the Vibes app, but also there's very low ROI on that because as soon as you, let's say that they do come up with the next stories and it's like, oh wow, you take AI and you stuff it in a social app and you do this one special thing and then everyone loves it. It's great. It's not just like a tap-off. Well, they didn't create that. No, I know, I know. But let's say that they did. It's like it's going to get copied everywhere anyway so it's not really that much. They really should just wait around for everyone else to do their R &D.

52:36They should be, Evan Spiegel, what are you doing? Come on, invent something for us. you know um and so and so i i can actually see alex wang's pushback on like hey you you want to you want to use instagram and facebook you you want to you want to do something more incremental but like what what are we going to how are we going to do something great in ai in those in those ecosystems like i don't know that there is that much because again the actual like feed ranking team that's not the gen ai team that's not msl that's not tbd labs that's that's core ai That team is cooking. They've been using GPU-accelerated algorithms for a long time.

53:14They're doing fine. They're shipping ads. And also, all the advances in AI, they're showing up in their financial results over there. Like, the ads are definitely getting better targeted. They're showing people more ads. They're showing people reels that they like better. Reels went zero to 50 billion. Yes, and a lot of that is an AI story. And they're not getting credit for that because it's core AI. It's not gen AI. and Gen.ai is the cool one because it's like, wow, cat, picture, video, awesome music. What do you think, Tyler? Yeah, I mean, I feel like a Nana Banana Pro product in Instagram is like very obvious or like Sora is also just like in Instagram.

53:53If they just made that, it's like a killer product. So I had this pitch during the - You immediately kill. Yeah, I had this pitch during the Studio Ghibli moment. I was like, they should figure out how to Ghiblify every single person's profile picture in Instagram. So you just, the next time you open Instagram, it just says like, hey, we made a cool cartoon version of your profile picture. Do you want to share it on your story? Do you want to make it your profile? Do you want to share it to your grid or whatever? Here's, let's just preload this because it's clearly very resource intensive. But they could have done it on some sort of cron job.

54:25It's runs in the background, burns a bunch of GPUs, but it gives you a bunch of cool outputs and it just gets people into the, oh, wow, like AI filters are here. Clearly, there's a lot of work to be done on the AI frontier, like the actual developing the model. It doesn't seem like they have a nano banana quality image generator model. Also, I don't know if they have the GPUs to actually release that to a billion users. And then at the end of the day, I don't know if it makes any sense because it's like everyone opens Instagram and they're like, oh, cool, you did something nice for me. You spent a dollar and then it's like, okay.

54:54If somebody's making great AI-generated content elsewhere, they'll probably just bring it over and host it. Yeah. So it's a little bit disappointing because it's like, oh, you want to do these things, but you can just – they're in the do-nothing-win scenario. What do you think? I mean, it feels like Google is getting like a massive – in the past, like what, two months, like Google stock has gone crazy because of like, oh, they actually are playing an AI. So it's like if Instagram basically takes all the people that started – that got a Gemini subscription because of NanoBurnet Pro, which is like probably a fair amount.

55:26if they just move them back to meta products. I don't think people will think about it that way. I think people see Google and meta very differently. I think people see Google as like, it's Google for work. It's my workplace. It's where I do research. It's where I learn things. It's where I organize my life, my data, my files, my spreadsheets, my slides. And on meta, it's like, that's the place where I look at reels. It's an entertainment platform. Yeah, I think also for a while, I don't even know if they still have them, but Instagram had the companion. and that seemed like extremely half-baked.

55:58Are you talking about stepmom? Yes. There was like an egg. You could talk to a cow. Yeah. It might have been on Facebook, but it was like extremely like not well. It was not dialed, but it was also not their team, right? Wasn't it? Wasn't it like a. No, that was not MSL. That's what I'm saying. No, not only was it not MSL, it was like a feature that was released by a meta team that then anyone could go in and create a personality. So it wasn't like a Facebook employee was like, oh, I bet people want to talk to a cow. It was like, I'm going to release into the wild the ability to talk to anything.

56:28And then someone was like, oh, I have an idea. I, as a user, will do UGC. It was user-generated content. So part of what maybe we haven't discussed so far is how TBD will tie into Reality Labs, right? Is it possible that they need, in order to fully realize the Reality Labs vision of having a pair of glasses that see and process everything that you see and can provide you that personal super intelligence. So you're walking around, it's like, oh, I forget that person. It just pops up like a name tag for somebody, right? You see an item in the real world and you do this and you buy it, right? So it's very possible that they need to eventually get that on device in order to be fast enough, in order to be super valuable.

57:17And so they do need this internal competency. and so I would there's of course stuff that we're missing here but ultimately I can see why Boz and Chris Cox were like hey why don't we just figure out how to make an extra 50 billion dollars a year by taking some of the best researchers in the world yeah and applying them to the core business also I mean I I like that I like that philosophy I like I they're bought in on the metaverse the AR the XR all this stuff but uh I mean they do got to buy time it just feels like they need to buy time because it feels like it's still not at some sort of inflection point where, oh, yeah, this is going to be the iPhone moment.

57:56Everyone's going to be using these augmented reality glasses next year or the year after. It's like it's still very niche. I was in a Best Buy. I saw the meta Ray-Ban displays, I believe, there. And they were certainly not being swarmed. So I don't know if we'll ever get any data on how many pairs they sold, but I'm not seeing it on a lot of lists of the hottest tech items this year. I'm not seeing a lot of people buy them, gift them. It still feels like, okay, they've created something really cool, which is technologically, it's a heads-up display. It looks good. It's cool, but there's a lot of work to be done to actually educate people, create software for it, make it seamless.

58:41I think it'll be a popular gift. I'm planning to gift some of that. But to what degree? Like 10 million units or a million? I don't know. It's a big question. But I know people are going to be giving each other cognition. That's right. Time with the AI engineer. Devin, crush your backlog with your personal AI engineering team. Well, without further ado, we have Ben Smith from Semaphore joining. He's in the rest of your waiting room. Ben Smith, good to finally have you on the show. Thank you so much for joining us. It's good to finally be on. Yes. Overdue. Nice to be here. Well, we were confused.

59:18We were confused because early in the show, about a year ago, you broke a story about a group chat, Chatham House. And we were very confused because we assumed that Ben Smith was a pseudonym. Because it sounds like the name that goes on every kid's fake ID. If you don't want someone to know who you are, you make up a name. John Doe, Ben Smith. This is just a name that you pull off the shelf. But it is, in fact, your real name, correct? Wow, that's a really insightful observation. Yes, it is my real name. Fantastic. Maybe I should have used a pseudonym. A lot of people were mad about that. They were upset about that.

59:54But I thought it was an insightful piece. I thought it was a fun little peek behind the curtain of the Chatham House. But anyway, we are here to talk about the Warner Brothers Discovery News. First, can you actually introduce yourself since this is the first time on the show? Would love to get up to speed on a little bit of the semaphore journey. Yeah, sure. I mean, I've been a political and media reporter for my whole career. I was at Politico when we founded that and then ran BuzzFeed News for eight years. Oh, yeah. Was media columnist for the New York Times. And so I've had like a real front row seat on how insane the media is in all sorts of ways.

1:00:30And also how frustrating it is for consumers right now in particular, how overwhelmed people feel and how hard it is to figure out who to trust. And that, in some of four, that was sort of the core impulse was to try to create a platform that thinks a lot about just how you make yourself trustworthy by being really straightforward and transparent. And then how you just try to cope with the fact that everybody's overwhelmed by incoming. And there are great new outlets popping up all the time that you want to be across. And there is garbage all over the place that you want to avoid. And how do you help an audience?

1:00:59And really, like the most, the people who are most driven insane by this are the most sophisticated consumers. Like how do you help people navigate this? A big problem right now, part of the chaos is on X specifically, there's like thousands of accounts that are like headline accounts, right? They're just acting. All they do is post headlines. They do breaking, just in, all this stuff. And so now there's a whole new crop of accounts that are purely fake news, but they use the same formatting. And so now I just never, I don't, some of the stuff I'm like, I'll, I'll, I do think it's been, it's, it's put media in an interesting position because in some ways, if you're like legacy media, you know, the think newspapers, cable networks, things like that seem to have their durable edges, they have like monopolized the truth.

1:01:50Like I still, of course, they put out fake stuff now and then by accident or they just get the reporting wrong and they'll issue a correction. But it still seems like a lot of headlines happen online. And I'm just like, I'll wait till an account from a company that has existed for more than like 10 years posts it. Because until then, I can't really verify it. Yeah, I mean, X was this incredible machine, I thought, for a long time for just figuring out what is going on in the world. And had lots of other problems and got very politicized and you could have people, you know, tell you to kill yourself all day and stuff like that.

1:02:27But like it was a decent place to know like what is happening. And it definitely kind of rewired my brain. I feel like I now there's nowhere. And honestly, to some degree, this is what we're trying to do in our newsletters. Like there's not somewhere you can log on and just be like, what is happening in the world? And be confident that you're getting an accurate read on that. Yeah. Do you think there's a difference between like the opinion and the fact finding side? I feel like with a lot of the legacy media outlets, people maybe still believe that like that's a good source of truth, that's a good source of facts.

1:02:55But they might not agree with like the conclusions or the contextualization or the opinions that are wrapped around those facts. But most people still have faith in the traditional media actually following like fact finding guidance. but at the same time there has been an immense amount of pressure maybe on the back of people's disagreements about their opinion section that has led to the questioning of their fact-finding sections. Yeah, I think this is like truest in coverage of technology, actually. Like you guys feel it most intensely because there's been this, to me at this point, like kind of boring and repetitive war between journalists who particularly post-Trump saw everything bad they thought was happening in America as the fault of Meta.

1:03:40and then on the other hand, technologists who felt that they were like just there trying to build companies and being persecuted by these psychotic journalists. And I don't know, but like having been part of that on the journalism side, like it's a lot of truth to both sides of that. But I do think that we're also in a world where consumers like are just not going to take a single view, a single perspective, don't want that, want diverse perspectives. And so like just literally what we do at Summit 4 is we like break the stories up into here are the facts and here's the journalist's opinion, which is transparently displayed and here's somebody else's opinion instead of in the traditional way, trying to kind of weave those together.

1:04:16And I think people would rather disagree with you openly and disagree with your analysis than kind of feel like you're sneaking it in. Yeah. No, that's a good approach. Um, have you been processing the, the, the Warner brothers story? Like how long have you been covering this? Have you been covering Zaslav like the entire time? Because there's been, there's been like the the writing on the wall that like this was being packaged for years correct yes i mean i think that you know i mean this is incredible i mean warner is obviously this kind of cursed company that has been acquired and sold and the each acquirer regrets the whole thing you know warner the brothers were never split up though the brothers together but it is also the It's the great Hollywood studio, right?

1:05:04And when Zaslav, this sort of unbelievably audacious acquisition of this Hollywood gem by this kind of garbage reality TV cable conglomerate of discovery, Dr. Pimple Popper was buying HBO, was this incredible bit of cable business magic and financial engineering that then just immediately destroyed enormous amounts of value and the stock went down to like, what, seven or eight dollars. I mean as a pure financial story it's amazing right like the value destroyed and now created in this bidding war that Zaslav has created but also obviously a story about movies and politics and power and all the other stuff wrapped up Did you think that the bidding war was fake or were you expecting the bidding war to materialize in a way that felt real Yeah we were talking with a friend who has had an incredible career in media, who I won't name, but he was like, I don't think there's a war here.

1:06:08I think a deal will get done, but I think there's only one person or one group here that's a legitimate buyer. This was, again, maybe six weeks ago at this point. It certainly hasn't played out that way. I would have said exactly the same thing. I think Netflix did either like a very convincing head fake or changed their mind. And I think no one thought they, at least I didn't think they would seriously bid. I thought, you know, Warner Media is both a bunch of interesting but like quite challenging to operate cable businesses, CNN being like the most culturally important. And then a studio, a movie studio.

1:06:49And there were a lot of people who really wanted the movie studios. Aslov was going to spin out the cable assets and then sell the movie studio, and that seemed on track. And so when Ellison came in and just said, I'll take the whole thing, yeah, I definitely assumed no one else really wants that. And Ellison isn't really, he's sort of a non-economic actor here. He's fundamentally like a kid who wants to buy a movie studio. And so how do you bid against that? And the history of the movies is being bought by people whose motives aren't economic. Yeah, kind of like sports teams, right? Yeah, totally.

1:07:21Exactly. That's a great analogy. How do you think about this from Netflix's perspective? Like, obviously, as a tech company, Netflix has been like such an incredibly performing stock, became so big, was at one point Fang, which was basically Mag 7 before there was Mag 7. But from my perspective, I've been a subscriber of Netflix forever. I don't really see myself ever churning, but I just, there's only a few things that have really broken through. Like, I know Squid Game. I know Stranger Things. There's like a few moments and it's hard for me to picture the staying power. There's not as much FOMO TV as I look over the last decade of my, you know, entertainment watching career.

1:08:03It's like, oh, like I couldn't have missed Game of Thrones. I couldn't have missed Succession. There's like all these important moments that only came from HBO. They only came from Warner Properties. And so from my perspective, maybe it's expensive, but it felt like this was a way to backfill some really like legacy assets that you just can't create overnight for no amount of money because, you know, it just takes 50 years to create Porky Pig, I guess. That's an amazing assertion. But I think you're basically totally right. There's something about the staying power and the cult, even just sort of like internal creative of culture at HBO that has had this string of high impact things.

1:08:45And then also write a library that includes Harry Potter, that includes like North by Northwest, Three Days of the Condor, but like just, you know, decades and decades of amazing TV and cinema. Columbo, I think, is in there, right? Steven Seagal movies are in there. Rambo. Sometimes you want to watch that. Yeah, and so there is a logic to that. Netflix already also spends, I think, hundreds of millions of dollars licensing stuff from Warner. And so there's some logic to, I mean, there's some, you know, some actual synergies there. Yeah, yeah. Does cable end up with, does the cable business end up with Paramount Skydance?

1:09:26Either way, Netflix doesn't want it. Clearly Ellison, the Ellisons really would like the whole thing. Yeah, I was sort of confused. But if the cable business just stays out in the ether, what is it just going to float? and just pick that up. Do they really only care about... What's your read? So, you know, I don't know. I mean, I think the basic thing that people would always say at Paramount is CBS News is 5 % of the company, 5 % of the revenue and 80 % of the headaches. And the way in which the news business has gotten swept up into this is that that's what Donald Trump cares most about. I mean, he also wants a remake of Rush Hour 4, by the way.

