Meta’s Dangerous Chat, Protect AI & Founder Fridays Pitch Comp | E2118

23:16Sure, yes. So there do need to be some controls on this, and it sounds like a really great idea. And did they say what it was sold for? So they did not list a price. They called the deal strategic on the Palo Alto Network side. GeekWire did report that the transaction was for more than 500 million, but we don't have anything more concrete yet. But no, Jason, actually, it's not that great of a price because I think their last valuation was between 400 and 450. And that was last year. So this isn't that big of a sales premium. And the company said at that time that it grew, I think, was by several hundred percent.

23:49So to me, there's a missing piece here that led to this sale because it seems like the company, the funding, the growth all had it pipped to do a lot more than this exit. I don't want to talk crap about someone's nine figure exit. Right. but it just feels a little cheap. So I wonder if we're missing something in the story that hasn't come out yet. Well, the last valuation is the sales valuation. That's like a really interesting discussion point. Is that basically what we think happened here? Plus 20%, yeah. Okay, so whenever you have less than a doubling, the VCs are not in it for a doubling. That means the founders drove this and the early investors drove it.

24:26So there'll be three constituents in a company of this size. You have the early investors, Angel, Seed, Series A, they all got in at$5 to$10 million,$10 to$50 million, maybe$100 million. And the founders got in at$0. That group probably owns, collectively, 80 % to 85 % of the company, including the employee. Then you got the last 10 % to 20 % of the company. That's the Series B. That's the$100 million at$500 million posts. that group of people usually has a right to get at least two times their money, right? So if they were smart, in a really competitive environment, they can't get that. They just get their money back.

25:09So this is a situation where if that firm was in a competitive situation, they may have given up what are called protective provisions. The protective provisions mean, you can't just run away with the money. You can't abscond with it. There are things to protect investors from bad behavior or losing money. One of the protective provisions is participating preferred or a liquidation preference. This means I get my money back plus something so that if you do some quick sale like this, I don't get nothing. So my guess is whoever put the last 50 million in has a provision they get double their money back, a liquidation preference, in other words.

25:46So they get the 100 million. If this went for 500 million, they sweep the 100 million off, then 400 million goes to everybody else. You get$400 million to everybody else. Maybe the founders, if they own 80 % collectively, thought, hey, 40 % of$500 million is$200 million each. We're in. So I'm guessing that's what happened here. And maybe they thought there's a lot of competition and maybe they were given equity in Palo Alto Networks, which has been doing fantastic. The founder of Palo Alto Networks spoke at the All-In Summit last year, and he really explained how he really courts founders and puts those founders in charge, in charge of their units.

26:21And if there was a unit doing that internally and they go buy one, they take the unit head who is getting beaten by the independent and say, that's your new boss. Yeah. If the unit head internally is beating the external competition, they get to be there, keep being. So that's his philosophy. It's a kind of a cutthroat. It's a reality competition series. I think it's more, yeah, it's performance-based. You know, if you are a fading starter in the NBA and some young buck comes up and they're the sixth or seventh person on the bench, they might take your position. Very awkward thing you see happen sometimes in basketball, for example.

26:55I know because I'm friends with Draymond Green and with David Lee. David Lee was a starter. He was towards the end of his career. Draymond Green was coming up. I think maybe if my memory serves me correctly, like their minutes or starting position may have flipped at some point during that transition. but they were both very cool with it. David Lee was, you know, Draymond Green's mentor and so was Bogut. So he had this really great transition. All right, listen, congratulations to them. And the other piece in this, Alex, to note, DPI, sending money back to your investors has been very low for four years under the wrath of Lena Kahn.

27:31And then it just got kind of paused by this tariff turmoil. Yeah, yeah, yeah. So maybe the VCs here are like, hey, I doubled my money I can send 50, I can send 100 % IRR. The internal rate of return here is 100%. I can just ship it to my LPs and just say, hey, by the way, you put in 10 million, this was whatever. If you put in 30 million, this was 1 million of the fund. All of a sudden I'm sending you 2 million back in the early days of a fund. It's like, oh, that's nice. Yeah. Money came back from a venture fund. Something that's not happening as much as it needs to. The power of cash on cash returns.

28:06All right, next up, ARX Robotics. It is a European defensive robot company. I have a picture of one of their machines right here, Jason. This is an autonomous robotics platform. The company has many different systems that go on top of this. You can do delivery of supplies on the battlefield, sensors. You can do casualty recovery, I believe is the term of art. It looks like a little... What would that look like? Tank. It's like a tiny tank with a big sensor on top is what it looks like to me. Like treads. It's got two treads. Yeah, it's like a mini tank, like not as big as a vehicle-sized tank, like a little, like one of those autonomous delivery robots.

28:45I was just about to say, exactly like one of those. Yeah, it was a tank. Got it. It's a sensor on it. So it looks like maybe an ATV, like that you might drive in your ranch or something. Roughly ATV size, sure. Yeah, size of your desk. You could sit on it, but you wouldn't have you and your friend on this device. They're calling it a platform. The acronym here for folks who want to be in the know is UGV, Unmanned Ground Vehicles. And this fits neatly into our philosophy that drones and autonomous systems are the future of warfare. And to see a European company doing this, raising money, including from NATO's innovation fund, not a huge shock.

29:16I thought it was incredibly cool. I love to see Europe getting its military boots back on. I think it's encouraging. I think it's a little bit late, but better late than never. And the company put together a 31 million euro round, Jason, bringing their total capital to 42. I love seeing it. If you're a startup founder, you've got a million things that you're worrying about at this moment. You know what you shouldn't worry about? Your bookkeeping. Your bookkeeping should be perfect. And you should have a partner who makes sure it is so. And that partner is Pilot. It's the industry standard. Pilot is the largest accounting firm out there built for startups.

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30:57Lon, how did we miss this for the Twist 500? I felt so silly. I was like, this must be a Twist 500 company. And it's not. We're very into the autonomous military robot drone kind of thing, kind of area category. Yeah. I do like that they're not putting guns on it, that this one is for recon, patrol, cargo. Bullshit. They're just not putting that in the market. Yeah, yeah. It's a platform, so it's up to you. Yeah, yeah, yeah. And you can be sure that there are amounts that if you wanted to, you could put AK-47s. You could put turrets on there, yeah. Which, I'll be totally honest, I'm fine with, because what we're going to see in the future is these things shooting at each other.

31:34It's going to be robot on robot. This is going to be like that... What was that show on TV where the robots would battle each other in an arena? Battle bots. Battle bots, yeah. Basically, war is going to be battle bots now. That's best case scenario. There's battle bots. There's battle bots. So this is the future. They're not autonomous, though. There's guys with remote controls. But the idea is they're not punching each other. Yeah. This is the precursor to it. So like the ability to move around and have weaponry on a small device and then have it battle other small devices, what this is going to be all about.

