Grok 4 Beats OpenAI + The $300 AI Agent Era | E2150

29:19And so we just need to protect that. And that's something I want to keep our eye on as we talk about all this AI stuff as time goes on. All right, four years and one month the US had as an edge over the USSR in atomic explosions. Pretty significant. Four years, you could have taken over the world in that amount of time. What was the minimum amount of time necessary once achieving that accomplishment and having a nuclear bomb would you need in order to take over the world? a year? Let's get producer Claude on that immediately. And if we don't like the answer, we're going to drag Daria up in front of Congress and whack him with a stick.

29:54No, unnecessary to even think that one through because it would be like you did have plenty of time to do it. Thankfully, in that situation, we did. So in this one, the I guess the thought experiment would be somebody creates something so powerful that they could dominate all of humanity for some very long period of time. What would that be? Fusion? Energy, maybe? Maybe some type of bioweapon? Like, if you think about it as something dark, like a bioweapon, or you can think about it as something very powerful in terms of economically or for the quality of life, like, I don't know, fusion? If you discovered fusion and you kept it to yourself for a couple of years and then everybody else got it, would you have some insurmountable lead?

30:40I don't think so. All right, listen, I'm going to level with you. We already know AI agents are using your websites. They're using your products, even if you're not aware of them. Agents are about to change how we handle all kinds of online transactions. But there's really a big problem, isn't there? How do we separate the real, authentic agents that represent real people from spam bots and, even worse, bad actors? You wouldn't book a trip with a sketchy travel agent or a flight on an airline you've never heard of or trust a new employee who didn't have an EIN or a social security number, right?

31:15That's why our friends at Vouch developed their Know Your Agent platform. This is brand new technology. With KYA from Vouch, now you have everything you need, identity servers that help you verify the human beings behind AI agents, permissions and delegation enforcement giving you the master controls you need over what you've built, and legal grade compliance. And knowthat.ai, a living directory of pre-verified agents, right? Agents are going to be talking to each other. That's starting to happen, folks. So you need to know the other side of the transaction, the other agent who's working with your agent.

31:50So turn your AI infrastructure into production-grade software with Know Your Agent from Vouchd. Here's your call to action. Check it out for yourself at vouch.id slash twist. That's vouch.id slash twist. Trust for agents. That's built for builders like you so maybe somebody in our audience can give us these uh ideas infinite energy would then accelerate the amount of energy you could put towards computing and then maybe you make the next 10 discoveries so i guess it could be like a domino's effect hmm so there's a there's a short story by isaac osimov called alexander the god it's not about me shockingly enough but it's very good and it breaks down what might happen if someone built a computer system that was so powerful it could run the global financial markets and essentially win and then the the moral of the story you just your spoiler is that the computer eventually becomes so powerful it fuses and then there's a global panic and then everything goes back to normal uh but this has been a thought experiment for a long time and i think even in those earlier free ai moments we were thinking about how it might also unravel perfect no one's gonna win forever perfect segue speaking of infinite money glitch and the gods bitcoin is that an all-time new high it's kind of somewhat related, right?

33:05There's a crazy crypto project in the sky that is now at$119. This feels like a breakout point. It was always hovering right around$100K. And people were wondering, is that $250K moment going to arrive? If it breaks to$119, that feels like some support level where it does feel like, okay, we're on the way to$200. And if it's on the way to$200, then hitting three four five seems also reasonable and then that eventually becomes this magical million dollar bitcoin um but there are people who are clearing positions did you hear about this old wallet that's was a i did yeah there's a wallet that's been around since the time of satoshi the satoshi era and it just got cleared so if what that means is somebody sat on some billions of dollars, tens of thousands of coins for an extremely long time.

34:05People probably thought the wallet was dormant. And here we are. Explain to the audience what the Sleeping Beauty Bitcoin wallet is. So if you go back in time to when Bitcoin was put together, a lot of people accumulated a lot of Bitcoins because they weren't worth much at the time. In fact, if you go back in time, you could get a couple for doing like a capture. People gave them away in their signatures because they were worth a fraction of a cent, you know, and there was going to be lots of them. So So who really cared? Some of those wallets from that era simply have not made a transaction. So they're called silent or asleep or you pick whatever term you want for it, Jason.

