Windsurf's Wild Weekend, SpaceX Invests $2B into xAI, Zuck's AI Data Supercluster | Jeff Huber, Scott Wu & Jeff Wang, Carl Pei, Garrett McCurrach

27:49And that might be a weird outcome, but it could be a silver lining. I don't know. Well, anyway, the second point that I made was that, you know, I said the second, the real culprit might be FTC antitrust. This is a hyper competitive market and Google still feels like they can't just do a normal acquisition. And I thought that was crazy because it's like, this is textbook, they should be able to acquire this company, right? Like, the cursor's out there. They're not acquiring the market leader. Yeah. OpenAI is clearly going after this market. And to the tune of what's their valuation? Like 350 billion or something like that?

28:27Like - We haven't, we should try to get an update there. Because I think the Masa, I'm not sure the full Masa - It's not even one tenth of, it's greater than one tenth of Google's market cap. Right? And so you're looking at like, and then is Microsoft gonna compete in this? Absolutely. They have compiling. They already do. And so it's like, you're basically like, I don't know, second, third, fourth in this market. there are four very serious players like this should be textbook rubber stamp good good to go do the deal no problem there's also a there's also a very long list of founder-led companies that were that are made that were maybe less hyped than windsurf but have incredibly talented teams there's like poolside there's there was that one that nat freeman and daniel gross did that was magic yeah there was magic.dev they were found apparently they were training their own foundation model for a while and that was kind of like you know very capex intensive and and and maybe slowed down some things on the product side but still like clearly it's competitive market everyone's working on it they're also we're missing out like there's probably a ton of yc teams they're working there was actually one yc team that got in trouble for forking uh like cursor too hard or something a little too hard yeah they crossed some line there um i think they did fine and i think that they wound up like cleaning it up but people were upset about like uh when you fork something you you have to abide by the MIT license or whatever the underlying license is.

29:46And so you can't just steal open source code and not abide by the open source rules. And then I said three new facts might come out, which they did. And the FTC thing was interesting because there was a little bit of pushback on that. People were saying like, oh, Lena Khan ate my lunch. Lena Khan's responsible for everything. And I wasn't necessarily saying Lena Khan was 100 % responsible for how this was structured or like how this played out. But she did kind of like warp the road a little bit that made it a little bit wonky to drive on. Yeah, basically we made hardcore capitalism illegal. So we nerfed capitalism.

30:27And then capitalism ended up coming in and saving the day. Yes, yeah, yes. With Scott Wu at the helm. Yeah, seriously, seriously. So the solution to anti-capitalism is more capitalism. This is the Brad Gerstner point. Yeah, totally. And so I still think that there is a way that even with the weird new FTC antitrust regime, Google and the WindSurf founding team could have probably been a little bit more aggressive, taken a little bit more FTC risk and avoided this whole PR dust up. But that would have been more risk for Google. And I think that the way they did this here where they - I mean, it's a great outcome for Google.

31:08It's like, we didn't buy the company. Look, they bought the company. Exactly. So it really is a great outcome for Google, even though I'm sure that their comp steam was up all weekend calling people. I have to imagine that this was like a war room for them. It was like serving, you know, it was the best possible story that the New York Times could have ever asked for. Oh, totally. It was like big tech buys hot company that was competing, you know, not necessarily like Like the whole point of Lena Khan's thing was that, you know, big tech is like squashing competition by by, you know, buying these companies early.

31:45And so you had the story that that was served up to them, which was, you know, exciting company in cogen, a lot of traction. Open AI almost buys them. Google says, OK, we're going to buy them. That's Google. Google and Open AI are arguably, you know, the two competitors that actually like matter in search right now. And so it was just the perfect story. And then I think Scott over at Andreessen had a good post that I – let me pull up here for a second. He was basically saying, there is an irony that Lena Khan's activism has resulted in deals that are far worse for everyone except the people she was targeting.

32:24Wait, who tweeted that? Sorry, Martin Casado. Oh, yeah, yeah, yeah. From Andreessen, yeah. And, yeah, it's like the people with the lowest – It's crazy. It seemed at the time that the people with the lowest leverage, the employees that had joined recently, were getting the worst outcome out of a deal that should have benefited everyone. Well, if you're looking for code review for the age of AI, head over to graphite.dev. Graphite helps teams on GitHub ship higher quality software faster. You can get started for free at graphite.dev. So my question is, Google, it feels like PR nightmare, accidental PR nightmare, because they had done, what, character just fine.

33:03It was not that big of a deal for them. And then scale had happened. Well, and it was very clear. That situation was interesting, too, because Google has delved into social in the past, hasn't had the best time. Not beating the ChatGPT script. No, that was intentional, of course. No, but they've messed around in social. You could tell that Google doesn't want to own the AI chatbot. Oh, totally, totally. They just don't want the association with... I mean, there was a rumor that Gnome didn't want to be in that. He kind of was just like, I want to train a great model. I want to train a great model.

33:33I want to do AI research. And then that became the use case. They found product market fit. And then he was like, I don't really like building this type of company. You see what Elon's launching today with the... I won't even say it on the show, but his new launch today basically signals that that is a very important news case. And he's interested in that market. He's interested in that market. Anyway, my question for you is, so feels like a PR nightmare for Google, feels like a couple stressful days, feels like they landed. Great timing over the weekend. And that's my question. Do you think that they were intentional and happy about releasing the news after market close because all of the facts had come out over the weekend?

34:14And it was such a hairy deal that more deals needed to be done even after the story came out and it couldn't be super clean. So you have to do it on late on a Friday. So then Saturday, Sunday, people can talk. Deals can get done. And then announcements can go out Monday. And then it resets the whole news cycle. So you kind of skip the crazy news cycle. I think the world's too online. So I think it helps that it wasn't a weekday. But I mean, to me, this whole thing, you know, from everything that we've kind of triangulated, this could have been avoided by managers taking it upon themselves to basically call each individual person at the company and say, before you have a negative reaction, I need you to be patient.

35:02I know you've been patient through this deal with OpenAI. It's not the deal that we wanted, but we are working to make this a positive outcome for anyone. And don't cry yet. Just don't cry. And it's really hard. And it's particularly hard because if you're in the scale situation, a lot of those people had been there for four years. And with Windsurf, most of those people had been there for less than a year. Almost certainly. And so the strength of those connections socially outside of work is weaker. So there aren't as many, oh yeah, like my boss, like we're already on signal with disappearing messages.

35:43So we just talk back channel all the time. It's like, no, I just met my boss three months ago. The crazy thing too is the argument was the new company has a strong balance sheet. Yeah. And they're going to be able to just do a distribution or pivot or like that was effectively the suggestion. It was intentionally ambiguous. And at the same time, the employees left behind on the ghost ship were already talking with other companies. Other companies were coming to them trying to recruit them. I like how you're coining ghost ship because everyone involved in the deal would prefer you to use the term remain co.

36:17Remain co. But that's not as sticky as ghost ship. So I think ghost ship is going to be the last ghost ship we see. I think it's like a new pattern and we're just going to see this more and more. No, but so then you have this dynamic where these talented people, specifically, I talked to a founder who was talking with a lot of people on the go-to-market team, being like, these are very talented people. They took a company from zero to tens of millions of dollars in ARR and a bunch of enterprise contracts in a very short period of time. I want to scoop them up. And those people were entertaining conversations because it was just totally unclear to them what was going to happen.

36:57So, yeah, I mean, I still, I think some of our friends hold the FTC like 100 % accountable. I'm probably under 100, but maybe over 50. But my key point is that never lose faith if the FTC is giving you trouble. Dylan Field didn't lose faith when he was dealing with a messy situation with the FTC at Figma. And also, you should use Figma. Figma.com. Think bigger. Build faster. Figma helps design and development teams. Build great products together. You can get started for free. That's bigman.com. Anyway, there was another side of the stakeholders that was interesting that this guy, Publius, said in response to your post, which I don't think anyone was talking about at all the entire weekend.

37:45This is cool. And this is something people don't really think about. I think we're in a good spot with these folks now. And I think they'll actually probably be in a better spot now. Much better spot. But let's read through it. So, Publius says, there are more stakeholders here that have not been discussed. There is a whole network of software resellers that invested millions into building partnerships with Windsurf. I was leading the team at one of those partners. We have customers that we have been selling to for years who we vouched for Windsurf too. I am sending out a note to our 300 customers on Monday that we are stopping all partnership activity with Windsurf effective immediately.

38:20I hope he didn't send that because it's, You gotta recall that email. Don't send the email. Cursor has no channel partners and this will cost our firm millions. Oh, interesting. I didn't realize that Windsurf had a channel strategy and Cursor does not. Very interesting. So Windsurf actually has resellers who go and sell it into their partners because they're doing something on, we do software development consultancy. We come in and help your team run more efficiently. We help you pick the right tools. You can imagine like McKinsey, I don't know where this guy works, But like you can imagine a consulting firm coming in and giving advice on what tools to use.

38:56They get a kickback from windsurf. They don't get a kickback from cursor. So he's gonna lose millions of dollars hypothetically. Hopefully not. But my reputation and good name is worth more. With Google taking the best engineers from windsurf our large enterprise clients are screwed. When they purchased windsurf and enterprise licenses, they were also purchasing an ecosystem that they assumed would continue to improve. This is disastrous for any startup tech company with goals of building an enterprise channel. It's interesting. I don't think people have any idea how much this just killed channel sales for any AI company.

39:27So the rest of the AI companies out there who are like, oh, channel sales is really interesting. Basically, if you're a top company in your category growing super quickly, you might turn into a ghost ship. Yeah, yeah. And so if I'm trying to resell that type of stuff, then I have to go to the CEO. They're good, but they're not so good to get these maxed out. They're not getting a trade deal. Yeah, yeah, exactly. You can count on them to not get traded. Yeah, yeah, yeah. You're having dinner with the CEO of some AI company who's talking to you about like, yeah, we have the best software. And you're like, but you don't have any like actually great AI researchers, right?

40:02Like you mostly just have like - We like to partner with companies with - Like medium to skill. With C tier researchers. Yeah, yeah, great product. It works, but not too well because we don't want to lose you to big tech. You want to keep working with them for a long time. And we're going to keep working with you. And so, yeah, there were a bunch of other reactions. shell co-hires let's see I'm not an M &A guy but something feels really broken in tech M &A confidentiality is out of the window deals get done and called off on a whim lack of rigor and discipline on both sides curious to hear what practitioners think people are going back and forth on this but really quickly let's tell you about Vanta automate compliance managed risk improve trust continuously Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation whether you're pursuing your first framework or managing a complex program.

40:49And so Will Manitis was particularly blackpilled over the week, friend of the show. Incredibly blackpilled. But we're so back, Will. You're good. Will Manitis said, the reason that tech has been able to grow so quickly and create so much wealth that it ritualized a set of norms around corporate governance that are very distinct from what the law actually requires. The second someone defects, the whole ship goes down. He's so upset. But basically, he's talking about the a handshake deal protocol is not a legally binding contract. Even term sheets, you get a term sheet from a VC, that's not a legally binding contract.

41:24Like a VC can write you a term sheet, everyone can sign it, and then you can just wake up. Literally says on the sheet. Yeah, it literally says, this is not binding. And then you can just wake up on the wrong side of the bed and be like, actually, I don't wanna do the deal. Or it could be like you found something in due diligence or you met a different competitor, but the game isn't over until the money's in the bank. The experienced entrepreneurs know this, but we run on this, basically, these society, these social constructs and these social contracts that say, hey, if you're the type of VC that constantly rugs on term sheets, on signed term sheets, there will be a bad vibe around you.

42:05I can think of two that are widely known and are still in business, but it becomes very hard to be an effective VC if your brand is you just pull term sheets. Yes, yeah, and some of those folks have been banned from YCDemoDay. Other people have had viral Twitter posts around them every once in a while. Like, they do that to a founder, and then the founder becomes very successful in post-economic, and is like, yeah, I still have a grudge, so I'm gonna tell the truth about X, Y, or Z. And so, the thing is that now, where we are now is, I don't think the whole ship goes down. I don't think this is a true defection.

42:47I don't think this reflects poorly. And I think that the question of like, the big question here was, will this cause more new startup employees to want to just go straight to Google? Let's say that you have the option of working at Google or Big Tech broadly, where you know the paychecks are coming on time. You know the RSUs are liquid and you can just cash out as soon as you get them or whenever their lockup is. And you know your managers, they're gonna be there. and you know, the company's going to be around, blah, blah, blah. And you can somewhat accurately predict what your comp will be in five years.

43:18Exactly. You really work hard. Exactly. And then on the flip side, you have startups, which are in some ways lottery tickets, but also you get to work on game-changing technology with really cool people. You get to move a lot faster. There's a lot less overhead. It's a lot more edifying for certain type of people. You get to work for potentially the next Sundar instead of Sundar. And the economic upside can be 1 ,000x. It can be huge. And the question is, if that deal was broken, if that deal was, okay, yeah, you can go work on the cool thing, but you might wind up penniless and not cashed out like you were promised, that changes the equation and that could pull people away from startups.

43:57But I don't think that's going to happen based on this, because I think the lesson from this is that everyone got taken care of and the social contract still holds, although it was very messy. And I think going forward, every company that's doing a deal like this needs to think, how do I get the scale AI outcome and not the windsurf outcome? Because just two days of pain is not worth it. I think one potential solution to these deals is exactly what we just saw happen, which is big tech company does basically an acquihire of the team that they want. And then you simultaneously sell off the underlying asset immediately and you generate a liquidity event for everybody.

44:41So everybody's happy. It doesn't have to be like life changing. Right. But it has to be something. Right. So that it's. And I mean, the very key thing is that they left enough money on the balance sheet because the money on the balance sheet. And this was this was Hari Raghavan's analysis. He clearly I mean, the guy's he's a good friend. He's he's obsessed with cap table math. I know he was. Yeah, I mean, this was capital J journalism. Yes, thank you. This was investigative journalism. Yeah. And so I mean, his post is so long that I need to just go to the TLDR. But the TLDR is that he says, I spent hours last night breaking down the cap table and deal dynamics from public info.

45:19I realized that the unvested equity is around 80 to 100 million dollars awfully close to the hundred million dollars the founders and board negotiated to leave behind in the bank Why shouldn't management just that was an invested detail? We're leaving enough as though you vested your full. Yes for you Yes, and so and so if you if it like it's it's still a leap of faith because I don't believe that Google and and cognition were in communication at all. And I think if they were, that would be more like antitrust chaos and stuff. But just economically, you know that if you, if you leave a company there with that much money on the balance sheet and that many like, that invested options, somebody is just gonna be like, wait, so I can get that for basically free, and I can make all the employees whole, and I get all the employees, and I don't have to pay really like anything to get that thing.

