Wednesday’s Diet TBPN

0:28What's going on over there, Jordy? I gotta write an essay. I gotta learn. I gotta lock in. I gotta learn how to write because this is, this is, this is, uh, it's, it's enraged me. Were you enraged? I wasn't enraged. I try not to let the internet make me mad. Okay. But they were trying to enrage you and the fact that they tried made you angry. I'd love to watch the Chad IDE brain rot code editor video. First, I want to see, I want to see the video for myself. Let's play it. Okay. So he's got some Newport cigarettes. He's packing, pulls out a cigarette. With the Stanford. Lights it up. He's got the cutoff.

1:08Stanford cutoffs. What is this music that's playing? He's got the guitar in the background. And what is he playing? Some sort of plink? This is steak. Oh, this is steak. Okay, so this is gambling. So he's gambling. He's gambling in the IDE.

1:26Okay, so I assume that means he's won something. or other i i actually don't know what the stake ui looks like okay so he's done winning he he has won the the gambling session with stake and now he's back in his ide and he writes a prompt and he says test the code and it pulls up some sort of mobile game that it's playing do you do you know this clash royale this is clash royale okay have you played i have played uh in middle school So I'll start by saying I think the video is funny. Okay. And I'm sure the founders are smart. For a low-budget launch video, I think they did well. They broke through.

2:03That is a very low-budget launch video. That literally cost nothing. Yeah. Okay. So I think that's great. And I want to be clear that I'm not bearish on the founders at all. But yesterday, YC announced Chad IDE, a.k.a. the BrainRot Code Editor. Chad is an AI code editor that allows you to gamble, watch TikTok, and use dating apps while you work on coding tests. Their launch rightfully got a lot of attention. On one hand, it's funny. On the other hand, what are we doing here and why does this belong in the official YC account? To understand Chad IDE, Clue Lee, Icon, Friend, and the new class of Gen Z startups, you have to understand the online environment that these founders grew up in.

2:41If you grew up on the internet and you studied how and why certain people would regularly go viral, you know that making people mad has and always will be an effective way to get attention. The feedback loop is simple. You make something that makes people angry, and people comment, share, and dunk. And because feeds are optimized to show posts with high engagement the most, you get a lot of reach. Rage baiting for commercial purposes, in my view, was pioneered by course bros. People like Tai Lopez realized that making the masses mad was an effective way to drive course sales. You could flaunt Lamborghinis, make a bunch of people angry.

3:15And as long as a handful of people found their way into their course, it was a viable, repeatable strategy. Historically on X, rage baiting was a marketing strategy, not a product strategy. Accounts like Sweaty Startup, aka Nick Huber, frequently post things to get an angry reaction and the subsequent reach. But behind the scenes, Nick has always been running a pretty normal commercial real estate fund. In 2025, rage baiting has become a product strategy. Clearly started as an app for cheating on coding interviews. chad ide's only known differentiation from the other 100 ai native ide's is that you can gamble and swipe on dating apps in it it's becoming clear that while rage bait might occasionally work as a marketing strategy it really should not be employed as a product strategy running a successful vc-backed company requires you to build a coalition of people that want to see you win getting media investors talent and customers on your side is not an easy task rage baiting whether at the marketing level or product level is the most effective way to get people who could be potential investors, customers, or team members to actively prey on your downfall.

4:13YC has long provided some of the most durable, high-quality, generalizable advice for startups, and I believe that it has had a tremendously positive impact on the companies that go through YC and even those that don't. Launch now, make something people want, do things that don't scale, ignore your competitors are just some of those. So as someone who believes that YC is one of the most important and influential institutions in tech. I believe it might be time to include this in their list of essential startup advice. Rage baiting is for losers. But I do think it's notable that rage bait has moved from kind of a fringe marketing strategy to a marketing strategy within tech to now living at the product level.

4:52And I just don't think that's going to create a lot of enduring value for the companies that pursue that strategy. Yes. So the reaction to this was very negative and I think there's a few it really has to do that layer of the stack it ends up it ends up it ends up impacting the brands of the firms that fund these ideas of course the most important thing in your piece that I liked was this idea that there is rage bait marketing doing a stunt doing something a little bit crazy but then delivering a quality product is separate from making the product itself rage-baity. And so I think a lot of people, when they saw this video, they wanted, they were wondering what does the product actually do?

