TWiST News: Grape-picking robots, startup investing for all, and the earnings numbers you need to know | E2037

0:00essentially sam alden said hey uh we face a lot of limitations and hard decisions about how we allocate our compute resources towards ideas so essentially jason they're compute constraint even with Azure in their pocket that blew my mind yeah they're blowing through five ten million ten billion a year in infrastructure and losing a lot of money um and that does say something that you know they're they're running out of bandwidth and i saw jensen wong who was talking about elon standing up this giant uh cluster so the build out keeps occurring i do think the interface of chat gpt is superior to any other interface, but the results are not.

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1:24Save up to 50 % on your cloud bill at oracle.com slash twist. All right, everybody, welcome back to this week in startups. It's Friday, it's November 1. We are but four days from the election. And we're not going to talk about that today. We're going to talk about startups technology. So this is a great reprieve for all of you that are white knuckling it to the end of the election. Or hopefully, if you're a founder of a startup, you're focused on your team, your product and your customers with me again today as always alex willham how are you sir uh you know i'm good i'm also very glad that this is our little election free safe zone because i feel like everywhere else i look if i open the door election turn on the sports game election so you know a little break sounds good yeah i'm so gonna win who's gonna win let me ask you i mean it is crazy to think that the prediction markets are like coming back down to the uh they were obviously very much in favor of trump but they they seem to have come down to the uh polls and the pollsters right the gap is closing and we're in a dead heat and i asked date silver on twitter like when's the last time it was like this was it al gore and bush and i don't even think that 2000 election was this close yeah well one thing i've been tracking very carefully apart from polymarket and kalshi and other prediction markets probably robin hood got in on that shout out to robin hood um but i just pulled up the data according to um the latest information from nbc 64.9 million votes have already been cast wow that is crazy we talk about the election day and we'll count all those on election day but i mean the election is now you know it's ongoing but uh jason we have a a really awesome show we have with us today we have the founder of a company called extend robotics that's going to tell us all about teleoperation vr and how to grab little grapes with a robot then an upcoming bill in the senate that might bring private market investing to everybody and we have a raft of critical earnings updates and if you and i don't yap too much we'll talk a little bit about apple's new satellite deal new stuff from open ai and i pulled some new chinese ev clips for you so lots to do lots to do today on this week in startups let's get started i had seen alex uh a video of grapes being picked by robots and ai we had an investment in a company root ai that was doing picking of berries and this is i think something we're going to see in the coming years general robotics powered by ai large language models helping the robotics you know move from doing very vertical tasks to doing very general tasks so vertical ai i think everybody knows like you can teach ai how to play chess or poker and have it really focus on that set of heuristics rules strategies uh just like cafe x could have uh the the startup we invested in that makes coffee a very constrained uh ability to make coffee in a box but to have a robot go fold your laundry pick grapes and make you coffee that's a whole different ball of black so let's introduce our guest today and see what he's up to yes so with us today is dr chang lu the founder and ceo over at extend robotics dr lou i'm gonna call you chang because that's gonna be a lot simpler but hey how you doing hello very good great to see you alex great to see you jacal how are you definitely a big fan of both of you and uh yeah and uh twist and uh and the audience podcast is definitely a big fan yeah uh so tell us what you're working on and the progress you're making you heard my little tee up about robotics and how it might change over the coming years because of advancements specifically in llms and ai learning so quickly and sort of generalized ai versus vertical ai and and do you think i got that sort of teeing it up correct yeah definitely definitely you've you've had a really good summary um but um yeah just generally for extend robotics we are a uk startup uh starting in 2019 um yeah i mean the extend really the purpose is to develop robotic software to extend human capabilities beyond physical presence ultimately to amplify world's labor productivities through immersive technology robotics and artificial intelligence so um yeah so our purpose is really helping the world making that transition from those traditional vertical uh factory automations into this real world general purpose automations uh really the aim is to combat the uh labor shortage obviously um everybody's talking about that um yeah but but obviously we we understand the the real world automation is difficult um because it have to um require like a multi-purpose system working for high variability tasks in those dynamic environments right and and that's that's generally deemed impossible previously obviously and uh and uh and we see there is a breakthrough since the i would say led by chat gpt that the the new generative ai is taking over on text demand or conversational demands but but but we see there's opportunity to embody those similar ai systems into physical uh form factor like robots and enable human-like experience even for physical works so we just saw one of your handheld robots um doing lab work um and picking grapes explain to us what's happening in that video if we pull it up again maybe you could sportscast us and tell us you know did the robot was it trained already on how to pick grapes or did you just tell it pick grapes or pick whatever you see in front of you if you think it's ripe like how much training do we have if we you know we see a robot here doing a handshake what do you call those robots that have like two or three hinges on them um yeah that we see in a factory what are those called i mean normally uh we call it a mobile manipulator i mean these ones in the showing in the video uh we recently has more more human-like form factors with two arms and a similar mobile base i mean we've developed software that is trying to be more widely compatible with off-the-shelf parts so we don't manufacture hardwares so i don't want to compete on on that but but we build software that is trying to give a lot of options for people to build their own setups so our software is basically virtual reality applications that people can use to upgrade their robots um and uh and and people can use once upgraded they can wear a vr headset they can use their gestures to operate robots and they can have finger level controls as well on on the on hands so the purpose of the software is has three purposes first is to be able to teleoperate robots in real time and then the second is to um to collect data for AI trainings.

8:51And then the third is to inference AI and be able to supervise and provide interventions when needed. And obviously, the hope is that we can allow the seamless shared automations happening, both with human as well as AI combined together, and they can basically complement each other over time. And as AI goes more capable, then it can become... Dr. Lill, I want to jump in there. So I know that Xtend is working with Queen Mary University on this grape picking project, but just to make sure that I understand, the current level of the technology is teleoperation, robotic arms in the field, and then allowing the robots to learn from humans, doing the motions for them to actually pick the grapes.