46:17Like, it's just going to happen immediately. And because it's just like, you've left this, you've left this like, you know, $100 on the floor and someone's going to pick it up. Like the free market will just work. I think the question that I had and that I think a lot of people probably had is what is the governance structure of the ghost ship? Oh, yeah. So Jeff, Jeff. Crazy question. Jeff Wang, who's coming on the show at 1 p.m. Oh, he is? Let's go. Jeff and Scott will both be coming on at 1 p.m. Okay. For 15 minutes. Okay. And can we communicate that to the other guests. Yeah. Yeah. Yeah. And so the question is like, OK, Jeff, you now run a company with hundreds of employees that are angry about what just happened, that that probably like maybe they want to keep building Windsurf, but maybe they want to go and do something else.

47:02And what happens? Like Jeff is basically, I would imagine, like has to make a bunch of calls. Yeah. It's like, do you just keep running the business? Yeah. Is there pressure to keep running the business? Question, Jeff, did you ever feel like, uh, is it Frodo Baggins throwing the ring into the fire? It's like pay out the hundred million dollars in bonuses after all, why shouldn't I keep it? Throw the ring in, throw the ring into the Mount Doom. Yeah. And the question was like, could, could, could the, the new leader, the leadership. Yeah. Like was it ever, was that an option? Could, could the leadership have decided, you know what?

47:37We can run this business super lean. Exactly. We could actually run this business with like 10 people. Yeah. And we're going to run it for a few years and we're going to we're going to use the advantages that we get from our own product to run a super lean team. And then and then you would have employees like effectively burned again. But that didn't happen. I'm very happy about it. Yeah. And the question. Another question is if you're if you're big tech and you're going to do one of these like zombie acquisitions, you got to leave enough for the unvested shares. And if you're founder and you're going to do one of these zombie acquisitions, the ghost ships got to be full of plunder Full of plunder stacked with treasure because then that's right then the rescue divers and go and lift the ghost ship off the Yeah, and if big tech comms are telling you you can't tell anybody that they're getting taken care of have to risk it Tell a little birdie conversations tell a little birdie to go fly around Yeah, yeah people know you you got to be you got to be having like quick calls not saying anything too specific, but saying what you said.

48:39I think you worded it perfectly. Yeah, and it - Just don't cry yet. Poor Varun, right? Because he was getting dragged because he apparently - He apparently people were messaging me like he joined the all hands for like a minute. 10 minutes, yeah. And it just seemed like he was being like ultra, like kind of like a psychopath. Totally. See you guys. Yeah. It was a good run. and it's like go go have fun building is it possible this would not have happened if he had said no i need an hour i need to explain everything would that have killed the deal almost certainly if that killed the deal what's the outcome for the employees probably worse than what they got you think it would 100 have killed the deal almost certainly if i think one of the key deal points in the negotiation with google was we do it via google's comms and legal strategy because Google does not want to get hit with some crazy FTC lawsuit that's going to not just be some multi-billion dollar settlement, but also a huge headache for years and bad press and stuff like that.

49:45So Google says, hey, we want to do this our way. It's going to be awkward, but we're going to take care of everyone. And yes, we will leave enough money on the balance sheet to pay out all the unvested options. But in exchange, you got to do the comms our way, which was rough. You have to create a terrible... You have to be scapegoated by the entire... You get hazed. Yeah, you're going to be hazed for 48 hours. You're going to be hazed. But then you get redeemed. And it's going to blow back on us so incredibly hard. Google didn't look good either that weekend. It was rough. It was rough. Anyway, let me tell you about Linear.

50:18Linear is a purpose-built tool for planning and building products. Meet the system for modern software development, streamline issues, projects, and product roadmaps. Start building at linear.app. And if you are launching a TBPN derivative product, derivative work, get on Linear. It's the tool we use. So what you would do is you'd put all the glasses of tap water that you need to drink, and then you would just check those off at a time. Yeah, every time you tap out. We only have one rule about copying us. It's the derivative works clause in our terms of conditions. And in there, if you create a derivative work of TBPN, you are legally required to drink a glass of tap water on your stream.

50:54Every time you go live. Yes, every time you go live. And so, yeah, again, we want to make it for, yeah, it's about being accessible. We did invent TV. We invented news. But we will open source it. It's an MIT license type of situation, a modified MIT license. Yep. The only modification is that you have to drink tap water. Yep. Anyway. It is a small price to pay. Anyway. Wait, question. What do you think? Why do you think Google did this? Why? Yeah. I mean, like. Oh, yes, yes, yes. That is the real question. We've talked about the role of the VCs. I think, based on what happened, never talk down on first ballot Hall of Famer Neil Mehta.

51:34Never talk down on the future first ballot Hall of Famer. Everyone was saying, oh, Neil Mehta, Green Oaks, they did this sloppy deal, screwing over the employees. Employees are great. Neil Mehta, potentially goaded. I don't know. I agree. I agree. No, it was well played. But the question is, how do you feel as a Google shareholder? Why did Google feel like they needed to do a meta-style trade deal in this category? Yes, it's a good question.

52:07So, Winsurf in my, I don't know everything about all the employees they brought over. They brought over 50 engineers. I don't know if any of those are like insane AI researchers with like crazy citations on like foundational papers. I don't know that it's the same. I don't know that they're trying to build a super intelligence team to really bring their models to the frontier because they already have that. Like Gemini is at the same level of AI research quality as OpenAI Anthropic by most benchmarks, by most people that use them. Like it doesn't feel like they're way behind there. Llama 4 on the other hand was a little bit behind.

52:42And so, and it felt like Llama 4 was specifically behind, not on the product side, but on the research side. Like they just weren't figuring out what works in RL. And so they had to bring over a ton of people to just be like, how do we actually train this next model? Like behemoth couldn't, they couldn't tame the behemoth. Like they gotta get some behemoth tamers in the building. And it seems like that's why they acquired all the different researchers who know, okay, like training on 100K H100 GPUs gives you this, and then you need to use this data, and you need to hold back this data, and you have this reward function and this reinforcement learning technique and you need to do all these different things.

53:20And so you need AI researchers for that. But meta has great product people. So like they're gonna be able to take what they build and then vend it into Instagram and vend it into all sorts of different places and use it to optimize the ads 1 % and make a trillion dollars. Like they're gonna be fine on that side. Google is great at AI research. DeepMind is amazing. They have so many reasons. They invented the transformer. They're not behind on the quality of the foundation model. They are they are behind on product and they are they are behind on like User experience and everyone complains. Oh, they have this amazing VO3 model But like I had to log in seven times to get access to it and then go through an upgrade thing And it was on wrong Google account and then I have to trigger it and then I guess so here's the here's the the Steel man for the short sellers.

54:06No, no, no. Here's what's what's kind of interesting about the way this is developed So at Google's last developer event, they launched Jules, which is an async development agent for CodeGen. It's a Claude Code competitor, an OpenAI Codex competitor? More so as like a Dev and AI competitor. Dev and competitor. And so now you imagine Google has more ambitions around CodeGen. Totally. They've seen Anthropics. Very few businesses actually will work at Google. You need a billion dollars of revenue or you're going to get shut down, most likely. and so code gen is an area that i'm sure they're taking very seriously i haven't heard a lot about jewels since the event i haven't heard about people that are that are using it i'm sure it's i'm sure it's powerful yep but you now have a dynamic where some you have cognition and devon who got not i can't say cloned by google but again like they were the first like serious like enterprise coding agent.

55:03And so and and the Windsurf GTM, you know, sales marketing team versus the former Windsurf founders and top researchers who are now at Google. And so I'm just incredibly excited to watch this play out. Pavel was posting earlier. He said, I hope these guys smoke Google at AI coding. Imagine the chip on your shoulder after this if you're a Windsurf employee so Yeah, everybody's got to be very fired up. Okay, really quickly, I want to track some poly markets around Google. Google forced to sell Chrome. Remember, we were tracking that a while back. There was a question of whether they need to split it up because the FTC, we've been talking about the FTC a lot.

55:49I will pull up this Google forced to sell Chrome. It is down at 1 % now. No one thinks that they're going to have to sell Chrome. And of course, the browser war is heating up completely. And I was checking the, they're not tracking the Sundar Pichai thing. Sundar Pitch AI? Pitch AI. He has been pitching AI very successfully. But the question of competition is like, it's heating up a ton in browsers, and then now it's heating up in this. And like the FTC should totally be sitting back and just watching the gladiatorial games play out and yet like even though I mean look at the look at the vibe coding market right now.

56:40It's competition not thriving. It's insane. It's insane Yeah, no, I completely agree And so like I think I think there's a lot of people that are making the argument that like oh you can't keep blaming Lena Khan She's not even there anymore and it's like she was there for long enough The legacy. To really lay out a new pattern and just instill a bunch of behavior in the big tech companies that results in these crazy deals. Anyway, let me tell you about Numeral, numeralhq.com, sales tax on autopilot, spend less than five minutes per month on sales tax compliance. It's like an AGI for sales tax.

57:14That's right. Should we talk about Duck's new super cluster? Oh yeah, let's go through it. Okay, so there's some new reporting from the times as well around their strategy, which we'll cover next But why don't we start with Zuck hit threads this morning? He hit threads hard with a thread with a thread. It was very cool He had a great visualization. I hope we can pull this up. I'll put it in the tab, but basically There we go This Jarvis send link to bang And linked to men. Good job. So basically, he has this cool visualization of how big the Hyperion Data Center is, and it's just the full size of Manhattan.

57:55And somebody was replying to this being like, he's building the cube. Oh, Sam D 'Amico, he's been on the show a bunch, from Impulse, he's building the cube because there's this old visualization of like, if you put a billion people in one building in Manhattan, it would just be this cube. And so everyone who's extremely pro-building housing is like, let's build a cube, let's build a cube. Anyway, the news is that Mark Zuckerberg is giving more details. He's announcing that the super intelligence team is real. It's been only rumored, reported. He hasn't actually said, hey, we're doing all this.

58:26That was all leaked reporting. He came out and posted on threads, and he posted on Facebook too, saying this is real, and here are the details. He says he's going to invest hundreds of billions of dollars in CapEx, which is what? They're doing like 60 to 80 a year now. And so I guess like it's more just like he's going to continue that for a couple of years. He's not giving specific guidance on where the ramp is. In 2024 EBITDA was$84, basically$85 billion. Oh, CapEx or EBITDA? That was EBITDA. Okay. Yeah. Look up the CapEx. CapEx was between$38 and$37 billion. Okay. And then some of that goes towards like Reels and then some of that's used for AI.

59:05And then the AI stuff kind of slips over into Reels and just other data center uses. But in general, you know, he's going all in. He's continuing to invest billions. What's interesting is that he claims that Meta will be the first lab to finish a one gigawatt supercluster. So he's basically racing against Stargate and thinks that he can bring Meta's next data center online before Stargate. And he's calling his one gigawatt supercluster Prometheus, which is a hilarious name. The guy loves the Roman Empire, apparently loves Greek mythology, too. but Prometheus is a very very edgy name to pick in my opinion because Prometheus is the titan who stole the fire from the gods.

59:52I get that it's like the seed of the new, it's like the seed of humanity, it's the seed of this new thing. It's a great name in many ways, but also it's like if God's real, he might not like that. And that could be a problem. It could be bad. but uh you know zuck seems to like like uh uh icarusian names yeah because um orion he likes flying i mean he objectively likes flying close to the sun he does that's kind of where he feels at home he does the warmth of the sun the warmth of the sun and you know the the hot take on icarus is that you know everyone talks about oh like you know don't fly too close to the sun you don't want to be icarus but you know who you know the person who was like telling icarus to do that No.

1:00:38Surprise, surprise. No one remembers his name. His name was Daedalus. And Daedalus was like, oh, don't fly close to the sun. Who do we remember? We remember Icarus. That's right. And so maybe, hot take, it's better to be Icarus than Daedalus if you want history to remember your name. Even if you fly too close to the sun. Even if you have a great fall, you will be remembered. That's right. So maybe it's a, you know, Icarus gets rich, Daedalus sounds smart situation.

1:01:06That's right. I think that might be the, what's going on. New mental model. Anyway, I mean, I was also on one of the first shows we ever did, I was talking about how the name of the new VR headset, Orion is kind of odd because Orion is like this hunter, but was notoriously like over his skis with the hunting and was killing all the animals and like was smited by the gods and, you know, and basically like it was, it was like a textbook a case of hubris and over-aggression. The moral of the story of Orion, who is the hunter in the stars, the reason he's in the stars is because of hubris. And so it's very funny to name your product like a tale of hubris.

1:01:44Maybe it's a reminder. I seriously want to talk to Zuck about this because I'm very interested, how many layers deep does he go? Because the guy clearly studies this stuff. He's a student of the Roman Empire. More than me, I just Google it. when a new name comes out and like look at the summary. I imagine that he reads it much deeper and I imagine that he gets the joke and is doing this almost ironically, which I think is cool. Anyway, the other news is that they're aiming to scale up Hyperion. So Prometheus will come online in 2026. So that's probably one year away, maybe a little bit more than one year if it's toward the end of 2026.

1:02:25And then they're building Hyperion, which will be able to scale up to five gigawatts over several years. And that feels like simultaneously like crazy, insane, ambitious, amazing. I love it. I'm super excited for the capability coming out of that. And also like the biggest glass of cold water poured on the AI 2027 folks like of all time. Because like I feel like everyone in the AI like is going to be self-reinforcing and just ripping is like, well yeah like the data center capacity will 10x every year for the next 20 years and it's like and and zucks like we're gonna 5x over the next three years i don't know how many several years is i imagine like three or four something but it's just funny to be like like it's it's incredibly ambitious it's the biggest data center ever i believe it's like this massive project it's so cool it's amazing and it still doesn't match the rhetoric of like the really crazy ai people at all.

1:03:17Totally. But, you know, it's fun. Anyway, that's the story of Zuck. Any other takeaways from the Zuck supercluster? Congrats. We should ring the gong. We should ring the gong for Zuck. Let's hit the gong.

1:03:32So there was some new reporting from Eli Tan over at the New York Times around Meta's new superintelligence lab is discussing major AI strategy changes. And so there is a picture. What does that mean? Like going closed source? Yeah, so I'll read through it. So Meta's newly formed superintelligence lab has discussed making a series of changes to the company's artificial intelligence strategy and what would amount to a major shakeup. Last week, a small group of top members of the lab, including Alexander Wang, Meta's new chief AI officer, discussed abandoning the company's most powerful open source AI model called Behemoth in favor of developing a closed model to people with knowledge of the matter.

1:04:11said for years meta has chosen to open source its ai models which means it makes the i'm gonna i'm not gonna read this uh any move towards a closed ai model what is uh what is software can you they were about to say they they the new york times wrote uh what they're about to make the computer code public what what is what is a computer oh what is code can we can we can we explain this for our audience yeah we should we should really break it down um anyway so eli writes any move towards a closed ai model would be a philosophical change at meta as much as a technical one uh meta has won over developers for open sourcing its ai models and one of its top ai executives jan lacun has said that the platform that will win will be the open one so um so yeah i think this is obviously still uh still very much in flux build mecca churchill mecca churchill if he builds mecca Churchill, instant win.