1:10:08That was a scoop one of my colleagues had recently. Is that real? Oh, 100%. It's been confirmed. He told Larry Ellison, I want Rush Hour 4. There's only been three. I want four. Jackie Chan is like 71, so it's challenging. These days they shoot his fight scenes in the dark. But no, Brett Ratner is making that movie because Donald Trump wants it. But mostly what Donald Trump wants is favorable coverage of Donald Trump. And by the way, however favorable it is, however favorable you're making it, that is not favorable enough. He wants it more favorable than that. As the Ellisons are now finding, like they've, I think, softened CBS's approach a bit.

1:10:44And all Donald Trump is going to do is yell at them about negative coverage of Donald Trump. So it's like a bit of a slippery slope there. And also a disturbing thing that the president is interfering in regulatory matters to affect coverage himself. Does the president get a report every day of like, here's the different takes? Because I'm assuming he's watching Fox. And I'm assuming he's dailying Fox. So is he getting like a deep research report? Do you think he's running like a query in chat GPT? It's like, tell me what's... No, he's watching a lot of TV. He's got a bunch of screens up. He's switching between them.

1:11:16And then he has an aide who has an iPad who brings him things that are of particular significance that he then watches the clips. So if something happens on a different screen, you can see the clips. He's watching a lot of television. Don't worry. And in any case, the CNN part of this, and I think the Ellicons do care about news, particularly they're very, very pro-Israel and they were disturbed. They felt CNN got, CBS got too anti-Israel. But, and I think they would like, I do think they are sort of ambitious about CNN. And there's always been a thought that CBS and CNN would make a good combination.

1:11:48But the driving force here is the movie business. And the news business is implicated as a way to make Donald Trump happy. Yeah. And is that just David Ellison's like passion for movies? I mean, he did, I think something that's getting lost here is like he founded a movie studio 20 years ago. Like he's not like new. This isn't like a pet project that he picked up today because Oracle stock popped. Like this has been his life's work. Now he's had a massive advantage with his dad, but it's not like he was doing a basketball thing last month and now he's doing movies. He's been doing movies the whole time.

1:12:21Yeah, no, totally. And in fact, like lots of rich people dabble in the studio business and he's built something totally real and made a lot of movies we've all seen. Top Gun. I mean, like, you know, like really like big stuff. And Skydance has been like a successful, important part of Hollywood. And he's also, I think he importantly kind of like learned a lot. Like he's not a newcomer to this weird business. Totally. Yeah. What did you read into the text message? He says, you know, he sends his message to Netflix to say, we, you know, we had dinner and we, you know, you will find out that we are who we were at that dinner.

1:12:56if he's buying the company, is that setting the expectation that they'll be continuing to work together for five years, 10 years? Or is it just like in the course of this sale process, we'll be good people? I mean, I have no idea what that text message was. It was sent, I think, hours after his lawyers had sent like some kind of flaming letter to the board saying, you guys are screwing us and aren't negotiating in good faith than giving his sweetheart deal to Netflix and then sent a kind of, to me, like kind of hapless and plaintive message to Zaslav saying, really, I love you. It's a good cop, bad cop.

1:13:33This is a classic strategy. Yeah, I guess so. Good cop, bad cop. What do you think are some of the, like the outsider interpretation of the deal? A lot of people are worried about, you know, just Warner Brothers getting sold. It feels like some people are anti-Warner Brothers getting sold to anyone because they're like, no matter where it goes, they're going to cut jobs or they're going to pull back from movie theaters. How are you interpreting? And I do think the people that are like, oh, well, you probably subscribe to Max and Netflix and you'll be able to cut one of them. But I just don't buy that Netflix wouldn't just, they might give you like a sweetheart deal for a couple of years until everyone forgets.

1:14:18And then it's like, hey, we have like, by far the best portfolio of content in the world. You might even call it a bundle. We're bundle maxing. We're back to the bundle. And as a consumer, I am annoyed enough at having different accounts and bopping around. I'd be happy for just one. I'd be happy for re-bundling. But I just don't buy that it's like a win for consumers and even in the medium term and probably not at all in the long run. You know, I don't know if it's not a win for consumers because that thing you said, it's so annoying. This landscape is so annoying for consumers. You realize, oh my God, I signed up for MGM Plus two months ago to watch something and it's still billing me.

1:15:01Everybody is living in this world of two or three streamers. You feel like you have to have three or four others that you forgot you signed up for. And it's not a tenable situation. And I think that kind of consumer push is pretty real and is the kind of like the obvious. The media is a boring, straightforward business. We're not trading credit default swaps here. And I think that just obvious consumer sense that it's time to bundle max again is what's driving this. The notion that you solve it by basically having the number one and number two merge with each other is not the obvious solution to that, I think.

1:15:38And I totally agree with you. It obviously means prices grow up. The people who are most freaked out, though, are the sellers. right? Are the issues like, is this a monopsony or like the, you know, the movie makers, the actors going to take a haircut because there's only one buyer left. And they're very, and Hollywood is obviously very concerned about that. Yeah. If you have one buyer, you have, you're a price taker. Yes. Yes. Yeah. It's funny. I was on the consumer side. I agree with you. I was looking for posts about the deal potentially being a monopoly. And I found multiple posts that were like, I miss when Netflix was a monopoly and they had everything in one place.

1:16:13Now I have to go to six different streamers. And I was like, that's funny. But yes, on the buyer side, that is obviously more of the risk. I wonder, how are you interpreting the rest of the big tech companies playing in Hollywood right now? Because it feels like Apple has a lot of money to spend on buying media assets and buying movies and producing stuff. Amazon as well. Who knows? Maybe Mark Zuckerberg buys the rights to UFC for VR. Then eventually he starts getting into movies. It feels like there's a lot of money chasing media generally. Do you think that we're going to see more of a pullback from the other big tech companies?

1:16:53Or do you think they'll go harder than ever? How are you interpreting the rest of big tech's role in Hollywood changing? It's a great question. Amazon and Apple in particular both spend a lot of money. Neither have quite built the, I would say almost the creative culture that Netflix did manage to. and that HBO is really the best at, which is your willingness to take these cultural risks. It's not a tech business. It is a business of taste and of relationships and of all this stuff that's hard to scale. Apple's made a lot of, obviously, wonderful stuff that has some cultural impact, but they're also incredibly careful about their own brand in a way that I think ultimately makes it really hard to do the things that really cut through culturally.

1:17:40I talked to a filmmaker years ago, right as Apple TV was getting spun up and Apple was starting to take it more seriously. And he said, like, no way. It's not going to work because Hollywood is a hits driven business. It's a venture capital style business. You have a lot of F minus movies for that one A plus movie. It's all about this high risk. And Apple does not like having, you know, egg on their face for a bad result. And so Apple, everything has to be an A - level, basically, to get out the door. And if you have that brought to Hollywood, like he was saying, that wasn't really the cultural thing.

1:18:18Then I think what he was missing was the fact that Apple probably wants to distract from the services monopoly. And so there's a whole extra incentive to continue saying, like, what app store revenue? What are you talking about? When we say services, we mean Ted Lasso. So I don't know if you buy that. We mean Brad Pitt. But I've enjoyed that conspiracy theory cropping up over this year, just this idea that Apple. But how have you interpreted that idea? I love the idea that movies are venture capital except without the returns. Yeah. It's like you get the risk, but you don't get the outsized. But at best, you don't get the outsized returns.

1:18:55Yeah, maybe that'll be Roloff Boto's next business. Yeah. He wanted venture capital return-free risk. But, you know, yeah. I mean, the risks are also, you actually mentioned Ted Lasso, like for instance, one thing that you will never see in an Apple TV production is anybody throwing or damaging an iPhone. Yeah. Like there's just like, it's just like you're living in their world and there's smooth edges to it. The smooth edges are crazy. I saw this whole conspiracy theory about how the lighting in Ted Lasso and Severance are both very high key, very flat, not a lot of contrast. and that that would potentially like prepare you for this metaverse where you're in the Apple Vision Pro because the Apple Vision Pro looks like this.

1:19:33And it's all like, it's like the Apple brand brought to cinematography within their like media assets. And it was like, maybe it's just their culture bleeding over there, but also maybe it's something more about like their view on the world and like their opinions. It was very, very interesting, but at least looking at those. And the shows are beautiful. They are beautiful. Yeah, the shows are beautiful. But they are a little plastic, I think. Yeah, they're not grungy. They're not divisive. They're not divisive. Like really good culture, good art is always divisive. Totally. I mean, even Game of Thrones, I remember like watching season one and being like, oh, this is like maybe going too far.

1:20:07Like this is like, can this be on TV? It's like edgy. It's like there's a lot of like, you know, the adult content, the violence. Like it definitely pushed boundaries, even though it was like, you know, R-rated, I guess. It was like aggressive. And you just don't expect that from Apple. But so, yeah, maybe you're back to monopsony. If you're selling something that's going to be for mature audiences, where are you going other than Warner Brothers, Discovery, Netflix, this conglomerate? Yeah. And so I think like Hollywood, it's always very torn because they really hate Trump and they hate the idea that Trump's friends are jamming this thing through with threats of kind of illicit regulatory pressure.

1:20:46And on the other hand, they hate Netflix. So it's like a tough choice. Yeah, rock and a hard place for sure. Let's switch gears to something they hate even more, which is AI. I'm curious how you guys have been trying to focus your coverage, how you personally feel about it. If you could snap your fingers and make it disappear, would you? Or do you enjoy it personally?

1:21:19I'm curious on your semaphores view and how you've even been approaching coverage? Because a lot of our coverage is obviously positive. We use AI, we work, we get a lot of value from it. But at the same time, we're well aware that most, it feels like most of the world at this moment is using it, but even sort of like hate using it, which has happened quite quickly. Yeah, I mean, you know, I guess I mostly see it as just the greatest story. Like it's just, you know, it's an incredible story right now of politics, of economics, and of technology. And we're just covering it obsessively. Reid Albergatti, our tech reporter, broke the story two days ago that NVIDIA is going to be allowed to sell H200s to the Chinese.

1:22:06I mean, it's a story that is pulling everything in. You have this American economy that is limping along except for AI, which is driving all the growth. Yesterday I interviewed Governor Shapiro of Pennsylvania. That's all he wants to talk about. I mean, it's just a fascinating political moment. And I mean, I use it and we use it, I think probably, I bet the way you guys do in like for the most boring stuff. It's like incredible for video production, transcription, you know, and essentially like I think a lot of companies are using it, which is just to take out cost on extremely boring things that you're happy to have software do.

1:22:41But yeah, but I think like, yeah, we're mostly thinking about it. I think the story that I'm obsessing about now is really the coming political backlash. Like I was just talking to a Republican consultant here in Washington who's essentially shopping for a candidate to lead the anti-AI president. He basically sees, thinks there's this big lane. I kind of buy this against J.D. Vance. Like he's the front running Republican nominee and the attack on him will be this guy is a tool of the tech industry. He's a tool of these AI guys who want to take your jobs, poison your children's brains and build like these weird boxes in your neighborhoods.

1:23:15And it's just not, it's not a popular. It's like not popular. And one of the strange things is that, you know, Trump is just unbelievably pro AI. It's one of the most important decisions this administration made. David Sachs really persuaded him, came in day one. He's with Sam Altman. He's with Elon, like all in for AI. But he didn't campaign on it. He hasn't really like bothered explaining it or selling it at all. And so I think we're just set up for a huge backlash that you're going to see in the midterms. Yeah, it's a fascinating story. I mean, I agree with you about AI touching just like everything.

1:23:46You can look at it from what is it doing to your kids to, you know, you can be sci-fi and say in a thousand years, the robots are going to control everything. You can talk about jobs. You can talk about taxes and all this stuff. But yeah, for consumers that aren't working in tech, they're like, it's cool to make a video of a cat surfing, but I'd rather just keep my job and keep the cat surfing video. It's just fascinating how much tech missed this. Like they didn't even, with social media, like you pointed out this whole thing about, you know, the war between media and tech around Facebook, maybe stealing the election, that type of stuff, right?

1:24:28It's like, well, at least everyone kind of enjoyed social media for like a decade. Like from 2006 to 2016. It was great. Yes, people were like, there's some, I saw a bad picture or like, oh, you know, I found out some bad information or something. But it was mostly like, oh, cool, Instagram, I saw a photo that my aunt posted. Like, this is nice. People had a pretty good time with it for like years, years, years, years. And then eventually it turned. And now we've grappled with it. We talk about the pros and cons, but we all kind of use it and we're all like, okay with it. With AI, it was like, on day one, I hate this.

1:25:04I hate everything about it. looks ugly. I don't like it. I don't trust it. And oh, by the way, go do some research. The people who are making the AI, they've been talking about how it's going to kill everyone for like a decade. They've been writing books about this for like a decade. Yeah. Well, what do they think in Silicon Valley about this? Yeah. We kind of created the crisis because, yeah, some of these videos pop up and you're like, wait, this was four years ago. And they said there's, you know, someone at a lab is on record saying it's very likely that AI on a long enough time horizon will kill all of them.

1:25:40No one was saying that on social media. You go back and no matter what you think of Mark Zuckerberg, you go back and you find the scandalous video of him before he was so powerful. It's like, yeah, he's drinking a beer out of a solo cup with a journalist in an interview. It's like, it's pretty harmless. It's pretty harmless. It's like a little sloppy, but it's like not, it's not him saying like, yes, I believe this will definitely swing the election in 10 years. Mark my words. And then it does. It's ridiculous. Yeah, we skip straight to the apocalypse. And it is also totally Sam Altman's fault slash an incredible feat of marketing that you say, like, I have this new product so incredible that it's going to kill everyone.

1:26:14Definitely got people's attention. Yeah, I mean, there is a long lineage of technology, millenarian technologies actually being like it's easy to marshal resources around them. I mean, in many ways, SpaceX is of the same cloth in the sense that Elon Musk was out there saying, like, if we don't go multi-planetary, all of humanity could be wiped out. So there is this existential crisis that if an asteroid comes and hits Earth, it's over for humanity. but if we build my company, SpaceX, and we get to Mars and we put a Mars colony there, then we have a backup plan. And if the asteroid comes and destroys one of those planets, well, the other one's still got some people on it, we can rebuild.