9:41But in time, this will get to the point when the robots are able to do it mostly by themselves, I presume? Yes, yes, exactly. We certainly view the automation as a spectrum rather than an overnight miracle step change. And there's always some level of human there. And hopefully towards the future, there will be less of a human and more of an AI in the process. We call it a human-in-the-loop AI, right? and as a collaboration between human and AI. It means that it makes this smooth transition, basically, where one human can simultaneously supervise more and more robots, depending on the level of autonomy that each robot becomes.

10:29So that's why we amplify labor. We don't replace labor. We amplify labor with AI. And it's going towards the same direction, but obviously we're proposing a more smooth transition here. All right, listen, interest rates are coming down, but it's still hard to raise a new round. Everybody knows that. The last thing you need is to get bogged down in the minutiae while raising. So if you're a founder overwhelmed with your cap table management, due diligence, and frankly, managing your investors, you need to check out Fidelity private shares. Fidelity understands that dealing with equity can be incredibly time consuming.

11:09That's why some founders joke that fundraising is a full-time job. I'm not working on my startup. I'm managing my investors. I'm doing fundraisers. And it shouldn't be, right? With Fidelity private shares, you're going to easily manage your cap table and your data room. You're going to get a more accurate 409A valuation, and you're going to get it quicker. You'll also be able to model the future of your company's equity, which you need to do as the founder, because this dilution adds up. People start signing notes. They don't know what the impact of those notes will be. And you want to model that out and you can fully automate your next funding round.

11:38So you stay on track. You seem professional, even if you're scattered, you want to come across as very professional and buttoned up. And that's what having a great partner like Fidelity will do. And you're going to get great support from Fidelity, a great startup community. They do a lot of cool events with founders and VCs. I'm going to be going to some of them. So check out Fidelity Private Shares at fidelityprivateshares.com. mention our podcast you're going to receive 20 off your first year paid subscription and alex this is what we i think are hearing about self-driving that there's 1.5 mission specialists we were told that waymo we don't know if that's true waymo says it's not true crews had virtual operators the idea here is humans in the loop watching the ai learn and And then eventually it steps back and watches 10 people picking grapes, or it goes from one and a half or two car robo taxis to 10 to 100.

12:34And then the mission specialists, which I love that term, eventually are just looking at very unique moments in time. Yes, professor? Exactly, exactly. So they generally should be just supervising what's happening and just monitoring just in case. and then only needed they come in and provide those interventions and always you can teleoperate whenever you need I want to talk about the grapes though because one thing that I don't know much about growing grapes for wine but I do know you have to be pretty delicate with the actual fruits themselves so how much of a challenge was it to train these arms or teleoperate them to not break the skin of the fruit and ruin essentially the wine harvest yeah so there's certainly level of integrations uh innovations needs to happen in some in terms of the sensory informations um be able to sense force at the end factor to uh to both provide feedback for operators but also a bit of information for the ai models make sure there is a clear feedback on on applying force because obviously for grapes is a it's very important to make sure not damaging them and they are very delicate and and especially for one making as we're working with a suffering grunge is the one english sparkling wine maker and a very keen i mean they're very uh they work really hard to make sure the the wine is on a good quality and we're working with quimera universities that are very experienced on custom end effectors to be able to uh in uh incorporate force into into the sensings and we come in as a as a human in the loop ai uh software um capabilities as a consortium we try to build this together but dr lu in the effectuator is just a fancy term for robot hand right i think grippers is the term that i've heard right grippers is that the term in in robotics yeah grippers and effectors um sometimes you can you can have different form factor for the for the whippers yeah okay when do you think a wine harvest will be done completely robotically what year if we were to put a bet on this yeah i think i mean in terms of our current project we are we obviously quite early in the in the stage i would say uh in the in the next three to five years this is something uh could be commercialized but obviously this is always also a process of commercialization commercial adoptions uh that's going to take some time but i think technologically um we're getting more mature in the in the next five three to five years i think what's going to be amazing about this alex is if you think about training skilled or unskilled workers right and when people start the job they're unskilled and then over a decade maybe they become skilled at it sure it's got to be extremely frustrating as somebody who runs a vineyard to have new people typically probably migrant workers come in and then train them of how to not damage the vines and how to do this correctly and now if this becomes automated then that means whoever the best caretaker was of these grapes and these vines would become the global single um vine manager in the world so this is a really interesting concept alex imagine if you had one if you had the greatest pilot of all time let's say sully who landed the miracle in the hudson let's say he is in fact the greatest pilot of all time you could have that pilot in every single plane here you could have the person who manages vines the most perfectly manage every vine in the world in other words the most perfect practitioner for any sport behavior in the world and then the really dystopian or weird moment in time for all of this alex will be i think instead of having migrant workers leave mexico to come to california to pick grapes they could stay in mexico not cross the border and have vr headsets and have the robots in napa doing this work it's kind of crazy when you think about that three to five year period no alex i mean i think one thing that we underestimate as a as a technological breakthrough is just broadband penetration around the world because what undergirds what you just said it's just fast connections now dr lu um i presume that if i'm going to interact with one of these robotic arms with the gripper at the end i need a pretty fast connection how latent is the i move my hand and then the robot moves its own arm is there a number you can put on that?

17:44Yeah, yeah. So actually, the data streaming, the latency and bandwidth reduction is one of our key IP about ability to really quickly compress the data, especially in this case, we're compressing 3D data to enable immersive experience in VR. And we have the full patent on it. And basically, our ability to stream data is about 100 150 milliseconds and that's obviously on top of the latency of the network Will it work on a commercial internet or do you have to have a dedicated network and would it work on say a 5G network could you do this with a Verizon or even a Starlink satellite connection from a low earth orbit satellite or is the latency not good enough on those platforms We can already do that yes so we can use on Wi-Fi 5G.