1:05:08Instant win. Instant win over Elon. Totally. They're clearly battling it out. They're trying to fight in MMA wars, and they never got that fight down. Now they're fighting it out in AI. Build Mecca Churchill. It'll be such a good meme. It'll be great. Something there. Whatever you build, Zuck, you got to sell it to people. You got to use Adio. Customer relationship magic. Adio is the AI native CRM that builds, scales, and grows your company to the next level. You can get started for free. Tailwinds of the last decade are now headwinds, says Bucco Capital Bloke. He says, higher rates, AI labor compression and available role salaries, business model maturity, managing margins versus growth, crowded knife fights versus greenfield, less liquidity because companies stay private longer slash forever, worse M &A environment due to regulation, PBD, technology enabled outsourcing.

1:05:59So little bit bearish from the Bucco Capital Bloke. Sheel says feels like a good time for everyone to learn about single trigger versus double trigger acceleration of shares So single trigger is if there is an acquisition all of your shares vest I don't know if this would the the question is like how do you find trigger because What's on the acquisitions? You're on the go ship who knows if you trigger the trigger, but double trigger means you have to be Acquired change of control and then fired and so double trigger is kind of standard. It's very hard to negotiate that if you're just the 300 through the 100 employee.

1:06:36Almost never happens. The people who negotiate are the CFOs who come in. CFO comes in, doesn't matter if CFO is employee number 700 or number three, like CFO is going to get single trigger. Always. Always. I don't know. Maybe not always, but like the people who know, know, but you should know about it. You should know about single trigger and double trigger. The other interesting thing that I was digging into that we didn't really ever get to the point of understanding. For a long time, people were saying, hey, you can debate all of the stuff about WindSurf, but the employees on the ghost ship, the ones who are in the remain code, the ones who were left behind, they would have vetoed this deal if they could have.

1:07:14I think if you go to them today and say, hey, you're working at Cognition, you're using Ramp now, they're going to be like, yeah, I'm happy. And it's not even like they landed at a boring company. I was saying they could land at some old line company that just picks them up. Like, what was that company that Humane landed at HP or they're doing smart printers now? That's not exactly like an upgrade in terms of status in Silicon Valley, right? It's not exactly a air horn moment. Exactly. You gotta put these on so you can experience the audio. But going to Cognition seems like a great upgrade in terms of just being at another cool company, you're still on the startup rollercoaster, you're on the ride, you have a lot of a lot of unbounded upside.

1:08:00It seems exciting. I mean, I don't wanna take too strong of a position here, but Scott and the team at Cognition are some of the best. And if you just lost all your engineering talent and you're confident in your own abilities and you wanna work with world-class engineering talent, really great, really great place to end up. Yep. Really quickly, let me tell you about Fin.ai, the number one AI agent for customer service, number one in performance benchmarks, number one in competitive bake-offs, number one ranking on G2, go to fin.ai. Your customers will thank you. But the question that I was running through and I was getting to was single trigger, double trigger, that does matter.

1:08:44That is important in acquisitions. But another thing that potentially could be relevant in a future acquisition, if we get sort of like, you know, the windsurf situation, one of these zombie aqua hires with the bad ending where even years later you're like, I would have loved to have vetoed that. Like I really didn't, I never, I wasn't happy with the ending at all and I haven't changed my position for years. Not just, it wasn't just a few days of chaos. It was like forever. I was like, ah, I wish that hadn't happened. I picked the wrong company. The question is, if you exercise your stock options, would you have a different outcome?

1:09:17And so essentially when you get, when you get a job offer from a startup, they give you a stock option contract that allows you to exercise and pay to buy stock, actual stock in the company, for a lower price. And the question is, your legal rights as an option holder are different than as a stock holder. So an unexercised stock option makes you technically a contract creditor, not a stock holder. And so you do not have the bundle of statutory statutory and fiduciary law rights that attach to stockholders. So if there was going to be a class action for the ghost ship employees, and they really did want to block it, or they wanted to sue Google, or they wanted to sue the founders, or something like that, they would say, this is a breach of fiduciary duty, and I'm a shareholder.

1:10:04You had a duty to me. But they didn't in this case, because if they hadn't exercised. I'm sure some of those employees had early exercise. It's a thing, but it's just an interesting piece of the puzzle that we fortunately didn't even have to go down this road, but I do think that people might want to re-have this conversation because the ChatGBT summary says, to preserve more robust remedies that stock law makes available, inspection rights, fiduciary duty claims, derivative suits, appraisal, exercise first, complain later, exercise first, complain later. And so you can do a partial exercise, But if you don't own a single share of the company, then you don't have the right to actually sue.

1:10:46Or you might have less of a claim to sue in a scenario like this. So it's a potentially rough scenario. Should we go through Elon? Let's switch gears. Elon is leading a massive$2 billion investment from SpaceX into his other company, XAI. Yes. We've talked about this. Nothing better than one hand washing the other. That's right. This is what we like to see. Yep. It's so efficient. It really is. How else do you wash your hands if not with one and the other? Yeah, try washing. It's impossible. Don't. Yeah, don't try to wash your hands with just one hand. Elon is taking$2 billion from the SpaceX balance sheet, which is, what,$400 billion now?

1:11:28And they're raising billions pretty regularly and doing tenders and stuff. So SpaceX is I think the largest the kind of neck and neck with open AI in terms of private market Companies it's a 20 year old company very stable business Starlink's print throwing off cash There's like so much that's that is mature about that business obviously Still got to get Starship to work still got to get to Mars still got to go to the moon regularly But you know exciting road ahead, but still very solid business And he's taking 2 billion off the balance sheet of SpaceX and putting it into XAI and so the the map of Elon companies is just getting crazy.

1:12:06Yeah, it's a Koretsu. It's a Koretsu. Everything owns everything else. So she'll - The question that when I saw this news come out, Yeah, what'd you say? My first reaction was that Mecca is gonna love Mars. He's gonna love it up there. It's gonna be the first, potentially the first AI to get to Mars. My second reaction was, I actually think that if you add up the valuations of every Elon company. Tesla, taken at number seven on the Mag-7. Yep. 900-ish billion-dollar company. SpaceX, 400-ish billion-dollar company. XAI, which is maybe getting valued at 200. It's at 200, right? Yeah. Something around 200 now.

1:12:45It's great. And then Neuralink, which is what, at like 12? Somewhere between like seven. Yeah. Somewhere around, roughly around like double. Almost a$10 billion company. Might as well be. So somewhere in that range. Yes. It's actually interesting to think of if you rolled all these assets up together. Yeah. Do you think it would trade at a premium to all of their standalone valuations? I don't know enough about in the public markets or private markets? Yeah, in the public markets. I don't know. I don't know enough about like, because I've heard a lot of public markets investors say stuff like, the market just really wants a pure play in this.

1:13:21Yeah, but what's more pure play than Elon Inc.? Just Elon Inc. Because a lot of these companies still, even at various points, end up being founder bets. Totally. Like Tesla is still a founder bet. Totally. Will Elon figure out autonomous vehicles? And I do think that there's this underrated narrative of like - And XAI too, at$200 billion. It's like, I don't think investors are underwriting the new AI companion today. Or certainly like the profit stream or even revenue stream from the API business. Yeah. No way. Yeah, they announced a$200 million government contract today. They were underwriting Elon being able to get deals like that done.

1:14:03And even remember, Ben Thompson, we asked him about this. And he basically said, I can't do analysis on Elon companies because they are detached from traditional business reality. And so my question is, if you roll all these things up, is this a$3 trillion company? I don't know. I don't know. I mean, the interesting thing is like, it does give you as a retail investor, like you can pull so many different narratives. So like right now, just within Tesla stock, if you're a Tesla investor, you can look at what's happening with Tesla deliveries because of the political backlash, or what's happening with the tariff war, the EV tax credit, and you can be like, that's bearish.

1:14:52but then you can simultaneously tell yourself a story about, well, RoboTaxi is going to be so big that it'll make up for everything. And then if that doesn't sit with you, you can be like, Optimus is going to be so big that it justifies a multi-trillion dollar valuation. So I'm still a buyer, right? Because you have these call options. And really it's all about the rare earths on Mars. Yeah. So imagine that. So right now with Tesla, I see like four stories and they're kind of like too bearish, too bullish potentially. like the bearish ones are EV tax credit and not being able to sell as many vehicles.

1:15:26The bullish ones are like, maybe he figures out RoboTaxi, maybe he figures out Optimus, right? And that's why you might choose to buy or sell Tesla. Or Neuralink chip in your brain with the XAI companion. When you put all of them together, it's like on any given day, it's so much easier not to be a panicin', right? You don't need to be panicking because you're like, well, yeah, like Neuralink got pushed back by the FDA, today, but SpaceX landed Starship. So like I'm buying. Or like, oh the Starship blew up, but Neuralink made a monkey play Counter-Strike. So like I'm going long, right? There's like always some good news to latch onto when you see the Elon portfolio as a whole.

1:16:06But there's this fascinating chart here. I don't know if we can pull this up, but it's the links between all the different Elon companies. So SpaceX buys five million annually in vehicle parts, energy systems, and the Model X Astrovan. So that's money flowing from SpaceX to Tesla. Stainless steel alloy technology, Starship materials for Cybertruck go from SpaceX to Tesla. And then the Boring Company purchased$300 ,000 annually in energy systems and uses the Model 3 for the Las Vegas loop. And so they're buying from Tesla. Starlink has a T-Mobile partnership connectivity for vehicle internet and superchargers in Teslas.

1:16:49And then you have all these other things where Neuralink might link into XAI. XAI did the all stock acquisition of X Corp. And then there's a study for robotic arm control and future mind controlled limbs that links Neuralink to Optimus. SolarCity was acquired by Tesla. FSD is a separate product. So all these companies are overlapping. And the interesting question is like, is like, should they just be that correct? Like, and what is stopping that? Should they all just be under one Musk Holdings, Musk Inc? And if it was, I think it's that, that would actually be extremely uncomfortable in the public markets, because there would be all these crazy shareholder lawsuits.

1:17:34Where, so like, you know, if you were, if you were a shareholder in, in like Musk Inc. and Musk Inc. is public and owns Neuralink. You can... There's also this beautiful cottage industry of people that are effectively resellers of Elon shares that own a lot of these companies and wouldn't necessarily want this to happen because that kind of stops the gravy train. Gravy train. I had somebody message me yesterday and said, it's funny how investing in Elon Co's is not too dissimilar from buying watches from ADs. you know because like if you have a great relationship with your ad in this case which is elon you can get direct access to the companies yeah but if you don't you're on the secondary market just buying up spv you're going to get bezel.com but don't worry because your bezel concierge is available now to source you any watch on the planet seriously any watch great transition stop worrying about your ad's head over to get bezel.com uh anyway uh if you're looking to buy tesla shares the one elon musk company in the public markets head over to public.com investing for those who take it seriously.

1:18:39They got multi-asset investing, industry-leading yields. They're trusted by millions. Anyway, in other news, is there anything else we should talk about with Elon ripping 2 billion into XAI? I think we're good there. Let's move on to Casey Neistat. Some personnel news, baby. He's joining Mod Retro as chief storyteller. That's not a real title, and it's not a real job, but I'm excited to be a part of the team. I love the candor. Candor? I don't know. I mispronounced that. But he put out an 11-minute video talking all, breaking down the mod retro thesis all about how planned obsolescence is destroying great consumer electronics devices.

1:19:16You buy something and it's in the trash in a couple years. It's collecting dust. And he goes through some of the products that he's had when he was young that still work as intended. They didn't need some crazy software update. It was an IoT toaster. It was, you know, the things that he loves, the Walkman, the original Game Boy. And he breaks down how Palmer's thinking about building and the Mod Retro team is thinking about building a quote unquote like Game Boy that's different from the other companies that are also creating similar like emulator products. He's like, I got this$50 one and it works.

1:19:49Like you can actually play it. Now you can't play it at a high level. Like the frame rate is not, like the quality of the product is not at a level where it's like truly competitive, but also it's kind of designed just like as like, you know, T-Mu level junk basically. And it's just like, how can we just like slop it up for a little bit? Whereas, uh, just getting to the quality level of the original game boy color. I have a game boy color from my childhood. And a while back I just put in, it had been a two decades. I just put in new batteries and just turned it on and just immediately booted up and worked.

1:20:25And that just doesn't happen anymore with, with modern electronics. because after Tyler updated to glass, we made, we made, uh, we made, uh, how is it? Give us a thumbs up. We're missing a microphone for Tyler today. So just give us the thumbs up. It's still good. We got a thumbs up. We got a thumbs up. Okay. We will be back on the stream. Uh, shortly. We will, we will buy another camera. We will buy another camera. Um, and, uh, and we will also buy another mattress from eight sleep mattress cover. Go to eight sleep.com, uh, get a pod five ultra. They have a five-year warranty 30 net risk-free trial free returns free shipping Shane Copeland over at poly market says one day there may be more AI's than humans creating pricing trading millions of poly markets on everything A unique benefit of on-chain prediction markets is the ability for AI agents to plug in multiple groups quietly print on poly market With a gentic workflows as AI ushers in super intelligence poly market ushers in collective intelligence.

1:21:20It's happening I'm using the best AI models. Oh interesting. Didi is doing something over there I asked it to use modern portfolio theory, bet sizing, make calculated bet. Yeah. Very interesting to see the interaction of AI and like Web3 or like, you know, just crypto generally, crypto powered protocols. Because it's like buzzword vomit. This is one that actually makes sense. There was an era of basically meme coins that were just like, I'm not a normal meme coin. I'm an AI meme coin. But this is actually bringing them together in an interesting way. Josh Kushner, friend of the show, had an absolute banger.

1:21:57He said the goal of life is to be excited to go to work and excited to go home. I love it. And I couldn't agree more. That's fantastic. Put that on a billboard, Josh. Go to adquick.com. Out-of-home advertising. Make it easier and measurable. Say goodbye to the headaches of out-of-home advertising. Only Adquick combines technology, out-of-home expertise, and data to enable efficient, seamless ad buying across the globe. Josh, I want to see that. you know every VC fund has some you know occasionally trite catchphrase saying on their homepage this is actually a great message you should take out a billboard in New York City thrive capital or thrive holdings or thrive our goal for life you want to be excited to go to work and excited to go home it's beautiful it's beautiful this is this is um I think it should be on the billboard yeah this is oh we just made a transition this is sustainable pro natalism in tech.

1:22:45It is. It is. Being excited to go to work and also excited to go home, be with family. It is. Should we do Mark Andreessen talking about O3 Pro? This is fun. So one of our buddies got one-shotted by this. Yes. So Matt Schumer said, ask O3 Pro based on everything you know about me, reason and predict what the next 50 years of my life will look like. And Mark said, do not under any circumstances do this. I would have told Mark. He's like, you will take your fund public, you will run a massive firm, but it will be a ton of headaches. It'll be like, you know that little knee pain you have? Well, you're going to have to probably get surgery eventually.

1:23:22And, you know, I think the issue is like ChatGPT knows an incredible amount about the things that you're working through in life, depending on how you use it, but the things that you're working through in life. I still think it knows. It does know a lot. certainly more than many other AI, many other software systems that I use. Like it probably even knows more about me than Gmail. But it's still only getting a slice of the picture. And I think that, I need to do this because I imagine it will be like, you will continue to succeed as a train conductor. Because months ago, I was trying to prompt engineer it into giving me stronger, more in depth data about trains.