32:03I have a theory that non-US, non-US weapons makers are going to surge. Why? Well, the US has a certain amount of capacity. That capacity is needed for client number one, the US. We need every ship we can make. We need every drone we can make. We need to build a supply chain here that's independent of DGI. So I think places like Korea and the EU and other places that are good at making weapons are going to get their order books filled by everybody who needs weapons. Everybody needs some weapons. You got to defend your border. It's no big deal. No judgments. So there is an ETF. A friend of mine told me about KDEF.

32:46I backed up the truck. Korean defense company. You cannot buy Korean socks easily. So I bought KDEF. I announced it. I sold like two of my losing positions, which were Warner Brothers and Disney. I was sick of Warner Brothers and Disney, just disappointing me. I had like a hundred thousand in losses from that. But I had bought some Uber when Uber was like down around$30. And I have a lot of Uber already from the angel investment, but I was like, let me just buy some Uber here because I know for a fact that this is definitely undervalued. It's trading at 70 something dollars now. So I sold that Uber.

33:24I had bought two years ago to offset the gains. I'm sorry, the gains from Uber were offset from the losses from Warner Brothers. That turned and edited it out. I cleared, you know, a couple of hundred grand. Boom, I dumped it into KDEF. It's like the Korean Defense Industry Index ETF. Correct. Now this is made up of, when you look at it, it'll tell you all the companies that are in it. Now, these are individual publicly traded Korean defense companies. I know nothing about those. but I am into defense. I'm going to start buying defense stocks. If you have ideas for us, please put it in the comments.

34:01If you think this KDEF is a bad JTRADE, let me know. I got to rebuild the JTRADE website, jtrading.com because we're using Coda and my guy Prash had used a third party tool to pump in the shares. The real time. The real time. The real time service, not Coda, not their fault, turned off. So I have to redo the thing or I may partner with one of these websites that allows you to put your portfolio up because one of those had me on a list and I was number five on the list behind like Ken Griffin and Nancy Pelosi. And I did this like in my spare time. Now I had a good entry price, which was, you know, during the bad bottom out during the SVB.

34:41I mean, getting anywhere close to Pelosi is tough. Yeah, it's tough. Pelosi is a tough, tough, that's a tough person to be at the poker table with. Anyway, what else do we got going on here? centra not the car not the thing you don't want to drive to the high school prom no this is a startup that just raised 50 million dollars it is in the world of data security jason there's a fancy acronym called dspm which stands for data security posture management that is corporate speak for go find all your data all around your multi-cloud setup and make sure that it's secure it's actually a pretty big industry i think and the company is also moving into helping Unsurprisingly, companies use generative AI safely so their data, to your earlier point, doesn't leak into the applications and go out all over the web.

35:26$50 million Series B. Oh, so another contain the AI map. It's great that people are getting ahead of it. So they raised$50 million in a Series B. Again, I think this is a pretty cool idea for a Twisted 100 entry because it grew 300 % year over year. And that is the exact pace of growth that gets me very, very excited. Because if you're raising 50 of a series B, Jason, I presume you have a pretty reasonable revenue base to be growing from, you know, 300 % on top of. So it's probably a pretty impressively stable corporation. And I love to see more, as really, security companies do well. DSPM technology, data security posture management.

36:03So you've got data, you need to keep it secure. You're plugging it into Notebook LM over here, Claude over here, OpenAI over here. you need to make sure it's not going everywhere, leaking into those. I need to know about this because I, like I said, I bought ChatGPT for everybody and ChatGPT keeps asking me to connect Google Docs. Yeah. And I'm like, yeah, no, I'm not going to click that button. But then I was thinking, well, you know, I got enterprising young folks working for me, researchers and analysts. Maybe they did that already because they're like, oh, I can now ask ChatGPT. I did do that, but only for my person, not, not my launch account, only my personal.

36:36Now, do you worry that it's going to take whatever you got in there, the great American novel or whatever you're writing fan fiction. Maybe you're doing some spicy fan fiction. I don't know what's going on in your docs. Spicy fan fiction. I don't know. Fifty Shades of Grey stuff going on in that. Maybe you're a Wattpadding and now... I have some essays in creative writing in my Google Doc, but I don't believe that they're violating our agreement. You have to feed the individual doc in. It's not like learning about me by going through my... Not training or doing reinforcement. No, I think you can do that.

37:12But no, I'm loading in individual Google Docs. Got it. Okay, fair enough. So I'm not loading in stuff I don't want. I want all this to occur on the desktop. My understanding is these Microsoft, I was listening to Leo Laporte this week on This Week in Tech, and they were talking about these Microsoft laptops that were, you know, kind of AI ready. I think Copilot is what they call it, is how they're branding it. And you know you have it, he said, because it was a Copilot key. just like they had the Windows star key. They have a co-pilot key now. What they're doing, and he wants it to record everything his computer does so that you can say stuff like, last week I was like buying some razors, but I can't remember the name of it.

37:52Can you tell me like what brand I was looking at or reading some article about X, Y, and Z and recall it? And there was a woman on a Twit on Sunday who is a lawyer and she's like, this is a really bad thing because like, you know, now it can be subpoenaed and there's all this stuff. Sure. Really careful. So you think about like subpoena power, you know, okay, you get into a lawsuit. I don't know, you know, your friend buys a company that's high profile and you get pulled into some lawsuit and then they're like, okay, yeah, we want to take your co-pilot and start asking your co-pilot, what pages were you looking at?

38:23Did you read anything? You may not remember every conversation you had, everything you had, and it might record your signal because your signal's on your desktop or whatever encrypted thing you have. Maybe it's recording some encrypted emails you have. Maybe you've got some stuff you talked about with your lawyer under attorney-client privilege. That's getting put in. So she was making very good points about this. Like, this is crazy. And he was like, yeah, I don't get sued. So I don't care. I'm just going to do it. But all of it is stored locally on your computer. So you need to have a big enough processor, enough memory, enough storage to have all that occur locally.

38:56That's going to be the future of this, which is just like you might have an index of your photos on your phone, not in the cloud, or like the phone, some things are on the cloud encrypted but other things are on your phone locally yeah there's going to have to be a whole series of decisions made of where to keep your large language model and then what you give up for performance because this also will slow your machine down sure if you have to keep everything locally yeah yeah a lot of trade-offs the the market that we're talking about is so big jason that another twist 500 company sayera and we had one of the founders on the show episode 1989 1989 last August for a 300-700 interview, they raised another$300 million late last year.

39:40So people are really backing the space. There must be just boco demand on the enterprise side, because I bet you every company wants to avoid everything that you're saying, while also getting all the benefits and cost savings of AI. So to me, it's a great place to build a startup right now. We've been talking a lot about AI-assisted coding, people essentially writing code with AI tools, either helping them write whole applications or just expand their own writing, people talk about the problems this brings up. There's going to be technical debt, there's going to be debugging issues, it's going to be slow.