18:46We're just working on testing on StarLynx. In fact, I think StarLynx is probably the lowest latency in terms of network because you don't have to go through the fibers. So it's more straight line. But we're working on testing that. But generally ability to compress data is small enough that you can actually stream over that uh standard network is one of the core uh capabilities we can offer after after wine what do you got what's the next after you pick grapes or is it just the company's going to work on picking grapes for a couple of years uh yeah we actually uh so we're quite wide in terms of uh adoptions so we have we we've been we actually started with uh nuclear uh applications as a as a teleoperation interface working with atkin release and uh we then we then take on some projects with with airbus on space robotics uh and uh and recently we started this this new uh new ground i mean uh a year or two a year and a half into this future future farming projects that is on agriculture applications and i think we are we're getting into the field that where a lot of attractions coming in from manufacturing industries, especially automotive and a few more manufacturing applications where we see there's a lot of labor shortage as well.

20:13So I think we are getting towards this phase where we start to focus on manufacturing. But I think all these applications really allow us to build a general purpose technology. And for us, because the technology is so general purpose and and widely applicable. All of these applications really contribute to advancing the technology while we're looking at more commercial adoptions at manufacturing applications. All right, Dr. Liu, we have to let you go, but one more question before we do. I know you're a UK-based startup. I also know that you guys have raised some grant money from the UK government.

20:50How supportive has the UK been to its startup community lately? I know we're in a post-Brexit world, but i love talking to folks from different countries so just give us the quick lay of the land for building a technology company in the uk i think the uk is probably one of the best environment for startup in if you are a software focused startup software and ai and there's a lot of government support in terms of pushing innovations happenings and and helping startups, small companies to innovate. There's a lot of venture capitals available to talk to, especially around the London area. I think it's a good starting point.

21:38When you make your next trip to London to get a big check, shoot me an email and we'll catch up on that because I'm very curious to see how the company goes. But, Dr. Lu, thank you very much. Extend Robotics, everybody. You can Google it. If you're into sparkling wine, perhaps check out and saffron grange yes all right thanks doctor awesome appreciate it good work up uh you know this is really interesting i think when we see these demos and you know a lot of times i'll see them go by on linkedin or ax and in the production team we talk about it what's underpinning this change what are the second order effects that will happen is what i always try to go to because then we can figure out the trends and i think there's a couple of very interesting ones here One is the greatest single practitioner in every vertical.

22:24I don't know how to phrase this exactly, but the perfect pilot, I think, might be the way to think about this. And we're the perfect poker player. You are going to have for every profession. The greatest practitioner addressing every single instance of that task. and so for picking grapes it seems mundane it probably seems like not super important but it probably is because great winemaking requires winemakers and this entire process all the secrets will eventually wind up in ai and the quality of wine like the bottom half of wine could become as good as the top half because all of the secrets all of the little nuance will be captured.

23:17So it will elevate the cost of it will elevate the quality while reducing the cost. Founders, I know that you're keeping a close eye on your burn rate. I am too. In today's venture market, every single hire you make has to be perfect, right? You can't make mistakes, you got to keep that runway as long as possible so that you can run more experiments. And you need talented people to run those experiments and figure out how you're going to get product market fit? How are you going to scale your company? And that's why you need to use LinkedIn jobs. As you know, LinkedIn brings you the candidates that you can't find anywhere else.

23:51LinkedIn passed the 1 billion member mark. Think about that 1 billion members and 70 % of LinkedIn users don't visit the other leading job sites. This is a phenomenal statistic. They don't even go to the other job sites. Why? Because they might not be looking and those are the best hires, but they're hanging out on LinkedIn doing professional development, checking in on their network, building their network, sharing content, finding leads, all that great stuff. Bottom line, there's amazing hires waiting for your company on LinkedIn and nowhere else. And they have a special deal right now. Post a job for free.

24:23What? F-R-E-E? What a great price. LinkedIn.com slash twist. That's right. LinkedIn.com slash T-W-I-S-T to post your job for free. Terms and conditions. Of course apply. I want to double click on exactly your thinking here because to me, the best pilot, the example you used was solely definitely a flesh and blood human but when you talk about um these ai models becoming the best at what they do do are you referring to like a digital digitally trained ai that learned from the best human to then become the best technology product you would assume that all of this monitoring of great humans would then result in the greatest jedi pilot of all time and it could also learn just from all scenarios so if there is a scenario where you know when you're picking grapes to learn hey you know this bundle of grapes needs 24 more hours on the line and this one you know we missed and we should have picked it earlier over time learning that is uh something that could come from a human's perception or over time the ai could learn hey when we produce this vintage of wine it got a lower score than the last five years right and let's go back and replay what we did and that type of um diligence on tasks exists for planes Every time a plane crashes, we have this wonderful thing that happens out of that tragedy, which is the entire system gets better.

26:01They focus so much energy at such great cost on making travel safe that we're now at a point where we've had no commercial airline deaths in America in like a decade. It's phenomenal. and you know tragically whenever the next one occurs they will put millions and millions of dollars into figuring out why that happened even if it was a drunk pilot or just a broken bolt and it's like super obvious they will track that down now that doesn't happen those kind of post-mortems those kind of debriefs does not happen when you're picking grapes i'm certain so now you're going to have that occurring so the perfect pilot for every profession is coming the perfect professional for everything i hear the implied add that to the theme list so trust me it's going it's going on um one last note about this before we move on by the way the other piece the part two of this is how strange is it that telecommuting remote work is going to be global so we're sitting here watching amazon and andy jassy deal with like a mutiny over at amazon for when they come back five days a week in january and here we're going to have people potentially picking grapes from mexico who would be migrant workers but since we were shutting the border down they would be able to do that work in a call center or from their home with a satellite connection just in the same way athena go to athenawow.com and get a virtual assistant we're investors in the company full disclosure um just like you could have somebody in manila working in your operations department like we do here at launch and many other startups have virtual assistants because you can't find assistants and admin workers in the united states sadly people don't want that job here so it's really interesting those two components of this that I am not struggling with, but kind of inspired by.