34:40But when one of those early wallets wakes up and begins to transact or move currency around, people pay a lot of attention to it for several reasons. One, it means that the overall supply of Bitcoin may be more liquid than we thought. One reason why people are often very bullish on Bitcoin's price appreciation is that people buy it and then hold. And so a lot of the big blocks of Bitcoin holdings move. Well, it could imply they're going to sell and move the price and so forth. People are also curious about Satoshi's own holdings and so forth. But just seeing a wallet wake up after 10, 15 years is is it shakes the foundation of how people think about Bitcoin.

35:14Now, in this case, hasn't changed the price in a negative way. In fact, as you just said, we hit a new high. But I'm curious to see if more of these wallets will wake up because if I had$2 billion sitting in Bitcoin and I don't, I would probably buy a boat just soon. What is the thesis here or the theory of who this person is and what happened? Did they have enough money? So they were a tech executive, let's say, who got into this early and they were already worth tens of millions of dollars and they had this wallet, or maybe they had that wallet plus some other ones, those other ones they were living off of, they sold along the way.

35:49But what else could explain somebody having billions of dollars in Bitcoin and previously hundreds of millions and before that tens of millions and before that millions and just being able to sit on it and do nothing? Were they getting a margin loan against it this whole time and living off of a loan against it? Could that be possible without the, and the wallet wouldn't have needed, they could have just given custodian, the custodian uh somebody else could be the custodial of that wallet i guess would be the way to say it and or give an ownership of it and now they've decided to liquidate it did the person lose the password for 12 years and find a thumb drive with it on it and then say oh i forgot i bought these and they opened up their account and it was there it's just a very weird story um to have come out of nowhere the the latest that i've seen on this and i have not actually gone and verified this to the nth degree.

36:43So I'm spitballing here with my friend Jason. Don't take this all the way to church and back. But I did see some reporting that there is new scams and exploits being aimed at very early Bitcoin wallets. And I'm curious if this may have got caught up in that because I don't see a particular reason why it would start to move at 118 versus 57 versus 32 versus 11. So somebody was able to hack it in some way. Hmm. Interesting. Uh, worrisome. Yeah, Yeah, that would be worrisome. Anyway, Coinbase, Robinhood, it seems like everything, just six months into this new administration, right? They started on January 20th and it's July 11th.

37:23So we're almost at the six month mark here. Crypto has been so given the green light, green flags in order for people to do things like stable coins, meme coins, that Robinhood and Coinbase have just gone on a run, stablecoins with Circle going public. This is quite a time for fintech too, yeah. Absolutely. And we're seeing venture capitalists respond to this. So if you're listening to the show today and you're building in the Web3 space, we have some good news for you. According to CryptoRank, in the first quarter of this year, crypto venture investments just cracked the$10 billion mark. That was up 263 % from the year ago quarter.

38:04And in the first quarter this year, Jason, 7.45 billion. That was up 136 % year over year. So if you take a look at the historical chart here of investments into the crypto space, you'll note that there's quite a lot of large bars to the right, which means that people are putting more capital to play. Now, the number of rounds isn't actually that exciting. It seems to be relatively trending lower, but the amount of money flowing into crypto companies is popping off. And so if you got stuck in the winter and are now looking to raise again. Well, this is a pretty warm time. The real question, though, Jason, for you is, are you going to start now backing crypto companies?

38:40Because when I joined the show, you were a little skeptical. I mean, for good reason. If you looked at the companies, you could wind up very quickly getting into a lawsuit, being sued, you know, being, you know, and not just being sued by anybody. Maybe the SEC decides to sue you. This was a really dangerous place to be investing capital. And that fall off there for July, that's obviously a partial month. So that might only be a week. And that would probably explain that drop off. If you look at June,$5 billion raised. That's a big number. I wonder if that includes Circle's IPO. I would think it does.

39:18And then the other$5 billion, I wonder if that's another crypto public company as well, or if this is all just venture dollars. into those companies. This is all venture dollars as it was described by crypto rank. But, you know, everyone counts slightly differently, Jason, so I don't want to be overly proscriptive. But my read was this is just venture, so it would not include the circle round. Yeah. And these rounds are also very strange. Like these could include ICOs and people selling coins and then getting back other coins. So I don't know if this is all venture capitalists putting money in, but let's put that aside for a second.