1:26:58And so it was an apocalyptic scenario in some ways. It wasn't the backbone of the business, but it was a piece of his rhetoric. But it's still more positive because it's not the rockets that are going to destroy us, it's the rockets that will save us. But it's still conjuring the idea of an apocalyptic scenario in some way. So I always found that interesting. Yeah, and I mean, I do think that, you know, by the end of the social media era, all these CEOs, and it's still true, were so like kind of beaten down by being grilled by Congress and hated the media and felt like everyone was out to get them.

1:27:30They're still like, they don't want like talking to the media. They like, all you guys all live in your signal group chats and like feel that everyone is out to get them. But actually the successful CEOs of this moment now talk to everybody are back to being these kind of mad visionary profit types who, as you say, like millenarian figures. And I think if you look at like, you know, Daria or Altman or any of these guys, it's sort of a throwback to an earlier style of maybe overselling, but of being very, very interesting when they talk about their products, not being sort of embedded in the culture wars.

1:28:08Yeah. I mean, like you, you just, you, you, you go back through the story of like Amazon and Jeff Bezos. And it was like finance guy delivering packages. Then he's hosting some web servers. Like there was never really this like world consequential thesis that bubbled up. He's done some great interviews. He's been inspiring in many ways, you know, uh, but he's never, he's never brought that, uh, you know, like world historic consequences to bear in his rhetoric. And I don't know, maybe that's benefited the company. The company's certainly done well, so maybe it didn't hurt. It would be funny. Be like, if we don't deliver this package in two days, everyone dies.

1:28:48We need to do Prime. We have to. The entire fate of humanity rests on you getting diapers in two days. Yeah, that's how I feel about the podcast industry. Yes, yes. How do you see the podcast industry evolving? What's your take? I mean, you mentioned like the consumers being unhappy with media. And I think I could think about a bunch of different instantiations of that. But like the fragmenting media landscape, like how are you thinking about what it means to be like independent, like the micro nim cell community? Like do you think that there's like a pendulum swinging and we'll see reconsolidation, rebundling?

1:29:29or do you think it's just going to diffuse and be smaller and smaller operations forever? How are you thinking about like the new media landscape? Yeah, I mean, you know, it's, it's, gosh, it's been like new media as long as any of us can remember. Someone was calling the verge new media or legacy media. And, and I'm like, they're like, yeah, they felt very new. It was very funny. Anyway, sorry. Yeah. Like I was, I sort of was a blogger when that was new media. Right. So it's, I feel like I've seen, but you know, the core, I do think there's like still a nostalgia for a 20th century media that's like not coming back because that was because you needed a broadcast tower or a printing press to reach a lot of people.

1:30:05And that was, and there's been a tech, and I think when people, people in my business and the East coast media often try to figure out like what went wrong, you know, was it when the CBS news got something wrong about Bush in 2004? Was it when the New York times put up its paywall too soon or too late or something? And like, no, these, there was a huge technological shift around distribution that kind of swept away a lot of this old stuff. And it wasn't something they could have tactically really avoided. It was just a huge technological change. And so they'll never be that kind of, or not in our lifetimes, unless the government imposes it, reconsolidation around a very limited number of news sources.

1:30:39You've got to go to North Korea for that.

1:30:45But that said, I think we are, because it's driving consumers crazy, the pendulum has swung out. They say media only bundles and unbundles, and we're out at the unbundled moment. And you can just see it swimming back. Like Fox is rolling up right-wing podcasts. MSNBC is about to roll up a bunch of left-wing podcasts. By the way, are we still calling these things podcasts? Like it's TV. And everything is converging on this very familiar but kind of boring television format that will start to get juiced up and become a game show with 19 boxes and whatever. And we're all going to have to start spinning.

1:31:19I can't tell if you're talking about us. No, you know what I mean? We also produce a podcast that I think looks fine, but I can feel the pressure to raise the production values. Whereas two years ago, we could all have been in our pajamas, in our basements, and it would have been fine. And so I think there's this convergence. And the audience is going to expect it. It's going to be competitive. It'll have to look better. It'll have to be more tightly edited, I suspect. People are going to want that. And it won't look like old TV, but I do think you're going to see consolidation around all the advantages you get when you're consolidated.

1:31:50You have a central guy selling all the ads. You can build subscription technology. You can cross-promote. Again, media business is so unlike the tech business and unlike the finance business in how uncomplicated it is. And I think you're going to just see consolidation for all these really dumb and obvious reasons that have to do with, and also it's sort of exhausting to run a small business for a long time and people who start them will. I don't know. Actually, I'm curious because you're in this. How are you feeling about it? do you want to stay independent do you want to be consolidated well i would say the best way to think about is we we like being the talent side we're not in this to run a we don't we don't have any interest in running a multi-hundred person organization we don't really even care that much about scale we're very okay with our niche we think it's like a couple hundred thousand people in the world that like are really gonna enjoy this content and millions more will see the content in different forms uh but uh knowing it's also a very friendly environment like like just earlier on the show we had joe weisenthal from bloomberg like we're not trying to poach him to do the joe weisenthal show on the tbpn network because like the whole network thing's a joke uh it's just a show we and so i'd much rather you know joe just does odd lots which is a fantastic show and then comes on our show when he feels like it and it makes sense and uh and we yeah the question going back to like saying you know msnbc what msnbc is doing with podcasters and what the cable networks are doing with podcasters my uh when you look at the revenue that these cable networks you know basically the revenue streams that they built up over time getting a dollar from every home that that uh that is subscribed etc up her channel uh it depends on depends on the network but But it's so hard to rebuild that with independent creators and get back to the scale, right?

1:33:48It basically shifted to the streaming. You need a website. A website or an app is now the distribution. And so I think that we understand this huge bifurcation between the platforms and then the individual creators that can command attention, right? But if somebody came to you and said, I heard you guys say on TV just the other day with Ben that you wanted to be talent. And you know what? We'll take all this off your hands. We'll pay you a salary. We'll commission you in some way. But you don't have to worry about anything else. We'll get you hair and makeup, whatever. Fly business class, whatever you want.

1:34:30And treat you as talent. You just don't have to run a company and worry about all that stuff. I think that's going to be the pitch to people who are getting exhausted, who are super successful creators but are sick of running a small business, don't really, aren't, I mean, you guys are actually entrepreneurs, so it's a little different. Yeah, it's weird because I don't know. It's appealing. I've moved anywhere. Yeah, so we've built out, you know, we hired. But I understand that from a lot of perspectives for sure. We hired somebody I've worked with in the past, Dylan, who started his career back at CNBC, worked at HQ Trivia, like understands media really well.

1:35:01We've built out a team around us that allow us to do that and allow us to work on the stuff that we really enjoy. I think one thing that's been interesting is how many traditional journalists have gone independent, but historically they were in the scoop business and then they go independent and they realize like when you're a part of a bigger media company, you can get once crazy scoop every three months. And you're like, from my view, like you're killing it. Like you're adding a lot of value to the organization. But when you go independent and you're like getting three scoop every few months, is that enough?

1:35:39Are you creating enough value to justify having people give you a lot of money every single month? I think yes, to some degree, but I think you'll see a rebundling in certain niches around, let's say a bunch of like scoop-driven technology journalists that say like, hey, we all went independent, but we should actually kind of rebundle together because it'll just create a more incentive for somebody to subscribe because they know like on an ongoing basis I'm going to be getting. And that's what obviously you're doing. So like a TVPN roll-up of like Alex Heath and Casey Newton? We wouldn't want to do that.

1:36:12No, I'm joking. But I could see. I totally see what you're saying. I mean, in a way, the way we've done some of four was. That's kind of what you're doing. Totally. There's a kind of scoopy, aggressive, especially what I am, who wants that, who I think I want. People want that kind of direct connection with an audience and authenticity and transparency that you get with Substack, but also there are features of that kind of reporting that it makes more sense to be part of a newsroom. And we've tried to create a space that is the best of both of those worlds for journalists. Yeah, and I think when a journalist goes from being able to spend all their time obsessing over a company or an industry or getting scoops to then, okay, I have to do all of that still to put food on my plate, but then I also have to develop an ad sales business and i have to like figure out and i have to manage a podcast editor and i have to hire another editor and and uh i gotta do my taxes and things you know like it just really adds up and then are you going to be as elite of a journalist if you're doing all those things and there's a very real scenario where someone else just takes your job that you had previously and ends up out competing with you on scoops because they don't have to worry about any of that stuff.

1:37:26So I think that's something that a lot of people will have to figure out. You know a lot about newsrooms. That is so much about like the way we were thinking about founding some before. That's hilarious because I don't think have you ever been. I've never been in a newsroom, but I just, but, but I mean, yes, so, so much of part of, uh, a lot of the success of, uh, the reason that we've, uh, been able to break through this year is we're not trying to do anything else besides, besides media, right? I mean, you've seen how How many people have you seen build a tech media company and become a venture capitalist as soon as they have any amount of...

1:38:00I got to get out of this. I got to get out of this. I just enjoy... There's very few things on earth that I love more than advertising. So I love media. There's very few things on earth I love more than talking with John about business and technology. So we know our line. Anyway, final line at your round. What's the biggest fish you've ever caught? The biggest like fish fish? Yes. Not a scoop. I went out with my uncle. I go out fishing for stripers with my uncle in the middle of the Hudson River. Cool. I think we got like a 45-pound striper. It's probably 40. Obviously, it's grown since I caught it.

1:38:38Nice. We're hitting the gong for you. All right. Thank you. Thank you. Last question. Wow, I only gong for scoops, but I'll take it. We'd love to hit the gong for scoops. But I'm curious if you think that kind of blowback against widespread gambling will be at all a part of the next election cycle. Do you think it'll be something that certain politicians kind of like latch on to and realize that there's a large number? Yeah, the AI thing feels obvious right now. But the gambling thing, it feels like maybe that's coming soon. Yeah, I think, you know, whenever there's something where you're like, it's crazy that this was ever illegal.

1:39:16like why did the idiots of the past, why were they ever against this? We should obviously just legalize it. Then like brace for backlash. There was probably a reason. And totally, yeah. I mean, I think lots and lots of people, lots of religious people, lots of non-religious people are like gonna get pretty, are getting pretty upset about this. And there's gonna be, there have been these sort of small scale B-list athlete corruption scandals. But we're gonna have our, you know, Chicago White's Black Sox moment, right? For sure. And that'll be the thing that drives it, I bet. Yeah, yeah, yeah, yeah.

1:39:46Yeah, that makes sense. That would definitely be like more of a national story. Nothing's really broken out and been like the current national story for like a full week. But I mean, imagine how much money you could make fixing the Super Bowl. Exactly. Yeah, that'd be crazy. And that would really, yeah, that'd be really depressing to a lot of fans. But not me because I don't watch the Super Bowl. And actually, it could just be like a parley where like you fixed like the, you know, how many, how your shoelaces were tied in the second half or whatever. Anyway, thank you so much for coming on the show.

1:40:17Great to meet you. Yeah, nice to meet you guys. Thanks for having me on. This is a lot of fun. Cheers, Ben. Bye. Let me tell you about Numero.com. Compliance handled. Numero worries about sales tax and VAT compliance so you can focus on growth. Our next guest is Matt Hicks, the CEO and president of Red Hat. We've been keeping him waiting too long in the Restream waiting room. So let's bring in Matt Hicks to the TBP on Ultradome. Well, when we have a second, I'm sure he's been tuned out because we had him. There he is. I'm sorry for keeping you waiting, but thank you so much for joining the show today.

1:40:53How are you doing? Hey, I'm doing great. Great. Thanks for having me. Yeah, really happy to have you here. Would love an introduction on yourself a little bit. I know that you became the CEO in July of 2022, but I'm more interested in understanding the landscape of the business today, how you describe the shape of Red Hat and all the different business lines that have developed over your tenure to become what the company is today? Yeah, I've been at Red Hat for a long time, actually over 20 years now. And so I started at Red Hat, actually in IT, when it was just RHEL at the time. And if you fast forward to today, we have RHEL, we have OpenShift, we have Ansible, we have Red Hat AI.

1:41:41I like to describe it as like when I started in open source, you really only had an operating system that was there. And today, you have any software that you could create any company idea to help you do that. And we try to cover that gamut, everything from operating systems to clustered capabilities with Kubernetes to AI capabilities in smaller models. So it's been a fun ride for a couple of decades here. Yeah. I would love to just jump into the AI side of the business. How are you thinking about bringing a red hat appropriate product to bear in AI? It sounds like you're not training your own huge model trying to compete with the big foundation models, but I'm sure there's a bunch of ways that you can plug into your client base.

1:42:32How are you thinking about the shape of the AI business over the next few years. Yeah, I think for us, and this is how we use things internally, we think you're going to end up using frontier models and the capabilities there in addition to smaller open source models. And I often describe, if you go back to like when Google search was invented, you had this feeling like it was going to change everything in business, but you didn't apply a Google search appliance to everything you did. Like you still had relational databases. You still had specialized applications because you needed that control.

1:43:12Frontier models to me are sort of like Google search. They're going to change everything. It's going to be pretty incredible. We don't know what will happen there. But they show possibilities. Small models for us are the things that you can train. You can specialize. You can run them in a factory or a space station, or you can run them as a mere mortal yourself in your own data center. And that combination is really powerful. Like, that's what we use internally. So our business is squarely in that smaller open source models. When I say smaller, still pretty large compared to traditional computing.

1:43:48But compared to those frontier models, they're just a very different tool. So, yeah, walk me through what a customer might experience if I come to you and I say, I have a business problem. I have a whole bunch of, you know, like data flowing in images that I need to OCR and transform into JSON or something. Like I have a defined business problem that that transformer based large language models will be good for. But I want something that's, you know, five nines of reliability. That's, you know, I control the ownership of the code. It's economical. What are you bringing to bear to help the customer achieve their goals?

1:44:30Yeah, so I think if you have that use case, and I often talk about them as like the three P's. We use frontier models to understand what's possible. Once you know it's possible with frontier models, if it's not possible with frontier models, it's like, just stop there. It's not going to translate that well. That's good. But if it is, then your second P is production and your third P is profit. The models we look at are about 100 times smaller, just in size. And so generally you could say if you can run them well, they're going to be 100 times cheaper to answer those questions you're going to ask it.