1:24:07And so I was like, I am an expert in trains. I own many trains. Tell me all the different brands of trains and the prices. Don't dumb it down for me. I am a train expert. And then I noticed that once they rolled out ChatGPT memory, it kept being like, you know, as someone who knows everything. Yeah, train expert. I was like, no, I was just prompt engineering. I'm sorry, ChatGPT. You do this, you do this, and it'll be like, yeah, and yes, John, you'll finally get that height reduction surgery. I know you're always complaining about people saying, oh, I didn't know you were so tall. I didn't know you were so tall.

1:24:40The funny thing about that is that that's just something that I would never go to ChatGPT with, right? Like discussion over whether or not being 6 '8 is like good or bad or like, I just wouldn't have that conversation with ChatGPT. So I don't know. I should run this prompt. I think everyone should run this prompt. It's kind of interesting just to see like the state of AI, right? And the state of these models. Like how clear is it? But I actually quote tweeted this and said, the line from Terminator, No Fate But What We Make, which I know you haven't seen. God, Terminator 2, you gotta see this movie.

1:25:11James Cameron, come on. It's one of the best ever. Someday. Someday. But in that, the whole theme of Terminator is the idea that they invent killer AI, then they invent time travel, they go back in time, and they're trying to prevent the AI from taking over in the second run-through. And there's this debate about fate, and the refrain of the main character is no fate but what we make. No fate but what we make. Like we are, we are, we have power over our future and I believe that. I believe that to be true. And so I think no matter what 03 tells you, go do what you want. Carve your own path. Make your own kind of music.

1:25:51So should we pull up this video of... Yes. Palmer Lucky on the Impulsive podcast. I absolutely love this. This is from Kyle Harrison. And I'll be right back. but we should play this yeah i will try and pull it up um so kyle harrison is i'm putting this in the tab let's see um let's see so uh kyle harrison was clipping the impulsive podcast with palmer lucky uh talking about kyle says a strong aficionado of conspiracy theories myself palmer lucky has given a perfect direct answer to anyone who believes the moon landings were faked and I thought this was very, very fun because as it's become more open to just talk about conspiracy theories generally, there's been a weird meme where people have gone from like, I believe in one conspiracy theory to I believe in all the conspiracy theories.

1:26:47And if you believe in all of them, you're not really thinking critically, you're not actually thinking independently. And independent thinking is what's the most important. So how are we doing on the video? Can we pull that video up? I would love to watch this and react to Palmer Luckey on the impulsive podcast full screen if we can be great Let's see it is loading But he gives a direct answer to it's a very funny action This is a quote tweet of Mike saying topic at lunch today What is one what is the one conspiracy theory that you have the most conviction in being true? Moon landing being fake was the consensus of the group.

1:27:26Mike, who you hanging out with? Canvas outdoors. You got some wild men in there. It's crazy. I like the conspiracy theory that John Wilkes Booth was a British agent and killed Lincoln. This is a very interesting one. Have you guys heard this? No, you've never heard this conspiracy theory? Yeah, there's a conspiracy theory. Like everyone knows about the JFK conspiracy. You gotta go deep to get into Lincoln assassination conspiracy theories. But there's all there's very little information about this. I don't know if we'll ever get to the bottom of the there was no reddit There was no no fortune at the time but But if you look at like some of the incentives at play at the time like it's it's completely possible that Like someone was pushing John Wilkes booth to do this and potentially it wasn't this reaction to the war or something I don't know.

1:28:13It's just an interesting theory that like I don't think many people have gone down Anyway, do we have a chance to pit pull this up? Yes? now? It's not working. Okay, we'll skip it. We'll skip it. Let's move over to... Just to give people kind of the takeaway, Palmer was basically, Logan said, I don't believe the moon landing was real. Palmer says, the reason that I think it's real is the astronauts left these effectively reflectors on the surface of the moon and you can build your own laser system to beam them up, wait for the light to travel and then come back to you. And it will not bounce, like the laser won't bounce back if you just shoot it at any part of the random moon you have to hit the mirror and they put a mirror up there so that you could do this the real question the real conspiracy theories the real real conspiracy theories ask how deep does this go who put the mirror yeah maybe it was aliens yeah because it could have been aliens and or it could have been a rover you know or a rover like like a non-human like a non-human landing oh rover i've never heard this term like an alien rover no like the mars rover oh oh okay so humans never went but nasa still put the mirror there yeah oh that's funny that's a wild one but the real like the real we can't get humans there but we can get a mirror there so let's do that and let's so it's like the moon landing was like 90 or let's just land a mirror on the moon that's hilarious no no but the um that's amazing but the but but the real the real theory that palmer very clearly did not deny is that the moon, he didn't say the moon wasn't made of cheese.

1:29:46Cheese, I knew you were going to go to cheese. Yeah, well, hopefully we'll have Palmer on the show soon, be able to press him on the moon landing further, get to the bottom of it, see how deep the rabbit hole really goes. But we have our first guest coming in the stream. Welcome to the stream. Jeff, how are you doing? Hey, guys. Great to be back. Thanks for having me. It's great to have you. For some reason, I'm missing it. Let me see. I think I lost it. John's not getting audio. Oh, are we going? Are we going? I'm not getting anything right now. No. Jeff, I got you loud and clear. All right. How are you doing?

1:30:21You had a busy, busy... We haven't put up a traded graphic for you and the team yet. But... And I'm almost surprised, but... I really should publish an address, you know? I think they keep sending to the wrong spot, so that's okay. Yeah, what's going on? What's going on? Give us the update since the last time you've been on the show. I was checking it and three months ago we chatted and actually the question of the day was like, what's going on with Zuck? What's going on with Llama 4? Where is this going? And I'm not sure if Zuck is a follower of the show, but I did go back and I said I wouldn't bet against Zuck at $100 billion of free cash flow per year.

1:31:00And I think that's panning out to be pretty true. Yeah, that was a great prediction. How did you react? Did you catch the news this morning that first hit threads and then it was being shared over on X as well around the new data centers. Listen, I mean, you know, it's hard to ignore a giant blue box on top of Manhattan, you know, it's like a pretty freaking epic, you know, the technology pros love to see it. It's a good graphic, right? It is. Yeah. Very relatable. I think, yeah, that was great visualization. I guess the other question is, yeah, just like what was your reaction to the windsurf news?

1:31:36We were chopping up on it. did you go through the emotional roller coaster? Did you never lose faith? Yeah. I'm super excited to see what Scott has to share here in a few minutes. Yeah. I mean, you know, obviously all kinds of weird distortions in the market from, you know, kind of former FTC policy, obviously hope that gets like cleared up quickly. I think it's a big get for cognition. I think it makes a ton of sense. They kind of needed like a horse in that race. And while yes, the gentic coding is part of the long-term play here, you can't go straight to streaming. You kind of want to start with the DVDs.

1:32:14And so with Cognition picking up WindSurf, I think they're kind of buying that DVD business and can allow them to really leapfrog to the age and stuff in the future. So it makes a ton of sense. Excited to see what they build. Okay. Where we left it as the potential risk of these zombie, the go ship aqua hire situations is that if a deal happens and we get kind of the bad ending where there's 80 % of the workforce, 90 % of the workforce, couple hundred startup employees who've been working hard for maybe a year and they don't get a good outcome and they're not happy about it, it could have a chilling effect on startup hiring and those folks could wind up just saying, hey, I'd rather just a stable bet in big tech as opposed to a lottery ticket that even if the numbers hit, I might not be able to cash it in.

1:33:09And so my question for you, you have to you compete with hiring people from Meta and Google. The question I have is do some of these later stage or even big tech companies themselves start using that as a recruiting tactic to be like, look, it's very possible that this company gets acquired in the next year and it's unclear you know i mean they already do like these rsu's are liquid like they'll just show up in your account you can just cash them in but uh but what is your take do you think it makes it harder for you to pull people over from big tech into the startup world i think you know the true believers in startups you know are oftentimes you know yes they're buying a lottery ticket they sort of understand that but ultimately you know the The analogy I think of is ships in harbor are safe, but that's not what ships are made for.

1:33:59And I think the best early stage founders and hires just can't, they have to live a certain way. They kind of have to hit the high seas and see what they're made of. That being said, I think obviously as startups start to scale and they're hiring the 20th person, the 50th person, the 100th person, the 400th person, that math really starts to make a lot of a difference. And yeah, absolutely. I totally believe that the recruiters at the big tech companies are already weaponizing this to bring people in the door. Yeah. What about the... I want to know more about how you're seeing the hyperscalers pick different parts of the stack to plug in as they build out the AWS dashboard.

1:34:47because it feels like with, like I wouldn't have necessarily expected like IDEs to be one of the places where potentially like AWS needs a play. They have Microsoft Azure has Copilot. Now Google, what was the one that they launched that was like. Jules. Jules but now they also have the windsurf team or some of them and like they might launch something that looks like you know, like a piece of software that's not at the api level above the api level um what what other categories of like ai tooling wrappers that type of stuff do you think big tech is looking at or what do you think they will like build internally like what i feel like you have some experience here exactly where the value capture ends up landing is a big open question everybody's nervous um you know the sas companies in the middle are nervous i think also the model labs are also pretty nervous about this you know Nobody at this point wants to have any two principles of a stance.

1:35:50They'd rather have an egg in every basket and however it hatches, they'll come out on top. I think that obviously, yes, coding has emerged. It's one of the largest use cases of AI today and it makes a lot of sense. It's a highly deterministic, highly controlled environment. It makes sense that people who are using these tools at the edge also are the ones applying them to more software. And so it's a great use case for AI. Retrospective sort of obvious, I think that like it was going to be a really big deal. You know, where the value capture really shakes out of the long term is anyone's to say, but I think like, you know, you can, in some sense, you'll never regret owning the top of the funnel and having a direct relationship with an end user and being in the default in a given category.

1:36:35Like that's Lindy. That goes back, you know, a millennia, right? You want to be the default, you want to control the direct relationship with the end buyer and you want to own the top of the funnel. And so in that way, like, you know, you may be pretty bullish about your models, but does that mean you shouldn't have an IDE play? Probably not. You probably still want an IDE play because, you know, you're not going to, you're not going to bet the farm on the models of winning the value capture at the end of the day. So yeah. How, how bright is the line between engineer, AI engineer and AI researcher right because it feels like we've, the original narrative around a lot of the trade deals was like, AI researchers can get a$500 million training run unstuck and that can immediately unlock billions of dollars of value, save you tons of money on inference, like the math just works out so clearly.

1:37:34I feel like we've always had this divide between, I mean to some degree we've had a divide between like DevOps and product engineering, but the bigger, brighter lines have always been between like engineering and sales, or engineering and operations. But is there a new dividing line between who's an AI researcher versus who's an AI engineer? And are companies gaming that yet? I always see the member of technical staff and I don't really know what that means. I assume if you work at OpenAI you're smart and can do a lot of stuff. but like how how niche is the skill set and how much of a dividing line is that i think the skill set is still quite different um you know if you're working at a large lab on a research team you really are concerned about primarily training whether pre mid or post training um you know you're primarily looking at loss curves you're primarily thinking about you know what benchmarks you're going to be exceeding at you're thinking about what data sources you can capture to continue to train and fine tune on you're experimenting with new approaches to reinforcement learning or other to like try to, you know, sort of geek out incremental gains and beat out your competitors.

1:38:40If you're an AI engineer, you're really thinking about like, how do I apply GPT-4 to legal? And it's really kind of a different shape of both like skills and also foci and obsession. So you know, it's not to say that like in the limit, like those, these things won't sort of converge or won't merge to some degree, but like in today, there's just a pretty bright line between the two. Yeah, what about the, I guess the question is like, DeepMind seems very different from the Lama organization in the sense that like the Gemini models are truly frontier. but the problem with Google's AI strategy feels like it's on the product side where not that many people are downloading the Gemini app.

1:39:27A lot of people are, it's like millions and billions and hundreds of millions of people. But like market share on chat apps and like who has it in their home row? Like ChatGPT is so successful, kids just call it chat and Gemini is not really at that level yet. And so - Jemmy. Jemmy, yeah. The question is like, the problem that Google's trying to solve feels like a different problem from the problem that Facebook is trying to solve. And the question is, can you acquire talent that actually solves that problem? Or is there some sort of underlying structural problem of how big Google is that is actually slowing down product development?

1:40:05My fear is that you get some great product engineers in, but then you're still hamstrung by Google's scale, Google's HR department, their legal department, how they think about, oh, well, we can't launch this unless it's internationalized on day one because we're Google. And so all of a sudden you have these great people who've been able to go zero to one on a product, get it really viral and create a product that people love, but they can't do that within the confines of Google. So what do you think about that? Yeah, I mean, the potentially more specific question is are you betting on google plus windsurf or or cognition plus windsurf if they're going after the same you know developer sort of engagement right if if these if these you know if the products effectively converge yeah yeah i mean like conway's law the idea that you ship your org chart remains quite stable and true and uh you can kind of take that even one step back which is like you ship your culture as an organization.

1:41:09Obviously, the org chart is one manifestation of your culture. I think that if Google leadership does not give this new Windsurf or half Windsurf team, like a really long leash and a ton of autonomy, there's going to be some level of like a immuno response and they're going to throw them back up again. I think you really have to give those folks a long leash and that has to come from the top. It has to be either founder or C-suite level where they're getting the green flag to like really run hard and ignore stuff like internationalization. And, you know, maybe you still have to get the legal sign-off, but like you get a dedicated team of legal people, you know, at your beck and call to unblock you whenever you need to.

1:41:51Yeah, I went too early to, you know, bet on the horses here. So I'm not sure if I can bet on the horses yet. I mean, even like the ADA rules, like accessibility rules, like when you're a startup, you move pretty quickly and you still have to do a lot of the accessibility work, but if you're like 90 % there, it's like if you mess up and the screen reader breaks on one page, you're like looking at like a$5 ,000 settlement to just say, hey, sorry, we messed up. Like one person couldn't use this. And we feel bad and we paid you and we're good. But if you're Google, it's like there's going to be an army of lawyers who are like, how can we squeeze them on this, get them to settle, there's just more economic power against that.

1:42:30And that just naturally slows things down. Yeah, it's very interesting. How are you, what are you expecting out of open source broadly, open source models broadly in the next couple months? We saw OpenAI delayed their launch, just basically saying like the takeaway was effectively not quite ready, need a bit more time, want to ship something that we're super proud of. At the same time today, there was some reporting that, and unclear if it's true yet, but reporting that says maybe Lama will shift away from open source in general. So I'm curious, generally excited for OpenAI's open source model, but what are you thinking?

1:43:19Yeah, it's a great question. I mean, China obviously continues to bring the heat on open source. Regardless what we think of the CCCP and their motivations, just yesterday over the weekend, the key meaning model came out, it's already doing incredibly well on benchmarks. A bunch of developers and founders that I know are pretty excited about that model. And so I think that at the end of the day, if there is some belief that if you have a very good model, that it could run away and eat an entire market, if so facto, you're fighting against everybody else who doesn't want you to be able to do that.