5:36Because all you've told me is that you created an April Fool's joke, and Google's been doing April Fool's jokes for years. The question for me and the question I had for Tyler was, what's actually under the hood at Chad IDE? The company is not called Chad IDE, it's called Clad Labs. The steel man here is that, hey, IDEs are boring. You got to do something funny. Film a funny video. Create a fake product, but then have something under the hood that is actually real, that does actually advance the conversation, and is maybe something that a real product would try to sign up and need a code. I think this would have been a brilliant kind of like stunt if they did it as a stunt and it wasn't core to the brand that they're building.

6:20It wasn't core to the product. If it was April Fool's and Michael Truell at Cursor or Scott Wu with WindSurf, we're like, we're doing a brain rod version of the IDE. Everyone would be like, that's hilarious. Okay, now back to using WindSurf and Cursor, right? Yeah. So I go to the website. You can't download it yet because it's still in beta. You need a code. I DM the founders, but they didn't get back to me. The company is not Chad Labs. It's Clad Labs. Yes. It's the Chad IDE, but this is obviously a marketing stunt. I kind of disagree. Yeah, but can you get a product from Clad Labs? Like Google would come out with a joke, you know, a pigeon-based algorithm or something like that.

6:58That would be out or like Google Translate for animals would be at like animals.googletranslate.com that day. But Google Translate would still work. So like walk me through the Clad Labs product. Like what is their core product outside of the stunt? When you go to the download page, there's options like which brain rot do you want? Yes. And it's like, you know, steak or like Minecraft parkour or whatever. And then there's an option that says, I don't want brain rot. Okay. There's obviously a product here. This is a marketing stunt. I like believe that. Okay. Met a very successful founder who said, I chose fund blank because they gave me credibility when I needed it.

7:33Now the fund backs everything, including the dumbest ideas I've ever seen. I don't think the next wave of founders will pick them. The credibility they had is gone. And I was thinking about how AUM weighted brain rot or AUM weighted slop is not an excuse for slop and controversial investments. If you put 1 % of your fund into something that is just going to go all over the internet and be like, we're the most degenerate, we're the craziest, we're the most insane, we're the most fraudulent, like in your face company, even if it's only 1 % of your fund, you're not gonna be able to say like, no, no, no, no, 99 % of my investments are just like trying to cure cancer genuinely, or like actually trying to improve developer productivity or like 99 % of my investments are just reasonable down the fairway, like good businesses.

8:21I took a flyer, 1 % is a little bit crazy. Well, if that 1 % gets a thousand times more views than your enterprise SaaS portfolio, like you're gonna be known as the slop fund. So like you need to be careful about that. Yeah, you know, one of YC's challenges as an institution is that they can only accept something like, I think it's like less than one, isn't it less than 1 %? Oh yeah, it's tiny. So super small, very low acceptance rate. And so if you're a founder that applied with an idea that you think is world positive, and then you see them announcing this kind of stuff, those founders are going to be even more frustrating.

8:56Say that I have some new way to do agents in my editor. And it actually works way better than Cursor. It's way better than Windsurf. It's better than everything else. And I applied YC with this thing. Okay, there's probably, what, like 10 other YC companies that are, like little YC companies in the same batch doing similar, you know, coding editor stuff. How do I differentiate myself? I feel like this is like fairly reasonable. Okay. We get some users that are, think it's like funny to gamble in their IDE. And then they realize like, oh, this is actually a pretty useful feature. Jordi, if you were in YC and you had a coding editor company, how do you like recommend, like, instead of doing stuff like this, how do you, how do they differentiate?

9:35Back to what I said, which was, which was separate out the rage from the core product and have it be like a marketing stunt. I still think you could have gotten the same amount of attention, but then people would go in and they'd be like, wait, this is actually a really cool novel approach. I don't think we know for sure that they're not doing that. There is no real product here. And that's what Jordy's risk is, is that they haven't built anything behind the scenes. It's all marketing. It's all stunt. The product you're making is to help people gamble and gambling is bad. And so if you're anti-gambling, you are anti this product that they built, and now they have the opportunity to say, no, no, no, here's the real thing, and they haven't done that yet.

10:15It would have been so easy if at that end of that video, that's what people feel like Gen Z entrepreneurs built. But we didn't want to do that, so we actually built this. Let's pull up this video. I don't want to gamble, but I want to see it actually in the IDE. That's funny. Tips to apply at YC Batch Winter 2026. I think Shirav is a literal child. Would you? First, you should have some clear goals. Like what you should do after funding and you should have a clear... I can barely hear this, but this is wild. Okay, we can pause it. But the reason I included this is because I think there's a lot of people like Shirav and tons of young people that look to YC as whatever YC is promoting, they approve.