1:45:12And so we work with customers to really find that use case. It doesn't always fit every aspect, but how many of those pieces can you move to something that is 100 times cheaper with it? And it requires some, you know, you're competing with the Googles of the world or Microsofts in terms of operational discipline. So you have to be able to run these things well. This is word you hear, inference, that pops up. we help enterprises with inference, just normal, mere mortal data centers, GPUs, NVIDIA, AMD, and running these models efficiently. So you can start to decompose that problem into, you know, what are the areas we can optimize and really control ourselves?

1:45:56So that's one of the use cases we have a lot, but that's a popular one. So yeah, getting more specific, company comes to you and they're saying like i'm i'm spending two million dollars a month with this with the on these like frontier models and and how where do you go from there are you like breaking down exactly how they're exactly what those tokens are being used on and then basically saying like hey we can actually break out this spend and reduce the cost by this amount obviously red hat has a margin but how did those conversations go specifically and how much spend today on frontier models really shouldn't even be going to frontier models and should be going to some of these smaller,

1:46:45more specific models? Yeah, I think if you look at, not overly simplified, but we sort of live in the world of text on it. So if you said, hey, my use case is video generation on all of these capabilities, that's not really our wheelhouse. That often isn't in that space where a lot of your business is going to operate, understanding policies, understanding numbers on it. So that's the first thing we look for, does this fall into that classic enterprise use case? Because there are things you'll keep on frontier models. The second part for us is where do you want to run these. You can rent space at a core weave, for example, to get GPU capacity, or it might be data-sensitive enough you want to host it yourself, and then you're in a hardware purchase.

1:47:35But for us, then, it's about going one by one. Sometimes it requires changing the data a little bit, but it's making those use cases run efficiently on it. When I look at what's that mix of what we use these big models for that we just don't need to. I think it's going to be really similar to cloud spend. In my role, they're really powerful. I love the learning experience people are going through and using them. But I'm going to bet there's a 70, 30, 80, 20 split of where we could take things that we're paying more than we need to and be able to optimize them. And it's just in that balance. Cloud was really good at learning a new operational mechanism.

1:48:19and skill set, we're going through that same phase, but I think we'll be able to optimize a lot, the majority to smaller models, even if you start in what's easiest and shows you what it can do in the larger ones. How have your thoughts on the relationship between building a for-profit business in and around open source technology changed over your career? So I started at Red Hat as I loved the open source model. I was actually a consultant at the time. And I had worked with Linux in college. And my first experience, I couldn't be stopped when I was working with Linux. Because if it wasn't working for a customer, I could change it.

1:49:05I could figure anything out. I didn't have to be dependent on someone. And I loved that feeling, that power that came with it. Just open sourcing things and assuming a business will happen, I think is also pretty flawed with it. Like you have to do something different that customers value that the open source community doesn't do. And in our case, open source communities is a great innovation model. They move really fast. We help customers that they can't keep that pace and speed of open source. They want the innovation model, but once they've built their app, they need someone that's going to help support it for 10 years.

1:49:48And that's that value we do that communities just don't care about. They're on to the next feature. And so it's been a really nice balance of we work with a community, we complement it, but we provide enterprise value. I think that's what's going to shake out in this world with AI of how do you find that symbiotic relationship where you can leverage open source? So you can use innovation models or other areas, but you still provide a concrete value to customers where they know what they're paying you for. How have you been processing the fact that it feels like Meta is pulling back from large scale open source AI efforts?

1:50:28China seems to be running away with it. is there any other nuance to, is it just like a business model problem that we haven't seen like the red hat of AI kind of crop up or stick around in the case of open AI as they've kind of evolved their business model? Although they do, of course, have GPT-OSS and, you know, MetaLama is still a real product. But it does feel like China has just taken open source AI way more seriously. And I'm wondering if you have any read on like, was that always the way it needed to happen? Were there alternatives? How did you interpret the open source AI LLM war play out?

1:51:06I put it in two buckets. There's a race to AGI. Personally, I'm not a big believer in that, but it's going to produce some incredible things on that journey. We'll see if we get there. But I think a lot of the big players, when they talk about these billions of dollars that go into training models, they're in the race for AGI at that point. And that's a new and exciting domain for them to chase. And I think Meta is in a similar boat there of what they're investing. I love the fact that they open sourced it, but they're in that AGI-ish camp and race. The number one innovator in open source models, I would say, is academia at this point.

1:51:50China has always been strong in open source. The US is very strong. Europe is very strong. But if you go look on Hugging Face at the sheer number of specialized tools we have out there, it's more than you're going to understand how to use well today. So I often, the coaching I give customers is, I don't think we necessarily need a lot more. It's just that stability in a few. So I worry less about, you know, China's created some pretty impressive innovations like in the Quinn model on training. But as long as those are shared in academia, we'll see the next mistraw pop up with options there. But that's how I separate the two.

1:52:34There's an AGI race. I don't think the financial mechanics are going to work out for open sourcing there. But then there's an academia-led ecosystem that already exists that's incredibly vibrant that is not chasing AGI. That'll fit really, really well with the boring enterprise use cases. Like, how do you run a company a bit more efficiently? How do you chase the next engineering innovation more efficiently? That doesn't necessarily have to be those big guys. Last question for my side, and then we'll let Jordy ask anything he has. But I'm interested in advice for, we talk to a lot of founders, There's a lot of startups that are kind of building the red hat of X.

1:53:18They're thinking about open sourcing a great piece of technology, building an open source community. We often talk to Y Combinator founders that come on and tell us, I have 5 ,000 GitHub stars already. I'm raising money. I'm going to build the next thing. And they're not going after red hat directly. They want to learn as much as possible from you. So do you have any advice for founders who are earlier in the journey? They might have built something great, a useful tool, a piece of software. And they really want to get the Red Hot model correct. They want to have an open source community. And then they also want to build a great for-profit business on top of it.

1:53:56You know, I think the mistake I see the most is I want to use it for a marketing tool and then keep all the control myself. Almost always those fade out. You can do that. You can get a lot of eyeballs with open source. But if you don't know who your community is, it could be a user community. It could be a contributor community. But if you don't know the value you provide them and they provide you, that marketing effort of stars only will fizzle. And it is very tough to give up some control and product roadmap to your competitors to build a contributor community. But it's what you have to do. We work with our biggest competitors side by side in Kubernetes.

1:54:43So I think for founders, really knowing is it the right time for them to give up that control and being authentic of their model, it'll give them staying power in open source. It's a savvy ecosystem. No one's going to get tricked into like a star count and then build a durable forever business off that. But a lot of options down there. But I think knowing those and putting some thought into that is a really important first step. Makes sense. Jordy, anything? Do you think working for one company for 20 years is underrated? Feels like... Company man. Maybe some of the people that are coming on the show will end up...

1:55:24Satya Nadella. Yeah, of course. A perfect example of this. Satya. But what are some unexpected sort of positive elements of being deeply embedded with a company for as long as you have? I think when I walked into Red Hat as joining the IT team to port Perl applications to Java, I didn't really see myself in this seat 15-ish years later. I was lucky enough to be involved in OpenShift in the early days. I didn't really see that. But the tenure, especially working in IT, seeing every part of the company, working in a startup in Red Hat with OpenShift, and just the pain and struggle that goes into bootstrapping something in a pretty successful company, it's what lets me do the job that I'm doing now.

1:56:17Because I have the depth and breadth to push on things in a different way than if you were an outsider. And I think it's really powerful. It's, you know, people bounce around. There's a lot of learning to be gained with that. But for me, I certainly use every day my 20 years of, you know, all the challenges and, you know, benefits, things that have worked, things that haven't to guide my decisions day to day. So that's, you know, I still pinch myself every day. I'm like, I'm surprised I'm sitting in this seat. But it's been a, you know, it's been a great run up to it. And I don't think I could do a good job without that depth of experience.

1:56:55Yeah, how do you help? A lot of people are impatient for the raise, impatient around the new title. What kind of framework do you give to somebody that comes to you, maybe at a different company, and says, Matt, I'm at this company. I've been here for three years. I just got an offer that I'll immediately make more money. I'll have a more senior title. Maybe the company making the offer is growing faster. maybe has more capital. There can be a lot of reasons to jump ship. But what's your framework for helping people make that decision? One, I always warn them, it's a personal framework. I'm like, it's worth what you paid for it, which is nothing on it.

1:57:39But for me, my driver has been, am I learning something new in this space? If I'm learning things, I can be patient for the right opportunity to leverage it. And I also tell them like, you have to be accepting there's some luck in the game as well. Like just being in the right place at the right time with the right skills. You can't always manufacture that. But for me, I always look at opportunities of they're going to come with some pain and challenges. But if you learn a tremendous amount, you're going to leave that being more valuable than you came in to it. And, you know, I take that into this role.

1:58:18It's why I, you know, in limited hours, I'm still learning AI myself to not just delegate it down the org, but to really build that hands-on experience. But that learning dimension has always been the most important dimension for me. Well, thank you so much for taking the time to come on the show today. Great to meet you. Great to meet you. Open source champion of the world. Merry Christmas. Have a great rest of your day. We'll talk to you soon. Love the show. Appreciate you all having me on. Thanks so much. We'll talk to you soon. Cheers, Matt. Goodbye. Let me tell you about Figma. Think bigger, build faster.

1:58:51Figma helps design and development teams build great products together. Gyms are coming to airports. This is big. This is big. Will you work out on your next plane? Consumers have been saying the other passengers aren't sweaty enough. We got to have gyms in right next to the gate. We have another guest joining in just a minute, but I want to riff on this for like 10 minutes. This is hilarious because it seems to be a collab between the Secretary Kennedy, who's the Health and Human Services Secretary. So there's a HHS crossing over with DOT somehow. And they're like, let's make the airports healthier, which is like a funny thing.

1:59:35I feel like these collabs don't happen before. but they're happening now. I don't know. The idea of working on an airport, it's kind of crazy because if you are all sweaty and then you have to, and they also said like, you should dress up when you go to the airport. And if you're dressed up and then you are all sweaty, that seems pretty rough. But I don't know. I like the idea of doing something new in airports. I think it's cool. I think it's good that there's some opportunity for some sort of grant program. I guess the question is the$1 billion grant program with how much it costs to make...

2:00:11Like is this like 10 gyms? Well, so I don't know, because there's a world where you build a proper gym in the 10 most premier airports that has a sauna, showers, full laundry. You're good to go. You can spend a couple hours in there, really get a serious workout in. Or it could just be a couple pull-up bars, and you put one in every terminal in America. I don't know. It depends on how... Can you imagine if it's just like, okay, yeah, turns out JFK put in an awesome, awesome application they got all 1 billion. Little calisthenics sound. They got it all. I don't know. It's a very funny story. Anyway, let me tell you about Fall, the generative media platform for developers, develop and fine-tune models with serverless GPUs and on-demand clusters, and we have our next guest in the Restream waiting room, Stephen Schwartz from WAP.

2:01:06There he is. Stephen, what's going on? What's up, man? How are you? We are great. It's great to Stu, great to have you back on the show. You and the team have been insanely, insanely busy, it seems. Give us the update from the last few months. Yeah. So I think we talked in March. And since then, things have been really crazy. I think the best way to put it is that at this point in time in our company, in order to even grow the business by 50%, we have to add more than a billion dollars in earnings on our platform each year. And I guess just to put in perspective what that looks like, if we were to onboard 1 ,000 businesses that do a million dollars a year, which those are not small businesses, that would only grow our business under 50%, which is pretty bad.

2:01:56So I think that the story of our recent months has been, how are we going to really 10X this thing? And that requires us to think a lot bigger. So we've been expanding pretty aggressively internationally. We have been partnering with really amazing platforms. We had an announcement earlier today. And I think that there's a lot of stuff that breaks when we grow, but the year's been pretty nuts. There's a lot of stuff coming out soon, and I'm really excited. And how big is the team today? The core team, people W2'd by WAP? Because I imagine part of the benefit is everyone on the platform has some incentive to grow the platform and support.

2:02:37But I'm curious what the core team looks like. It's about 75 people. So it's actually a pretty similar size. I think that everyone's going at a really high RPM. We like to have our team really lean and everyone has a lot of autonomy and almost no bloat anywhere. So I think we're definitely underwater right now and there's about 75 people total. Wow. So talk about the shape of the business. You guys had a post going viral this week. Somebody was saying, team talking about grinding. The team's grinding because you guys are generating billions. There's billions of dollars flowing through the platform and only 75 people working on the team.

2:03:23But the common criticism would be like, WAP is a course platform. And obviously, like some of these partnerships you're announcing, like the bigger, broader vision, I think, is certainly starting to crystallize for me. But talk about the shape of the business and really like where where this is all going. Yeah. Well, I think it's really funny how many people get offended when when these teams that are hard at work. I think it's obviously like results are the most important. And I think that is not really the intention is nothing about trying to range bait anybody or even to seek necessary attention.

2:04:04I don't even think Cameron expected that to go that viral. But I think at the end of the day, when our team is excited about something, people are going to be working hard. And given the nature of our team, we have a lot of former founders, a lot of former entrepreneurs that are really driving huge parts of our business forward. And I think that the common people know what for so many different things. Right. We started in Sneakerbox and then that naturally progressed into more a broader variety of different desktop software. And then people are like, hey, can we sell chats with the software? We're like, yeah, that sounds like a good idea.

2:04:38Let's make sure you can do that. And then people are like, hey, can we drop the software entirely and just sell chats? We're like, that sounds pretty cool. Paid chats. Let's do it. And then people start to do that. And then they're like, can we also add long form video? And that made sense. People used to make the long form video as a way to explain how to use the software. And pretty quickly people are like, wait, we don't even need to sell software or chats. We can just sell long form video. And that's where the course is. And I don't think that we ever set out to be a course platform at all.

2:05:07We really focus hard on the primitives that are necessary for the future of work and for the future of commerce generally. And I think that one of the lowest lift ways to start a business is making a course. And I think that when you look at our business today, I mean, I think we probably do more than a billion dollars a year in paid groups and educational programs. We probably do almost a billion dollars in agency services that are sold on the platform. We'll maybe do$300 million,$400 million of pure software sales. And on the emerging side, I think we even have more than$50 million of physical product sales each year now.