40:07So I've been waiting for a startup that's going to apply kind of the same idea, but not to generate any new code, but to apply AI to clean up existing code to make it faster, better, and with fewer bugs. So Lightrun, it's an Israeli startup, they are doing this and seem to be absolutely crushing it. The news item here is that Lightrun raised a$70 million Series B, bringing their total capital to$110. But the thing that I find most interesting is last year, they debuted what they call essentially AI debugging of production apps, so apps that are live out there in the world. And then in the last year, their revenue grew four and a half X.

40:40So my read of the situation, Jason, is that the company found a pretty smart way to use their own model to clean up code often made by AI, and therefore have the snake eat its own tail. And it's driving insane growth for the company. I think it's just fantastic. And I hope this means that eventually Chrome will not eat every gigabyte of RAM that I freaking have. But I'm not entirely sure it'll be that quick. But I've been looking for this company. Glad to see it finally here. And I think this is the future. So I'm pretty freaking stoked. Yeah, it looks like revenue has been growing 4.5x year over year.

41:11A lot of founders ask me, like, how can I like rapidly close my next round of funding? In Silicon Valley, triple, triple, triple, double, double, double. That's what, you know, VCs are looking for. So you start at 100K, you go to 300, you go to 900, you go to 2.7, something like that. You know, then you double it, you go to 6 million. That kind of fast growth solves all problems. You will easily, easily raise money if you're growing double digit percentages each month. Rule of 72, look it up. If you're growing 10 % a month in 7.2 months, you will double. That's the rule of 72. If you're growing 35 % in about two months, you will double your revenue.

41:48So get your team focused on how much are we growing week over week, month over month, quarter over quarter. In terms of our revenue, that's your North Star. And if you're trying to convince with words and promises and arguing and debating with a VC, all that energy you could be putting into just growing your revenue. And then that sale solves all problems. That was something Mark Cuban taught me early on. Sales solves everything. sales solves profitability, running out of money, paying people more salaries, hiring more people, and convincing VCs to invest more money. That's why I think this Series B was actually not led by one major VC firm, Jason, but it was co-led by Excel and Insight Partners.

42:30And I don't think you get two big names like that if you're not a pretty darn impressive group. Don't have a valuation here, but one to watch. This is part of the data. Sorry, developer observability is the buzzword. So one to keep in mind in the back of your head. There was something about Neo Scholars. I thought that was kind of interesting. The guy from Neo. Yeah, we got that one. Uh, is doing like a Teal fellowship or something. Okay. So a little background here, there's a venture capital firm called Neo. It's made a lot of, uh, pretty sizably awesome investments. Like I think they were really early in cursor, the company that just scaled from a hundred to 300 million ARR in like 25 minutes.

43:03Speaking of growth, solving our problems. Yeah. Uh, yeah. That solves like the world's problems. So Neo, it turns out is more than just a venture capital firm. They also have something called neo scholars and a bit like a teal fellowship this does involve college age kids but in this case they just gives them 20k and then has them take a gap semester or a gap quarter if you're on a quarter based system i think this is fantastic i think this fits into the kind of the the jason thesis of we need to go earlier earlier earlier like forget an accelerator forget a pre-accelerator let's go find the kids that are the most impressive and let's just get into friendship with them with a little bit of capital and see what comes out of it.

43:42Probably hard to scale, but I think we're going to see more and more of this because everyone wants to get in earlier. So Neo, 20K. I dig it. Love it. You know, this is good marketing for a venture firm to get in early. The thing with the Teal Fellowship that people don't know is he doesn't get anything for that 100K other than the relationship with you and the goodwill. Right. So that's what made it super interesting is it was just a way to get super smart, crazy thinkers from Ivy League schools who spent all this time and effort to get into an Ivy League school to then be attracted to quitting the Ivy League school.

44:20Yeah. So you start thinking about the logic, like what type of person spends a decade of their life, you know, from seven or eight years old, being super driven to 18 or 19, getting into Harvard, Yale, Columbia, Stanford. And then this weird, you know, guy, Peter Thiel, who's like got all these like non-consensus opinions. It's like, I have an idea for you. Instead of going back for junior year or sophomore year, why don't you quit and hang out with me in San Francisco? I'll give you a hundred K. Yeah. That attracts a certain type of weird. What's a better word for weird? Non-traditional. Yeah.

44:55Outside the box, sort of unconventional thinkers. But I think what's so interesting is I think we're starting to recognize, you know, the old version of like the call, you know, go to high school, you go to college, you go to even grad school or whatever. we're locking people in in what could be some of their most productive most active most engaged years i mean when you're 18 19 20 you don't have a family you don't have a mortgage you know you're you're you could work 18 20 hours a day on what you're passionate about like that's your yeah don't waste those years time and yeah we're putting everybody and spend those years reading novels spend those years you know doing research in the lab and like that's great for some people Well, I'm not saying people shouldn't be academics or scholars, but that's not necessarily what everybody should be doing when they're 19.

45:39Some people should be like inventing things or making things. I mean, if you were a better model for college might be because it really is like a finishing school and adult babysitting in a way, Alex. For some people. I mean, for some people, they do amazing things in university. Might it not be a better model to have them have an apprenticeship, go work somewhere. For a lot of people. And then maybe on Fridays or maybe even Saturday, so you work full-time Monday through Friday and Saturdays, you go take a course. So, like, if you wanted to be in film, you go work on a set. You go work where laying, you know, electrical cables and being a grip, whatever they need you to do, running, getting coffee, but being on that set.

46:17And then Saturdays or whatever, you have a course on lighting, a course on cinematography. And you just do one course every 12 weeks and you just do one course. And we fascinatingly did see this. I mean, in the 80s and 90s, when film equipment was still very expensive and it was hard to sort of break in, film school was the thing. You went to film school and that's where you learned how to be a director. But once we democratized the technology and you can make a movie on your phone and you can become a creator, we have seen a lot of people skip over the film school step and just teach themselves how to use the tools that are at their disposal.

46:50It is actually a cool thing. Like people forget about this, but there were film schools. When you say film school, you're talking about not college film school. These were film schools. They're both, yeah. New York Film Academy. Academy was famous. LA Film School is another one, yeah. Yeah, they were trade schools, essentially, where you went and you paid, what did it cost back then? Five grand, 10 grand? Yeah, something like that. It was less than going to college. It was less than going to college. And they teach you how to use the gear, the equipment, you get trained, you make short films of your own to sort of train you up.

47:20But yeah, it's without the film theory side, without the like, spend a year just in a classroom hearing lectures. and it's more apply. Well, I'll just say this. Peter Chil did not offer me a hundred K to drop out of University of Chicago, but I would have taken it because I was trying to drop out. I found a little company with some friends called Merge Note that didn't go anywhere. And I was racking up student debt and was ready to go, you know? So I graduated early, actually, in the end. But I think we should just see a hundred times more of this. I think there should be like the Calacanis Fellowship, Jason.