39:52And I think you could feel pretty good going to an attorney and saying, if I'm going to do this stablecoin thing, if I'm going to do this, will I be sued? And they would say, a lot less chance than under Biden. So if the president can launch a meme coin, I think you can, too. And I think that's kind of where these, well, I mean, let's call it what it is. You know, they've said meme coins, NFTs, these are collectibles. If you want to buy collectibles and they trade with the ticker symbol on, you know, trading accounts on Robinhood where I bought my Trump coin and I've lost 70 percent. And I did it as a joke, obviously.

40:30But, you know, you. This is now the rules of the road. And I think it was previously, if you do something that's innovative or new, you're going to get caught. And it's just a matter of how big the settlement is. And if you can survive, we see XRP as an example of that. They were able to survive. They had enough money, enough cash that they were able to fight that lawsuit until Trump came into office. And XRP was, I think, is largely off the hook now. I don't know the exact state of all their cases, but I believe they won one case. They weren't able to prove that they were doing solicitation of non-accredited investors because those things were trading on marketplaces not being sold directly by XRP.

41:19So it wasn't that they weren't selling to consumers, it couldn't be proven that they were selling to consumers. Putting all that aside, I think now people are, you're in the clear, is probably how most people feel to experiment. Does it mean commit crimes? Does it mean abscond with the money? Like we saw with ICO. So I think we'll see a lot of innovation. I've always liked FinTech. We were involved in Robinhood and Wealthfront. I think FinTech's a great space, you know, and adjacent to FinTech is crypto. Sometimes they overlap, sometimes they don't. But now with crypto regulations being out there, I think you're allowed to dream again.

42:01Hey, what could the world look like if you could tokenize shares of a private company like Robinhood did with OpenAI shares? Like, okay, it seems like there's enough legal consensus that you can experiment against. So here we are, folks. Great time to give it a shot and invest. And everybody's got to take as investors and as founders, you got to define your own level of risk. And when you talk to attorneys, they will almost universally tell you like, we can't give you a legal opinion on this. It's too new in these kind of areas. and so then they rely on what's happened to other companies and other cases out there well if all the other cases are being folded and settled okay yeah they can tell you we don't have exact law or hey the stable coin laws are in process this is where we think they wind up here's what circle did they're in the clear and then if you wanted to innovate beyond what circle is doing and maybe get closer to tether and offshore, you know, marketplaces for crypto, et cetera, and exchanges.

43:07Yeah, then you're going to be taking more risk. And jurisdiction is the other piece that really matters here. If you're doing stuff in Panama, and Malaysia, and Singapore, and Dubai, like Zerg, different places have different rules, the United States is catching up to those. Yeah, but catching up by having fewer, I think is maybe the right way to say that kind of a race to a more relaxed market for entrepreneurs. And that's why when I see companies like Agora raising for its stablecoin product, well, it kind of just tracks with how you and I view the world and what we see coming. People want stablecoins.

43:38They want to be able to trade. Okay, well, off we go. Now, before we get to our guest, Jason, a couple of small things. One, Grok, G-R-O-K, the AI model. This is the inference provider, of course, I believe, Sonny from our old AI shows. Yeah. Yeah. He's now, he's part of the Grok family, right? He sold his company to Grok, and he is responsible for all the developer relations, which I think is like developers.crok.com, G-R-O-Q, as opposed to G-R-O-K, which is Elon's Grok. These folks make inference chips, and they've done a ton of different deals, and they're raising more money, it seems, yeah?

44:16Yeah. So according to reporting, they're going to raise between$300 and$500 million at a $6 billion valuation. For context, their last round, Jason, 640 at a 2.8, so a more than doubling of their value. Why? Well, they signed a big deal with Saudi Arabia, and I believe it was the Humane Project, their AI G42 competitor. They also announced an expansion into Europe, and perhaps most importantly, the information reports that they grew their revenue from$90 million last year to an expected $500 million this year. So$6 ,512 ,000 makes a lot of sense to me. I don't know their margins. I I don't know how repeatable the revenue is.