2:05:47So I think that when you go to our homepage, we do a pretty poor job showcasing a lot of the supply. That's not been a huge priority of ours today. We are very focused on our infrastructure for the sellers and for the platforms now that are integrating with our product. So I think that the core sellers are generally the loudest because they're very good marketers. And I think a lot of the other stuff in the platform, people know well for clipping and things like that, which are also really awesome ways to make money. But, yeah, the course stuff is funny. Totally. What's going on on the actual infrastructure side?

2:06:24You guys used to work with Stripe on the back end. You killed that part. You moved on from that partnership at some point. How are you guys processing payments today on all these different verticals? And I'm assuming that's like a core part of the offering for these individuals, businesses that are coming onto the platform. And you're giving them a variety of ways to monetize. Yeah. So you can kind of think about the core value prop WAP to be payments and distribution all out of the box. And I think that we never really set out to be a payments platform. I think that's pretty boring. And I think there's a lot more that we can do.

2:07:03I'd say that today money is much more commoditized than it was 10 years ago. And especially on the payments front, we don't think that that's a real long-term way to create value. And I think that when we look at our ecosystem as a whole, the mentality is like, how can we bring all these parts of the Internet together in a way that makes it really easy for retail and for general consumers to actually get what they need to start a business? When people think of payments today, they really only generally know Stripe. And after that, it's a huge fall off. No one really can name even another company that's similar to Stripe.

2:07:38You may have Shopify in the picture, but they're very, very focused on physical and larger shops now. So for us, it's really, really important that everything is extremely tightly integrated. And when you're asking about infrastructure, the way that we look at it is we have people earning about$200 million a month on the platform today. So part of our infrastructure is dedicated to thinking about how can we get more functionality delivered to those merchants so they can do a lot more with their money. Today, just for reference, the process is almost universal across every merchant. They'll make money and then they'll withdraw to their bank and then they'll go invest on Meta and TikTok ads or whichever ads platform of their choice.

2:08:21And then they'll invest in crypto. And I think that it's really exciting right now on the infrastructure side because we're about to let merchants do a lot more with their money. So you can imagine you make money, go invest it into ads. You go invest it into Bitcoin. You go invest on Polymarket. You go and do a lot more with your money. So we're doing a lot to bring a lot of our activity on chain and to tap into the broader financial application layer that exists today. So that's one part of our infrastructure side. And the other part of our infrastructure side is on the advertising front, I think distribution is critical.

2:09:01And we've recently partnered up with a number of different, for example, games on Discord or publishers writing blogs that will actually render products that are listed on blog. And that means that anybody selling on our platform gets to take advantage of pretty immediate distribution. So those are the things I think I'm pretty excited about on the infrastructure side. The move away from Stripe, I think, I mean, I've been building on Stripe since I was 12 years old. And I love Stripe so much. And I think that we're still a partner with Stripe and we still use Stripe. And I have nothing but great things to say about Stripe.

2:09:34I think that when you're looking at our mission, which is to deliver everyone a sustainable income, there's certain primitives that need to be available. And those are simply not available on Stripe. So, I mean, getting paid out in Venmo, getting paid out in crypto and other markets throughout Africa is very, very important to our mission. Interesting. So talk more about the partnership with Micro One that you guys announced today. That is, I'm curious, like maybe break down Micro One and their business for people that aren't familiar and then how you guys are integrating. Yeah. So Micro One is a really cool business.

2:10:10They basically partner with AI labs to offer general public access to pre-recorded videos and situations that the general public can weigh in on and say, what would they interpret the most likely solution to any set of visual problems to be? And the AI labs will use that as fuel for their training data. And MicroOne is essentially aggregating all those opportunities and delivering payouts at scale to the general public that's paid for by the AI labs. So when we're thinking about WAP and what the partnership means to us, there are so many ways that people can earn income on the Internet today, and it's only going to get crazier and crazier.

2:10:58So we've invested a lot over the last few months in our public SDK and our developer infrastructure so that platforms can tap into our network. And that's exactly what MicroOne is doing. That's pretty interesting. Did you think about getting into data labeling earlier and in a direct way? Like, or, yeah, I mean, did you ever think about, like, just offering data labeling tasks to the current community of people on WAP? Because didn't DoorDash, like, launch, or Uber was going to launch, like, the ability to do data labeling tasks while you wait for your next thing or something? Like anyone with a pool of huge human capital is looking at this right now, right?

2:11:38Yeah. I mean, like, how do you think about the different eras even? It felt like the 2010s where if you had a cell phone, you could make money in the real world. And now it's kind of the continuation of that is like if you have an internet connection, you guys are trying to just enable somebody to open an app and make, you know, maybe they're not going to immediately make some, you know, incredible income. but most of the apps, you open them, they suck your attention and money and all that. You guys are trying to have an app that you can open and have the opposite effect. Yeah, I think I grew up on Facebook all day, every day, and Skype.

2:12:15And I think that there's two ways you could have gone on the social media platforms. You could have maybe sat there and just read, watched videos, and what the kids call brain rot today. I think the other way is to try to get as much productivity and value out of the network as you can, meeting people and maybe finding customers and whatnot. And for me and the people that I met early on in the Internet, we focused on the latter. And I think that the goal of BOP is to bring together all of the pieces of the Internet that are super scattered right now and hopefully make it a place that's a lot more worth your time to spend.

2:12:52And I think that the money is one part of it. But I'd say it's also like the idea and dream of starting your own business is very much an aspiration to a lot of people. And we think that you open the app and you can start a business. You can find ways to make money by providing value to other peers on the network. You can meet people in chats. And it's a very much expansive application. of applications, I think it makes it difficult for people to understand what we do. So with Micro One, you're just providing the payment backend. They're actually going to source the experts to do the data labeling.

2:13:32Is that right? And then they're also handling the relationship with whatever lab they're selling the data to? Yeah. So to answer your question, we thought about going into that type of market. I think for us, we really try to stay on what we're good at and i think what we're good at and and how we how we handle payments how we handle payouts how we handle uh what you can what else you can do with your money as well as distribution and um we don't know as anywhere near the amount of of industry expertise that micro windows and i think that that's why we wanted to partner with them and um we don't have we don't have that's not our forte so i don't think we we really have thought much about going into that I mean, we did the clipping stuff and the content reward stuff.

2:14:14And now, I mean, there's actually a lot of other platforms that are starting to implement our SDK as well on that front. Because, again, like we built that app in two days as a test case to show what you could do with the WAP ecosystem. And it obviously blew up. I think we still pay out millions of dollars a month to people all over the world that are clipping. But there's also other platforms now that are integrating that stack and are able to focus really, really hard on making sure that's an amazing product. Yeah. I feel like you sort of live in the future because you're so tapped into young entrepreneurship broadly and such a wide swath of individuals.

2:14:50Can you help me get up to speed on how the next generation is thinking about sports betting and gambling? Because I feel like there was like the drop shipping wave. There's the course wave, the clipping wave. Like is sports betting in a is it going through a boom right now? Because in tech, with the prediction markets, I think everyone's starting to be a little bit more top of mind. But they might forget that we had the CEO of DraftKings on the show yesterday. And I think Google invested in that company in 2017. And so it's not new, but it does seem like it's growing a little bit. But I'd love to know, how are you?

2:15:26Capital G invested, I think, in Flutter or FanDuel. Oh, that's right. Okay, sorry. Yeah. So obviously, sports betting is not a new invention. but it does feel like maybe it's going through a renaissance. How are you seeing like the, the, the trend within that industry? Like what, what are the trends that you'd even describe? Yeah, it's a good question. I mean, sports betting has been around since like Coliseum days before that. So I think that it's just, it's a really good way for people to be literally bought into what they're watching. And I think that what's happening now is you're seeing a lot of entertainment, a lot of social and a lot of integration between all of that on top of sports betting, which makes it a lot more fun.

2:16:09And I think when you imagine somebody to be watching a football game betting alone, it's a lot less fun than betting with your friends. And I think that when people think of sports betting and WAP, a lot of that notion is around the communities that are on the platform talking about sports betting and participating in sports betting, but they're not really participating. They're not really betting on our platform. And I think that people very much love to bet. And I don't think that's going to change. I think that the types of bets will evolve. And I mean, I'd say that sports betting in the 2000s was probably more popular for retail than investing in stocks, which is definitely changing now with Robinhood and all of the other more retail friendly applications.

2:16:51So I think that people like to invest in things and to put their money where their mouth is. And I'd say that that trend is going to continue on. And we're seeing during this first season. So right now it's definitely popular. Yeah. I mean, like there has been a long history of folks doing financial education, teaching you how to trade stocks. Trading Forex has been a big thing that there's been a lot of courses around. Are there courses around sports betting? Are they like roughly the same? Is that the same size business or is that like more niche because it's like more random? Yeah. Well, I think asking what kind of categories are on WAP is kind of like asking what categorical content exists on social media.

2:17:32Sure. It's just everything. Emeril. And it involves that maybe somebody will launch a sports betting community and they'll add a course to it. But it's not necessarily the core part of the product that somebody's talking to other users. Sure, sure, sure. Yeah. I'm just, I'm fascinated because I feel like a lot of tech people are like, oh, there's like this crazy breakout moment. And I think a lot of people, if you zoom out, they see it as much more of like a smooth curve that's been happening for decades. How much do you and the team try to predict these sort of like future trends? Like what is the next sort of trend like clipping?

2:18:13Is it more like reactionary to the current moment and saying like, let's build the best possible infrastructure for what's happening today? Or are you trying to looking in corners of the internet, you know, maybe some subreddit that's gaining popularity or things like that to try to predict these things and actually be ahead of them? I think that we lean on our existing customers a lot to build around them and to make sure that if they're onto something early, that our platform can support what they want to do. I'd say that every shift in what the predominant form of way to start a business and way to earn income on our platform has been trailblazed by a few subset of merchants.

2:18:55And then we've quickly built the product to better support that. So I actually don't think it's worth the time to try to predict it because it's getting really crazy. I don't think we're very tapped into what the people are doing, I think, in the trenches across the internet, but it's very, very, very hard to predict and rather really focus on the primitives that we know are going to be true throughout all these different trends. That makes a lot of sense. What are you most excited for next year? Yeah, I think WAP is very underinvested in AI right now. And I think that's going to change. And the platform is very complicated still.

2:19:32There's a lot of components we've created. We're a very engineering-heavy team that's created a lot of infrastructure. But I think that we're now flattening a lot of that, simplifying a lot of it, and riddling AI throughout the entire platform. So I think that's going to be pretty crazy. And that's probably what I'm most excited about for next year, is just making sure that you guys are actually on the app starting businesses and find it worth your time to do so. So that's what I'd say. Amazing. Well, thank you so much for taking the time to come chat with us today. Great to get the update, and congrats to the whole team on a wild year.

2:20:05I remember we have a mutual friend, won't name him because he's anonymous, but I think he told us at the end of last year, Q4 of last year, the company that he was most, and this is like an institutional investor. He was like, the company I'm most bullish on that is most under the radar, most underhyped is WAP. And you guys have certainly delivered this year. So well done. Really appreciate it. Long way to go. Fantastic. Job's not finished. Love to hear it. Cheers. We'll talk to you soon. Have a good one. Let me tell you about Profound. Get your brand mentioned in ChatGBT. Reach millions of consumers who use AI to discover new products and brands.

2:20:51Gavin Baker says, deeply amused by all the confident commentary that data centers in space do not work from a physics or engineering perspective. Elon operates two of the largest coherent GPU clusters in the world. SpaceX is responsible for over 90 % of mass to orbit. And SpaceX operates the largest satellite constellation in the solar system. More than 10 years later, no other company or country can consistently land and reuse orbital rockets. He publicly states that the lowest cost way to do AI compute will be with solar-powered satellites. Maybe, just maybe, his pencil and paper analysis of the physics or the economics at play is superior to yours.

2:21:33There might have even been more than just a pencil and paper analysis of the subject done by some of the best engineers in the world. Perhaps they have thought of a cooling solution that has not occurred to the galaxy brain accounts here, even after they took several minutes to carefully think about the problem. The CEO of Google also agrees that data centers in space will be normal within a decade. If you're not currently operating a large AI data center, a large satellite cluster, and have not landed a rocket, that takes most of the accounts on X, maybe a little less quick to confidently assume that Elon and Google are both wrong on this topic, especially when they're working, albeit very small, data center in space today.

2:22:13StarCloud's orbital setup just successfully trained in LLM. Great name, by the way. Yes, I'm biased on these topics. And as ever, time will tell. Yeah, I think a lot of the reaction was just like, hey, like three to four years feels super aggressive. Yeah. but at the same time, I don't know. I was trying to put it in like where would I, how would I quantify my position? And I would probably say like there will be under one gigawatt of capacity in space by the end of 2027. And by the end of 2027, I expect to see several gigawatts of like AI data centers online and terrestrial based. But maybe that's too conservative and maybe that's not even what Gavin's saying.

2:23:02Maybe Gavin is targeting something more like 2029, maybe 2030, something like that. But if you were to try and say there will be a significant amount of compute, like 10 % of overall compute or something like that in space in a year or two, that feels maybe more aggressive. But in 20 years, I don't think anyone disagrees with that. In two years, I think everyone agrees it's not there. So it really feels like we're talking about timelines here more than if. It's more when. But I'm not sure. I don't know. Elon responded and said, fools are determined to be fools. Trying to stop them from being so is futile.

2:23:48Hey, optimists get rich. Pessimists sound smart. Easy to be pessimistic on this. Should we pull up this clip? I am optimistic about Julius AI, the AI data analyst that works for you. Join millions who use Julius to connect their data and ask questions and get insights in seconds I'd love to pull up a clip. I'll this clip from See of Netflix. Oh, we go from 8 % of you hours today in the United States to 9 % So we're still behind YouTube at 13 % and potentially worth noting that we would be behind What would be if Paramount combined with WBD them at 14 %? So we think that there's a really strong fundamentals-based case here for why regulators should approve this deal.

2:24:30We go from 8 % of view hours today in the United States. So, yeah, view hours, is that like a good metric? There's something. He's definitely including YouTube in there and using view hours. At the same time, I think that's valuable. I don't know. it's hard to kind of grapple with. As a consumer it doesn't seem like it's oh no all of a sudden there's only one place to get content that's not what people are the most worried about. They're maybe worried about a one buyer scenario for the movies that they make anyway you can always just make a movie and put it on Restream one live stream 30 plus destinations if you want multi-stream go to Restream.com Restream there's a post here from Julian who says if you thought paying for your kid's college tuition was nice.