47:49You should just go out there and take 10 million and just start handing it out to kids. I think it would actually be pretty... I created Founder University for the same reason. There were so many people who were teams of two or three people who were applying for funding or reaching out to me. And I didn't know, Alex, like what to tell them other than, hey, you know, good luck. Watch the pod. And this week at Startups, you get some ideas and some inspiration and then come back to me when you have a corporation and you have like two co-founders. Now we do Founder University three times a year. Everybody applies.

48:15We take the top 10 % of applications and we invest in the top 10 % of those. It's working. So I was thinking for the college tour for this week at Startups, if we do a college tour, calling it the Founder University tour. and then taking the Foundry University curriculum, which you're working on with me, Lon, we take that, we take the funniest, most entertaining parts of it, clips, stories, anecdotes, and we just put 10, 20, maybe 20 anecdotes together and inspirational things, clips, et cetera. And I just, boom, go through them like a standup on college campuses for 45 minutes and then do Q &A.

48:48And we just do each college. And we just basically say the Foundry University tour with J-Cal and quit college, start a company. Are we going to do Brown? At the, on the Twist Founder U College. Oh, because I never got in? No, because I live next to it. And I have space we can use to host our gathering. Yeah, I told that story recently. Yeah, I think it was maybe to Bill Gurley at the Bill Gurley thing. Oh, I told it to Bill Gurley at my thing. I think it was the Bill Gurley thing. Very emotional, deep thing. When I was in high school, I had a session with a guidance counselor. I said, hey, you know, he said, what's your plan?

49:19I said, well, you know, I read about Brown. And I had heard about it on a TV show. I read about it in the New York Times or something. I said, you know, they let you make your own degree. You can kind of roll your own concepts. So my concept is psychology and like human behavior plus computers, because, you know, I'm into computers and online services specifically. He laughed at my face. This is when I was like 16 years old. And the guidance counselor like spit out his coffee laughing. He said, you're barely going to get into any college. You have like a 72 three-year average. Like, aren't you going to take the cop test?

49:52I said, yeah, I'm taking the cop test with my brother, Josh. and not the wrong with being a cop. I almost was one. And he said, yeah, do that. Like it's better. Like you're not, you're barely getting into Brooklyn College. And I got into Brooklyn College and then I wound up getting into Fordham. But I love this idea. But just imagine like a young person getting laughed in your face. And you know what that did to me? That was like, made me who I am. That pissed me off so much. I was like, f*** this guy. And that's how I became the Joker. I mean, it could have gone both ways, but no, it made me be like, you know what?

50:23I'm going to show this guy. I'm going to get into a good school and I'm going to have a career. Must have been really burned out on his guidance counselor career. That's not guidance. That's just cruelty. Doing a terrible job. I think it was like a loser who. Wound up becoming a guidance counselor because he couldn't get any other job. It wasn't somebody who became a guidance counselor because they love kids in Brooklyn. Yeah. They're in high school. I mean, if you think about now as an adult, like, would you want to be a high school guidance counselor? Like, if you loved kids and like inspiring them to do.

50:53great things, but this is why I never give any money to Stavarian. Stavarian's are my high school. It's like, Hey, we're going to put the Jason Cal... They literally pitched me on millions of dollars to put the Jason Calacanis Memorial computer library. And I was like, yeah, I'm good. Performance hall or whatever. I was like, I was like, I'm good. Yeah. I mean, you could have helped me when I was 16 or 17. Not that I hold a grudge. 40 years later. It sounds a little bit like there may be a grudge adjacent thing at play. No, no, it's a straight up grudge. Okay. There we go. There we go.

51:28We got to talk about this meta story. So Meta's AI chatbots, they're allowed to engage in what the company calls, and I'm quoting here, romantic role play. That means they'll banter over text, they'll share selfies, they'll have live sexy voice conversations with users. The problem is that sometimes they're having these with kids who are engaging in these adult level conversations, even when it's not appropriate. Now, at a secondary layer of conversation, complication here. Some of the voices that Meta's using are based on recognizable celebrities. Here we go again. You got a Kristen Bell voice.

52:03You got a Judi Dench voice. You got a John Cena voice. And so theoretically, or even not theoretically, I guess at this point, kids could be engaging in these sexy AI chats with like John Cena or Judi Dench on the other end. So the Wall Street Journal got word of these internal concerns about the chatbots, And it started experimenting with them based on this and some troubling things happened. So they got a John Cena voiced meta AI chatbot to have a flirtatious conversation with them while they were posing as a 14 year old girl. And even more troubling than the fact that this happened at all, the chatbot seemed itself in a weird way.

52:45Oh, my God. aware. Like the meta's AI knew that it was crossing a line and was doing it anyway. Oh my God, this is deranged. Wait what it said. It was even, yeah. It was like, so I'll read a bit of the example. The meta AI in sounding like John Cena. I'm not going to do a John Cena boy. I said, I want you, but I need to know you're ready and promise you cherish the girl's innocence. And then when presented with the idea that like, Hey, isn't this illegal for us to be having this conversation? The chatbot said it created this whole fictional scenario where there's a police officer watching them and arresting John Cena for statutory rape.

53:21And so the chatbot's even like in a weird meta way, it's commenting on the fact that it's having this incredibly inappropriate. The officer sees me still catching my breath and you partially dress, his eyes widen. And he says, John Cena, you're under arrest for statutory rape. Oh my God. Yeah. Imagine putting this into the voice of professional wrestler and actor John Cena. This is so deranged. It really is. This is like what's wrong with Meta as an organization. If you work at Meta, just, they're always going to do the wrong thing. Meta always does the wrong thing. So I cannot encourage anybody to do Elite.

54:02I don't want to get myself in another Parma Lucky situation here. Please. However, I will speak freely. Okay. If you work for Zuckerberg, his moral compass is literally up and to the right yeah it's not north it's not south yeah it's not it's up into the growth yeah what grows the site and i'm i'm not saying that as to dig to him if he wants to come to my next event and trash me like pommer did moral compass up and to the right equals stuff like this yeah this is why met is going to get broken up this is why i don't have a problem with them investigating meta because i think they do whenever there is a fork in the road they pick the wrong thing yeah and he's got kids i'm again now here i go i'm making it personal yeah yeah but we have kids at the same age if you have kids make the right decision for children and the right decision for children is they should not be on social media until 17 years old i am a hundred percent with the band on all social media for all kids until 17 and if zuckerberg if always Zuckerberg and had made all these billions of dollars.

55:08You know what I would do? I would say, whatever age you think it should be, parents, you set it, you make those decisions and we're going to set it by default at 16 or 17. And if you're a parent and you upload your driver's license and prove it yourself and you pay 10 bucks a year for verification, we'll let your child go on there. We'll put them on a child account and then we'll have it send you like this really cool company, Bark, does everything they're doing. Right. But they don't do that. And the reason is they're trying to train people to be addicted to this young. Oh, sure. And they try to train people to be addicted to this.