28:08Yeah. It's going to be interesting to see how long US-based developers can charge the wage premium they have been compared to their international compatriots. Like, for example, if you're a pretty solid developer in the US and you live in Seattle and you work for Amazon or Microsoft, and then you move to, I don't know, France, I mean, you would take a pretty serious salary reduction. So by that logic, and to your point about teleoperation and people from around the world taking more part in the economy as we see from our end does that mean that in time one of a developer's best traits in the u.s is going to be their ability to go to an office because the person in london or manila or wherever and so i wonder if that's going to be their their saving grace i think that will be part of it just like a sommelier you could have the greatest sommelier in the world telecommute in to tell you what to order but you'd still want to go to the restaurant and have that experience of the sommelier in person you know real world meat space as we call it back in the day you know would be uh charming and wonderful and uh i think that's probably how this will hash out and they'll just be a global standard for salaries that i think we're going to because if you look you know like you'll have somebody in manila uh or india or kenya these are all emerging markets for virtual assistance business process outsourcing and they're all let's call it low single digits per hour workers three four five dollars an hour in the united states minimum wage seven eight bucks i think but the average wage more like 15 to 25 and an assistant in any major city would be 50 60 70k probably which then puts you at 35 an hour 30 an hour something in that range and so that's what i think is happening is you're going to just see the the salaries converge on a global average for work and then people will decide if they want the luxury item of having the person in person to your point like maybe the 150 or 250 000 developer coming to the office at meta making high-end decisions will be fine that person gets 250 $50 ,000 for dragging their ass into an office and eating, you know,$30 Neiman Ranch steaks for free.

30:31And then they'll have five developers working for them for 50k each, you know, the same salary on their squad. And I think that's like going to be a very interesting efficiency play. It's going to be tough though. It's going to be tough for people in the US who are accustomed to being, what you're saying is the A plus players are fine. They will work with A plus players in lower cost of living areas. What if you're a B? You're screwed. Yeah. I really, that seems to be the case. You're going to be bummed. B is not better. It's bummed out. B is for bye-bye. We're done with you. There's a lot coming here.

31:07I want to make one last point, though, about wine. I had to quit drinking, but when I used to drink, I used to drink a lot of whiskey. Big fan. Love scotch. My scotch tastes quickly. It surpassed my budget, actually, so I switched to bourbon. But I heard a really funny apocryphal story about a scotch distillery and uh they got some sort of like health inspection you know people wanted to come and open the doors and look at them and they found their room where the whiskey was aging and it was just full of cobwebs like just an absolute mess and the health inspector's like you guys you got to clear this out you can't have i mean this is a health hazard and such and the the whiskey guys were like but but if we take them out they've been in for so long what if that changes the flavor all that's to say that the alcohol industry is not exactly progressive on technology at all points but the labor shortage will drive a demand for technology products and so i think they're gonna get that's exactly right you know if you um do not have vibrant immigration in your country and you're do the protectionist thing which you know people have the right to do and then societies can make that decision japan certainly made one yeah where you know you can't be a citizen of japan but they're they're trying to get people to move there to work to fill those gaps and they're they're quite promiscuous uh promiscuous when it comes to giving visas but not citizenship you're going to see that blend but if you can't find workers people are going to find other solutions has happened in the cashier business and the concept of a cashier 10 years ago you would be perplexed to go into a restaurant a quick serve restaurant and not see cashiers and here we are 10 years later you would be perplexed to not see online ordering and so things can move quickly and humans can adapt very quickly to these changing circumstances yeah all right let's talk about ai everybody it's everywhere self-driving cars breakthrough medical research, and of course, business tools that make everybody better and faster at their jobs.

33:13If AI hasn't hit your industry yet, trust me, it is on the way and it's happening fast. But AI requires a ton of computing power. You know that. And those costs will skyrocket if you're not careful. I have seen these bills come in. It can get crazy quick. And that's why it's time for you to upgrade to the next generation of cloud. And that means Oracle Cloud Infrastructure or OCI. OCI is a blazing fast and secure platform that covers all the bases. Infrastructure, databases, app development, and of course, all your startups, AI, and machine learning needs. Now here's the kicker. OCI costs 50 % less for compute and 80 % less for network compared to other cloud options.

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34:31Yeah. So one thing that hasn't changed and some people wish that it would is the rules about investing in private companies. If you are a US citizen, Jason, there is a thing called the investor accreditation program. If you meet certain thresholds, you're considered to be intelligent enough to buy securities that are not publicly traded. But there's some movement in the Senate to actually change that. But first, I want you to tell people, what does it mean to be an accredited investor? Sure. we have laws in this country around accreditation it basically means that you make over two hundred thousand dollars a year or you have a million dollars in net worth and it combined with your spouse if you're in a couple and so it basically means if you're in the top five percent of earners or wealth holders in the united states you're what's called accredited another word for this might be sophisticated intelligent but a credit is the word they use now when you have that status which you could have gotten from winning the lottery having a great job that pays well um having an inheritance any of those possibilities could you could be involved in uh some illegal activity any of those reasons that you have accumulated wealth in the mind of the sec and our government means you can take the risk of investing in alternative assets.