2:25:22Larry Ellison is writing a$40 billion check for his son to acquire a movie studio and a television network. That, my friends, is father of the year. Totally agree. We should all aspire to one day write a $40 billion check for our children. Each of them, actually. It's hard to think of a better use of, what, 20 % of the net worth than picking up a movie studio? Doing a deal with your son. It seems fun. It seems like Larry is definitely in the conversation. He's at the dinner. He's hanging out. He's part of this, even though David's obviously driving the story. Larry's very much there, but also participating.

2:26:05Joe commenting on - We already talked about that on the show. Let's skip ahead. Let's go to this data on a quiet year for venture capital. Bryce Roberts posted it. Looks like it's from the information, but the source is pitch book. So there's a couple things going on here. But terrible, terrible. I thought we were so back. With the AI boom, I am shocked by this data. Are you shocked by this data? I'm shocked. It certainly hasn't felt like that. I thought it was going to be higher than ever. It feels like there's so many new funds. There's so many new massive funding rounds. But are we still working through the 2022 glut of capital or something?

2:26:45Like what's going on? Yeah, I mean, sentiment was that AI saved private markets, venture capital. Yes. Because we were on a crazy sugar high in 2021. And we've had so many folks come on the show that just yesterday, yeah, I raised a$500 million seat. It's like, that's got to come from somewhere. But apparently only$50 billion flowed into venture in 2025. Well, yeah, so these funds are deploying capital. Some of them might still be deploying. Hopefully, there's still some, not all of, obviously, the funds that were raised in 2022, it's not like they just were like, I'm going to deploy this all this year.

2:27:23It's like it trickles out. I think the other thing, the reason that this is surprising is that some of these big headline deals that the industry has been focused on this year are sovereigns going direct, their hyperscalers making these big equity investments in labs. Yeah, circular deals. And so that kind of, yeah, that's kind of, you know, NVIDIA. I think we've had a couple guests today say NVIDIA. Yeah. Throwing me off. But anyways, it certainly doesn't feel like this. The question then is, I mean, you're also just seeing way less venture funds being formed. Maybe that's healthy, right? So Katie Roof, who broke this story, says, venture fundraising is the worst it's been in at least a decade.

2:28:17And I don't mean for startups, which are seeing an AI boom, bubble. The firms themselves are often struggling. We are seeing the lowest number of venture funds raised in at least 10 years. I'm fascinated by this. I wonder if we're going to see venture funds close down, or is this just a function of the everyone gets a fund, phenomenon sort of pulling back because maybe, maybe it's really that 2021, 2022 were just complete deviations from the norm because I mean, it really was a time when everyone got a fund. It was crazy. Anyway, let me tell you about linear meet the system for modern software development.

2:28:56Linear streamlines work across the entire development cycle from roadmap to release. we also have a venture capitalist joining the show some can break it down for us and I'd love to know his thoughts on this bombshell report from the information that says you're cooked you're cooked it says if you're in venture pivot to toiletry become an electrician because it's all over do you think it's over do you think venture capital the game's over uh guys the game is it's never been better i think let's go we uh let's go well one thanks for having me on venture capitalist it's never been better put the headline up i love it raylock turned 60 years old this year so this firm started investing before the internet the original partners would find companies how many years old 60 60 60 60 yes what that's so old i I had no idea.

2:29:59I thought it was like 10 years old. That's crazy. No. Congratulations. We're the oldest firm in the US. Overnight success. I love it. Yeah, overnight success. And we're in our 17th fund. And I would tell you, the company quality we see right now, we've never seen anything like it. I mean, of course, there's a lot of things that are crazy going on. But if you just look at the overall secularity of what's happening, I really think the game's never been better. Yeah. But you're in a unique position. You have a name brand. Is it not crazy? Does it not seem insane that there was more money raised in - 21, 22.

2:30:352018, 2019, 2018. Yeah, so help me understand it, because Greylock is in a great position. It's a great brand. It's a name that everyone knows. Been around for 60 years. It's crazy. You can get into the companies that are doing really well. If we are witnessing more monopolistic markets, more winner-take-all bets, more, okay, the the champions being crowned in this category, everyone's just going to get in. You're going to be one of the funds to get in. A lot of people are not going to get in. Do you think that's what's driving the lower amount of new funds that are being raised? Is that what's going on?

2:31:09How are you interpreting the fact that the number of funds seems to be going down year over year for the past four years? I think we had, and you guys were talking a little bit about this, but there was almost this one-time anomaly in the market structure in the 21 period where you saw like an explosion of new funds. And on the one hand, it was like super exciting, all these solo GPs, new funds, new guard, et cetera. And then I think like once you hit an air pocket and you realize like life is not just straight and up to the right, but these cycles have ups and downs and even the best companies have ups and downs.

2:31:40I mean, I think about the companies we've been a part of from when they got started, the most recent success case being Figma. Like it took Figma several years to get the product right and start accelerating sales. And they became one of the fastest growing companies of all time. Entrepreneurs want firms that are in this for the very, very long run. And so what you're going to see is a re-concentration to a small set of firms that are like venture capital is a hundred percent of what they do. They don't have any other jobs. It's not a side gig. And those firms are going to raise more capital and be stronger partners to the best companies.

2:32:11It wouldn't surprise me if like the net number of firms goes down because most firms don't perform. But I think if you think about it on an aggregate basis and what lies ahead for venture, there's good reason to be extremely optimistic. Let's talk about SPVs because I think that might be a piece of what's going on here. Do you, does Greylock historically have a policy around when to pull the SPV off the shelf? I know some firms, they never use them. They never have in their history. Other firms, you know, yeah, they use them as much as they want. Other firms, they're not even that special. They're not, yeah.

2:32:42Every day. I just call them purpose vehicles. I don't call them special purpose vehicles, just regular purpose vehicles. PV. Just internally, walk me through Greylock's thesis on SPVs. Our business model is very simple, which is we want to partner with a small set of founders and be their most meaningful partner. We keep everything else really simple. We have a single fund. It's a billion-dollar vehicle. We've raised billion-dollar vehicles consistently over the last 15 to 20 years. That billion dollars goes into a really concentrated set of core positions, something like 25 companies. And then if we do our job right and we partner with the right teams, some subset of those go on to become iconic public businesses.

2:33:21And the founders do really well. Our investors do well. We do well. We're not trying to like optimize at the margin and spin up an SPV here and spin up an SPV there. We think it like takes the eye off the ball. Like the only thing that really matters is leading that first or second round in the great companies. Love that. do you think that the fact that there are other firms spinning up a lot of SPVs for bigger and bigger deals could be just, I'm trying to resolve the cognitive dissonance of like, I'm looking at a chart going down, down, down in terms of money. And then every day I'm hearing bigger and bigger numbers around the AI boom and the AI bubble potentially.

2:33:55And it just feels like maybe some of the dollars that are flowing into just tech and growth investments and high growth companies is maybe not being captured by traditional venture capital firms. It might be sitting outside of the normal system. Do you think that's possible? Yeah, I think it is. So maybe two-part answer. So one is power laws always dictate a technology in venture. AI makes the power law more extreme. So as we're saying, there's going to be a smaller set of companies, but also a smaller set of firms and capital pools that are involved with those companies and supporting those companies.

2:34:24And they will become larger than ever before. And I just saw the news about the most recent SpaceX tender. It's just the latest example of that. But then the second is you're right. Like a lot of the capital, especially at the very late stages may not look like traditional venture. I mean, a lot of it is actually corporate capital. If you look at the role that Nvidia, just Nvidia alone plays in AI financings, that's a big portion of dollars. SPVs are for sure a piece. Other capital pools that we wouldn't view as traditional venture capital firms, crossovers. Private credit, debt. I mean, there are companies where they're hard tech and they'll see, you'll see a big headline number, a hundred million, 200 million raised.

2:35:00And actually, 80 % of that's debt because, yeah, they're going to be buying a building. And you don't want to pay for that in equity. And so, yeah, that's another maybe distortion to the financing story. Yeah, and as a founder, like, you want to pick the most capitally optimal way to finance the business at any junction in time. It's not always going to be traditional venture capital. If there's a debt provider or strategic capital provider who doesn't think about ROI on the capital the same way a traditional venture investor would, like, that could be a lot more attractive for you at a certain point in the company's life.

2:35:29So I think it's probably overall healthy for the ecosystem and honestly great for founders. But that could explain what you're seeing in the report that you're referencing. Talk to me about Greylock Edge. What's the pitch to founders? There's so many different ways to start a new business. I'm interested in how you carved out a unique product there. So one thing I love about Greylock is our history is defined by helping founders get started from scratch in our offices. If you rewind the clock 20 years, there are two companies that got started at adjacent desks in our San Mateo office. One is a company called Palo Alto Networks, which is a ballpark$150 billion cyber company today.

2:36:06And the second is a company called Workday. And since then, we've started other – we've helped start – Sorry. We're going to be celebrating. Yeah, keep them going. Keep them going. They got two banger companies. Let's go. Do you still have those desks? Do you keep them in a glass box and pull them out? We have a variety of good luck charms from that office. We've now elevated to the modern standing desks, which I don't think were used back then. And then I'd say since 2005, we've had another eight or nine companies get started that way, including Abnormal, which is late stage private and others.

2:36:47So with Greylock Edge, we took all of that and we said, hey, let's go take that to the market so entrepreneurs understand when they get started. They can work with us before there's an idea. And we will work with them to help identify the right idea. We have nine senior recruiters on our team. They place an engineer at a portfolio company every other day. So we'll help build out their initial engineering team. And then we have a large customer development arm that sources like somewhere between 40 % to 70 % of the first two years of pipeline. So kind of the way I look at it is we're an Ironman suit.

2:37:14You plug into the Ironman suit. We accelerate you out of the gate. And then once you're on your own, you kind of get rid of the Iron Man soon. Do you think it's particularly good for B2B enterprise companies? I mean, that sounds like where – because if I'm like, yeah, I'm starting a consumer company for Midwestern moms or something, I'm going to be like, how are you going to help me go to market necessarily? Exactly. I'd say our focus is horizontal enterprise software. Okay. And what I mean by that is, by the way, there's 20 ,000, 21 ,000 companies in the world that do north of a billion a year in revenue.

2:37:50They control most of IT spend in the world. So very simplistically, if you're an enterprise software entrepreneur and you can build something that can sell to those 20 ,000, you can build not just a public company but a company of the scale of what I just spoke about. And for those, we have an understanding and an ability to accelerate. It's not going to apply to everything. But for that shape of company, it's very, very successful. That's amazing. Cool. Jordy, anything else? This is great. Yeah, do you guys have any kind of thesis around what's been happening to SaaS in public markets? I was listening to the new Invest Like the Best episode yesterday with, sorry, I'm blanking on his name.

2:38:30He's talked about space data centers. Gavin. Gavin Baker. Gavin Baker, sorry. As Gavin Baker was on and talking about how he thinks there's a lot of these enterprise SaaS companies that are not really willing to cut into their margins and lean heavily enough into AI. What's your guys' general? Clearly, you're bullish on the enterprise for these companies that are getting off the ground and then maybe even late-stage companies. What is your general framework for how to think about how SaaS is evolving? I think in order to see a new rise in software, you need three things to be true. You need a new pricing model, you need a new underlying software interface, and you need a new data model.

2:39:16Last time that happened was in 2005 with cloud and the rise of those companies. That's happening again now. And in our view, it creates the first opportunity. By the way, investors have been looking for this for a long time. Like eight years ago, it was mobile. And people were like mobile CRM, mobile HR software. But that was just a new interface. It wasn't fundamentally disruptive. I think the confluence now with sort of this agentic era is fundamentally disruptive. And we are going to see, like, let's say, late stage and public software companies at threat from new startups that come in with an outcome oriented model and agentic based interface and operating directly on the unstructured raw data versus a structured schema.

2:39:53And it's very disruptive. Right. And like, you know, for example, we're investors in a company called Resolve AI, which automates software operations on top of observability tools. But now when you have agents doing all that work instead of users and humans, you have to ask yourself, okay, well, if I'm a large public SaaS co-in that space, all of a sudden I've been disintermediated from my end user. What does that really mean for my long-term durability? And so we take a very constructive view on it, which is really good for new startups and new companies. I think Gavin was making the comment that these late-stage and also public companies, they're in a bit of a stuck between a rock and a hard place because they worry about short-term margins.

2:40:29in order to really lean into AI, you have to be willing to take down your margins with the belief that over time you're going to drive value and margins will come back up as the unit cost drops. A lot of companies are not willing to make that long-term investment and in that dilemma creates the opportunity for startups. Makes a lot of sense. Well, thank you. Thank you for joining. Great to meet you. And it's a lot of fun. We'll be back on soon. Thanks for having me, guys. We'll talk to you soon. Have a good day. And Merry Christmas. Merry Christmas. Gemini 3 Pro. So Google's most intelligent model yet.

2:41:00It's state-of-the-art reasoning, next-level vibe coding, and deep multimodal understanding. We have our next guest in the Restream waiting room, Nicholas Kellis from Xlight. He's the CEO and the CTO pulling double duty. Some people work 996. What's going on? You guys work in two jobs at the same company. Is that right? That is correct. Somebody's got to do it. Explain that to me. What does your day look like? What do you do? What are you building? But also walk me through the life of a CEO and a CTO all in the same one body. All right. So a lot to unpack there. So I'll first start with what we're building.

2:41:40Yes. And in order to do that, let me start with some context. So I think it's valuable to take a step back and first recognize that semiconductors are an essential part of modern society. They're critical to our economic and national infrastructure in terms of AI, HPC, data, quantum. And they span all the way to virtually everything that's under the Christmas tree this year is going to have semiconductors integrated. So they truly are probably our most important commodity to this nation. And so what Exide is doing is we're building the world's most powerful lasers to transform the manufacturing of those semiconductors.