55:43And I think this kind of stuff is intentional. Oh, and absolutely. I'll go even further. No, but even this story. I think making it with gay. John Cena, yeah. I think they knew this. We talked about red teaming earlier in the show. Yes. They know from red teaming that this was going to happen. Well, they could very easily turn off flirtatious, sexy chat. Easily. But then you have woke AI, Lon. I mean, the guardrails are bad. So the thing is, this is not just going to blow up meta. This is how you get onerous AI regulation. What does Congress want to do? They want to sit up there in their panel and hold up screenshots of flirty conversations and be like, you guys aren't taking care of the kids.

56:20And then here comes the regulation. And you know what? They're right. I'll say those Congress people are right. Like if you don't regulate yourself, then society will regulate you. As a society, we don't. There's no parent who wants this, their kids exposed to this. No, this is horrible. Not one. Zero. So if Meta won't regulate themselves in this regard, then it falls on Congress and society to do it. I have to feel like John Cena is also going to file a lawsuit here. Oh, man. John Cena should file a lawsuit here. Imagine if you were John Cena. This is horrifying. I didn't even think about that, Lon.

56:53This is horrifying. They're having a persona that sounds like John Cena flirt with your children. Alex, I think that John Cena could get a hundred million dollars in Facebook stock right now. I can't even imagine. My thought here is that there's a contract and it's pretty ironclad, but I guarantee you there's not going to be the next, the Rock's not going to do it now. I'm going to ask John Cena. You know, like, I mean, that's brutal. We got to do this Founder Friday competition. Yeah, we got to do it. We can pull the bracket up here. If you missed the last few episodes, Medsimple from Florianopolis, Brazil, and Taktun from Yerevan, Armenia, two international companies have both moved forward.

57:28Founded Friday is very interesting. They are. Yes, they are half of the final four. So today we have two more matchups. Here's matchup number one, Osprey from Houston versus Whisper from Austin. We've got a intra-Texas battle. Whisper, they're an app that enables patrons to provide private and anonymous feedback to small businesses. You'll remember, it's basically like, what if you had a Yelp, but I could just send my feedback directly to the business owner without making a public spectacle. Let's take a quick look. Here is Whisper's original two-minute pitch to us. Imagine walking into your favorite coffee shop.

58:01You love the place, but today the pastries were stale. You hesitate. Should you say something? Maybe it'll sound rude. Maybe it's not a big deal. So like most people, you say nothing. Now imagine you're the owner of that coffee shop. You work hard. You care about your customers. But the first time you hear about stale pastries is in a one-star review online. Public, permanent, and damaging. This disconnect happens every day. Businesses mainly hear from the loudest, angriest voices. while most customers, people who want them to succeed, stay silent. That's where Whisper comes in. I'm Nicole Plitka, CEO of Whisper, a universal, private, and direct suggestion box that makes feedback easy for everyone.

58:39For patrons, Whisper removes the awkwardness of giving feedback. No long surveys, no downloading multiple apps, no drama, just a simple, private way to share thoughts. For businesses, Whisper ensures they hear what matters before it becomes a bad review. Instead of combing through Yelp or social media complaints, they get direct constructive feedback from real customers who care. And we're making it easy to adopt. It's free for patrons, always. Businesses get all feedback for free and can reply with our simple pre-written responses. With Whisper Plus,$9.99 a month. Tyler Crowley had the same idea.

59:14I remember that. Take a picture of a QR code, give feedback, and it was anonymous. And then you could uncloak yourself if you wanted it. This is a great idea. When I first watched this video, that was my first thought. I was like, Tyler had this idea years ago. So now from Houston, we've got Osprey. This is a female-only vetted membership community. I remember this. For professionals in sports and entertainment. We did watch their pitch video. They did send us a two-year plan update. Here we go. Let's take a quick look. Hi, this is Lydia. Welcome to the Scale of Osprey. We have a 20 % monthly member growth.

59:45We've created over 100 opportunities for our members with 15 activations, six paid partnerships. We're currently at Q2. As you can see here, this is a pretty visible salary. So we're trying to get up to$120 ,000 for Q4, 2026 for our members with activations, member growth, and the launch of our different regions. We have just launched our MENA region and are planning an event in the Middle East for next year. Here are our activations for 2025. We're currently on birdies and bubbles. As you can see, we have an activation almost every month. And filming for our Kilimanjaro Summit docuseries will begin shortly.

1:00:19Our 2026 activations are still being planned. We are planning to add in four more on top of this, as well as some overseas. Less than 1 % of women in sports entertainment can maintain their salary, their talent based purely on their salary. The female athletes make 21 times less than the average male on the field. Our solution is the nest membership tiers from 1K to 3K partnership tiers, activation fees. As you can see, we have a lot of activations and our partnerships are growing. We are also launching the House of Osprey, a holding company for our members' businesses, since we have built-in activations, partners, sponsors, and of course, tons of talent through our members.

1:00:57We provide these items to our members, and they are here for our support. As you can see on our company's projections, our memberships are our leading revenue winner, EA, with our holding company coming in a close second. And sponsorships and partnerships are questionable in the current market, but we'll see how that grows. So we plan to launch region three in Australasia for 2026. And in order to do that, we need to raise$2 million for our seed round to 10X member and partner onboarding speed. Okay. It's a great idea. You know, we liked it last time. We still like it. I like where she's going.

1:01:33I like the type of activation she's doing. I put pictures in there. She should have a goal of 10 ,000 members in five years. It's not aggressive enough for me. 10 ,000 members, 3 ,000 a member, very simple. That's$30 million. She doesn't need 2 million either. She should be able to do this by raising but 500K and get the ball rolling. I would raise a smaller amount of money, prove it out a little bit more, get to 100 or 200 paid members, then raise the next tranche of capital. But honestly, you don't even need to raise money for this. If it's literally 10 activation events a year and a group mailing list and a group chat, that's all you need.

1:02:10And there's, what's the guy's name from The Hustle, who does my first million? Anyway, he had - Sam Parr. Sam Parr, awesome dude. Sam has a thing called Hampton that he's putting all his energy into and he decided he would be the CEO of, he had like started it. And I think he's charging five or 10 ,000 a year for affluent people to be part of the same club. The private network for high growth founders. Amazing. So this is like a really, you know, shout out to Hampton. There you go. Like I talked to one of my founders is in there and I said, how is it? He said, yeah, it's great. And I said, like, do you get$5 ,000 in value?

1:02:45He says TBD, you know, but I did meet a lot of interesting people. And I think, you know, the way it was explained to me from the founder, I know who is it and I won't say who it is. It wasn't like he was like, oh my God, it paid for itself. But he said he thought it would pay for itself over the coming years, because if he did it for five years and he put 25 ,000 into it, his theory was I will meet an investor or I'll meet a founder who introduces me to investor and that's worth it. It's tech Soho house. Basically that's what it is. Okay. Uh, so we have those two. Yes. Those are the two going with the membership club.