1:43:55And so I do think that like to some degree, the margins will be competing in a way that more things will be open source in the future. And I think that also, you know, if you think about the workloads, we don't use supercomputers to write our email. We just need basic at home stuff. It works just fine. And the same models can, you know, same idea can be extended here, you know, while the frontier models are going to be developed, you know, kind of developing and, and figuring out new science and hopefully letting us don't die, right? We'll see. I think that, you know, for a lot of like business use cases and consumer applications, honestly, the intelligence bar is just like not that high.

1:44:28And the capability overhang that's already in the models today continues to be quite large as well. I mean, there's a lot of, you know, people joke there's a hundred million dollars inside your laptop, you should figure out how to unlock it. Well, it's a billion dollars inside of these model weights at least. And, you know, we've got to go unlock it, so. Yeah. Yeah, what's your temperature check on just overall progress, stagnation? Are you feeling the acceleration? Are you feeling a deceleration? Dwarakash last week updated his timelines, kind of pushed them out. Still very aggressive timelines.

1:44:59But what was your reaction to that? It feels like I'm seeing a few memes about no one knows how to scale RL. Or like, yes, we're seeing impressive stuff on ArcGIS from Grok 4. But keep in mind, we went from 7 % to 14%. and this is a test that kids can do. And so it feels like everyone's saying, like, we need new research. We need new breakthroughs. We need new paradigms. What's your overall temp check on timelines? And just like - Yeah, I mean, listen, I think that like AI continues to be really spiky and it's really hard to intuit where it's strong and where it's weak. And it's, you know, we want it to be strong in all the ways that human intelligence is strong.

1:45:34We also want it to be strong in all the ways that human intelligence is weak, you know, sort of project all of our hopes and fears and dreams, like onto these things. And, you know, I think in many cases, they're still not there. Just today, Chroma released a technical report on the topic of context rot. And so the question is basically like, okay, this model's got a million tokens, but does it? Like, what can you actually do with those million tokens? Needle in a haystack is certainly one benchmark, but we demonstrate across a sweep of other approaches that actually these models, like, they can start to fall apart really early, like way earlier than you might think.

1:46:09You might see reasoning performance drop off even around like 10 ,000 tokens or earlier. And 10 ,000 tokens is like not that much. And so, you know, like I don't, you know, at least what I want as a builder is I don't want a model that has the 10 million token context window, but kind of maybe sort of work sometimes. Like I want a model that has 60 ,000 tokens, but is perfect at paying attention to that model, to that context and perfect at reasoning over that context. And so, you know, we hope that this report will both help developers understand what's possible to build today. But we'll also create like a new set of benchmarks to the model labs we'll care about.

1:46:44Cause I think this is ultimately what people who are building care about. Okay. So, I mean, that seems like victory lap for you. Give me the update on Chroma, RAG. And you know, because it's, I mean, just to kind of set the base case, like there was a lot of like, oh, like RAG is gonna get one shot by just huge context windows. I saw the million tokens. And it was like, that's a lot of stuff. I feel like I could just stuff everything in there. And then I was talking to Dorakesh about can we go even larger? Can we get to a billion token context window? And he was making some of those points, but he was also just saying like the - Inefficiency.

1:47:16Yeah, the inefficiency, like it scales quadratically. And so just getting to a billion tokens is not a thousand X harder, it's like a billion X harder or something like that. Yeah, yeah. But give me the update on like RAG as a research effort, what Chrome is doing in terms of a product, and then some of the actual like use cases, when this works, where this breaks down, like how it fits into the overall puzzle? Yeah, the big question has been, is long context all you need or not? And, you know, maybe it will be someday. So I don't have a time machine. I've not been in the future, but I don't care about someday.

1:47:52I care about now. And I care about the community developers that we serve and giving them good information so they can really reason about what is this stuff? What is it useful for? How can I mix it together to create value? That's what we really care about. And so, I mean, the research was not really commercially motivated, right? I think that no good research is commercially motivated. You have to go in with just like a question and, you know, a thesis and you'll just see what happens. Like you can't go into it with a bias. Yeah. And I think really, you know, the bias from us came from intuition, from us building stuff.

1:48:21We noticed that actually once models start crossing these certain like thresholds, stuff really starts falling apart. And this is what you talk to anybody building in the space. They'll tell you this firsthand. This is their intuition as well. Yeah, like a million tokens, maybe, but like, it really starts to fall apart after a certain number of tokens. And so we wanted to like really just try to quantify that and reason about that and put numbers around that. And so you start to think about like, what are the solutions there? Well, one solution certainly is to use retrieval. Obviously, you know, we are biased in that way.

1:48:49We think Chrome is a great tool for that. We're also seeing increasingly people use re-ranking in the loop. We're also increasingly seeing people take like a large context window, say like 10 ,000 or 100 ,000 tokens and breaking it into many small LLM calls because the fewer the context, the better the model can reason. And so that sort of process of doing sort of a map reduce, so like splitting it into many pieces and then having these like huge army of parallel small, fast, cheap LLMs like process that context is also, I think, emergingly a best pattern and best practice. But, you know, it's still early.

1:49:20I think that like we didn't really want to go into this technical report either with like, here are all the answers. We don't know all the answers. We want to motivate, like, here's the problem as we see it. Yeah. Well, speaking of other, like, research and technical reports, what was your interpretation of the meter report that suggested that code tools were, like, Cursor and Windsurf were actually potentially slowing down a set of developers? It wasn't a huge study, but it seemed like a shocking result in the sense that it was people were expecting a 20 % increase and they got a 20 % decrease, roughly.

1:49:56and one of the developers who was actually in the study chimed in as well and was like, I think I know what's going on. I'm like leaning on this tool too much. I'm doing a lot of waiting for stuff. And so maybe some of this just naturally is cured by speed, but would love your take on that report if you read it. I mean, we as society are going to figure this out the hard way. We're going to figure out like how much of our sort of reasoning should we externalize to AI and how much of that reasoning that we then have to integrate to process what it thinks, right? And there's also news over the weekend about OpenAI making you dumber, or ChatGPT making you dumber, and headlines like this.

1:50:32And of course, the exact claims, you always want to dig under the hood and look at the actual study design and their actual claims versus the salacious headline. But I think it just speaks to how early all this stuff is. Obviously, there's a ton of excitement. People wanted to change the world. I think exactly how it gets integrated into our workflows over the medium and long term, like you know the classic thing where like over the next year it probably won't look like that much but over the next 10 years it's gonna look totally different um and so yeah we'll just wait 10 years and see but yeah yeah talk about uh just just condensing down information in the context of uh of rags specifically but also just the other the other techniques for this um what i'm interested in is like andre carpathy recently was kind of thinking through what the future of reinforcement learning could look like and he draws on this very interesting story that I think most people will be familiar with which was that for a long time if you went to any LLM and said how many how many incidences of the letter R are in the word strawberry it would get confused and it would give you the wrong number and this was because of tokenization each piece of the word is broken down so it can't really see the letters and so the solution was that they they kind of baked in some sort of like system prompt apparently that said yeah if a user asks you to count letters split it into individual letters and iterate through it one at a time and then you just kind of like figured out the cheat code for that particular type of problem the problem of course then is that like humanity's job is unbounded and there's a billion different versions of that that come up all the time in the context of work and like that's where you have all these little edge case failure modes and that's probably why you know I still have to book my own flights or something or you need a human to book your flights because using all that stuff there's just too many edge cases so his his solution is like we need to develop a reinforcement learning paradigm that goes and finds those hard one lessons and bakes them down and saves them and that feels like something like compressing of information because you're not just gonna want to stuff all that into the context window again you're gonna run into that problem so so just talk to me about your reaction to Carpathia's post and then just kind of how RAG might interface with the next models, whether on the training side or on the inference side.

1:52:50Yeah, for sure. I mean, I think learnings from the system running can be integrated both into the data systems that underwrite that system can also be integrated into the weights. Now, whether that's through RL or different means is going to be dependent on the use case. One way that we've been thinking about it is we're calling this the inner loop and the outer loop of context engineering. So if your context needs to be tuned to do a good job, context fraud is real and motivates the need for context engineering. And this is the job that many application developers are doing, have been doing now for years, is like solving that problem of what should be in the context window right now.

1:53:27That's the inner loop. The outer loop is how do you design a system that will get better at the job of the inner loop over time? So how do you capture signal from your users? How do you capture feedback from agents? How do you capture all that data? How do you analyze all that data? And then how do you bring that data back into that inner loop problem? That could be obviously number one, massaging and changing the knowledge and data your model has access to, as known as retrieve organic generation. Or it could also be, you know, applying it to weights in different many stages of the pipeline, including the LLM itself, the embedding model, re-rankers, all of the above.

1:54:04And so, I mean, this concept we just sort of put out like a week ago, we gave a little short, a short kind of conference at RAMP's office in New York on context engineering NYC. Let's hear it for RAMP. Listen, you got to do it. You got to do it. And this is the first time I've really seen this posited in such a clear way. And so, you know, again, we don't have all the answers, but I think this is the question people will come to ask in the future is like, not only how do we build a system which works today, but how do we build a system that gets better over time automatically and that is like the outer loop of context engineering uh i i want to get your how you're thinking about grok last week was an intense week from everything from uh the fiasco i think it was on tuesday uh with with uh the grok bot just going wild maybe it brought more attention to launch wednesday which was extremely impressive um but then later in the week, you know, people were realizing that like the reasoning model was, uh, or, or like part of the kind of reasoning loop was like kind of making sure that, uh, it understood the boss man's views, uh, by, by, you know, what, what is, what is Elon?

1:55:13So my question, finding the coverage and then reinforcing that wrongly and not. So, so as I went into the weekend, I was thinking this will be interesting to see how Grok can do in the enterprise. And then this morning they announced It's like a$200 million deal with the government. So I think that's a good stamp of approval. But I'm curious, like, kind of what insights you have around, you know, some of the basically like larger potential customers and how they're even thinking about model selection for, you know, different products and applications. Yeah, you know, I think you should probably wait.

1:55:51I think actually, again, Ramp Plug has like the graph of like, you know, Anthropic and chat GPT or anthropic and opening eye revenue growth. You know, let's wait to see when Grock makes a dent in that. That's not to say they will or they won't. I don't know. You know, there are these headwinds that you're talking about, which is, you know, you can either see as a feature or a bug, depending on which way you look at it. I mean, you know, there's things like there's things are not like it's kind of hard to predict the future. I guess what I want to know is like, what is the what is the flip side?

1:56:22Maybe we should just talk to our ramp about this. But what's the flip side of that chart? We know who the sellers are. OpenAI, Anthropic, Gemini, and then Grok. And there's like kind of a long tail. But who are the buyers? Because I see individual like prosumer, knowledge retriever. I would pay$200 for a better Google types. Yeah. I'm one of them. Then there are the developers who are paying for developer tools. But then what is like the third bucket of like buyers for tokens right now? It seems like it's a lot of companies with like kind of point solutions, little I'm stuffing an LLM in my enterprise SaaS, speeding something up, cleaning up some data.

1:57:04But do you have any insight into like kind of what's the third wave that's coming that everyone listening to this should start investing in now? I think you're right that a lot of the spend, well, a lot of the spend is consumers. You know, a lot of the spending is also business enterprises. They're using it for really boring stuff. Process automation broadly. You know, those buyers you should expect to be like way more conservative about like the tool they pick. You know, the adage of you never got fired for hiring IBM definitely also applies here. And so sort of reasoning about like, who is the IBM of this space and why I think will like help you determine where that spend is going to go.

1:57:46Yeah, that's a great question because from being on the frontier as a brand, I would say OpenAI, but then from a scalable infrastructure, I would say GCP and Gemini. But then from a model agnosticism view, I would say Microsoft. It's a tough question. I don't know if the IBM has emerged. Maybe you have a strong opinion. Maybe Jordi does. But overall, I mean, great, great, great catching up with you as always. Yeah. Anything else, Jordy? Yeah, congratulations on the launch of the paper. Yeah. I mean, yeah, very exciting results. So thanks for funding it. Good to see you. Have a great rest. We'll talk to you soon.

1:58:27Good to see you. Take care. We need to tell you about Wander. Find your happy place. Find your happy place. Book a Wander with inspiring views, hotel-grade amenities, dreamy beds, top-tier cleaning, and 24-7 concierge service. It's a vacation home, but better, folks. and if you're looking to take a vacation to the Goodwood Festival of Speed you might run into Dua Lipa she says I love speed I love it she's really a driver like this is not a large she wasn't driving the car but she's in the car she's not just hanging out and the livery was absolutely fantastic so just to give everyone some context so we have Scott Wu from cognition and Jeff wang from windsurf joining any minute now where the studio crew is getting ready for everybody set up we are ready whenever bring them in how you guys doing congratulations thank you round of applause did you guys have a relaxing relaxing weekend yeah really chill weekend yeah yeah easy easy, easy, nothing too much.

1:59:30Jeff and I, honestly, we both haven't really slept. Go easy on us, okay? Well, you had a lot of people to take care of and honestly, when we heard the news a few minutes before we went live and we were fist pumping here in the studio because it's such a fantastic outcome and I'm sure everybody involved is grateful for the work you guys put in to get this done. But give us, yeah, Kick us off with the high level. What's actually the partnership look like? How would you describe it in your own words of what's actually happening? Yeah, I mean, this is a real acquisition. We are being acquired by Cognition.

2:00:14Okay. It must feel great to say that, too. Don't hear that much. It was a tough Friday, I would say. I don't think anybody would want to be in my shoes on Friday. But we talked to a lot of teams out there. There's a lot of AI companies, foundational companies. And after talking to Scott and the Cognition team, it was done in my mind. There was a done deal. That's amazing. I don't know if you guys know this, but Cognition was probably the only other team that we thought was smarter than our team, actually. Wow. Yeah. No, and that's what we put. We put that together just on the show, seeing the announcement.

2:00:53It's like you take this incredible go-to-market sales machine that you guys had built, and you combine that with one of the best research and just hardcore engineering culture. Perfect overlap. And it's a perfect match. Perfect overlap. Yeah, absolutely. And on the Windsurf side, obviously there were all these stories breaking out on Twitter and everything going on. And people were saying, well, the thing that's left is just a shell. And we looked at it and we said, well, actually, I don't know if that's right. There's the code, there's the product, there's the customers. Most importantly, there's the whole team, obviously.

2:01:27And it's an amazing product and there's a lot to do and a lot to build together. And so I think as we started talking about it, we found that there were just so many natural ways to partner, you know, both in terms of obviously the customers and customers would love, you know, are super excited to have a solution that basically combines both the IDE and the agent. And then the technology itself, which is, you know, I think we at Devon, you know, building Devon have always focused on this kind of remote background agent as the thing that we've kind of done. Whereas, you know, Windsurf is really focused on the agentic ide and and i think there's a lot of kind of things that play in there um all the way down again to the kind of the fit of the the relative teams and the team strength and so on so it's almost like you predicted this because like the like these types of mergers are really hard because you have two brands that are popular but scott you've been managing cognition and devon like you've had the the corporate structure and the product structure for a while and so like it doesn't seem nearly as complicated as like where does this go do you have thoughts on it yet.