44:53We can't say it's an ARR multiple, but 12X does not seem nuts for that level of growth. And I just love to see companies that are not just NVIDIA, but are building chips for the future do well because back to our point about AI models, steel sharpens steel. And we want to see a lot of companies pushing ahead here with new ideas and so forth. And Grok makes LPUs, not GPUs. Those are language processing units as opposed to graphical processing units. So I'm really excited about this. I'm keeping tabs on Grok because I think it's a really cool company. and I just hope that they do really well and make sure that Jensen stays up at night.

45:25Yeah, I am a shareholder. And of course, I was a shareholder in Sunny's company, which got bought. So I have some modest exposure here. So apparently this is good for me. Never mind. I hope Grock crashes into a wall. And I hope not. I'm just kidding. No, so far so good. You know, the inference chips are a different architecture than, say, when you're building your language model and you have to compile it, essentially. so there is going to be an infinite it seems or in the medium term an infinite appetite for this as consumers stop doing jobs and businesses stop doing jobs inside of apps or sas software and they start with a language model and when you start with a language model and you need a context window and you've got a you want to throw a video in there and say tell me about this video or a book or a book and a video, or you want to index your entire hard drive and, you know, make that the context window.

46:21Like it's going to be pretty crazy. I don't know when we get to the point at which this becomes like storage and people are like, I don't know how much storage I have or need because every three or four years, like they keep giving me the ability to record in 4K, 8K, whatever, you know, and it doesn't make the videos any better. and the storage keeps going down as our phones and the quality of the video goes up. So even as we make bigger and bigger files, it doesn't seem like the storage business is a great one to be in. At some point, 10 years from now, 20 years from now, we'll be looking at this kind of infrastructure in that way, I'm sure, but that's not going to be for another 10 or 20 years.

47:03It took, gosh, I'm trying to think about how long we sweated storage on computers for consumers or businesses. And I would say for consumers, it ended sometime 20 years ago where you really didn't have to think about it, right? Like you weren't buying your computer and saying, how much storage does it have? Because you had cloud become available and cloud was easily expandable. So that was 15, 20 years ago, 2005 time period. RAM and processing power of chips. Gosh, I think that stopped maybe 10 or 15 years ago where people don't even look at how much RAM they have on their computer unless you're doing video editing or video games.

47:45No. Or you're a tab hoarder in Chrome because Chrome's... I mean, you're right apart from Chrome. Yeah, but you don't need to have that many tabs open. That's like a choice. That's like a crazy... That's like... I don't know. I'm going to make a two-hour 8K video on my... Or 4K. I don't know if my phone can do 8K. does 4k for sure i'm gonna make like a 60 frame per second 4k video of like a flower growing like you don't need to make that you can make a short 30 second video it's the same thing it doesn't change you're choosing to open infinite tabs and then complaining when you run out of memory it's stupid it's like it's unnecessary just close your tab in fact people like you are now causing these browser companies to add features where they turn off and they shadow turn off your tabs like you know that's what's happening now they like you're welcome turn them off well you can also close your windows why do you keep all these tabs open i don't get it well i mean just for this show i have about 15 articles pulled up for various contextual points that i might need to reference and then 15's fine but you're gonna have another entire sorry good i'm sure you're you're 50 we all know 15's okay but i think you've got 50 tabs open right now oh yeah then i have a separate chrome instance that has all my screen shares prepped for the show and then in my third chrome window and then on my other screen i mean we pull together a lot of stuff for this show and so i just i use a lot of tabs and wait how do we end up here oh ram right let's get back on topic like june could you possibly need more than 16 gigabytes of ram on a laptop if you're not doing video editing i think the answer is no and yeah i i have now stopped even i i literally get the lowest amount of storage because everything's in the cloud.

49:33So I don't think about storage anymore. I don't think about the CPU, the GPU or the CPU anymore because they're all off the charts in Mac and on PC. There's no game or something I'm playing that needs that. And then even video editors, they used to come back to me every year and say, oh, you know, can I get an upgraded computer? Now they have computers that are two or three years old and they're like, yeah, it works fine. It works fine. I'm like, should we get the new one? It seems like it's faster. It's like, yeah, it's 20 % faster. We don't need it. But that's going to be interesting to see if that happens with AI clusters.