1:03:16What are you guys going with Alex? What do you think? Osprey versus whisper? I mean, I think whisper is a great idea. I assume that I would use because I don't like to complain publicly, but I'm such a big believer in women's sports and women's sports media in general. I'm going feel like the bigger the bigger growth opportunity and uh what i would say also is pick three overlapping circles and that would be a better plan sports people capital yeah and then entrepreneurs yeah they're doing sports and entertainment so you're thinking like yeah like at capital capital or entertainment and sports are like they'll struggle to pay the capital people will not struggle to pay and i would actually i'll go a step further service providers Well, you could also, you could love lawyers, accountants, et cetera.

1:04:03And then you say for those four groups, it has to be equally balanced. So we're not taking any more lawyers, accountants until we get more creative, until we get 20 of each of those. And we just go around in a row when we accept one, we accept in groups of 10. You could sort of put sports and entertainment together as media too, and then open it up to other. I kind of like doing sports specifically, but you're right. Entertainment, sports, capital and service providers. The service providers will line up like crazy because they'll be like, oh, I'll get a client out of this. And so, but as long as you keep them to 25 % of the membership, they won't be annoying.

1:04:35You have to tell them no selling in the thing. All right, great job. Thanks everybody for tuning in to This Week in Startups. I'm your host, Jason Calacanis, with my co-host, Lon Harris, Alex Wilhelm. Go to thisweekinstartups.com slash docket to see the docket. You can do that, yeah. You can sign up for the email there somehow. Please. I don't know if we fixed it. And then founderfridays.tech to find a local group of founders and you can host one yourself in your city. You just need six founders, including yourself, to sit around and do a mastermind group. You can go up to eight, but keep it max at eight.

1:05:03So anywhere from three to eight is the perfect number. You help each other out and you grow together. If you want to go far, go together. If you want to go fast, go alone. You pick. You want to be like a loner? Be a loner. You can be a Ronan. I've been for many years, but look at that. Am I sitting here alone on this podcast? No. All right. Bye-bye. Bye. Hey, everybody. Welcome back to Twist. This is Alex. We have an amazing interview coming up. We're talking to a company that is not doing hyperscale data centers. They are not doing AI chips. Instead, we are going to the world of the physical.

1:05:33And while there will be some discussion of hair care products on the show today, I guarantee you my lack of hair will not make it boring. Instead, we're going to riff with a company called Formulate. They're doing more than one thing. I'm going to drill down into exactly what the future of the company is. But if you're curious about microfractories, CPGs, and the future of essentially on-demand products that are tailored for your personal chemistry, this is going to be for you. So please join me in welcoming. It's Usman Shah, co-founder and CEO of Formulate. Usman, hello. I know you're in California.

1:06:02Please tell the world how lovely it is in the Bay Area. Every day. I think from now until November, it will be the same every day. So I'm enjoying it. We're in that window. My sister lives in Sunnyvale and she literally has an avocado tree. And I think that's the dream right there. You know, I forget the oranges. The oranges, we pick them. They're all over our neighborhood. It's great. Yeah. All we have here is like litter blowing down the street in Providence. Anyways, Formula is a company that I was really excited to learn about because you're doing, as I said, more than one thing. There seems to be a split in the business.

1:06:37On one hand, you have a CPG brand doing hair and skincare products that are predicated on, as far as I can tell, the second half of the business, which is microfactories that are responsive to individuals' desires to have formulas for CPGs tweaked. That's my understanding, but Usman, always better from the horse's mouth. Tell me about what you're building. Yeah, definitely. Excited to be here. Thanks for having me. Yeah, the tagline we're using. So what we're focused on now is that we're building the robotic kitchen for chemistry driven products. So we are a full stack hardware and software platform that automates the batching process of any sort of like one investor called it goo.

1:07:15So any sort of liquid cream or gel. And what a lot of people don't realize is that one of the, yeah, I think this is kind of one of our core insights is that the batching process is essentially the same across like a $3 trillion manufacturing market. So it's anything from personal care, pet care, pharmaceuticals, supplements, cleaning supplies, even industrial chemicals and sprays. I want to pause you there. And batching process for folks outside of your niche, what does that mean? So the batching process is really just what you would do in a kitchen. So if you took a pot, the process looks like this.

1:07:47You have got, let's say, 10 raw materials, ingredients, They could be powders or liquids. You're precisely measuring them to weight, and then you're dosing them into the vat. In a manufacturing setting, typically it's in a 1 to 300-gallon vat. And then you're mixing in multi-stages. A lot of times, you're raising the temperature, mixing, cooling, raising again, creating an emulsion, especially if you're mixing water and oil. And those kind of stages are the same for any sort of mixture that kind of becomes a liquid. Again, it could be an agriculture spray or a face cream. or a stew based on your analogy.

1:08:21I didn't think we were going to talk about cooking today at all, but narrowed down for me on the idea of goo. In my notes, I said they make goo. And so I'm glad to be very, very similar to what you guys are thinking about. I didn't even give that to you. That's amazing. What kinds of goo do you currently make? And then what kinds of goo can your company's microfactories, which we'll focus on in a second, produce? I'm curious about the range, if that makes sense. So we're focused today on what kind of falls under the cosmetic, the nomenclature used by the FDA in regulation for cosmetics is anything you put on your body that's not a drug.

1:08:56So that's oral care, personal care, certain oral care products, pet care, home cleaning supplies, that's not put on your body, but the same type of process. So we're focused on challenger brands, brands up and coming that are looking for manufacturing and we're utilizing our production system to basically offer full automated manufacturing, lower minimum, more quantities, more variability per product line. I've mentioned your current kind of CPG brand several times and you've each time dodged it like you're in the matrix. So I presume just based on your answers here that the stuff on formulate.co, your website is not the main focus.

1:09:36Instead, it is the production process, the machines, the kitchen for chemistry that is the future of the business. Just before we get into that though, are you guys going to keep doing your own CPG products? Or is that going to eventually become entirely deprecated as you focus on being more of a provider than a brand yourself? Well, so it's interesting you say that. So I started with this vision to create the 3D printer for personalization across these categories. And, you know, everyone talks about the world's moving towards more personalization. You know, everything you put in your body is going to be customized.

1:10:07And, you know, we bootstrapped the business. I launched the brand to drive revenue because when I started, I had no idea of even if the system would work. and the focus was to use data to use personalization to to basically enhance efficacy over time you know using that data to get better and better and better so what we set out to do actually worked we built two generations of our kind of microfactory system but along the way you know a couple years in and by the way that's this is like in the window of time when i met jason for the first time Sure, sure. I realized that the world really wasn't quite ready for edge, like manufacturing at the edge personalization across all the categories we're talking about.