35:56Alternatives in this case would be private companies. So you could invest in Uber or LinkedIn before they were public. When something's public, it goes through a lot of vetting, a lot of sunlight, a lot of audits. We still have fraud in public companies, but it is a fraction of what could happen in private companies like theranos or we work where you saw fraud or incompetence or just the wild west it doesn't necessarily even have to be fraud it could just be they're swinging for the fences and things can come apart at the seams now the reason we do this in america is to protect what the government very um um condescendingly uh believes that 95 of the citizenry here are stupid and unable to make these decisions at the same time so you can go on to draft kings and you know or prize picks and do a parlay and bet on the knicks or wherever you feel like it which i'm totally in favor of and i think it's great you could bet on public equities um and on the margins you can do crypto and crypto falls into this so the question is who gets to participate in this and the reason it's important is because true wealth creation and the ability to move from one strata to the next is largely determined by your ability to bet on these and i'm saying bet because it is a risk to make these investments in highly volatile assets and if you were to have the ability to invest in uber when it was five million that could work out very well for you or if you could invest you know in linkedin or doordash and you know what if you work in human resources or you were a cab driver and you saw linkedin or you drove for uber you would immediately want to put a thousand dollars into those companies and you would be rewarded with a thousand x or more so i'm very much in favor of allowing people to take a test to become what i'll call sophisticated and actually we have tests for cutting people's hair if you want to cut people's hair for driving cars and in some cases for owning a firearm in some places you can just get one but we don't have tests for gambling on sports we're going to vegas and playing blackjack i actually would be in favor of if somebody wanted to go to vegas and gamble them having to take a test on each game that they play i'm dead serious if you wanted to buy more than a thousand dollars in chips why not give people like a little test here's the rules of blackjack here's the rules of poker you have and if a flush beats a straight, now you can play.

38:38I would actually be okay with that. And that's the same situation here. I'm just thinking about how much money that would have saved me regarding the game of craps throughout my life in which I put money down on the table, magic happens, and then my money goes away. I never understood the connection between the things. It just evaporates from the table. Now, the thing about the number of people who count as accredited investors is very interesting. The journal covered this empowering main street in america act which is what we're talking about the bill in the senate but the thing is the number of people who meet the accredited investor test if you will or threshold has dramatically expanded so back in the day jason your five percent number would have been dead on it was 1.8 of households in 83 but thanks to inflation and just the changing value of money right now there's 24.3 million u.s households or just about 18 that meet this threshold.

39:30So my point is this, we've already allowed the accredited investor standard to dilute itself so much that it's become pretty much meaningless. So then why do we need it? Why do we just get rid of it? I think the answer to your question is because if you were running the SEC like Gary Gensler is, you would have the mandate to protect consumers above all else. And And that mandate then means when something like FTX happens, you have egg on your face. You bear the brunt of that. So they are risk averse, which is the mandate they've been given. They are not given the mandate to have the polarization of wealth and the wealth gap in our country close.

40:13And that's what actually this legislation would do. If people who are just starting their careers who had under$200 ,000 in net worth, but who made$75 ,000 working at a venture firm or in human resources or in accounting and they happen to see coinbase or you know um linkedin which is such a great example because so many people got their jobs on linkedin or posted jobs yeah on linkedin and and those folks would not have met in almost all circumstances the in the majority of circumstances they accredited but they would know that that was a good bet to make and here you know that that is the reason and incentives really matter the incentive the sec is not to get poor people to become middle class or middle class people to become millionaires that's not their mandate their mandate is to protect the public and build trust in the financial system okay fair enough but that's that's the problem it's sort of like with the rocket ships and the launches in california you have the coastal commission which you know i guess virtue has this virtuous mission to protect the coastline california's great asset is the coast it's like this incredible you know natural bounty but we kind of want to get to mars and get things in space as well but their mandate is to protect the coastline and okay if you want to protect the coastline oh you should just say don't build anything no houses no rockets no pier and you know we had this in san francisco i remember in the bay area when i lived there somebody wanted to put up this ferris wheel in golden gate park i don't know if you remember that the first great idea i would totally have used that and like people were like you know what we don't want to have like the london giant ferris wheel because um i don't want to look at it it's in my backyard and then the other group of people were like but kids and couples in the middle of a romance would go up there and you know propose to each other and it would be charming and wonderful and you know the naysayers win uh and so that's really what's happening here is the incentive for one group of people is outweighing the big picture and then that's where leadership comes in and this is i think what's happening now people will when they make this sophisticated test and people take it it should be in my mind a three or four hour preparation for the test and it should be 50 to 100 questions in other words it should be the equivalent of i don't know a driver's license i think the driver's license is probably the right amount of work you could pass the driver's license test and practical driving with what three or four hours of training don't tell a 16 year old alex who failed it the first time well you were probably not paying attention so anyway i think this is great we're starting to see this now come up over and over again and if we do this it'll make america more competitive because more people become wealthy more people will put risk capital to work and the amount of appreciation in companies ultimately happens in the private market more than it happens in the public markets today so if you were to invest in i don't know instacart or something or reddit how much of that occurred in the private markets you know as opposed to the public markets probably a lot of the acceleration occurred in the private markets if you want to put that into perspective imagine a company that goes public at say a 10 billion dollar valuation and then a year later it's gained 40 % and now it's worth 14 billion.

43:54Great. But that means that your possible returns as a public market investor were 40%. But if you bought in at a$10 million valuation, it's several hundreds and hundreds and hundreds of percent. If you want more about this, it's Senator Tim Scott, South Carolina is the driving force behind it. And it has a lot of other stuff in it as well, including extending the jobs act to a lot of companies with up to$2 billion in revenue to go public under different rules. And there's a lot to it, but mostly I think it's a good package of things. And I hope that people don't get their faces ripped off too often, but capitalism.