2:42:19So we make them better, we make them faster, we make them cheaper, and we make them require less energy to produce. So that's what we're doing at Xlight. As far as my role, it's like I think anybody in a startup, it is wearing a bunch of hats. I actually get credit for a couple of hats, but most people don't. So, yeah, we've been focused on building out the technology. And now, of course, with this LOI, which we're getting a lot of press around, it's really ramping up our efforts to build our prototype and advance to our first commercial products. How did you meet Pat Gelsinger? We had him on the show a couple months ago, a couple weeks ago, and it was amazing.

2:43:00He's a huge fan, but I would love to know about your relationship and how it's developed. Yeah, so we met Pat through Xlight. So he was, I'm sure as he described to you, out looking, trying to figure out what his next thing was going to be, exploring the world of venture capital, happened to come to Playground. But it was already aware of Xlight and what we're doing with light and its applications lithography. That is something that is near and dear to Pat. Pat is a technical person at heart. He believes very strongly in the need for this type of capability to drive the innovation that's going to bring leading-edge semiconductor manufacturing back to the U.S.

2:43:38So he kind of sought us out to some extent. And then from there, it just became an incredible relationship. Pat has had a profound impact on the company from just adding that kind of gravitas and cachet and recognition of what we're doing through to being, he's taken on the undesirable role of trying to make me a better CEO. And he does everything in between. So I am eternally grateful to him, and I can't give him a high enough regard. And can you take me through the U.S. Department of Commerce announcement, the deal? And I mean, I want to know how the deal came together, but how I should think about it from the perspective of, is it more of like a venture capital style investment or like a contract to deliver specific things?

2:44:29Walk me through exactly what your relationship with the Department of Commerce will be over the next few years. Sure. And hopefully it extends beyond a few years. First and foremost, I want to recognize that this administration really did approach this with an incredible urgency and creativity. And I'll just kind of give a sidelight that I really believe that has to be an essential part of our industrial policy going forward. We cannot continue to believe that the status quo is going to keep us competitive. So I'm really grateful for that. But I have to emphasize that that urgency and that ability to move quickly was premised on lots of incredibly diligent work that was done by the Department of Commerce.

2:45:13We've been engaged with them for over two years. So there's over two years of tech diligence, of commercial diligence, of financial diligence that they were able to leverage. So they moved quickly. They had a sense of urgency. They're acting creatively. But it's really rationally founded. So what is getting to the first commercial product look like, you know, more tangibly? So it definitely goes through our prototype. So one of the key things that Xlight is doing is we're leveraging very mature technologies that have been developed in the national labs over decades. And so we take these mature technologies that have been, you know, operating in light sources for science and we're commercializing them for semiconductor manufacturing.

2:45:58So we have the advantage of their mature and proven. We've taken the opportunity to apply some unique IP and how we bring that system together and how we apply it for semiconductor manufacturing. And so we're now in the process of building our first prototype. And this is not a proof of concept prototype. This is a basically kind of, for lack of a better term, a show me the money prototype. The semiconductor industry wants to see that you connect this to a scanner, you expose wafers, it works as it should. So that's the starting point. And then along that path, we're continuing to work very closely with our customers.

2:46:33Our customers are the fabs. And building that value proposition so that as soon as we have that first prototype done, we're already going to be building our first commercial system. Yeah. How much of your business is like capital intensive, actually just dollars out the door, facilities, equipment versus human capital intensive? Like over the next few years, how do you expect to balance the different costs in the business? Yeah. So you have to be kind of calibrated when you talk about capital. So I came from quantum computing before this and spent a long time building these types of facilities.

2:47:10So compared to quantum fusion, it's not capital intensive. But compared to, you know, SAS or something like that, it's very capital intensive. So it's, you know, to build facilities and, you know, a few hundreds of millions of dollars. And just, you know, kind of getting back to my previous response, because we're leveraging mature technologies, it's, you know, we are able to, you know, kind of stand on the shoulders of a lot of work that's already been done. So from a personnel perspective, we're quite lean. but from you know a capital expenditure it's it's all going in you know for the most part into hardware and infrastructure to build these facilities out yeah uh that is amazing congratulations i want to ring the gong we have to we have to

2:47:57very very cool uh yeah congrats again to the whole team uh on on the grant and uh yeah we're excited to follow the journey we will talk to you soon loop have a good rest of your day Goodbye. You too. Thanks. Let me tell you about getbezel.com. Shop over 26 ,500 luxury watches, fully authenticated in-house by Bezel's team of experts. Our next guest is the CEO of DuPont Registry Group. I believe he's in the Restream waiting room now. We will bring him into the TV pin ultradome. Welcome back. Back in the garage. Thank you so much for joining the show. Okay. How are you? Great to have you back. Fantastic.

2:48:34What are you in front of today? it's a 575 m from ferrari very nice little roof scoop on there i love that uh what else is new in your world give us the latest update what news is going on in your world so the big news that we've been working on for a while is that we launched dupont registry live which is a the dupont registry online auction platform a completely different value proposition we are the only online auction platform offering 100 % sell through. So if you come and you want to sell your car with us, we guarantee that the car will sell at the price that you decide. And the second thing is that for the buyers, we are giving 14 day return policy.

2:49:17So it removes buyer's remorse. You can buy that car, you can drive it, you can return it, we'll take it back. That's crazy. Is that extremely capital intensive? Do you have to raise a bunch of money to make sure that you're guaranteeing liquidity? Yeah, we did. We did raise capital. We have a bank partner at the moment. We raised$34 million in working capital. We're working on extending that line by the end of the year. And it allows us to acquire the cars. Most of the cars today are on inventory, but we believe that a lot of dealers are going to sign up as well as private sellers. So, I mean, I imagine that there has to be a rigorous vetting process on the way in, in that case, right?

2:49:53You can't just take any old Nissan Murano cross cabriolet and throw it on the site. uh there's a bar how do you think about setting that bar for what can make it onto the dupont registry so so we do have a big location in nashville we're actually uh moving into the location next week it's a bigger location 65 000 square foot so we take ownership of the car we're gonna ship the car to that locations we're gonna do a an inspection that will bring the dupont registry certification uh to the car and then we are taking nice picture of the car we're pushing it online and then we uh we make so so have you have you guys been specifically acquiring inventory in order to launch the platform or were you historically holding inventory because i i always have leveraged the platform just as a as a buyer and enthusiast to just browse cars and and know that you guys are sourcing from a ton of different dealerships yeah we're sourcing from our dealership partners.

2:50:55We're sourcing from private sellers. This has been going on for the past 18 months. We're now transacting close to 1 ,000 cars every month. And part of those now cars is the new only channel strategy to be able to sell those cars to the potential buyers. We do have dealers today on our platform that are bidding for cars. We do have clients as well. This is the power of the DuPont Registry Group ecosystem. What's the most underrated car on DuPont Registry today right now the only one that i would bid on for me personally yeah i have my eyes on that target singer by singer that's the one beautiful car olive green it's targa it's just amazing yeah yeah it looks remarkable it's stunning what are you like how how is the uh i can understand you know having the having the guarantees having that return policy having the certification that all makes a lot of sense it's nicely counter-positioned against other auction platforms uh both both new and old that are kind of relying on you know kind of winging it uh but uh what what am i missing anything around like the other ways in which the platform is opinionated or differentiated no it's exactly that those are the two main differentiator um this is our secret ingredients.

2:52:18This is how we are differentiating from platforms that are also doing online auction. It's very disruptive. A lot of people are asking us, how do you do it? This is our secret sauce. We have the platform and we have the ecosystem to making us able to do these kind of things. Yeah. Yeah, I mean, it's a great value prop. Makes a ton of sense. What are you most excited about for 2026 in the industry broadly? How did Did you react to some of the regulatory changes here in the U.S.? Are you expecting to be selling a bunch of mini Toyota trucks? I don't know if those will meet the bar, but what's most exciting to you broadly?

2:53:01For me, the most exciting thing is there is a report coming on Friday. It's a report done by Boston Consulting Group, and they used our data and our audience to run the report. It's estimating the luxury car market in the U.S. to be$110 billion. And it's a market that in the next 10 years is going to double. We actually see that in the transaction we run now. There is a lot of potential. All the tariffs, etc. are actually fueling the luxury used car market at the moment. There is a lot of demand for those cars. And our buyers are really, really looking to have convenience to be able to transact online.

2:53:40And this is what we're building. Over the next 18 months, you will see a massive technology transformation into Pond Badi Street Group. And we will start enabling transactions online with the capacity for any buyer to buy the car from your phone, get it delivered. Love it. Question from the chat. How are you thinking about Chinese electric vehicles? We've talked about BYD on the show and Xiaomi. Do you think that there's promise there, opportunity there? Do you understand how your business might integrate with them? Because they're not being sold in the U.S. yet. But do you have any predictions for where that market might go?

2:54:21I mean, electric cars, some of them are amazing electric cars. And we've seen one of them beat the world record for the fastest cars on the road. To me, 30 years from now, everyone is in a robotaxi. No one is driving for their day-to-day daily driver. And they're going to drive on weekends to have fun. would you drive a Chinese electric car or would you drive a Ferrari so our business the business we're in I think we're fine I love it do you think there'll actually be a resurgence in kind of like track and racing culture I know there's some change of I don't know if this is public but there's a real estate developer that's currently buying a racetrack here in California, I think there could be some renewed.

2:55:16And if people no longer have to drive on their commute, I think there will be more excitement around track days and things like that. But does that align? Of course, it's completely aligned with our strategy. We have a lot of experiences today where we get people on the road, where we are making sure that they can drive their cars in a very safe condition, but in the best condition. It includes track days, it includes rallies in the best places around the world. And I do believe that there will be more and more of that in the future. Yeah, maybe that's the next filter that you add. I'm looking at DuPont Registry and I see you can filter by price, mileage, year, transmission, drivetrain, track only.

2:55:59You've got to give us a track only filter. But hopefully soon. The product is continually iterating. But thank you so much for taking the time to come chat with us. Yeah, great to get the update. Congrats on all the progress. Always a great time. Excited to start bidding myself. We'll talk to you soon. Great to see you. Thank you, everyone. Have a good one. Goodbye. Let me tell you about 8sleep.com. Exceptional sleep without exception. Fall asleep faster, sleep deeper, wake up energized. How'd you do last night? I think I've been picking it back up while I pull out my... Oh, I don't even know if my phone's around here.

2:56:34So you pull up your number. I'm going to tell you about adquick.com. Out of home advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Plan, buy, measure, out of home with precision with Adquick. And, oh, there's my phone. Let's see how I did. Well, we have our next guest here live in the, not the restream waiting room, the real stream waiting room, the TBP and Ultradone waiting room. We have Phillip from Verkata. Welcome to the show. I want to, here, introduce yourself, but then get ready. Just go hit that gong right now. Let's do it. Let's do it. Let's do it.

2:57:11You don't know anything about him or his company yet. But you know he's here for a good reason, because the company has, of course, raised money. But please, introduce yourself, introduce the company, and then we'll get into the news. Sure, yeah. So, excited to be here. I'm Philip. I'm one of the founders and CEO of a company called Verkata. And Verkata is solving a super important problem in the world, which is the problem of safety in the physical world. And we solved that problem with AI. We solved that problem with software. And we deliver that through devices like cameras, like door access controllers, alarm systems, and so on.

2:57:44Yeah. So, I mean, Anduril in some ways is physical security for the military. Yeah, exactly. You have flock safety at the municipal level. Are you at the B2B level, the B2C level? Who are your customers? Yeah. So think of enterprises. Think of schools. Think of government buildings. Think of anyone and everyone in the world, places you probably interact with every day. Sure. Airports, hospitals. If you go to the gym, gyms. Airports in the gym. The gym's going to be in the airport. There you go. You get two for one now. There you go. So you get two for one there. You need to secure that. But let me make it real for you as an example.

2:58:16So we do like 100 of the Fortune 500 users today. But to give you a sense... And that's in their office buildings, on their campuses? Office buildings, campuses, parking lots, stores. What are the other 400 doing? Get with it. We're getting after them. So we'll get them all. But to put it in perspective, I think it's sort of like an example makes sense. So just in LA, recently we got a customer which is Terawatt. They are a commercial vehicle charging station. So they charge the self-driving cars, the Waymos of the world, you name it. And their challenge is they've got, you know, kind of premises outdoors, parking lots where all expensive vehicles come in.

2:58:52And they need to secure that, right? And they don't want to guard on every parking lot. And so what's their best next alternative? Well, up to this point, it was you can put cameras and then you can hire people watching those cameras. And that's very expensive. And if you know anything about people, they're really bad at watching video. Oh, yeah. Yeah, especially because you could watch 300 hours and there's only 30 seconds. Yeah, exactly. And so you take out your phone one time to watch that one TikTok. It was a really good meme. It was a really good meme. And you miss exactly what's going on.

2:59:24You miss the guy jumping defense. You miss the guy stealing the cable or doing whatever. And so that's what we're able to do in real time. I imagine this product sells itself because if you don't have security, your salespeople can just go straight to the CEO's office. They just break right in. Okay, so you raised new money from capital G, Google,$5.8 billion valuation. You are, it sounds like some or a good amount of it was used, was secondary. When did you start the company? What were the first products? Yeah, what were the first products? Go to market. Yeah, look, so let me just give you like a brief on the business and how it's grown, right?

3:00:03So the business is about nine years old, almost 10 years old. in its history. We started in 2016. Sorry, you can't hear this. We have overnight success. This is the overnight success one. But yeah, it's been 10 years. We're at 30 ,000 customers globally, 17 offices around the world. Like I said, 100 of the Fortune 500. So that's kind of the journey of the business. We started in video security initially. So that was the first idea. And then from there, we expanded to a platform of physical security. And that product, video security, Was that a white-labeled video camera, and then you were doing the SaaS product, the software around it?

3:00:41Or were you building hardware on day one? How did that all come together? Yeah, so think of it like an end-to-end solution, right? Think of it almost like the iPhone of the video security industry. You buy it from us. We guarantee it. It works. We do the hardware. We do the software that runs on the hardware. We do the cloud software, and we seamlessly integrate it all together. And that was the magic that our customers fell in love with from the beginning. That's where we started. So that's 2016, 2017. We launched the camera. That goes really well. I mean, the market really loved the product when we launched it.

3:01:09A few years - Was there any doubt or was it just up and to the right immediately? Well, you know, it's interesting. There was doubt at the very, very beginning. In 2016, we were starting the company and people said, Philip, why are you doing hardware? Why not just do software? Just build back then computer vision. It wasn't even AI back then, right? There were so many hardware failures around that time. Hardware is hard, right? So I get it. I get why people were skeptical. But then once we got the product to market, people got it. And it just worked well. The customer reception was phenomenal.