11:00And so I just, I want to avoid a scenario where the shurabs of the world think that they need to put rage bait in order to break out in this industry. It's not the reality. You can just build a great product. You can let that speak for itself. You can find ways to market it along the way. Albie, who is a 14-year-old applying for YC, went extremely viral earlier this week. Got 3.6 million views. Wow. 14-year-old founder. I'm Albie. I'm 14 and I'm based in Sydney, Australia. I've been building things ever since I was six or seven Don't get the joke Really good editing Well, I've been building things ever since I was nine First writing code at code camps Then building Roblox games And even launching a soccer gear brand when I was 12 Wait, did he edit this?

11:46We gotta hire this guy to edit for us This is a great roto Coding, AI, content creation, etc Instead of boring textbooks, you level up, earn XP and unlock challenges as you go. All while learning from top founders, creators, innovators, and other young people doing amazing things. I started Finkel because school wasn't teaching me or my friends how to actually build, create, or launch something in the real world. Teddy says my default reply to high schoolers hitting me up for VC funding is put me on the phone with your parents. You're supposed to just turn on the webcam and basically just talk for one minute.

12:20That's how you apply to YC. One shot it. Yeah, you're supposed to just one shot it, no editing, because they don't want it to turn into, oh, to apply to YC, you spend two weeks doing an edited video. They're like, no, work on your product. And then the marketing is like the last little cherry on top. Like that's always been the YC mantra. And that's a little bit of like this Cloud Labs thing. Although the weird thing is like the video, I love the video. It's funny and it's cheap and it's clearly just like a bit and they did it and it was two seconds. But then it feels like they didn't give me the payoff of like, oh, okay, you guys are funny and you're working on something cool and interesting and hard.

12:53Ev Randall, who's coming on the show on Friday, went on Harry Stebbing's show, 20VC, is putting the timeline in turmoil over some comments about other funds. I don't think Robbie or Hamant or even Ben and Mark at this point, I don't think that they can go to LPs, one of those legs of the stool, and say, hey, this basket of funds that we're making you invest Pari Pissu across, we're going to get you 5x net on that. I don't think they can say that or they at least can't say that with a straight face. And if you look at the recent return data, I think it suggests that. So I think they'll be able to make an immense amount of money on an absolute basis.

13:28But I think a lot of these LPs are in the business to make or in venture to make high money on money returns. Like they had PE for the low return stuff and they probably get better liquidity from PE. They're here for the high money on money returns. And this is one of the reasons why I'm extremely excited about benchmark competitive position in today's market, because we can go to LPs. We can say, hey, we're shooting for higher than 5x net. We have the historical track record to back it up, and we have the fund sizes to back it up as well. I mean, you had Miles from Carnegie Mellon come on here and do the awesome math and the very clear math of, hey, do you know how hard it is to return 4x net on$8 billion,$10 billion?

14:03It is immensely hard, and it defies the laws of physics. So I think there's a difference between are they going to make a ton of money, and are they going to produce the returns that LPs really want this asset class to produce? Two very, very different things. But for now, the rubber won't meet the road because, as you mentioned, there's just so much global demand from LPs for exposure to private technology. And they are happy to take lower returns. And so I don't think there's any end in sight. But I think on a relative basis between all of these different constituents and all these different GPs, there's a huge, huge delta and a huge differentiation between who can actually produce venture-like returns.

14:36Boo, he's not HGI-pilled. Boo. 10x. You're going to 10x the fund. Just 10x it again. Just 10x it again. 10x it again. fund raise all within a raise a hundred billion dollar fund and 10 exit just 10 exit and we're going to 10 exit again uh no obviously ev was on a little bit of damage control wait wait i so i want to hear what what exactly did he say the first line he says uh they cannot go to lps and say with a straight face that they can do 5x net can we play the actual clip because i feel like that's not quite right what do you say i don't think ravi or hamant or even ben and mark at this point, I don't think that they can go to LPs, one of those legs of the stool, and say, hey, this basket of funds that we're making you invest Pari Pissu across, we're going to get you 5x net on that.

15:22I don't think they can say that. Yeah, because maybe they can go with a straight face and say, we're going to get you 6x net. Part of the reality is I don't think no fund manager can really go to LPs and you can share that you believe there's a chance we'll get a 5x net, But isn't it like 99 % of funds just don't come anywhere close to that? I think the broader point that he's making is something along the lines of like, I saw some other post about like there will be fortunes made just by getting retail investors and the broader capital that's out there in the world into the private Mag7, the OpenAI's, the Anthropics, the SpaceX's, the Andurals.