44:26I mean, could it be any worse than buying crypto coins that have no value in the real world? I mean, it can't be worse than that. Could it be worse than gambling on sports? I don't think it's going to be worse than those two. And we allow those and it can't be worse than going to Vegas and playing crap. So this by default, I think will be, this will exist. investing in private companies will exist exactly between gambling and sports you know going to vegas and public markets which seems reasonable there could be something right in the middle which is you invested in a company it was private the founders were lunatics they took a ton of risk and they lost your money okay you know you but you only put five percent of your net worth into it So the other 95 % were your home, your equities, your bond, your wealth front, perfectly designed portfolio, whatever it is.

45:20You know, I remember this tweet that I saw. This guy was like, you know, angel investing is the best way to have less money. And I just, I just died because I mean, if you're angel investing, you're, I mean, that's idea stage, couple people and like three lines of code. I wrote a book on it. You are going to need to hit 30, 40, 50 qualified investments according to every angel I've ever talked to. They've said between 30 and 50 is the number of bets you have to place in order to have one power law, potentially nothing is guaranteed, potentially let you hit break even in a profit and beat what happens in a low cost index fund.

45:58Now you do have the outlier that you could hit some grand slam. And that's reason enough in my mind to do it with a low single digit percentage points of your net worth. That is the advice I would give to you, Alex. If you told me, hey, I want to get involved, I'd say, great. I know how much you make, relatively speaking. You have some amount of savings, 5 % or less. In other words, if you lose it, you would make it back on your other equities and interest that year. So if you blew out the 5%, you'd still be even, right? Because you're probably making 5 % on your existing equities and money. Also, the rest of our family investments are in zero-cost index funds and low-cost international bond funds.

46:39So like our, my personal financial positioning as a family is so conservative that if this did come to be, and if I wasn't trying to maintain my journalist tag. Yeah. I mean, also, I just want to bet on my friends. Like whatever it's someone that makes a new company, I just want to like buy into it. Yeah. I mean, that's like, I, I frequently get asked to invest in restaurants and movies and I have the standard joke, which is, uh, I, I, I would, but I, I, I like money too much. so i don't because i like money and people laugh and whatever um and i generally just pass on those investments because i know that it would never work now i did invest in my friend nick charecki's film with a group of my poker buddies um and if i did not care if i made money or lost money because that's my friend and i just wanted to see his movie do well and it did well and i'm sure we'll break even on it yeah but but for example there's a coffee store near my house that just opened up It's called Brown B.

47:36It's here in Providence. And I know the owner. His name is Waleed. Lovely guy. I've been walking by that place where he's been building it out, remodeling it. It would be so cool if I could go up to him and be like, Waleed, I love you. I love what you're doing. Let me buy 10K worth of this company. But the system isn't set up for that right now. It's set up for bank loans and this other old school stuff. Imagine if they could put in the window, we're raising money to redo the store. It's going to be a$100 ,000 renovation. We're looking for a hundred of our top customers to put in a thousand dollars and whoever does gets upgraded to a vent you know a large coffee but for the price of a regular for life yeah help us out and you'll also own one percent of you'll own yeah for every ten thousand you'll own one percent of this million dollar enterprise and you know if you make money you make money but if you don't you don't care yeah because you wanted to support your logo but that would be illegal currently to do which is just sounds so ridiculous it's done anyways we will eventually get this stuff sorted out but uh in the meantime jason uh i have some big ai news i don't know if you caught all the open ai announcements this week but three things happened one they did an ama over on reddit which was incredibly well received and i have answered the question of where the hell is gpt5 in case anyone was curious where that model is essentially sam alden said hey uh we face a lot of limitations and hard decisions about how we allocate our compute resources towards ideas so essentially jason they're compute constrained even with lasher in their pocket that blew my mind yeah they're blowing through five ten million ten billion a year in infrastructure and losing a lot of money and that does say something that you know they're they're running out of bandwidth and i saw jensen wong who was talking about elon standing up this giant uh cluster so the build out keeps occurring i do think the interface of chat gpt is superior to any other interface yeah but the results are not so i really feel like google has to make a gemini app a dedicated app that 100 percent of the interface is designed to be used by consumers and i really love canvas on chat gpt which allows you to write notes and claude has had this for a while but you ask your questions and it just keeps refreshing the same document which is really nice i was writing the liquidity overview document for the next liquidity conference um and as i was writing it um instead of using a word processor or grammarly as i am prone to do i did it in canva a canvas in chat gpt and that was the first time i edited a document without editing the document i gave the ai commands to edit the document then i cut and pasted it into a grammarly or a google doc i can't remember what i did or a notion page one of those three and so that's kind of this interesting moment i think we're gonna be at and i'm also been doing uh as i may have explained when i drive my daughters to school i put on chat gpt's voice application i asked them what they're working on in school and then i have it give us quizzes on it so i said hey give us some increasingly difficult questions in american history and it was great it was fun to do with the the chat gpt and who was the first president of the united states who freed the slaves who wrote the declaration of independence you know and i was like yeah who did write that first draft for the declaration oh yeah that was benjamin franklin i got it wrong and i was like i knew that answer but i had forgotten because it's been 40 years since i was in history class yeah and i was just thinking about tutors you know what an advantage it is to have tutors did you have tutors growing up alex no but my parents afforded or no no well my dad um uh who was a phd in chemistry uh he actually held what he called homeschool on friday nights through saturday morning so we'd have our friends over and have a sleepover and do science experiments and write poetry and basically they just broadened our public education incredible um you know my parents couldn't afford it they were busy working and so i was always a little bit jealous of my friends who had tutors and when i got older i realized oh poor people or middle or middle class people don't have tutors and all the people who i met who were getting into colleges were like yeah you know i was falling behind in math i had a math tutor yeah i was falling behind in science i had a science tutor and then i was like oh what an incredible privilege it is to have that and now that's completely democratized with a custom ai tutor for free for life on any subject holy cow the world will become more just because of this technology i am so here for it if you have kids try this just get into one of these have it do quizzes it will remember where you're at and you will become superhuman so to speak and your ability to tutor i am very interested in how google speaking of google did in their earnings i did see that youtube was a blowout quarter for youtube yes and that they did 8.9 billion in quarterly revenue in advertising and if you put those numbers together they said they did 50 billion in revenue over the last year but 35 billion of it was advertising which means the other 15 billion was subscription revenue and that to me is extraordinary so maybe you could take us through and also the cloud had a blowout quarter but maybe searches were down so this is really interesting and i know google went up their shares went up a bit and they were one of the ones who was maybe lagging.