2:02:30I'm sure this is down the road. But it seems like you're actually fairly set up to integrate these two companies in a way that's not super chaotic to either, which is great. Yeah. Yeah. I wouldn't say it was intentional. I think on our end, for example, it's probably more that we tend to over-focus on software engineers because it's just the bottom of who we are and how we think about it. And in particular, these product and capabilities things. Whereas Because I think on the Windsurf side, I think Jeff and the whole team have built out a really great suite of all the different functions. Sales, deployed engineering, enterprise work, infrastructure, marketing, operations, and so on.

2:03:12Finance, et cetera. And yeah, it just turned out to be a really, really great fit. Jeff, Friday, end of day, did you think you would be running a process so quickly? I know the obvious move would just be continue to run and scale the business. You guys had a lot of momentum. But what was going through your head Friday night? Because I imagine at the time you were also balancing. You were all of a sudden managing a team of hundreds of people that probably all wanted your time and attention as well. My immediate priority was just to get a lot of options on the table and to have a lot of pass forward.

2:03:51I had to tell the team, this is the path forward immediately because this is happening now. And then outside of the meeting, I was thinking, okay, who do I need to talk to? What is the best use of my time? I can tell you I was on the phone for pretty much 24 hours nonstop on my phone after the all hands. And me and Scott, we worked really fast. We met at our office the next day. He even brought in everything on a piece of paper to sign.

2:04:22He had to talk through a lot, but that was, it was really, it was pretty dramatic, Scott, but it was cool. Scott Cardani Yeah, it was fun. And naturally, you know, because it has to be this way, we got things signed like one or two hours before we were able to put out the announcement. But like, as soon as we started talking about it together, I think it was kind of clear for both of us, like, the way that we really make this a success is, you know, obviously, customers kind of want to understand what's next, the team wants understand what's next you know the whole world is talking about it we want to be able to come out together as soon as possible and say we're going to do this we're going to make this really amazing um we're going to make sure we take care of all the users and all the customers we're going to make sure we take care of the team and there's just a really great product here at its core and and that's what we want to focus on and that's what we want to build out together yeah and you know what's crazy um what is crazy like we talked uh pretty late on the front end as well um we were comparing notes and there was like almost no overlap i mean we talked about the team already but even the product, the product is like missing exactly what the other product is offering.

2:05:18And the ability to combine the products together is going to be so amazing for our users. It's going to be really cool. Yeah. I think there's going to be a lot of fun stuff around, you know, you can have an agent work and then review the code, you know, locally in your IDE. You can be planning tasks out and then kind of sending them off for work. You could be, you know, you can do a first pass with an agent and then come and look at the work and then kind of finish that up and do the finishing touches with Tab and all these other features and so on. And we're really excited to build that out together.

2:05:49MARK MANDELAVYSCHIHLAMPANI - How is the team feeling right now? I imagine this is the craziest 48 hours of their career as well. MARK MANDELAVYSCHIHLAMPANI - Give us a preview of the Slack emojis that are ripping right now. MARK MANDELAVYSCHIHLAMPANI - Actually, we announced it at another All Hands. MARK MANDELAVYSCHIHLAMPANI - OK. MARK MANDELAVYSCHIHLAMPANI - All Hands, and then we put another Monday All Hands. And very, very different time. It's like it couldn't possibly get worse. So it's only up. We made it dramatic, too. So me and Scott and the team, we really went out of our way to make this a very generous acquisition.

2:06:19I'll just say that. And I think the team probably felt like their career was over or something. It was very sad on Friday. But I think today, I don't know. How long did they clap, Scott? They kind of cheer for like a finance or something. um so i think the sentiment has shifted the team is even more fired up to go uh the whole product is still there all the all the things we had and the gtm team is still there and now they also have devon uh to sell as well so everybody's fired up now that's amazing yeah every time i talk to scott it's always because like he's done something really incredible and aggressive like like and it's like okay like let's do let's talk about this right now and before i was making like that documentary took me a month to put out a single video.

2:07:05Now fortunately I have a daily TV show, so I can just have you on and we can chat about it. I do have some random questions, I don't know if it's worth. I'm interested to know about that go to market team and channel sales specifically. There was somebody in the comments of one of Jordy's posts talking about how Windsurf was growing revenue and working with channel partners. Can you walk me through, how, what would you give advice to somebody who's structuring a successful channel partnership strategy for a product like this. What incentives do you have to align? How big of a piece of business was that?

2:07:43Do you expect it to be a continual source of growth? I'd love to know about just that as a particular strategy, as opposed to, say, Google ads or going viral. Yeah, we made the decision to go 100 % partners back in February. The thing about a partner channel kind of like segment is like you have to like you have to like kind of feed them like you kind of kind of build belief with them in the product, but also show that there's an economic incentive to. And it did take some time actually from Q1 to Q2 to like get the top priority partners, make sure those partners can easily sell on your behalf as well.

2:08:18And it really took like about four to five months to really see this like kind of take off. So some of our partners have already started bringing in seven figure deals, even without even trying the product. They just go to their customers. They ask them what they want and they just say it's Windsurf. And now they can say Windsurf and Devin. That's amazing. Yeah, I was getting multiple messages from people Friday and Saturday being like, I want this team. I want this team. And that was what and I think that it is it is just it's such a this whole deal and everything is really a testament to the caliber of the team, which was just which was one of the major disappointments Friday is if you were on the team that that was staying behind at Windsurf.

2:09:01There's this sort of almost like signaling, right, of like I took this company. Let's say you joined last August and you brought the product to market. You launched it. You grew it to tens of millions of dollars in revenue. and then don't get to kind of continue the mission. I'm just really happy for everyone involved. Yeah. And now we're all one big team and it's, I mean, we're kicking it into another gear. I think we're all so amped up to take this and just go, you know, we're going to go full speed basically for the next while. And we get to play on offense now and go for it all. Are you guys already making plans to get under one roof?

2:09:42what's the office setup. We have a lot to figure out. But yeah, working towards that. Maybe get some sleep first. Getting to the point that there's kind of the product collaboration, there's the go-to-market collaboration, and then there's the literal kind of team situation. A lot of work to do over the next couple months. Well, we've got to tell our customers, we got there back now. And the product is going to get so much more cool. That's amazing. Well, you guys turned something which was, in many ways, a disaster. I was just waiting for the New York Times piece on Monday and getting to see the New York Times push out this news and turning this whole thing into a win is incredible.

2:10:19And you guys have done a service to the team and the industry. So thank you. Yeah, honestly, honored to get to be a part of it, to work with such a great group of people. And I just want to see you guys. You guys have no idea how things went with all the legal and everything last night in terms of figuring these things out. Are we going to make it there in time? were we not going to be it was we we've been through a lot and i think it's uh it's it's it's just the sort of thing so just so you know uh scott was like we are announcing monday uh hell or high water and uh we we just did not sleep uh for the last like 72 hours yeah it's been a crazy it's been crazy i mean we yeah we we appreciate you hopping on the stream do you have anything else jordy sure you guys deserve probably probably too early to sleep but you both deserve a power nap at the very least thank you for coming on anything else that that makes sense to share now or should we let you go we're all good awesome yeah a lot more announcements soon thanks for having us amazing guys great work cheers talk to you soon congrats bye and next up we have carl pay no not yet one second um that is amazing that yeah what a great story absolute dogs absolute dogs that is the perfect cemented in sv lore tech lore for sure for sure didn't know i mean i knew scott could fundraise yeah i didn't know he was this kind of this caliber of deals guy absolute dog absolute dog uh well read through some timeline what else let's do it uh bigma has such a homey feeling i spend all day in it i really enjoy it feels cozy safe good to come back to shout out Zach giving Figma a little shout out let's bring in our first there he is first studio walk-in first studio walk-in let's go welcome to the stream Carl how you doing welcome thank you how you doing it's great to have you here we haven't done this much before no we've had a few people in in studio done a few usually when we're in person we're on the road but good to have you come here would you mind kick us off an introduction yourself the company yeah my name is Carl I have a company called nothing we're the only new smartphone company to have emerged in the last 10 years yeah I felt like tech got really boring yeah like I was a big big tech fan I got the latest iPhones all the time I sat up to watch the keynotes.

2:12:53I was based in Europe, so the time zone wasn't always the best. But in the recent five years, I haven't done that anymore. Every iteration is pretty much the same as the previous one. And I wanted to do something about it. So what'd you do to spice it up? What was the first feature? And then walk me through all the other features. Please, pull it out. We'll see. Show us. So we're in a very big industry, right? Like 1.2 billion smartphones are sold every year. So we're not trying to reimagine the category. we're trying to find our niche so we started with industrial design so if you look at our products yeah they look pretty different totally before actually starting to make products we made a design book we took inspiration from movies from architecture furniture design and we created this little mood board and then we based all our designs on that so if you look at our different products these are headphones this is a smartphone you can immediately tell even if you don't see the logo that it's from the same company totally yeah so design is how we started um if you ask our users why they buy our products design is number one reason and then lately we've been working more on the software side so it is funny a cell phone should be the ultimate personal accessory yet the that but yet they've all converged onto the same exact form factor it's so funny because john and i have the same exact exact same exact same up all the time, I grab it, he grabs mine.

2:14:19Yeah, I mean, how much do you think we are at like the end of history for differentiating on like quantitative specs? Because for a long time it was like, okay, I need to go with this one because it has just a faster processor, but that kind of disappeared and then there was software lock-in, you want the blue bubbles or whatever. But if we truly get to the end, then we're going to get it like, every watch tells the same, people spend a lot of money on certain watches that say something about them. Right, same thing with cars. But what's your view on like, just staying on the frontier? How stagnant is the frontier?

2:14:53We're pretty much at the end. You think so? In terms of hardware innovation, we all have the same suppliers. We buy the same screen, same processor, same battery. And you don't think that there's gonna be any sort of like, crazy breakthrough where, like this happened with the Apple Vision Pro, where Mark Zuckerberg was certainly like, doing everything to stay on the frontier, VR headsets, And then Apple allegedly does this crazy thing with their supplier where they're like, you know that thing that you're making in the benchtop that costs like thousands of dollars for this screen with this pixel density?

2:15:26Let's just pull this forward and just like eat that cost to just leapfrog everyone and have the best screen. Now they made a bunch of other mistakes so the product didn't take off, but they at least nailed it on the screen front. Everyone agrees that the Apple Vision Pro has like the best resolution at least of the modern VR headsets. So you don't think that there'll be like, oh, wow, the next iPhone has twice the battery life. They figured out something crazy. Not anytime soon. And I would probably say that the first phase of the smartphone wars are over. Yeah. And Apple and Google won. Yeah.

2:15:56They have the biggest platforms. iOS has like a billion users. Android has three billion. But I believe that the next war is just beginning to happen. Yeah. And that's going to be all about reimagining the operating system. Yeah. The previous generation operating systems are very mature already. Yeah. But now with AI technology, I think we can build something really different. Yeah, how are you thinking about partnerships? I mean, John's probably said this 200 times on the show, but all he wants is better transcription, Siri. Oh, you know what we did? I don't know if the people there can see it, but...

2:16:27Hold it up. Hold it up. If you hold this... Oh, wow. Now we're actually recording this meeting. Okay. Okay. Oh, you see the waveform there? You see the waveform, you see the little red light blinking. That's a nice touch. And after the meeting, you can just have AI summarize the... And my question is, is that using a transformer-based transcription AI, or is it using the old thing that gets every other word wrong? We're using a model. Whisper? I think we're using Whisper plus Gemini. Okay. So, yeah. It's going to be fantastic. Amazing. And for some reason, no one's thought to implement that in the old stuff.

2:17:01And it's getting to a point where I'm, like, deeply frustrated with it. Because my standard workflow for I need to send someone a text message this long is I open up the ChatGPT app. I click the Whisper button. I talk to it, then I copy it, then I paste it into my text message box because I don't trust the standard transcription in iOS by default. It's very, very frustrating. Anyway, I wanna talk about the second smartphone war that's coming. Who's gonna be in that war? It feels like Apple and Google are gonna continue to compete, you're gonna be there. It feels like Johnny Ive and Sam Altman and the OpenAI team want to play in there.

2:17:42There's probably gonna be other folks. Yeah, I feel like they, in a lot of the kind of teaser content, it's really around saying like, this is an additional device in your stack. They're not going as far as to say we're gonna fully replace the phone. Yeah, I guess why not just try and do like an add-on or like a fourth device, third device? I mean, most Apple people have like Apple Watches, phones, the iPad, the computer, you know. For me, the smartphone is one of the best devices, especially for applied AI, because it's got all the distribution. 1.2 billion are sold every year. We have it in our pockets every day.

2:18:17We charge it every day. We use it for four to six hours every day. It's got the distribution, but it also has the data. We do so much on our phones. So if we're going to build a really intelligent operating system, we need the distribution scale, but also the depth of data to create a really personalized experience for each consumer. I do believe that in the next 10 years, we will all be carrying another sensor as well, because sometimes the phone is in our pockets, and we need another sensor to capture data for us. I don't believe it's going to happen that quickly, though. Other sensors. Glasses.

2:18:50Something we've been debating on the show. Could be glasses. One of the challenges, though, is you're walking around. A lot of these, you know, the meta Ray-Bans are like actual glasses, sunglasses. Are people going to be carrying multiple glasses that they're using differently throughout the day? There's I don't know what the form factor is going to be it might be glasses. It might be a pin. It might be a necklace But I'm not super bullish that it's going to come in the next two three years What do you think of the idea of which is which is a challenge to be clear if you're a seed stage company?

2:19:20Yeah, and you need to generate Traction sales now so to pick a new form factor you guys can almost from your position be like well we have the supply chain, we know we can build hardware, we can in some ways kind of see how this next device evolves. Exactly, we built this machine, right? Because making hardware is very tough, especially smartphones. Like from having an idea to actually shipping the products across like 40 countries, servicing the consumer, it's a machine. We're building the brand, building the fan base. So I think whenever a new form factor comes out, it's quite easy for us to quickly follow and have distribution worldwide.

2:19:56Well, what do you think about putting a camera on headphones? We've seen like patents of other companies doing it. I'm just not sure what we would use it for. It seems like the, it seems like meta Ray-Bans are like, we want a camera on your face and we will give you headphones for free via speakers that you can kind of listen on someone's call. But for the most part it's so it's so close and so localized that if someone's taking a call on the meta ray-bans back there We won't really hear what the other person's saying and then Apple I think is the company you're referring you're like alluding to potentially has a patent and people have been kind of rumoring that That the next version of air pods Pro might have a camera on there And so then you could ask Siri take a picture of that tell me what it is Are you bullish on like the idea of visual intelligence because when I've walked around with the meta ray-bans?