16:03There's a whole host of companies. There is a world where you set up a fund that has lower return expectations, but also lower risk. And it's a great deal. And LPs love it. I don't know that it's that hot of a take, but it certainly put the timeline in turmoil. Part of it is that Benchmark's feeling pretty good right now. If you look at their 2020 fund, they have Mercure. They have Fireworks. What's the other one? They have a bunch of multi-ten baggers at this point in that fund. So they're feeling pretty good about going to LPs and saying, look, we still got it. Yeah. Still cooking. To be clear, I slash we love working with our friends at all of these funds.

16:41And this part was not meant as a slight slash commentary on their quality as investors. Just POV on fund strategies and the unique value prop of Benchmark. I think it's a fair tweet. But it's amazing because everyone is coming out and just trashed. Part of what made it feel super personal is that Harry tagged Ravi and Ben. Totally, totally, totally. Yeah, we actively try to avoid tagging people if someone is talking trash about someone else or sub-tweeting them. We don't really try and handhold into drama. Since my former colleagues at A16Z are RIAs and thus cannot legally comment on what they can slash cannot say with a straight face to LPs, this sounds a lot like what crappy board members say when as an outside observer they have zero clue what actually happens day to day in the business ev thinks he understands andreason's business but in fact he does not understand andreason's business but i want to know like what is the misunderstanding because the steel man the bull case on the andreason strategy is that ev is ev is making the claim that they will make more money dollars total dollars because they're investing out of a bigger fund size.

17:58They don't need to go and say, we're going to 5X it. So it's a different pool of LPs. Also, part of the major appeal of investing in A16Z is that you pretty much know that you're going to get in every important company. That's my point of view. I'm not an LP, but I happily would be. And it's because you know you're going to get some exposure to pretty much every important company, not necessarily always super early, But at some point in the company's life cycle, it's very likely that they will take a meaningful check from A16Z. What does Ev say? He says, I think smaller constrained funds can produce higher returns in venture.

18:38Quote, this must be a shitty board member. Don't work with him. Incredible non sequitur. Thanks, Scott. Meanwhile, over on X, people are saying, calling me unk. They're saying I'm a boomer. Oh, yeah. For my post, which I think is fair. But again, there's more nuance. During the Clearly heyday, I would imagine that 80 % of the team's hours were spent on marketing and 20 % were spent on product, maybe. Now I think it's flipped. And I think that's very bullish. I think that's good. But Tyler, you had a rebuttal? This seems very different from, like, you see the gambling on your credit card statements or whatever, like from other accelerators.

19:18Like, this feels very different. Like, this is, like, the marketing. I think people kind of tend to group all of this stuff together where it's like what Grant Daniel was talking about yesterday. Some of these are like immoral companies that you could say. I think this feels different than that. What if the whole product is, and this is all we've seen, a VS Code fork with minimal autocomplete. They're always a year or two or five behind Cursor and WindSurf. and yes, it has the ability to add Tinder and steak and sports betting in it. And like that, the product that they are telling us they're building is what they're building and they stay with it for five years.

19:59Like, what do you say then? Yeah, then that's not good. Dwarkesh Patel, Dylan Patel sat down with Satya Nadella and they got an exclusive tour of Fairwater 2, the most powerful AI data center in the world. Maybe this is wrong, but I think Colossus 2 will be bigger. It's just currently, it's not big. Like this is the current biggest. It's the current biggest. Okay, okay. So you had a chance to actually sit down and watch this whole interview before we started the show. Can you give me some takeaways? Where should people, are there any timestamps that we should pull up? Are there any takeaways that people should know before they go and watch it?

20:33It was pretty enlightening. I usually think of Satya as being very non-AGI-pilled. And I think this was a bit of an update. So there's a bunch of reasons for this. So early on, I think it was one of the first questions. And he's like, what is AI? AI is basically two things. Satya is saying this. There's cognitive enhancement. So this is like your tools or this is your autocomplete. This is your co-pilot, stuff like this. And then there's like the guardian angel. And this is like the very AGI build where, I mean, it's like kind of lording over everything. And so he actually does like say these two things are like very possible.

21:10Okay. So the next thing he's talking about kind of how he thinks about pricing structures of AI broadly. So there's this kind of conflict between subscription models and usage model of pricing. I think he's broadly more kind of focused on, at least in the short term, on this subscription kind of thing, right? Throughout the interview, he keeps emphasizing the point that, like, Microsoft is a hyperscaler. And so that means, like, a bunch of things. That means that they're going to keep supporting multiple models. It means that they are going to, like, they want to prioritize the kind of long tail of, like, high margin users.