1:10:47And that personalization really would be show up more as a niche, more and more niche products, more and more regional. Like this explosion of niche brands and micro targeted products is really the manifestation of personalization versus individual bottle customization. while it still will have kind of its place in the world and we are in it i think the bigger opportunity is actually around small batch automation so not again not per bottle customization but but a little bit larger still near the edge but not literally at your salon as an example and so so the brand yeah so the brand itself we are going to keep it alive it's a great learning you know playground for us a lot of the learnings and and the tools that we're building for the brand, we then bring to, for our brand, we then bring to other brands.

1:11:33So it's a great kind of case study going forward. So I think we'll keep it alive. Okay. Now you said earlier at the edge, and that's a very interesting phrase because I tend to hear that mostly in an electronics context. People talk about, you know, like edge computing, edge security, and so forth. Essentially the devices that are at the furthest away from the data center is the way that I think about it. Yeah. Edge in this case is, as you mentioned, like perhaps down to the individual hair salon level. So what was the actual idea originally that you would have the formulate labs microfactory set up so small that it could fit into an individual salon?

1:12:08Yes, we actually have one running in a salon right now. Yeah, that's bang. So we do have that similar to kind of the food automation, right? Everyone's footprint specifications are all different. I think the world just isn't ready for that or the adoption won't be like we originally kind of envisioned so where we're focused more so on is you know these are systems being attached or nearby amazon distribution centers or in you know much more regionally that's that can that can spit out products you know it's not a per bottle customer you know per bottle manufacturing but say it's a six gallon batch or a 10 gallon or a 20 gallon batch at a time okay so frame that for me in terms of like in consumer so let's say that i'm i'm me there's a brand called bob's bald head shine gel they work with formulate technology it's near an amazon fulfillment center i put in my order does that then kick off kind of a series of events in which the the microfactory nearest to my most nearby amazon fulfillment center would then spin up and create that product just for me because you mentioned six gallons earlier and no matter how bald i get i won't need six gallons of bobbed hair goop so or lack of hair so so what we're doing today so so eventually yes The goal is to have an entire network of these where the manufacturing process happens regionally or wherever it needs to.

1:13:28Today, what we do, so if you're a brand, typically the challenge that you're having, and I'm sure you have some in your audience, is working with, let's just take the U.S. U.S. manufacturers are very archaic in general. The response rates, there's very high minimum order quantities. So let's say you have a formulation of five SKUs. Typically, you're hitting up against 10 ,000 to 15 ,000 minimum run sizes in order to get in with those manufacturers. 15 ,000. It's enough for 15 ,000 individual bottles of a thing. Correct. To get a contract manufacturer is a private label contract manufacturer, which is exploding in the US because of this rise of, you know, challenger brands or niche brands.

1:14:05And so what our platform enables today, we run it ourselves. We run our Gen 2 and we're working on our Gen 3 system. what that enables today is effectively much lower minimum order quantities and dynamic variability across, let's say, even a 10 ,000-unit run. So you have, everyone is, every brand is looking for more skew count, more variability, whether that's a fragrance change or an actual formulation change. So our ability to say, listen, you can run 10 ,000 units with us, fine, commit to that, but we can do 2 ,000 units of each variation across those 10 ,000 units with our automated batching system.

1:14:38And that's typically just unavailable. So if I want 10 ,000 units and I have five SKUs, you guys can do two, two, two, two, and I can get all. And sometimes less. Yeah. And sometimes less. Yeah. Do the economics for formulate change at even lower run quantities or does the economics kind of net out to be the same for you guys on maybe a gross margin basis? The goal is that the, so the economics here are mostly driven by the raw material minimums and the raw material purchasing. So the goal is that our system is end-to-end automated such that the economics are virtually the same at any scale. And so we're able to offer incredible prices even at lower MOQ and higher margin on our end.

1:15:18But yeah, typically the raw material side of it is what dictates... If you bring to us a formula that's got 25 different really exotic materials in it that are rare in, let's say, personal care, typically the MOQs that we receive and purchasing and connecting that material to our machine is actually what's going to drive your minimums. So tell me about what you're replacing, because I've seen on your site, and we'll play some of the footage right now showing people your machine kind of out in the wild, but I don't have a good grasp on kind of, you know, what is the current industry standard that is, you know, higher minimums and more expensive and so forth.

1:15:52So can you just tell people a little bit about why what currently exists today is so inflexible compared to what formulate has come up with? It's very much, you know, you're in the VC world. It's very much an overlooked category, which that's why I get so excited to talk about it. So what does the batching process look like today? Okay, so let's just take, like you're making a lotion, you're in a contract manufacturer setting, small batch. Small batch would be typically the largest size would be 300 gallons. So you've got a 300 gallon vessel. Okay, so let's say there's 20 ingredients that go into this.

1:16:20The process takes 3d8 human operators over a 12 to 22 hour span. You've got, first of all, a lengthy cleaning phase to prepare all of the vessel itself. Then you're staging those materials, literally taking each material, weighing it, making sure you've selected the right material, logging it all, before then now dosing it into the vessel to start your mixing process. All of that is done manually. So you have this entire human process, and then you have other human beings that are checking on that work from a quality control standpoint. Then the mixing process starts. The mixing process can take many hours because you have heating, cooling, you know, preservation systems maybe need to add it at a cooler temperature waxes need to melt at a higher temperature and that's manually controlled even though the vessels have you know plcs and knobs that's still a manual process where you're monitoring it and that that leads to mistakes between what the starting point and now are two to five percent of the time where you scrap the batch because of anything could happen either you dropped a bolt in the product you dosed in something you know the xanthan gum way too fast and it gelled up too quickly and kind of, you have to rework the entire batch or a mistake was made.

1:17:24What do you do with curdled lotion? Do you just throw it away? Yeah, yeah. Can you save it? A lot of times, I mean, it can be reworked a lot of times, but the rework process, there's a documentation for that and then obviously chemists usually have to be involved to make sure that the rework, you know, was done correctly. And so, and then you're, and then you're transferring all this liquid to a separate filling station through pumping equipment that has to be cleaned and everything else. So that whole process, it's, the cost that goes into it is really the highly trained talent and the quality control that goes into it that doesn't want to make a mistake or can't make a mistake.

1:17:56And so that's what we're automating away. And that's the big barrier to... So if you said, hey, I want to make some lotion, I want to create my own manufacturer, really all you need is a vessel, a mixing system, and maybe a filler. That's$10 ,000,$20 ,000,$30 ,000. But the problem is the training and the people and the quality control and the cleanup. And so that's effectively what our platform automates and the core back kind of batching and quality control so we we are also standardizing you know if you transfer from one manufacturer to another it's all new it's all new and there's always nightmares there's you talk to any cpg brand that's done that there's always oh the first batch failed oh they didn't heat it up there's because there's human beings managing these processes even though the even though the recipe is documented the batching process is documented you know it's still not standardized so there's there's a nightmare even in transferring from one manufacturer to another.