53:20So let's drill in to what's happening at Google and then what we can look at in terms of second order impacts and what founders can sort of ascertain from this incredible quarter. Yeah. Okay. So in Q3 over at Google, just to put some high level numbers out there, revenue was 88.27 billion, up 15%, Jason, pretty solid growth for a company of this size, earnings per share 212, both of those beat expectations. Now, you're right, Google Cloud brushed revenue there was up 35 % to 11.4 billion. And critically, Google Cloud now makes money. So a year ago, its operating profit was about 266 million, basically break even for a company Google size.

54:02This quarter, nearly$2 billion in operating profit at Google Cloud. In a quarter. In a quarter. So I mean, this is as a standalone company would be an extraordinary company. Oh, absolutely. This would be an enormous public company. We'd be talking about just this company but that's just one part of the course google empire on the search front google made a lot or alphabet i should say made a lot of noise about how ai is actually making search better and used by more people does not really reflect my personal use but hey you know uh explain that unpack that because this is i think critical sometimes we see something in a stock and what management is saying but your own personal behavior is radically different explain this disparity that you're experiencing or dissonance pulling a quote from their uh their earnings transcript uh alphabet said they're quote seeing strong engagement which is with ai search which is increasing overall search usage and user satisfaction which means that the average user of google search is not me which actually helps explain to me what google search has become because it's further away from what i want but apparently i'm more in the minority than i thought Now, to your point about startups, I think that means that you really need to go talk to a lot of people in like Oklahoma and not just San Francisco or Austin or Seattle.

55:25We are the vanguard. We are the tip of the spear. We're the early adopters. But as early adopters do, the massive middle and the lag guards will eventually do. So you and I start now, I think, a lot of searches with an LLM, whichever one it is. i am doing probably 20 or 30 chat gpt sessions per day um and then probably i do five or 10 on gemini or claude or other llms just to test them in comparison uh sometimes grok when i'm on twitter x so if we were to look at that i think my use case my default now is to ask chat gpt my default is not to ask google i think you're the same and we're trying to think of the instances when i prefer google and i find google oppressive when i'm doing almost any search yes because of the number of sponsored links that are there it's the whole top of the page exactly so the you i think this is the lesson when you run a business if you become a monopoly you squeeze and squeeze every ounce of revenue out of that user base as you're supposed to do but as you squeeze and squeeze that the users can slip through your fingers to a better solution and i think that's what's going to happen to google that's the big challenge is there's no advertising in chat gpt it could be you could have links in it uh when you do a search and i wouldn't mind having a couple of them but you you kind of get the answer and then if you get the answer to your question how many days between this date and this date like i was doing that for the election i would say how many days between now and november 5th i would go to chat gpt to do that because it was just easier and i would get the right answer and i wouldn't click on any links or if i want to know you know um like i said basic history facts i used to do that on google find a web page on the open internet and then do it now chat gpt just steals whatever that web page had and regurgitates it and take and intercepts that content so this is um going to be very challenging for them the second lesson here is probably really good idea to have multiple revenue streams because no matter what happens to google search the investment in waymo youtube and cloud are going to save the company because now they have massive revenue 50 billion from youtube 50 you said they had 2 billion in profits i don't know what the top line was on cloud for cloud it was basically 11.4 billion in revenue and then just under 2 billion cloud profits so then you have basically 250 billion dollar a year businesses in youtube and cloud if you have 100 billion in revenue over here that's not search uh that's pretty great for balancing it out and we don't know um what the waymo revenue is but that is a black hole of profit there's no profit in that business that's going to lose 10 billion 5 10 billion a year for another 10 years so those long bets actually are probably paying off i i think so so a couple a couple notes about that one to put google search in comparison compared to its other businesses uh google search and other the line item in alphabet's earnings was just under 50 billion dollars just for q3 so when we still think about google keep in mind the search is still the the vast driver of its income though i think we both agree that that's going to be under a lot of pressure two open ai put uh its new search product live for everyone out this week if you're on the web interface and you're a paid subscriber so i've been playing with this any good it's great oh yeah you want to share your shit and show it uh sure don't mind at all yeah i mean i i did see that they were going to do this so this is our this is their perplexity killer i know perplexity was very upset about this because they were using they were built on chat gpt and then sam decided i shockingly that he was going to compete with them i guess so i need i need a good query and i'm going to go ahead and push the search the web button when I get it in.