21:45Compare that to Oracle, who you can think of Oracle as basically... Prioritizing one potentially low margin power user, which is OpenAI. Yeah, exactly. You're giving bare metal, essentially, to one customer, OpenAI. All the big hyperscalers have their own chip play, right? There's Triniun, there's TPUs, OpenAI is doing their own chip. And Microsoft does have their own chip. The actual production is like way behind everyone else. And then Satya basically brings up that Microsoft has IP to everything OpenAI has, except for consumer hardware. Satya signaled that he's open to buying capacity from neoclouds, like Oracle, Nebius, Lambda, Iron, N-Scale.

22:25Isn't he already doing that? Yeah, he is. But Semi-Analysis has a concept called the pause, which is basically a gap of this insane period of demand that you're trying to meet that demand. and Satya actually says specifically, you're rightfully calling out the pause in the interview. Interesting. The chip question is also very important because you can think of it like if you build a bunch of data centers right now, they have very specific power requirements that are directly based on the chip. If you're building based off the H100 chip, that's different than if you're building a data center based off GB200s.

23:04And it's not like fungible. You can't just trade one out for another. So that's another one of the reasons why you don't want to basically have insane build-out right now because you don't think you know that chips are going to get much better. Sure, especially with ASICs, right? Yeah, exactly. NVIDIA is constantly saying, we've got this next chip coming out. You want to build up your data center with those chips because otherwise they're going to depreciate and you're going to have these basically data centers in five years that are using the old-gen chips or two generations back. Yeah. Anything on depreciation?

23:36He gives like two reasons how you can justify data centers, right? Because data center basically depreciating in like five years or the chips, which is a big part of the cost. There's basically two ways to like justify the actual build out. One of them is basically you can think of like research as just being like R &D spend. And the other is just like everything has to be like super demand driven. So that's also why he's not. It's like, again, in comparison to Oracle, Oracle is basically maybe you could say that they're kind of skating to where the puck is going or trying to figure that out. and then doing a bunch of debt, et cetera.

24:08And then Microsoft, Satya is saying, no, where is demand right now? How do we fulfill that demand? Basically, exactly. If we're not fully built up, then we can lease from the neoclouds. Yeah, makes sense. Okay, one last thing. Dwarkesh asks Satya, does he buy basically the revenue growth of when OpenAI or Anthropix says they're going to be like 70, 100 billion in like three years? He's like, well, they have to justify their fundraise somehow. And then he basically... He doesn't say much else besides that. Wow, Satya, absolute dog. I love him. He's the best. Another thing that I was surprised to hear is that Satya, he made a big point of saying that there is a super intelligence lab within Microsoft.

24:51They're going to be training their own models. That's why I've always felt like the dynamic between OpenAI and Microsoft is so interesting because OpenAI just has massive ambitions in the enterprise. They want to create, Sam alluded to an AI-native Slack recently. Microsoft has Teams. And imagine those competing. It's going to be AI native. You can imagine OpenAI having like word processing, Excel-like product. You know, you can imagine them ultimately competing on like every single layer, including eventually at the cloud layer. Have you ever done illegal drugs, Tyler? Answer the question. No.

25:26Answer the question. Good answer. Who's your favorite host, me or Jordy? Answer the question. Answer the question. I'm my favorite host. Oh, taking shots. an emotional and expressive robot to reshape our attachment to set to technology. Is this a CGI, uh, vibreel or is this a real product? I don't, it's pretty cool. I don't know. It's weird. It just feels cool. Cool thing to have. There was, um, put a speaker on it. I'm like 90 % sure it's real. There was a, um, Apple research paper that came out like, I don't know, six months ago. It was all about like expressive robots. Sure. And they had a bunch of like demos and stuff on how they could build this stuff.

26:01Wow. Okay. This is, this is very cool. Uh, I have been delight baited. I have not been rage baited by this. Rigetti, what an opportunity, ka-ching, buy IBM. What does that even mean? Kramer posts like a crazy amount. I mean, he's got 2.3 million followers. He's posting like every half hour. That's our show for today. I do not tolerate Kramer slander. Yeah, no, no. I think he... He's entertaining. He's insightful. He's controversial. He's a total package. We love Kramer here. I took delivery of a beautiful, shiny new HW4 Tesla Model X today. I like this hardware four. He cares about the chip inside that thing.