50:06And then you think about like Colossus that Elon built that really, I think, is a big part of why Grok hit these things is that they have this giant cluster. How long are those GPUs good for? You put up 100 ,000 of them, you can use them for three, four, five years. What's the lifespan of those? Microsoft recently changed the accounting of its depreciation, Jason. pushing it out by one more year. I think it was four to five, from four to five. So call it a half decade. Okay, five years. So you spend all of that money, billions of dollars, 100 ,000, you know, per GPU or server, I guess, you know, like, and then it's gone in five years.

50:46And then what do you do? What are we going to do with all these Colossus, you know, data centers? Do they stay online? Do they have some afterlife purpose or do you, they're not worth running anymore because the new ones are so much more energy efficient that we just turn them off? Or can they be used for something else? I think it's like actually, if we're going to build out this much infrastructure, people should be asking these questions. If somebody, let's put this on the docket for Monday. I would like to get the answer to this one is what happens if these things do have a five-year life, what is the post five-year plan?

51:20What is the plan for years six to 10 do they get turned off because the energy consumption makes them not worth using do they get resold is there somebody who needs to use them in a world where ai has solved all those problems then you don't need these chips anymore the problem's been solved it's been baked into an llm i'm just really wonder what happens to all these i wonder if nvidia has like a recycling program because with facebook what how long does facebook keep their servers on you know in that open cloud, had that open computing standard they created. I wonder how long they depreciate theirs for before the energy consumption of them in ratio to what they're capable of doing becomes untenable and you're just better off turning them off.

52:04And then if you turn them off, is it worth taking them out of the rack for the real estate or do you just leave them in the rack and then just build more racks behind them in a giant data center and just turn them off because the real estate cost is less than the cost of dragging them out of there depending on where you are i have i have a lot of questions about all this so we'll talk about it more but just a couple of quick data points um according to a number of sources here when you do run these gpus in a data center at like max capacity for a while they do degrade so they do actually have a life expectancy to them now the major companies have pushed out their depreciation calendars up to five.

52:40They break? Or they are like a battery on a Tesla or an EVA that they degrade and they can be capable of 60 or 80%. I wonder what they mean by degrade. Like actually break or they perform at a lower ability? Well, according to training data from Meta's Llama 3, there's actually a 9 % annual failure rate of GPUs used for training information. So again, we'll do more research here, but that's one thing. That's a lot. So that means every 10 years, every 11 years, they have all failed. Wow. That's interesting. That's brutal. But I think the real question is, how fast does NVIDIA push the envelope out?

53:19Because every year, if they have a faster chip out that's much better, I think that makes last year's chip depreciate faster. So if NVIDIA runs into a problem that it can't expand capacity or performance faster, then I think these last longer. But if NVIDIA is better, they get shorter lifespan. fan. So we'll talk more about that on Monday. I'll do some research and talk to some people. Yeah, and the other piece of research is I wonder what it costs to ship them and to rack them and to unrack them. Now, we have a guest, Jason, so I'm going to go ahead and move our click to cancel work until Monday.

53:52There's a lot of interesting stuff there, but it's just going to take too long to get us through. So I think it's time for a quick commercial break while we get our friend into his chair.

54:02So Claude is not just writing show notes for us anymore. It's gotten a lot better. It's actually analyzing guest applications. It's helping us draw up interview questions based on a founder's specific background, what they're doing. And it actually helps us generate research in real time as we do the show. And that's why Claude is perfect for startup founders. It is intelligent, it is quick, and it will help you no matter what you are doing. Now, if you do create a lot of code, of course, Claude code is an excellent pair programmer for you. It can help you out even I believe in your terminal as well.

54:32So no matter what you're building, well, Claude probably has a solution to it. And if you need to bring your own data into the context, well, don't forget, there is Model Context Protocol, or MCP from Anthropic, the makers of Claude. And what that will do is ensure that your private data, your proprietary data, the stuff that you need to become great in the world of AI is available to your favorite AI model. And that's why we have partnered with Anthropic to give Twist listeners 50 % off Claude Pro for three months. If you go to claude.ai slash twist, we know if you're bootstrapping out there.