2:20:50I like having an LLM at my fingertips, but I'm very rarely actually saying, what is this can? Because I can look at it and it says yerba mate. It says mate, you know, it says mango can kill it. I don't need Nei to do that. What I do need Nei to do on my glasses is tell me, what's the history of yerba mate? And I could just ask that without taking a picture. I can give it the, like I'll be walking around and some idea will pop into my head and I'll be like, I need to know the history of the state of California. Tell me when it was founded. Just give me the data. And it's nice to have an LLM at my fingertips, but I don't actually need the visual intelligence.

2:21:27I see it on my phone. I have the new button where I can pull out visual intelligence. I'm not a daily active user of any visual intelligence project, but are you bullish on it generally? Long-term I'm bullish. I don't know exactly how it's going to play out, but for your use case today, we already have a ChatGPT voice integration in our earbuds. So if you connect these headphones to our phone, you can just click a button to make a phone call with ChattyP voice. Yeah, that sounds good enough. Yeah, good enough for now. Do you think the technology industry broadly just so badly wants there to be a major platform shift that they just talk that in some ways?

2:22:04And it makes sense in the context of like Zuck, right? Zuck has spent the last decades like basically being like, you know, the platform layer just kind of messing with it, right? Yeah, it's been a hassle. It's been a hassle. So like it makes sense to invest tens of billions of dollars to try to make sure that you have a real horse in the next platform race. But at the same time, it's I think if you love technology and you grew up the way that I think the three of us did, you have this desire for there to be like because it would just be fun and exciting. Even if you look at the phone, you're like, OK, this this might be this might be the dominant platform for the next 30 years still.

2:22:43Yeah. Yeah, I'm super excited to see what the industry builds. We need people to try new things. For us, we're still going to be focused on the phone because I believe there's so much cool software we can just build on the phone. Of course, we're thinking about what comes next and we're prototyping, but that's not where our main focus is. Sure. Was the changes to iMessage a catalyst for you guys? They allowed like red receipts and delivery? Oh, the RCS? I see it as a positive for us. Yeah, it has to be a positive. I'm curious if it was, did it make a material difference? No, because I think it's not just about the color of the text message.

2:23:21It's not just about the read receipts. It's actually about the color. It's about the color. The color is more important than the text. It's way more important. That's hilarious. And that hasn't been solved. Yeah, they need to add that to the protocol. What color message do you want this to show up? And then all the Android users. There's so much social pressure of having a blue bubble. Like my friend told me that at school his daughter's teacher is like handing out homework through airdrop. And his daughter was only one who had to raise their hand and say, I don't have an iPhone. Sorry. Yeah, that's rough.

2:23:49Yeah, the social pressure is big. On the blue bubbles and the idea of like tech is almost a status symbol and a personal expression. I was joking earlier that if OpenAI wants to build a phone, they're going to have to contend with the blue bubble issue. They should do like gold bubbles or like the Trump phone. I think Trump was launching a phone. I'd love your take on that at some point. Is there a hierarchy of colors that you should be thinking of? Is blue intrinsically more welcoming than green? I think because of how the ecosystem has played out, you just have to go blue if you want a chance.

2:24:28Sure. Yeah. So we're on our phone business. We're not targeting the U.S. very strongly just because of this reason. Like we can't see a way past the blue bubble situation. OK. So, yeah. Walk me through the landscape of your non-U.S. competitors. Then who's actually in in the market? What are the different markets that are interesting? Like where's the biggest opportunity? If we're talking about building the next generation operating system, I think we got to put China aside because China will have its own ecosystem. with its own players and the rest of the world will have its ecosystem i believe you need data and distribution to be able to build the next os so of course the smartphone companies will be contenders like apple google samsung and us there's only four smartphone players outside of china today yeah um but then there's other companies with a lot of data as well like meta for instance or open ai so it could be any one of them have you ever done uh like a post-mortem deep dive on the on the Facebook phone?

2:25:27I had it. You had it? Back in the day, yeah. What, I didn't even know it existed. Yeah. Wait, it was actually a real thing? It was real, it was built by HTC, I think. Oh, interesting, okay, yeah. I think Chamath worked on that project. An interesting bit of Silicon Valley lore. But I wonder what the, like, is the lesson there differentiate more on design? Is that what you learned from that? Or is it more like price for performance? What are the different levers that you think you need to pull? It's probably like PMF. People have certain expectations from a smartphone, like great cameras, great battery.

2:26:04You can't underperform on any of those things. You've got to be competitive with the latest iPhone, the latest Samsung. And then you can add your flair on top of it. But your flair cannot be significantly different from what people are used to. I believe that in the future, for instance, that apps are going to go away. There's only one app on the phone, and it's the operating system. But we can't ship a phone without any apps. People love their apps. So you can have a future vision, but it's going to be like a step-by-step process to getting there. And you've got to bring the consumers along the way.

2:26:34Talk to me about... How do you think... I can imagine a world in which more and more of the apps that you use day-to-day are just eaten by the operating system. Something like weather, for example. I don't love my weather app, but I will open it up from time to time. And there's a different scenario where I just transcribe, how's the weather going to be this afternoon? And it just knows where I am, and it just pops it up and says, it's going to be 72 and sunny. But then for other things, don't you think there'll be some networks that endure? For example, something like Estrava, somebody who's really into running, it's hard to imagine that that just merging with the operating system.

2:27:14I see it slightly differently. I think broadly there's two categories of apps, like waste time apps and save time apps. Waste time apps are more like entertainment apps. And the save time apps are just utilities. I think the utilities are going to be really easy to replace in the beginning. But when it comes to Netflix and Spotify and those like entertainment apps, it's going to take some more time. But eventually the OS will partner with apps and apps can still exist in a container, just not as a separate thing you launch. Yeah, yeah, yeah. That makes sense. What have you learned from the history of bloatware on smartphones?

2:27:51I worked at a startup years ago, 15 years ago or something. It was running a Siri competitor. Part of their business model was getting BlackBerry to pay them to pre-install their app. It was a pretty good deal for BlackBerry. In this case, it was a pretty good piece of software. And so it just obviated the need for the customer to go and click pay for$20 for this app. At the same time, customers have notoriously been like, why do I have 75 Verizon apps on my phone? And they get kind of frustrated with that. What's the good condition for that? What's the bad case? And then where does it go? The smartphone market is very big.

2:28:34So on the lower end, everybody has a ton of bloatware. and I think that's okay-ish for the consumer because they get a better priced product that they couldn't afford otherwise. But if you're operating on the high end and you have a ton of bloatware, then it's kind of weird because people are already paying a lot of money for your product, then have ads inside of the product. That's kind of how I think about it. Yeah, what are the key breakpoints for phone pricing, like internationally even? Internationally, probably around$300. like that's the main main category yeah here in the us it's very different it's like a barbell shaped market where the ultra premium takes a lot of share and the low low end like burner phones take a lot of share oh interesting how much are burner phones in the us i don't have the numbers but probably like 20 of the market okay wow yeah i i meant in terms of price like are we talking like 150 yeah oh so really really cheap yeah interesting how uh big thing how much capital would you need to deploy to be able to make a cheap phone, high-quality phone in the United States?

2:29:38Are we talking like... Like manufacture locally? Yeah, yeah, yeah. Would you need like$50 billion to set up all the different... And use the CapEx or OpEx problem. Well, yeah, the question is if you have to basically not just do the assembly, but recreate all the sub suppliers, you start adding that up and it gets... I don't really know because we partner with a bunch of factories all over the world. So if we wanted to manufacture in the U.S., we wouldn't know who to go to to partner with. We do a lot of our manufacturing in India, and there we've seen that the government has been pretty successful.

2:30:10I think India is now the second site in terms of volume after China, and they have incentives to, like, if you manufacture locally and export locally, you get some cash back, and I think that model really works. So if the U.S. is serious about this, it's more of like the structural incentives that need to be set up for this to run. Yeah. Interesting. What would it take to, is there anyone trying to build like a Tata Nano of phones? Like something that's like smartphone level, not burner phone, but at like 75 bucks a pop. They already exist. They do? Yeah, yeah, like for Africa. Okay. Are they delivering on the promise at all?

2:30:50Yeah. They're doing a great job in Africa and other markets where people need cheap phones. You can get a smartphone for like 50 bucks now. Yeah. Interesting. Interesting. What about, how do you guys think about, have you integrated wallets for stable coins? Is that something that should happen at the operating system layer for a phone? I'm sure you've been. I haven't thought too much about it for me. Like there's no real use case for crypto yet. No real use case for crypto. What about store of value, bro? We just haven't seen anything with real PMF yet. What about Bitcoin? That's PMF. Yeah, that's like one of the only things.

2:31:24I get you. Yeah, you're probably not trying to sell that many phones into sanctioned countries where the citizens really want to get dollars on chain. Can you walk me through the relationship between manufacturers and telecommunications companies? I remember like years ago. This is the absolute last question because I know you've got a hard out. Oh, yeah. We've got to make time for it to hit the gong. Every market is different. but in the US there's basically very little relationship between brands and carriers because there's only three carriers and they're playing a user acquisition game against each other so their main way of acquiring users is not through selling unique hardware it's mainly the bundle right how much data do you get do you get free Spotify do you get Netflix so for a small brand like us there's basically no play with a carrier unless we build a groundswell of support with our community or have like really really innovative products I think our products are becoming more and more innovative and fresh.

2:32:22But we probably need a couple more years before we have a product that's really different for the US. Cool. Very cool. We hit the gong and then we'll let you go. Well, do we need a number? Can you give us anything? How big is the company? How many employees you got? How many phones have you sold? We're about 750 employees. Wow. We're 0.2 % market share globally. That's actually huge. Yeah, we've done that. Congratulations. Thanks. We've done more than a billion in revenue and we're doing a billion this year. What? Okay, okay, okay. Smash the gong right behind you. That is fantastic. Very well deserved.

2:32:54Give it a solid. Congratulations. And thank you so much for coming by. Really appreciate having you in person. This is fantastic. Thanks so much. Great stuff. Really buried the lead there for sure. Are we hopping straight on with Garrett? Or we got 15 minutes? I guess we got 10 minutes? Yeah, 10 minutes. I want to go through. Is there anything else you want to go through? I like this. In the how to spend it section of the Financial Times, we have a review of something we've been hunting for, which is the best hotel gyms in the world. There we go. There we go. So if you've been to a hotel gym on chess day, you've probably been disappointed because many it's hard to find a hotel with what is it?

2:33:42bigger than 50 pound dumbbells. 50 pound dumbbells. And we believe, we haven't fully verified this, but we believe this is due to a market failure in the hotel gym insurance market. Insurance market. And so I think that there are two tiers of insurance. One for like a CrossFit gym or a powerlifting gym that has free weights and also barbells and you can do hang clean and clean and jerk and all that stuff. And then there's a different level of insurance underwriting for things like treadmills and bicycles and free weights that go up to 50 pounds. And so that's why when you're traveling, you see a lot of gyms that don't have, they won't, you can't do squats.

2:34:22There's a leg press machine. And so they lean on the machines because the risk of injury is lower, but the risk of gains is also lower. So we are gonna understand where you should travel because to get access to the world's best gyms. Hotel gyms are a mixed bag. even in top flight spots, working out can be a jarringly subpar experience. Could not agree more. Machinery might be decades old. The water cooler might date to the 80s office era. Should get Rora. For years, hospitality didn't invest in gyms as unlike with restaurants and spas, the gym usually doesn't bring in any extra revenue. That's an interesting dynamic I hadn't thought of.

2:35:04So yeah, I mean, if you put in like a Nobu in your hotel, that's gonna drive a ton of extra revenue, whereas your gym will not. So increasingly - Just charge me per set with the 75. Per pound. Yeah, charge me per pound. And then you gotta put the bigger weights in, because I'm gonna wanna lift heavy. Profit maximizing strategy. So, but increasingly top hotels are pivoting. It's important I keep the same fitness routines as when I'm at home, says Emily Oberg, founder of clothing label Sporty & Rich, who works out six times a week. Her favorite hotel gyms include the Ritz Club in Paris for the pool and the Il San Pietro in Positano.

2:35:40It has alfresco cardio equipment, outside cardio equipment, tennis courts and views. It's motivating if the space is also beautiful. Gym lighting needs to make you look and feel good while working out, says interior designer Kelly Werstler. Acoustics should amplify without distracting. Materials should perform functionally while still feeling refined. I couldn't agree more. Have you been to any of the proper hotels, the Santa Monica Proper Gym? I haven't, no. She designed the Santa Monica Proper. Oh really? Kelly Wurstler. Yeah, there you go. Okay, so the best concept, these are awards from HTSI and the Financial Times, how to spend it.

2:36:19The best concept goes to Power in Ireland, a great gym chain in the lobby of the hotel. Power, Ireland's leading boutique workout provider, has partnerships with the Dean Hotels in Cork, Dublin, and Galloway, and the Mason, also in Dublin. In the gyms, there's a functional fitness area with a custom athletic rig and AstroTurf track, a lifting area, free weights, and a cardio area equipped with techno gym skill run treadmills, rowers, ski ergs, watt bike pros, and more. There are several 45-minute classes, including run and Metcon. Guests can recover afterwards in the Hyperice suite, which is stocked with massage guns and foam rollers.

2:36:58Rooms from 200 euros. Not bad. The most scenic is at the Amon Zoo in Greece. It's an Amon property, of course. There we go. Summer escapes are all about picturesque locations, seafront settings, a quaint and quiet locale, and often ancient European history. This Amon property, Jim, offers all of the above, and then some. The resort has its own UNESCO-protected ruins, but it's the outdoor shaded weights area overlooking the Aegean. Let's give it up for hotels that have ruins. That is the real sell, according to Tim Blakey, a personal trainer and founder of the workout at Prime Body. We go on holiday to be outside, he observes.

2:37:36There's a slight breeze. The sun is usually out, and you can get your nature fix while you lift weights. Rooms from 1 ,500 euros. Also not bad. Oh, hey, they have a proper hotel. Did you know that this was going to be in here? The proper hotel in Santa Monica. Best for recovery. It has an immortal chamber where tech-infused lounge chairs pulse with electromagnetic fields to deliver red light therapy to reduce inflammation and combat jet lag. There's also VO2 wax testing. Let's go. Okay, that's cool. Yeah, it's funny, though, when you walk into a, I mean, you're going into a hotel gym. What do you really care about at the end of the day, John?

2:38:13How much weight you can throw around. How much weight you can throw around. so and they say at the the proper hotel in Santa Monica don't be surprised if you see Brian Johnson on your way out my personal favorite hotel Jim since a sense a porcupine Creek this is Larry Ellison's basically four seasons competitor and they've done a really nice job with it okay we got to go through there's a few others the most exotic the best for classes but the the The most exclusive. This is what I want to know about. The most exclusive hotel gym in the world, according to the Financial Times. Siren at the Emery in Knightsbridge.

2:38:55Guests of the all suite Emery have full access to Siren, a comprehensive wellness club with only 140 vetted members. It costs 15 ,000 pounds per year to join. I thought you were going to say per month. The gym is small, but it has 360 degree mirrors, so it feels bigger. LA celebrity trainer Tracy Anderson has licensed her name to Saran. It's the only place where you can book her dance cardio workouts in the UK. Alternatively, guests can request the Saran. Isn't that kind of disappointing, though, that the nicest, the most exclusive gym in the world is 15 ,000 pounds a year? Like shouldn't somebody make like a$100 ,000 a month gym?