3:01:37And it was one of those stories where it just took off. And from there, two, three years into the business, we realized that the opportunity is much larger than that. It's not just video security. It's actually this broader world of physical security. The customer base has a dream of an integrated system that solves broader problems. So we started looking at access control. Think of all the badge readers, how you get into buildings. We started looking at alarms, massive market. Every building that closes at night has an alarm system. All of those send you false alarms. They've been invented years and years ago.

3:02:08All it takes is a truck drives by, a sensor shakes, and you're getting a call at 2 a.m. What is that about, right? Police stopped going to alarms because they get so many false alarms. So let's solve that. It's the same thing with car alarms on the street. You walk around and you're like, oh, car alarm. Cars going off. No one even just psychologically in our society really stops everything if they hear a car alarm going out. If you're at a restaurant, you're not going to be like, I got to go check on that. Something serious is happening. So that's where it evolved to. We now have the full suite, full platform.

3:02:36I'm super stoked. One of the cool things is it's only been like four years, five years, really since we expanded beyond physical security. 77 % of my core customers now use two or more of our products. 50 % use three or more and so on and so forth. So this platform story is really resonating. It's playing out really nicely. Will we see robots integrated into your platform? I've had this thesis that, not the most original thought, but this idea that security guards are primarily there to just be a human that is at least a human-shaped thing that is on the premises providing this sort of return effect.

3:03:18And I can see humanoid robots getting traction faster and just standing in places that need to be secured and having a physical presence. Sort of looking intimidating. Looking intimidating before they're really good at like actually adding value in my home. Yeah. I don't know. I'm sure you've like thought about it. How do you think about humans? Yeah. I mean, look, I think you might have some of that. I mean, I don't know how close that future is, right? But I think, you know, fundamentally, if you think about physical security, it is a human problem. And I think humans are not going away from the problem of solving physical security for other humans.

3:03:51So, yes, we might have robots. Yes, we might have sensors. But ultimately, at the end of the day, I think security personnel is going to exist and it's going to address those human problems. It's just the technologies that we're building, technologies like humanoid robots, will make that security personnel have a superpower in a way. It'll make them more aware. It'll make them do more useful things. It will save them hours of time watching mindless video or missing things and focus them on actually resolving the emergency at hand. Yeah, it's interesting thinking about the role of the human security guard.

3:04:25You can almost think about it as like a bundle of tasks or jobs to be done. One is basically a camera that you can move. A security guard can go look behind that gong and see if there's something going on there. But at the same time, you can just put a lot of cameras and get coverage. But a security guard can also go and ask for more context. Say, oh, hey, are you supposed to be here? Let's have a conversation about this. And that's something that we're not quite there with the humanoid robot. And so are there any other formats that you're excited about, like the four-wheeled robots or the drones?

3:04:59I mean, I saw, doesn't Amazon sell a drone camera that can fly inside your house, which I thought was very odd? I don't know if that product's doing well. But how do you think about the other form factors that might be a little bit more economical, a little bit more tractable before we get to the full humanoid? I think the reality of it is, is I think, you know, the cost of sensors and the cost of being able to be aware of what's going on is just going down. Sure, sure, sure. And it's not a new idea, right? We've had sensors in the world, you know, for decades. Really, we've had it, right? And so, you know, my sense is the ease of deployment of cameras, the form factors of cameras, it's going to get easier.

3:05:36It's going to get simpler. It's going to be easier for the customer to use. And it will take all sorts of form factors, right? It might be a camera that's drilled into the ceiling. It might be a camera that's running on solar power. It might be a camera that's on a drone. And by the way, it might not just be cameras, right? It might be radar. It might be microphone. It might be other sensors. I think the challenge becomes, what do you do with that information? And how do you effectively process that information, ideally in real time, so that we can mitigate the situations, right? You don't want to just use it after the fact.

3:06:06Yeah, yeah. This happens. Yeah, here's the insurance thing. We have great footage of you getting robbed. Right. It's amazing. Do you work with museums? Yeah, so we work with all forms of customers all around the world. I mean, you bring up museums, which pops to my mind immediately. Yeah, what happened there? Which is crazy, right? I mean, in broad daylight, people came with a lift and got in there. But it's actually a very difficult problem to solve, right? Because if you think about it, they have to secure the perimeter of that building. And if you've ever been to that building, it's a massive structure.

3:06:39If you literally had humans or even robots roaming around that building, that would be a lot of humans and a lot of robots, right? And so one of the things we're excited about is, you know, camera technology paired with AI is now getting to the point where monitoring for things like that is more reliable than humans doing it. It's faster than humans doing it. And so in a situation like that, we could totally, you know, alert the physical security response. It's like, hey, something suspicious is going on right here, right? And we could do that in real time with very high accuracy without missing events.

3:07:13So those type of situations we think we can solve. Help me walk through how AI actually impacts decision-making on top of a sensor platform. Because I imagine the first version was probably just some business logic. If movement, send push notification or email or something, then you get to some sort of heuristic-based linear regression or something. But now you actually could take a video and upload it to an LLM and ask it, does this look suspicious? And it would just tell you, like, yeah, that does look suspicious or not. Are we there yet? Are we using generative AI? Are we using transformer-based models for this stuff?

3:07:54Like, what's the state of the art? Yeah, look, so the state of the art, frankly, it's amazing. And the amount of progress in the market in the last two years has been just phenomenal. Like, if you take a video clip and, I don't know, take it and upload it into Gemini, Gemini will know everything that happened in that video clip, and it just blows your mind. Five years ago, that was science fiction. Today, that's a reality. We rely on some of that. I think the way we think about that is we try to understand what's going on in all of these scenes in real time with particular sensitivity to things that might be security incident related.

3:08:30And so if you think about that kind of premise, like what is common to all security incidents or most of them? Well, they mostly involve humans, they mostly involve vehicles. There's at least some motion in the frame. There's some motion going on. That was the basis, right? And so 10 years ago - You don't need to just be uploading, oh, there's 10 seconds of video where nothing happens, upload it to Gemini, pay the token, no way. Yeah, yeah, yeah. And so you're onto something, right? So I think that's kind of the crux of it. It was like processing all of the video from all sensors and all cameras, today is still prohibitively expensive.

3:09:01And so you can think of almost as like a layered filtering approach, right? We use different heuristics and different mechanisms, some on the edge, on the processor that's on the camera, some then in the cloud, and some with like heavier models that we offload to. But with that full stack, we're able to, you know, discern things that really matter. And that might be something like, you know, a person climbing a fence, right? Or a person carrying an object or an object left behind, or, you know, soon enough, a person pulling a weapon. Yeah, yeah, interesting. Interesting. Is there demand for sort of on-premise inference for any security stuff like this?

3:09:33Do you feel that? Yeah, I mean, I think, look, as I said, I mean, the whole thing is, you know, how do you deliver this inference at scale at a reasonable cost that makes sense to, you know, kind of the broad base of customers? And I think the only way to do that, frankly, is to do some of that inference on-premise. The way we think about that is we do that on the edge on our device. The two reasons for it. One is purely the inference cost. The second is actually if you think about it, most of the world is actually not connected with fast enough bandwidth to push all the high-quality, high-resolution data in real time to the cloud to do the processing in the cloud.

3:10:11And so that's yet another reason that we take this kind of hybrid cloud approach, as we call it, where we do some processing on the edge. And that's been phenomenal for our devices. How do you think about pricing for nonprofits, for more sympathetic audiences? When I think about security for a big tech company, I'm like, they can pay the full price. But for a local school who might be worried about an intruder or some sort of disastrous situation that could happen at a public school, it would just feel so bad if it was like they almost said yes to the contract, but it was just out of reach. How do you think about making sure that you're delivering the product?

3:10:48So look, we try to be flexible and understand our clients and their needs. In some product categories, we actually even have kind of special pricing for that. But you bring up a good point, right? Schools are a big customer segment for us, particularly in the U.S., K-12 education. And some of it stems from kind of the very scary security issues. Yeah, of course. But what we're finding, which is really interesting, is the school might invest in our system to sort of prepare for these dramatic scenarios. but then they're finding so many more daily uses because we had made the software intuitive, right?

3:11:23So we're solving problems like kids vaping on campus or kids bullying each other, right? Or, you know, I love the cases where like the principal sends us some video of like, you know, these two kids got into a fight and I was able to pull it up on my phone and figure it out. Oh, and by the way, I could like on my phone, you know, quickly obscure the faces of other kids in the scene and share the two kids that were in trouble with the parents, right? So things like that are, in my mind, it's... Yeah, yeah, positive outcome. You're building it out because you're going after the very scary problems.

3:11:53Yeah, the excuse that I didn't start it. But there are so many more positive externalities. It's a completely different lifestyle. You used to be able to... You used to be able to say... You used to be able to throw down and get away with it. Well, let's be real. Kids are creative, right? Yeah, they're always going to find away. So they will do fun stuff. That's amazing. What's next? You'll get the rest of the Fortune 500, the other 400. are you going to go public at some point? Do you want to stay private forever? Yeah, look, I mean, I think we're a business that is definitely going to be a public company.

3:12:23If you think about it, we've got a market that supports it. You know,$55 billion a year in spend in the categories that we operate in today. That's six product categories. We're chasing other adjacencies, you know, massive customer adoption. Our customers are buying more from us every year. So a customer who buys Verkata, 12 months later, they double their spend. 24 months later, they triple and so on and so forth. So it's the kind of business that has the profile to be a public company. We're not ready to make that announcement today yet. Of course, of course. But stay tuned and we'll keep you posted.

3:12:57Bill for it. What about the supply chain? I mean, if you're building physical hardware, I imagine that the tariff, like Liberation Day was probably stressful to you. How are you thinking about what, and also security is important, right? This is potentially critical depending on who you're selling to. How do you think about building out your supply chain for manufacturing? Yeah, lots of change in geopolitics. Obviously, we have an Asia-heavy supply chain. We started in Taiwan. We diversified away from Taiwan. We've got multiple regions in Asia where we manufacture our products. There's also just different pieces.

3:13:32A plastic housing coming from China is different than a semiconductor coming from China. Yeah, exactly. Then the chips and the RAM and all the different components. Look, I would say over the last couple of years, we've diversified our supply chain, you know, quite a bit. Yeah. So we feel, you know, like we're in a good spot as it comes to that. That's cool. Is there anything that you plan on, like, reshoring or you're thinking about or looking about making in America? Is that an interesting opportunity? You know, not at the moment. Yeah, not at the moment. Maybe in the future. I don't know. Yeah, maybe.

3:14:07Anyway, thank you. Do you have anything else, Jordy? No, great to meet you. This was fantastic. This was a lot of fun. Thank you so much. Thanks for having me on the show. It was fun to be here. This was great. We need ricotta. We do. We do. Let's get you. Yeah. Thank you so much for having me on the show. I'm going to tell you about Wander.com. Book of Wander with inspiring views, hotel-graded menus, dreamy beds, top-tier cleaning, and 24-7 concierge service. It's a vacation home, but better. I wanted to close up the show by just reading this post because I just thought of Tyler immediately when this post came out from Jonah Katz.

3:14:38He says, great job on that project, man. I really like the way you prompted Claude and did nothing else at all. Claude is a great model. It's a good model, sir. It's a good slop app that barely works. Well, we have to actually close. But we couldn't do the show without you, Taylor. We really appreciate you. I have to actually close on this post from Charlie Puth. Oh, yes. He says, hi, Elon. These sonic booms have gotten progressively louder since they started launching the rockets in Santa Barbara. He was talking about Vandenberg Air Force Base. This one at 3 a.m. today felt like 150 to 160 decibels violently shook our whole house and really frightened my pregnant wife.

3:15:18I hope they do not get louder. Anyways, I was far enough away. I didn't hear anything. But given the pace at which I think the number of launches. Do you see this post? is you may want to reconsider living near Vandenberg. Launch cadence is about to hit 100 per year from two complexes. So you're just going to have sonic booms like every 24 hours eventually. Bizarre. There is a community note on this. People are kind of going back and forth. It says SpaceX does not launch rockets from Santa Barbara. They launch it from Vandenberg, which is 68 miles north. But he might be saying Santa Barbara County, or it might be going past Santa Barbara.

3:16:03But, I mean, the outrage from the Santa Barbara crew, if this is a real thing, is going to be intense. You got a lot of people. Ellen DeGeneres is hanging out there. It's the Montecito crew that will really come down. Santa Barbara. It's the Montecito of California. I don't know. You mean it's the Connecticut. Yeah, no, no. It's not the Connecticut. I don't know. I haven't mapped it. I actually don't know. It's the Catskills, right? Isn't the Catskills upstate? It's kind of upstate New York coded, right? I'd say so. Something like that. I don't know. We'll have to get some resident New Yorker to break it down for us.

3:16:38But, yeah, people are going back and forth. I was digging into, like, is this even possible? Can it really get up that high? I feel like we need Brian Johnson to weigh in on this since he is both, you know, I believe he's like a big Elon bull, but he's also extremely sensitive to loud noises. And so I'm sure he'd get up there with his deciliter. Final post. We'll start with a black pill and then a white pill. Okay. On the topic of Southern California, this person, Sam, says, it's actually kind of crazy how washed L.A. is as a city right now. Lots and lots of closed, failing restaurants. The wages here are shockingly low compared to cost of living.

3:17:14Film industry still hasn't recovered from that double strike two years ago. I've been saying it's been kind of like Detroit energy lately. Don't come at me with that activity, brother. Trevor says, things are definitely changing and will be painful for a bit, but the glass half full take is that all the boomers who held onto power for far too long are being shaken out. New blood pumping into every corner of the city next 20 years is going to be magic. What is this picture? He's attached. This is hilarious. I like this. It's Randy Newman, I Love LA. Okay. It's the music video. Yeah. Well, this is a great way to play it out.

3:17:49I love LA. I love that song. Anyway, thank you for tuning in today. We will see you tomorrow at 11 a.m. Pacific. Sharp. Leave us five stars on Apple Podcasts and Spotify. And have a great day. Merry, Merry Christmas. Merry Christmas to you. The holiday season is upon us. And we love you. We'll see you tomorrow. Goodbye.