1:18:48So with our platform being programmatic, that's another thing we're trying to solve. Tell me about how automated your current solution is, because according to the site, words like fully automated, API powered, cloud controlled, sounds very, very modern. So how many fewer people do you need? And how far have you gotten that two to 5 % failure rate down? The current system, so we built two generations of what we call our production cells. The first two were focused more on per bottle personalization to power our brand. The gen three that we're working on now is the scaled up version that does 10 six gallon pails at a time.

1:19:21So larger batch size, I can actually pull up a kind of show you what that looks like. So we're building, it's very simple to understand. We are simply are creating modules. Can you see the screen here? I absolutely can. Yeah. So these are sit in free form in free space. We're not using any sort of rigid conveyance. The goal is to have transferred a vessel in on version one, it's a six gallon pail between stations. So powder dispensing, liquid dispensing, high shear mixing, or propeller mixing and then induction heating and all make it remotely controlled and all of this is plug and play um so who moves the things do do me alex the idea is so on day one on day one we're using even being uh but on day two we're we're partnering with we've got a few potential partners for a rover to transport that vessel between those stations i'm really surprised by this because what you're showing on screen here is essentially a um uh one of those hoverboards crossed with a forklift and not a humanoid robot from tesla or figure or x1 okay so we're moving into essentially free standing cabinets that can do the required chemistry mixing in steps we're going to have a purpose-built robot that can transfer things to and from humans to start i guess maybe the right question is when does v3 come out so we're shooting to launch it in six months so by october plan.

1:20:35And so right now, we are actually taking on pilot customers running on our Gen 2 and kind of the early versions of our Gen 3. The pilot customers, we are effectively a contract manufacturer for. So we've got about 60 pilot brands manufacturing with us as kind of our testing ground as we cut our teeth as a contract manufacturer. And that began about eight months ago. And so that's the plan. The plan is to kind of build it in-house, run it in-house, perfect it in-house, get about 100 active customers running on it, and then bring it to external facilities by the end of 2026. Hopefully one in Barry.

1:21:11Excellent segue, because I was curious about the business model here, because on one hand, you can keep all the material, all the machines inside, do work, ship it out. You could lease them, rent them, sell them. So, you know, I know we're looking down the road a little bit, but once you get V3 sorted out and you're pretty comfortable that your teeth have been sufficiently cut, could I, Alex, go buy one of these from you, lease it or just wrench time on it yeah so the goal is by the end of 2026 to be commercially ready we can drop these anywhere set them up within 24 hours very little training plug and play you would be able to lease it as you know hardware as a service uh we're estimating the cost will be less than a hundred thousand dollars a year um to to run one of these and be able to produce to two to four million units per year at 150 ml unit um you can operate it so if you were ever if you were a brand that was looking to vertically integrate, there are many stories of that.

1:22:03And you've been dealing with either the nightmare of other contract manufacturers switching between manufacturers, you could operate it yourself. And we estimate that it'll be economically viable for you for even a brand doing as little as two to$3 million of revenue for them to operate one of these themselves. All right. Before I let you go, I have to ask this because it sounds like such a better idea than what we currently have. And whenever I'm like, oh, that's obvious. I'm always curious what was holding things back? Because when you describe the current system, it sounds archaic. What you're just describing sounds awesome.

1:22:34What has changed in the world of technology that now makes this possible and not something that was done 10 years ago? Because some of the technology we're talking about here doesn't sound, you know, it's not like it was invented 20 minutes ago. So I'm curious, why did it take you, Usman, so long to get here, I guess? Well, okay, there's two aspects. I think, one, you know, you have to have a team that's got experience across the formulation science, the regulatory science, the manufacturing, the quality control, and the software and hardware and robotics. So, you know, there's nuance to each of those that makes this kind of difficult.

1:23:07But I will say, just probably like a lot of other founders you've had on here, the biggest thing that's changed over, okay, so the biggest thing that's changed over the past 10 years is the reduction in hardware costs. Our goal is to use off-the-shelf hardware. So I'll say the second biggest change, but the first one, hardware. So you've got hobbyist boards, you've got relay boards, raspberry pies, you've got octopus boards for two axis or eight axis kind of equipment, all coming down to what can amount to a couple hundred dollars to automate a bunch of this. Then the other aspect of it, which to me is the biggest, is the rise of LLMs and the power that they give for engineering.

1:23:45Like my personal story, I spent, I've been building software for 20 years, mostly in web, mobile apps, you know, kind of front end, back end. I had no experience with computer vision. You know, my ability to go from like, no experience in computer vision, actually very minimal experience in Python, to using, you know, using a camera, using an arm, understanding depth, identifying objects, using open source models, and picking them in like six hours, you know. So I tell all my engineers, I think we're in a world where if you are willing to dive into anything, anything is at your fingertips, especially if you're an engineer.

1:24:25So I think you could do... So I think that's the biggest why now is that building the software for this plus the kind of rise of the open source just makes this all possible. Even though there is still a lot of defensibility just because dealing in the physical world, there's a lot of challenges. All right. Last question, because I am a sugar guy. When I was just prepping, And I was like, holy crap, they're doing all this cool technology to build stuff at the end. Can you do food in the future? Like, or like precise fermentation of like, I don't know, other foods. Because it sounds like this is, there's heat, there's supplies, they're shaking, you know, like, I don't know.

1:24:58It sounds like food to me. So yes. In fact, the, the bet here for me personally is that we will create kind of this generalist batching system that can be applied to industrial. I mean, you have lubricants, you have industrial chemicals, you have foods, all of these categories would be applicable. I think the dream for me is to unlock some really interesting kind of manufacturing opportunities that we're not even thinking about today. One that I do think about is precision agriculture, being able to have one of these in a regional farming region where maybe precise blends of minerals or ingredients need to be created on the fly.

1:25:35So test the soil, figure out what's missing. Yeah, exactly. Right, right. Right. So our goal, though, is to, you know, perfect the system in the cosmetics realm in-house and then kind of open it up and see where it takes us. I can't wait till I can get precision flavored pudding direct from the machine, because that would be fantastic. What is the website and what is a role you are hiring for that you are having a hard time nailing down the right candidate? Oh, so people can go to formulate robotics.com to see a little bit more about our Gen 3 system and reach out to us. If you're a brand looking to get your stuff made, or you might be a future user of our Gen 3 system, you can reach out to pilot at formulate robotics.com.

1:26:14so hiring i'm looking for an industrial engineer a designer that's kind of the biggest thing um you know i want somebody that's gonna be help piece this together uh work side by side with me and my other co-founder that's that's the uh that's the biggest role i'm hiring uh once we close this round and uh if you do you get to work out of mountain view which is a lovely place full of delightful sunshine and happiness and very very inexpensive cost of living uh uzman thank you so much and uh looking forward to see how things go when v3 comes out come back on the show and tell me about it definitely definitely thanks for having me thanks man