55:03Every dollar counts. So let us save you a couple of them. That's claw.ai slash twist. All right. Next up on the program, we have a founder. I'm a second time investor in Ben's company. His first company, Neighborly, such a great idea during COVID. And it wound up shutting down. We'll get into that. But you have a new company, and it's Ben Seidel. I'm pronouncing your name correct? You are. Seidel. and the new company, you came to me and you pitched me this idea. I said, that sounds crazy. There's many more questions than answers for this one. I'm in. So let's talk a little bit about what you're building with Autolane.

55:43Yeah. So with Autolane, we're building the connective tissue between autonomous vehicles and businesses. So it's essentially an operating system that allows high volume retailers, shopping centers. So think of like a Whole Foods or a Costco or a shopping center like The Domain here in Austin to be able to connect, coordinate, and control autonomous vehicles on their property. Got it. So I have something like The Domain, which is an outdoor mall here in North Austin. It's pretty impressive when you see it. It's like you can live there and there's an Apple store, tons of restaurants. They want to get deliveries there.

56:23It's going to be automated, obviously. There'll be self-driving cars. We've got self-driving cars all over Austin. For whatever reason, this has become ground zero, it seems. But there needs to be some connective tissue. When you're in LA, there are those street... What do they call those little robots on the street? Oh, the sidewalk bots? The sidewalk bots. We're seeing Zipline in Dallas doing drone delivery. But the big opportunity in your mind is a self-driving Tesla, a Waymo, a Volkswagen ID Buzz. Zooks. a Zoox is going to show up at the domain and somehow at the domain, a retailer is going to take a burrito or a pair of sneakers and put them into a self-driving car that's going to come to my ranch out in hill country and give me what I want.

57:15Yeah. So which piece of the puzzle are you going to take care of? Or is that all the point of this startup is to figure out what needs to get done? Yeah. So we can't put the idea, essentially, if you look at the components that you would need in order to make that type of a transaction possible, of course, you need a self-driving car, you need that technology to be flawless. And I think we're pretty close to that. So I kind of envisioned, well, fast forward a few more years, and let's say most OEMs are either licensing or shipping some type of personally owned autonomous vehicle. Toyota, GM, Ford, you'll have a bunch of these companies shipping these types of cars.

57:57And if most of us have access to this technology, don't these cars essentially become physical AI agents? These become, you're kind of like Butler, right? Yeah. So in that model, I have the car. I have a Model Y, Hardware 4, pretty incredible. not perfect yet, but getting there pretty close, right? I think I would say two out of three drives I do is flawless. One out of three, I can have a, that was sub optimal moment or, oh my God, moment to be totally candid. Like when it gets near construction, that seems to be for these cars really challenging. Um, but I might send my car to the domain and say, Hey, my car is there.

58:43What now? Yep. And that's what we are building. So most of the, I would say, autonomous driving technology has been applied to ride hailing thus far. So, of course, Waymo has been operating in public for years with almost no significant incidents. I don't think there's been any. Nobody's gotten hurt. Nothing. And so, you know, they've now have more market share than Lyft does in San Francisco and still growing. So I think that San Francisco, if you were to look at the market share for ride hailing, you could pretty much assume that what you're seeing in San Francisco is going to continue to expand and duplicate across the country over time.

59:30Now, it won't be an overnight situation, but of course, AV ride hailing is here. Yeah. And if that's any indication of where the general market is going for TNCs and aggregators, you should expect that delivery will also go that direction over time. And so what we've been building at AutoLane is essentially the connective tissue to say, if that is to take place, the vehicles are here, the AI driving systems are here, the regulations are coming, consumer adoption is happening. but if you've taken a Waymo or you've used FSD to go to a business uh you'll quickly notice that one of the hardest parts and kind of least developed parts of the technology is the pick up and drop off experience yes and because of that uh and that is like what we call the last feet because that is the part that is is really unrefined at this moment that's where we are focused on at Autolane is to build the software and hardware to basically enable physical and digital infrastructure to make that final 50 feet polished and flawless.