2:39:44I think you just designed home gyms in mega mansions. Maybe I did. With an entire team of specialists. So you can pay the 15 ,000 pounds a year for a membership, or you can book a suite for 1 ,600 pounds per night. So maybe, I don't know, what is that? It's in pounds, so that's like 15 bucks US or something? It is pretty funny, the dynamic of this is the most exclusive club in the world, but if you just book a hotel room, you can go to it. Yeah. That's a bit silly, don't you think? But this is where it gets good. So if you book the hotel room, it's suites only. You book the hotel room, it's going to cost you 1 ,600 pounds a night.

2:40:21They have a weights trolley that you can request, and it brings the weights to your suite. It includes dumbbells, kettlebells, skipping ropes, yoga balls, resistance bands, and a leather gym ball. A Peloton bike can also be installed at a whim. So you can be in your room and be like, I don't want to go to the gym. Bring the weights to me, and they will bring them to you on a trolley. That is luxury. I love it. Anyway, lots of fun in the how to spend it section of the Financial Times. Any other news? Let's do some timeline. The other, yeah, some timeline. I like this post from Dylan Patel. He said, AI bros, when I tell them Boeing outperformed NVIDIA, Meta, Google, Broadcom, AMD and Microsoft this year.

2:41:06I got to pull up the Boeing chart on public.com. I certainly do. So year to date up 34%. Let's give it up for a great American. Only 34%. How does that outperform Google and video meta? I guess they all round trip because of the video is only up 18 % year today because a lot of the election stuff. Yeah, yeah, yeah, yeah, yeah. Totally. No, that makes a ton of sense. Well, we have our last guest of the show joining now. I'm going to let you take the intro. I will be right back. Let's do it. Can we bring in Garrett? I will say what up. How are you doing? What's going on? How's it going? It's great to have you here.

2:41:48This is the first time, correct? Yeah, first time. First time. I'm surprised it took this long. It's great to see you. You've got some exciting news today. Hit us with a quick intro on yourself and the company, and then we'll get into the news. Sweet. Yeah. My name is Garrett, CEO of Pipedream Labs. At Pipedream Labs, we build the infrastructure to make autonomous logistics scale. Amazing. Give us the quick catch us up to speed on the history of the company. I know we first met back, I think it was in 2021. You've been very busy since then. And then I want to get into what you're announcing today.

2:42:26Yeah. Well, likewise, man. Congrats on the show. Studio looks sick. Yeah, you have to come in person next time you're around. Yeah, I got you guys. So yeah, the announcement is something we've been working on for a long time. The kind of first product we were working on at Pipe Dream is what we see as the fiber optic cable for autonomous logistics. How do you move a lot of things really quickly and really cheaply? So we put underground pipes in cities and then we have these robots that go through the underground pipes and deploy orders to what we call portals. But they're like ATM size kiosks.

2:43:05It's a modular system made to be able to be retrofit, you know, whether that's into a building, an apartment building, underneath a road. And uses just standard construction methods that cities are used to using for non-invasive construction going into buildings and through public right of way. So we got, you know, that's something we were working on. We got that to a really good place. And something that we kind of thought about a lot when we were starting was, you know, if we're working on the fiber optic cable, we wonder if there's also going to need to be kind of like the cloud architecture for autonomous logistics.

2:43:42Because as you start to move things really quickly, and we see this with drones already, Like drones are like this magical, they're magic. It's incredible. And they're so quick. And yet it's still taking like 15, 30 minutes sometimes. Like I had one that took 40 minutes because it's so hard to pick out of those stores that they're picking from. And they're picking out the stores because those are the closest storage areas to where the customers are. So it's kind of like an inefficient system. You have this really fast delivery method and a really slow processor to get that thing out of storage and into the drone.

2:44:25So that's something we thought about a lot. So, you know, me and my co-founder, Cannon, we're a huge retail nerd. So we're always diving into Costco and Walmart and Amazon and the history of just logistics and retail as a whole. and what we realized is like man it is time it is time for a time so let's just to scale and no one's stepping up and building these fulfillment centers that are made to rapidly dispense so we had learned a lot worked with a lot of partners who taught us a lot about how to run those facilities and decided you know what it's time to go so we just acquired our first rapid fulfillment center here in austin um it's going to be what feeds the network um here in austin and uh yeah that was the other announcement so so is this uh just so i'm getting it correctly so is this set up in order to serve the like you know original pipe dream infrastructure and then also traditional drone delivery as well yeah so the way that we see it is if you have something at a rapid fulfillment center, the goal is how do we get it into the customer's hands as quickly and as cheaply as possible?

2:45:36And a lot of the times that's, you know, you may want to move it through the Pipe Dream Network to a closer location. You might just want to put it into a drone directly. It may be a heavier item. It may be a bundle of items. You want to put it into a self-driving car. I think for the foreseeable future, I think it's going to be even like really load dependent as well. I think autonomous vehicles and drones are going to be kind of like the GPUs of the autonomous logistics scale up. We're going to be constantly constrained by their availability. So our goal is to be really good, one, at dispensing really quickly and dispensing into the right modality.

2:46:19and constantly figuring out what is that right modality for that address, what is the right modality for that time, and making sure that that order is getting into that right modality and getting into the person as cheaply as quickly as possible. So over the next year specifically, what delivery form factor are you most excited about? Yeah, I think the two that we're most excited about is autonomous delivery right now is still pretty cost-constrained. The cost per delivery is still really high. So you're either passing it out along to the customer, or you see a lot of the times it's heavily subsidized.

2:46:55I think especially on the drone side, that's going to come down a lot over the next year. And so that's the one that we really want to be the best at doing. We have an internal goal here at the team that we want to, by the end of next year, we want to have done the most drone deliveries of any company, which is crazy. It's not like a super high bar right now. But I think that is a resource that is really underutilized. And is there, what is the regulatory framework that drone deliveries are needing to happen within right now, specifically in Austin? Like I imagine peer to peer, I could just put something, you know, attach something to a drone, take it up, fly it over to a buddy's house and drop it.

2:47:38But then if you're trying to do this at scale, I imagine like you have to keep keep a lot of other things in mind. Yeah, it's right now. It's not such a straight pathway to being able to do it city by city. So each company who is doing the drone deliveries has to get their own regulatory clearance. And so it is like pretty, pretty big hassle. That's changing pretty rapidly. We just had the executive order to make that pathway clear up. I really think, especially as you start to get more consumer demand for it, I mean, it's just if you go and look at the reviews from people who have experienced a drone delivery, it's borderline a religious experience.

2:48:22It really changes how you think about commerce as a whole. So I think that's going to change over the next couple of years. I think there's a lot of companies that have died saying drone delivery is going to scale in the next two years. They've been saying that for the last 15 years. So it's a tough thing to time. That's why we want to get really good at drone deliveries and be really careful and just kind of learn right now, be ready for that scale, and really focus on pickup as well. Pickups is a huge industry. it's one that doesn't have a lot of infrastructure to it so it's still such a bad experience but it's still one of the fastest growing ways that people experience retail is ordering ahead and picking up especially in grocery so that's one where we saw the ability for us to go into grocery make it a really really great pickup experience that's something that you can do right now make really good margins on, learn, and then as those autonomous methods decrease in costs, specifically due to better regulation, then we'll start to add that on as we go along.

2:49:34Amazing. Anything else? I think that's it. Good to see you again. The last time we talked, or I mean, we talked a few times, but I interviewed Garrett like two, three years ago or something. all about how Amazon had been talking a big game about drone delivery. And I was like, let me talk to everyone else who's been working in this space. And it's a fantastically massive market that is incredibly difficult to actually get things to work. And once they start working, it's great. So good luck to you. Yeah, and I think the key thing is staying in the game, finding a sustainable business model that's not dependent on adoption over a 15 year period versus a 15 month period.

2:50:20I remember when we were talking, we were, like, it's just such a, it's one of those businesses that you just like naturally noodle on, like, okay, should you go to, like, people that are building new prefab home communities and install a bunch of pipes in the ground when they build the buildings? Or should you do some sort of boring company thing where you get really good at drilling into old, you know, neighborhoods? Or should you do flying or driving? Like, there's so many different modalities. So very exciting that you're kind of exploring all of them now. So congrats and good luck. Appreciate it.

2:50:51Thanks for having me on. Great stuff. Yeah. We'll talk to you soon. Talk soon. Bye. All right. See you guys. In other AI acquisition news, we almost missed it because Sundar did everything he could to drown this out. But we surfaced the post and it's about Mark Zuckerberg acquiring Play AI, poaching the entire team. And they are joining the Meta Super Intelligence Lab next week. Zuck cannot be stopped he has the Thanos gauntlet there they completed something who's on the who's on the who's on the cap table researchers I guess it's the team I feel like I feel like we were played a very big role in this meme becoming bigger but a lot of people have run with it in different directions it's been amazing watching it watching it grow like this the play a group will report to Johan Schalquick cool name not sure how to pronounce that who recently joined Meta from a separate voice AI startup called Sesame AI.

2:51:47I remember this. That was a controversial one because Sesame is a new company and shouldn't be losing people to Zuck already. But the entire Play AI team is coming over and I believe it's a YC company because I saw one of the YC partners posting about, hey, this news is out now. Another 100 million for Gary Bates. The dark knight. The dork knight rides again. Never go up against him. Well, in other news, over the weekend, Janek Sinner made history as the first Italian man to win a singles title at Wimbledon. Naturally, this is according to Bezel, he celebrated with a rose gold Rolex Daytona Oysterflex on the wrist.

2:52:23So thank you for doing the most important work. It looks absolutely fantastic. Yes. Cover of the Wall Street Journal for this, by the way. In bloom, Italy's Yannick Sinner celebrates Sunday in London after his men's singles championship win over Spain's Carlos Alcaraz. I don't know if I follow tennis enough to pronounce that. Poland's Igor Swatek defeated blah, blah, blah. And yeah, more coverage. But he's looking happy with the trophy. I love how little attention you play to tennis, John. You know what I do follow, though? I follow hitters. I follow watches. And Jensen absolutely mogged the rest of the tech world.

2:53:07He really did. With one of the most insane Richard Mills in the world. You don't see him in a short-sleeved t-shirt much. No. He took off the leather jacket for this. And this is such a come-from-behind moment. Because we've been talking about the lack of wrist game. And we've been doing wrist checks on Jensen for months now. Karp was early and right. Oh, for sure. With the Aquanaut. With the Aquanaut with the orange strap. zuck's been ramping up putting up insane fp jorns really anytime he steps out of the house he has a cubitus he's got he's got a stack collection and everyone was saying even even jensen's uh uh family relative lisa sue over at amd was mogging him with uh with a rolex we saw uh but now never doubt jensen out never talk and the market loves this john the first talks up oh Oh, the stock's up?

2:54:033 % over the last five days. So obviously because of this. Obviously because of this. But this watch is really, really special. I mean, what I love about it is that it's just so thin. Like when I think Richard Mell, I think of the silhouette, the outline, this kind of like, well, it's almost like a bowed rectangle, which I think is a very cool, unique design. I think of the skeleton. It's checking those boxes, but then it's just so thin. And it looks fantastic. And Jensen is wearing it very well. So congrats to everyone. We need to do a deep dive on RM because the story is crazy. It's basically this longtime executive who decided he was going to make a luxury watch brand.

2:54:41Yes. And to actually just decide. It's easy to say, I'm going to start a watch company. Yeah. Very, very much harder to like actually crack the code and be able to sell watches. I'm surprised some of our friends haven't started watch companies, given how many companies they're spitting up every two seconds. Yeah, a certain one in particular. It'll happen eventually. It'll happen eventually. The last, another post, somebody posted RIP McKinsey. You don't need a 300K consultant anymore. You can now run full competitive market analysis using Grok4. And our friend Buko Capital Bloke says, I'd like to see an LLM provide regular consulting to turbocharge opioid sales, be a trusted partner for autocratic regimes and help young people get hooked on e-cigarettes.

2:55:25Very negative on the consulting firms. Who speaks for them? But we got to, we got to, we got to, let's give a round of applause for McKinsey, BCG. The white shoe firms, they do great work. Yes, some mistakes were made. But overall, good farm team for future PMs and big tech. Yeah. So in other news, Monumental Labs has raised some money. Over$8 million, most recently in a$7 million seed round led by Alexis Ohanian776. This is the company. Stone carving alert. Yeah. They're carving stones. They're carving stones. You heard Monumental Labs, you thought new foundation model. AI robots can already carve stone statues.

2:56:09Entire buildings are next. The stone carving startup, Monumental Labs, has raised money. They have a new HQ, almost 40 ,000 square feet in Greenpoint, Brooklyn. So the cool thing here, so they are opening this new facility in Greenpoint, which makes total sense to be the home of what will become the largest fine art stone fabricator in North America and possibly in the world when it opens in the fall. Makes so much sense in this, you know, a lot of people would, you know, this company was non-obvious, but then if you think about what we would pay for stone statues here in the studio, and I think what a lot of people will pay.

2:56:50Of all the Mag7 CEOs, potentially, just hypothetically, I don't have like a mood board for that or anything. Yeah. It's not like saved on my phone. Yeah. We want to make the Mount Rush, Rushmore of the Manosphere. For sure. Yeah. Yeah. Yeah. It's Mag seven watching over the Manosphere. No, but I think, I think, you know, if they can really crack, uh, congratulations to the monumental labs team. That's a very exciting company. And, uh, led by Alexis Ohanian, a friend of the show. And also, he says, looks like the secret is out can't wait for y 'all to watch because he is going to be a guest shark he's going to shark tank uh the upcoming season of shark tank which will be uh wednesdays this fall on abc and stream on hulu uh he's going to really have to really go shark mode because alexis is uh known to just be a really nice guy really really founder very sharky that's not not i mean uh sharp elbows i'm sure getting into deals you know sure but um but yeah he's gonna uh i mean but there's always room for for just offering an entrepreneur on shark tank a nice fair deal you wouldn't you know he's not gonna be offering you know like just give me 20 percent of top line forever yeah i mean as a personality i think he'll fit in great i think he will really add something to the show so very excited for him go check it out and final post from adam singer i was gonna end on this too uh cmo of adquick out of homemade easy and measurable says love seeing out of home from the new gen of tech media brands great brands do things online and in the real world our software makes this really easy for all and I just want to give a quick shout out to Adam for betting on us early yeah bet on us when we just were two guys two suits and a stack of posts we'll never forget that and you'll really go do yourself a favor and sign up for ad quick yep after you're done with that advertising easy and measurable come on people it's really not complicated after that leave us a five-star review on Spotify podcasts wherever you listen and I can't wait for tomorrow yeah there there was a couple weeks of news since last Friday yeah and I'm sure there will be quite a bit more tomorrow the other piece of news the information launched a competitor to us and they had some technical issues so if you know things about computers please contact them yeah tell them tell them the technology your brother sent you and that's our show see you tomorrow cheers goodbye have a great monday