59:40But Jason, what do you want to learn about? Let's say great ski vacations for families. think oh i pushed the wrong button oops okay so i'll just do that again and i'll do it search this time because i know what i'm doing i see so you click a different button there you click the search operator button and then here we go and it gave us a couple of images a table maybe you told it to do tables no i didn't but it did it both times actually this is the regular tragedy pd4o response and then this is what we got from search so jason um do you prefer smugglers notch big sky or oh i love beaver creek that place is great so yeah i mean here we go and those are all links right you link out to those places or no no those are not links but we can click the sources button which then brings up links to where it pulled from and essentially it appears to have gone through and read every single listicle that was seoed for google and then compressed those down into a list for me so this is the uh the listicle of the listicle it's a metalistical yes it's a medical and this is where i think they're going to get sued to all um hell and back again and this is why the new york times should not settle their lawsuit the new york times should take it to bat i think they should go to bat on the lawsuit yeah on behalf of the content industry because if you see what chat gp is doing they're stealing all that content processing it presenting it as their own and those and then burying the citations and links which is decidedly more cutthroat than what google did with their one box even google with the one boxes which is you know or their snippets under the link where they give you like one or two sentences that pissed off content producers but at least you got some traffic from google so you could say you know what i'll make this deal with google i'll make the deal to put my listicles into the search engine knowing i'm gonna get links and it was this little dance that content creators publications writ large made with google you take a little bit and send us some traffic and we're all good here sam altman is taking everything and giving nothing to the content providers and i will say that's why i would say this is destined to get him massively sued in in and far be it for me to to simp for um you know 100 billion dollar companies but i'll stand up for them here they did note in their official corporate blog post about this launch of search that they are working very closely with their existing content partnerships so i think the idea is to lean pretty heavily on on that side of things um one more open ai thing put the links at the top level though they obviously are being selfish with that that's why i said are the links on the top level there are they buried bearing the links i think is the key mistake here i know aesthetically it makes it look better but it should say from buzzfeed right this from here or cited by buzzfeed it should say cited by buzzfeed travelosity and travel and leisure and you know alex and jason ski vacations.com and if it did that on each one of their citations then you would have this like recognition it would put the fair in the fair use here yes i i'm with you i'm with you on that i'll be very curious to see how this all plays out but one last open ai thing uh they brought the advanced voice feature that you were describing to yes to desktop this week i didn't know that wow it's really fun i i i can't do a demo because i can't have the audio play out of my ears into the computer but if you are a paid chat gft subscriber go try out the desktop app advanced voice mode it feels different than you'd think because you're talking to your computer and it's talking to you while you're doing other stuff and it feels like a different it just feels different to me in a really cool way so i recommend everyone try that again really love for it to be monitoring my desktop right now you and i talking we will be doing this show next year and you'll say uh i'll ask you hey how many users did um how many paid customers does uber have and it would just come up like as a sentence while we're talking and say according to uber's q you know court q3 filing x y and z and that's where it's going to get really interesting is when there's this persistent agent on your desktop watching what you're doing and giving you supplemental information i would love to have another monitor here that was my ai agent that was watching us talk and just giving me supplemental information like remember pop-up videos you remember that on oh i viscerally remember those yeah there was a show called pop-up videos it would give supplement you if you had watched the video for you know 10 years take on me uh it would say you know it would draw a line and pop up a little bubble and say this are you know person you recognize from this tv show or this artist was this who did this this drawing or did you notice that this person has a coffee in the background on game of thrones and they shouldn't that little you remember that scene i do when they had a cup of starbucks in the end i mean westrow starbucks packed westrow starbucks that was a busy filming schedule i gotta say i i want to find the showrunner who made that mistake and just be like it's okay you guys did great until the last season then you did terribly finish by the way house of the dragon have you watched it i've seen a good chunk of the first season but uh then i only cow the second season i don't want to say anything but my wife and i really enjoyed it i want i want to watch it done it's so good also industry i told you about industry did you watch it yet jason i have an eight week old baby like i i would love to follow up on every content recommendation i get because my friends are very smart yeah but i i'm covered in spit up and and crying i understand i saw you walking around with a very cute baby on your on your chest it was very charming i miss those days i love i love having her with me you know what else do we got in terms of earnings we got amazon i saw we got apple where do you want to go next which ones stood out for you and by the way if they break up google i i'm a google shareholder alphabet shareholder man i am stoked if they spin out one or two of these businesses because it's going to unlock massive shareholder value as i've always said if youtube was a standalone company it would be worth i think double netflix uh given its footprint i just realized though i didn't tell you the most interesting thing about Alphabet.

1:06:16So I'm going to pull that back up because this is the critical thing. Sundar Pichai, during the earnings call, said, today, more than a quarter of all new code at Google is generated by AI, then reviewed and accepted by engineers. That's at Google. A quarter. Now, a lot of this is going to be super background, boring code, not like, you know, cutting new UI, but that's still an enormous amount of code that is starting with an AI genesis at, as you said, Google, a company that's known for its engineering prowess. it's going to double and then it's going to double again i mean we're obviously going to have robots creating robots you know like imagine a factory of wrote what you could imagine here is a factory of robots building robots that's what google is about to experience there will be ai agents writing ai agents and when that happens and you get that flywheel going that's where people feel that there is an ai risk and you know we saw we talked about claude having access to your desktop and being you know it can do certain things it can't do others it can't like make a purchase for you as an example but obviously that's what we all want so it's only a matter of time before these agents start spinning you know in a in a velocity that may be unstoppable and that's i think a 10 chance or a 1 chance but it's one that's worth looking at and we will look back on that statement as part of that hockey stick of when it goes parabolic straight up zip zip zip 25 being done 50 being done 99 being done 99.59 all code in the world and then code we didn't asked to be built as being built to do things we didn't ask it to do and all of a sudden we figure out that we're in a simulation i i'm fine with that that final scenario because if it's all a simulation then i want to know what my score is but another company that's doing big things in ai and cloud jason of course is amazon and amazon has a couple numbers that i want to just point out to you because they they blew my mind so aws grew 19 last quarter okay it's now on a 110 billion annualized run rate, which is bonkers.