1:00:42And then if that can take place, then all of a sudden you have the ability for these cars to conduct commerce. And that's where we think that the next wave of commerce is going. I really believe that we're going to see something akin to the transition we saw with e-commerce. We're going to see something that I would coin autonomous commerce. It makes sense to me because there are places I've wanted to go here in Austin. There's like a sando shop, you know, Japanese sandwiches. And I have wanted to go to this place in North Austin, but I live in South Austin and the hill country. And I just I could, I would have ordered from this place every week some sushi or a nice katsu curry or a wagyu sandwich on that great Japanese bread.

1:01:32Yum, yum. It would have been very easy for me to just say, I order it. My car will be there. Just put it in the front trunk with a nice pack. And yeah, my car comes back here to Capital Factory where I have our studio and I jump back in my car and go home. That's right. It could have done that errand for me already. Yep. And two or three other ones. Yep. But there is so much logistics in what I just described. That's right. Which is why I was really excited to invest in the company. Yeah. And thank you for that. Oh, well, of course, I mean, the greatest success we've had is when we've known a founder for two or three startups.

1:02:09And your first startup was amazing. I still think it's one of the greatest ideas I've ever heard. And I still think it will work. But I'm glad you went on to this one, because this one feels like It's even bigger. And that's typically what happens with founders. They have some amount of success with cigar tissue in the first one. And the second one, then they're just like, oh yeah, I'm not going to make those mistakes. I'm not going to overspend on this. I'm not going to underinvest in that. And they just boom, boom, boom. So we just love second, third time founders here, especially if the first company or second company was a complete disaster, blew up, or was like a modest success because those things kind of set you up.

1:02:44You still have the chip on your shoulder. We'll get to that in a second. So also, this is going to be super fragmented, is your best guess. Oh, yeah. Super fragmented. So explain the fragmentation and then what you perceive a retailer, what set of problems is the retailer going to have due to that fragmentation? Great question. So yeah, one of the easiest ways to think through how this industry could play out from a solution standpoint. So let's take Walmart, for example, okay? Okay, so if you agree with me that personally owned autonomous vehicles or autonomous vehicles in general as a technology are going to scale over the next five to 10 years, if we agree on that?

1:03:24Everybody agrees. Okay, well, then I guess you would also need to agree that those cars are going to go to Walmarts. Yes. They already are. Yeah. Waymos are dropping people off, picking people up from those stores. There isn't commerce taking place with Walmart directly yet via those vehicles, but of course there will be. And so one of the major aspects of this conversation that I think is important to consider is whether or not, because the industry is a bit divided on this topic, but whether or not you believe in personally owned autonomous vehicles being a significant market share within the autonomous vehicle industry.

1:04:02Some people believe, oh, the technology is going to scale and the costs are going to come down to a point where OEMs will operate their own robotaxi networks and people just won't own cars. Some people will choose not to own a car. I think there's a lot of people who believe that side of the spectrum of the industry where essentially you won't need a car at all and the services, both ride hailing and delivery, will be so cheap that it really won't be a need to have a car. So maybe that becomes the case for some people. For young people, I could see it. For people who live in an urban environment and don't have access to a garage.

1:04:37People will say that about Uber since the early days. And it remains to be seen whether that played out the way. Well, Uber, I would say, is like 5 % of the population. Yeah, exactly. I don't think it played out the way. So maybe it goes to 10. Totally. And so I think we believe a similar situation is going to arise here with autonomous. And actually, it's not, in my opinion, the case that we just won't own cars. It's that actually the cars that we do own are going to be able to do a multitude of things for us, and they're going to be much more valuable and we'll need less of them. But I do think most people will own a personally owned autonomous vehicle in their driveway, and it can do errands for them.

1:05:13It can pick up their kids from school. It can drop them off at the airport and drive home. It can do all types of things. And so we might, instead of having two or three cars as an average American household, we might just have one or down to one and a half. Because when I get dropped off here at work, I could send my car to go pick up the kids from camp then they could also make their way to I don't know back to the ranch to run some errands for the housekeeper and get some chicken feed or something so we really think that personally on autonomous vehicles is going to be the future of transportation and if that's the case and you go back to kind of your question about Walmart and their fragmentation.

1:06:00So if most people have access to this technology, whether you own the car or not, or whether it's your neighbors or your friends, and you order something from Walmart, groceries, retail, what have you, well, that car is gonna be able to go to Walmart. Now, if that's a Toyota or a Tesla, or that's going through DoorDash, or that's going through Uber Eats, or that's a drone, I mean, you're talking about not just cars, but all types of robotics here that are going to do consumer transactions. And so if those vehicles are going to Walmart to do commerce on behalf of a consumer, imagine being Walmart in this case.

1:06:37Yes. It is a complete nightmare that is about to unfold on their hands because... In their parking lot, there'll be 10 times as many cars showing up. That plus there will be 15 to 20 OEMs. And each one of these OEMs have a different hardware, software, and data stack. Right. Right. And that's not one type of vehicle. They have to already design their parking lots for a number of vehicles. You could have, you know, trailers showing up in the back to unload. You could have, you know, SUVs, you know. So right now a parking lot has compact car spots, spots for the trucks, spots for SUVs and larger ones, and maybe a pickup or drop-off zone.

1:07:18They've got maybe arguably... And curbside pickup. And curbside pickup. So they've got maybe five areas right now. Now you need another area where my self-driving Model Y or your self-driving Toyota, because Waymo just said they're going to license Waymo's self-driving to Toyotas. Like you saw that announcement. I'm sure you're on top of that. Hyundai as well. Yeah. On Hyundai, they're doing Waymo. They've got a partnership with Hyundai. Wow. So all those cars are going to have self-driving. They're going to show up in a parking lot. What parking space do they go to? Yep. Do they go to the pickup zone?

1:07:50Do they go to any spot in the pickup zone? How do you know the car is there? How do you know where to put the stuff? Does it go in the backseat, the trunk, the frunk? How do you unlock the trunk? You gotta unlock the car. How do you know which VIN it is? How do you know which customer is associated with which car? How do you know which stall that car is in? How do you know which order? If you have three orders at Walmart and my car goes, well, which order is it? There's basically what I call the three Cs of AV orchestration that Walmart or any major retailer is gonna need to solve. One being communication.

1:08:20So this is Jason's Model Y. It's coming to pick up order number one, two, three. It'll be here in 16 minutes. It's license plate, blah, blah, blah. It'll be install two. Okay. All that information needs to be communicated. The second part of it is coordination, making sure that that car is going to go where Walmart wants it to go because the curbside pickup operation across 4 ,500 stores operating 16 hours a day is a very expensive labor line item on their P &O. So when they can shave off 15, 30, 45 seconds from a pickup and drop off curbside arrangement, then they are operating more profitably and then they can knock the prices down on their retail good, which is the entire Walmart business model, right?

1:09:07Like operating more efficiently, reduce the prices for consumers and sell more goods. And so they are obsessed with finding ways in which to do these types with things more efficiently. And so are, so is McDonald's, so is Chick-fil-A, down the line, HEB. And so really what you end up with on those three seasons, you've got the communication, you've got the coordination, the car needs to go right here so we can be faster. And then the last part of it is control. Now you don't need to tell the car how to drive to Walmart, but you do when it gets to your private property, you do need to say, okay, well, I need to be able to unlock this car, unlock the frunk or unlock the trunk.

1:09:42And if you have 20 OEMs shipping different types of autonomous vehicles, your Walmart, you're going to have to have an integration with every single OEM. And those OEM integrations, they're not stable for five years. Tesla's APIs change every two weeks. I know that because we have integrations with Tesla. So you're going to have 20 OEMs that are changing their code base every two weeks. That's an entire in-house team that you're going to have to have. And Walmart potentially could build this software, maybe, but they're one of the few who could actually create this. And then, sure, Toyota, Hyundai would have no choice but to interface with Walmart.

1:10:21That's right. But after Walmart, that drops off pretty quick. It does. Yeah, and like even HEB is a local retailer. That's right. They're not across the entire United States. That's right. Starbucks, yeah, they might be able to figure this interface out with their drive-thru, maybe. But still, you know, with all these different players showing up, I could see a world in which 10 years from now there would be more autonomous vehicles in a drive-thru, in a Walmart parking lot than actual human customers. All right, everybody. This has been, go check out Autolane. Is it autolane.com? Goautolane.com.

1:10:56Goautolane.com. And we'll see you all next time on This Week in Startups. Bye-bye. Thanks, Jason.